GE Medical Systems buys Kretztechnik, Data
d01a.jpg (8760 bytes)GE Medical Systems (GEMS of Waukesha, Wis.) in July took the first step in acquiring 3D ultrasound systems company Kretztechnik AG (Zipf, Austria) for approximately $148 million.

GEMS signed a definitive agreement to purchase Medison Co. Ltd.’s (Seoul, Korea) 65.4 percent (8.1 million shares) stake in Kretztechnik for approximately $10.30 per share. The transaction would have a value of approximately $83.4 million.

GEMS also will pay approximately $14.60 per share for the remaining 4.4 million shares of public Kretztechnik stock. The tender offer would be worth approximately $64.2 million.

If and when the transaction is completed, Kretztechnik would become a wholly owned subsidiary of GEMS.

The attraction for GEMS is Kretztechnik’s next-generation 3D ultrasound technology, which allows patients and physicians to view real-time 3D images of anatomy in motion, often referred to as 4D imaging. 4D imaging is accomplished in large part through Kretztechnik’s mechanical scanning technology.

“They can produce images, which have up to 15 volumes a second or slightly higher, allowing real-time visualization of a fetus and imaging different parts of the body in multiple planes simultaneously,” said Omar Ishrak, vice president and general manager of GEMS’ global ultrasound business. “We have 3D technology in our ultrasound products, but not information that is displayed with this kind of speed.”

He described similar GEMS’ 3D ultrasound technology as “in a very early stage, but is nowhere near the sophistication that the Kretztechnik products have.”

Under the transaction, GEMS, Kretztechnik and Medison also would enter into a strategic relationship for the exclusive distribution of Kretztechnik products by Medison in Japan, Korea and China. There also will be a cross licensing of technology between the companies, but that is where the partnership will end.

“There are some technical components that we will supply Medison and Medison will supply us,” Ishrak said. “It truly is an arm’s length OEM agreement and nothing more than that.”

Ishrak said GEMS plans to maintain the identity and name of Kretztechnik products for the time being after the acquisition, “but there will be no confusion in the market that these are GEMS products. We will have to decide exactly how we brand it. The technology will cross-fertilize across our other products.”

The transaction depends in part on GEMS buying at least 90 percent of Kretztechnik’s outstanding shares. The companies anticipate closing the entire deal this month.

Kretztechnik posted sales of approximately $95 million in the 12-month period, ending April 30, 2001. The company employs approximately 440 people worldwide and operates subsidiaries in Germany, France, Switzerland and Spain.

Medison acquired Kretztechnik in 1996. In 2000, Kretztechnik completed an initial public offering of approximately 35 percent of its shares on the Neuer Market of the Frankfurt Stock Exchange.

GEMS on July 20 unveiled its second acquisition proposal in less than a week, as the company inked a definitive agreement to acquire Data Critical Corp. (Bothell, Wash.).

GEMS is offering $3.75 per share in cash for the wireless communication technology company. Data Critical also granted parent company General Electric Co. (GE of Fairfield, Conn.) an option to acquire newly issued shares of Data Critical common stock — representing 19.9 percent of its total shares outstanding — at the $3.75 per share transaction price. Based on 17.1 million outstanding shares, as of June, the acquisition would be worth approximately $64 million.

According to Data Critical’s filing with the Securities and Exchange Commission (SEC), shareholders representing 33 percent of Data Critical’s outstanding stock have voted in favor of the proposed acquisition. Data Critical’s board of directors also has approved the agreement.

The companies expect to complete the deal by the end of the third quarter. Data Critical would become part of the GE Medical Systems Information Technology unit (GEMSIT of Milwaukee).

The agreement to sell Data Critical to GEMS surprised industry analysts, because Data Critical had acquired VitalCom Inc. (Tustin, Calif.) in June. VitalCom stockholders received 0.62 shares of Data Critical common stock for each share of VitalCom common stock held.

“We were not out seeking a partner. We were contacted by GEMS,” Data Critical CEO Richard Earnest told analysts. “When a partner like GEMS comes along and says, ‘We think we can do some neat things together,’ you look at all the different constituencies and say, ‘This is the right thing to do.’”

