Cedara completes sale of SNS assets to BrainLab
Cedara Software Corp. (Mississagua, Ontario, Canada) has taken another big step in its restructuring plan.

With the blessing of the Ontario (Canada) Superior Court of Justice, Cedara in March sold assets of its Surgical Navigation Specialists Inc. (SNS of Mississagua) wholly owned subsidiary to BrainLab AG (Munich) for approximately US$1.7 million. The assets include software, designs, hardware technology, copyrights, patents and patent applications related primarily to image-guided surgery.

SNS has been operating under an order for protection since August 2001, through Canada’s Creditors Arrangement Act from the Ontario court.

Cedara said proceeds from the sale would be distributed among SNS’ creditors — of which Cedara is the largest creditor — pursuant to the court agreement.

Cedara benefits in several ways from the divestiture. The company progresses in its plan to rid itself of an unprofitable business and can direct its attentions toward its medical imaging software products.

Being SNS’ largest creditor, Cedara Chairman and CEO Michael Greenberg, M.D., said that the company anticipates receiving approximately US$1.5 million from distribution of SNS’ sale proceeds.

For BrainLab, SNS’ image-guided surgery technology appears a fine complement to the company’s current line of image-guided surgery and stereotactic radiosurgery products.

BrainLab’s products include the m3 micro-Multileaf collimator, which debuted in 1996 for radiation oncology. The m3 micro-Multileaf collimator features BrainScan and adapts the beam to the shape of the tumor from each direction.

One year later, BrainLab received FDA clearance for its VectorVision image-guided surgery system. The passive marker wireless system is designed to provide navigation for cranial and ENT (ear, nose and throat) surgeries and support the precise placement of screws in the spine. BrainLab plans to extend VectorVision’s applications to navigation for total hip and total knee replacements.

BrainLab’s ExacTrac patient positioning system is used for the treatment of tumors anywhere in the body using radiosurgery.

BrainLab has offices in 11 countries and has more than 400 employees. The company has U.S. offices in Redwood City, Calif., and Chicago.

For almost a year now, Cedara has been working diligently to reduce expenses and restructure to bring itself back into profitability.

When Cedara released its mid-fiscal year financial results, Greenberg told analysts that the company “is on track with our basic plan. Our plan has been — and continues to be — that we will leave Q4 with a net operating profit.”

For the first six months of FY2002, ending Dec. 31, 2001, Cedara’s revenues increased to approximately $14.1 million, compared with $11.8 million in the first half of FY2001. Cedara posted a net loss of approximately $116,000, compared with a net loss of approximately $11.8 million in the year-ago period. (All amounts are in U.S. dollars.)

Comdisco to sell Medical Equip. unit to GE Capital
In another move to climb from bankruptcy, Comdisco Inc. (Rosemont, Ill.) on April 4 unveiled plans to sell its U.S. medical equipment business to GE Capital Corp. (GE of Stamford, Conn.) for $165 million.

The pending deal involves medical imaging equipment, which Comdisco leases to medical services providers.

As part of the sale, Comdisco would also transfer $45 million in debt to GE Capital, a unit of General Electric Co. (Fairfield, Conn.).

In January, Comdisco received the bankruptcy court’s approval to sell its Electronics and Laboratory and Scientific equipment leasing businesses to GE Capital for $665 million. The companies hoped to close this transaction by April 30.

Comdisco’s operations outside of the United States are not included in the reorganization. The company hopes to emerge from bankruptcy this summer.

Comdisco Inc. (Rosemont, Ill.) was scheduled to return to court by April 18, as the healthcare and technology company attempts to resurrect itself from bankruptcy.

Comdisco was to present the court an amended reorganization plan and two proposed divestitures for the court’s review and ruling. The company was scheduled to file its reorganization plan, but the court last month granted Comdisco a three-day bridge of the exclusivity period to April 18.

The reorganization plan is expected to include paring its Comdisco Ventures portfolio over the next three years and the company’s future strategy for its IT (information technology), healthcare and telecommunications leasing assets in Europe and North America.

The Illinois bankruptcy court must review and approve all of Comdisco’s divestitures. If approved, Comdisco said the sale could close before May 31.

The last month also considered Comdisco’s proposal to sell its IT assets in Australia and New Zealand to Allco Finance Group Ltd. (Sydney, Australia) for $44 million. Allco specializes in equipment and infrastructure finance and leasing. The two companies announced the deal on April 9.

If approved, Comdisco and Allco expect to complete the transaction on or before June 18. Allco says it will offer employment to all of Comdisco’s employees in Australia and New Zealand.

Comdisco voluntarily filed for reorganization under Chapter 11 of the U.S. bankruptcy code on July 16, 2001. The company — which hopes to ask for creditor acceptance of a restructuring plan by the end of June — has targeted emergence from Chapter 11 for August or September.

