March 2002

In its opinion dated Jan. 29, the court also dismissed all claims against Del Global and the other defendants with no findings of liability or wrongdoing by any party.

Under the court-approved agreement, members of the class action will receive $2 million in cash, $2 million of subordinated promissory notes due in five years with interest at 6 percent per annum, and 2.5 million shares of Del common stock and warrants.

The class action stems from Del Global’s November 2000 warning that its net income for FY2000, ending July 29, would be substantially lower than net income in FY99. Del also announced at the time that it would delay filing its financial results with the Securities and Exchange Commission (SEC) in order to revise its fiscal 2000 quarterly results and its FY99 numbers.

The court’s decision helps Del Global take another major step in righting itself after the events of 2000 and 2001.

Last September, Del Global closed its DynaRad Corp. (Deer Park, N.Y.) subsidiary in order to streamline operations and conserve cash. DynaRad’s portable x-ray business was transferred to Del Medical Imaging Corp. (Franklin Park, Ill.).

With the addition of DynaRad’s product line, Del Medical received a boost of $3 million in billing, estimated Del Medical President Walter Schneider.

The DynaRad move is just one of several measures Del Medical has taken over the past year to regain its standing in the general radiography systems market in the wake of its parent company’s indiscretions.

Schneider joined Del Medical as senior vice president of operations in September 2000, just as Del Global’s troubles began to surface. He was named president in February 2001.

“The problems were revenue recognition-related problems; problems relating to accounting issues that never should have happened,” Schneider recalled to Medical Imaging. “I initially decided I made the wrong move and resigned. I was asked to stay and clean up the problem. We surfaced the problems and took corrective action.”

Del Medical currently has 95 employees, which is down from a work force of approximately 110 people a year ago. Despite fewer people, Schneider said the company today has increased production by 22 percent.

“We build and ship approximately 1,500 x-ray systems per year,” Schneider said. “I have a plan in place to take that number to 2,000 in the next fiscal year [ending July 2003] and up from there.”

Del Medical also has had to restore dealer and customer confidence. The dealer component was a particularly critical factor, given that Del Medical distributes its products exclusively through dealer channels.

“It was survival here. When the public information came out about our problems, the hospital accounts shied away from us because of experiences with other companies that went under,” Schneider said.

Del Medical also is counting on reduced competition to help its chances for a rebound. Last month, Hologic Inc. (Bedford, Mass.) exited the general radiography market by closing its Littleton facility (the former XRE division Hologic acquired in 2000 when it bought Trex Medical Corp.). The former Marconi Medical Systems Inc. (Highland Heights, Ohio) also dropped its general radiography line before its acquisition by Philips Medical Systems International B.V. (Best, Netherlands).

If the deal is consummated, GEMSIT would continue a string of company and product acquisitions that began soon after GEMSIT’s creation in September 2000. MedicaLogic would become GEMSIT’s second transaction of 2002.

MedicaLogic specializes in electronic medical records (EMR) for patients treated in care areas outside the hospital or outpatient settings. The company employs approximately 200 people.

For GEMSIT, the lure of MedicaLogic is its market ability to help GEMSIT expand its advanced medical record technology beyond the hospital to capture a patient’s medical history in a single electronic record for care throughout the healthcare network. With the growth of integrated delivery networks (IDNs), GEMSIT sees MedicaLogic as a logical addition to diversify and broaden the business unit’s portfolio.

Add EMR capabilities to GEMSIT’s recently launched Centricity clinical information system, and GEMSIT President and CEO Greg Lucier says GEMSIT will be able to offer healthcare providers a “medical information product that spans a patient’s entire health history — whether the care process occurred during an inpatient or outpatient encounter.”

MedicaLogic says its outpatient systems are used by more than 16,000 physicians to manage millions of patients’ records and that Logician is the most widely used ambulatory care electronic medical record.

At the same time of the GEMSIT announcement, MedicaLogic/Medscape (Hillsboro), MedicaLogic’s parent company, filed Chapter 11 of the U.S. Bankruptcy Code. By doing so, MedicaLogic will resolve any liabilities that remain after the acquisition through the bankruptcy process. MedicaLogic will maintain normal operations throughout the transaction process.

