Course correction

Course correction

CEO rebuilds Vasamed to aim for bigger markets

by Matt Krumrie   It’s 4:30 a.m. and Paulita LaPlante is wide awake. She hops onto her home computer and notices Terry Duesterhoeft, her vice president of sales and marketing, is also online.

They instant message each other, share a few witty comments, and start brainstorming ideas for the company they run, Eden Prairie-based Vasamed, which develops low-cost, non-invasive monitoring systems for vascular and cardiovascular health.

Duesterhoeft has been with the company for about a year, hired to roll out its latest line of products, acquired in part from Vasamedics of Little Canada in 2002 and called SensiLase.

He expects the second generation of the product line to help the company expand — from a $30-million wound management arena to the $200-million market for screening for peripheral arterial disease. Doctors can use the products to test blood flow in people with diabetes, chronic skin ulcers, and at risk for amputation. 

LaPlante has been with the organization since it was founded as Optical Sensors Inc. in 1989, and president and CEO the last six years. She is the architect of a complete company overhaul, which she calls a “deliberate process” to redefine its mission and strategic direction.

While some might call the impromptu early-morning messaging signs of being a workaholic, LaPlante says, “Can you be a workaholic when you truly love what you are doing?”

LaPlante asks that question as she returns home from the supermarket on a cold Saturday morning in January. On a day off for most people, LaPlante is talking about her company and answering questions about a recent success. Vasamed showed up on the Deloitte Technology Fast 50 late last year in fourth place in Minnesota, with 1,485 percent growth, to just over $2 million in revenue in 2003.

The company employs 30 people, and while 2004 revenue figures for the publicly held firm had not been released at press time, projections are $5 million in 2005.

If that goal is reached, the company may finally emerge from a period of hard times. The company’s original product line was developed but then abandoned in 1999 when it couldn’t be profitably sold. Since 2000 emergency cash, totaling about $11 million from its majority owner, Circle F Ventures in Scottsdale, Arizona, has kept the company operating.

For the nine months ending last September, revenue was down 55 percent from the same period a year before because a licensing arrangement was winding down with a company called Nellcor, for a product that measures reduced blood flow and indicates early signs of clinical shock. Revenue from the new Vasamedics-related lines was heading up, however, and that’s where the company’s future lies.

“We are not out of the woods yet,” says LaPlante. “We are rebuilding and selling but we are still relying on outside sources of capital to accomplish this. Circle F Ventures identifies good tech companies in need of reorganization and funds them to a successful conclusion.

“It really has been a long haul,” she says. “We have been through the school of hard knocks.”

With the company’s product platform in hemodynamic or blood-flow monitoring — with more than 40 U.S. patents to its name — she believes success is no more than two or so years away.

“You have to really show that you can earn and get repeat customers,” LaPlante says. Then she and others who have stuck with the company will get their reward.

“I’m not getting out for peanuts,” she says. “We need to run the business as a real business. Then we can be in the driver’s seat.”

LaPlante, 47, tends to deflect praise by rattling off long lists of mentors and employees who have helped her and her company, and her journey with the company has been long and involved. Some turning points:

• LaPlante has made two key acquisitions. In 2002 the company, then known as Optical Sensors Inc., purchased Vasamedics, a manufacturer of laser Doppler patient monitoring instrumentation, by paying off $158,000 of their debt and offering stock if sales milestones were met.

In 2004 the company bought rights to technology called Steorra, from Brookfield, Wisconsin-based SORBA Medical Systems Inc. The medical instrument company sells non-invasive hemodynamic (or blood flow) monitors. That cost $300,000 and 425,000 shares of common stock at $4 per share.

“The goal in acquiring both was to round out our intellectual property,” LaPlante says, to help the company offer a full range of non-invasive hemodynamic monitoring tools. She translates: “We can non-invasively monitor the ability of your heart to get blood to peripheral sites and the viability of the tissue beds where the blood is being transported.”

In addition to the two product lines and patents acquired, Vasamed retained certain rights on the carbon dioxide monitor licensed to Nellcor.

• In May 2004 the company changed its name from Optical Sensors Inc. to Vasamed, which LaPlante says better reflects the suite of products they have and will be introducing. “The use of the name Vasamed completes the process,” she says.

While at least four other companies make such products, she believes Vasamed will succeed by supplying doctors’ offices with low-cost tools that aren’t widely available now outside of hospitals.

LaPlante developed the company’s strategic plan by tuning in to critical-care doctors. “I paid close attention to what clinical-care practitioners were doing,” she says. She reads their major journal cover to cover each issue. She also employs a researcher and a system to pull together all the articles on her company’s area of interest, key-worded, for her review.