Data Critical develops and distributes wireless and Internet systems for communicating critical healthcare data. The company’s products include StatView, AlarmView and FlexView, a line of wireless alarm notification products for hospitals. It also provides MobileView and ECGStat wireless devices for physicians, as well as WebChart and PocketChart. The company estimates that its wireless systems are installed in more than 400 hospitals in the United States.

Data Critical’s Paceart division specializes in PC-based software for managing the care of cardiac patients with implanted devices. Data Critical figures that Paceart systems are used by more than 2,500 cardiologists across the United States.

Data Critical also offers PatientNet, which it garnered through the VitalCom acquisition. The wireless infrastructure technology integrates patient information from various manufacturers’ monitoring and bedside devices into a single network in real-time.

Royal Philips completes acquisition of Agilent’s HSG
Royal Philips Electronics (Amsterdam) on Aug. 1 completed its acquisition of Agilent Technologies Inc.’s (Palo Alto, Calif.) Healthcare Solutions Group (HSG of Andover, Mass.) for $1.7 billion.

Agilent received $1.6 billion in cash on Aug. 1. Royal Philips paid the remainder when certain post-closing conditions were completed.

As a result of the transaction, Royal Philips will post charges this year of approximately $200 million. The company said the predominantly one-time charges relate to the amortization of intangibles, in-process research-and-development, purchase accounting adjustments and adaptation to the Philips accounting principles.

Royal Philips announced its intention to buy HSG last November, the same week the company unveiled plans to acquire ADAC Laboratories Inc. (Milpitas, Calif.).

HSG’s portfolio contains more than 400 healthcare products and services and is among the worldwide leaders in-patient monitoring products and ultrasound systems.

HSG has annual sales of $1.5 billion, currently employs approximately 5,000 people and operates in more than 100 countries worldwide.

With the addition of Agilent’s HSG, Philips Medical Systems will consist of seven business lines — X-ray, ultrasound, nuclear medicine, CT and MRI, cardiac and monitoring systems, imaging IT and customer service.

photoPhilips Medical Systems will keep cardiac and monitoring systems in its home base of Andover. Steve Rusckowski, HSG’s senior vice president and general manager, will become CEO of that business unit and report to Hans Barella, Philips Medical Systems’ president and CEO.

HSG’s ultrasound product line, which includes the Sonos series and the hand-carried OptiGo, will merge with ATL Ultrasound (Bothell, Wash.). The photoSonos platform and OptiGo also will remain in Andover. Tim Mickelson will continue to serve as CEO of ultrasound, while Greg Petras, general manager of HSG’s Imaging Systems division, will head the Andover ultrasound operation.

The acquisition of HSG is the second of three major moves in the healthcare market by Royal Philips in the last nine months. With ADAC and Agilent’s HSG in the fold, the company now can concentrate on completing its purchase of Marconi Medical Systems Inc. (Highland Heights, Ohio) from Marconi plc (London) for $1.1 billion.

The proposed transaction includes a five-year technology supply partnership with Marconi for Philips to purchase up to $150 million of equipment and services of Marconi’s communications products.

If and when the Marconi Medical Systems transaction closes, Philips Medical Systems will have estimated sales in the United States of $3.8 billion and approximately 10,500 employees.

Philips Medical completes HQ move to Bothell, Wash.
With a few employees and outside consultants literally putting the final touches on their projects, Philips Medical Systems North America in August effectively ceased all activity in Connecticut and is operating out of its new headquarters in Bothell, Wash., site of the company’s ATL Ultrasound campus. The company first indicated its intension to pull up stakes and move to the Northwest in August 2000.

“Right now we consider our move completed,” Jack Price, president and CEO of the newly designated Philips Medical Systems North America Sales and Service Region, told Medical Imaging on Aug. 8. The few people remaining in Connecticut — not in the company’s former Shelton headquarters building, but in interim quarters set up in Milford to accommodate transitional operations — were set to finish their work and exit the company by the end of August, he said. That group is completing an information technology (IT) project for the company’s service organization.

Price said about 80 of the company’s 360-plus employees made the move to the Northwest.

