TWST: Please begin with a brief historical sketch of the company and a picture of the things you are doing presently.
Mr. Severson: Abaxis is a point-of-care blood chemistry company. We make a little machine about the size of a toaster and a plastic disk that has multiple blood chemistry tests in it. Instead of sending your blood sample off to a laboratory and waiting around for two to three days to get the result, the healthcare provider, whether it's a doctor, a lab tech, a clinician, a nurse, an office manager, just adds a hundred microliters or just about five drops of blood to the machine, pushes the button, and 12.5 minutes later you get up to 14 blood chemistry tests. What we do is we reduce the cycle time from days to 12.5 minutes, and the patients like it better, the doctor likes it better, and certainly it's more efficient to the healthcare system because everybody is more efficient.
TWST: What's on your agenda? What are the main opportunities over the next few years and the main strategies you will be employing?
Mr. Severson: The main opportunity now is to take this highly centralized, very large business of $4.9 billion and decentralize it and deregulate it. Right now, it's highly regulated and we are in the process of deregulating it, but only if we use the Abaxis product. The regulation is called CLIA and the deregulation is called CLIA waiver. Out of the 24 tests, we only have four tests left to be deregulated. Then, once you deregulate it, it opens up the opportunity so much wider because you don't need a license, you don't need inspections; you don't need all that stuff. The big opportunity is the deregulation.
TWST: Do you see any need to improve the company's capital structure?
Mr. Severson: The great thing about Abaxis is we're cash flow positive. I expect to continue to be cash flow positive. We've probably around $55 million to $57 million in the bank, so we don't need to raise more money.
TWST: Would you expand on the theme of the decentralization of health care?
Mr. Severson: What's happening is it's going on in two steps. The first group that needs health care, it doesn't have enough people with health insurance, and most doctors will not even take an appointment with a patient who doesn't have insurance. So where are these guys going to go? Right now, they are going to mini clinics, they are going to urgent care centers, they are going to emergency rooms, and there is no focus provider for these people. What's happening is companies are now getting involved, Wal-Mart, Walgreen, all these guys are setting up what they call mini clinics or walk-in clinics. For those walk-in clinics to be successful, they are going to need to be able to determine which patients they can treat and which patients they can't. Also, the walk-in clinics are becoming much more popular than before. Many people even with insurance are not interested in calling for a doctor, getting an appointment a week later, coming in, waiting for 20 to 30 minutes to see the doctor, then see the doctor for two minutes and then have to pay a $20 to $40 co-pay, and then they've got to wait for two to three days to get the results. Where the alternative is, you go into the neighborhood clinic next-door and he has got the capabilities of doing that differential diagnosis, is it serious or can I treat it? If it's serious, you get to the hospital right away, if he can treat it, he spends 20 minutes with you and you spend about a $20 to $30 co-pay. You might not have any co-pay at all because your insurance is not covered. You don't have insurance, you just pay for it. We see the future there.