Financial snafus hit MICA at the wrong time

Financial problems struck Medical Imaging Centers of America ata most inopportune time. The San Diego company was well positionedto take advantage of physician flight from joint ventures in theface of stricter than expected safe harbor regulations. Now theimaging services firm may have difficulty financing acquisitionsin the short term.

MICA is a large, publicly traded company with extensive experiencein managing shared imaging services; an ongoing, profitable imagingcenter business; and--until last month--impressive financial results.It placed number 16 on Fortune magazine's list of the 100 fastestgrowing U.S. companies, published this month.

Then something apparently went wrong with its fee-per-scanbusiness. According to executives and analysts interviewed bySCAN, MICA's fall from a 65% increase in net income during itssecond quarter (end-June) to an expected loss in the third quarterdoes not reflect on industry trends as much as on the particularsof MICA's per-scan business. Its stock lost nearly half its valuein a single day in September (SCAN 10/9/91). MICA would not respondto inquiries from SCAN.

According to the Los Angeles Times, Michael L. Jeub, MICA'snew president, indicated that the firm will lay off 40 employeesover the next several months as it tries to pull out of the loss.Jeub replaced Allan H. Danto, who had been in charge of MICA'sChicago-based fee-per-scan business. Danto continues with MICAas executive vice president for sales operations and asset management.Danto had been named president of MICA last May. Prior to that,he headed MICA's Chicago-based shared-service business.

MICA was also pinned with a shareholders suit after its stockcollapsed and the firm called off an intended acquisition of Medifax,a medical records documentation and storage firm.

Part of MICA's decline in revenue may have resulted from higherthan normal past revenues due to the sale of equipment ratherthan regular service revenue. MICA may also have been paying toomuch attention to building the number of its shared-service sitesrather than ensuring that sufficient revenue is generated at existingsites.

Ironically, another company to hit the fast-track Fortune 100was SciMed Life Systems. The angioplasty catheter firm reapedthe benefit of competitor C.R. Bard's temporary withdrawal fromthe angioplasty market, and pulled in strong revenues over thepast year. Last month, Eli Lilly received a patent on a cathetersimilar to SciMed's major angioplasty product, and SciMed's fortunesdived abruptly.