Medrad launches IPO, trims debt

Contrast injector supplier Medrad completed its initial publicoffering earlier this month. Half of the total one million sharesof common stock offered at $12 per share were sold as new sharesby the company and half were owned by existing shareholders. Medradtrades on the NASDAQ exchange under the symbol MEDR.

The Pittsburgh company will use its proceeds to pay off debt.This continues a deleveraging strategy that has helped Medradmaintain a profit while investing 9% of sales into research anddevelopment, according to the IPO prospectus.

Medrad sold its guidewire business to Schneider two and a halfyears ago for $2.1 million (SCAN 11/22/89). These funds helpedthe company reduce its debt levels and trim interest expense by60% in fiscal 1990.

Another injection of cash was obtained in fiscal 1991 (end-January),when Medrad received $250,000 from the settlement of an injectorpatent lawsuit against Cincinnati-based Liebel-Flarsheim (SCAN4/25/90), the prospectus said.

Liebel-Flarsheim and E-Z-Em are the two largest competitorswith Medrad in the contrast injector market. Medrad has a dominantposition in this market with its microprocessor-controlled injectorsystems, the company said.

While there are nearly as many angiography systems as CT unitsinstalled in the U.S. (see graph), Medrad's CT contrast injectormarket has grown far more rapidly. Sales of angiography injectorsrose 5% on a compound annual basis from fiscal 1989 to fiscal1992. Sales of CT injectors increased at a 40% annual rate duringthis period.

About 2.2 million angiography procedures using contrast mediainjectors were performed in the U.S. in 1991. This compares toabout 7.7 million CT procedures where either manual or poweredinjections of contrast media were performed.

Vascular injection systems are replacing drip infusion deliveryin an established CT contrast market. The MRI contrast market,on the other hand, is virgin territory, with only one agent approvedfor sale in the U.S. Medrad expects MRI contrast usage to increasein volume and flow rates per procedure, broadening the use ofvascular injection systems, the prospectus said.

Depending on how prevalent MRI contrast use becomes clinically,this area could offer the same potential as CT for injector sales.Approximately 6.4 million MR procedures were performed in theU.S. in 1991, the company said.

Medrad also has a development agreement with Molecular Biosystemsfor injectors for use with its Albunex ultrasound contrast agent.Albunex received a panel recommendation for Food and Drug Administrationapproval in echocardiography applications this month, but hasnot hit the market yet.

Advances in technology, increased use of contrast media injection,improved therapies and an aging population all portend growthin medical imaging procedures and the injector business, the prospectussaid.

The bulk of Medrad's business continues to be in contrastinjectors and related disposables and service. The firm, however,has built its MRI coil business from about 5% of sales in 1989to 8% last year. MRI coil sales amounted to $8 million in fiscal1992, the prospectus said.

GE and Philips are Medrad's two OEM customers for its coilline. GE Medical Systems is Medrad's largest single customer forcombined sales of all products. The largest medical imaging vendoraccounted for 13% of Medrad's sales in 1992, over half of thatfrom MRI coil products. Medrad's main competitors in the coilbusiness are the MRI vendors themselves and independent supplierMedical Advances of Milwaukee.

Medrad makes 15 different types of surface and internal coilsfor MRI. The firm recently introduced its MRInnervu internal prostatecoil. Developments include a multicoil array for imaging largerareas of the body, the prospectus said.

Medrad's third product line is image enhancement and managementsystems. Included in this business are the Omniplane film changer,FluoroVision fluoroscopy image enhancer, and Pathfinder fluoroscopyroadmapping system for use in interventional angiography procedures.This line makes up 6% of total sales and should increase withthe trend to filmless imaging systems, Medrad said.