VTEL to replace FRED with HS2000 rollabout

October 1, 1997

VTEL to replace FRED with HS2000 rollaboutCompany also reports big year-end net lossVideoconferencing manufacturer VTEL is working to maintain a firm foothold in the changing U.S. healthcare market with a new telemedicine rollabout that

VTEL to replace FRED with HS2000 rollabout

Company also reports big year-end net loss

Videoconferencing manufacturer VTEL is working to maintain a firm foothold in the changing U.S. healthcare market with a new telemedicine rollabout that integrates clinical, educational, and networking capabilities in a PC-based system.

HS2000 is a second-generation telemedicine product for VTEL. The Austin, TX-based company has found moderate success with FRED (Friendly Rollabout Engineered for Doctors), a mobile, PC-based system for telemedicine and continuing medical education that was introduced in 1995. HS2000 retains FRED's clinical packaging while upgrading its networking and data-sharing capabilities.

"Our focus and direction is one of building a flexible platform for integration," said Linda Roach, director of VTEL's healthcare customer business unit.

HS2000 is designed primarily for use in healthcare environments where high-quality video and interoperability with other videoconferencing systems are critical. At its heart are VTEL's Enterprise Series Architecture (ESA) platform, Pentium processors, and a Windows 95 operating system. Other features include enhanced video capabilities, thanks to the addition of high-resolution video technology developed by CLI, which was acquired by VTEL earlier this year.

Also central to HS2000's design are its data-sharing and LAN/WAN connectivity features, which include T1/E1 line rates and advanced multimedia capabilities. Thus, by inserting a network card, HS2000 can be integrated with any hospital information system, providing the user with access to computerized patient records and other critical information. HS2000 is also compatible with a variety of medical application software packages, and can connect to a broad range of video-based medical peripherals.

"We want to make this a full-scale tool for telemedicine," Roach said.

The basic HS2000 system sells for under $50,000; standard features include a graphical touch-screen interface, hand-held remote control, 14-inch monitor, and mounted camera. The system is designed according to specific customer requirements, from peripherals and network connectivity to future software needs.

HS2000 is the flagship product in VTEL's new HealthStation series, and the company's first healthcare-specific product to be introduced since Roach joined the company this summer after leaving the PACS division of Eastman Kodak (PNN 9/97). Other HealthStation systems will follow as the market evolves and the technology continues to advance, she said.

"Because of the flexibility of the platform, we expect to have enhanced and upgraded versions of this product in the coming years," Roach said. "We know that there are going to be variations and enhanced capabilities coming out, so there are likely to be other products with the HS label."

In the meantime, VTEL is working to expand its presence in the healthcare market. The company posted revenues of $99.3 million in 1996, with healthcare accounting for about 20% of sales. Its strongest niches in telemedicine continue to be the military, correctional facilities, rural emergency rooms, urban hospitals, managed care, and health education institutions. Historically, its products have been used more for consulting and continuing medical education applications than clinical telemedicine.

In fact, VTEL says that sales of FRED improved after the company began emphasizing the system's administrative and CME capabilities. VTEL claims more than 100 installations of FRED at present, but with the introduction of HS2000, plans are already in the works to phase out FRED over the next six months. The company will continue to support existing FRED installations, and is offering an upgrade program for customers who need the added capabilities of HS2000's ESA platform.

"Since 1995 (when FRED was introduced), a lot of attention and expenditure in healthcare has been focused on improving information technologies," Roach said. "(HS2000) is a value-priced product that expands our medical rollabout line and continues VTEL's long-standing commitment to providing solutions specific to the healthcare market."

In other VTEL news, the company in September reported 1997 financial results that included a large net loss due to nonrecurring charges associated with the CLI acquisition. For the year (end-July), VTEL posted revenues of $191 million, a figure that includes revenues from CLI. VTEL's net loss for the year was $52.1 million, which includes acquisition-related costs of $29.5 million and a $7.8 million loss from CLI's discontinued broadcast products division. VTEL in 1996 changed its fiscal year end from December to July, making year-to-year comparisons difficult.

For the fourth quarter of fiscal 1997, VTEL had revenues of $46 million, up 4% compared with the third quarter of fiscal 1997, when the company had sales of $44.1 million. The firm posted a net loss for the most recent period of $35.5 million, primarily due to the merger-related expenses mentioned above. Excluding one-time items, the company would have had a net loss of $5.7 million.