Digital x-ray a bright spot in Swissray mid-year financials

Digital x-ray a bright spot in Swissray mid-year financials

Company says it’s sold 58 ddR systems so far this year

The digital radiography business is alive and well, according to x-ray equipment vendor Swissray International. While the Hochdorf, Switzerland-based company saw a 52% drop in revenues in the second quarter (end-December) due to a decline in its conventional x-ray and OEM business, sales of its ddRMulti-System digital x-ray system were up more than 10% in the same period.

For the first six months of its fiscal year, Swissray had net sales of $7 million, compared with $10.1 million for the same period in 1998. The company posted a net loss of $10 million during the first two quarters of this year, compared with a net loss of $7.1 million for the same six-month period in 1998.

The downturn in financial results isn’t being attributed to Swissray’s digital radiography business, however. Bucking an industry-wide trend that has most DR companies reporting single-digit sales at best, Swissray sold 58 ddR units during the first half of fiscal 1999 (32 in a single $13 million order from the Romanian Ministry of Health [PNN 11/99]), according to Ueli Laupper, CEO of Swissray America, based in New York City. This compares to just 12 units sold in the first two years the product was on the market.

Most recently, marketing partner Hitachi Medical Systems America received a multi-unit order for Swissray’s ddR systems from American Radiology Services of Baltimore. ARS, which is affiliated with Johns Hopkins Imaging, owns and operates 18 imaging centers and provides professional services for 14 hospitals in the Baltimore area.

However, although Swissray is equipped to manufacture over 300 units annually, its worldwide installed base of digital x-ray systems is still under 20. The company recently announced that its backlog currently stands at 48, primarily because of delays in preparing customer sites for the new equipment.

But Laupper is confident that this is the year Swissray’s DR business will really take off, and he expects to have 150 units installed by year’s end. With these installations, he believes Swissray will achieve revenues of $30 million to $35 million this fiscal year and will double those revenues in 2001.

Laupper credits Swissray’s marketing partnership with Hitachi and the convergence of several market forces for the dramatic upturn in its DR business this year. The company joined forces with Hitachi last August, gaining immediate access to a much stronger sales and distribution network (PNN 9/99).

Swissray sells directly in parts of Texas, New York, Illinois, and California and through distributors in New England and other regions; the agreement with Hitachi extended the company’s reach into much of the rest of the U.S.

“The Hitachi relationship has boosted sales and validated the Swissray approach,” Laupper said. “It also gives us more credibility and greater market exposure.”

Changes in the healthcare environment are also stimulating sales, he added. In particular, the growing use of CT, MR, and cardiac imaging systems has pushed end-user investment in PACS, and the need to reduce the costs of x-ray imaging under managed care is prompting more customers to recognize the long-term value of investing in DR.

“There are 80,000 conventional x-ray systems worldwide, so the market for DR is enormous,” Laupper said. “It represents the largest segment of diagnostic imaging.”

In addition to continuing its full court press in the DR market, Swissray is looking to expand further into image management through its Information Solutions division. The company is already working with a few modality and HIS/RIS vendors, including Data General, McKesson/HBOC, and Agfa, to develop more integrated systems.

Swissray is also actively investigating other ways to broaden its market presence and product offerings, and hired an investment banking firm last year to help evaluate various strategic alternatives, including additional industry partnerships, acquisitions, and even a merger (PNN 8/99). There have been rumors that Hitachi is among several potential buyers to approach the company, but Swissray declined to comment on this.

© 2000 Miller Freeman, Inc., a United News & Media company.

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