• AI
  • Molecular Imaging
  • CT
  • X-Ray
  • Ultrasound
  • MRI
  • Facility Management
  • Mammography

Purchase of MRI Devices forms part of Intermagnetics master plan


Intermagnetics (IGC) wants to become the dominant independent supplier of MR magnets and coils. Its pending $100 million acquisition of MRI Devices is the second step of a master plan hatched to achieve that goal. The first was the $152 million deal to

Intermagnetics (IGC) wants to become the dominant independent supplier of MR magnets and coils. Its pending $100 million acquisition of MRI Devices is the second step of a master plan hatched to achieve that goal. The first was the $152 million deal to purchase patient monitor developer Invivo, completed in January.

"These two acquisitions weren't done in isolation," said Garry R. Morrow, director of marketing for the MRI sector of Intermagnetics. "We had a road map for what we planned to do and the integration plan for both pieces was put together before we did either piece."

The acquisition of privately held MRI Devices, which requires only regulatory approval to be complete, will add coils that complement the existing portfolio of Intermagnetics' subsidiary Medical Advances. It also adds a functional MRI system and work-in-progress computer-aided diagnosis system for MR mammography. The deal, announced May 17, coincided with the International Society for MR in Medicine conference in Kyoto, Japan, where the two companies were exhibiting established and newly released products.

The two product lines have few overlaps. MRI Devices coils address mostly cardiovascular and neurovascular applications. Those built by Medical Advances are focused primarily on the extremities. Neither company's efforts are exclusive to these areas, but they do not conflict with one another. At the ISMRM meeting, Medical Advances introduced an eight-channel torso coil. MRI Devices highlighted an MR mammography coil optimized to support interventions.

"Because this is a relatively small market, there is no real room to research and build coils that another company already has," said John Wilkie, sales and marketing manager for MRI Devices. "So merging the two companies together will actually result in a full complement of products."

Further synergies will be found in the sales organization. Direct sales efforts by MRI Devices have traditionally focused on imaging centers. Medical Advances, since its acquisition of Invivo and that company's 40-person sales force, has sold its products directly to larger hospitals, for the most part.

Leveraging Invivo's sales force is the critical consideration in the two-step acquisition plan developed by IGC strategists. Medical Advances has been selling its products primarily through the efforts of the Invivo salespeople. With the acquisition of their company four months ago, they expanded their presentations from MRI-compatible patient monitors to include MRI coils.

The five-person direct sales force previously maintained by Medical Advances is now being called in, when necessary, to help on deals made by the Invivo-based sales group, according to Andrew J. Beck, marketing manager for Medical Advances. The MRI Devices sales staff will eventually gravitate into similar roles as sales specialists, leaving the heavy lifting to the full-line sales force. This will not happen immediately, however.

"The full-line sales representatives are going to need a certain level of education (on the new products), and that's what we are going to do over the next six months," Beck said.

Both companies also rely on OEMS, including GE Healthcare, Siemens Medical Solutions, and Philips Medical Systems, which sell their coils bundled with new scanners. Their coils are also offered in OEM accessory catalogs.

The purchase of MRI Devices will make the consolidated company the only major independent vendor of MRI coils and magnets in the imaging industry, a fact underscored some 18 months ago by GE Healthcare's purchase of coil manufacturer USA Instruments. Rumors began circulating soon after the acquisition of USAI that a major OEM was looking to buy MRI Devices as a counterbalance to the GE-USAI deal.

Wilkie refused specific comment, but he acknowledged that the USAI deal made MRI Devices an appealing target for acquisition. This raised some fears within the company that MRI Devices would lose its independence.

"This alignment with IGC calms those fears and clears the way for us to provide our technology to all customers," he said.

Fred Keller, Medical Advances general manager, refused to com-ment on whether IGC had competition in its bid to acquire MRI Devices. He noted that acquisition of the coil maker will strengthen the company as an independent supplier of MR technology.

"We will be the only remaining organization of substance that can sell you an MR coil or superconducting MRI magnet without the influence of a competing organization," Keller said. "And we will market that to the community."

If there was any competition, it will soon be a moot issue, as the $100 million cash and stock transaction proposed by IGC is all but done. The deal has passed due diligence and its com pletion hinges only on regulatory approval, which Keller said is imminent.

IGC is offering $45 million cash, a three-year $5 million promissory note, and about $50 million in Intermagnetics' common stock within a range of 1.8 million to 2.2 million shares, depending on the stock price at the time of closing. Half of the stock will be restricted from sale for two years; the other half for three years.

The cash portion will be financed through Intermagnetics' $130 million credit facility. Michael Burke, Intermagnetics executive vice president and chief financial officer, said the increased cash flow expected from the acquisition would enable the company to aggressively pay down its debt.

Revenues for the consolidated company during fiscal 2005 are expected to reach nearly $300 million, excluding acquisition-related charges. Company executives anticipate more than a 15% bump in annual earnings. MRI coils and superconducting magnets have been a key source of income for Intermagnetics, but the company also supplies other products and services to customers outside the medical community.

MRI Devices and its 200 employees generated about $47 million in revenues in calendar year 2003. It is headquartered in Waukesha, WI, with additional R&D, manufacturing, sales, and service facilities in Gainesville, F; Wurzburg, Germany; and Schwerin, Germany. Medical Advances is headquartered in Milwaukee. Engineering and operational facilities will continue in Waukesha and Gainesville, according to IGC executives.

"When you look at the different types of coils, there is no reason why they all have to be made in one place," Keller said. "The development of these coils requires a lot of engineering talent, and radio-frequency engineers are hard to find. By pooling these organizations, we will have a real advantage in staying ahead of new coil technology."

Related Videos
Where the USPSTF Breast Cancer Screening Recommendations Fall Short: An Interview with Stacy Smith-Foley, MD
A Closer Look at MRI-Guided Transurethral Ultrasound Ablation for Intermediate Risk Prostate Cancer
Improving the Quality of Breast MRI Acquisition and Processing
Can Fiber Optic RealShape (FORS) Technology Provide a Viable Alternative to X-Rays for Aortic Procedures?
Does Initial CCTA Provide the Best Assessment of Stable Chest Pain?
Making the Case for Intravascular Ultrasound Use in Peripheral Vascular Interventions
Can Diffusion Microstructural Imaging Provide Insights into Long Covid Beyond Conventional MRI?
Assessing the Impact of Radiology Workforce Shortages in Rural Communities
Emerging MRI and PET Research Reveals Link Between Visceral Abdominal Fat and Early Signs of Alzheimer’s Disease
Reimbursement Challenges in Radiology: An Interview with Richard Heller, MD
Related Content
© 2024 MJH Life Sciences

All rights reserved.