May 2001

The company detailed its plans on March 11, one day before the company’s stock debuted on the New York Stock Exchange (NYSE).

The international conglomerate — which competes in six primary U.S. business segments — has some lofty goals for the U.S. market, including revenues in excess of $25 billion in the States within two years. To reach its revenue and earnings goals, Siemens said it will consider new acquisitions or the sale of some less-than-stellar operations.

“One option would be to aggressively build up market share to reach the necessary critical mass,” said Siemens President and Chief Executive Heinrich von Pierer on March 11. “Another option would be to get out of a handful of these businesses.”

Von Pierer predicted that Siemens “will achieve $25 billion easily, even without acquisitions.”

Siemens posted sales of $16.2 billion in the U.S. in its fiscal year, ending Sept. 30, 2000. U.S. revenues accounted for approximately 22 percent of worldwide revenues of $78 billion. Had Siemens realized a full year’s worth of revenues from its 2000 acquisition of Shared Medical Systems Inc. (Malvern, Pa.), Siemens’ U.S. revenues would have reached $20 billion.

With its strategic business plan becoming more global than local, Siemens’ revenues from its home country of Germany has decreased from 42 percent five years ago to 24 percent in FY2000. The eventual goal is to reduce German-based revenues to 20 percent and advance U.S. numbers to 25 percent of total revenues. Siemens’ plan is to make China its third-largest market.

With a listing on the NYSE, Siemens also hopes to jumpstart its relatively low name recognition in the U.S., as it uses the proceeds from its public shares to finance acquisitions and fund stock options for its 90,000 U.S. employees. Siemens’ worldwide work force has approximately 460,000 people.

Siemens’ stock trades as ADRs, or American depositary receipts, under the ticker symbol SI. On its first day of trading, Siemens’ share price reached a high of $113.25 per share before closing at $110 on volume of 4.1 million shares.

The company also launched a $20 million to $25 million corporate image campaign in March. Siemens will compete against companies, such as General Electric Co. (Fairfield, Conn.), across a broad range of similar products and services, including medical imaging equipment.

Prime will make the acquisition through its subsidiary, AK Associates LLC (Harvey, Ill.), which also manufactures mobilized technology, ranging from medical imaging to lithotripsy to specialized vehicles.

Last year, Calumet posted sales of approximately $50 million. AK’s 2000 sales totaled approximately $22 million. AK produces approximately 75 coaches annually, while Calumet builds approximately 100 units each year.

“We expect the combined build to grow to 175 [units annually],” said Prime Medical President and CEO Brad A. Hummel.

In 1978, Calumet became the first company to mobilize full-body CT scanners and seven years later delivered the first fully mobile MRI system. Calumet also has a manufacturing operation in Sanford, Fla., a service and sales facility in Camberley, England, and sales offices in Beijing and Sao Paulo.

Prime currently operates a fleet of 67 lithotripters and 15 refractive surgery centers in 34 states.

Mobile MRI vans continue to be a strong segment of Prime Medical’s product line, with mobile PET the fastest-growing segment.

“There has been an expansion in the mobile MR segment, driven primarily by the big time players, InSight [Health Services Corp. (Newport Beach, Calif.)], Alliance [Imaging Inc. (Anaheim, Calif.)] and others,” said Hummel. “There has been a tremendous rush to mobilize PET, as well as some CT technology used in the cardiology.”

Hummel said he expects the acquisition to close in the second quarter. Terms of the agreement were not disclosed.

The transaction includes a three-year agreement for ProAct IT Group to provide IT-infrastructure systems to GEMSIT in Sweden, Norway, Denmark and Finland. This agreement also allows both companies to collaborate in providing PACS and infrastructure expertise.

ProAct Medical, a division of ProAct IT Group (Stockholm), already distributes GEMSIT’s PACS product to Scandinavian healthcare providers. The company specializes in transforming healthcare facilities into a digital environment, focusing on storage and management of medical images and offering archiving, diagnostics and workflow solutions.

