ATL shifts sales focus to high-end ultrasound

Sales of ATL's high-end Ultramark 9 scanner into the radiologyultrasound market boosted that company's revenue over the pasttwo years. But this positive trend was diminished by a declinein revenue from lower end scanners. The Bothell, WA, vendor ismoving away from that sector of the market.

ATL will become an independent ultrasound company this monthas its sister company, patient monitor supplier SpaceLabs, spinsoff into a separate publicly held company. That split was approvedby shareholders of parent holding company Westmark Internationalin May.

Going it alone, ATL now must reveal its sales and income figuresto shareholders, as do competitor Acuson and other publicly helddedicated ultrasound vendors.

ATL and SpaceLabs were originally medical equipment units ofSquibb and were spun off from that pharmaceutical company in 1986under the Westmark umbrella. SpaceLabs has had slightly less revenueand considerably more profit than ATL in the subsequent years,according to the Westmark proxy statement provided to shareholdersfor the vote last month.

ATL's revenues actually declined 2.6% in fiscal 1991 (end-December),from $287 million in 1990 to $280 million. Net income, however,rose 9% last year, from $6.6 million in 1990 to $7.2 million (seegraph). Sales of the UM 9 had grown to 68% of all ATL sales bythe fourth quarter of 1991.

"With ATL's commitment of its resources to high performance,premium-priced systems, its position in the low- to mid-pricedultrasound market has been allowed to decline," the statementsaid.

The firm's Ultramark 4 general-purpose, non-color-flow scannerwas once ATL's primary product, but accounted for only about 20%of total revenue last year. ATL discontinued another lower endsystem, the UM 5.

ATL's strategic shift matches the general makeup of the ultrasoundmarket. Worldwide, radiology ultrasound sales account for 41%of the total market relative to other applications. Premium scannerscosting over $150,000 account for 40% of the world ultrasoundmarket when divided on the basis of price, according to the proxystatement (see graphs).

The vendor's primary market is its home base, with U.S. salesaccounting for 70% of total revenue in 1991. The ultrasound marketoverall is split more evenly. U.S. sales account for slightlyless than half, with the rest of the market split mainly betweenEurope and Japan (see graphs).

ATL is not active in the Japanese ultrasound market, whichremains a hard nut for foreign firms to crack.

"Its complex distribution system is highly competitiveand Japanese manufacturers account for almost all sales,"according to the proxy statement.

Medical ultrasound is the fastest growing imaging modalityworldwide. The ultrasound segment reached about $1.8 million in1991 out of a total medical imaging market estimated at $8 billion,the company said.