In November 2001, Comdisco sold certain assets of its Availability Solutions (AS) business to SunGard Data Systems Inc. (Wayne, Pa.) for $825 million in cash, plus approximately $25 million in cash for working capital.

Comdisco in February received court approval to sell substantially all of its North American IT CAP (Information Technology Control and Predictability) Services contracts to T-Systems Inc. (Lisle, Ill.).

RT shortage may ease, as ARRT exam volume rises
Maybe the shortage of radiologic technologists will ease soon.

The American Registry of Radiologic Technologists (ARRT of St. Paul, Minn.) says more candidates took ARRT exams last year than in 2000, marking the first increase since 1994.

d01a.jpg (13959 bytes)ARRT Executive Director Jerry B. Reid described the numbers as “a step in the right direction” to solve the shortage of radiologic technologists (RTs).

A total of 8,287 first-time candidates took ARRT’s primary exam, an increase of 6 percent from 2000. The number of ARRT exams peaked in 1994 and has declined annually until last year.

Radiology remained the most popular exam, accounting for just less than 90 percent of the total. Radiography tests gained 4 percent in 2001, while nuclear medicine technology rose 12 percent over 2000. Radiation therapy posted a gain of 45 percent in the year-to-year comparison.

There were 2,779 first-time post-primary exams conducted last year, compared with 1,975 in 2000. Mammography accounted for 41 percent of the tests, while computed tomography (CT) exams totaled 23 percent and magnetic resonance imaging (MRI) made up 21 percent. Bone densitometry exams were 9 percent of the total.

ARRT says last year’s numbers follow an “unusual 2000,” when all post-primary exams registered sharp declines. The organization blamed the decrease on the introduction of clinical experience eligibility requirements in 2000. Last year’s gain, the ARRT surmised, was due to more candidates having completed their requirements.

Instrumentarium bids $140m to acquire Spacelabs
Instrumentarium Corp. (Helsinki, Finland) in March unveiled plans to acquire Spacelabs Medical Inc. (Redmond, Wash.) in an effort to boost its presence in the U.S. critical-care monitoring market.

Under the terms of the agreement, Instrumentarium will pay $14.25 in cash for each share of Spacelabs common stock, making the transaction worth approximately $140 million. Instrumentarium plans to fund the acquisition from cash on hand and existing credit facilities.

The deal — approved by both companies’ boards — is expected to close in July. The acquisition is subject to approval by Spacelabs’ stockholders, as well as other regulatory approvals and closing conditions.

If approved, Instrumentarium would operate Spacelabs Medical as a division of Instrumentarium, which will continue to serve customers directly through U.S. sales channels. In international critical-care markets, the Spacelabs Medical division will collaborate with Datex-Ohmeda Inc.’s (Madison, Wis.) sales forces. Datex-Ohmeda also is an Instrumentarium division. The two divisions will continue to serve their respective distributors worldwide. Instrumentarium anticipates that the acquisition will have little impact on Datex-Ohmeda’s global critical-care operations outside the United States or on Datex-Ohmeda’s U.S. operations in anesthesia.

“Instrumentarium has achieved a leading position through Datex-Ohmeda in most of the world’s critical-care monitoring markets, and, a result of this acquisition, we now extend our leadership globally to include the strategically important U.S. market,” said Olli Riikkala, Instrumentarium president and CEO, in a prepared statement. “With an installed base of over 100,000 monitors worldwide — of which 70,000 are in the U.S. — and [with] a rich history of innovation in cardiac monitoring, Spacelabs is an excellent complementary business for Instrumentarium.

“We will now have a substantial growth platform for the U.S. patient monitoring market,” he added.

Instrumentarium added that the acquisition also is expected to more than triple its sales to critical-care customers in the United States. Spacelabs’ sales totaled $242 million last year.

“This transaction is the result of the strategic initiative to maximize shareholder value that we announced on Dec. 13, 2001,” Carl Lombardi, chairman and CEO of Spacelabs Medical, said in a prepared statement. “The process we employed in evaluating our strategic alternatives was extensive and thorough, and we are excited about the opportunities that the merger with Instrumentarium presents.”

Lombardi added that Spacelabs can best compete “by aligning ourselves with a company that has a product offering that complements our own. We believe this merger will leverage the strengths of both companies, providing avenues for further growth.”

Spacelabs Medical provides integrated healthcare information systems and instrumentation with a focus on wireless, telemedicine and Internet products for healthcare. In cardiology, the company offers ECGs and ambulatory blood pressure and Holter monitors. Spacelabs employs approximately 1,200 workers.

Instrumentarium operates in the anesthesia, critical-care, medical equipment and optical retail markets. In 2001, the company’s sales totaled $920 million. It has approximately 5,300 employees worldwide.