Quest, which provides diagnostic testing, information and services, currently owns 18 percent of MedPlus’ outstanding stock and has proposed purchasing the remaining 8.63 million shares of preferred and common stock for $2 per share each. The total value of the transaction would be $17.3 million.

On news of MedPlus’ decision, the company stock on April 2 lost almost half of its value, falling $1.69 on that day to close at $1.81 — a 52-week low — on volume of 91,200 shares. Quest stock declined $1.50 on the news, closing at $87.37 per share on volume of 439,600 shares. MedPlus has traded as high as $9.94 per share in the last 52 weeks, while Quest’s 52-week high is $146.25.

MedPlus said its action is based on the current operating performance of the company and the recent and continued downturn in the capital markets, which have adversely affected the company’s ability to raise the debt or equity financing to fund ongoing operations.

For the nine-month period, ending Oct. 31, 2000, revenues totaled $8 million, while the company reported a nine-month net loss of $4.6 million. The company has not released its FY2001 results, ending Jan. 31.

Quest has annual revenues of $3.4 billion.

In a prepared statement, MedPlus Chief Executive Richard Mahoney said the company’s financial condition mandates that Quest’s acquisition proposal close “in the immediate future.”

“Other alternatives considered would have provided insufficient long-term funding,” he continued, “very unfavorable dilution to common and preferred shareholders and significant guaranteed rates of return on newly invested funds.”

Researchers at Stanford University (Palo Alto, Calif.) a few years ago found themselves irresistibly drawn to a project to produce a low-cost MRI. After spending five years building a scanner and securing grant money to support the venture, team members delivered their first results in September 2000 with images of human hands.

The trick to producing images on an inexpensive scanner is no slight-of-hand. The project is based on decades-old technology never used for medical imaging. It also involves two inexpensive, resistive magnets, as compared to the one expensive, superconducting magnet found in conventional MRI scanners.

“We knew theoretically that the physics would work, because we knew that the magnetization didn’t care about homogeneity during certain phases of the process. That is just understanding MRI physics,” began Steven Conolly, Ph.D., senior research associate and project leader. “The question has always been: ‘How cheap would it be and how good could you make it?’

Conolly said the Stanford MRI system employs T1 relaxometry, also called MR field-cycling relaxometry, a scientific principle around since the 1950s, yet never used for imaging.

Magnetic resonance produces images that have T1 or T2 contrast, he explained. “If you measure T1 at 1.5T or 0.5T, the T1s change; T2s don’t change very much from 1.5 to 0.5, but T1s do.”

Field-cycling relaxometers mapped out the T1 function of field strength, but were employed for scientific purposes only, he said.

The Stanford MRI was designed specifically to image hands and is small in comparison to conventional MRI scanners. It has a nine-centimeter bore; the free bore of the magnet is about 24 centimeters and measures approximately 50 centimeters long. It weighs approximately 300 pounds.

Conolly comes up with a $150,000 price tag by tripling his team’s $50,000 total costs, but he admits that that figure might be “na?ve,” because it does not take into consideration several factors, such as installing power and a screen room. “We’re not even at that phase yet,” he said. “We are just trying to show that it works in principle.”

The timetable for the completion of the project is being determined by grant money and so is open-ended, he indicated. The group has been told its proposal for a knee scanner is being funded, and another grant request, for a small-animal imager, also is being funded. Team members will put together yet another grant request to fund a head scanner.

“Our group is in electrical engineering, but a huge fraction of our support comes from the National Institutes of Health (Bethesda, Md.), and we are very much committed to the application before the engineering.”

The imaging industry is casting a “skeptical” eye on the project and no company is providing funding for the research.

At the same time, Conolly said vendors “are definitely interested. The people at GE [Medical Systems (Waukesha, Wis.)] have been following it fairly closely. I guess they are still in a judgment phase.”

