Cedara acquisition of Dicomit expands modality offerings

Software firms see 3-D as next wave in ultrasound

Cedara Software, a leading medical imaging and PACS platform developer and supplier, has rounded out its modality offerings by purchasing Dicomit, a supplier of ultrasound systems and DICOM connectivity products. Cedara paid $15.3 million in cash and stocks for Dicomit, which will now operate as an independent division of Cedara. Both companies will continue in the Toronto area, and Terry Callahan, president and CEO of Dicomit, will remain at the helm of Dicomit.

The acquisition is a logical extension of an existing relationship between these two Canadian software vendors. Cedara has held an 8.5% stake in Dicomit since 1998, and both companies cite numerous parallels between their businesses as additional motivators behind this deal. Both rely on an OEM strategy for product sales and share many of the same customers. Dicomit, in fact, had been supplying products to Cedara and they had worked together on several installations. Both companies have also seen a shift toward more outsourcing of services for many of their customers.

"Together we are able to address more customers and serve existing customers with a wider range of technology," said Michael Greenberg, chairman and CEO of Cedara, which has a strong presence in CT, MR, and nuclear medicine. "Adding new capabilities in ultrasound and Web connectivity helps us to build a company that is the best choice as a partner for outsourced medical imaging technology."

Cedara and Dicomit also see this as an opportunity to move ultrasound image viewing and archiving in more sophisticated directions. Dicomit built its business on connectivity products that provide legacy ultrasound systems with DICOM capabilities, but in recent years the company has put much energy into developing and refining its 3-D reconstruction software for ultrasound. This fits well with Cedara's CT and MR 3-D capabilities and puts the newly combined company in a strong position to meet the anticipated demand for 3-D imaging.

"We think the next real wave in ultrasound is 3-D," Callahan said.

The Internet has been another focus for Dicomit over the last year, with particular emphasis on Web-enabled transfer of ultrasound and other images in conjunction with PACS. The company recently introduced Web-based image distribution technology and software components for ultrasound and other modalities and has applied for patents on the movement of volumes over the Internet and 3-D reconstruction.

"Dicomit has developed many products that will be the standard for DICOM connectivity, and Cedara has been doing direct DICOM and looking at e-strategy," said Arun Menawat, vice president and general manager of core software and service at Cedara. "Our vision is that there are a number of instances where customers want to see live images going across the Internet, and ultrasound is likely to play an important part in that."

Callahan and Menawat say they are already bundling their products in turnkey packages. In addition, Cedara is evaluating the multimodality capabilities of various Dicomit products with an eye toward incorporating its MR and CT viewing components into some of these products.

"Cedara has very sophisticated review and archiving capabilities, and Dicomit has the ability to acquire static images and 3-D volumes," Menawat said.