U.S. healthcare spending will double
Healthcare spending in the United States will reach $2.8 trilling in 2001, more than double the $1.3 trillion spent on healthcare in 2000.

In a report released by the Centers for Medicare and Medicaid Services (CMS of Baltimore, Md.), healthcare spending could account for 17 percent of the U.S. gross domestic product (GDP) in 2011, compared with 13 percent in 2000.

Healthcare spending already is off to a flying start in the new millennium. The CMS report expects spending to increase by 10 percent in 2001, when all the numbers are tallied. The CMS report cites one-time increases in expenditures for Medicare due to recent legislation and faster Medicaid growth for the anticipated increase in 2001. In 2000, healthcare spending grew 7 percent in 2000, compared to 1999.

The report — published in CMS’ journal, Health Affairs — segments different areas of spending. Private spending for healthcare is expected to grow by 9 percent in 2001 and peak at 9.4 percent for 2002, compared with 7 percent in 2000.

The report credited the effect of escalating household incomes, a shift to less restrictive forms of managed care, and rising price inflation due to the weaker influence of selective contracting for the increase in this category.

The report believes that the rise in private healthcare spending will decline to 6 percent by 2011, due in part to slower per capita real income growth. Other probable factors include more restrictive forms of managed care, a larger uninsured population, and an increase in consumer cost-sharing.

On the public healthcare spending side, the report sees an annual growth rate of 7 percent through 2011. By 2003, the CMS sees annual Medicare spending growth dropping to 4 percent, while annual Medicaid spending growth is expected to dip to 8 percent.

Out-of-pocket spending, while still substantial, is expected to hold fairly steady over the decade, falling slightly to 14 percent of total personal health care spending in 2011 from 15 percent in 2001. Employers, the report speculates, will continue to shift costs to employees.

The healthcare spending report is available at the CMS web site at www.hcfa.gov/stats/NHE-Proj/.

Healthcare IT market tops $6 billion
Despite a sluggish economy, the healthcare information technology (IT) sector avoided that pitfall last year.

A new report from market research firm Frost & Sullivan (San Jose, Calif.) figures that the healthcare IT industry generated $6 billion in revenues from IT services, software, hardware, implementation and consulting in 2001.

The study also opines that over the next several years, demand for clinical software, clinical data repository products, electronic medical record keeping applications, and other software tools from large healthcare institutions should sustain the industry.

Frost & Sullivan senior industry analyst Amith Viswanathan, who authored the study, added that a “slow adoption curve from the physicians’ community has stymied an explosion of growth” in the healthcare IT market. “This might be expected, given that 50 percent of all American private-practice doctors operate single-member practices.”

As one might expect, the larger healthcare IT vendors are expected to continue to do well in the market, while the mid-tier firms could struggle in this economy.

“Top-tier companies — whose gross revenues exceeded $100 million — held the largest percent of the total market share in 2001,” said Viswanathan in a prepared statement. “They are also relatively stable, with almost all participants maintaining their market position in relation to the previous year.”

The mid- and lower-tier firms, the report noted, are expected to struggle for financial survival in a field marked by slackening venture capital interest, competitive saturation, and narrowing product margins.

Hologic receives PMA for Lorad digital mammo unit
Three years of clinical data and millions of dollars of investment finally paid off for Hologic Inc. (Bedford, Mass.) on March 18, as the FDA awarded the company final pre-market application (PMA) approval for its Lorad Digital Breast Imaging (LDBI) full-field digital mammography system.

Hologic’s LDBI uses CCD-based (charged-couple device) technology for the system designed for the same clinical applications as traditional screen-film mammographic systems.

Even with its PMA approval now in hand, Hologic plans to release the LDBI into the market on a very limited basis only. Instead, the company will keep its sights set on the development of its second-generation, amorphous selenium digital mammography system, the Selenia.

Hologic says it is in the final stages of development for the Selenia. The system currently is gathering data at Johns Hopkins Medical Center (Baltimore, Md.) and Massachusetts General

Hospital (Boston).

“At this point, our expectation is that there will be a limited number [of LDBI systems] sold and shipped,” said Glenn Muir, Hologic’s vice president of finance and administration. “We are focusing today on the second-generation, more advanced technology that we have through the DirectRay acquisition.”

The Selenia features Hologic’s amorphous selenium DirectRay direct-to-digital technology, which the company acquired in its June 1999 acquisition of Direct Radiography Corp. (DRC of Newark, Del.).

The new system also would require PMA regulatory review and approval by the FDA. Hologic continues to gather data and has not yet filed its PMA for Selenia. Hologic demonstrated its Selenia at the European Congress of Radiology (ECR) conference in Vienna, Austria, in March.

“The focus is on driving toward regulatory approval from the FDA of the better performing system,” added Muir. “Because of the performance characteristics, [Hologic’s strategy] weighs heavily on moving in the DirectRay direction.”

