SonoSite launches midrange system weeks before financials

February 20, 2002

New platform replaces cardiac flagshipLess than a year ago, SonoSite was pinning its financial hopes on two hand-carried systems. The general-purpose SonoSite 180Plus is still onboard, but the SonoHeart Plus has been replaced.On

New platform replaces cardiac flagship

Less than a year ago, SonoSite was pinning its financial hopes on two hand-carried systems. The general-purpose SonoSite 180Plus is still onboard, but the SonoHeart Plus has been replaced.

On Feb. 4, the company introduced the SonoHeart Elite. It's just as light (under 6 pounds) and compact as its predecessor, but the Elite is packed with more features, including continuous wave Doppler and extended resolution harmonic (ERH) imaging.

"The system can be carried anywhere a physician wants to do echocardiography," said Pat Martin, director of global cardiovascular medicine.

The Elite cleared the FDA in December 2001 (SCAN 2/6/02) but was kept under wraps at the RSNA meeting to protect its planned February launch, according to Martin. Documents supporting the company's 510(k) application to the FDA described the system as substantially equivalent to ATL's highly touted high-end HDI 5000 ultrasound system. But Martin said the Elite is really a midrange product.

"This is not a high-end machine," he said. "This is not going to compete with the Acuson Sequoia or the Philips Sonos 5500. Its benchmarks are the HDI 3000 and the HDI 3500 from ATL-midrange products. The feedback we've received is that we meet those benchmarks."

Priced at about $30,000 fully loaded, the Elite can compete effectively with the Acuson Cypress, the Biosound Caris Plus, and the Toshiba Nemio, Martin said. As of Feb. 4, 11 units had been ordered, and shipments are expected to begin in early April. Citing company policy, Martin did not offer sales projections.

"We're going after cardiologists and cardiac sonographers," he said. "It's ultraportable and can fit into any clinical environment. It provides the functionality that the marketplace has been asking for."

Several physicians have previewed the system, including Dr. Judy Mangione, director of echocardiography at Northshore University Hospital in Manhasset, NY. Mangione was impressed with the capability of the system for its size and price.

"For such a small piece of equipment costing only $25,000, SonoSite has made tremendous improvements by adding color Doppler, spectral Doppler, and harmonics," she said. "Insofar as image quality is concerned, the device is clearly very competitive with some larger machines."

The new platform had some limitations, however, especially related to throughput.

"Would it be fruitful to use such a device in a busy office or hospital? Ergonomically, if you're doing many studies, perhaps six or more per day, the smaller device could make it more difficult to perform those studies as quickly," Mangione said.

SonoSite hopes to place systems in hospitals, clinics, and physician offices-where portability is more of a concern than throughput. The small size offers an added benefit to physicians working in cramped quarters.

"It doesn't produce much heat," Martin said. "In many private offices, the rooms are small and cramped, and heat production becomes an issue, especially with stress echo."

The commercial launch of the Elite, which coincided with the World Congress of Echocardiography meeting in New Delhi, India, came 10 days before the company was to release its fourth-quarter and 2001 financial results. SonoSite executives were tight-lipped about the impending release, refusing to comment about whether the company's financial picture would continue to improve. Losses had dropped to $2.3 million in 3Q, while total quarterly revenues increased to nearly $12 million.

Less than a year ago, Jens Quistgaard, chief product and marketing officer for the Bothell, WA, company, predicted profitability in 2002. Since then, the SonoHeart Plus has come and gone. Such short product runs should not be alarming, Martin said.

"One of the things we pride ourselves on is our ability to move very quickly with our technology," he said. "In cardiology, people have been asking for continuous wave. This platform provides it."

Although the Elite itself will not ensure profitability in the near future, it should help push the company in that direction, while SonoSite's bankroll provides a cushion for its less than profitable operations. A private placement of common stock on Aug. 8, 2001, generated net proceeds of $23.1 million. By the end of the third quarter, the company reported $23.8 million in cash and cash equivalents.

"We're well funded, but we've never operated in the black," Martin said. "Our projections have been to break even in the relatively near future. Obviously, new platforms are key to any company's financial survival. But, we've never been off our financial track."

Two product platforms are sufficient at this point, he said. Others are on the drawing board.