Lumisys divests Imagraph to focus on core businesses

Lumisys divests Imagraph to focus on core businesses

Subsidiary had hurt firm’s bottom line and cash flow

Lumisys has signed an agreement to divest most of the technology assets of its Imagraph framegrabber subsidiary to Foresight Imaging, a new company formed by several Imagraph employees. Under the terms of the technology transfer agreement, Lumisys will transfer all of Imagraph’s framegrabber boards and associated software to Chelmsford, MA-based Foresight, with the exception of HLImage, a software product targeted for machine vision image analysis. Lumisys is seeking to divest that product as well, said Lumisys president and CEO Dr. Phillip Berman.

Lumisys bought Imagraph in 1995 as part of an effort to expand from its core film digitizer market into video framegrabbers, which digitize analog video signals from such modality scanners as CT and MRI systems. Imagraph caused problems for Lumisys almost from the outset, however. Expected synergies between the two companies never materialized and the subsidiary’s revenues ran below expectations. Lumisys restructured Imagraph’s management team, and while some improvement later occurred, Imagraph was swimming against a market shift away from analog-based image output devices in favor of digital, DICOM-based scanners. The move to digital-based systems was also occurring in the company’s scientific markets.

Imagraph has been a considerable drain on the company’s bottom line and cash flow, Berman said. The subsidiary showed revenue growth in 1997, with the division recording sales of $6.2 million and a profit before taxes of $207,000. But sales slipped in 1998, falling 13% to $5.4 million. Imagraph posted a loss of $346,000 last year.

For the first quarter of 1999 (end-March), Imagraph’s sales fell 36% compared with the first quarter of 1998. In April, Lumisys said it would explore strategic alternatives for the subsidiary, which was no longer a good strategic fit with the firm’s future direction, according to Berman.

Foresight, which will be led by Imagraph general manager Mark Mariotti, will pay Lumisys around $300,000, with additional royalties on hardware and software sales to be paid over a three-year period. Lumisys anticipates it will receive about

$1 million in royalty payments over the three years. All of Imagraph’s employees will join Foresight, which was founded by Mariotti and Imagraph employees Jack Melville and Tony Molinari.

In other Lumisys news, the firm has named Terese Bogucki director of computed radiography marketing. Bogucki joins Lumisys from William C. Isaacs Company, where she directed marketing and education programs for biotechnology and medical device clients. Prior to that, Bogucki was employed at Eastman Kodak as a medical physicist.

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