Imatron shows record profit after media and sales blitz

Imatron expects to sell at least 30 of its electron-beam computed tomography (EBCT) scanners this year, compared with 19 in 1999, but its stock continues to languish along with the rest of the NASDAQ.

The company is on a high-profile roll. Following a front-page USA Today story in August, EBCT technology was discussed on ABC's "Good Morning America." The buzz increased following USA Today reporter Bob Davis's scan at the HealthView screening center in Newport Beach, CA, run by radiologist Harvey Eisenberg. Davis was found to have a weakened artery wall, which could result in a future aneurysm.

Talk show host Oprah Winfrey was also scanned at the HealthView center and showed evidence of early-stage heart disease. She had not been aware of any symptoms of coronary disease. HealthView and other such centers around the country were quickly swamped with calls from people wanting to be scanned.

Parade magazine then featured an article on former Sen. Paul Simon, who was scanned at the University of Illinois in Chicago and was found to have high levels of plaque in his coronary arteries. Subsequent tests showed that Simon had three blocked coronary arteries requiring bypass surgery. The senator is now a vocal proponent of EBCT.

The technology received additional publicity on NBC's Today show.

Imatron, meanwhile, announced record revenue and net income for the third fiscal quarter of 2000. Revenue was $17.8 million, compared with $11.1 million for the same quarter in 1999, an increase of 60%. Net income for the period was $1.6 million, up from a net loss of $1.7 million a year earlier.

Perhaps even more impressive is Imatron's revenue for the first nine months of this year, up 82% compared to the same period in 1999.

Imatron's stock price does not reflect the company's renown, however. Despite all the good news, its stock hovered around $2.25 all last week, and peaked this year at $4.88 in March.

S. Lewis Meyer, Imatron's CEO, isn't concerned. Revenue has been sufficient to expand manufacturing and increase the company's worldwide direct sales force from four to 22.

"Our stock hasn't taken the hit a lot of stock has," Meyer told SCAN. "All our good news came out when the NASDAQ went from 5000 to 3000. It's pretty frustrating when we've put good numbers on the board. It will get there. NASDAQ will be back to 5000 one of these days and we'll be there."

Imatron's peak coincided with this year's NASDAQ high of around 5000 in the first week of March.

The medical establishment, however, remains ambivalent about direct-to-consumer marketing. A joint American Heart Association and American College of Cardiology "consensus report" published in their respective journals in July described EBCT as "a highly sensitive technique for detecting calcium" in coronary arteries, but questioned its usefulness.

The report recommended that the heart scanning technology be made available only on a doctor's order. But other studies, including one published in the October Journal of the American College of Cardiology, support EBCT wholeheartedly.

"The more the message gets out, the more the concept of early-stage (coronary artery disease) diagnosis will be accepted by the public and the medical community," Meyer said. "That's what's driving our business right now."

Although Imatron retains a New York public relations firm, the company's primary marketing focus is trade shows, Meyer said.

He believes the future of EBCT scanning also includes lung studies.

"We say the electron-beam scanner does the best lung scan. The Great American Smokeout coming up is an opportunity to get the message out," he said. "The more those kinds of messages to the general public drive business to the EBT centers, the more EBCT scanners we can sell."

Public awareness of the benefits of early detection will drive the success of the technology, he said.

"If people found out they had plaque in their early 40s, there would be less heart disease, and I can make the same comment about lung cancer," Meyer said. "The survival rate for lung cancer is 12%. I find it difficult to understand people complaining that the test for lung cancer is not perfect. With frequently occurring diseases, early detection makes a difference. Colon cancer is another good example; we think 3-D imaging discovers more polyps and fewer people go on to develop cancer."

The EBCT scanner doesn't move like rotating multislice CT scanners; rather, the Imatron version fires an electron beam into a large ring that generates x-rays.

"Ten years from now all CT scanners will be electron-beam scanners," Meyer said. "Manufacturers of multislice CT can make more slices in a revolution, but they cannot make them scan faster‹and we can. Speed is almost always critical in CT applications, especially in the heart and lung."

Meyer said Imatron does not plan to branch out into other imaging arenas.

"We are working to extend the (EBCT) technology," he said. "We're not off looking at some other area. CT scanners are a monstrous market."