A Boca Raton, Fla.-based musculoskeletal physician practice management company, BMJ Medical Management, has replaced its chief executive officer and cut 20 other corporate-level employees to boost its sagging finances.
Donald Lothrop, a general partner at Menlo Park, Calif.-based Delphi Ventures, a venture capital fund, on Oct. 7 replaced founding CEO Naresh Nagpal, M.D., who remains the PPM's chairman.
Delphi Ventures is one of BMJ's largest investors, owning 7.8% of the company's stock, or 1.4 million shares. Nagpal owns 11.1%, or 2 million shares.
Since BMJ's Feb. 4 stock-market premiere, no other nondental PPM has gone public. BMJ was priced at $7, below its expected $9-to-$11 range, and at the time of Lothrop's appointment had slipped below $1.
"I don't want to leave the impression that the financiers are taking control of the company," says BMJ Chief Financial Officer David Fater. "Dr. Nagpal is a quintessential entrepreneur. His skills lie in vision and growth. With the stock price where it is . . . we would have to slow down. So we felt a change in leadership was needed, and Don happened to step up to the plate."
On the same day, James Fox, M.D., a Van Nuys, Calif., practitioner, and Stewart Eidelson, M.D., who practices in Boca Raton, resigned from BMJ's board. In a prepared statement, the company said the two orthopedic surgeons wanted to concentrate on their practices. Fox joined BMJ's board in November 1996; Eidelson joined in October 1997.
Two weeks before Nagpal's departure, he announced a plan to reduce annual expenses by $3 million by cutting 20 employees involved in practice acquisition.
The company announced the cutback would result in a $2 million charge against third-quarter earnings. Results for the quarter, which ended Sept. 30, were not available at deadline.