491: When the Virtues of Organic Growth Trump M&A | Arthur Levine, CFO, Sensus Healthcare

Listen to the Episode Below (00:35:52)

Back in 2014, shortly after Arthur Levine first stepped into the CFO office at Sensus Healthcare, the fast-growing medical device company hit a sizable speed bump. A growing number of future Sensus customers were putting their purchases on hold as uncertainty around insurance reimbursements grew in relation to a review being conducted by The Centers for Medicare & Medicaid Services.

In order to quickly ease the company’s hefty appetite for cash, Levine and Sensus management executed a sizable layoff largely impacting the company’s sales team–while for the time being the healthcare company opted to leave its research and development team untouched.

Ultimately, reimbursements for Sensus offerings remained in place and product demand surged, allowing its 2015 revenues to jump 77 percent. Such news could not have been better timed for an initial public offering, a notion upon which Sensus acted in early 2016.

“We became one of the first companies to complete an IPO in 2016. Actually, we were the only Florida-based company to go public on a major exchange that year,” explains Levine, who had helped to restore the company’s sales function by green-lighting a flurry of new sales hires in 2015.

“I like the challenge of turning companies around,” says Levine, who quickly adds: “I also like periods of stability and a little less stress.” –Jack Sweeney

Guest: Arthur Levine

Company: Sensus Healthcare

Headquarters: Boca Raton, FL

Connect: www.sensushealthcare.com/

CFOTL: Tell us about one of your finance strategic moments of insight …

Levine: I would say at Sensus that it was really the realization that we are generally better off developing new technologies internally than acquiring them. I can tell you that since our inception, we’ve grown, on average, around 30 percent annually, and now that we’re a public company, there’s pressure to continue to maintain that type of growth rate.

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Until now, it’s all been organic growth. As we scale and continue to grow, the CEO, the CTO, and I continue to evaluate many potential deals that get presented to us by investment bankers and other contacts. In the last couple of years, I’ve looked at many deals, and the conclusion was always that they were either too expensive, or not the right fit for the technology, or both.

As an entrepreneurial company with virtually no bureaucracy, we can develop new technologies quickly, at a much lower cost and lower risk level than by acquiring technologies. We can also pivot and change the plans as quickly as needed. The bottom line is, we end up with new technology without the risk of integrating an acquisition–in maybe a little more time, but not that much extra time, compared to acquiring technology.

I wouldn’t totally rule out an acquisition. However, I think I’ve raised the bar on our management team, in terms of acceptable price and fit in order for us to agree to do one. It took a little while; we were probably more actively seeking acquisitions a couple of years ago than we are today. Again, we’re not ruling them out, but it really has to be the right one.

jb