In the case of establishing criteria for a cardiovascular fluoroscopy benchmark phantom, vendors collaborated with the Society for Cardiac Angiography and Interventions (SCA&I of Bethesda, Md.) and the National Electric Manufacturers Association (NEMA of Rosslyn, Va.) over four years to make it happen.

NEMA recently published its standard XR 21-2000 which sets characteristics and test procedures for a phantom to benchmark cardiac fluoroscopic and photographic performance.

“Virtually all of the manufacturers of cath lab equipment were represented and there was strong participation from the technical component of industry,” said Martin J. Ratner, vice president and general manager at Nuclear Associates (Carle Place, N.Y.). “There were physicians and medical physicists, as well as the service and engineering component of the manufacturers. For the first time in the imaging industry, there is total consensus that the program and the product is right.”

SCA&I approached NEMA in 1997 to help obtain the broadest possible consensus on the benchmark phantom. Defining and maintaining the quality of X-ray systems in cardiac cath labs always has been one of SCA&I’s priorities.

XR 21-2000’s basic stipulations include that the phantom be of Plexiglas because of the material’s X-ray absorption and scatter properties which are similar to soft tissue. The phantom’s working thickness of 5, 10, 15, 20 and 30 centimeters also should correspond to projections through an infant, a large child or small adult, an average size adult and a heavy adult.

At this point, compliance with XR 21-2000 is voluntary, but given the broad acceptance and consensus compliance is not expected to be an issue.

Some industry observers see the creation of the benchmark phantom as one element in the march toward the possible accreditation of cath labs. The America College of Cardiology (ACC of Bethesda, Md.) has formed a task force to consider cath lab accreditation.

“Quality assurance in the cath lab has always been an important issue,” added Ratner. “Right now, cath labs are required to follow whatever various federal and state regulations are in place, but as digital imaging technology becomes more prevalent, image quality control is becoming much more important.”

Stephen Peake, Imanet vice president, said the idea for the centers was prompted by the growing interest in PET imaging. That technology can produce quantitative, high-resolution images of molecular processes, resulting in information about the pharmacokinetics of substances and their interaction — at the molecular level — with cells in the human body. Pharmaceutical companies value that information in the early stages of their development processes, he indicated, because it helps them determine whether a particular chemical is likely to realize its potential.

“With PET imaging, it is possible to inject tiny tracer quantities of new substances labeled with a PET isotope such as Carbon 11, and in doing so, to get human data at an early stage without needing to do the vast amount of toxicity testing that would be needed to inject therapeutic quantities,” Peake elaborated. “What tends to slow down a development program is the need to go through the quite demanding steps of generating toxicity data, obtaining various approvals to go through preclinical testing, prephrase one, phase one, phase two and so on. This can short-circuit that by getting into humans at a very early stage.”

SST is NAI’s proprietary technology that uses a laser-activation process to artificially polarize certain gases, such as helium, and produce high-resolution MRI images. Peake said polarized helium generates a signal that is “vastly more intense than the signal from water, for instance, or from gadolinium,” a common MRI contrast agent. “We’re talking about factors something like 10,000 — a huge increase in intensity — and this means it is possible to get extremely high-resolution images of the lungs, for example, just by asking the patient to breathe in what we call this hyperpolarized helium and to get an image of it using an MRI machine,” he said.

NAI has been working on SST in collaboration with Duke University (Durham, N.C.) and at a research center in Malmo, Sweden.

Peake pointed out that Imanet intends to establish its network of research centers within academic centers that have a reputation for PET imaging research. While it is too early to define the number of centers and a timetable for their creation, each is expected to exhibit expertise in a particular area, such as urology or oncology, he noted. The first center, established Feb. 14 at Hammersmith Hospital (London), is the result of Imanet’s agreement with the Medical Research Council in the United Kingdom.