MedicaLogic plans to use proceeds from its divestiture to GEMSIT, along with proceeds from the sales of its other business units, adding that it should be sufficient to pay creditors in full. MedicaLogic also believes the proceeds will be sufficient to pay accumulated dividends to preferred shareholders and possibly provide a distribution to common shareholders.

The transaction is subject to various approvals, including that of the bankruptcy court, and to customary conditions. The companies say the transaction could close by April.

The specialty marketer and distributor of medical products in February unveiled a plan to consolidate its distribution centers from 72 locations to 40, centralize purchasing and trim staff by the end of March 2003. To grow revenues, PSS also will focus on increasing the number of sales representatives, expanding its product portfolio, and enhancing customer reach and market penetration.

PSS President and CEO David A. Smith said the company initiative to “stabilize and strengthen the business is ahead of schedule” and PSS is “accelerating the implementation pace of our three-year strategic business plan to begin this quarter rather than April 1.”

The first year of the plan “requires some heavy lifting and restructuring,” Smith added in the prepared statement. “Even though we are five months ahead of schedule, we are ready to go.”

The announcement came as PSS posted financial results for its third fiscal quarter, ending Dec. 28, 2001.

For the nine-month period, net sales declined to $1.35 billion, compared with $1.37 billion in the same period of FY2001. PSS’ divested European division contributed $15.4 million to sales. PSS posted a net loss of $80.5 million in the nine-month period, compared with a net loss of $26.4 million in the year-ago period. The net loss was due primarily to a mandated accounting change. Excluding that factor, income for the nine-month period was $9.5 million.

PSS’ restructuring comes in the wake of aggressive acquisition activity in 1998 and 1999 by parent company PSS and its subsidiaries, Diagnostic Imaging Inc. (DI of Jacksonville) and Gulf South Medical Supply (Madison, Miss.).

By October 2000, PSS’ colorful co-founder, chairman and CEO, Patrick Kelly, stepped down to pursue other interests, as earnings declined sharply and revenues leveled.

PSS has three divisions — Physician, Imaging, and Long-Term Care.

PSS’ Imaging division will consolidate 19 distribution centers by the end of FY2003, ending March 31. The closures will reduce the number of distribution facilities from 26 locations to seven regional centers. PSS also will centralize service call dispatch and service billing to Jacksonville by the end of FY2003. PSS said staff will be reduced by 15 employees.

PSS said that those moves and other related measures will result in the company taking a restructuring charge of approximately $8 million to $9 million in the fourth quarter of FY2002, ending March 29. Additional charges will amount to $600,000 in the fourth quarter.

PSS also will record approximately $7 million to $8 million in restructuring charges in FY2003, including previously adopted charges of $1.5 million. The charges will be related to costs associated with employee severance, lease terminations, relocations, facilities restructuring and asset impairments.

To propel revenues, PSS began in this quarter to add 70 to 90 new sales representatives over the next two to three years. Plans also include PSS’ Imaging division introducing new EMI (electronic medical imaging) services products in FY2003 and expanding its Women’s Health business unit.

Argus supplies software for the management of quality control and test data for radiation oncology and medical imaging equipment. The company’s products are used by more than 500 centers for testing linear accelerators and related equipment, including treatment simulators, CT treatment simulators, and high-dose rate brachytherapy systems. The Argus line includes software for CT scanners, radiographic and fluoroscopic checks, as well as testing mammography units and film processors.

Argus achieved revenues of approximately $2 million in 2001. Terms of the cash transaction were not disclosed.

Varian plans to integrate Argus’ products and create a radiation treatment portfolio that can be marketed by individual product or as a package. The company also expects to increase market share of Argus products through Varian’s worldwide sales and distribution network and OEM relationships, a capability Argus did not have on its own.

Varian also will close Argus’ Redwood City facility “as quickly as we can,” said Varian President and CEO Richard M. Levy, and make Argus part of Varian’s Oncology Systems business in Palo Alto. The company has nine employees; Varian plans to retain seven of them.

