Swissray hires investment banking firm in effort to bolster its growth

Swissray hires investment banking firm in effort to bolster its growth

Company confident in light of pickup in ddR sales

Swissray International’s efforts to expand its business received a boost last month with the hiring of investment banking firm Raymond James & Associates of St. Petersburg, FL. Under the terms of the agreement, Raymond James will support Swissray with financing, as well as help the New York City-based digital radiography developer evaluate alternatives such as industry partnerships and bids from potential buyers.

Swissray executives insist that Raymond James’ primary focus will be on capitalizing on the company’s growth opportunities, rather than finding a buyer. After more than a year of marketing its digital radiography system, ddR Multi-System, Swissray believes it is on the cusp of dramatic growth on every level of its business, including its sales and marketing infrastructure, revenues, and R&D efforts.

The company has sold 17 ddRs since it launched the product last year, 10 of which were sold this year. In July, Swissray sold one unit to Southside Hospital, Bay Shore in New York, and in June, the company sold a system to the Hamot Medical Center in Pennsylvania.

“The reason we hired an investment bank was to assist us in our growth strategies,” said Ueli Laupper, CEO of Swissray America. “Direct digital radiography is probably the hottest topic in the industry right now, and in the next five to 10 years, all (analog) x-ray systems will be exchanged for digital units. We’re now in a rapid growth period, with a lot of orders coming in, and we have strategies in place for market development.”

The company will require additional financing to achieve its ambitious growth plans, however. Despite being the first medical imaging vendor to win Food and Drug Administration clearance for an integrated digital-detector x-ray system, the vendor has been unable to convert that lead into profitability. Swissray posted a net loss of $10.7 million for the nine-month period ending in March, and has cash reserves of about $1 million.

Last fall, the NASDAQ stock exchange delisted Swissray’s stock, citing the company’s failure to file its 10-K report by an extension deadline and the fact that the share price had dipped below $1 (PNN 11/98). NASDAQ’s decision came only weeks after Swissray effected a reverse stock split in an effort to bolster the price of its shares above the minimum required trading price of $1. Swissray has applied to be reinstated on the exchange, and while it awaits NASDAQ’s approval it continues to trade on the Over The Counter bulletin board.

The firm’s share price has improved in recent weeks, trading as high as $4.13. As of late July, the stock was trading at around $3 a share.

Like other companies participating in this sector, Swissray’s bid for commercial success has been affected by unfavorable market dynamics, such as the high price and unproven record of the technology. In addition, Swissray is competing in the U.S. against vendors with a long track record in the medical imaging market. Swissray was virtually unknown when it debuted AddOn-Bucky at the 1995 RSNA meeting.

But the company believes its time has come, especially now that its systems are in clinical use. The partnership with Raymond James is part of Swissray’s further effort to establish itself as a player in the U.S. market and to reassure potential investors of its viability, Laupper said.

“Raymond James will help stabilize Swissray’s stock, as (a company’s) credibility is much higher with an investment banking firm,” Laupper said. “When we became a public company, we began looking for a good U.S. investment bank, and we’re 100% convinced that we’ve found the right one.”

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