Hologic’s LDBI system currently is installed in six locations. Four of those sites are using the LDBI in an American College of Radiology (ACR of Reston, Va.) Imaging Network (ACRIN of Philadelphia) clinical study funded by the National Cancer Institute (NCI of Bethesda, Md.).

Planar Systems to acquire Dome Imaging Systems
d01b.jpg (9047 bytes)Dome Imaging’s CX monitor would become part of Planar Systems’ portfolioif the proposed acquisition closes as expected for $60 million.

Planar Systems Inc. (Beaverton, Ore.) is poised to expand its presence in the healthcare display and monitor market.

Planar and Dome Imaging Systems Inc. (Waltham, Mass.) in March unveiled a definitive agreement for Planar to acquire Dome for $61 million and make Dome part of Planar’s Medical business unit.

If approved, Planar will pay cash for all of Dome’s capital stock and will assume all outstanding Dome stock options. Planar will finance the transaction with a new $40 million senior credit facility and cash-on-hand.

With the addition of Dome’s display systems for medical imaging modalities, Planar would broaden its line of medical-grade display and workstation systems, reaching beyond its current product portfolio that targets patient monitoring, surgical suites and healthcare informatics.

“We feel that this combination not only positions Planar to accelerate our growth in the medical technology market, but customers will benefit from having a single source for some of their best-in-class technologies,” said Matt Harris, vice president and general manager of Planar’s Medical business unit.

Both companies currently supply monitors and displays to OEMs, such as GE Medical Systems (GEMS of Waukesha, Wis.), Philips Medical Systems International B.V. (Best, Netherlands), Siemens AG, Medical Engineering Group (Erlangen, Germany) and Toshiba America Medical Systems (Tustin, Calif.).

Dome and Planar, however, have had no business relationship between themselves in the past. Karen D. Miller, Dome co-founder and vice president and sales and marketing, credited Dome’s investment banker, Chela Technology Partners (New York City), with finding the Dome-Planar connection and bringing the two companies together. Dome, she added, was not specifically seeking an acquisition or divestiture proposal.

Likewise, Planar was not actively looking for an acquisition, so the deal happened by chance, to some degree.

“We look at market opportunities and the two key, shining stars of market opportunity for us have been for the past year healthcare informatics and medical imaging,” said Harris. “When you look at the digitization of medical imaging, there are some very difficult technical problems that have to be resolved. It was natural for us to look for acquisition opportunities to penetrate that marketplace.”

Dome will add approximately $28 million in annual sales to Planar. Dome currently has 68 employees.

“We intend to, as much as possible, maintain intact the organization of Dome,” Harris said.

Dome has been a privately held company since it was founded in 1989. Planar, founded in 1983, employs approximately 700 people and has manufacturing and offices in the United States and Europe.

Planar has passed one of its key final hurdles in its bid to acquire Dome. Planar received antitrust clearance from the Federal Trade Commission (FTC) to buy Dome Imaging.

Planar also warned investors that earnings in the company’s second fiscal quarter, ending March 28, will be “below expectations.”

Planar estimated that its second-quarter sales will total between $48 and $50 million, well above sales of $40.8 million in the same quarter of FY2001. Net income, however, is expected to range between 14 cents and 16 cents per share, compared with 19 percent per share in the year-ago quarter.

Planar cited several non-recurring expense items, along with product mix changes for the adverse effect on its second-quarter earnings.

SHL completes tender offer for Raytel shares
SHL TeleMedicine Ltd. (Tel Aviv) on April 1 successfully completed its tender offer for all of the outstanding shares of common stock from Raytel Medical Corp. (San Mateo, Calif.) for $10.25 per share.

According to SHL, the telemedicine company purchased approximately 2.3 million shares, or approximately 77 percent, of Raytel’s 3 million outstanding common shares.

SHL was to complete its acquisition of the remaining 23 percent by merging Raytel with subsidiary SHL TeleMedicine Acquisition Corp. (Tel Aviv).

Because SHL had not purchased at least 90 percent of Raytel’s shares, Raytel shareholders had to approve the transaction. If SHL reached the 90 percent mark before the shareholder vote, the acquisition — by terms of the original agreement — would become official without the vote.

Both SHL and Raytel develop and market telemedicine systems for the healthcare applications. SHL’s portfolio includes remote monitoring systems for cardiology and pulmonary uses. SHL achieved revenues of $30.6 million in 2001 and net income of $12.1 million.

Raytel’s products include remote pacemaker monitoring services, as well as other cardiac diagnostic services utilizing trans-telephonic monitoring technologies. The company also owns and operates a number of outpatient medical imaging facilities and cardiovascular and nuclear cardiology diagnostic service operations.