For Varian, the acquisition diversifies its radiation treatment portfolio with software intended to make the use of IMRT less complicated, time-consuming and cumbersome for cancer treatment practitioners.

“Right now, most of the people who are buying new machines are buying them capable of doing IMRT,” Levy said. “However, only 15 percent of the machines capable of doing IMRT are currently doing [IMRT].”

Levy said one reason for the lack of use is the learning curve. Few practitioners are schooled in IMRT technology and procedure.

“Our goal has been to reduce the learning curve by automating and integrating as much as we can,” Levy said, “where the user only has to learn how to use one computer interface rather than many, and to make the commissioning and quality assurance measurements are easy as possible.”

So predicts a new RIS-PACS report from market research firm Frost and Sullivan (San Jose, Calif.).

Senior industry analyst and study author Amith Viswanathan said the market for integrated RIS/PACS products generated revenues of $150.6 million in 2001, adding that it “will attain a market size somewhere between $500 million and $784 million annually in the year 2004.”

Viswanathan identified the top five vendors, in order of revenue market share, as Siemens Medical Solutions (Malvern, Pa.), Cerner Corp. (Kansas City, Mo.), Meditech Information Technology Inc. (Westwood, Mass.), IDX Systems Corp. (Burlington, Vt.), and McKesson Corp. (San Francisco).

The RIS/PACS market has been uneven, Viswanathan noted, but it is poised to improve through 2004.

“The demand for RIS products has experienced a prolonged period of slowdown nearing a zero-growth curve over the past five years,” a condition he blamed on oversaturation of the market and low-price leverage caused by commoditization of the RIS product type.

However, he said that the market should “expect a strong rise in 2002 caused by last-minute HIPAA concerns and a more robust economy coinciding with an expected software product replacement cycle.”

He estimates market growth of total revenues for PACS products for 2001-2002 of 18 percent.

Much of this new interest, he said, generates from hospitals desiring to integrate digitized film slides into text-based systems or implement RIS and PACS separately, usually in one department.

“We estimate a sizeable and growing correlation between PACS buyers and RIS buyers in the U.S. hospital market,” Viswanathan said, the bulk of which is expected to be standalone RIS/PACS sales.

“It is much more difficult to sell a $600,000 RIS and then a multimillion-dollar PACS add-on than the reverse,” he added. “[But] PACS will obviously be a strong rejuvenating force to the RIS market, and may be at least partially responsible for a large degree of new radiology IT product sales.”

Another compelling point is that 50 percent of vendors interviewed “claimed to have a homegrown RIS system partnership agreement with a brand-name RIS vendor to co-sell combined RIS/PACS products. Over 60 percent of top-tier healthcare IT vendors claimed to have a partnership agreement with a brand-name PACS vendor or a homegrown PAC system that they will co-sell with a RIS product.”

Over the next year, UPMC and the Air Force will develop what they described as a “multi-specialty teleconsultation system” with a common platform to help clinicians access and view medical information, from pathology slides to CT scans.”

UPMC and the Air Force hope their project will serve as a national model to improve the nation’s healthcare delivery system and allow for swift diagnoses of various conditions where specialty medical care may not be readily available.

In the first phase of the project, the telehealth initiative will be operated in conjunction with Keesler Medical Center at Keesler Air Force Base (Biloxi, Miss.).

The partnership is funded through an $8.5 million appropriation in the U.S. Department of Defense’s (DoD) FY2002 budget. UPMC also received $1.94 million in federal funds from the Labor-Health and Human Services-Education spending bill for implementation of a seamless electronic health record, which will link UPMC’s rural hospitals, physicians’ offices and clinics with its main hospitals and specialists in Pittsburgh.

The UPMC-Air Force alliance is driven in large part by a decline in both the private and military sectors of specialists who diagnose and treat medical conditions. The military’s medical services are expected to lose 50 percent of their radiologists over the next three years because of a nationwide shortage of these specialists and the military’s inability to compete effectively with job opportunities in the civilian market.

The telemedicine system would help offset the shortage of specialists and make available real-time consultation.

Sixty percent of survey participants identified their current priority as upgrading security on IT systems to meet requirements under the Health Insurance Portability and Accountability Act (HIPAA). Fifty-six percent also say security issues will remain an IT priority for the next two years.

