BLOOD SUPPLIER AIMING TO SQUEEZE MORE PROFITS; FORMER RED CROSS EXECUTIVE HIRED TO BOOST HEMACARE MARKET SHARE.Byline: Ben Sullivan Daily News Staff Writer For all of its 20-year history, blood products specialist HemaCare Corp. has operated in the shadow of the American Red Cross American Red Cross: see Red Cross. , struggling in the role of David to the Red Cross' Goliath. Now, in an apparent effort to even the playing field, HemaCare's board of directors has hired a Red Cross insider to serve as chief executive. After a year in which the company saw essentially zero earnings on stagnant sales of $11 million, William Nicely, former chief executive for the Red Cross' Southern California Southern California, also colloquially known as SoCal, is the southern portion of the U.S. state of California. Centered on the cities of Los Angeles and San Diego, Southern California is home to nearly 24 million people and is the nation's second most populated region, blood services division, was brought in Monday with a mandate to cut costs, improve efficiency and drum up new business. In the process, the board hopes, he will help bolster the company's anemic shares. It's a deceptively simple list, Nicely said, and one for which he is under the gun to devise a strategy. HemaCare's board will meet June 29 and Nicely must make his recommendations then. ``The past I can't change, only the future,'' the new CEO (1) (Chief Executive Officer) The highest individual in command of an organization. Typically the president of the company, the CEO reports to the Chairman of the Board. said this week. ``But it's just too early to be concrete about what I plan to do.'' HemaCare was founded in 1978 to make money at what had traditionally been a nonprofit business: The collection of blood and blood components for resale to Southern California hospitals. By emphasizing its small size relative to the Red Cross, and putting a premium on customer service, HemaCare met with some success, enough at least to go public in 1986. By 1992 the firm was generating $12.4 million in annual sales. Earnings were harder to come by, however, and from 1992 to 1994 the company lost money every quarter but one. Part of the problem was a lack of focus. Over the years, HemaCare dabbled dab·ble v. dab·bled, dab·bling, dab·bles v.tr. To splash or spatter with or as if with a liquid: "The moon hung over the harbor dabbling the waves with gold" in several money-losing projects, including research on an alternative treatment for HIV HIV (Human Immunodeficiency Virus), either of two closely related retroviruses that invade T-helper lymphocytes and are responsible for AIDS. There are two types of HIV: HIV-1 and HIV-2. HIV-1 is responsible for the vast majority of AIDS in the United States. infection and the establishment of a blood services center in St. Louis. ``Mistakes were made,'' Nicely said. Each of the endeavors was subsequently scrapped, leaving HemaCare wiser but poorer, with only the business of collecting and distributing blood to fall back on. But a back-to-basics strategy based on those operations may simply not be enough to turn the company around now, analysts say. With its high concentration of hospitals, the Southern California market has in recent years drawn additional suppliers beyond HemaCare and the Red Cross, making it far more competitive than in the early 1990s. A large San Diego San Diego (săn dēā`gō), city (1990 pop. 1,110,549), seat of San Diego co., S Calif., on San Diego Bay; inc. 1850. San Diego includes the unincorporated communities of La Jolla and Spring Valley. Coronado is across the bay. blood bank, for example, recently began peddling its products in the Greater Los Angeles region after the loss of a major local contract to the Red Cross left it with excess supply. Officials at the nonprofit Red Cross, meanwhile, say they have no intention of ceding cede tr.v. ced·ed, ced·ing, cedes 1. To surrender possession of, especially by treaty. See Synonyms at relinquish. 2. any more of the $100 million L.A. market to competitors. From an estimated 90 percent-plus market share a decade ago, the Red Cross controls about 75 percent today. HemaCare supplies about 10 percent of the market. ``HemaCare's fighting one of the most entrenched en·trench also in·trench v. en·trenched, en·trench·ing, en·trench·es v.tr. 1. To provide with a trench, especially for the purpose of fortifying or defending. 2. monopolies in the U.S. health care system, and that's really tough,'' said Michael LeConey, an analyst at Dirks & Co. ``The Red Cross plays hardball.'' And because the Red Cross need not make money - and in fact is supplemented by charitable donations - some have said they cheat. Last June, the organization settled out of court a lawsuit HemaCare filed in 1995 alleging that its blood pricing in Los Angeles and Orange counties violated federal fair trade laws fair trade laws n. state laws which permit manufacturers or producers to set minimum rates for resale of the product. They have been repealed or found violative of state constitutions in many states. . And Nicely said his former division did lose money throughout the first half of the 1990s. Neither side would discuss terms of the settlement. Red Cross spokesman Mark Jackson said only his organization ``views competition as healthy.'' While the deck appears stacked against HemaCare and Nicely, LeConey said if the company can grab even a few more percentage points of the Southern California market, ``It would be a home run for shareholders.'' HemaCare shares have lost 50 percent of their value over the last 12 months, closing Thursday at 62.50 cents. ``They're basically the only publicly traded company publicly traded company A company whose shares of common stock are held by the public and are available for purchase by investors. The shares of publicly traded firms are bought and sold on the organized exchanges or in the over-the-counter market. in the country attempting to build a position against the Red Cross in what is a gargantuan gar·gan·tu·an adj. Of immense size, volume, or capacity; gigantic. See Synonyms at enormous. gargantuan Adjective huge or enormous [after Gargantua, a giant in Rabelais' market,'' LeConey said. ``Can they do it? That's where the rubber meets the road.'' THE FACTS Company name: HemaCare Corp. Address: 4954 Van Nuys Blvd, Sherman Oaks, CA 91403. Business: Blood and blood component wholesaler. Chairman: Alan Darlington. Chief Executive: William Nicely. Employees: 66. Stock symbol: HEMA HEMA Hydroxyethyl Methacrylate HEMA Hollandsche Eenheidsprijzen Maatschappij Amsterdam (Dutch international retail organization) HEMA Hydroxy Ethyl Methacrylate HEMA Health and Environment Ministers of the Americas HEMA Hemophilia, Classic . Annual sales: $11 million. Market capitalization Market Capitalization A measure of a public company's size. Market capitalization is the total dollar value of all outstanding shares. It's calculated by multiplying the number of shares times the current market price. This term is often referred to as market cap. : $4.55 million. History: The company was founded in 1978 to supply hospitals with blood and blood components such as platelets and red cells. It has always competed with the American Red Cross and profitability. CAPTION(S): Photo, box PHOTO (color) William Nicely, new chief executive of HemaCare, stands in the company's facility for collecting blood donations. Terri Thuente/Daily News Box: The facts (see text) |
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