Sunrise Reorganization Splits Business in Two

LONGMONT, Colo.–In a bold move to counter the industry’s
turbulent conditions, Sunrise Medical will break into two separate
businesses, one specializing in mobility and the other in
respiratory equipment, the company announced last week.

Under the plan, set to take effect July 1, Sunrise Mobility will
supply Quickie, Jay, Guardian, Hoyer and Bio Clinic products. The
company has also reached an agreement with A.R.T. (Artistry in
Rehab Technology) to offer its portfolio of products, which include
Whitmyer, AES, Rehabilitech, Kid Kart and Kid’s Up brands.

The respiratory company, DeVilbiss Healthcare, will supply the
DeVilbiss respiratory and sleep therapy product lines.

“High-performing organizations reinvent themselves to both
survive the waves and to get ahead of the waves,” said Michael N.
Hammes, chairman and CEO of Sunrise Medical, in a videotaped
announcement.

And the waves in the HME sector have grown increasingly menacing
in the past few years with the onset of competitive bidding, the
Deficit Reduction Act’s 36-month cap on oxygen rentals, drastic
changes in power wheelchair coding and reimbursement, impending
changes in manual wheelchair codes and increased legislative and
regulatory demands.

“We are in a time of change as an industry,” Hammes said, adding
that splitting the company will allow both entities to become “more
flexible, more agile and more responsive” to industry demands.

“Ultimately,” he said, “the creation of the two separate
organizations will improve focus and create long-term value for
customers. A truly focused approach can make all the difference in
the world. And we just couldn’t provide the necessary focus as one
organization.”

Under the new structure, Hammes will become CEO of Sunrise
Mobility and continue his role as chairman of the overall company.
Kees Regeling has been named president and CEO of DeVilbiss
Healthcare.

The new structure will be an asset, Regeling said. “As a
separate organization, we’ll be better able to identify and plan
for shifts in the market and react accordingly. This really will
strengthen our position as a player both domestically and
internationally.”

Headquarters for DeVilbiss will be in Somerset, Pa., where that
company was based before being acquired by Sunrise in 1993.

In an attempt to curtail spiraling production and labor costs,
DeVilbiss is also considering relocating some of its manufacturing
operations from Somerset to a new facility in China, sources said.
A presence in that country would underscore DeVilbiss’ intent to
increase its stake in the global respiratory market. With a
decision on the potential relocation anticipated in mid-June,
however, officials would not confirm published reports that said
the company might eliminate 40 jobs at the Somerset plant.

A statement issued Thursday said Sunrise and DeVilbiss were
still finalizing details of their global operational and commercial
plans, but it was certain that each organization would have its own
sales force.

Company execs also said the new structure would not “slow new
product launches or cut research and development.” Indeed,
DeVilbiss is working on new products that should launch this
calendar year, including a new CPAP platform and ambulatory oxygen
solution.

DeVilbiss customers can continue to order products through
Sunrise Medical until July 1; after that date, they must be ordered
through DeVilbiss Healthcare. Sunrise Mobility will begin
representing A.R.T. products July 1, but aside from selling and
marketing, the A.R.T. Group will remain independent, the statement
said.

A Web page including details about the reorganization is
available at http://www.sunrisemedical.com/evolution.