Promoting patient safety and reducing medical errors ranked as the second-most important IT priority, as noted by 46 percent of respondents.

Other HIMSS survey findings include:

• Seventy-four percent cited clinical information systems as the ranking application for healthcare organizations in the next two years — a 10-point increase over last year’s results.

• Fifty-eight percent of senior-level executives ranked enterprise resource planning (ERP) applications as important this year, as compared with only 11 percent in last year’s survey.

• Deploying Internet technology — last year’s second-highest IT priority — decreased eight points this year, and deploying Internet technology decreased 14 points in projected importance over the next two years. Only 38 percent of respondents identified Web applications as important in healthcare in the next two years, as compared with 50 percent last year and 70 percent in 2000.

HIMSS also announced that it will release its HIMSS Solutions Toolkit in June. The toolkit is designed to help healthcare providers with tools to gather information about IT vendors, consultants and suppliers.

With anticipated growth in the range of 70 percent this fiscal year, the picture archiving and communications systems (PACS) company already has set the stage to accommodate booked orders, as well as PACS installations that could come to fruition before the year is out.

A.L.I. Chairman and CEO Greg Peet said the company is benefiting from several market factors, including pent-up spending delayed by Y2K priorities.

With Y2K concerns a fading memory, Peet sees image management systems and radiology coming on strong, as budgets and, subsequently, the healthcare sector grow.

“I believe that growth is driven, because all the vendors have invested a decade to build this promising technology and there are a number of products — including ours — that are proving capable and mature enough to offer good solutions,” he said.

With sales and orders expanding, so are A.L.I.’s facilities. Next month, A.L.I. plans to complete the addition of 7,000 square feet of capacity on its existing production area, increasing it to 13,000 square feet.

Over the next year, A.L.I. also will incrementally add approximately 20,000 square feet to its staff facilities, bringing A.L.I.’s complete complex to 72,000 square feet.

Peet said the company has booked orders and is in the contracting phase for more installations, which in total “represent 100 percent of our commitment for revenue plans. We are very, very confident we will achieve 70 to 75 percent growth for the year.”

In FY2001, ending Oct. 31, A.L.I. tallied total revenues of approximately US$27 million.

The portable digital radiography (DR) sensor is designed for use by healthcare providers with stretchers, gurneys and patient tables. Canon has set a list price for its CXDI-31 of $85,000 to retrofit an existing Canon CXDI-22 DR system.

The Canon CXDI-31 — which weighs approximately 6.2 pounds and is less than one inch thick — incorporates the company’s amorphous silicon (a-Si) technology. As a portable unit, Canon has designed the CXDI-31 to acquire an image from virtually any angle. The Canon CXDI-31 has a flat-panel sensor that comprises a scintillator and an a-Si sensor plate to generate high-resolution radiographic images.

The sensor features a 100-micron pixel pitch, realizing high-resolution imaging (approximately 6.5 million pixels) in a 9-in. by 11-in. format for bone x-rays.

Siemens Corp. (New York City) has joined HealthSouth Corp. (Birmingham, Ala.) in a multi-million dollar effort to build the world’s first totally integrated, all-digital, automated hospital.

Siemens will provide healthcare information technology (IT) applications and infrastructure, digital medical imaging equipment, network systems, telecommunications, and building technologies for the new HealthSouth Medical Center (Birmingham).

The collaborative effort will combine the resources of Siemens Medical Solutions (Iselin, N.J. and Malvern, Pa.), Health Services (Iselin), Information & Communications Networks (Boca Raton, Fla.), Energy and Automation (Alpharetta, Ga.), and Building Technologies (Buffalo Grove, Ill.) units. Coordinating the integration of businesses, technologies and products is Siemens One, which the company created last October to pursue these types of cross-operational projects.

HealthSouth broke ground on the new medical center on Nov. 28, 2001. The all-digital facility will replace the current HealthSouth Medical Center, also in Birmingham. Plans are to complete the new facility next year.

The new HealthSouth Medical Center will be a 10-story, 219-bed complex with more than 500,000 square feet of floor space. The facility will include a hotel, retail shops, media center and visitors area.

