Fischer public offering funds direct sales effort

Fischer Imaging launched an initial public offering (IPO) thismonth of 1.97 million shares of common stock at an anticipatedoffering price of $10 to $12 per share. Fischer will not receiveproceeds from 470,000 shares sold by existing stockholders. Thefirm will be listed on the NASDAQ exchange using the stock symbolFIMG.

Existing stockholders will retain about 61% of company equityfollowing the public offering. The percentage of Fischer stockheld by CEO Morgan W. Nields will decline from 36.3% to 21.7%following the offering, according to the IPO prospectus.

Fischer will use the additional capital to reduce its $10.3million debt load to less than $1 million and finance expansionof the firm's direct sales and marketing staff.

The Denver x-ray supplier is having a good year, accordingto the prospectus. Net revenues for the first half (end-June)of 1991 were $27 million, up 30% from $19 million in the firsthalf of last year. Fischer had a net profit of $1.2 million inthe first half of 1991, compared to a loss of $658,000 in thesame period of 1990. The firm's net revenues for all of 1990 were$44.2 million and net earnings were $141,000 (see graphs).

Fischer is expanding its direct sales force to market severalhigh-end diagnostic and minimally invasive therapeutic devicesaimed at surgical markets. The company had 17 direct sales representativesin the U.S. as of June, the prospectus said.

Dealer sales in the general radiographic market have been declining,the company said. This includes lower end x-ray products acquiredthrough the acquisition of Raytheon Medical systems in 1988. OEMsales, on the other hand, rose 44% in 1990, after slipping 14.5%in 1989 due to the exit of major OEM customer Xerox from the mammographymarket.

FISCHER'S OEM BUSINESS accounts for 36% of company sales and willcontinue as an important part of the vendor's business strategy.Major OEM accounts include:

• Varian Associates--x-ray imaging for therapy simulationsystems.

• Storz Medical--x-ray imaging for lithotripsy systems.

• GE Medical Systems--cardiac catheterization positioningsystems.

• Picker International--R/F tables.

• Dornier Medizintechnik--x-ray imaging for lithotripsysystems.

Direct sales of Fischer's Mammotest x-ray-guided breast biopsysystem picked up dramatically in the first half of 1991. Accordingto the prospectus, 33 Mammotest units were sold in this six-monthperiod, compared to 10 units in all of 1990 and four in 1988.About 50 Mammotest systems are installed in the U.S.

Fischer manufactures Mammotest under license to Tekniska Rontgencentralenof Sweden (SCAN 11/11/87), but the firm has made improvementsin the technology. Fischer's patents related to Mammotest havebeen allowed, although not yet issued, by the U.S. Patent andTrademark Office.

Two other high-end interventional product lines are part ofFischer's niche sales strategy.

The vendor has sold 20 dedicated x-ray imaging and positioningsystems for use in diagnostic electrophysiology (EP) studies since1985. EP systems are used by interventional cardiologists in diagnosingand treating cardiac arrhythmias. Fischer is awaiting 510(k) marketapproval from the Food and Drug Administration for its newestEP products. This is expected in the third quarter of this year.

Fischer signed an exclusive marketing agreement with InternationalSurgical Systems in January for sale of its 2000 C and 2000 Plusendovascular x-ray systems. This specialty imaging equipment willbe targeted at surgeons performing interventional procedures suchas angioplasty. FDA approval for these products is also expectedin the third quarter. ISS will sell the systems directly in theU.S. and through agents in Western Europe and South America.

Although growth of the approximately $1 billion U.S. diagnosticx-ray market has been sluggish over the past five years, angiographicand interventional x-ray systems are selling well. The specialprocedures segment of the x-ray market increased from 35% to over40% last year, the company said.