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TWST: We'd like to begin with a brief historical sketch of HearUSA and a picture
of the things you're doing at the present time.
Mr. Chouinard: We provide hearing care services and hearing devices to the
hearing impaired population. We have over 145 corporate-owned centers in eight
states and one province in Canada. Our centers are located in California,
Florida, New York, New Jersey, Massachusetts, Ohio, Michigan, Missouri, and the
Province of Ontario. Our business is driven by contracts with managed care
organizations as well as the "private pay" population through advertising and
the use of our national call center here in West Palm Beach.
Over the years, we've developed a very good relationship with the managed care
organizations in our regions, and as the only JCAHO accredited hearing care
chain, we have been fortunate to acquire the majority of the contracts in our
existing areas. We also developed a national call center system and patient
prospecting database that allows us to successfully reach - and keep - the
private pay patient. We have developed an extremely sophisticated wide area
network computer system that allows us to manage all of our operations across
the country and Canada in a real-time environment.
In areas where we don't have corporate-owned centers, we have a network of
affiliated providers that provides coverage for members of national managed care
contracts. We in essence refer them patients in exchange for an administrative
fee.
Our typical corporate center averages about 2,000 square feet in size and
generates between $500,000 and $600,000 in revenues, and we have between one and
three professionals in each of our centers.
We were founded in 1987 by Dr. Paul Brown. Originally, the primary focus was on
securing managed care contracting through becoming a healthcare provider and not
a retailer. While successful in large part, this approach proved to be very
costly. Also, we were very dependent on the managed care companies to maintain a
hearing benefit. Ultimately, in 2001, there was a change in philosophy. The
Board of Directors approved a more hybrid approach that included an equal focus
on the private pay sector of the market.
As a result, we decided to enter into a strategic relationship with one of our
vendors, Siemens, and looked for a large acquisition to increase the private pay
sector. We acquired Helix Hearing Care, a Canadian-based company in 2002. Helix
had a large operation in the US. The transaction closed in July 2002, at which
point a new management team and a five-year strategic plan was put in place. We
first focused on the integration of both businesses. It took two and a half
years, so we worked on that in 2002, 2003, and a little bit in 2004.
A second objective was to improve the operational performance of the combined
company. Under the guidance of the new management team, we put in place a sales
training department, upgraded our call center, and changed the incentive
compensation of our professionals to improve operational efficiencies.
The third objective, once organic growth and positive cash flow was assured, was
to start growing the company through acquisitions. In 2005, we implemented our
acquisition program and in February 2006, we renegotiated our agreement with
Siemens to implement a line of credit that can be accessed to make acquisitions.
Tickers included in this excerpt: EAR
For more information call (212) 952 7433. The
Wall Street Transcript does not endorse any of the comments made by interviewees, and does
not make stock recommendations.
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