“Originally, our guess was a little above 100 or so [would accept the invitation to move],” he remarked, “but, as it turned out, we were somewhat fortuitous in terms of the job market out there. As we were beginning to recruit, it was at the time that many of the dot-coms were disappearing, and we had a very robust market in terms of hiring.”

Price said Philips has hired people in administrative, support and internal sales positions, bringing its total employee population in Bothell to approximately 2,000.

The 57-acre ATL campus has three buildings; a fourth, intended to house engineering operations, is under construction and is expected to be completed by the end of this year. At that point, most of the Philips sales and service group will work out of a single building, although a few employees will remain distributed throughout the organization, Price said.

He added that the move was accomplished without disrupting Philips’ daily operations.

“We had a plan all along, a plan with two work forces, and that was one of the reasons we have the building in Connecticut until the end of the year. We were able to bring people on and have an overlap,” Price indicated. “There are some difficulties with that, but so far, it has been going well in terms of transitioning us from one team to another and not have any real issues in terms of loss of continuity.”

ATL also has a scan-head manufacturing plant in Reedsville, Pa., with about 200 employees. Price said there are no plans to make any changes to that facility.

At the time of the original announcement, Price had indicated that the move “was never taken on as a downsizing effort.”

He declined to reveal relocation costs, calling them “company confidential,” but adding, “It wasn’t inexpensive.”

Hologic outlines restructuring plan for profitability
“We will be more proactive, responsive and exhibit a greater sense of urgency in everything that we do. You can expect strict adherence to the principles of candor, commitment and consistency and uncompromising dedication to return Hologic to profitability — and certainly to enhance shareholder value.”

With that statement, President and CEO John W. Cumming in August began to chart a new course and set a different tone at Hologic Inc. (Bedford, Mass.).

On Aug. 13, 12 days after having been elected to the two posts, Cumming unveiled plans to restructure the bone densitometry and digital imaging technology company with the goal of returning Hologic to profitability.

Hologic Inc.

For the nine months ending June 30

2001 2000
Revenues $133.2 $66.6
Net (loss) ($15.9) ($7.7)
dollars in millions

The strategic blueprint includes a companywide cost-savings initiative, which Hologic estimates will save approximately $10 million annually. The plan includes a 10 percent reduction in the company’s work force — which occurred Aug. 10 — and lower operating expenses in each of Hologic’s four business units.

In a conference call with analysts, Cumming described the plan as “an important first step toward profitability. However, we recognize that expense reduction alone is not sufficient to guarantee profitability or long-term success, particularly in view of the ongoing research and development expense associated with our digital mammography program.”

The work force reduction “will result in savings of approximately $6 million as we look out into FY2002,” Glenn Muir, Hologic executive vice president and CFO, told analysts. “The remainder — $4 [million] to $5 million — will come from other cost initiatives on the purchasing side.”

The restructuring will result in a charge, primarily related to severance costs, of approximately $1.3 million in Hologic’s fourth fiscal quarter, ending Sept. 29.

“Of the $1.3 million,” Muir added, “that will be paid out over three to five months from now. It will not be a lump sum in [the fourth quarter].”

While the addition of digital imaging, general radiography and mammography products — through the acquisitions of the former Trex Medical Corp. and Direct Radiography Corp. (DRC) in 2000 and 1999, respectively — has bolstered Hologic’s revenues, the development of digital technologies has taken its toll on the bottom line.

In its third fiscal quarter, ending June 30, revenues increased to $44.9 million, with mammography and general radiography systems contributing $20.7 million to that total. Hologic posted revenues of $22 million in the same quarter of FY2000. The company posted a net loss of $1.2 million in the third fiscal quarter, compared with $2.6 million in the year-ago quarter.

“Although these acquisitions substantially increased Hologic’s potential for long-term growth,” Cumming told analysts, “the costs associated with the acquisitions and ongoing research and development expenses for digital radiography has come at the expense of profitability. It is now imperative that we, as a company, focus our energies on returning Hologic to profitability.”

Hologic isn’t stopping at cost reduction and watching its pennies. The company also plans to focus on long-term revenue growth through new marketing programs, expanded distribution channels and new strategic business partnerships.