Peake said Imanet has two goals. The first is to provide the pharmaceutical industry with information conducive to its development processes. The second is to develop diagnostics that can be used, in conjunction with therapeutics, to better identify patients who will benefit from those treatments.

Epix lends its MS-325 MRI contrast agent to the project, while InSightec, a developer of devices and software for high-intensity focused ultrasound, contributes its investigational method of heating and destroying tumors.

Epix CEO Michael Webb said the catalyst for the project was BWH, a nonprofit teaching affiliate of Harvard Medical School (Cambridge) and a founding member of Partners HealthCare System (Boston).

Gadolinium-based MS-325, currently in Phase III clinical trials, is designed to be injected into the vein where it binds temporarily to proteins in the blood, allowing it to be retained in the vascular system for a longer period than traditional MRI contrast agents that are without binding qualities.

“Specifically, the current contrast agents that can be used for this MRI guidance only last for 30 seconds or more,” he added. “MS-325 gives bright imaging of these tumors for up to an hour and maybe longer. We believe that will give physicians a lot more time to do these interventions, like tumor ablation, and have the tissue visual in the body for much longer.”

Twenty-five liver cancer patients (19 men and six women) at the University of Maryland’s Greenbaum Cancer Center (Baltimore), beginning last August, received a new treatment called TheraSpehere, which delivers millions of microscopic glass beads embedded with the radioactive element yttrium-90 directly into the artery that feeds cancerous tumors.

While results are preliminary, Ravi Murthy, M.D., assistant professor of vascular and interventional radiology at the Greenbaum Cancer Center, said most patients “in general appear to experience a somewhat higher quality of life and fewer side effects than with conventional treatments.”

Since beta radiation from the beads travels only an average of 2.5 millimeters in tissue and is centered on the tumor, Murthy said that the effect on noncancerous tissue is minimal and much less than other cancer treatments. The treatment is administered as an outpatient procedure in a hospital’s interventional radiology department and takes approximately two hours to complete.

In March 2000, the FDA awarded MDS Nordion (Kanata, Ontario, Canada) a humanitarian device exemption for TheraSphere in the treatment of unresectable hepatocellular carcinoma. It also permits the FDA to approve these devices based on proof of their safety alone.

Bush used the forum to speak in opposition of the Patients’ Bill of Rights now before Congress. He opined that the legislation must cover all patients and all health plans and should guarantee the right of care at the nearest emergency facility. Women, he said, should have access to a gynecologist, children are entitled to pediatric care and patients who need a cardiologist should have access without having to go through a gatekeeper.

Bush added that he does support every patient’s right to prescription drug coverage and that right should include Medicare patients. He also pledged an additional $2.8 billion in funding for the National Institutes of Health (NIH) next year and plans to double the NIH budget by 2003.

On the exhibit floor at ACC, Philips Medical Systems North America (Shelton, Conn.) displayed its BV Pulsera, which acquires images using up to 30 pulses per second for dynamic applications such as cardiac screening, stenting and pacemaker implementation. The BV Pulsera is part of a new line of C-arm systems launched in early March at the European Congress of Radiology in Vienna, Austria.

Philips also showed its new Integris Allura flexible cardiovascular cath lab system. The new system can be used for both coronary and peripheral procedures, as it introduces a new high-speed stand, a high-performance rotational angiography program designed for 3D imaging and a further extension of connectivity capabilities with compliance to DICOM standards.

In the realm of cardiovascular MR, Philips exhibited its SENSE (sensitivity encoding) at ACC. The SENSE fast-image acquisition technique for cardiovascular MR imaging is designed to provide significantly faster image acquisition and reconstruction, as well as more powerful gradients for enhanced diffusion-weighted studies.

As expected, Agilent Technologies Inc.’s (Palo Alto, Calif.) Healthcare Solutions Group (HSG of Andover, Mass.) launched its OptiGo portable ultrasound device. Promoted as a “visual stethoscope,” OptiGo is about the size of a laptop computer and gives a physician the capability to evaluate left ventricular function, valve function, chamber size and pericardial effusion.

