In the six months since I’ve reported on the downturn in the PACS segment

In the six months since I’ve reported on the downturn in the PACS segment (Lifelines week of 10/27/08), things have not gotten much better.  If anything, things are worse.

 

Medical imaging software vendor Merge Technologies has announced it may not have the cash to continue operating beyond June 30 and may have to seek bankruptcy protection.

 

Merge also announced its first quarter financial results, showing continued losses and reduced revenue. The quarterly net loss totaled $7.8 million, compared with a loss of $9.7 million during the same period last year. Merge now has generated losses from operations during nine consecutive quarters. Its 23 cents per share loss in the first quarter, however, was two cents less than investment analysts expected. Quarterly revenue was $13.7 million, down 14% from the same period a year ago.

 

Available cash and equivalents at the end of March totaled $8.5 million, compared with $14 million at the end of December. The company also has no credit facility and is entirely dependent on operating cash flow to meet its capital needs.

 

Merge also announced it has divested its operations in France and China to focus on core businesses. It received no cash proceeds from the divestments. The company’s stock price fell three cents per share, or 8.6%, to 32 cents in morning trading on May 12.

 

Emageon Inc.'s net loss more than doubled in the first quarter, following employee severance payouts after trimming its local work force last year. Emageon posted a net loss of $4.6 million for the quarter ended March 31, compared to $1.8 million during the same period last year. Emageon's losses per share increased to 21 cents, versus 9 cents in 2007. Emageon incurred an $800,000 charge for employee severance and associated expenses, according to the press release issued early Monday.

 

Emageon's first quarter revenue dropped to $19.3 million, compared to $27.4 million during the same period last year.

 

In October 2007, I talked about Emageon’s stock “languishing” at $8, well now they wish they were “languishing” there.  The stock has been hovering around $3 a share since the beginning of the year.  The stock was trading in May 2006 at around $16.  "Our first quarter results are reflective of the difficult environment in which we are currently operating," said Emageon CEO Chuck Jett. "High penetration rates for our core radiology products in the large hospital sector and a more constrained capital spending willingness by our existing and prospective customers are realities that we must manage through."

 

Aspyra is also down to cents at $0.65 per share, down from $2.40 a share 6 months ago.

 

As previously indicated valuations and investments in this segment are not going to be strong anytime soon.