Cumming said Hologic “will soon unveil new marketing programs to expand market share in our core markets of bone densitometry and mammography and our commitment to be the leader in digital imaging.”

New technologies, pharmaceuticals to aid nuclear med
While the combination of positron emission tomography (PET) and CT held much attention at the 48th annual meeting of the Society of Nuclear Medicine (SNM of Reston, Va.) in June, many companies are working on the next-generation of other nuclear medicine technologies.

Marconi Medical Systems Inc. (Highland Heights, Ohio) is partnering with eV Products Inc. (Saxonburg, Pa.) to develop a new solid-state detector whole-body gamma camera. The companies are working on advanced cadmium zinc telluride (CZT) detectors and electronics to analyze information more quickly than sodium iodide (NaI) detectors and do so less expensively. Neither company could speculate how soon a commercial product may be available.

eV Products also is working with Anzai Medical (Tokyo) to design, engineer and assemble the EZ Scope, a small field-of-view gamma camera. The device is fabricated from a single cadmium zinc telluride (CZT) detector with an active area of 32 mm by 32 mm and is 5 mm thick.

Anzai currently is conducting phantom trials on EZ Scope at two Japanese universities. Anzai hopes to submit an application for FDA clearance and Japanese government licensing by the end of this year.

IS2 Research Inc. (Nepean, Ontario, Canada) showcased two products — its recently FDA-cleared Digital Cardiac Camera (formerly known as the Bi90) and its works-in-progress MammoCam.

Priced at approximately $260,000, the fixed 90-degree Digital Cardiac camera is designed specifically for cardiac imaging. The unit has a small footprint and four self-leveling feet. As of SNM 2001, IS2 had sold three Digital Cardiac Cameras, the first of which is set for delivery in October.

The MammoCam is a scintimammography device that has been performing phantom studies in the lab, detecting masses as small as 2 millimeters at a depth of 11 centimeters. Clinical trials are set for the University of Montreal (Quebec, Canada).

IS2 hopes to receive regulatory clearance for the MammoCam in the first quarter of 2002.

Gamma Medica Instruments (Northridge, Calif.) offered its LumaGem, a five-inch-square field-of-view dedicated gamma camera, which features 1/4-inch “dead edge” around the perimeter of the camera. The device is FDA 510(k) approved and is specifically designed as a single-organ optimized camera, which can be mounted on a mammography system for scintimammography by removing the bucky.

“We are confident that we will routinely see lesions well below one centimeter,” said Bob Rusk, director of medical sales and marketing. “We don’t have all the clinical evidence we need, but we are confident we can see lesions probably approaching one-half centimeter [in size].”

Gamma Medica also showed its LumaGem hand-held imaging probe, which offers a one-inch-square field-of-view. Designed for both pre-operative and intra-operative situations, interchangeable collimators allow choices of imaging parameters, including variable spatial resolution, sensitivity and field-of-view.

DuPont Pharmaceuticals Co. (North Billerica, Mass.) highlighted several of its current clinical trials and SNM 2001 papers involving the imaging agent, Cardiolite (kit for the preparation of Technetium Tc99m Sestamibi for injection).

d01e.jpg (11507 bytes)Images from a DuPont Cardiolite SPECT study help to prognose andrisk stratify cardiac patients.

One presentation featured the use of Cardiolite SPECT (single photon emission computed tomography) to prognose and risk stratify cardiac patients, so clinicians can make better patient management decisions.

DuPont’s Cardiolite also is at the center of a study of patients with diabetes who are at increased risk of coronary artery disease.

“If [a person] has coronary artery disease and diabetes, the risk for a future event is as if he or she already have had a heart attack,” said Bradley Pounds, DuPont’s director for Cardiolite. “You want to identify those adult patients early.”

Diabetics are given a multi-laboratory assessment of blood work and clinical assessment, as well as Cardiolite SPECT. The hypothesis is that some percentage of those patients will have undetected, silent coronary artery disease.

Preliminary results from the multi-center study could be available as soon as November.