She abandoned her own studies of medicine, and the pursuit of a Ph.D., in favor of business. “To be around critical-care physicians — they have a passion for what they do. If you listen to them, you can find out a lot.”

• The company is moving forward now relying on sales revenue, development fees, loans and equity infusions from current shareholders to continue operations. Its biggest investor and largest shareholder has been Circle F Ventures, created to invest in early stage companies.

Since March 2000, Circle F has provided just over $10.5 million of capital to fund ongoing operations through equity financings, bridge loans and cash advances.

The projected total cash needs for 2004, including funds already or to be advanced from Circle F, was estimated at $4.2 million.

Charles Snead of Circle F, a Vasamed director, believes the company is now on the right track, with new products that can be sold into a broader market.

“Cleary we put far more money in than we intended, but that’s not unusual in our game,” he says. “We’re going to continue our support of the company. We’re trying to get to the point where we can tell the story to a broader audience, and get other investors interested.”

He says LaPlante has done a good job rebuilding the company, essentially from scratch to replace revenue from the Nellcor licensing agreement, which ended last year. “They were a one-product firm,” Snead says. “They bet the farm and the farm didn’t grow.

“We do like what we see. They’re making meaningful progress,” Snead says.

Unlike most of its small-company peers, which are owned by private investors, Vasamed must deal with the challenges of being publicly held.

"Being a very small, publicly held company — albeit over-the-counter — is time-consuming, fraught with legal perils and expensive,” says LaPlante.

LaPlante says she has taken a positive attitude about the whole matter and to that end, pulled accounting and finance under the ISO umbrella. The International Organization for Standardization, or ISO, is a non-government organization that sets technical standards for various products and services. The idea is that if you use an ISO-compliant product or service in the United States, it also will be in compliance anywhere in the world.

LaPlante notes that the process requires documentation and quality practices that are extended to all aspects of Vasamed’s business.

She’s also implemented stricter accountability and transparency practices, to go along with new Section 404 rules set by the Securities & Exchange Commission.

“We think that being public and implementing 404 rules makes for a more well-managed and trustworthy company,” says LaPlante. “Our only negative in all of this is the very real expense of quarterly and annual audits and filings.

“Many companies in our situation went private but we did not enjoy the support of our shareholders in our desire to re-enter the private corps. And that’s OK with us. We are here at the pleasure of our shareholders and we hear them loud and clear.”

As is the case for most public company CEOs, LaPlante owns stock options and so will benefit if the firm does well. She was granted more than 185,000 shares in 2002, at an exercise price of $2.08. As of last year there were 94 stockholders, holding about 3.6 million shares. Since 2000 the stock has traded on the over-the-counter market, with the symbol OPTL, and today goes for about $3.50 per share. LaPlante points out that no one pays much attention to the stock, and no one trades it actively.

LaPlante faces this challenge as she does everything else: with a positive attitude, and by listening to those who are important to her. In this case, it’s her shareholders. In other cases, it’s her co-workers.

LaPlante admits she isn’t an expert on everything (although she’s pretty knowledgeable about most things), but by assembling a team that understands what is important and is needed to succeed, she is working hard to position the company to be successful for the long haul. 

Thomas Letscher, a partner at Minneapolis law firm Oppenheimer Wolff & Donnelly and co-chair of their medical technology industry group, has known LaPlante since 1991.

“Paulita is one of the brightest CEOs with whom I have had the opportunity to work,” he says. “She is extremely creative and insightful and inspires confidence and loyalty in her employees. One of her greatest strengths is her ability to think strategically, identify market opportunities and conceive business plans to meet these strategic objectives. I think these qualities have helped her succeed.”

Her employees see that commitment.

“I think it’s been a long road to get where we’re at, but the main reason we are where we’re at is that Paulita put together a committed team from the get go,” says Victor Kimball, vice president of product development and who has been with the company for 13 years.

“About six years ago we put together a strategic plan to build the foundation of this company and we have not wavered under Paulita’s leadership. But a part of that leadership is knowing how to find and put people in a position to succeed. She also knows when to let others lead, offer assistance and guidance. She surrounds herself with personnel who has the skills she doesn’t, and recognizes the importance of that.”

Duesterhoeft agrees. He has more than 15 years of experience in marketing, sales and business development, most notably spent at General Electric’s medical and ultrasound divisions during periods of rapid expansion. As global marketing general manager at GE, Duesterhoeft helped grow the ultrasound business from less than $50 million to $700 million in six years.

“I have had more direct impact on the performance of the company than in any of my past roles at GE or elsewhere,” says Duesterhoeft about his job at Vasamed. “As we expand product lines, the distribution channels and branding strategy becomes more complex and demands a much more strategic view of the  market and future.