“We are providing a fair amount of this technology and installing it into the existing facility, so the personnel can get more comfortable with digital, state-of-the-art technologies,” said Jon Trigg, director of Siemens One.

Every patient in the new HealthSouth Medical Center will wear a wireless Siemens wellness monitor to track his or her health status. The system will be designed to notify a clinician immediately if a patient has a problem and will indicate the exact location of the patient.

With HealthSouth’s adaptation of Siemens Soarian, a health information system built for the Web, physicians can access patient information — such as vital signs, images and test results — and enter orders and update information electronically.

With the groundbreaking last November, Trigg said Siemens “almost immediately is moving in the areas of building technologies. Then, as we go forward, we are planning the information side of this [facility].”

HealthSouth expects to spend $100 million to $125 million to construct and equip the new hospital near HealthSouth’s 92-acre campus in suburban Birmingham.

The Indiana Heart Hospital is scheduled to open in December 2002 as a 210,000 square-foot facility with 88 patient beds, 32 outpatient rooms, four surgery suites, six cardiac catheterization labs and a cardiac emergency department.

“We will admit our first patient on Valentines Day of 2003,” said Michael C. Venturini, M.D., cardiologist and chief medical officer of The Indiana Heart Hospital.

Since the facility will be built from the ground up and eliminate paper and film-based medical records, the design will omit medical storage rooms, paper charting areas and central nursing stations. Clinicians will view electronic patient records instantly from either inside or outside of the facility and healthcare providers will have access to patient information at the bedside.

“When you move to a paperless environment, access to clinical workstations becomes critical, since the habit is to look for paper,” said Neal Bowlen, CIO of The Indiana Heart Hospital. “Having our facility covered 100 percent by wireless technology gives our physicians and clinicians limitless access to clinical information.”

The all-digital workflow structure was designed through a partnership between hospital staff and GE Medical Systems Information Technologies (GEMSIT of Milwaukee). The infrastructure will include wireless, handheld communication technologies and GEMSIT’s Centricity information system.

GEMSIT President and CEO Greg Lucier said the hospital and GEMSIT will use an enterprise archive, which will serve as a centralized repository for digital images from all modalities.

As a safeguard against computer problems and outages, Bowlen said the facility’s infrastructure will include two complete internally redundant data centers.

“Redundant power and infrastructure also has been deployed to mitigate outages,” he added. “Disaster recovery was one of our most expensive capital projects for this facility.”

GE Medical Systems (GEMS of Waukesha, Wis.) will provide medical imaging equipment for the hospital. Among the technologies will be GEMS’ Innova 2000 all-digital cardiovascular imaging system; the GenderSmart 12SL gender-specific echocardiogram to test women’s heart waveforms; and the GE Signa MRI system.

In a poster presentation at the 14th annual International Symposium on Endovascular Therapy (ISET), David Rosenblum, D.O., MetroHealth’s chief of vascular and interventional radiology, demonstrated how ultrasound images could identify large emboli that were less visible on angiography. The imaging studies should facilitate surgical pulmonary thromboendarterectomy.

In a small percentage of patients who survive bouts of pulmonary emboli, the blood clot in the lungs fails to resolve, causing chronic thromboembolic pulmonary hypertension that will frequently require open surgery to repair.

Before the surgeon begins the thromboendarterectomy procedure that can result in major complications, he or she might want to perform an IVUS study to clearly pinpoint the clot and its position in the artery.

“That’s what we are recommending on the basis of our study,” said Rosenblum. “We believe that the IVUS performed before surgery to remove these emboli will complement pulmonary angiography studies.”

The researchers performed the studies on 28 patients, 19 of whom were women with mean age of 51. Pulmonary arteriography was performed via the right jugular vein approach, because it offered a shorter distance and a more favorable angle than on venous access sites.

The catheter was manipulated into the main pulmonary artery where contrast was injected to obtain right and left posterior oblique and occasionally straight posterioanterior views of the chest, obtained through digital substraction angiography.

The catheter then was exchanged for an IVUS catheter, which was advanced into each lobar pulmonary artery and each main pulmonary artery.

