Access plans initial stock offering and becomes eMed Technologies

Access plans initial stock offering and becomes eMed Technologies

Company plans launch of Web sites co-branded with customers

Teleradiology and miniPACS provider Access Radiology is about to enter a new era. The company has changed its name to eMed Technologies and has announced its intention to go public.

Access adopted the new name to reflect its shift towards Internet-based products, a move that began with the July launch of the firm’s Web-based teleradiology and image distribution application, called Framewave Web (PNN 8/99). The company plans to follow through on this vision with more Web-based products later in the year.

While the name change reflects the vendor’s future direction, the similarity of the new name to EMED, the longtime PACS participant it acquired in November, can’t be ignored. In fact, the new name also reflects eMed’s long history in the market, said John Strauss, vice president of marketing.

With its acquisition of EMED, Access had gained an installed base and a corporate infrastructure that includes the operations of teleradiology leaders Image Data and Advanced Video Products, which were acquired by defense firm E-Systems in 1994 and 1992, respectively. E-Systems was then purchased by Raytheon in April 1995.

Moving forward, eMed Technologies hopes to raise $57.5 million through an initial public offering, and has applied to the NASDAQ National Market System to have its common stock approved under the symbol “EMDT.” Company executives declined to comment on the IPO, since the firm is in the quiet period mandated by the Securities and Exchange Commission. But information regarding the firm’s plans is readily available in its prospectus.

Founded in early 1992, Access had a modest beginning, generating just $139,000 in revenues. But it has experienced strong growth in the last three years, with revenues growing from $1 million in 1996 to $12.6 million in 1998. Performance through the first six months of 1999 has also been impressive; the vendor booked revenues of $11.4 million, compared with $6.2 million in the same period last year. Increased sales of its Framewave product line and sales of PACSPro products acquired from EMED drove the revenue growth, according to the filings.

The company has been unable to translate its skyrocketing revenues into profitability, however. EMed posted a loss of $5.6 million in 1997, and $5.1 million in 1998. In the first six months of 1999, it recorded a loss of $1.2 million, compared with a loss of $1.9 million in the same period last year.

As part of its efforts to become the leading supplier of medical imaging work-flow solutions to healthcare providers, the vendor plans to introduce a Web site development and hosting service, called eMed Web. With this service, eMed will establish and manage co-branded Web sites for its customers.

The Web sites will include Framewave Web’s integrated image and report management capabilities, as well as the opportunity to incorporate other clinically relevant information and customer-specific marketing information, according to the SEC filings. Healthcare professionals, including radiologists, will be able to view images at home over an Internet connection. EMed also plans to use eMed Web as the platform for offering additional work-flow solutions, including speech recognition, reporting, scheduling, and billing.

A subscription-based fee pricing model will be employed for eMed Web, in which customers would make recurring payments. EMed expects that the introduction of this new payment model may result in a gradual decrease of nonrecurring revenue from system sales as a percentage of revenue and the gradual increase of recurring subscription fees as a percentage of revenue.

The vendor also plans to use its relationship with its installed base to increase sales, continuing its strategy of leveraging the large customer base acquired through its purchase of EMED. EMed claims to have a total installed base of over 1800 hospitals and outpatient imaging centers, with 7000 radiologists employing its products. Sales and marketing activities will be expanded.

With its current cash resources, eMed expects to have sufficient funding to meet its requirements for at least the next 12 months. Additional capital may be required in the future.

Of the IPO proceeds, $3 million will be used to repay indebtedness outstanding under the vendor’s credit facility. The firm had used borrowings under this facility within the past 12 months to fund working capital requirements as well as a portion of the purchase price for EMED, which Access acquired from Raytheon in November 1998 for an aggregate purchase price of $3.2 million (PNN 11/98). As of June 30, eMed had cash and cash equivalents of $5.1 million, working capital of $4.6 million, and total assets of $13.6 million.

In other company news, eMed has hired Dr. Jerry Froelich as chief medical officer. Froelich comes to eMed from Radiology Imaging Associates of Denver, where he served as a partner. He was also medical director of radiology at the Columbia Swedish Medical Center in Englewood, CO, and a clinical associate professor of medicine at the University of Colorado.

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