HSG is targeting physicians’ offices, CCUs and ICUs, emergency rooms and outreach clinics, as well as use during hospital rounds. OptiGo has one price — $11,900.

Toshiba America Medical Systems (Tustin, Calif.) featured its multislice Aquilion CT scanner, which features half-second rotation speed and the ability to acquire eight 0.5 mm slices per second.

When integrated with Vital Images Inc.’s (Minneapolis) Vitrea 2 for Windows workstation, the Aquilion also can perform coronary artery calcium scoring. This method can capture scans using a 0.3- to 0.5-second prospective-gating technique.

Siemens Medical Systems Inc. (Iselin, N.J.) highlighted its information technologies as related to cardiology. With its connection with Siemens Medical Solutions — the former Shared Medical Systems — the company looked to show how access to integrated patient information anytime and anywhere can improve quality of care and make for more efficient cost control.

The Siemens exhibit took attendees through various real-life physician scenarios to see how a doctor accesses patient information at home, in the office and in the hospital. By combining digital cardiac cath labs and integrated clinical information networks, the goal is for hospitals and healthcare facilities to improve the efficiency and workflow of the cardiology department.

In other ACC news, Camtronics Medical Systems Inc. (Hartland, Wis.) and CardioWorks Inc. are aligning to develop and distribute outpatient cardiology information systems. The CardioWorks system will be integrated with Camtronics’ Vericis for Cardiology image and information management system, providing enterprisewide access to the complete cardiac patient record.

tumor necrosis therapy-based (TNT) positron emission tomography (PET) imaging agents.

Over the past four years, PSI has helped Peregrine develop methods for large-scale radiolabeling of the company’s Cotara and Oncolym monoclonal antibody-based anti-cancer drugs

“We have contracted [Scherrer] to do all the preliminary research and development for the compound and to do the proof of concept in animal models,” said Edward Legere, Peregrine’s president and CEO. “Once we have the proof of concept, we will put it on a regulatory track.”

PET imaging has received considerable notoriety, especially over the last two years, in oncology, given the modality’s sensitivity in the detection of microscopic tumor cells. PET also can help show physicians the efficacy of a particular therapy soon after treatment.

Peregrine believes TNT is well-suited for the delivery of PET imaging agents for the real-time measurement of the effectiveness of cancer therapies.

“Even though [PET] is rather expensive now, there are a lot of people working on data issues, which add to the expense,” added Legere. “We figure by the time we get this [product] developed and on the market, PET will be one of the dominant imaging technologies. The real goal is for us to develop a product that doctors can measure the efficacy of a treatment in real-time.”

Cancer physicians look for the amount of cancer cells being killed by a treatment, essentially measuring necrotic cancer tissue. Peregrine said that its researchers have shown that TNT is “very effective” in finding and attaching to recently killed necrotic tissue and TNT can selectively bind to and accumulate in significant volumes in necrotic cancer tissue. Targeted delivery of PET imaging agents also could provide improved images for physicians.

“We believe [TNT] will be effective on all tumor types,” added Legere, “and we are moving into other areas of the body with the basic goal of proving that our drug works on multiple tumor types.”

Cotara recently completed Phase Two and is set to progress to Phase Three trials this year. Currently, the lead indication for Cotara is advanced brain cancer. Peregrine recently launched a study at Stanford (Calif.) University testing Cotara on other cancers. Three additional studies also are planned to commence soon.

Lane F. Donnelly, M.D., is the co-author of two of three articles on pediatric CT settings in the February issue of American Journal of Roentgenology and associate director of the radiology department at Cincinnati (Ohio) Children’s Hospital.

Donnelly declared that “no one has ever shown that, or even believes that.” “That” is the insinuation that children may develop cancer due to radiation from CT scans.

