Gendex lands mammo with Soredex purchase

X-ray vendor Gendex continues to march on the acquisition warpath.In December, it announced plans to merge with Dentsply, a dentalsupplies vendor three times Gendex's size, and last month it purchasedthe mammography line of Finnish vendor Soredex.

Other recent Gendex acquisitions include the purchase of EurekaX-ray Tube from Siemens in August (SCAN 9/23/92) and Philips'dental x-ray business in late 1991 (SCAN 1/29/92).

The Soredex purchase will give Des Plaines, IL-based Gendexan entroeee into the mammography market. Gendex almost enteredmammography when it sought to purchase Transworld X-ray last year,but it broke off negotiations before a deal was completed. Transworldwas later picked up by Continental X-ray (SCAN 9/16/92).

"We think mammography is a key market," said JohnD. MacLennan, Gendex vice president of medical marketing. "It'sone that's growing, and we want to be involved in that growth."

Gendex is the leading U.S. supplier of dental x-ray equipment,with a market share over 50%. The firm was started with the acquisitionof GE's dental x-ray business in 1983. It purchased medical x-raymanufacturer Universal/Allied Imaging in 1988.

SALE OF SOREDEX'S MAMMOGRAPHY LINE marks the end of a multiyeareffort by the vendor to build its U.S. position in this imagingmodality. Soredex-built mammography equipment was sold first byTecnomed and then by AFP Imaging in the U.S. before Soredex MedicalSystems took it over directly in 1991.

SMS of Conroe, TX, was formed three years ago to develop medicalsales of Soredex's Scanora craniofacial x-ray system. The U.S.subsidiary reacquired distribution rights for its Cranex panoramicdental x-ray system from Philips two years ago (SCAN 3/27/91).

Soredex's mammography products include the Mamex DC AMI, theMamex DC Mag FS and the Mamex DC S. The sale includes all finishedgoods, spare parts and inventory. The price of the acquisitionhas not been disclosed.

Soredex holds about a 5% share of the U.S. mammography market,according to MacLennan. The company has an installed base in theU.S. of 1100 units.

Manufacture of the Soredex products will be transferred fromFinland to the U.S., where Gendex has built a new 68,000-sq.-ft.facility in Des Plaines, MacLennan said. The company has dedicatedspace in the plant to manufacturing mammography products and willbegin moving into the building later this month. Production willbegin in the U.S. in the next year, according to MacLennan.

Gendex has also begun working with Soredex on a stereotacticbreast biopsy device being developed as an add-on to Soredex systems.The device is in clinical trials, MacLennan said.

The Soredex acquisition enables Gendex to diversify furtheroutside the company's base in dental x-ray, according to Ann C.Logue, a stock analyst with the Chicago Corporation.

"They have half of the dental x-ray market, so they don'thave a lot of room to grow there," Logue said.

The Dentsply merger gives Gendex access to Dentsply's Europeandistributor network, which will allow Gendex to develop an internationalmarket for its products. Sales outside the U.S. account for abouthalf of Dentsply's revenues.

This transaction is being structured to qualify as a tax-freereorganization and a "pooling of interests," in whichall outstanding Dentsply shares will be exchanged for about 13.8million shares of Gendex common stock. The merger will add about$400 million to Gendex's annual sales.

The name of the new corporation will be Dentsply International,with Gendex continuing as a dental and medical equipment divisionwithin the company.

The largest shareholders of Gendex stock are the McDonoughfamily, whose 11% stake in the merged company will make them itslargest shareholders as well, according to the Chicago corporation.John J. McDonough is chairman and CEO of Gendex, while Edwin J.McDonough is president and COO.

The transaction requires the approval of the boards of directorsand stockholders of both companies.

In other Gendex news, the company reported strong revenue andnet income results for the third quarter and nine months (end-December).

Gendex had sales of $44 million for the quarter, up 106% overthe same period last year. Net income was $4.3 million, up 181%,and the company reported earnings at 41
per share, up 156% from 16
per share last year.

BRIEFLY NOTED:

• Although it is still too early to gauge the effects ofworldwide corporate trimming at Siemens this year (SCAN 10/7/92),indications are that there should be minimal disruption to the800 or so employees at Siemens Medical Systems headquarters inIselin, NJ, according to an article last month in the Newark StarLedger.

SMS has already had a hiring freeze on at headquarters fortwo years, the article said. Siemens is attempting to minimizethe use of layoffs to trim staff, according to an SMS spokesperson.

"Siemens Medical Systems continues to evaluate its businessand respond to the changing health-care environment. As part ofthis process, some downsizing through a program of attrition andearly retirement has been initiated," she told SCAN.