MANUFACTURER OF THE YEAR
The Two-Year
Turnaround
Left for dead not long ago, Cyberonics Inc. has roared back to life
thanks to a new—but also old—focus.
Erik Swain
In early 2007, things could not have been any worse
for Cyberonics Inc. (Houston). It was buried under
an avalanche of negative publicity and underperformance. The neuromodulation company received a
major setback from CMS, which denied reimbursement for the depression indication of its VNS (vagus
nerve stimulation) Therapy System. As a result, its financials suffered, and auditors expressed concern about
future viability. Creditors went after the company in
court. To make matters worse, the year before, the
firm had come under fire for the timing of stock-option
grants to top executives, news that generated a lot of bad
publicity. Its CEO and CFO resigned. Rumors abounded
that corporate raider Carl Icahn, whose specialty is buying underperforming companies, stripping them down,
and selling them off for a profit, was going to take over
the firm.
In 2008, however, the outlook could not be any better
for Cyberonics, given the adversity it was facing less than
two years ago. A new management team came aboard
in spring 2007 and refocused the company on its more
profitable product applications. New hardware products
were well received. Licensing deals brought in some
more cash. The firm was able to settle with its creditors.
All of this has added up to five straight quarters of epilepsy growth, with the last two being profitable.
For its quick, unexpected turnaround and the contri-
butions its technology has made to healthcare, Cyberon- Neurostimulation can start with the vagus nerve, which is less invasive
ics has been named MD&DI’s Manufacturer of the Year than other therapies on the market. Although Cyberonics may have
for 2008. spread itself too thin with the device’s possible indications for use,
recent efforts to refocus on epilepsy are paying off.
Anatomy of a Resurrection
Cyberonics is one of several companies playing in the neuromodulation and neurostimulation space. It is a technology
platform with huge potential. Many expect it to do for the
brain and nervous system what cardiac rhythm management
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technology did for the heart: provide electrical charges that
change a fault in the organ or system.
But Cyberonics, which was founded in 1987 by Reese
Terry and Jacob Zabara, goes about this differently than its
competitors, many of whom have been bought up by device-industry giants in recent years.
