A slimmer Diasonics turns profits

February 13, 1991

Diasonics showed initial success last year in refocusing its medicalimaging business on ultrasound and specialty x-ray products, followingthe sale of its magnetic resonance imaging unit to Toshiba inlate 1989. The Milpitas, CA, company lowered its

Diasonics showed initial success last year in refocusing its medicalimaging business on ultrasound and specialty x-ray products, followingthe sale of its magnetic resonance imaging unit to Toshiba inlate 1989. The Milpitas, CA, company lowered its lithotripsy expectations,however, as market projections for that therapeutic modality sagged.

Diasonics now considers lithotripsy as largely an upgrade opportunityfor users of its Uroview urology x-ray system, said presidentRod Young.

"We view (lithotripsy) as mostly a renal market in theU.S.--and to a large extent, a replacement renal market. However,we are still doing a fair amount of business in Japan and otherinternational markets," Young said.

Japanese approval of biliary lithotripsy could come sometimethis year, which will increase the attractiveness of this market,he said.

Although U.S. ultrasound sales have not reached desired levels,Diasonics' overall revenue from continuing product lines grew37.5% last year, from $194 million in 1989 to $267 million. Companyincome--minus the lump-sum earnings from the sale of the MRI business--was$16.4 million for the year, compared to a loss from continuingoperations of $21.5 million in 1989 (see graph).

Diasonics hopes sales of its all-digital Spectra Plus color-Dopplerultrasound system, introduced last year, will boost 1991 revenues.The ultrasound business unit should also benefit from sales ofthe vendor's IVUS intraluminal ultrasound device. IVUS was approvedby the Food and Drug Administration for coronary and intracardiacimaging last year.

Nearly half (45%) of Diasonics' 1990 revenues came from internationalsales, generated largely through Sonotron, the vendor's Swisssubsidiary. Another 29% of revenue came from OEC Diasonics ofSalt Lake City, the vendor's x-ray unit.

International revenues were enhanced by a decline in the valueof the dollar last year. However, Sonotron's success selling VingmedSound's cardiovascular ultrasound system in Europe was also afactor in Diasonics' strong international performance. The firm'sVingmed business should increase this year following acquisitionof Vingmed Sound in the fourth quarter of 1990 (SCAN 12/12/90),Young said.

Although lithotripsy did not pan out as expected, Diasonicscontinues to invest in ways to leverage its imaging technologyinto therapeutic applications. On the front burner is a partnershipwith Paine Webber to develop an ultrasound-based ablation systemfor the treatment of benign prostatic hyperplasia, a disease characterizedby enlargement of the prostate.

This use of ultrasound waves to remove tissue could have futureapplications in other clinical areas, such as surgery and oncology,according to Diasonics literature.