Positron goes public with $16 million IPO

For the past year proponents of PET have been facing the unsettlingprospect of a reformed health-care system without room for mega-tickettechnologies like PET. PET developer Positron, however, has notlet uncertainty over PET's prospects interfere with its plansfor growth. The Houston-based company went public in Decemberwith an initial public offering that raised $16 million.

The new war chest should give Positron the ability to competeon more equal footing with rivals GE and Siemens, according toCFO David Rodrigue. Positron plans to use the money to increaseits marketing efforts, conduct R&D and search for a potentialacquisition in the medical device industry, Rodrigue said.

"We've been restricted over the last few years becauseof a lack of funds in what we could do in developing our productline," Rodrigue said. "Being public gives us the opportunityto do some things in the way of acquisitions. It also opens upmore markets to us in obtaining funds."

In a deal that closed Dec. 3, Positron issued 1.75 millionshares of common stock at a share price of $8.25 and an equalnumber of warrants at 25
each. After underwriting costs, the IPO netted Positron $14.3million.

At the end of trading Jan. 27, the stock closed at $6.75 andthe warrants at $2.88. The stock is listed on the NASDAQ stockexchange.

The IPO seems to have been well received, given Positron'sfinancial performance over the past several years. Positron hasbeen hamstrung by the lack of growth in the nascent PET marketand has posted a string of money-losing years. The firm reporteda net loss of $1.7 million on $6.6 million in revenue for 1992,and for the first nine months of 1993 reported a net loss of $1.9million on revenues of $1.9 million.

Positron executives are optimistic that the modality is aboutto turn a corner, however. The Health Care Financing Administrationshould approve Medicare reimbursement for PET procedures sometimethis year, an action that will lead to increased demand for scanners,according to vice president of sales Howard Baker.

In addition, PET should have a role in managed care due toits ability to replace high-cost procedures, Baker said.

"We are confident there is going to be a healthy PET market,"Baker said. "Under managed health care, PET will do verywell. PET is a cost saver in cardiology and oncology, and whenit comes out of research in neurology it will probably prove thesame way."

Positron has won access to the international PET market withthe signing of a distribution deal with Israeli vendor Elscint(SCAN 6/30/93). Positron will use some of the proceeds from itsIPO to concentrate on international sales while the reimbursementpicture is sorted out in the U.S., Baker said.