For Nycomed Amersham Imaging Inc. (Princeton, N.J.), nuclear medicine is its fastest-growing business segment. Nuclear medicine accounts for approximately 33 percent of total revenues, while X-ray and MRI products account for the bulk of the remainder. Nuclear medicine sales reached $104 million in North America in 2000.

“Those sales should grow in excess of 20 percent this year,” said Thomas Giordano, general manager of the nuclear medicine unit. “That growth is coming from both market share and from the market itself, with an increasing number of patients, particularly in the U.S., reaching baby boomer years.”

The company has three primary imaging agent products. MyoView — the company’s largest-selling radiopharmaceutical and fastest-growing product — is used in the diagnosis and localization of regions of reversible myocardial ischemia. Ceretec specializes in the visualization of cerebral blood flow and the labeling of white blood cells to localize intra-abdominal infection and inflammatory bowel disease. Indium-Oxine is utilized for radiolabeling autologous white blood cells.

Palatin Technologies Inc. (Princeton, N.J.) reports positive interim results from a Phase Two clinical trial of LeuTech in patients with bone infection (osteomyelitis). LeuTech is a radiolabeled monoclonal antibody designed to image and diagnose infection.

The study demonstrated LeuTech’s ability to rapidly detect osteomyelitis in diabetic patients with foot ulcers. LeuTech produced an image in less than one hour, compared with 24 hours for an image using indium oxine-labeled white blood cells.

Study: PET sales will surpass gamma cameras in 2002
Long-time advocates of positron emission tomography (PET) will continue to enjoy their day in the sun for several more years.

So predicts market research firm Frost & Sullivan (San Jose, Calif.) in its latest report on the nuclear medicine market.

Total Nuclear Medicine Market Revenue Forecast
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With reimbursement for more than a dozen medical indications by the Centers for Medicare and Medicaid (CMS) and the rise of molecular and fusion imaging, PET imaging revenues could quadruple to more than $880 million by 2007. The PET market generated revenues of $216 million last year.

Gamma camera sales, which still account for approximately two-thirds of the nuclear medicine market, are projected to reach $426 million six years from now. Growth in this segment is expected to be considerably less dramatic than PET, since revenues were $307 million in 2000.

If projections in the report hold true, PET revenues will surpass the numbers for gamma cameras next year.

The dedicated PET market “will be the one that over the next decade will grow phenomenally and will see a healthy installed base in the next couple of years, too,” said Monali Patel, Frost & Sullivan medical imaging analyst. “I think the only thing that would stifle the [PET] market in the future is if reimbursement were to somehow change or decrease.”

The report predicts that the growing utilization of PET systems will lead to installed-base sites purchasing additional new units long before replacements. PET sales also will expand to community hospitals, freestanding medical imaging centers, freestanding PET centers, specialty centers, such as oncology centers, research and academic institutions, and mobile PET services.

The report believes that the U.S. gamma camera market “appears to be on the verge of saturation. Recent CMS reimbursement decisions appear weighed against gamma camera procedures performed by a large number of the dual head cameras in operation today.”

Growth in the gamma camera sector is expected to come from the development of newer applications of existing technologies and the use of newer radiopharmaceuticals.

AMA provides boost for CAD in mammo
The American Medical Association’s (AMA of Chicago) Common Procedural Terminology (CPT) Editorial Panel has approved a Category I CPT Code for the use of computer-aided detection (CAD) technology in conjunction with screening mammography.

d01g.jpg (8891 bytes)R2’s ImageChecker remains the only FDA-cleared mammography CAD system.

Effective January 2002, the new Category I CPT Code for CAD will be included in the AMA CPT 2002 codebook. Physicians use CPT codes to bill commercial insurers and Medicare for the full range of services they provide. CAD’s new CPT code is considered an “add-on” code, since it is used in conjunction with established codes to bill for screening mammography services.

The bottom line is that the CPT code for CAD will aid in a physician’s ability to bill for and receive supplemental reimbursement for the service in addition to what he or she may receive for performing and interpreting a screening mammogram.

The new CPT code should be a benefit for R2 Technology Inc. (Los Altos, Calif.). The company’s ImageChecker remains the only FDA-cleared CAD system for mammography. ImageChecker was approved in 1998 for use with screening mammography to help radiologists minimize false negative readings.

