HealthWay: Heading for $1 billion within a decade

PULASKI — “Nothing is tougher to sell than air,” says Vincent (Vinny) Lobdell, Jr., president of PURE Global. Tough or not, Lobdell and his father Vincent G. Lobdell, president and CEO of a sister company — HealthWay Home Products, Inc. — have set their sights on growing their enterprise to $1 billion in annual sales by 2023.

Father and son are on a mission to purify indoor space. “Everybody has a right to pure, indoor air,” says the elder Lobdell. “Our goal is to make every environment clean … [by] improving every breath you take … Today, chemicals, disinfectants, and sterilants are causing microorganisms to mutate into ‘super bugs’ … Mold is now considered a greater threat than asbestos, and it’s far more prevalent. U.S. businesses report spending $50 billion a year due to absenteeism, … and the World Health Organization rates infection as the number-one cause of death worldwide.”

HealthWay manufactures air-quality products for residential, commercial, and medical uses as well as for the hospitality industry and the military. The company manufactures disinfecting filtration systems (DFS), portable air cleaners, air-purification systems, air deodorizers and gels, and concentrated green cleaning products branded under the name Terafore. PURE Global started out focusing on creating allergy-friendly, innovative packages to purify hotel rooms. Using its patented technologies, the company has expanded in the hospitality industry to include cruise ships and aircraft and now has ventured into serving schools, offices, and retailers.

“The FDA has classified our filtration systems as Class II medical devices,” says Lobdell, Jr. (Class II medical devices comply with general controls and are also subject to special controls.)  “Our systems are effective against bacteria, mold, viruses, fungi, and mildew, killing between 94 and 100 percent [of the foreign agents].” The senior Lobdell “conservatively” estimates the systems are “… 99.9 percent effective.”

World headquarters for both companies is located at 3420 Maple Ave. in downtown Pulaski in Oswego County. In 2009, the Lobdells bought and renovated the former Ontario Iron Works building, a 16,000-square-foot, two-story structure. The construction manager for the project was V Squared Management, LLC, a real-estate holding company owned by Lobdell, Sr. The holding company also owns two other buildings in Pulaski used by the operating companies, comprising about 9,000 square feet. They serve as warehouses. The companies employ 45 in Pulaski and another 135 internationally, including 90 at their manufacturing operation (Shenzhen HealthWay Electronics, Co., Ltd.) in Shenzhen, China. Consolidated revenues total $20 million annually, with 40 percent derived from exports.

So how does a company grow from $20 million annually to a $1 billion in a decade?

“The first thing we did was to stop thinking as a manufacturer concerned with indoor-air quality and think like a provider of indoor-environmental quality (IEQ),” posits the president of PURE. “IEQ focuses on the total quality of a building’s environment [in relation to the health of those occupying the space] … There are many factors to consider: lighting, air quality, temperature, relative humidity, ventilation, and damp conditions, to name [but] a few. Indoor environments are highly complex, and the occupants can be exposed to a variety of contaminants in the form of gases and particles. [These occupants] … need to be concerned with everything from cleaning products, construction activity, carpets, furnishings, and perfumes to cigarette smoke, microbial growth, and insects.”

Lobdell, Jr. refers to this thinking as a “blue-ocean strategy.” He says, “We are creating demand in an uncontested market space, rather than competing with other vendors in an existing industry where your product is seen as a commodity.”

Lobdell, the father, points to the worldwide demand for IEQ as a reason to set an annual goal of $1 billion in revenue by 2023. “A [2012] survey of travelers by the Cornell University Research Institute found that 41 percent either have breathing difficulties or travel with companions who do.” His son adds that “… currently more than 1 million people [around the globe] stay in a ‘pure room’ every, single night. The [hospitality] industry tells us that hotels are typically charging a 10 percent premium for a room that’s free of chemicals and synthetics. That is massive exposure to the need for HealthWay products and a clear indication of the travelling public’s concern. It’s a huge marketing opportunity.”

 

International opportunities

In their drive to grow, the Lobdells are not restricting their vision geographically. “We already export 40 percent of our products,” says the younger Lobdell. “We have 250 distributors, and our products now reach into 30 countries. Our projection is that we will expand our exports to 70 percent of our business in order to reach our goal.” Lobdell, Sr. adds that “… currently, the companies have three basic revenue streams: 35 percent comes from our own HealthWay brand, 45 percent from contract-manufacturing for private-label accounts, and 20 percent from PURE. All of these areas are showing strong growth, especially in developing markets.”

Lobdell continues: “It takes a different level of management to run a billion-dollar company than a $20 million one. We have already hired key people like Al Rayeff as the chief science officer, Karen Hurd as director of operations, and Chirag Patel as the engineering manager. Our management team also includes Mitchell Lobdell as the plant manager, Jeff Herberger as the vice president/creative director, and Antony Papageorgiou as the COO.” Papageorgiou was the former director of brand services and director of hotel operations for Celebrity Cruises.

In addition to the management team, the Lobdells rely on professional support from area vendors. “We work closely with KeyBank, with whom the company has had a 35-year relationship. We also are working now with Pathfinder Bank … Our accounting is handled by Furgison & Co. [CPA, P.C.] in Pulaski and Robert E. Genant, in Mexico, represents us for general law. Simpson & Simpson [PLLC] near Buffalo does our patent work,” says Lobdell, the father.

