$2.88 Billion
Prior Fiscal: $2.91 Billion
Percentage Change: -0.9%
No. of Employees: 10,000

Hillrom makes a return to the top company list after a hiatus last year. While experiencing a slight dip from its previous year’s fiscal, the firm’s 2020 report keeps the company relatively consistent in terms of sales to where it’s been for the last several years. Down by less than a percentage point versus the prior year, Hillrom’s latest fiscal tally of $2.88 billion was off slightly from its company high of $2.91 billion in 2019. While gains in its two larger segments were positive, the unfortunate substantial losses in its third business resulted in the overall loss for the year.

Specifically, Patient Support Systems rose 3.3 percent year-over-year to finish at $1.54 billion (up from $1.49 billion). The increase was driven primarily by global sales growth for intensive care unit and med-surg beds, increased U.S. rental revenues primarily due to COVID-19, and recent acquisitions.

Within Hillrom’s Front Line Care unit, the growth was 4.8 percent compared to 2019’s fiscal. This was represented in real figures by $1.03 billion versus $978 million. That increase was primarily driven by non-invasive ventilator sales under U.S. federal and state government contracts, as well as growth internationally in patient monitoring and physical assessment tools primarily related to COVID-19.

The challenge for the firm originated from Surgical Solutions, which dropped by 27.8 percent ($317 million from a previous $439 million). While losses here were partially due to deferred elective surgical procedures during the early part of the pandemic, the majority of the decrease was attributed to the divestiture of Hillrom’s surgical consumable business. This took place just before the start of the 2020 fiscal (August 2019).

Seeking to strengthen its core focus, however, Hillrom made several strategic acquisitions in 2020 to benefit from future growth opportunities. While the purchase price for all three companies was only a little less than $30 million, the digital health functionality that come with them represent focus areas for Hillrom.

The largest buy of the three (at $13.1 million) was Excel Medical. The capabilities acquired were the ability to improve clinical workflow as well as enable better access to real-time patient data and predictive analytics. Hillrom currently promotes the solution as “a vendor-agnostic, comprehensive data acquisition and storage platform, for cardiac monitoring systems and medical devices.”

The other two procurements were also made to bolster the digital health offerings of the organization. Hillrom first onboarded its $7.5 million purchase of Connecta Soft, S.A. de C.V., which provides capabilities to capture vital signs data and provide patient monitoring visualization in acute care settings. Videomed, on the other hand, cost $7.8 million to add operating room integration and real-time video and data management capability to improve clinical workflows, standardize setup, reduce time in the OR, and enhance safety to the firm’s portfolio.

In addition to affecting future growth through acquisition, Hillrom also expanded its product portfolio with a number of announcements.

It launched the Welch Allyn Spot Vital Signs 4400, an easy-to-use vital signs device ideal for ambulatory and emergency department settings. With its critical blood-pressure averaging feature, the unit helps quickly and accurately detect hypertension while digitally capturing other key vitals—temperature, pulse rate, and pulse oximetry—in less than one minute. Vitals information can easily be sent to the patient’s electronic medical record.

It also brought to market the Hillrom Extended Care Solution—a new, connected remote vital signs monitoring device that allows clinicians to shift care closer to home. To ensure caregiver access to data-driven information, this solution combines the aforementioned Spot Vital Signs 4400 device with a patient app and clinician review portal to help extend patient care beyond the walls of a healthcare facility.

In July 2020, Hillrom launched two respiratory health products—Volara System for oscillation and lung expansion (OLE) therapy and Synclara Cough System. The Volara System delivers OLE therapy through a combination of continuous positive expiratory pressure, continuous high-frequency oscillation, and a nebulizer in one portable, lightweight device. The respiratory therapies delivered are suitable for a number of acute and chronic conditions, including post-operative pulmonary complications, that are treated both in acute care settings and at home.