“We hope [the decision] will ultimately help reduce financial barriers to the widespread adoption of CAD for breast cancer detection and make it available to many more women in the United States,” said R2 President and CEO Michael Klein.

Digital advances will drive mammography market
Last year marked a long-awaited turnaround for digital X-ray mammography, according to a new report by market analysts Frost and Sullivan (San Jose, Calif.), which predicts the total X-ray market could hit $567 million by 2007, up from $282.5 million in 2000, as a result of digital system sales.

The report chalks up the advance primarily to the introduction in 1997 of small-field digital systems and their promising early breast cancer detection capabilities. Other market drivers are manufacturer competition, improvements in technology and newfound cost effectiveness.

Total Mammography Market Revenue Forecast (all segments)
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Currently, five companies manufacture small field digital mammography X-ray devices: GE Medical Systems (Waukesha, Wis.) and Siemens Medical Systems (Iselin, N.J.) lead the pack, with Instrumentarium Imaging Inc. (Milwaukee), Hologic Inc. (Bedford, Mass.), and Fischer Imaging Corp. (Denver) filling out the ranks. GE is the only vendor with a FDA-cleared full-field digital mammography unit. Fierce vendor competition is keeping technology current and costs down. Because the smaller companies feel pressured to innovate to stay in the game, the newest crop of digital X-ray mammography devices provides increased contrast resolution, wider dynamic range, higher signal-to-noise ratio and real-time imaging.

The dark cloud hovering over this picture is reimbursement, which many mammography providers find inadequate. The report claims that that factor alone could delay or cancel equipment orders. But providers’ needs for greater speed and procedure volume coupled with the convenience of digital storage will offset reimbursement shortages and eventually drive small-field digital to dominate diagnostic and interventional mammography in the United States. Full-field digital mammography will then fill in any gaps as analog systems are retired, with digital eventually replacing analog altogether.

“The biggest two factors that are holding back the digital X-ray market are price and concerns among radiologists and healthcare facilities about whether these systems actually provide any real benefit, other than the fact that they’re digital and you can use them with PACS and you’re avoiding the whole film aspect,” said Frost and Sullivan medical imaging analyst Antonio Garcia, the author of the report. “In terms of clinical benefit, the jury’s still out on that. Right now I just think it’s going to be very slow.”

Financial Pulse
Health Care Markets Inc./Medical Imaging Stock Index Analysis

Alliance Imaging Inc. (Anaheim, Calif.) is back in the public sector. The medical imaging fixed and mobile service provider raised $121.9 million from its initial public offering (IPO). It is the third offering of public stock by Kohlberg Kravis Roberts & Co. (KKR of New York), which acquired its 92 percent stake in Alliance in 1999 from Apollo Group (Purchase, N.Y.). Alliance offered 9.4 million shares at $13 per share. KKR still owns 65 percent of Alliance, even after the IPO. KKR did not sell any of its shares in the offering. Proceeds from the IPO will help pare down debt of $769.2 million, $466 million of which was incurred in the KKR acquisition. In the first quarter of 2001, Alliance’s revenues increased to $91.2 million, compared with $84.3 million in the first quarter of 2000. Net income declined slightly to $1.2 million, compared with $1.4 million in the year-ago quarter. The company posted revenues of $345.3 million in 2000, a healthy gain from $318.1 million in 1999. Alliance reported a net loss of $2.2 million last year, compared with a net loss of $43.4 million in 1999. In its IPO filing with the Securities and Exchange Commission (SEC), Alliance noted that, as of March 31, it had 392 medical imaging and therapeutic systems in place, including 325 MRI systems, in 43 states.

