GE empowers R&D to improve access, lower cost of healthcareStereotaxis revenues grow, losses shrinkHansen revenues rise, loss increasesNeoprobe sales jump
Delays in hospital purchases pushed revenues down nearly 15% at Vital Images in the first quarter, according to CEO Michael H. Carrel, but belt-tightening allowed the company to cut its losses. In the quarter ended March 31, the company tallied $14.8 million compared with $17.3 million for the year-earlier period. Net loss dropped, however, to $251,000, which compares with a net loss of $594,000 in the 2008 first quarter. The company contained costs primarily through an 11% workforce reduction in November 2008.
GE launched today Healthymagination, a six-year initiative that will redirect half of its $1 billion healthcare R&D budget toward driving down the cost of healthcare while boosting access to improved care through technology and service innovations in the U.S. and around the world.
GE's chairman and CEO Jeff Immelt announced in a press conference the company's commitment to spend $3 billion in R&D in the next six years to support the new objectives that he says will be met in part through the development of lower cost technologies and a new electronic medical record system to ensure that providers make the best use of medical technologies and available practices.
The initiative is modeled on the company's "Ecomagination" program begun four years ago with the goal of developing and implementing ecofriendly products and services.
Immelt specifically cited low-cost digital x-ray machines, portable ultrasound systems, low-dose CT scanners, and more affordable cardiac equipment as ways to deliver on these promises. Another $2 billion will be provided to finance the acquisition of healthcare IT and improve access to care in rural and underserved areas. GE also committed $1 billion for partnerships, patient education, and other services.
The $500 million per year earmarked for Healthymagination technologies will account for half of the $1 billion GE plans to spend on R&D in each of the next six years, said John Dineen, CEO of GE Healthcare in an interview with Diagnostic Imaging SCAN, a business publication affiliated with Diagnostic Imaging.
He noted that GE's R&D budget will increase in the next four or five years. Funding for Healthymagination projects will originate from this existing, incrementally growing pot of money, according to Immelt.
"What we are really going to be doing is putting our ideas through screens and saying, ‘Hey, is this product going to make a difference from a quality, cost, or access standpoint?' In making that judgment, we want to be sure that we are not simply trading off one for the other," Dineen said.
Funds will go toward producing by 2015 at least 100 innovations that lower cost, increase access, and improve healthcare quality by 15%, Immelt said. The company will share its expertise in management with providers and others in healthcare to bolster productivity, cut costs and improve quality of care.
Among the four priorities of the new initiative is acceleration of the development of healthcare information technology. The other three will target the design and production of high-tech yet affordable healthcare products, broaden access to underserved patients, and support consumer-driven health. Some of the effort from this initiative will be directed internally to expand employee health efforts by creating new wellness and healthy worksite programs, while keeping cost increases below the rate of inflation.
Stereotaxis grew revenues by 58% to $11.1 million in the first quarter, cutting its losses to $7.5 million compared with a loss of $13.5 million in the year-earlier period. The company recognized revenue on five Niobe Magnetic Navigation Systems and five Odyssey systems totaling $6.9 million, while disposables, services, and accessories revenue produced a record $4.3 million, a 61% increase over the same period in 2008. This sudden rise dovetails with increasing usage of the navigation and magnetically controlled catheter intervention system in the U.S. Orders for new equipment in the first quarter totaled $8.8 million, resulting in an ending backlog of $67 million. The company's operating expenses fell to $14.8 million, a 17% decrease from the first quarter of 2008.
Revenues at Hansen Medical rose 14% in the first quarter ended March 31 compared with the year-earlier period, but net loss widened to $14.3 million from $11.6 million. The provider of robotic interventional products cited an increase in costs due primarily to litigation and executive severance and commissions. These expenses were partially offset by decreased expenses due to reduction in staff and a corporate one-week furlough. The company expects to reduce expenses slightly this year from last year's levels as a result of a reduced labor force and one-week furloughs each quarter.
Neoprobe revenues leaped to $2.7 million in the first quarter from $1.8 million in the year-earlier period, boosting net income to $814,000 for the quarter compared with a net loss of $1 million in 1Q 08. The company, which develops products based on radio-guided surgery, gamma detection, and injectable cancer-targeting agents, credited the growth to increased demand for its gamma devices, sales of which rose by $915,000, or 53%, for the first quarter, due in large part to the company's primary marketing partner restocking its inventory, as well as changes in the terms of its primary distribution agreement, which took effect at the beginning of the year.