The Synclara Cough System is a non-invasive therapy that simulates a cough to remove secretions in patients with compromised peak cough flow. The device uses mechanical insufflation-exsufflation technology to clear secretions from the upper airways, representing the most complete solution available to assist patients with vital secretion evacuation.

Hillrom also announced the full commercial launch of the PST 500, a precision surgical table, and an addition to the Yellofins Stirrups line—Yellofins Apex. The PST 500 features the versatility of a wide range of positions across various surgical applications to help surgical teams expand procedural capabilities. Its safety features include a 1,000-pound weight capacity, collision monitoring, a self-leveling floor locking system, and a light-messaging system to help combat alarm fatigue.

The Yellowfins Apex stirrups represent enhanced safety, with a dual-rod design that prevents medial leg drop, and automatic position-locking technology to safely position the patient while protecting both the patient and the surgical team. In addition, the stirrups offers greater ease-of-use with single-point boot release capabilities, alleviating the need for heavy lifting.

In April 2020, Hillrom announced the availability of five innovations specifically indicated to help address the COVID-19 pandemic. One of the announced solutions was the previously covered Welch Allyn Spot Vital Signs 4400 with Extended Care Solution to enable remote vital signs monitoring.

In addition, the company gained emergency use authorization (EUA) from the U.S. Food and Drug Administration to adapt its MetaNeb System. The MetaNeb System combines lung expansion, secretion clearance, and aerosol delivery into a single integrated therapy session and can be used with any ventilator.

The organization also integrated digital respiratory rate capture capabilities into its Welch Allyn Connex Spot Monitor. This technological advance can empower care teams to accurately monitor the respiratory rate of COVID-19 patients and could lead to earlier detection and intervention.

Hillrom created and deployed a simple, cloud-hosted version of its Voalte mobile solution, a method for allowing caregivers and patients in field hospitals to communicate. Voalte Extend software empowers patients by giving them the ability to send a message from a mobile device directly to their nurse. The secure, Azure Cloud-based, ready-to-go solution could be deployed quickly using remote tools.

Further, the company partnered with AgileMD to offer constantly updated COVID-19 clinical pathways from leading centers managing these critical patients. With clinical recommendations changing daily and staff turning over quickly due to exposure and illness, instant access to advanced COVID-19 clinical pathways and predictive analytics through existing physician and nursing workflows empowered providers to quickly implement best practices for evidence-based, consistent care.

In addition to the expanded offerings Hillrom offered for healthcare professionals battling the COVID-19 virus, it also substantially increased (i.e., more than doubled) production of critical care products that were in such high demand. This increase included ventilators, hospital beds, and vitals monitoring devices.

AT A GLANCE
$2.84 Billion
Prior Fiscal: $2.74 Billion
Percentage Change: +3.8%
No. of Employees: 10,000

Some companies are undeniably ahead of their time. Amazon, for example, came into the world as an online bookstore because its founder recognized the enormous business potential of the Internet while it was still in its infancy. “This is Day One. This is the very beginning, this is the Kitty Hawk stage of electronic commerce,” Jeff Bezos (with thinning hair) gushed to an interviewer in 1997.

Similarly, Bob Moore identified an unmet need for gluten-free food earlier than his rivals, and fashion firm Nau met the groundswell of public demand for “green” products well before its crest (the company’s foresight, however, failed to prevent a Great Recession-induced wipeout).

Some corporate visionaries are not so obvious, though. DuckDuckGo, for instance, provides web surfing privacy (via no profiling), and Restless Bandit helps companies find workers by perusing old resumes.

Hillrom is clearly part of the latter group. Established less than a week before the 1929 stock market crash, the company was founded on the concept of “bringing the home into the hospital.” Its founder, Notre Dame graduate William A. Hillenbrand, hoped to create a warmer, more comfortable hospital environment by supplying healthcare institutions with wood and metal beds. He spent nearly a year visiting U.S. hospitals to determine the best design.

Hillenbrand had a tough time selling his concept once the Great Depression hit. But in a stroke of entrepreneurial genius, he managed to coax hospitals into furnishing their private rooms with his beds for six months free of charge. He promised to accept returns from any unsatisfied customer at the end of that six-month period.