Raytel’s revenues for its fiscal year, ending Sept. 30, 2001, totaled $71.3 million. The company posted a loss from continuing operations of $13.3 million in FY2001. Raytel blamed the loss on a provision for payments of $14.1 million in connection with the June 2001 settlement of claims made by the U.S. government in connection with Raytel’s past pacemaker operations and Medicare billing practices.

GE Medical expands in EMR and ultrasound
GE Medical Systems (GEMS of Waukesha, Wis.) has closed on transactions to extend its presence in the European ultrasound market and to make its mark on electronic medical records.

GE Medical Systems Information Technologies (GEMSIT of Milwaukee) completed its acquisition of MedicaLogic (Hillsboro, Ore.) in a cash transaction worth $35.25 million.

GEMSIT sees the addition as a way to extend its Centricity Enterprise beyond hospitals and into outpatient care settings.

GEMS also expanded its European presence in ultrasound with its acquisition of ViewPoint Bildverarbeitung GmbH (Munich).

ViewPoint provides documentation, image management and reporting software for medical imaging. The company’s product portfolio targets obstetrics and general imaging ultrasound, as well as endoscopy.

Bush nominates JHU’s Zerhouni for NIH post
President Bush has nominated Elias Zerhouni, M.D., a radiologist and executive vice dean at Johns Hopkins University School of Medicine (Baltimore, Md.), for the position of director for the National Institutes of Health (NIH of Bethesda, Md.).

Zerhouni has been with Johns Hopkins since 1985, after spending four years at Eastern Virginia Medical School (Norfolk, Va.) as an associate professor and then vice chairman.

The NIH includes 27 scientific institutes and centers and is considered the nation’s leading biomedical research institution. The federal government continues to support the NIH with greater financial resources, increasing the agency’s budget to a proposed $27 billion in 2003, compared with $13.6 billion in 1998.

Zerhouni has been considered a general supporter of stem cell research. He helped create the Institute for Cell Engineering at Johns Hopkins, which is involved in extending embryonic research in adult stem cells, which the president supports.

Zerhouni, if confirmed by Congress, would face several challenges. The NIH has lost several prominent scientists since Harold E. Varmus stepped down as director two years ago.

Born in Algeria, Zerhouni, who is now 50, graduated magna cum laude from the University of Algiers School of Medicine in 1975. That same year, he joined Johns Hopkins after completing his radiology training and served as chief resident in the department of radiology in 1978.

Zerhouni left Johns Hopkins in 1981 to join Eastern Virginia Medical School, where he was promoted to associate professor and vice chairman in 1983. From 1981 to 1985, his responsibilities included developing the imaging division of the department of radiology at Eastern Virginia’s DePaul Hospital (Norfolk).

He returned to Johns Hopkins in 1985 as co-director of the MRI and CT divisions. One of his accomplishments came in 1987, when Zerhouni received the Paul Lauterbur Award for MRI research for his work in imaging myocardial mechanics, which he dubbed MRI tissue tagging. He became director of MRI at Johns Hopkins in 1988.

His work in MRI tissue tagging continued through the 1990s as Zerhouni developed dynamic 3D characterization of ventricular strain in dogs and humans. The NIH funded the project through 2000, as he continued to improve and validate 3D tagging methodology, as well as the investigation of existing and novel forms of perfusion measurements to complement functional assessments achieved with tagging.

Zerhouni’s research included studies of myocardial perfusion and function at rest and stress with high-speed, near real-time MR scanning. He also was involved in the development of new instruments for intravascular imaging with MRI, the near microscopic imaging of breast tumors in-vivo with MRI, and the development of image-guided biopsy instruments.

Varian, UPMC collaborate on rad therapy projects
Varian Medical Systems Inc. (Palo Alto, Calif.) and University of Pittsburgh (Pa.) Medical Center Health System (UPMC) have set into motion two projects that will extend access to radiation therapy technologies to more cancer patients.

UPMC announced plans to spend $20 million to brings Varian’s IMRT (intensity modulated radiation therapy) capabilities to 16 clinical sites in the Pittsburgh metropolitan area. Varian will supply the equipment, as well as accessories, software and training on its SmartBeam IMRT radiotherapy technology. IMRT is designed to improve outcomes for cancer patients by concentrating higher radiation doses in tumors, while sparing surrounding healthy tissue.

Shalom Kalnicki, M.D., vice chairman for clinical affairs for UPMC Health System, said UPMC currently is treating patients with IMRT at four sites. Installation of the additional equipment and technology will occur over the next year.

“By standardizing equipment, software and treatment protocols, our cancer centers can share resources, streamline training, and offer a broader range of treatments more rapidly and cost efficiently,” Kalnicki said in a prepared statement.

UPMC’s network will feature the ability to incorporate patients’ medical images from CT, MRI and PET (positron emission tomography) scans into individualized treatment plans, verifying patient position and tumor location to ensure accurate dose delivery. The technology also will use respiratory gating technology to compensate for tumor motion by synchronizing treatment with a patient’s breathing pattern.

