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Michael: You described SynCardia as a “science project” when you stepped in as CEO. Did you have a plan in order to move SynCardia from a “Science Project” to a successful operating company? Rodger : Yes I did. My partner and I designed the plan and allocated the time required to execute the plan. I believed that with 18 to 30 months of good work we would be able to transfer the company to a new CEO. My partner and I were assured, by the then CEO, that the artificial heart drivers contracted for development by SynCardia with German manufacturers were well underway and would serve the company well. Subsequently, and not until we were in the boat, my partner and I were astonished that neither the planned hospital driver nor the planned portable discharge driver were functionally adequate. We discovered this flaw and many others after launching our plan. Action steps necessary to unlock the value of SynCardia were straightforward. My first step is always the same: Inventory the business systems and install or improve systems to assure that chaos is captured and order is consistently achieved. I can’t over emphasize that this first step is essential. Many take short cuts and all that do pay the price! Once the systems platform was installed then our plan was to populate SynCardia with excellent talent in key management roles. The talent had to be like minded and preferably talent that we had worked with in the past. Talent that understood our offense and defense play book. The total artificial heart was not reimbursed by the Centers for Medicaid and Medicare (CMS) and obtaining reimbursement codes was necessary for survival. What seemed to be straight forward required 3.5 years of determination and effort. The result was a new reimbursement code and the highest reimbursement ever provided by CMS. Capital is essential to any enterprise and the best form of capital is the excess cash that remains after the sale is made and expenses and overhead are subtracted. The next best form of capital is equity or investment by shareholders. And the most egregious and insidious form of capital is debt. Consistent with that, our plan at SynCardia was to sell what was on the shelf while we modified and improved scalable manufacturing processes and launched new technology. Enroute to success we did just that: we produced sales and raised new equity in like amounts, and not until we had raised $53MM in new equity was the company ready to stand alone. We avoided debt until it was certain that we would make it through the narrows. The darkest hours occur when capital sources have been stretched or exhausted yet profitability and cash flow are within your grasp. When debt is layered on too early it may be the straw that broke the camel ’ s back. The straw that lost the company! Well, at SynCardia the straw didn’t break our camel’s back, she is alive and well. And, difficult as it was to nurture her every step of the way, we finally came to that precious point where we were ready to find and put into my place, our replacement CEO.
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