CompuRad acquires Star's PACS archiving technology

Star elects to exit medical imaging

Star Technologies has ended its eventful experience in medical imaging with the sale of its PACS technology to CompuRad. Sterling, VA-based Star has decided to focus on the document imaging market.

Under the terms of the deal, CompuRad receives Star's Medical Image Management Systems (MIMS) technology, which encompasses the DICOM 3.0-compliant Star Image Management Server (IMS) and Film Image Scan System (FISS) software. The transaction was valued at up to $1.4 million, including 100,000 shares of CompuRad stock and royalties on future software sales over a five-year period. Star retains the right to use the technologies in nonmedical imaging markets.

Star was hurt by relying heavily on one OEM partner, GE Medical Systems, for a large portion of its sales. Although Star had supplied GE with image reconstruction modules for incorporation into GE CT scanners for a decade, GE decided to stop purchasing the modules in May 1995, a move that cost Star 90% of its revenues. Legal action ensued, and Star was awarded a $9.1 million judgment by an arbitration panel (SCAN 3/27/96). The award did not make up for the loss in sales, however.

To help make up for its revenue shortfall, Star debuted several products, including FISS and IMS, at the 1995 Radiological Society of North America meeting. The company also attempted to merge with Sterling, VA-based electronics firm Electronic Instrumentation and Technology (EIT) in August 1995. That deal, fell through, however, when the two companies could not agree on the financial terms of the deal (SCAN 11/20/96).

While Star believed that the MIMS technology remained strong, it had reached a point where it required additional investments in development and marketing resources, said Robert Compton, president and CEO. The company chose instead to focus on the document imaging marketplace.

As part of the new focus, Star has acquired the PowerScan and StageWorks document imaging and processing software from Intrafed for $1.9 million and up to 2.6 million shares of Star common stock. Star has created a new subsidiary, PowerScan, to further develop and market these products.

While the sale of PACS technology marks the medical imaging swan song for Star, the agreement provides Tucson, AZ-based CompuRad with all the products needed to be a full-line PACS company. CompuRad executives believe the move will help the company capitalize on the rapidly growing PACS and miniPACS markets.

"The only thing we were missing was an archive, and this is a very good one," said Cary Cole, vice president of sales and marketing. "We're still evaluating whether we're going to pursue filmless hospital contracts directly or through OEMs and VARs."

The acquisition also makes a nice fit with several prior CompuRad product introductions in 1997, which have allowed the company to offer in-house image distribution systems and other miniPACS implementations. For example, iNet Pro qualifies as a DICOM storage-class provider and storage-class user and provides support for DICOM query-and-retrieve storage classes. Another introduction, iView Pro, is a Windows NT-based viewing software package.