Not surprisingly, none of the hospitals returned Hillenbrand’s beds, and some even placed orders for more product.

Hillrom flexed its visionary muscle quite regularly during its formative years, introducing an adjustable crank double pedestal over bed table (1933), an electronically controlled bed (1950), the first therapeutically designed rocker/recliner (1972), and the first voice-activated hospital bed control system (1993). It also introduced advancements like patient-monitoring beds, maternity trundles, and burn unit beds.

One of the more recent displays of Hillrom’s progressive thinking occurred with the launch of a philanthropic effort to reuse its old hospital beds. Ten years ago, the company partnered with non-profit humanitarian relief group Project C.U.R.E. to refurbish its old beds and place them in needy healthcare institutions worldwide. The first beneficiary was tiny Valladolid State Hospital in Mexico’s Yucatan Peninsula, which had been using nearly 40-year-old beds.

Hillrom executives touted its “Hospital Beds for Humanity” initiative as unique to the company, noting it provided a way to both extend product life and effectively leverage employee passions and interests (the program was spearheaded by a senior executive). “The opportunity we have is uniquely Hillrom…that’s exciting,” Patrick de Maynadier, former senior vice president, general counsel, and secretary, said during the program’s debut. “We have the opportunity to have a huge effect on the world.”

All worlds, actually.

Research shows that charitable efforts can help better connect employees to their work and engender a more productive, engaged labor force. A 2017 Fortune survey revealed employees with positive corporate philanthropic experiences are four times more likely to admit their teams are willing to work harder to get a job done. These employees also are more likely to be brand ambassadors eager to express pride in their employers, and more willing to stay with their companies for a long time.

ANALYST INSIGHTS: After a few years of aggressive M&A activities, Hill-Rom is now focusing all of its brands under the name of Hillrom. Hillrom likely needs another good year of operating performance to allow it to continue to pay down its debt before it re-enters aggressive M&A investments.

—Dave Sheppard, Co-Founder and Managing Director, MedWorld Advisors

“People almost always want to make some sort of impact—in their work and in their communities,” Jonathan Becker, a workplace culture expert and partner at Fortune’s “Best Workplaces” list, noted in early 2017. “The leading employers let them do both by combining employees’ ideas, skills, and goodwill for worthy causes. Giving the team this sense of ownership in the positive things their company does is good for everybody.”

Particularly companies. Since establishing the Hospital Beds for Humanity effort, Hillrom’s revenue has more than doubled, rising to $2.84 billion in fiscal 2018 (year ended Sept. 30, 2018). Gross profit more than doubled as well, reaching $1.39 billion (up from $627.9 million in 2009).

Obviously, Hillrom’s decade-long path to prosperity was far more dependent upon product innovation and business models than charity alone. Nevertheless, the company renewed its social commitment platform with the fiscal 2018 kickoff of Hillrom for Humanity, a program that facilitates corporate volunteerism through environmental sustainability initiatives, medical equipment donations, disaster relief, and STEM (science, technology, engineering, math) enrichment.

“Our impact extends to our more than 10,000 associates and the dozens of communities where we live and work globally, through focused investments and purposeful actions to accelerate social and environmental progress. We do this through Hillrom for Humanity,” Hillrom president and CEO John P. Groetelaars wrote in the company’s 2018 Corporate Social Investment Report. “We created Hillrom for Humanity in 2018 to deepen our corporate social investment, while building on the legacy of giving, volunteerism, safety, and environmental sustainability we have embraced for over a century. Hillrom for Humanity is a new beginning for our company…”

That new beginning coincides with the new chapter Hillrom embarked upon last May with Groetelaars’ appointment as president and CEO. He replaced the retiring John J. Greisch, who had led the company for eight years.