Despite a fine showing by its Medical Solutions segment, Siemens AG (Munich) described its third-quarter earnings, ending June 30, as “unsatisfactory” and promised to “define further measures to improve our results.” Total sales increased 19 percent to approximately $18.6 billion in the quarter. Siemens posted a quarterly net loss of approximately $613.3 million, compared with net income of $546.4 million in the third quarter of FY2000. For the nine-month period, sales rose 16 percent to approximately $54.3 billion. Net income totaled approximately $566.4 million, down from net income of approximately $1.63 billion in the year-ago period. Medical Solutions — aided by last year’s acquisitions of Acuson Corp. (Mountain View, Calif.) and Shared Medical Systems (Malvern, Pa.) — increased third-quarter sales by 56 percent to approximately $1.48 billion, while new orders gained 64 percent to approximately $1.68 billion.

Compiled and analyzed by Health Care Markets Inc. (Hilton Head, S.C.), the stock indices above plot the performance of two market segments: Imaging Devices and Imaging Services. The indices are part of WDI’s healthcare database of more than 1,000 companies. For comparison we also plot the progress of the S&P 500. The indices began in January 1991 with a base of 100.

Strong growth in its Oncology Systems business helped offset a decline in the
X-ray Products sector, as Varian Medical Systems Inc. (Palo Alto, Calif.) posted double-digit gains in sales and earnings in its third fiscal quarter, ending June 29. Sales increased 12 percent to $191 million, compared with $170.7 million in the third quarter of FY2000. Net income climbed to $19.5 million, up from $14 million in the year-ago quarter. For the nine-month period, sales climbed to $545.6 million, compared with $481.7 million in the same period of FY2000. Net income rose to $44.5 million, up from $29.6 million in the year-ago period. Oncology Systems in the quarter increased sales to $151.9 million, compared with $132.7 million in the year-ago quarter. Sales in the X-ray Products unit declined to $33.1 million, compared with $34.4 million in the third quarter of FY2000.

GE Medical Systems (GEMS of Waukesha, Wis.) helped propel parent company General Electric Co. (GE of Fairfield, Conn.) to a record $3.9 billion in earnings in the second quarter. Orders for digital X-ray products — led by the GE Senographe 2000D mammography system and GE Innova 2000 cardiac X-ray system — increased 122 percent compared to the second quarter of 2000. In addition, orders for CT systems advanced 39 percent and PET imaging systems rose 27 percent in the same year-to-year comparison.

Vital Images Inc. (Minneapolis) received a boost from software license fees to post healthy financial results in its second quarter. Revenues increased 46 percent to $3.7 million, compared with $2.5 million in the second quarter of 2000. Vital Images also lessened its net loss to $402,000, compared with a net loss of $802,000 in the year-ago quarter. For the six-month period, revenues climbed to $7 million, up 47 percent from $4.8 million in the first half of 2000. The net loss decreased to $1 million, down from $1.5 million in the year-ago period. Second-quarter software license fees increased to $2.3 million, compared with $1.7 million in the year-ago quarter. For the six-month period, software license fees rose to $4.5 million, up from $3.2 million in same period of 2000.

FDA gives Fischer SenoScan good reviews
Fischer Imaging Corp. (Denver) is one step closer to market for its SenoScan full-field digital mammography system.

The FDA in July sent Fischer an approvable letter confirming the agency’s review findings that the SenoScan system is safe and effective for use in the same clinical applications as traditional mammographic film-screen systems.

SenoScan is subject to a routine FDA review of final system level verification, labeling and the official report of the recently completed full plant inspection.

If and when SenoScan receives pre-market approval (PMA), it would become the second full-field digital mammography system to hit the market. Currently, only GE Medical Systems’ (GEMS of Waukesha, Wis.) Senographe 2000D digital mammography system is available commercially.

Fischer said that its PMA application was the result of a 1,500-patient study conducted over three years comparing the SenoScan digital mammography system with conventional film mammography.

Edward Sickles, M.D., professor of radiology and director of breast imaging at the University of California at San Francisco (UCSF), completed a study using two SenoScan systems at separate UC hospitals in San Francisco.

Sickles said that, on average, the facilities acquired, transmitted and completed a remote interpretation of SenoScan images “even before the conventional films were available from the film processor. In addition, the accuracy of the remote digital interpretation by experts was superior to that of the conventional film screen interpretation by general radiologists.”

Sickles added that digital mammography also will make screening mammography readily available to women in rural locations as digital mammograms are transmitted over the Internet.