Swissray hires investment firm in effort to bolster its growth

Company confident in light of healthy 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 by helping the company solicit financing, as well as help the New York City-based digital radiography developer evaluate such alternatives as industry partnerships or bids from potential buyers.

Swissray executives insist that Raymond James’ focus will be primarily 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 verge of dramatic growth on every level of its business: in its sales and marketing infrastructure, its revenue, and its R&D efforts. The company has sold 17 ddR systems since it launched the product last year (SCAN 1/21/98), 10 of which have been 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 its lead into profitability. For the nine-month period ending in March, the company posted a net loss of $10.7 million, 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 shares’ price dipping below $1 (SCAN 11/11/98). 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 awaits NASDAQ’s approval while it continues to trade on the Over The Counter bulletin board.

Like other companies participating in digital x-ray, Swissray’s bid for commercial success has been impacted by unfavorable market dynamics, such as the high price and novelty of digital x-ray technology. In addition, Swissray is now competing in the U.S. market against larger companies with long track records in the medical imaging market; Swissray was virtually unknown when it debuted AddOn-Bucky at the 1995 RSNA meeting (SCAN 12/13/95).

But Swissray believes its time has come, especially since the company has placed its systems 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 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.”