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Oridion still can’t shake the Physio-Control blues

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Sometimes it’s the company you keep.

For Oridion, which has its U.S. base of operations in Needham, Mass., that company would be Physio-Control Inc., one of its distribution partners.

Oridion, which makes capnography monitors to measure the amount of CO2 in a patient’s breath, took a 72 percent hit to its bottom line during the first six months of 2009 due to continuing problems with the distributor.

Oridion sells many of its products through OEM and and private-label agreements with companies like Siemens and Philips Medical Systems.

But the distribution deal with Physio-Control, a division of Minnesota-based medical device goliath Medtronic continues to drag down the company’s bottom line.

In January of 2007, Physio-Control suspended shipments of its LIFEPAK defibrillators after a Food & Drug Administration inspection of its Washington state plant. Those findings led to an injunction being filed in U.S. District Court in Seattle in April last year, with the federal watchdog contending that Physio-Control failed to address 11 violations flagged in previous inspections.

In the resulting settlement, Physio-Control was ordered to halt sales until it could clear up the issues with the FDA.

The stoppage has had a profound effect on Oridion’s bottom line. The company logged virtually no sales through Physio-Control for the first six months of the year; by comparison, the agreement produced about $3.4 million in sales during the same period last year. Officials said they’re hopeful that revenues through Physio-Control will rebound in the third and fourth quarter of this year.

For the second quarter, the company reported a $588,000 profit on $9.7 million in sales, compared to $1.9 million on $10.7 million in sales for the same period last year.

For the six-month period ended June 30, Oridion reported $902,000 in profit on $19 million in sales, compared to $3.2 million on $22 million in sales.

The company also issued guidance for the rest of the year, speculating that sales would decline overall by about 5 percent.

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