Sequoia propels vendor's third-quarter results to record levelsUltrasound vendor Acuson is back, and with a vengeance. The MountainView, CA, company surprised Wall Street and the ultrasound industrylast week when it reported strong financial
Ultrasound vendor Acuson is back, and with a vengeance. The MountainView, CA, company surprised Wall Street and the ultrasound industrylast week when it reported strong financial results, as well asa new ultrasound scanner to complement the super-premium Sequoiasystem introduced in April (SCAN 5/8/96).
The new scanner, called Aspen, is a melding of Sequoia innovationsand more traditional ultrasound technologies found in the vendor's128 XP/10 scanner. Acuson has developed some technologies thatare found only on Aspen, however, such as a new method of colorDoppler imaging that merges conventional Doppler and power Dopplermodes. Aspen will occupy a price point between Sequoia and 128XP/10 and will be targeted at a range of applications includingthe radiology, cardiology, vascular, and ob/gyn markets.
Acuson began developing Aspen five years ago as an offshootof the Sequoia program, which itself began in 1987. The companyrealized at that time that Sequoia would establish a price pointfar above anything else on the market, according to Samuel Maslak,chairman and CEO. It decided to use some Sequoia innovations todevelop a new scanner that would be highly advanced yet not asexpensive as Sequoia.
Both Sequoia and Aspen share a similar ultrasound cart andergonomic design, and indeed are nearly identical in appearanceexcept for a few distinguishing features. Like Sequoia, Aspenincludes the DIMAQ on-board DICOM-compatible workstation thatenables digital image storage and management. Clinicians willbe able to use over 20 transducers on Aspen, including both Sequoiaand 128 XP/10 probes.
The primary difference between the systems lies in their respectivebeamformer architectures. Rather than using a beamformer to transmitand receive ultrasound signals, Sequoia 512 employs a 512-channelcoherent imageformer that processes both the phase and amplitudedata of an ultrasound signal. Aspen, on the other hand, uses aconventional 128-channel analog beamformer.
Acuson has completely revamped the architecture around Aspen'sbeamformer, however, according to Rick Smith, vice president ofgeneral imaging business operations. Aspen's beamformer is basedon 128 XP/10 but employs a new digital beamformer controller notused on that system. As a result, Aspen is able to utilize moreinformation from the beamformer, which translates into bettersignals.
Acuson has taken pains to point out that Aspen is not simplya hybrid between 128 and Sequoia. The new scanner includes severaltechnologies not found on either system, the most intriguing ofwhich is its new Convergent Color Doppler (CCD) imaging mode.CCD allows clinicians to simultaneously use both conventionalDoppler to view directional blood flow and power Doppler to viewperfusion. Users can achieve a blend of the two modes on a singleimage, according to Smith.
Another new Aspen technology is Auto Doppler, a spectral Dopplerquantification mode that is more accurate and easier to use thanother techniques, the company claims. The technique automaticallytracks the Doppler waveform so that clinicians don't have to doit manually, according to William Carrano, director of marketingof the company's general imaging business unit.
Acuson will position Aspen as a super-premium scanner designedto take on ATL's HDI 3000, GE's Logiq 700 MR, and Siemens' SonolineElegra. Sequoia, meanwhile, will be positioned against other modalitiesin a bid to use ultrasound in place of more expensive technologieslike CT or nuclear medicine. The 128 XP/10 scanner will competein the upper mid-range segment. Aspen will carry a list pricebetween $150,000 and $250,000, while XP/10's price will be cutto $110,000 and up. Aspen shipments should begin in the fourthquarter.
A strong third quarter. Aspen will add to the pressure Acuson'scompetitors are already feeling due to Sequoia. There was initialspeculation that Acuson would have trouble selling Sequoia, witha price range of $300,000 to $350,000, into an ultrasound marketstill recovering from the onset of managed care.
Acuson's results for its third quarter (end-September), thefirst in which sales from Sequoia have been realized, indicatethat those fears may be overblown. Revenues leaped 24% to a company-record$93.3 million, compared with $75.4 million in the same perioda year ago. Acuson reported net income for the period of $1.6million, compared with net income of $1.9 million in the thirdquarter of 1995. Although Acuson's profit is lower than last year,many analysts had been expecting the company to report a net lossdue to costs involved in ramping up the Sequoia program. Acuson'sstock hit a 52-week high of $21.63 a share after the results werereleased.
As the results suggest, Sequoia has exceeded Acuson's expectationsfor the product so far, according to Daniel Dugan, senior vicepresident of worldwide sales, service, and marketing. Sequoiais being accepted by a broad range of hospitals outside the universitysettings that are Sequoia's natural environment. Dugan predictsthat Acuson will gain market share on the strength of Sequoiaand Aspen sales.
Given Sequoia's early success, the next question is, can Acusonmaintain its momentum? Not in the short term, at least with respectto profitability: The company will most likely post a net lossin the range of 10¢ to 20¢ a share in its fourth quarter,due to start-up costs related to Aspen, according to Maslak. Theremay also be a temporary slowdown in order placement as buyersevaluate which Acuson scanner meets their needs.
But in the long run, Acuson appears to have staked out newterritory in the high end of the ultrasound market, and it couldbe years before some of its competitors catch up.
"With the introduction of Sequoia and Aspen, we've reallychanged the landscape of the ultrasound industry in a fundamentaland permanent way," Maslak said. "Sequoia will expandapplications and the size of the market for ultrasound, and Aspenwill, together with Sequoia and XP, help Acuson capture a largershare of that expanding market."