Respironics

Respironics:

A case on Growth Strategy

"We are honored and thankful to our customers and the respiratory profession for bestowing us with yet another milestone, our 10th Zenith Award. We look forward to a tremendous 2007 as we continue to bring innovative products, outstanding service, and valued solutions to the market."

- John Miclot; CEO of Respironics

It was a perfect evening on December 12th, 2006 when John Miclot stepped up to the podium at the International Respiratory Conference of the American Association for Respiratory Care in the extravagant Las Vegas, Nevada to receive its 10th Zenith Award. The award recognizes companies based on the quality of their equipment, service record, accessibility and helpfulness of their personnel, and truth in advertising. This award signifies that members of the association have voted Respironics as one of the top 5 of 400 companies in the sleep disorder industry. The election process makes the award one of the most prestigious in the respiratory care profession.

With so much hype surrounding Respironics' past performance, new CEO John Miclot is in no position to let his stakeholders down. Some time to assess the future and develop a strategy for Respironics to exceed past performance is exactly what Miclot needs. Under the founder and former CEO; Gerald McGinnis' leadership, Respironics was able to tackle growth opportunities in the past. However, the question to ask is:

Have the growth opportunities been tackled fully thus increasing value for stakeholders at an optimal level?

Or

Does the Board of Directors need to replace the existing executive team so that there is a more precise vision on venture growth strategies?

The Company & CEO

For many, a full night's sleep seems beyond their reach!

An estimated 6% or 18 million Americans suffer from a sleep disorder known as sleep apnea . Sleep apnea is a life-threatening and life-altering condition that causes a person to stop breathing repeatedly during sleep. As a result, the body does not get enough oxygen, thus interfering with restful sleep. The most common signs of sleep apnea are nightly snoring, morning headaches, irritability, decreased daytime alertness and functionality. During both day and night, a person with sleep apnea experiences a decrease in his or her quality of life. Some consequences of untreated sleep apnea are heart attacks, high blood pressure, strokes, and even death. Sleep apnea is a condition that needs immediate medical attention. Sleep centers test for sleep apnea and other sleep disorders through monitoring a patient's sleep at night to identify any abnormal sleeping patterns. If diagnosed positive with sleep apnea, patients purchase a positive airway pressure machine from a sleep center or a durable medical equipment retailer (DME) that they can wear on a nightly basis so cessations of breath do not occur. This treatment is nearly 100% effective .

For life-threatening sleep apnea, companies like Respironics exist! Respironics is a global provider of diagnostic sleep monitoring equipment that allows sleep centers to monitor a patient's sleep during night or day to see if they have sleep apnea. Additionally, the company sells positive airway pressure machines to sleep centers and DME retailers which patients can wear at night to get a good night's rest (Exhibit 1). Respironics' value proposition to providing equipment to test and treat for sleep disorders is to ensure "we provide valued solutions around the needs of our customers and the markets we serve" . As the founder; Gerald McGinnis asserts, "if in doubt, ask our customers".

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