On the back of the HealthWay business card is the company motto: “We breathe innovation.” The senior Lobdell, who has a degree in engineering, points to HealthWay’s concentration on research and development. “We have seven engineers on staff focused on R&D. Just look at the level of technology in our products, for which the company holds 23 patents (and a number of trademarks). HEPA (high efficiency particulate air) is the U.S. government’s standard for air filtration. For us, this is just the starting point. Our technology is 150 times more efficient than HEPA, destroying 100 percent of pollutants (at .002 microns, 100 times smaller than the tip of a human hair). Our units contain a seven-stage pre-filter, then a germ-killing zone, and finally the main DFS filter. At PURE, our solutions are customized based on pre-testing and analysis. To succeed, we have to be innovative, cutting edge. Not only do we rely on our own R&D department, but we also collaborate closely with the Center of Excellence (in Syracuse) for research and testing.”

HealthWay and PURE have already developed an impressive customer list including the Mayo Clinic and Cleveland Clinic, Shriners Hospitals for Children, and FEMA. In the hospitality field, hotel chains such as Marriott, Wyndham, Hilton, Sheraton, and Hyatt use their products. Crystal Cruises, which defines the luxury travel experience on its liners and in its hotels, has signed on, and in the field of education Harvard University, Florida State University, and the University of California are all customers.

Vincent G. Lobdell began his career in air purification in 1981, when he founded Tektronix, Inc. in Syracuse, a company that sold fire-safety equipment. At the time, the public was concerned with the effects of second-hand, cigarette smoke. Lobdell created an electronic precipitator to filter the smoke, but government regulation banning smoking in public buildings soon forced him to switch to the residential market. A Syracuse University graduate in mechanical engineering with a minor in business, he changed the company name to HealthWay in 1996. Lobdell sold the business to a group of Honeywell investors, who struggled before taking the company into bankruptcy protection. He purchased the rights to HealthWay in 2004 and rebuilt the company to its present size.

Vincent, Jr., 33, graduated from SUNY Oswego in 2003 with a bachelor’s degree in marketing/economics. Father and son have just completed a two-year Entrepreneurial Masters Program co-sponsored by MIT and the Entrepreneurs Organization. The program is limited each year to 65 entrepreneurs, each of whom is a founder of a company with more than $1 million in annual revenue. The stated purpose of the program is “… to bring together the next generation of entrepreneurial giants.”

The Lobdells are in constant motion managing the enterprise. “I visited 50 countries by the time I was 30,” declares Lobdell, Jr. Still, the two find time to restore properties in Pulaski and support the community’s historic restoration and downtown revitalization. “I have lived in Pulaski for 30 years,” says the elder Lobdell. “I love this community. [Despite] traveling the world, there is a special beauty to the area. Pulaski is enjoying momentum with the creation of [projects] … like the river walk (Salmon River).”

The Lobdells’ most recent project is the restoration of the Kallet Theater in Pulaski to a 1950s décor. Encouraged by a grant from the Empire State Development Corp. and loans from the Oswego County Industrial Development Agency totaling $780,000, father and son have invested $2,225,000 to restore the 1935 building, which now features not only the movie theater but also doubles as an auditorium for live performances and for celebrations, complete with a commercial kitchen and lounge for the entertainers. The marquee has been rebuilt to serve as a digital billboard alerting the community to what’s happening in town. The theater held its grand re-opening on Nov. 16 with a sold-out performance by the Marshall Tucker Band and the violinist SVET.

HealthWay and its sister companies have generated a 15 percent to 20 percent compounded, annual growth rate that has placed them on the Inc. 5000 list of fastest-growing companies. To reach the goal of a $1 billion in revenues within a decade, the Lobdells need to accelerate the pace. “We’re in negotiations now with the country’s direct-sales industry leader,” says Lobdell, the father. “This has the potential to blow the lid off our OEM (original-equipment manufacturer) operation. The orders would far exceed our capacity to manufacture the units, so we would have to rely on a contract-manufacturer.”

While Lobdell wouldn’t disclose the name of the company or a timetable to conclude negotiations, his son appeared in a 2011 video shot at a Carico International, Inc. meeting touting HealthWay’s products. According to a story related by the younger Lobdell, who addressed Carico’s  sales force at the meeting, Richard R. Cappadona, Carico’s president, and Vincent G. worked closely together to develop an air-purifying device. Carico is located in Ft. Lauderdale in a 100,000-square-foot center that administers the marketing-support and warehouse operations for its wholesale and private-label customers.

The Lobdells are also counting on PURE Global for much of the growth. “At this time, we have zero competition in the PURE room space,” says Vincent, Jr. “We’re the global leader, and we intend to establish our brand [permanently].”

Jud Gostin, the founder and former CEO of Sensis Corp., once told this reporter that what the area needed most was more billion-dollar companies. The Lobdells are determined to join this select group, despite the challenge of selling air. It’s not just their goal; it’s their mission.

 

Contact Poltenson at npoltenson@cnybj.com