Starting as single lab in Simcoe, Ontario, CML HealthCare Inc. has become the leading medical diagnostics provider in Canada. Its 200-plus lab and diagnostic imaging sites process more than 40 million tests annually, in areas such as biochemistry, hematology, immunology, microbiology, histology, cytology, endocrinology, urinalysis, X-ray, ultrasound, mammography, bone mineral density, MRI, CT, and nuclear medicine.
Executive vice president and CFO Tom Weber wears many hats: he oversees finance, treasury, accounting and reporting, internal audit and compliance, corporate development, supply chain, and facilities, and regularly collaborates with the CEO and board on strategy. He took a break from his hectic schedule to talk with us.
Advantage: You seem to have more responsibilities than typical CFOs. Tell us about your day-to-day duties.
Tom Weber: I’m in charge of the usual financial-management matters, but I also discuss and evaluate growth opportunities with the CEO and development team, and then communicate our findings to the investment community. I also secure capital, financing, and identifying new opportunities for CML through my strong relationships with the investment banking community.
Fortunately, the strong team that works under me handles most routine business and financial requirements, giving me more time to focus on our operations and pursue broader business and strategic activities.
Can you tell us anything about CML’s planned growth?
We have three key strategies: (a) building scale and strengthening our infrastructure; (b) expanding our service offerings and differentiating; and (c) expanding our customer base and markets. We’re aiming at more diverse test offerings and introducing new services. Things like esoteric testing in molecular diagnostics and genetics—that could help uncover genetic predispositions to diseases and thus improve treatment through companion diagnostics.
Do you see any emerging trends in your field?
Outpatient routine testing is moving from hospital settings to freestanding community clinics. This benefits everyone. There’s increased accessibility for patients, cost savings for the hospitals/government payers, and greater availability of critical-care hospital space.
Would you say you’re a hands-on manager?
Well, my reporting staff [is comprised of] mostly senior managers, so they need little day-to-day guidance. But I prefer basing decisions on facts rather than on hunches. I urge my staff to think analytically. I’m always willing to discuss their alternatives or possible solutions with them so we can reach a conclusion together.
Speaking of management, you completed the Harvard Leadership Program recently. How did it benefit you?
I learned more about what I need to be effective, particularly the importance of empowering your staff, your team, even your peers, to do their jobs better. Setting clear goals and targets and offering constructive feedback—positive or negative—is a great way to motivate employees.
You executed a major refinancing of CML’s credit facility a few years ago. How did that come about?
That grew out of an earlier business venture in the US. We already had a solid base in diagnostic imaging in Canada; the US medical imaging market was large and fragmented. So, in 2008, we acquired American Radiology Service in Baltimore, Maryland. With 20 locations in that state, we saw it as a good opportunity for growth.
Significant reimbursement cuts in Medicare and from private insurance companies impacted the entire medical imaging industry. In the 2008 recession, people lost jobs and their health insurance—and when that happens, they defer medical care and tests. Thus, we saw fewer patients.
We exited this very difficult marketplace by selling the US imaging business to RadNet in late 2011.
And the credit refinancing came afterward?
Yes. We had a five-year bank credit facility, and it was coming up for renewal. We refinanced it with a bank syndicate about a year early, which I believe was a very prudent move.
We improved our interest rate and now save well over a million dollars in interest charges annually. In addition, we increased our revolving line to C$400 million from $375 million, and we loosened our covenants. This new facility gives us long-term, committed, attractive capital to pursue strategies and growth opportunities as they arise.
What advice would you offer to up-and-coming CFOs?
Look beyond the numbers. You also need to understand the rest of the business and industry in which you operate. To do this, you need to get out of your office and engage with staff at all levels in the organization. Also, visit your operations and meet with customers and suppliers—understand what’s important to them.
You can just be “the finance guy,” or you can provide more value across the organization. If you have aspirations to become CEO or president, being well rounded is critical.