Groetelaars’ past experience leading and growing businesses at both C.R. Bard and BD apparently came in handy in his new position: For FY18, Hillrom boosted its core revenue 3 percent and increased both its domestic and OUS (outside U.S.) sales 4 percent to $1.96 billion and $892 million, respectively. Earnings per diluted share skyrocketed 87.4 percent to $3.73, and gross margin expanded 40 percent to 90 basis points. Likewise, operating margin improved 20 basis points to 10.2 percent.

Such strong growth led to solid gains in Hillrom’s three business segments in FY18. Patient Support Systems notched a 0.4 percent sales increase (to $1.42 billion), as growth in hospital bed systems, clinical workflow solutions, and patient handling equipment was offset by lower revenue from recently divested interests. One of those divestures—Hillrom’s third-party rental business—cost the company $20 million. The venture was sold to Minneapolis-based Universal Hospital Services during the second quarter.

Hillrom used its expertise in hospital bed systems to help minimize the financial fallout from that divesture. In late October 2017, the company released the Centrella Smart+ bed in the United States and Canada; the bed incorporates advanced verbal and visual notifications into its technology (an industry first, according to Hillrom), and is designed with a scalable platform, allowing customers to add more features or upgrade their system. The bed also integrates the company’s NaviCare Patient Safety System, an innovation that automatically activates bed safety settings and alerts caregivers when the berth is unsafe.

In addition, the Centrella Smart+ bed is equipped with USB ports and mobile device storage, and its new surfaces provide for quiet, therapeutic respites as well as adjustable comfort levels.

“We have engineered the new bed system to help reduce patient falls and pressure injuries, which are significant patient safety concerns,” Paul S. Johnson, president, Hillrom Patient Support Systems, said in announcing the Centrella’s North American debut. “In addition, we are introducing new features to elevate the patient experience and provide caregivers with an unprecedented level of information that enhances patient care.”

Enhancements in care proved vital to Hillrom’s Front Line Care profits in FY18: Revenue in this segment swelled 8.5 percent to $960.2 million, driven mainly by new product launches in respiratory care and the company’s Welch Allyn portfolio.

Hillrom released a steady stream of Welch Allyn innovations in fiscal 2018, beginning with the fall 2017 pairing of its Internet of Things home medical devices with Honeywell’s remote patient monitoring platform, and the launch of the Connex Cardio electrocardiograph, a PC-based resting ECG system designed to help improve decision-making and simplify clinical workflows.

Connex uses Mortara technology and Welch Allyn’s EMR connectivity capabilities to identify, manage, and track conditions like heart disease and stroke. Users launch from the EMR to capture and save ECGs in as few as two clicks (numerous EMR systems are supported).

Last spring, Hillrom tapped healthcare IT security firm Imprivata to better secure its Connex vital signs monitoring devices, and unveiled new enhancements to the Welch Allyn Spot Vision Screener. The handheld portable device can be used to screen for vision-related conditions in adult patients with pupil sizes as small as 3 mm.

New product introductions were integral to the success of Hillrom’s Surgical Solutions business as well. Sales jumped 5.5 percent to $458.3 million, due to innovations released in the United States, Middle East, and Europe. Those new technologies included a new multi-functional operating room table designed for cranial and upper-cervical intraoperative magnetic resonance procedures. The table allows neurosurgeons to perform intraoperative imaging with the patient in his or her original surgical position, thereby minimizing infection risk and reducing operating times.

The table integrates and leverages Hillrom’s TruSystem 7500 OR Table platform. The product’s design allows for a wide range of interchangeable tabletops, enabling a broad range of procedures and multi-disciplinary uses to occur using one column. Its segmented composition also offers optimal patient positioning.

$2.7 Billion
NO. OF EMPLOYEES: 10,000

After eight years of leading Hill-Rom, John J. Greisch had quite a bit to be proud of.

Greisch took the reins of the hospital bed and surgical product maker in January 2010, having previously worked seven years at Baxter International. During that tenure, he served as president of the company’s BioScience division (which has since spun off into Baxalta), chief financial officer, and president of international operations.