Lead author Jonathan Schweid, a second-year student at the Medical College of Ohio (Toledo), said that special effort was made to image the origin of the upper, middle and lower lobe pulmonary arteries.

Rosenblum said the preliminary study found that IVUS identified emboli in two patients where no evidence appeared on angiography studies. Ultrasound also eliminated emboli in two other cases of suspicious lesions seen on angiography. Overall, IVUS was successful in 70 percent of the cases in finding the exact location of the thromboembolic disease. In the other 30 percent of the cases, IVUS confirmed evidence of chronic thromboembolic disease, but precise intraoperative position of the main thrombus varied slightly.

Rosenblum — who also serves as an assistant professor of radiology at Case Western Reserve University (Cleveland) — noted that IVUS is limited to larger main and lobar vessels. In several cases, the IVUS device could not negotiate some of the blood vessels, and steering the device steady in the blood vessel was not always possible.

The acquisition proposal would include Richardson’s reloading and distribution of x-ray, CT and image intensifier tubes. The medical glassware business is within Richardson’s Medical Systems Group, which posted sales of $40 million in FY2001, ending May 31, 2001. The medical glassware business accounted for approximately half of those revenues.

The rest of the Medical Systems Group’s revenues came from medical monitors and display products. Richardson will move that product segment into its Display Systems Group.

Richardson’s medical monitor and display business increased 72 percent FY2001 and the company says the product segment is a better fit for its Display Systems Group. The Display Systems Group posted sales of $42.7 million in FY2001.

Edward J. Richardson, chairman and CEO, said the divestiture of the medical glassware business will allow Richardson to focus more of its resources on its four remaining business units.

“We feel that the consolidation of our resources will facilitate the acceleration of our rate of sales and earnings growth,” Richardson said in a prepared statement.

Terms of the transaction were not disclosed and are subject to due diligence and regulatory approvals.

Second Look is a stand-alone computer system designed as a screening tool to help radiologists identify suspicious microcalcifications and masses in mammograms.

Second Look currently is available in Europe, Asia and Japan. The company is wasting no time in getting the system into North American markets.

“We have product ready to ship and we have both direct sales and direct marketing organizations in the United States,” said Peter Farrell, CADx’s director of marketing.

The company has 12 sales people on board and plans to hire more. CADx also has eight direct service people and four third-party service organizations to handle Second Look in the United States.

It can be utilized as a tool for screening film, as well as for diagnosis. The procedure is reimbursed by Medicare at approximately $17.74 per patient. The system has a list price of $169,000.

CADx also is pursuing CAD programs in lung and colon cancer, as well as cardiovascular disease.

HealthTech starts Sunday, April 21, with three pre-conference workshops. The first session featutres C. Wayne Hibbs, president of C. Wayne Hibbs & Associates (Dallas), who explains “How to Be a Player in Medical Technology Evaluation.” Hibbs will discuss information necessary to be a contributor to the technology evaluation process.

The second workshop is presented by William Pollock, president of Strategies for Growth (Westtown, Pa.); Leo Moerkens, president of Hands-on Management Consultants (Oxford, Conn.); and Scott Cabral, president of Peritum Consulting (Delmar, Calif.). The trio want to know: “Is Your Organization Ready for Customer Relationship Management (CRM)? And Are You Prepared to Implement It?” The panel will focus on why CRM is needed, what is required to get started and what needs to be done once it is implemented.

The third forum is hosted by Manny Roman, president of the Diagnostic Imaging Technical Education Center (DITEC of Solon, Ohio), Myron Hartman, program coordinatior of biomedical engineering at Penn State University (Upper Burrell, Pa.). The duo will offer insights into and discuss “Today’s Maintenance Management Challenges.” Roman and Hartman will cover what employees and departments need to remain competitive in today’s environment and the necessary skills to survive.

On April 22nd, the schedule starts with a keynote address by Diane Darling, president of Effective Networking (Boston), who delves into “Turbo Networking for a Successful Conference.” Darling will outline the basics of networking skills and ways to make networking more fun, effective and profitable.