What investigators’ studies of CT scans did show, however, is that radiation dosage and other adjustments were not being made for children, particularly in hospitals catering to an adult population. Consequently, children were exposed to radiation levels five times higher than necessary.

Donnelly, who was at the Duke University Medical Center (Durham, N.C.) before joining the Cincinnati hospital, said most of the data were collected at Duke in 1999. Doctors investigated 58 body (chest and abdomen) helical CT examinations that were referred from outside institutions for radiologic consultation. Examinations were grouped arbitrarily on the basis of age: 0-4 years; 5-8 years; 9-12 years; and 13-16 years.

“Because kids are smaller, it takes less X-ray to penetrate their bodies and generate the same quality image with less radiation as you need in an adult with more radiation,” Donnelly said. “We did a survey of all the CT scans that were referred to us over a period of time to look at the parameters, and the bottom time was, they were not being adjusted at all.”

Those results, the study concludes, “suggest that pediatric patients may be exposed to an unnecessarily high radiation dose during body CT.”

Donnelly indicated that a second paper is a description of the technique protocols employed at the Cincinnati hospital to decrease pediatric CT radiation dose as much as possible without compromising image quality.

“Our take on it was it is probably a very small risk that kids are exposed to, and certainly, the last thing we want is any parent to be scared out of allowing their kid to have a medically indicated CT scan,” he added.

Donnelly noted that since the news first surfaced in the mainstream press about the studies, he has had time to do little else but answer a flurry of questions from print reporters and representatives of the broadcast media. While he maintained that the initial “sensationalized” reports caused anxiety for parents and problems for hospitals, he also acknowledged that the publicity, in the long run, may prove beneficial.

“I think those articles certainly would have been read and had an influence on people in radiology departments throughout the country had none of this [press] happened. Our hope is that people will tear it out of the article and hang it in their CT control rooms and use it to lower the dose.”

A modified HDI 5000 system from the ATL Ultrasound (Bothell, Wash.), a division of Philips Medical Systems North America (Shelton, Conn.), was on board the shuttle and destined for the International Space Station (ISS). The HDI 5000, intended for the space station’s research laboratory known as Destiny, is charged with a dual mission — to conduct long-term medical imaging studies and help evaluate and support the general medical condition of the ISS flight crew.

Ultrasound images obtained from the HDI 5000 will be transmitted from the ISS to earth. It is expected that the HDI 5000 will participate in three studies during its tenure in the space laboratory: cardiac output measurements, the evaluation of changes in muscle fiber length and thickness in microgravity, and a cardiac study using noninvasive echocardiography to acquire as much diagnostic information as possible. This information will be helpful in determining the practicality of a human traveling to Mars. The ultrasound system is the only medical imaging device planned for the ISS.

In order to ready the HDI 500 for its space mission, ATL engineers worked with the National Aeronautic and Space Administration (NASA of Washington, D.C.) and NASA contractor Lockheed Martin Corp. (Bethesda, Md.), altering the system to fit into racks aboard the space lab as well as removing all plastic. The system’s normal 106,500 cubic inches of volume were reduced by 80 percent and its weight was trimmed from 440 to 167 pounds. Engineers also added special shielding to protect the HDI 5000’s electronic circuitry. System upgrades and repairs will be accomplished via satellite.

Burbach takes the CEO role after serving as ADAC’s president and COO since last November.

Burbach joined ADAC in 1996 as vice president and general manager of the radiation therapy products division and in 1998 became president of ADAC’s Medical Systems division.

Eckert came to ADAC in 1990 as controller of the Customer Support division. Later that year, he was promoted to director of operations for the Nuclear Medicine division, responsible for the introduction of several major products. By 1993, Eckert was appointed vice president and general manager of the Nuclear Medicine division and one year later became president and general manager of the newly formed ADAC Medical Systems, with direct responsibility for the nuclear medicine, radiation therapy planning and customer support business units.

In 1997, he was named president and COO. In August 1997, he took on the additional responsibility of CEO.