Some UPMC sites are receiving entirely new systems, while other facilities will receive upgrades, which add IMRT capabilities.

Varian also will have a hand in a new UPMC telemedicine venture.

UPMC has co-founded a company — along with the University of Pittsburgh Cancer Institute (UPCI) — to provide medical physics services, including treatment planning, for UPMC cancer centers over a telecommunications network. D3 Advanced Radiation Planning Services (Pittsburgh) will help UPMC sites commission new equipment, perform quality assurance testing and upgrade systems.

Using Varian software, D3 will offer patient treatment plans over a telecommunications network, as well as training and other medical physics services.

D3 initially will offer its services to the UPMC Health System at the UPCI, enabling UPCI to implement IMRT throughout the UPMC Cancer Centers. D3 then plans to make its services available to hospitals and freestanding clinics across the nation.

Clinics will compensate D3 for treatment planning, while D3 compensates Varian for the use of its software.

Clinics will use Varian’s SomaVision software to identify the tumor and transmit patients’ medical images and dose prescriptions to D3.

Del Global Technologies sets its course in FY2002
Del Global Technologies Corp. (Valhalla, N.Y.) will be the first to admit that the company has its work cut out for itself.

The medical imaging and power conversion equipment company in April released a detailed report on the circumstances that led to its current plight, where Del stands today, and its hopes and goals for its current fiscal year.

On the financial side, Del released its long-awaited operating results for its fiscal year, ending July 28, 2001. Net sales totaled $92.9 million, while the company posted a net loss of $8.5 million.

The report for FY2001 is the first set of financial results issued by Del since June 2000.

The net loss includes an income tax benefit of $4.9 million, as well as expenses of $9.8 million related to the settlement of a class action lawsuit and $822,000 for its reorganization that included the closure of its DynaRad facility (Deer Park, N.Y.). Excluding the income tax benefit, Del’s operating loss in FY2001 was $11.8 million.

For the first six months of FY2002, ending Jan. 26, net sales slipped to approximately $44 million. Del described the total as a “modest decline” from the same period of FY2001.

Sales in Del’s Medical Imaging Systems Group (Franklin Park, Ill.) totaled $46.5 million in FY2001. The group supplies its own direct customers and major medical imaging vendors with general radiography products that include Universal, Del, Villa, DynaRad, X-Tek and Acoma. Del’s Medical Imaging Systems also owns an 80 percent interest in Villa Sistemi Medicali S.p.A. (Milan, Italy), which manufactures stationary and portable medical x-ray systems, and RF imaging systems for the medical and dental fields.

As for its previous results, Del said it expects to file its Form 10K for FY2002 during the fourth calendar quarter of 2002. The report will include operating results for FY2002 and FY2001. Del gives no assurance that it can complete its FY2000 results or previous fiscal year financial statements.

In March, Del signed a commitment letter to establish a new, $10 million senior revolving credit facility. The company said it will disclose the lender once the agreement is finalized and closed. The credit line will replace Del’s current credit agreement.

“This new credit facility should provide us with adequate working capital financing capability to accommodate the growth we expect in Medical Imaging Systems, and the growth we expect in Power Conversion from the [explosive detection systems] business,” said CFO Thomas V. Gilboy in a prepared statement.

Del also noted that in February the company filed its own complaint against its former CEO Leonard A. Trugman. The suit alleges that Trugman engaged in — in Del’s words — “numerous acts of securities law violations, fraud, breaches of fiduciary responsibility and corporate mismanagement.”

Because the suit is ongoing, Del declined to provide additional information about its action.

Analogic Corp posts mid-year loss, initiates cost cuts
Analogic Corp. (Peabody, Mass.) is tightening its belt once again, as the company continues to restructure amid lower revenues in its current fiscal year.

In its second fiscal quarter, ending Jan. 31, the OEM supplier’s revenues decreased 21 percent to $72.6 million, compared with $91.7 million in the second quarter of FY2001. Analogic blamed the revenue falloff on the reduction in its industrial technology business. Net income slid to $605,000, compared with $4.5 million in the year-ago quarter.

For the six-month period, revenues declined to $148.4 million, down 14 percent from $173.3 million in the first half of FY2001. Analogic also posted a net loss of $5.8 million in the six-month period, compared with net income of $9.1 million in the year-ago period. The net loss includes a first-quarter charge of $8.9 million related to the jettison of Analogic’s unprofitable telecommunications subsidiary, Anatel Communications, and eliminating certain assets of its Test & Measurement division.

Excluding the charges, net income for the first half of FY2002 would have been approximately $1.3 million.

Bernard M. Gordon, Analogic’s executive chairman and chairman of the board, said the revenue decline and net loss were due to the recession and what he described as the “excessive expansion” of the company infrastructure. While Analogic cannot reverse the state of the national economy, the company has taken steps to reduce expenses.

