Lumenis Plagued with Problems

As a result of a string of financial and other problems, Lumenis Ltd. (Yokneam, Israel) has announced that its CEO, Yacha Sutton, has retired. The board has formed a search committee to find a permanent CEO. In the meantime, the company's vice chairman has assumed CEO duties.

Lumenis, a leading global supplier of medical lasers, is being investigated by the US Securities and Exchange Commission (SEC), which is questioning the veracity of its financial statements, and has been sued by a former financial officer who charged he was terminated in retaliation for disclosing accounting irregularities. Nonetheless, the principal lender to Lumenis, Bank Hapoalim, has confirmed its continued support of the company.

Lumenis has become the world leader in the surgical CO2 market. The company was formed in April 2001 when ESC Medical Systems and Coherent Medical Group joined forces. Both were pioneers in the application of light to medical and esthetic procedures. Three years earlier, ESC had acquired Laser Industries, with its well-known Sharplan brand name. Recently, Lumenis introduced the UltraPulse SurgiTouch as the first "smart” laser. It is based on the CO2 laser technology of Coherent and the advanced scanning capability of the ESC Sharplan SurgiTouch.

Still, sales have not met the company's expectations. In announcing third quarter results in October 2002, CEO Sutton said, "Lower US esthetic sales and an adverse product mix impacted margins in the third quarter. Operating expenses, while reduced from previous levels due to our cost reduction program, were adversely affected by the costs associated with the gathering of documents and other information in connection with the SEC investigation.”


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