Burbach’s appointment comes one month after Philips named Jeffrey W. Nelson as general manager at ADAC. Nelson previously served as ADAC’s senior vice president of sales. In his new post, he is responsible for ADAC’s nuclear medicine, PET (positron emission tomography) and service businesses.

Masterplan (Chatsworth, Calif.) has appointed Adam Coffey as its president, responsible for all Masterplan business operations. In addition, Bruce Cree will assume the duties of chairman of the board, while maintaining his current CEO post. Coffey most recently served as zone operations manager for GE Medical Systems’ (GEMS of Waukesha, Wis.) Central Atlantic zone. Masterplan also has appointed Joe Hansbauer as vice president of sales and has named Doug Mourer as vice president of business development. In his 25-plus years in healthcare, Hansbauer has held sales and sales management positions with original equipment manufacturers and capital planning and maintenance service companies. Mourer most recently served as the regional sales manager for Masterplan’s Southwestern region.

Computerized Thermal Imaging Inc. (CTI of Layton, Utah) announced the retirement of David A. Packer as president and COO. The move will become effective upon CTI’s submission of its fifth and final module to the FDA for its breast cancer imaging system. CTI Executive Vice President John M. Brenna will replace Packer as president and COO. Prior to joining CTI last October, Brenna was president and COO of the Lorad division of the former Trex Medical Corp.

E-Z-Em Inc. (Westbury, N.Y.) has named Judith K. Meritz, Esq., to the position of vice president of regulatory affairs. Meritz joins E-Z-Em after serving as director of regulatory affairs and regulatory counsel for healthcare supplies distributor Henry Schein Inc. (Melville, N.Y.).

Immunomedics Inc. (Morris Plains, N.J.) has named Cynthia L. Sullivan as CEO. Sullivan most recently served as Immunomedics’ president and COO. Before joining the company in 1985, Sullivan served at Ortho Diagnostic Systems Inc. (Raritan, N.J.). Chairman David M. Goldenberg, M.D., said Sullivan’s appointment will allow him to devote more time to research and clinical development efforts.

The anticipated changes are relative to USD’s 9 percent subordinated convertible debentures due in 2003 and its 6.5 percent convertible notes due in June 2001.

USD still is completing its financial statement for 2000, but anticipates that its net worth will be less than $18 million. Therefore, under the debentures, USD is prohibited from incurring certain types of debt and would be required to offer to purchase a portion of the debentures. USD will seek a modification of certain provisions of the debentures, including the repurchase obligation, the consolidated net worth covenant and the covenant that limits USD’s ability to borrow.

As part of its ongoing restructuring plan approved by shareholders last year, USD has sold 30 of its medical imaging centers. The company added, however, that — in the company’s words — “the pace of such sales at acceptable prices has not met with expectations. USD also needs to maintain its corporate infrastructure to operate remaining centers pending sale and collect accounts receivable of sold centers and is required to devote a significant portion of its cash flow to the repayment of the principal of its debt.”

Based on its current estimates — and assuming no more centers are sold and short-term liquidity is available — USD anticipates that current cash and cash generated from operations will be sufficient to meet its anticipated cash needs. If its principal repayments can be restructured, USD said it believes its cash flow will be sufficient to permit the completion of sales of its remaining centers over time. The company added that there is no guarantee, however, that those sales will occur.

Because of its current situation, USD added that it does not expect to have sufficient funds to pay the notes at their scheduled maturity without additional center sales.

USD currently owns, operates or manages 44 fixed-site medical imaging facilities.

Analogic’s DR business “is building according to schedule,” said President and CEO Thomas J. Miller, adding that Eastman Kodak Co. (Rochester, N.Y.) recently announced a number of shipments of its products from the Analogic DR supply agreement. Analogic began shipments of complete DR systems to Kodak in August 2000.

