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But the collaboration will take a tollin SRI’sz backyard. By the end of January, the medicalp supply company will close its PlanfCity facility, which currently assembles surgica l kits containing the disposable medical productxs SRI will get from Cardinal in the Cardinal will manufacture disposable products for SRI exclusively under a five-year agreement that calls for the two firmsz to market and sell “hybrid” surgical containing both reusable gowns, towels and basins from SRI and Cardinal’w disposable drapes, tubing, gauze and instrumentation.
Cardinao (NYSE: CAH), headquartered in Dublin, Ohio, and one of the largesyt health care suppliers in the is a market leader in disposable products but does not have the reusablde productsSRI offers, said Steve Inacker, president and GM of Cardinal’sx presource products and services “Our customers over time were increasinglyt interested in reusables,” said Inacker, citingg a growing concern by healtu care facilities about environmental issues. “Iyt was a natural fit to look for a partnefr that was a market shar e leader on thereusable side.” SRI (Nasdaq: STRC), whicn posted a $3.2 million loss on $94.
2 millioh in revenue last year, also was lookiny for a strong partner, said Gerald Woodard, who was named CEO in Januarh after serving as president of in a subsidiary of CNMD). SRI currently serves hospitals and surgery centerz in19 states. This deal is a chance to extenxthe company’s footprint nationwide, Woodard said. The companyu has 10 plants wheres medical productsare decontaminated, dried and sterilized for re-use and four depotws from which products can be shipped to supplement the processinhg plants’ operations. Woodard expects the Cardinal agreementg will allow SRI to open additional depots to servicewmore customers.
The Plant City facility, which has 40,80 square feet of leased space, is the only SRI facilit that handlesdisposable products. Woodard said the companyu is figuring out how to help the 43 workers who will lose their jobs. A small number might be hiredf atthe company’s Tampa processing facility, he The cost of closing the Plan t City facility is expected to be about $500,00p and will be incurred in the current quarteer and the first quarter of 2009, the companyt said in a filing with the . It will be offsef by a $1.25 million paymeny from Cardinal with some of that money earmarked for marketingh expenses and opening new Cardinal also agreed to buy upto $1.
6 millio of SRI’s disposable productzs inventory, the filing said. Health care facilities consider a varietyg of factors in deciding whetherd to use reusable ordisposable products, includingb financial pressure from Medicare and privated insurers to keep infection rates low, said John Ransom, a healtuh care analyst at in St. Older physicians were reluctant touse disposables, but younger surgeonsx favor them, said Michael Carroll, president of in Tampa. But the lower upfront cost of disposables mighty be outweighed by the higher expenseof waste-haulinyg for biohazardous material, said Mark Wilson, senior associatwe at Euthenics, a medical equipmentt planning firm in St. Petersburg.
“There’s a balancinfg act, accommodating individual physicians’ preference with revenue Carroll said. Group purchasing organizations have been creatingb programs to encourage the use of environmentallypreferrede products, Woodard said, adding that SRI’s customera can save up to 1 million poundd of disposable waste a year. The SRI-Cardinalk partnership will give customersmore choices, Inaker