Other highlights of the day include sessions on: Web-based Equipment Management Systems; Cutting-edge Test Equipment and Technologies; Project Management for Technical Managers; and Managing Service Contracts in Radiology. Also on the agenda are seminars on Network Security for Healthcare Companies; The Balanced Scorecard and Six Sigma; and Building a HIPAA Compliant Web Security System.

Tuesday’s schedule features a keynote presentation by James Lussier, president and CEO of St. Charles Medical Center (Bend, Ore.). Lussier will cover “21st Century Healthcare Organizations — Maximizing Creativity, Innovation and Mission.” Lussier will address how healthcare organizations can be innovative, remain on their respective missions and still be highly effective in using technology to transform services to meet the needs of the educated health-conscious consumer.

A sampling of other sessions for April 23rd include Outsourcing Non-Core Services, An Overview of Reprocessing: Regulatory, Safety and Economic Issues; and Integrating Imaging into the Electronic Medical Record. The rest of the day will feature topics such as and Regulations for Third-Party Repair Facilities/ISOs; Slimming DICOM for Interoperability; Practical Database Report Generation; and Reducing Ultrasound Maintenance Costs and Improving Clinical Quality.

The HealthTech 2002 exhibit hall again will host an array of companies with expertise in software and systems integration, training and career development, tools, test equipment and accessories, replacement parts, manufacturing and remanufacturing, recruiting services, dealers and distributors, consulting services, professional and trade associations, multi-vendor and independent service organizations.

IS2 Chairman and Chief Technology Officer Iain Stark said the BCC has obtained clinical images of smaller tumors than scintimammography cameras and mammography systems have detected.

“Mammography is different, of course, but it looks like we will be able to see two- to five-millimeter tumors in the breast,” Stark added.

The BCC’s clinical trials took place at the University of Montreal (Quebec, Canada), commencing in August 2000. IS2 exhibited the system as a works-in-progress at last June’s annual meeting of the Society of Nuclear Medicine (SNM of Reston, Va.). At that time, IS2 referred to the system as the MammoCam.

The BCC is designed for a more comfortable positioning for the woman, who lays prone on the table. The table can swing 15 degrees in either direction to produce a stereotactic image for more exact location of the suspected tumor. There is no compression of the breast.

With FDA clearance in hand, IS2 plans to install the BCC in several more sites this year.

“Sales are targeted to start next year. This is the year to demonstrate [the BCC] at multiple sites that it is a useful adjunct to mammography, particularly in dense breast cases and equivocal cases,” Stark said. “We want to get the statistics to demonstrate that it is effective in doing what it sets out to do.”

IS2 has yet to finalize arrangements for placement in other clinical sites in the United States or Canada.

The goal is to find healthcare facilities “that are familiar with scintimammography and have other [imaging] techniques, so we can do the sensitivity and specificity measurements of our system vs. theirs and where there are a reasonably large number of patients,” Stark added.

IS2 has set a target selling price of approximately $135,000, marketing the BCC in the same price range of higher-end analog mammography units.

Revenues totaled $47.1 million, compared with $44.5 million in the first quarter of FY2001. Hologic also lessened its net loss to $1.6 million, compared with a net loss of $6.8 million in the year-ago quarter.

The net loss is due in large part to restructuring costs of approximately $1.6 million for severance-related expenses from the closure of the Hologic Systems division manufacturing facility in Littleton, Mass., as well as additional reductions in its workforces in Europe and at its Lorad division (Danbury, Conn.).

Hologic completed the closure of the Littleton plant in January and relocated certain product lines and sales and service support personnel to Bedford. The financial effect of the Littleton closure was a restructuring charge for severance costs of approximately $806,000.

Excluding the restructuring costs, Hologic’s income was approximately $2,000 in the quarter. Digital imaging systems and arrays contributed 70 percent to total revenues, which helped recoup the decline in sales from Hologic’s conventional general radiography products phased out from the Littleton operation. General radiography accounted for 13 percent of total revenues. Hologic’s conventional general radiography business lost $2.4 million in the first fiscal quarter.

Sales in Hologic’s other business units — bone assessment, mammography and mini C-arms — increased 1 percent compared to the fourth quarter of FY2001, ending Oct. 31, 2001.