His CEO “is self-confident and decisive. She hires good people, listens to them and gives them the resources and support to succeed.”

It’s hard to get LaPlante to talk about or get excited about any successes she has had. She continues to direct any compliments to those who work for Vasamed, refusing to take sole credit for the recent growth.

LaPlante is originally from Rochester and earned her bachelor of arts from the College of St. Catherine in St. Paul. She loves the opera, traveling and bird-watching. She also loves reading, whether it be for business or pleasure, continuing to research her markets to try and understand how Vasamed’s products will help the medical industry provide a better health care product to the general public

“She reads an incredible amount of technical research,” says her husband, Colin O’Neil, owner of Prescription Landscape Inc., a St. Paul-based commercial and residential landscape company.

Two business owners in one family leads to never a dull moment, LaPlante says with a laugh, but the success of her husband and having him as a confidante and mentor is a big part of the foundation of success in life, says LaPlante.

She emphasizes the importance of surrounding yourself with good people in your professional and personal life, and of being a leader but also treating those who work for you as they deserve.

O’Neil sees that in the relationships LaPlante has with her employees.

“They are extremely intelligent and have an incredible work ethic,” says O’Neil. “Paulita has been very loyal to this core group and they have returned the loyalty with their performance.”

O’Neil says when LaPlante started, initial public offerings of med-tech companies were common and medical device profit margins were strong. The capital invested in those products seemed endless and spending on marketing and product development was a given. In the past five to seven years, all of that turned around, says O’Neil. The whole organization needed to change focus and priorities.

“The entire workforce was forced to become better at their jobs and to take on more duties to survive,” says O’Neil. “Paulita believes she can't ask others to work harder than she does.”

LaPlante continues to talk about those who have made an impact on her career and begins to rattle off a who’s who list of mentors and industry contacts that she respects and admires, and with whom she shares knowledge and information.

Among them are Dr. Paul Marik, director of the department of critical care at Thomas Jefferson University in Pittsburgh; Thom Gunderson, a health care analyst at Piper Jaffray; Doris Enbibous, president and CEO of Graftcath Inc.; Snead of Circle F Ventures and a member of the Vasamed board of directors; and Lynn Schleeter, director of sales innovation at the College of St. Catherine.

Her personable and sensible approach has helped her build strong relationships with industry contacts throughout the world, supporters say.

“I look at things as the best of times and the worst of times,” says LaPlante. “We are bringing solutions to the medical device world. But we still have ground to cover and goals to reach.

“What we are doing is nothing anyone else is doing right now. It’s very Star Wars-like right now, with all these technologies and patents and possibilities. But I’d be crazy if I said we got this far with just me.”

LaPlante says in order to succeed you have to find mentors, find leaders and feed off of their success.

Schleeter has worked with LaPlante on a number of occasions, mostly when LaPlante speaks at leadership conferences for women business owners at the college.

“She is willing to share anything that will advance anyone’s career,” says Schleeter. “She listens to what people ask and speaks from the heart and speaks honestly. She has a tremendous balance in her life between work and the compassion for her employees, and her personal life and family. She’s a very dynamic, unique person.”

Kimball knows how LaPlante values relationships.

“She’s connected to everybody in the medical device community,” says Kimball. “Not only in the Minneapolis area, but worldwide. I don’t know how she does it, but she seems to know who is doing what, how they are doing it, and what trends in the marketplace are leading that.”

That goes back to her listening to her employees, networking with industry contacts, and understanding the marketplace. She has pulled that together to plan the best future for Vasamed.

“She has tried to plan her future,” says O’Neil. “What I mean by that is that she has a vision of where she thinks the market will take her products and she knows how difficult it is to succeed if any process or detail is missed.”

That’s why, sometimes, the best brainstorming is done at 4:30 a.m. — before the rest of the competition gets started.

[contact] Terry Duesterhoeft, Vasamed: 262.893.2847; www.vasamed.com. Victor Kimball, Vasamed: 952.947.9519; vk******@*****ed.com; www.vasamed.com. Paulita LaPlante, Vasamed: 952.947.9545; pl*******@*****ed.com; www.vasamed.com. Tom Letscher: Oppenheimer, Wolff & Donnelly: 612.607.7443;*******@*********er.com“> tl*******@*********er.com; www.oppenheimer.com. Colin O'Neill, Prescription Landscapes Inc: 612.369.5056; co*********@*********pe.com; www.rxlandscape.com. Lynn Schleeter, College of St. Catherine: 651.690.8762; lf*********@****te.edu; www.stkate.edu. Charles Snead, Circle F Ventures: 480.419.7811; www.circlef.com