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The Acquisition Of Six Key Distributors And Introduction Of New
Products Has Helped Establish Dynatronics As A Leader In The
Physical Medicine Market
Healthcare
Medical Appliances & Equipment
(DYNT-NASDAQ)
Dynatronics Corp.
7030 Park Centre Drive
Salt Lake City, UT 84121
Phone: 801-568-7000
Kelvyn H. Cullimore Jr.
Chairman, President and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
Published – September 14, 2007
BIO: Kelvyn H. Cullimore, Jr. was named Chairman of the Board of Directors in
January 2005. He continues to serve as the Company's President & CEO, positions he has
held since 1992. He has served as a Director of the Company and its predecessors since
1979. He currently serves on the board of directors for ITEC Attractions, Inc. (ITEC), an
entertainment, restaurant and retail mall complex in Branson, MO. Additionally, he has
served previously on the boards of a printing company, lumber company and travel agency.
Mr. Cullimore is a member of the board of the Medical Device Manufacturer's Association, a
national medical device trade association headquartered in Washington D.C. He also serves
as the Mayor of Cottonwood Heights, Utah, a suburb of Salt Lake City where Dynatronics
corporate headquarters are located. Mr. Cullimore graduated cum laude from Brigham Young
University in 1980 with a degree in Financial and Estate Planning.
Company Profile:
Dynatronics manufactures, markets and distributes advanced-technology medical devices,
orthopedic soft goods and supplies, treatment tables and rehabilitation equipment for the
physical therapy, pain management, sports medicine, chiropractic, podiatry, plastic
surgery, dermatology and other related medical, cosmetic and aesthetic markets.
CEOCFO: Mr. Cullimore, there have been some changes at
Dynatronics over the last few years; what is happening today?
Mr. Cullimore: “The good news is that we have
acquired six of our best distributors. This will increase our sales by about 80% and
positions us to be very competitive in our market.”
CEOCFO: What is the marketplace
for Dynatronics?
Mr. Cullimore: “Dynatronics markets its products
to the physical medicine market place. We manufacture products for physical therapists,
sports medicine practitioners and chiropractors. Our products have been distributed in the
past through a network of independent dealers. However, in recent years there has been a
consolidation movement within our market, which has narrowed the channels of distribution.
We are fortunate that we are able to acquire the top distributors in our market place.
Several others have made attempts to acquire them and we were successful in striking a
deal with them which they accepted. We feel we have put together a team that has the best
salespeople in the market as well as the best products in the market.”
CEOCFO: Please tell us about
some of your newer products.
Mr. Cullimore: “Recently, Dynatronics introduced
the new Dynatron X5 device for pain management and edema reduction. It has very good
margins and is a product that practitioners like because it provides them with good
reimbursement.
In the last year, we have developed several other new products
including our first traction and decompression device. We have also expanded on our light
therapy equipment. All of these products have helped to establish Dynatronics as a
technological leader in the market place.”
CEOCFO: What is it about a
Dynatronics’ product that sets it apart?
Mr. Cullimore: “Dynatronics has always prided
itself on being the technological leader in the market. We provide products that are the
latest in technological advancements at a very affordable price. We were one of the first
companies if not the first to introduce microprocessor-based technology to the devices in
this market. We have patented features on our equipment that make them unique. We feel
that our products are very user-friendly and that is why they have been so popular with
the practitioners.”
CEOCFO: Are you primarily in
the US, and do you see that changing?
Mr. Cullimore: “Dynatronics actually distributes
its products nationwide and in many countries around the world. We have segments of the
market that are stronger internationally than others. Right now, we have a strong presence
in the Pacific Rim area, South Africa, and countries such as that. Our products are very
well-known domestically among the physical medicine practitioners.”
CEOCFO: Do you sell only to
practitioners?
Mr. Cullimore: “We sell primarily to licensed
medical practitioners including physical therapists, athletic trainers, sports medicine
practitioners and chiropractors. We also sell to patients through prescriptions, but we
focus primarily on selling to practitioners who, in turn, treat their patients with our
products.”
CEOCFO: With the baby boomer
population aging, I would imagine that market would be expanding.
Mr. Cullimore: “Yes and the weekend warrior crew
is certainly good to us. We appreciate everyone trying to stay physically fit, because
sometimes that leads to the need for therapeutic interventions and with the baby boomer
population aging; we address that market as well.”
CEOCFO: What about your
manufacturing and operation facilities, do you think you will need to expand?
Mr. Cullimore: “We recently expanded our
Tennessee facility. We now have a 40,000 square foot facility there that will help support
some of our expansion needs. We also have a 36,000 square foot facility here in Salt Lake
City that has some excess capacity. Therefore, we have ample capacity with some room to
expand at our facilities.”
CEOCFO: What is the financial
picture of the company?
Mr. Cullimore: “Dynatronics just completed its
fiscal year on June 30, 2007. It had been a difficult year because of high R&D cost in
the first part of the year. The 4th Quarter ending June 30th turned
out very well for us and bounced us back to profitability. By adding the acquisitions that
occurred on July 1st, our future looks very good. We will be seeing significant
increases in sales in the coming year. There will be the traditional shakeout period in
this 1st Quarter while we assimilate these acquisitions. However, we feel that
starting with the second quarter, we should see some nice improvements.”
CEOCFO: Do you see further
acquisitions?
Mr. Cullimore: “Yes, we plan to make additional
acquisitions. We just announced the addition of a top salesman from southern California
and we are looking now for additional acquisitions in other parts of the country. We also
intend to bring on additional direct sales reps to strengthen our channels of
distribution.”
CEOCFO: How big a part is
R&D in developing new products, and how often do you phase out a product?
Mr. Cullimore: “R&D has always been a large
investment for us. We typically invest between 8 to 10% of our revenues in R&D. We
believe that new products have always been our lifeblood and continue to pursue R&D
aggressively. Generally, we introduce two or three products a year and have additional
products in the pipeline to keep our product line fresh.”
CEOCFO: What do you see two or
three years down the line for Dynatronics?
Mr. Cullimore: “Dynatronics has made some major
changes in the last sixty days that are going to take us in a new direction in becoming
more of a direct distributor of our own products. We are looking for the best way to make
sure that we are the main competitor in the market. We will continue to make acquisitions
and expand our channels of distribution in international markets.”
CEOCFO: Why should potential
investors be interested and what might they miss when they first start looking at
Dynatronics?Mr. Cullimore: “We believe the recent
strategic change to acquire our distributors positions us very well to be competitive with
larger companies in our industry. We have the best and most experienced sales force in the
market. We have the strongest core product line in the market. It puts us in an enviable
position for success in this particular market sector. I think that portends well for
future growth.”
CEOCFO: Do you have any final
thoughts?
Mr.
Cullimore: “This is a great time to be a part of Dynatronics. With a
projected 80% increase in 2008 over 2007, we are clearly on a strong growth trend and look
forward to exciting times ahead.”
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