Moving Up from the Basement: The Intraoperative Imaging Trend

Traditionally, hospitals built in years past housed their large, high-powered imaging devices in the lower floors of their facility. Patients were directed there for the picture taking or wheeled down to the imaging centers either before or after surgery. In recent years, however, a paradigm shift in imaging locations has begun whereby these sophisticated imaging devices (MRIs, CT scans, etc) are being located much closer to the patient so the imaging can be performed in a much more timely fashion, or even during surgery itself, also known as intraoperative imaging.

Two small cap stocks are already taking advantage of this paradigm shift and offering hospitals a way to bring the imaging device closer to the patient, rather than vice versa. Both companies report a very positive response from physicians and hospitals to the concept of this kind of imaging capability.

Poway, CA-based Digirad * (Nasdaq: DRAD, http://www.digirad.com/) has two business segments: Digirad Imaging Systems, or DIS, provides physicians with personnel and equipment services for performing nuclear imaging, echocardiography and vascular ultrasound. The product side of the business sells cameras for nuclear imaging including its new ergo large field-of-view, general purpose portable imaging system. Its unique, ergonomic, lightweight design allows it to be moved easily anywhere in might be needed in the hospital.

Digirad is small ($47 million market cap) and in July reported revenue for the first six months of 2011 of $28.4 million.  But it also reported a cash balance of $31 million as of June 30, the end of the second quarter. DRAD stock closed Sept. 2 at $2.39, about in the middle of its 52-week range of $1.82-$3.10.

Manitoba-based IMRIS, Inc * (Nasdaq:IMRS, http://www.imris.com) proposesd a different and more comprehensive take on the issue of intraoperative imaging.  IMRIS provides fully integrated image guided therapy solutions – actually a fully functioning surgical suite –  that delivers images and information to clinicians during surgical or interventional procedures. The IMRIS suites incorporate magnetic resonance imaging and fluoroscopy into the operating room, actually allowing the patient to be imaged without moving.   These suites are specialized to serve neurosurgical, interventional neurovascular and cardiovascular surguries and partnerships are in the works to deliver imaging during radiological procedures as well.

IMRIS stock has been as high as the $8 range but fell recently in light of weak bookings in the first half of the year and general market weakness. But analysts uniformly believe the long picture here is very positive. IMRS closed Sept. 2 at $4.15.

* Denotes client of Allen & Caron, publisher of this blog

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