Beckman Coulter Inc., the Fullerton-based producer of medical tests and devices, said Friday that President and Chief Operating Officer Scott Garrett would become chief executive Feb. 21.
Garrett, 55, a longtime veteran of the medical device industry, will succeed retiring CEO John P. Wareham, 63.
Garrett joined Beckman Coulter in 2002 after holding various jobs in the device business, including a 15-year stint at Baxter International. Garrett assumes the top spot at Beckman at a high point in the company's history, analysts said.
"Right now, the company is in one of the best periods in its history for revenue growth and profitability," said Steven M. Hamill of Piper Jaffray. Garrett "is walking into a good situation," he said.
Thanks to a series of product launches in the last couple years, Beckman has captured market share from industry giants Abbott Laboratories and Johnson & Johnson Inc. All three companies make tests that are used in hospitals to diagnose diseases, such as prostate cancer or heart failure, or to measure certain compounds in the blood, such as calcium or cholesterol.
Hamill said Beckman had done a good job delivering improved tests that allow hospitals to process a high volume of patient samples, thus reducing labor costs. Hospitals often are eager to cut costs in their testing labs because Medicare, the federal insurance program for the disabled and elderly, does not cover diagnostic tests directly.
Medicare typically reimburses hospitals for the estimated cost of an entire procedure, such as heart bypass surgery, Hamill said. In such a situation, "a hospital can run as many tests as it wants and not get paid one extra cent."
Beckman's most significant new product was the UniCel DxI 800 Access, a $350,000 automated system launched in 2003 that can process up to 400 tests an hour. The test is a significant growth driver for the company and has helped Beckman win new hospital customers from its competitors.
Staying ahead of its rivals will be Garrett's chief task as CEO of Beckman. "The big challenge will be if Abbott and J&J fix their problems and become more effective competitors -- they certainly have the dollars to do so," Hamill said.
Beckman said Wareham would continue as chairman until the company's annual shareholder meeting April 7. Garrett joined Beckman's board Monday, the company said, raising the total number of directors to 12.
Neither Garrett nor Wareham was available to comment Friday, company spokeswoman Anne M. Warde said.
For the first nine months of 2004, Beckman had net income of $151 million on revenue of $1.7 billion. Wall Street expects the company to post revenue of $2.4 billion for all of 2004, an increase of 9% over 2003. The diagnostic test market overall is growing at an annual pace of 5% to 7%.
On the New York Stock Exchange on Friday, Beckman shares fell 19 cents to $67.68, on a day when the markets were generally down.