“A substantial number of people were hired; a bureaucracy was built in certain areas and we are taking that down,” Gordon told analysts. “During the past eight to 12 weeks, we have reduced expenses in the company by in excess of $10 million a year and we are continuing to work on that activity. We have reduced our staff from its peak in November [2001] of 1,907 people to slightly below 1,700 people [today].”

Analogic faces other challenges in FY2002. The company no longer will supply CT systems to Philips Medical Systems International B.V. (Best, Netherlands) by the end of June. Philips no longer has a need for the CT units since its acquisition last year of Marconi Medical Systems Inc. (Highland Heights, Ohio).

Gordon estimated that the loss of Philips’ CT business will mean approximately $7 million to $10 million fewer revenues per quarter for Analogic.

He added that the company “will more than replace” the lost revenues by increasing sales of its explosive detection systems, recouping Philips’ business through the supply of new products, and developing new medical imaging systems.

Analogic’s CT group has designed a number of new CT systems, Gordon said, including a radiotherapy machine, which received FDA clearance in February. The company also is developing a combination PET-CT system.

Gordon added that Analogic is negotiating with Philips to supply CT and MRI subsystems, while it continues to fill orders for Philips in other medical areas, including patient monitors.

News briefs …
AmeriNet Inc. (St. Louis) has selected Instrumentarium Imaging Inc. (Milwaukee) as its sole provider of mammographic imaging equipment for the second quarter. The pact includes Instrumentarium’s Performa and Alpha RT mammography systems, as well as the Diamond breast care system.

Hologic Inc. (Bedford, Mass.) and Agfa-Gevaert Group (Mortsel, Belgium) have signed a letter of intent for the joint development of digital mammography technology. The pact includes reciprocal distribution rights for Hologic’s amorphous selenium digital mammography system, the Selenia, and Agfa’s medical image management systems and workstations. The companies plan to finalize the agreement over the next several months.

RealTimeImage (San Bruno, Calif.) has signed a licensing agreement with picture archiving systems developer and marketer Medasys-Japan (Tokyo) to integrate RealTime’s iPACS Enterprise into Medasys’ DICOM-server products. iPACS Enterprise is designed to provide immediate access to lossless diagnostic quality images and image sequences over a full range of bandwidths. No pre-processing or intermediate storage is required.

Eastman Kodak Co. (Rochester, N.Y.) put the finishing touches on a multi-million-dollar order from NorthEast Medical Center (Concord, N.H.) for computed radiography (CR) and PACS equipment. The order includes a Kodak DirectView PACS system with an EMC Corp. (Hopkinton, Mass.) online storage system, Storage Technology Corp.’s (Louisville, Colo.) L700 tape library, 20 Kodak DirectView diagnostic and referral workstations, and eight Kodak DirectView CR 900 and CR 800 systems. Kodak was expected to complete the installation in April.

Mobile PET Services Inc. (San Diego) has garnered more support for its positron emission tomography (PET) services. Great Britain’s largest medical insurance provider, British United Provident Organization (BUPA), will refer patients to Mobile PET’s London PET Center Ltd. for diagnostic tests. Mobile PET says that since the PET center opened a year ago, the number of physicians referring patients for PET scans has increased from less than 50 doctors to approximately 170.

Advanced Diagnostics Inc. (Preston, Wash.) has changed its name to Advanced Imaging Technologies Inc. (AIT). AIT specializes in diffractive ultrasound, which uses what AIT calls “through wave” transmission of sound to create detailed images of soft tissue, combining in one system elements of conventional ultrasound, radiography and MRI. AIT is promoting diffractive ultrasound for imaging the breast, muscular and joint anatomy and vascular structures. AIT’s Avera breast imaging system with diffractive ultrasound features real-time imaging with a large field-of-view.

Financial Pulse
d01c.gif (25403 bytes)Alliance Imaging Inc. (Anaheim, Calif.) continued to enjoy prosperity in 2001, as the call for medical imaging services continued to rise.

The company’s revenues increased 9 percent last year to a record $375.2 million, compared with $345.3 in 2000. Net income reached $10.5 million, compared with a net loss of $2.2 million in 2000.

“Regardless of what has happened to the economy, with terrorism and a down economy, our industry continues to do well and show consistent growth,” Chairman and CEO Richard N. Zehner told analysts.

MRI remains the strength of the medical imaging services provider, accounting for approximately 89 percent of Alliance’s business at the end of 2001.

Alliance is joining the rest of the medical imaging industry in taking advantage of the growing interest in positron emission tomography (PET) and its capabilities, particularly in oncology imaging.

In February, the Centers for Medicare and Medicaid Services (CMS of Baltimore, Md.) expanded reimbursement coverage to tests that use PET to determine myocardial viability in patients who have ischemic heart disease, as well as the use of PET for patients with breast cancer.

