Norland shows strong sales growth, but HCFA changes hurt fourth quarter

Company claims growth in table-scanner segment

Bone densitometry manufacturer Norland Medical Systems reportedfinancial results for 1996 (end-December) that showed both revenueand net income growth. The company's fourth-quarter results werenot as strong as expected, however, due to new Medicare reimbursementguidelines for peripheral bone densitometry published last yearby the Health Care Financing Administration.

For the year, Norland of White Plains, NY, posted sales of $25.3million, up 39% compared with $18.2 million in 1995. Net incomegrew to $2.4 million (not including a one-time stock-offeringcharge of $398,000), compared with net income of $2.1 millionin 1995. Norland sold over 750 systems in 1996, compared withfewer than 600 in 1995.

Norland hit some turbulence in the fourth quarter, however, dueto HCFA's establishment of a separate reimbursement figure of$37.57 for peripheral densitometry scans, compared with $121.16for scans conducted by larger axial systems (SCAN 1/8/97). Norland,which markets the pDEXA peripheral densitometer, is more relianton peripheral densitometry than competitors Hologic and Lunar.

For the fourth quarter, Norland had revenues of $5.1 million,the same as in the previous year's final period. Net income droppedto $235,000, compared with $681,000 in the fourth quarter of 1995.

In anticipation of the impact of HCFA's changes, Norland reducedthe price of its peripheral densitometers in December to makethem more attractive to physicians. Norland's peripheral businessshould also be helped by the extension of a sales incentive agreementwith Merck & Co., the developer of osteoporosis drug Fosamax.

Also in the fourth quarter, Norland enjoyed success in placingits Eclipse compact table scanner: The company estimates thatit sold 20% of all table scanners in the U.S. in the fourth quarter,compared with 5% the year before.

In other Norland news, the company is moving forward with itsplan to buy Norland Corporation, the Fort Atkinson, WI, companythat manufactures the DEXA (dual-energy x-ray absorptiometry)scanners that Norland distributes. Norland Medical will buy allof Norland Corp.

s outstanding stock for $17.5 million, with a possible additionalpayment of $2.5 million based on performance.