Medical Action Industries knows in advance that its products will end up in hospitals' waste bins. The company manufactures, markets, and distributes a wide range of single-use, disposable medical products. Some of its main products include wash basins and bedpans, IV start kits, containment systems for medical waste, sterilization products, dressing and surgical sponges, and laboratory products (such as Petri dishes and specimen containers). Though it sells primarily to hospitals, Medical Action Industries also serves doctors, dentists, veterinary clinics, outpatient centers, and nursing homes.
Medical Action Industries' products are marketed in the US through direct sales representatives, while distribution is handled by wholesalers. It also has limited international sales operations through independent distributors. Many of the company's US hospital customers are served through contracts with group purchasing organizations (GPOs). Top selling products include IV start kits, operating room towels, and central line dressing trays.
The company operates four US manufacturing facilities. At two of the plants (located in Tennessee and West Virginia), Medical Action Industries makes its own plastic (injection molding and blown film) products, while the other two plants (in North Carolina and Virginia) assemble procedure kits and trays. The company purchase most of its cotton-based product lines (operating room sponges and towels) from overseas manufacturers, largely based in China; it also makes some products under private-label agreements with other medical suppliers.
Through increased product sales -- including those of newly developed or acquired products -- Medical Action's revenues have shown a healthy increase in recent years, including a 21% rise to some $437 million in fiscal 2012. Net income has fluctuated, however, falling flat in 2012; the company has attributed its unsteady profits to rising commodity prices, as well as reduced spending by hospitals brought on by economic and health reform pressures.
To increase sales and profits, Medical Action Industries has widened its product line over the years through strategic acquisitions. Significant acquisitions include AVID Medical, a manufacturer of custom procedure trays, for some $62 million in 2010. The purchase gave Medical Action Industries' clinical care operations a healthy boost and accounted for 75% of the company's revenue growth in 2012. Historical acquisitions have expanded the company's product line in areas including bedside, lab, and operating room supplies.
In addition, Medical Action Industries conducts internal product development efforts to both add new offerings and to improve the design of existing products. The company's strategy also consists of adding sales and marketing resources, finding new markets for existing products, facilitating international expansion, and increasing productivity and efficiency. As GPO contracts are an important part of the firm's business model, the company seeks to maintain relations with such purchasing organizations and to expand the breadth of services provided to each group.
Wholesale distributors account for the majority of Medical Action Industries' annual revenues, including Owens & Minor (44%) and Cardinal Health (22%). The wholesalers in turn deliver the company's products to end users including hospital GPOs Novation, Premier, and MedAssets, which together account for about 45% ot total sales. – less