Analogic also noted “continued strong demand” from Agilent Technologies Inc.’s (Palo Alto, Calif.) Healthcare Solutions Group (Andover, Mass.), for which Analogic manufactures a line of patient monitors.

Miller added that the company “saw no foreseen disruption” in Analogic’s supply of patient monitor to HSG, even with the pending sale of Agilent’s medical business to Philips Electronics NV (Amsterdam). Philips is — and remains — one of Analogic’s largest customers.

Weaker sales and nonrecurring charges adversely affected Norland Medical Systems Inc.’s (White Plains, N.Y.) financial results in 2000. Revenues slipped to $13.4 million, down from $17.8 million in 1999. Norland also posted a net loss of $13.3 million, compared with a net loss of $2.2 million in 1999. The net loss was due to nonrecurring charges of $11.4 million, which included a $7.3 million write-off related to the value of remaining unamortized costs of goodwill and a $4.1 reserve against the company’s deferred tax assets. Norland Chairman and CEO Reynald G. Bonmati said the company “significantly reduced” its quarterly losses last year through its cost-reduction program. He added that the company believes it can return to profitability through “a reasonable increase in the sales of our bone measurement systems in the U.S. market alone.”

Positron Corp.’s (Houston) comeback appears to be under way. The company notched revenues of $6.7 million on sales of five Posicam PET systems in 2000, compared with $1.5 million in 1999 on sales of no systems. The company also posted its first-ever profit of $81,000 last year, compared with a net loss of $1.4 million in 1999. Positron President Gary Brooks said the financial results “reflect not only the restart of the company, but also the most Posicam systems sold by the company in any year.”

Swissray International Inc. (Elmsford, N.Y.) has retained Redington Inc. (Westport, Conn.) for financial communications to improve shareholder relations and increase corporate awareness in the financial community. Redington specializes in working with emerging technology companies. Redington’s work for Swissray would involve national awareness programs for Swissray’s direct digital Radiography (ddR) systems and to help investors better understand the market opportunities.

Sales growth in four of its five business units powered Richardson Electronics Ltd. (LaFox, Ill.) to double-digit growth in its third fiscal quarter, ending Feb. 28. Net sales reached $125.5 million, a 27 percent gain from $98.9 million in the third quarter of FY2000. Net income grew to $4.2 million, up 65 percent from $2.5 million in the year-ago quarter. For the nine-month period, net sales totaled $376.6 million, compared with $292 million in the same period of FY2000. Net income advanced to $14 million, up from $8.5 million in the year-ago period. Sales in Richardson’s Medical unit increased 3 percent in the third quarter to $9.6 million, compared with $9.4 million in the third quarter of FY2000. For the nine-month period, the Medical unit’s sales declined by 1 percent to $29.9 million, compared with $30.1 million in the year-ago period.

Palatin Technologies Inc. (Princeton, N.J.) reported lower revenues, but an improved net loss in its second fiscal quarter, ending Dec. 31, 2000. Revenues slumped to $665,000, compared with $1 million in the second quarter of FY2000. Palatin also posted a net loss of $1.8 million, compared with a net loss of $2.8 million in the year-ago quarter. For the six-month period, the company’s revenues declined to $1.5 million, down from $2.2 million in the first half of FY2000. The net loss decreased to $4 million, compared with $4.2 million in the year-ago period. Palatin credited the lower net loss to a decrease in research and development costs related to LeuTech, its radio-imaging product for diagnosis and management of equivocal appendicitis.

Buoyed by a 50 percent advance in medical product sales, Howtek Inc. (Hudson, N.H.) notched sales of $7.8 million in 2000, a gain of 17 percent over $6.7 million in 1999. Medical sales increased to $2.2 million last year, compared with $1.5 million in 1999. Howtek credited part of that growth to the introduction of two new medical film digitizers in the fourth quarter. Howtek also more than halved its net loss in 2000 to $1.8 million, compared with a net loss of $4 million in 1999.