State of the Union
Hello, Serendipity!
This is going to be a lengthy e-mail with a lot of good information. Read it all the way through as many times as you need to be sure you clearly understand the message! Let me say right of the bat that this is a GOOD message for our company – not an easy message, but a good one! I will be as detailed as I possibly can so that there is no “reading between the lines”. This is an official communication of the FACTS. As your leaders, we’ve always tried to be as transparent as possible so that you know you can trust us. We take our job as your leaders very seriously –it’s an HONOR to serve you.
2016 was quite a year for Serendipity! We acquired 18 All American Hearing locations, 5 Ascent start up locations, as well as new locations in West Hills, Burbank, and Salinas. We basically doubled in size pretty much overnight. No doubt, we ALL felt it.
Here are some things we learned from this growth explosion:
We forgot that it doesn’t happen overnight. It took FIVE years for us to become profitable in our core Sonus locations. We also underestimated the capital it would take to make these stores profitable. While some of the acquisitions we made were in good shape, most were not profitable when we took over.
It’s not just about GROWTH. It has to be responsible growth. In a nutshell, we didn’t know what we didn’t know. We bit off way more than we could chew. Hindsight is 20/20, right? A new motto for 2017 – BETTER before BIGGER!
PEOPLE make all the difference. We didn’t fully expect the culture clash that we encountered with some of the new team members. At this point we are happy to say the detractors have moved on to other companies and fields. We now know that the attitude of the clinic teams make all the difference. THANK YOU to those of you who are still with us! At the end of the day we have to all believe the same things for a healthy workplace to exist.
A solid support structure is absolutely necessary. Because this change happened so rapidly, we didn’t have our administrative infrastructure in place quickly enough. Communication channels weren’t clear, your needs weren’t being met and frustration grew rapidly. We’re happy to report that we ended the year much better than we started it!
On the bright side, we saw unit and revenue growth in 2016. The growth occurred in our core clinics and in the single acquisitions that we did. We did not experience growth in the former All American clinics or the Ascent start up locations. Here’s the breakdown in annual revenues vs targets:
Unfortunately, this growth in units and revenues was outweighed by increased spending, personnel turnover, and unexpected challenges that we couldn’t have predicted, especially with our limited experience in acquisitions.
Some things to celebrate:
· In July we asked you all to shift your focus to cash collection. All the sales in the world won’t sustain a company if you’re not getting paid for those sales. As a result of your focus and efforts at the clinic level we are in better shape than we’ve ever been in terms of the percentage of cash collected. Thank you for your efforts. It’s paying off and will continue to do so for sure.
· In Q4, we created our Inventory Control process. It’s already saving the company money. We are no longer delivering hearing aids that we won’t get paid for. We are catching things that negatively affect profitability before they happen. We are very excited about what this means for our cash position in 2017!
· We’re excited about our training programs for 2017. The addition of Jennifer Gililland, our full time training manager, is going to give you all resources you’ve never had before. We can begin to help spur even more growth for you as professionals in a rapidly changing industry. Your patient care will be better than ever – something we can all celebrate as it “raises the bar” in the industry!
In a nutshell, we learned a lot last year. Our current situation has forced us to take a look at our business in ways we might not have otherwise. We’re looking at the right things. We’re excited about our teams. We’re on the right track and we’re committed to making 2017 our best year yet. As part of that commitment, we’ve had to make some tough decisions:
· In early January we made the decision to relinquish the 5 Ascent start up locations. We simply underestimated the amount of capital we’d have to allocate to these locations with very few sales and, in some cases, no staffing.
· Effective Feb 16th, the following locations will return to the All American Hearing Network: Walnut Creek, Santa Cruz, Freedom, Salinas, Redwood City, Merced, Oakhurst, La Mesa, Oceanside, and Encinitas. We appreciate the efforts of the staff that remain in these locations and we are working hard to ensure a smooth transition for them. We wish them only the best.
· This leaves us with 32 clinics that we are excited to continue to support and build
I’ve tried to be very clear with this communication. However, we know you may have questions. The most productive course of action is to ask those questions and not make assumptions. To ensure that you have access to the correct information, we will be available on Monday’s conference call at 12:30 to answer any questions you may have. We’re also happy to address individual questions if you’re more comfortable asking one-on-one. If something is on your mind please speak up! We don’t want anything to detract from your focus on patient care.
Thanks for trusting our leadership once again. We are getting stronger! As Bill Austin says….”Better today than yesterday. Better tomorrow than today.”