Cedara promises improved efficiency in the wake of huge losses

Software pioneer sees brighter fiscal results in ’02

Most observers knew it has been a difficult year for Cedara Software, but the company made it official last week, announcing a net loss of $45.5 million, or $2.68 per share, in the fourth quarter and $67.8 million for fiscal year 2001. The quarterly loss compared with a net loss of $7.3 million, or 47¢ per share, in the fourth quarter of 2000 and $6.6 million for the entire fiscal year 2000.

Cedara, whose products facilitate image-guided therapy and image management, also reported a net loss from continuing operations of $11.9 million, up from a net loss of $3.8 million in the fourth quarter of 2000. Annualized, the net loss from continuing operations totaled $26.3 million, up sharply from a net loss of $3.3 million in 2000.

On the bright side, revenues from continuing operations totaled nearly $14 million in the quarter, up from about $8 million in the fourth quarter of 2000. Record revenues of $46.7 million were reported for the fiscal year.

Consolidations within the PACS sector stalled the sales efforts of many of Cedara’s customers, which had an impact on Cedara’s sales performance, said Michael Greenberg, chair and chief executive officer. Additionally, higher than anticipated costs totaling $2.5 million for its only fixed-price development contract affected profitability. And Cedara subsidiary Surgical Navigation Specialists experienced a major product release delay just as its sales arm and 20% co-owner exited from the business, resulting in heavy losses.

The company has since moved to turn its operation around. Six executive positions were eliminated and the payroll was cut 35%. Arun Menawat was named president and chief operating officer in charge of day-to-day operations. And Analogic invested heavily in Cedara.

“The market fundamentals remain sound, our customers continue to look for cost-effective solutions, and our relationships continue to expand,” Menawat said. “Our cost position is substantially improved. On this basis I remain cautiously optimistic for the long-term future of this company.”