“This is an exciting opportunity for me,” Greisch commented at the time of his appointment as Hill-Rom president and CEO. “Hill-Rom has a great brand and strong market positions and I am proud to have the opportunity to lead the company to the next level of success. With the company’s diverse product portfolio and focus on innovation, I am confident that we can continue to bring market-leading solutions to patients and caregivers around the world and across the care continuum.”

Under Greisch, the company completed seven acquisitions from 2013 to 2018, most notably June 2015’s landmark $2 billion purchase of Welch Allyn, a manufacturer of diagnostic devices, patient monitoring systems, and miniature lamps. Touting a portfolio of equipment that lets physicians conduct diagnostic tests in point-of-care settings like hospital beds and emergency rooms, Welch Allyn was an excellent strategic fit to join Hill-Rom. It expanded the company’s reach into post-acute care settings like home health and long-term care centers.

“As one company, we will have the infrastructure, capabilities, and innovative product portfolio to faster pursue a differentiated business model that meets the evolving needs of patients and customers and delivers superior healthcare outcomes across multiple care settings,” Greisch declared in announcing the transaction. “We believe this combination, which will be accretive to Hill-Rom’s adjusted gross and EBITDA margins, will also result in an enhanced financial profile, creating the opportunity for accelerated growth.”

Three years later, almost exactly eight years after taking the Hill-Rom helm, Greisch announced his retirement. “It has been an honor to lead this great company over the last eight years,” he proclaimed. “I am extremely proud of the value we have created together for patients, customers, and shareholders.”

In fact, the value Greisch and company created was strong enough to ensure Hill-Rom’s debut in the Top 30 this year. The firm’s qualifying $2.7 billion sales in fiscal year 2017 (ended Sept. 30) was a modest 4 percent boost from the year prior. Domestic revenue matched the 4 percent boost, growing to $1.9 billion, and sales outside the United States contributed $849 million, a 3 percent rise from the prior year. For those unfamiliar with Hill-Rom’s structure, the company is divided into three business units: patient support systems, front line care, and surgical solutions.

ANALYST INSIGHTS: Traditionally, a hospital infrastructure company (i.e., beds, etc.), Hill-Rom has been aggressive in the past few years in acquisitions in both the Cardiology (Mortara) and Patient Monitoring Segments (Welch Allyn). They seem leveraged so watch for focus on execution and possibly bolt-on acquisitions as they pay down their debt.

—Dave Sheppard, Co-Founder and Principal, MedWorld Advisors

Hill-Rom’s patient support systems business provides specialty bed frames and surfaces and mobility solutions, as well as clinical workflow solutions, which specialize in software and information technologies to improve care and deliver actionable insight to caregivers and patients. On the whole, the segment’s revenue sunk a slight 1 percent due to shedding certain business segments within the division.

Hill-Rom divested its Völker business, which served the European long-term care bed market, to a CoBe capital affiliate toward the end of fiscal 2017. Völker was acquired by Hill-Rom in 2012, and achieved $40 million in sales in 2016. The company also completed the sale of the non-core asset Architectural Products division, as well as WatchChild, a fetal monitoring system, to perinatal software company PeriGen. Together, the three divested entities garnered 2016 revenue of $75 million.

However, when excluding the divestiture, patient support systems sales elevated slightly, rising 3 percent. The division was further fortified by the release of two hospital bed systems last May.

The Hill-Rom 900 Accella bed system was globally launched first, designed for higher acuity patients in intensive and acute care settings. To help caregivers more easily prevent fall incidents, Accella features a three-mode bed exit alarm, intelligent night light, brake-off indicator, low-height indicator, head-of-bed angle alert to ensure proper head elevation, and SlideGuard technology that a Hill-Rom study determined cuts the chance of patient migration in half.

