Lumisys to buy CompuRad in merger of PACS players

Film digitizer market leader Lumisys has agreed to acquire PACS and teleradiology software developer CompuRad. The deal would unite two of the largest PACS and teleradiology component providers in the industry.

For CompuRad, the deal provides access to the formidable OEM channels possessed by Lumisys. Lumisys, on the other hand, acquires a PACS and teleradiology product line that should help preserve its position as a top component provider in the face of questionable long-term prospects for film digitizer revenue due to the looming commercialization of new x-ray digitization technologies.

CompuRad's PACS offerings will be added into the Sunnyvale, CA-based company's product catalog for OEM customers. In addition, Lumisys executives also see potential in incorporating CompuRad software into the firm's traditional film digitizer offerings.

"CompuRad has a full set of software components that can be integrated directly into our hardware," said Lumisys CEO Stephen Weiss. "We're going to take as much of the CompuRad software (as we can) and embed it into the digitizers so that they will become intelligent, DICOM-network appliances."

Under the terms of the acquisition, CompuRad shareholders will receive 0.928 shares of Lumisys common stock for each share of CompuRad common stock. As of Sept. 30, CompuRad shares were selling at $6.50, leading to an acquisition value of $25.6 million. The deal is expected to be finalized between December and January, said Cary Cole, vice president of marketing for CompuRad.

The transaction is expected to qualify as a tax-free reorganization and to be accounted for as a pooling of interest, according to Lumisys. It is also subject to shareholder approval by both companies as well as regulatory approval.

Following the close of the acquisition, the CompuRad name will be retired, although its Tucson headquarters will continue to operate. It will likely function as a software and customer support division within Lumisys, Weiss said.

As a result of the deal, Lumisys will phase out the direct sales previously performed by CompuRad. The company will continue to support its installed base and will provide them with upgrades to CompuRad products if they desire, Cole said.

"We're not going to leave them in the cold," Cole said. "We'll support them, and if they want new products, they can buy them from us. But over time we'll be moving them towards our VARs and OEMs."

CompuRad executives will play a prominent role in the new Lumisys. Dr. Philip Berman, chairman of the board, president, and CEO of CompuRad, will take over as president of Lumisys, and Dr. David Lapan, a member of CompuRad's board of directors, will join the new company's board of directors. Weiss will retain his position as CEO with the new company. Cole will also assume the position of vice president of marketing for Lumisys, while Henky Wibowo, CompuRad vice president of engineering, will be named vice president for software development.