ADAC enjoys return to growthwith strong third-quarter results

Vendor bullish on potential of new products

Nuclear medicine vendor ADAC Laboratories posted financial resultsfor its third quarter (end-July) that show the company back onthe growth track it had been following until the nuclear medicinemarket slumped in late 1993. ADAC, of Milpitas, CA, said it expectsto enjoy continued growth, based on several new technologies introducedat the Society of Nuclear Medicine meeting in June.

ADAC reported revenues for the quarter of $45.6 million, up 14%compared to $40.1 million in the same period a year ago. Net incomewas $3.1 million compared to $269,000 in the third quarter of1994. Year-to-date revenue for the first nine months of fiscal1995 was $134.6 million compared to $133.9 million the same periodlast year. Net income so far this year is $8.2 million, up slightlyfrom $8 million last year.

ADAC CEO David Lowe said the strong results were due to marketshare gains by the company as well as continued improvement inthe U.S. nuclear medicine market. The U.S. market for the quarterending in March was up 8% over the previous quarter, which itselfwas up 2% over the preceding period, according to ADAC's interpretationof data from the National Electrical Manufacturers' Association.

"There has been some evidence of growth over the last sixmonths," Lowe said. "We've seen good quarter-over-quarterand year-over-year improvements in both our market share and thestability of the nuclear medicine marketplace."

ADAC believes its U.S. market share for gamma cameras andcomputers is in the mid-30s. It hopes to build that share intothe mid-40s on the strength of three new technologies debutedat the SNM show: molecular coincidence detection (MCD) for positronimaging using SPECT cameras, and the Solus and Cardio dual-headgamma cameras (SCAN 6/21/95).

The Minneapolis meeting generated an unprecedented number ofsales leads, Lowe said. Bookings are at an all-time high.

"Our current period, July, August, September, will be thebiggest bookings quarter in the history of our company,"Lowe said. "The modest gains we've had have been encouragingfor us, but we expect our momentum to significantly increase."

ADAC is particularly bullish on MCD. The company believesthe technology will allow nuclear medicine to better compete withother modalities in staging cancer patients, according to Lowe.

In another bit of good news, ADAC and its partner in Japan, SumitomoMetal Industries, received regulatory approval last month fromthe Japanese Ministry of Health and Welfare to market Vertex Epicin that country. ADAC signed a sales and marketing agreement withSumitomo last year (SCAN 10/26/94).

ADAC has begun installation of its first Vertex system in Japan.The company expects to record about 15 gamma camera sales a yearin the country, with a meaningful impact on ADAC's revenues beginningin its 1996 fiscal year.

Also last month, ADAC said it had completed its acquisition ofradiology information systems vendor Community Health Computing.ADAC is folding CHC into its HealthCare Information Systems subsidiary,which includes ADAC SD&G Healthcare Systems. The new subsidiarywill be based in Houston, with radiology information systems handledfrom Milpitas.

Prior to the CHC acquisition, information systems sales madeup about 7% of ADAC's revenue, Lowe said. That number will increaseto 15% with the addition of CHC.

The introduction of CHC's LabStat laboratory information systemsproduct next year will be an important expansion of the company'sinformation systems product line, he said.