Schick Technologies Inc. (Long Island City, N.Y.) posted its fifth straight quarter of operating profit in its third fiscal quarter, ending Dec. 31, 2001. Revenues totaled $7 million, compared with $5.4 million in the same quarter of FY2001. Net income rose to $1.5 million, up from $439,000 in the year-ago quarter. For the nine-month period, revenues advanced 18 percent to $17.7 million, compared with $15 million in the same period of FY2001. Net income reached $1.9 million, compared with a net loss of $2.4 million in the year-ago period. Schick credited debt reduction as one reason for its improved results.

General Electric Co. (Fairfield, Conn.) posted lower total revenues, but grew its bottom line in 2001. Revenues declined to $125.9 billion, compared with $129.8 billion in 2000. GE attributed the decrease to the effects of GE Capital Services’s strategic repositioning activities. Net income increased to $14.1 billion, compared with $12.7 billion in 2000. GE Medical Systems’ (GEMS of Waukesha, Wis.) total equipment orders increased 20 percent to $6.2 billion in the fourth quarter of 2001, compared with the fourth quarter of 2000. Sales of GEMS’ Discovery LS systems increased 173 percent in the same quarterly year-to-year comparison, while orders for positron emission tomography (PET) systems advanced 122 percent.

A.L.I. Technologies Inc. (Vancouver, British Columbia, Canada) posted record sales and earnings in its first fiscal quarter, ending Dec. 31, 2001. Sales increased to approximately US$10.2 million, compared with approximately US$5.7 million in the first quarter of FY2001. The company also achieved net income of approximately US$2.3 million, compared with a net loss of approximately US$448,000 in the year-ago quarter. The PACS company cited “revenue acceleration” and cost reductions as two reasons for its first-quarter profit.

Sonus Pharmaceuticals Inc. (Bothell, Wash.) tallied revenues of $8.75 million, compared with $408,000 in 2000. Sonus also posted net income of $542,000, compared with a net loss of $2.1 million in 2000. Last year’s revenues include a $8.5 million payment from Nycomed Amersham plc (Buckinghamshire, United Kingdom) and Chugai Pharmaceutical Co. Ltd. (Tokyo) for rights to Sonus’ ultrasound contrast intellectual property. Sonus also has raised $13.6 million in gross proceeds through the private placement of common stock to a select group of institutional investors. Sonus issued approximately 1.9 million shares of common stock and warrants to purchase 385,800 shares of common stock at $9.40 per share. If the company’s stock trades above $12 per share for 20 consecutive days, Sonus can require the warrant holders to exercise the warrants in full whereby the company would receive an additional $3.6 million in cash proceeds.

Mobile PET Systems Inc. (San Diego) released preliminary results for its second fiscal quarter, ending Dec. 31, 2001. The mobile positron emission tomography (PET) provider is projecting revenues for the quarter of $4.1 million, up 13 percent from the second quarter of FY2001. For the first six months of FY2002, revenues are estimated to reach a company record of $7.8 million, 400 percent greater than the year-ago period.

Record new business booking revenues helped power Cerner Corp. (Kansas City, Mo.) to double-digit gains in sales and earning in 2001. Revenues rose 34 percent to $542.6 million last year, compared with $404.5 million in 2000. Earnings — excluding non-recurring items — totaled $34.2 million in 2001, compared with $20.4 million in 2001. The IT provider added that it is “comfortable” with estimates that first-quarter 2002 revenues would be approximately 50 percent greater than first-quarter 2001.

Epix Medical Inc. (Cambridge, Mass.) has finalized its offering to sell 2.6 million newly issued shares to a select group of new and existing shareholders at $12.50 per share. The offering raised net proceeds of approximately $30.2 million. The pharmaceutical company is developing contrast agents, such as MS-325. MS-325 is an investigational new drug designed to enhance MR imaging.

Swissray International Inc. (Elmsford, N.Y.) has completed an initial $3 million senior secured revolving credit facility with Credit Suisse. Swissray plans to use the credit arrangement for purchase order and/or receivables financing, as well as for general working capital.