“We believe a conservative estimate on the breast [coverage and reimbursement] is that it should increase the PET volume by 10 percent over the current volume,” said Jamie E. Hopping, Alliance Imaging president and COO.

With PET’s market potential, Alliance Imaging plans to increase its resources in this area. The company initially estimated that it would finish this year with approximately two dozen PET systems in operation, but Alliance Imaging may accelerate its plans.

Financial Watch
Restructuring costs bit into Agfa-Gevaert Group’s (Mortsel, Belgium) bottom line, dropping the company into the red in 2001. Agfa-Gevaert posted net sales of approximately $4.3 billion last year, a deadline of 7 percent from $4.6 billion in 2000. The company also reported a net loss of $250.4 million, compared with net income of $147 million in 2000. Agfa’s HealthCare unit achieved greater revenues last year, fueled by its picture archiving and communications systems (PACS) products, as well as digital systems and printer sales. Net income, however, declined, due primarily to greater production costs, research-and-development expenses and the development of a sales network for Agfa’s digital systems.

Boosted by a 41 percent increase in MRI magnet systems, Intermagnetics General Corp. (Latham, N.Y.) posted healthy financial results in its third fiscal quarter, ending Feb. 24. Net sales increased 8 percent to $37.2 million, compared with $34.3 million in the third quarter of FY2001. Net income advanced to $3.1 million, compared with $2.9 million in the year-ago quarter. Third-quarter earnings included gains on the company’s sale of an investment and the divestiture of its helium products business. For the nine-month period, net sales rose to $116.2 million, an 18 percent gain from $98.4 million in the same period of FY2001. Net income more than doubled to $17.1 million, compared with $8.4 million in the year-ago period. MRI magnet systems sales climbed to $27.5 million, compared with $19.4 million in the third quarter of FY2001.

GE Medical Systems (GEMS of Waukesha, Wis.) says a new operating platform and three new products boosted its global ultrasound sales to $870 million in 2001. The 15 percent gain is GEMS’ seventh straight year of ultrasound sales growth. Last year, GEMS introduced its Logiq 9, Logiq 7 and Vivid 7 ultrasound systems.

The Nasdaq has transferred Cedara Software Corp.’s (Mississauga, Ontario, Canada) listing on the stock exchange from the National Market to the Nasdaq Small Cap Market. Cedara keeps its ticker symbol, CDSW.

Executives on the move …
Imaging Diagnostics Systems Inc. (IDS of Fort Lauderdale, Fla.) announced that John d’Auguste stepped down as president of the company, effective March 14. IDS CEO Linda Grable and COO Ed Horton will assume his duties. The company said that d’Auguste will pursue other interests in his home state of Virginia

United Medical Instruments Inc. (Fremont, Calif.) has named Dennis Raybould as vice president of operation. Raybould previously served as operations manager GE Medical Systems’ (Waukesha, Wis.) Diasonics unit for three years. Raybould will lead the development of a state-of-the-art repair facility.

MarCap Corp. (Chicago) has promoted Ken Seip to director of sales. Seip most recently served as manager of indirect originations and syndications. Seip also held the post of senior credit analyst at MarCap.

The Society of Nuclear Medicine (SNM of Reston, Va.) has named Virginia M. Pappas as its new executive director. She most recently served as deputy executive director and began her career at SNM in 1978. She has held a series of leadership roles in the organization.

ECRI (formerly the Emergency Care Research Institute of Plymouth Meeting, Pa.) has appointed a new management team. Jeffrey C. Lerner, Ph.D., has been named president and CEO. Lerner previously served as ECRI’s vice president for strategic planning at ECRI. ECRI’s founder, Joel J. Nobel, M.D., moves into the new role of president emeritus, focusing on international health services opportunities. The members of ECRI’s new management team include Anthony J. Montagnolo, M.S., who becomes COO and executive vice president, while Ronni P. Solomon takes the posts of executive vice president and general counsel. The senior management team includes Mark E. Bruley as vice president for accident and forensic investigation; Vivian H. Coates as vice president for information services and technology assessment; and G. Daniel Downing as vice president for finance.

Voxar Ltd. (Edinburgh, Scotland) has announced several appointments to its staff. Alan Potts has been named vice president for direct sales in North America. Potts has served for the past 15 months as Voxar’s U.S. regional sales manager. Potts is a former executive with Eastman Kodak Co.’s (Rochester, N.Y.) Cemax-Icon division (Fremont, Calif). Skip Amiot has become vice president for channel partnerships. Amiot also served at Cemax-Icon before joining Voxar in November 2000. Colin Roberts has been appointed Plug n View 3D product manager. Most recently a clinical application specialist for Voxar, Roberts will have input into the ongoing design and development of Voxar’s Plug n View 3D software.