The Hill-Rom Envella Air Fluidized Therapy bed for patients was introduced a few days later at the 2017 Wound Ostomy and Continence Nurses Society Annual Conference. To allow an ideal healing environment for the prevention and treatment of advanced pressure injuries, Envella touts increased bead depth, adjustable air flow and sensing technologies, advanced weight-based pressure distribution, and an integrated scale. These features all work to maximize immersion and envelopment, minimize shear and pressure, and effectively regulate the skin’s microclimate.

The company’s front line care segment provides respiratory care products, and sells medical diagnostic monitoring equipment and a diversified portfolio of physical assessment tools that assess, diagnose, treat, and manage a wide variety of illnesses and diseases. Front line care’s revenue rose a respectable 9 percent over the previous year. This division includes the suite of products and services inherited from Welch Allyn, whose Europe and Asia Pacific businesses were the primary source of the segment’s growth.

The Hill-Rom subsidiary entered the connected home monitoring market in November 2016 by introducing the Welch Allyn Home Hypertension Program. The program allows patients to sync the Welch Allyn Home Blood Pressure Monitor to a smartphone in order to engage in progress toward healthy blood pressure goals. The data is transmitted to practitioners for free via the Clinical Portal so they can gain visibility into patient compliance against treatment recommendations. Last May, Hill-Rom also broke ground on a new 100,000-square-foot addition to its Skaneateles Falls, N.Y., Welch Allyn campus. The expansion is expected to usher in 100 new jobs, a large portion of which will be R&D and engineering roles.

The company further augmented its front line care offerings last February and increased revenue by acquiring non-invasive diagnostic cardiology technology provider Mortara Instrument for $330 million. The purchase added Mortara’s electrocardiography, cardiac stress exercise, Holter monitoring, ambulatory blood pressure monitoring, cardiac and pulmonary rehabilitation, and multi-parameter patient monitoring devices to the company’s portfolio. Based in Milwaukee, Wis., with offices in Australia, Italy, Germany, the Netherlands, and the U.K., Mortara has over 400 employees globally and generated approximately $115 million in revenue in 2016. The transaction brought together Welch Allyn’s primary-care diagnostic cardiology offering with Mortara Instrument’s strength in acute care.

Last April, Hill-Rom achieved FDA clearance for the Monarch Airway clearance system, a mobile device that offers high frequency chest wall oscillation (HFCWO) therapy in a mobile vest with a customizable, personalized fit. The Monarch system employs Pulmonary Oscillating Discs that provide targeted kinetic energy and HFCWO to the lungs to thin mucus and generate airflow. It was also the first HFCWO device that permitted patients to move freely while using it.

Hill-Rom’s surgical solutions business provides products that improve surgical safety and efficiency in the operating room including tables, lights, pendants, positioning devices, and various other surgical products and accessories. Thanks to double-digit growth in the division’s surgical equipment and patient positioning businesses—driven by 2016’s release of Integrated Table Motion for Intuitive Surgical’s da Vinci Xi Surgical System and Welch Allyn RetinaVue 100 Imager for diabetic retinopathy, as well as new product growth—2017 revenue rose a moderate 6.4 percent as compared to the previous year.

Last January, the surgical solutions business added the TruSystem 3000 Mobile Operating Table to its arsenal. The table is universal and suitable for many surgical disciplines, and can be customized for those procedures thanks to a broad range of patient positioning components and accessories. The head sections, leg sections, arm supports, and anesthesia frames are easy to attach and dismantle through a coupling system. A backlit display of TruSystem 3000’s remote control also enhances ease of use and safety in low-light operating room environments.

Last July, Hill-Rom’s surgical solutions division released a new line of safety surgical instruments, including the Bard Parker SafeSwitch Disposable Scalpel Handle and Scalpel Handle Cover and the Bard Parker Blade Remover. With these instruments, surgeons can safely retract, pass and disarm surgical blades in one step, with one hand, helping to prevent sharps injuries. The Blade Remover also allows surgical team members to safely remove up to five contaminated blades per remover without the need to touch the blade. Both products drastically reduce the risk of injury when surgical teams pass instruments to each other.