ADAC sharpens focus on NM, PET, and radiation therapy

November 8, 2000

ADAC Laboratories is selling its Health Care Information Systems division to Cerner of Kansas City, MO, for $6 million, citing poor financial performance and a difficult market climate for healthcare information systems.The company has already signed a

ADAC Laboratories is selling its Health Care Information Systems division to Cerner of Kansas City, MO, for $6 million, citing poor financial performance and a difficult market climate for healthcare information systems.

The company has already signed a letter of intent to sell its Cardiology Systems Group to Camtronics Medical Systems, a subsidiary of Analogic.

ADAC expects to report lower-than-anticipated revenue and earnings for the fourth quarter (end October), with revenue in the range of $83 million to $86 million. The bulk of that revenue came from sales of PET and CT imaging products.

Ongoing poor performance of the HCIS business is being blamed for much of the projected fourth-quarter shortfall, although ADAC's PET business has been having some problems as well. The company had predicted (SCAN, 7/5/00) PET sales would quadruple in fiscal 2000. While PET orders are strong, shipments have been slower than expected.

"The market for large-scale healthcare information systems has been quite difficult for at least the last 18 months, and we believe a divestiture will benefit our HCIS customer base over the longer term," said Andrew Eckert, ADAC's CEO.

The company received FDA clearance in May for its Skylight gamma camera. The Skylight's architecture allows gamma detectors to be mounted overhead, which removes limitations associated with the floor-based mechanical gantries of other nuclear medicine systems. ADAC's first order for the Skylight is from Cedars-Sinai Medical Center in Los Angeles.

ADAC plans to use a new detector material, gadolinium-oxyorthosilicate (GSO), in a prototype PET system that will hit the market in mid-2001. It is unclear whether the final product will be a PET body imager or brain imager.

ADAC officials said the GSO crystal will allow better quality PET imaging because of its higher energy resolution and high count rate capabilities. GSO is manufactured by Hitachi Chemical of Japan. Satellites have used GSO to detect gamma sources in space, and GSO has been placed in detectors searching for oil underground, said Toshinori Takeyama of Marubeni Specialty Chemicals, which markets GSO in Japan for Hitachi Chemical.

Because of its high density, GSO absorbs light more quickly and thereby contributes to faster image acquisition, Takeyama said.