A Diagnostics & Imaging Week

Agfa-Gevaert (Mortsel, Belgium) has completed its $132.5 million (EUR 106.5 million) acquisition of U.S. cardiology imaging and information networks manufacturer Heartlab (Westerly, Rhode Island).

Agfa said it expects the deal to be accretive in the first year.

Heartlab's Encompass networks are installed in more than 250 U.S. cardiovascular care centers.

Agfa and Heartlab have been collaborating since December 2003 as part of a distribution agreement for the Belgian company's Impax for Cardiology solution, which allows integration of radiology and cardiology, which Agfa described as "the two most image-intensive departments within hospitals."

Agfa said the acquisition "will expand on other recent acquisitions to strengthen [our] leadership position in imaging technology and healthcare IT."

Additionally, Agfa said it has acquired the remaining shares of Med2Rad, a leading developer of radiology information systems (RIS) in Italy.

The transaction price for the 70% of Med2Rad shares that Agfa did not already own was $4 million (EUR 3.2 million). Agfa had bought a minority stake in Med2Rad in January 2003.

Agfa has been the exclusive distributor of the Med2Rad RIS since 2000.

Merge Technologies (Milwaukee), doing business as Merge eFilm, a healthcare software and services company, and Cedara Software (Toronto), a developer of medical software technologies for the global healthcare market, reported completing their merger, first reported in January.

The transaction was approved by the shareholders of both companies on May 24 and received final court approval from the Ontario Superior Court of Justice on May 26, the companies said.

Terms call for Cedara shareholders to receive either 0.587 shares of Merge common stock or 0.587 exchangeable shares for each common Cedara share held. The transaction was structured to be tax deferred to Canadian resident Cedara shareholders, who receive exchangeable shares. The exchangeable shares were issued by Merge Cedara ExchangeCo Limited, and will trade on the Toronto Stock Exchange under the symbol MRG.

Richard Linden will be president and CEO of the combined company, as previously reported, and Abe Schwartz, president and CEO of Cedara Software, will continue his involvement as a Merge eFilm board member. Corporate headquarters for the newly combined company will be in Milwaukee.

Linden said, "The combined company will provide a comprehensive suite of medical imaging software applications and professional services to help manage clinical and business workflow for our customers. Additionally, the extensive OEM supported research and development function of the new company will further accelerate our entry into advanced visualization and clinical application markets and ensure we stay on the leading edge of imaging software development."

Merge eFilm, it said, is "focused on accelerating the productivity of imaging centers, small- to medium-sized hospitals and clinics with a suite of RIS/PACS products that more efficiently streamline, integrate and distribute image and information workflow across the healthcare enterprise."

Cedara is a provider of medical imaging technologies, its software deployed in hospitals and clinics worldwide and licensed by medical device and healthcare information technology companies. It reports about 28,000 medical imaging systems and 6,400 picture archiving and communications system (PACS) workstations licensed to date.

Cedara recently acquired eMed Technologies (Lexington, Massachusetts), a provider of PACS and teleradiology solutions installed, it reports, in more than 2,000 hospitals and imaging centers.

Hospira (Lake Forest, Illinois) reported that it would expand on its offerings to the hospital sector, primarily the operating room, through the purchase of Physiometrix (North Billerica, Massachusetts), a firm developing systems for monitoring the consciousness of patients during surgery.

Hospira, a major U.S. hospital products manufacturer spun off from Abbott Laboratories (Abbott Park, Illinois) in 2003, said it would make the acquisition with $23 million in cash, plus the assumption of Physiometrix debt of about $1 million.

Under the merger terms, Physiometrix shareholders will receive payment of $1.59 in cash for each share of common stock held. In addition, holders of options and warrants for common stock of Physiometrix will receive a cash payment equal to this amount, less the applicable exercise price and applicable withholding taxes. Options and warrants with an exercise price that exceeds the per-share cash payment will be terminated in connection with the closing.

Physiometrix employs about 40; the announcement of the proposed sale did not address possible staff cutbacks. The purchase is set for completion in the third quarter, assuming approval by Physiometrix shareholders and customary closing conditions. It already has been approved by the board of Physiometrix.

While some following the patient monitoring sector said the $24 million price tag puts a high premium on the deal, Hospira with the acquisition will lay claim to one product already marketed, another to be marketed later this year and the intellectual property of Physiometrix, on which it is likely to build.

Physiometrix is focused on "brain-state" monitoring, a sector where it has attempted to go head-to head with Aspect Medical Systems (Newton, Massachusetts), developer of the Bispectral Index system for more accurately measuring the precise level of consciousness of a patient undergoing surgery.

The goal of this type of monitoring is to avoid, on the one hand, over-sedating patients — which slows their recovery and release from the hospital — and, on the other, under-sedating them so that they actually may be awake during the surgery — a condition known as surgical consciousness. This condition, not unexpectedly, has a rather magnetic way of attracting lawsuits.

Aspect has established an 80% or more dominant foothold in this arena, with Physiometrix attempting to play catch-up with a monitoring system that features more electrodes. But the lack of uptake suggests that it has failed to convince hospitals, and primarily anesthesiologists and surgeons, that it offers a substantial improvement over BIS monitoring.

Physiometrix describes its PSA 4000, already commercialized, as a real-time electroencephalogram (EEG), or brain-state monitor, featuring disposable sensors and a proprietary measurement parameter — called the Patient State Index — that aids in monitoring the effects of anesthesia agents.

Physiometrix has received FDA 510(k) approval for its next-generation PSA 5000 monitor, and plans call for rollout later this year of the PSA 5000, bannered by the company as having an ergonomic design that improves on the PSA 4000, and having more power.

The products being developed by Physiometrix are based on advanced gel materials, advanced signal-processing electronics and proprietary software. The company generated about $1.9 million in 2004 sales at the wholesale level primarily through a distribution agreement.

Assuming completion of the proposed deal, Hospira will market the current PSA 4000 system and the PSA 5000 system.