Acuson records $10 million loss due to costs involved in Sequoia launch

July 31, 1996

High-end scanner to begin shipping this monthAcuson's new Sequoia scanner may represent the future for theMountain View, CA, ultrasound vendor, but the launch of the productthis spring put a crimp in the company's second-quarter

High-end scanner to begin shipping this month

Acuson's new Sequoia scanner may represent the future for theMountain View, CA, ultrasound vendor, but the launch of the productthis spring put a crimp in the company's second-quarter financialresults. Acuson reported a $10.6 million loss for the quarterdue to costs associated with Sequoia's release, while revenuesdropped as hospitals defer Acuson scanner purchases until thenew system begins shipping.

For the quarter, Acuson had revenues of $74.4 million, down9% compared with sales of $81.9 million in the second quarterof 1995. Acuson said the drop was due to a pause in order placementwhile potential customers for the company's older 128XP scannersconsider buying Sequoia systems instead.

The first Sequoia scanners are scheduled to begin shippingby the end of this month (SCAN 5/8/96), and thus revenues forthe new scanners were not reflected in the company's second-quarterresults.

Acuson's $10.6 million net loss for the quarter contrasts witha $1 million net profit in the same period a year ago. Acusonsaid the loss was expected because of costs involved in Sequoia'slaunch, which has seen the company demonstrate the scanner toover 7000 physicians since its unveiling on April 29. Acuson'sexpenses for selling, administration, and general purposes increasedto $35.7 million for the quarter, up from $27.2 million in thesecond quarter of 1995.

Acuson said Sequoia's launch has sparked interest in all threeof its major markets: radiology, cardiology, and international.One of the first orders for Sequoia 512 radiology scanners wasplaced by New York Hospital/Cornell Medical Center, which hasordered three scanners, while one of the first Sequoia C256 cardiologyscanners will be sent to Dr. James Thomas at the Cleveland Clinic.

The first international Sequoia will be sent to Dr. KouichiItoh at Jichi Medical School in Japan. Acuson also reports thatit has received multiple orders for Sequoia scanners from Brazil,a market the company entered two years ago.

Acuson shareholders seemed to take the news of the company'ssecond-quarter results in stride. The vendor's stock dropped onlyslightly, to just over $13 a share. Acuson's share price has fallenconsiderably since Sequoia's launch in April, however, when itreached a high of over $21 a share.

In other Acuson news, the company last month announced an agreementwith TomTec Imaging Systems of Boulder, CO, to develop a DICOM3.0 interface that will allow their products to be networked.The agreement will enable TomTec's echocardiography review stationto accept DICOM images acquired with Sequoia C256.

Acuson has also released a new software version of its Aegisultrasound image management product. Release 2.6 offers an improvedgraphical user interface, support for dual monitors, and greaterimage storage capabilities.