The news is filled with sobering reports of major companies failing and the same forces trickle down to the medical equipment industry. As we reported earlier, the most recent casualty is Med1Online, which closed its doors April 10, 2009.

The Golden, Colo.-based company, founded in 2002, cited poorer than expected financial results, coupled with the challenging state of the economy as the reasons operations have ceased. The company was unable to repay its secured indebtedness--in excess of $4 million--to Colorado State Bank and Trust (CSB), and was unsuccessful in restructuring payment obligations.

At its prime, Med1Online had 120 employees. At closing, 60 were furloughed, DOTmed News has learned.
When Med1Online closed, it was in possession of assets in its 120,000 square foot warehouse, some of which were consigned and some owned outright by the company. The consigned assets will be returned to those consignors; Med1Online's inventory will be sold. CSB holds a blanket lien on those tangible assets. After the bank and other lien holders are satisfied, any remaining funds from asset sales could be distributed to creditors.

Meanwhile, the company may not be alone in a fiscal vise. Smaller medical equipment firms face serious headwinds during an economic downturn because they are often highly leveraged. DOTmed News has already reported several companies facing bankruptcy this year. The customer base is also at risk. Independent equipment companies typically serve--and extend credit to--underfunded rural hospitals, universities, and clinics. If one of these entities declares bankruptcy, as was the case with some of Med1Online's customer institutions, those receivables disappear from the books. Further, as inventory ages, the ability to leverage these assets is exhausted.

Watch DOTmed News for further exclusive updates on the disposition of the company.

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