Battered by high resin costs, Medical Action Industries (Brentwood, NY), a supplier of medical and disposable surgical products, is refocusing on cost management, product mix and productivity improvement in an effort to boost its bottom line.
"We continue to focus on organic growth and enhancing our product and service offerings," said Chief Executive Officer and President, Paul D. Meringolo. "Net sales have increased from the comparable prior year period and sequentially. Persistent volatility in raw material costs, particularly resin and cotton, continue to influence our gross margins. We are managing through this period of volatility by continually reviewing our pricing strategies across our product lines, minimizing product sourcing costs and operating expenses."
In its Clarksburg, West Virginia plant, Medical Action Industries manufactures containment systems for medical waste, using linear low-density polyethylene, high-density polyethylene and film-grade polypropylene. The company's sharps containers are manufactured from either polypropylene or polyethylene and are produced either by extrusion blow molding or by injection molding.
Meringolo did not provide details on pricing, but costs for many basic plastics increased 30 to 35% from summer 2010 to summer, 2011. Prices have dipped some since. Due to intense competition in increasingly cost-conscious medical markets, Medical Action Industries could not pass on the entire price increases. The impact of cotton costs was even more dramatic than plastics.
Specific details on cost reduction strategies were not discussed.
In a separate move, Medical Action Industries last week announced a plan to realign into strategic business units in order to increase focus on targeted market segments and accelerate growth.
The company will be organized into three businesses: Custom Procedure Trays and Operating Room Products; Minor Procedure Kits and Trays; and Patient Care Products.
- Richard Setian was named President and General Manager of Custom Procedure Trays and Operating Room products. An expert in the field of Custom Procedure Trays, Setian had been president of AVID Medical prior to its acquisition in 2010.
- Cindy Bell was appointed President and General Manager of Minor Procedure Kits and Trays.
- Charles Kelly was chosen as President and General Manager of Patient Care products.
- Robert DeSimone has recently joined Medical Action as Vice President of Strategic Planning and Organizational Effectiveness.
Net sales for the third quarter of fiscal 2012 were $112,969,000, an increase of 8% compared to the year-earlier period. Net income for the third quarter was $1,825,000 versus the $2,304,000 for the comparable prior year period.