ADAC financial numbers improve as nuclear medicine market stabilizes

Firm cracks Japanese market with Sumitomo deal

Nuclear medicine vendor ADAC Laboratories is predicting smoothsailing ahead after a choppy 1994. In a teleconference with industryanalysts this month, ADAC executives painted a picture of a companythat weathered a series of setbacks this year but emerged witha leaner organization that is poised to increase its share ofthe U.S. gamma camera market to 40%.

ADAC, of Milpitas, CA, was hit hard this year by the slumpin the U.S. nuclear medicine market and a bruising legal battlewith Elscint over gamma camera patents. Despite the difficulties,ADAC expects to post respectable financial numbers for its fiscal1994 (end-October).

The key to ADAC's performance was dramatic growth in internationalbookings, according to chairman and co-CEO Stanley Czerwinski.While domestic gamma camera orders declined, international bookingswere up 56% over last year and the company booked $11 millionin product sales for the fourth quarter, he said.

International sales are certain to get a boost due to an agreementADAC signed with Sumitomo Metal Industries of Osaka for productmarketing and distribution in Japan. Prior to the agreement, ADACdid not have a presence in Japan, which represents a market ofup to 130 gamma cameras annually, Czerwinski said. ADAC must receiveregulatory approval for marketing its products in Japan and willnot see substantial revenue from the agreement until fiscal 1996,Czerwinski said (see story, page 5). ADAC also opened its firstAsian office, in Singapore.

In the U.S., the gamma camera market seems to have bottomedout after three quarters of declining sales and pricing, accordingto figures released by the National Electrical Manufacturers Association.NEMA reported that the U.S. market is stabilizing in terms ofpricing and volume for the quarter ending in June, ADAC said.

According to ADAC's preliminary fourth quarter results, revenueswere $42.3 million for the fourth quarter (end-October), comparedto $43.3 million in the same period last year. Earnings for thequarter were $3.5 million, compared to $4.9 million last year.For the year, ADAC reported revenues of $176.2 million, up 12%over the $156.9 million the company recorded last year.

ADAC's share of the U.S. nuclear medicine market now standsat 33%, up from 27% in 1993. ADAC president and co-CEO David Lowesaid that the company's market share next year could hit 40% onthe strength of a series of new product introductions ADAC ispreparing.

ADAC is readying the debut of Vantage, its simultaneous transmission-emissionattenuation correction technique for the Vertex variable-angledual-head gamma camera. ADAC also has other new product introductionsup its sleeve that it declined to reveal at this month's teleconference.

"We really are quite bullish at this point regarding ourcompany's financial and operating performance," Lowe said."We think that we have a number of significant setbacks behindus, and we are looking forward to improved performance in fiscalyear 1995."

In other ADAC news, the company has signed a strategic technologyalliance with Advanced Visual Systems (AVS), a Waltham, MA, developerof 3-D visualization and software development products. ADAC acquiredexclusive rights to use the company's AVS/Express software developmentenvironment for nuclear medicine equipment. The program allowsADAC users to customize their applications without specializedimaging or graphics programming skills.