TomTec completes comeback by finalizing financial package

May 13, 1998

Company shows new products at conferencesThree-dimensional ultrasound developer TomTec Imaging Systems has put the final pieces in place in the company’s financial restructuring plan, an effort that began almost a year ago after TomTec’s

Company shows new products at conferences

Three-dimensional ultrasound developer TomTec Imaging Systems has put the final pieces in place in the company’s financial restructuring plan, an effort that began almost a year ago after TomTec’s U.S. parent was shut down by its venture-capital backers. The newly reorganized TomTec heralded its return with high-profile exhibits and new product introductions at the recent conferences of the American Institute of Ultrasound in Medicine and the American College of Cardiology, both held in March.

The shutdown of TomTec last year came as a surprise to the medical imaging market (SCAN 6/11/97). Perhaps no one was as shocked at the closure, however, as executives at the company’s German subsidiary, which had contributed much of the technology on which TomTec was based. At the time, TomTec consisted of a parent company based in Boulder, CO, with a German division headquartered in Munich. The company’s structure was the legacy of the 1994 merger of Tomographic Technologies with Prism Imaging/Freeland Systems.

The management of TomTec’s German unit was aware that its U.S. parent was seeking additional funding in May 1997, and a Canadian investment firm reportedly had been lined up to provide the funds, according to Frank Schlau, senior vice president of sales and marketing. Management was expecting an announcement that the funding had been secured and thus was blindsided when the U.S.-based TomTec announced that it was shutting down on June 1.

The announcement set off a scramble among TomTec’s German management team to save the firm, Schlau said. The executives entered negotiations with TomTec’s liquidators, with the intention of regaining control of the company and restoring it to the corporate structure it had prior to the 1994 Freeland merger. The management team was successful, and last month TomTec announced that it had completed its capital refinancing with the help of two other companies, ultrasound firm Medison America of Pleasanton, CA, and Japanese cardiology company Nihon Kohden.

Under TomTec’s new structure, the management team led by Schlau, CEO and CFO Ulrich Haupt, president and chief technology officer Bernhard Mumm, and other TomTec employees own 42% of the company. Medison America owns 33% and Nihon Kohden holds the remaining 25%. TomTec is headquartered in Munich, where 30 of the firm’s 40 workers are based. The rest are employed at subsidiaries in four other countries, with three executives based in the U.S. to handle distribution in this market.

TomTec’s strong presence at the AIUM and ACC meetings was designed to counter the confusion that resulted from the shutdown last year, Schlau said. While the closure of the U.S.-based TomTec was widely publicized, some market watchers, especially those in the U.S., were unaware that the company had been reorganized.

“In the U.S. there was a lot of press that said we were shut down, and therefore a lot of people at the (American Heart Association meeting in November) and the ACC show were astonished to see that TomTec was back,” Schlau said. “Everyone read the press release that said we were shut down, but most didn’t read that we were coming back.”

TomTec’s exhibits at the AIUM and ACC conferences focused on new products the company is releasing. TomTec displayed its latest advancements in its core 3-D/4-D imaging technology, as well as a new image management system that the firm hopes will compete in the ultrasound miniPACS market.

On the 3-D/4-D side, TomTec unveiled a new version of its EchoView system that runs on Windows NT, rather than the MS-DOS operating system on which older EchoView versions were based. The new version, EchoView 4.0, also runs on industry-standard dual Pentium 333-MHz chips, rather than the proprietary hardware used for the older system. The new EchoView has a dramatically improved user interface and is much easier for clinicians to operate, according to the company.

On the 2-D side, TomTec’s new Image Management System brings the company into a new market segment. The workstation software allows image review, reporting, measurements, and archiving to magneto-optical disk, all in a networked environment. TomTec offers separate editions of the software, tailored to ultrasound scanners from various manufacturers, such as Acuson, Hewlett-Packard, and Aloka. In addition to ultrasound images, the software can accept images in any commonly used file format, such as DICOM 3.0 or JPEG.

Image Management System will be competing in a market already populated by experienced ultrasound miniPACS vendors like Acuson and ALI Technologies, but TomTec hopes that the flexibility and low cost of its offering will help it carve out a niche. The price of the system varies depending on configuration, but a typical networked installation with 25 workstations would cost $100,000. That price is for a software-only version of the product, as TomTec prefers to piggyback the system on an ultrasound department’s existing PC network.

TomTec sells its 3-D/4-D technology directly in the U.S., but plans to use distributors to sell the Image Management software in North America. The company is in discussions with a possible partner, while in the rest of the world, TomTec will sell the product directly, Schlau said.

TomTec’s move into ultrasound image management should be a welcome diversification for the company, especially given the high profile that image management took at the ACC conference. That profile is due to increasing demand for medical image distribution, according to Schlau.

“There is a need to have images available, not only in the ultrasound lab, but everywhere in the department and the hospital,” he said. “This would be the solution to network the whole cardiology department.”