Kodak
to Purchase Algotec, Medical Imaging Technology Innovator
Acquisition will Improve Company's Position in Growing PACS Market
ROCHESTER,
NY, Nov. 18 — Eastman Kodak Company announced that it will
acquire Algotec Systems Ltd., a leading developer of advanced picture-archiving-and-communications
systems (PACS), in a move that improves Kodak's competitive position in
the growing market for PACS, which enable radiology departments worldwide
to digitally manage and store medical images and information.
Kodak plans to acquire privately
held Algotec for $42.5 million in cash and expects the transaction to
close by year-end. Algotec, whose technology is among the best in the
PACS world, will become the "center of excellence" for developing
Kodak medical PACS products and attendant 3D imaging technologies.
"This move will bolster
our current PACS development efforts and will give Kodak greater leverage
in a market growing at 15-20% annually," said Dan Kerpelman, President
of Kodak's Health Imaging Group, and a Senior Vice President of the company.
"We will own Algotec's intellectual property, including its unique
source code - ideal for developing products in the rapidly growing category
of web-enabled PACS. By fully utilizing this intellectual property, we
will create a stream of compelling product innovations and, in doing so,
will accelerate the growth of our business."
The PACS market is fertile
for growth. Banc of America Securities' "2003 Hospital CIO Survey"
indicates that almost 60% of chief information officers in U.S. hospitals
plan to purchase PACS within the next three years. The price of a PACS
system ranges from $500,000 to $3 million or more, depending on exact
requirements.
"Algotec's technology
will put us in a better-than-ever position to capitalize on this opportunity,"
Kerpelman said, "as will changes we are making in our field operations."
Sales and technical specialists
that serve multiple product groups in Health Imaging soon will begin supporting
its PACS operation exclusively. "We also plan to double the size
of this team by year-end, putting a total of some 40 specialists into
the market to serve customers," Kerpelman said.
"This new field model
and our planned acquisition of Algotec represent a one-two punch that
will give Kodak a sharp, new competitive edge in PACS," he added.
Kodak-Algotec Relationship
Began in 2002
Algotec and Kodak have had a close relationship since May of last year.
At that time, the two companies signed an agreement under which Algotec
began providing supplemental software for the development of Kodak's PACS
products.
The innovative KODAK DIRECTVIEW
PACS System 5, currently rolling out in the market, is the result of the
companies' collaboration.
"Having emerged as Kodak's
principal supplier of PACS technology, Algotec will become part of the
Kodak family as a wholly owned subsidiary within our Health Imaging Group,"
Kerpelman said.
The Algotec team, composed
largely of people involved in research and development, will become part
of Health Imaging's R&D operation, which reports to Michael Jackman,
Chief Technology Officer and Vice President of Health Imaging.
Industry Pioneer
Since its formation in 1993, Algotec has been a recognized technology
leader in medical imaging information management, processing, teleradiology
and PACS. In fact, Algotec was the first company to receive FDA clearance
for a Web-based PACS viewer.
"Kodak has the brand name,
resources and commitment to drive much greater adoption of PACS by healthcare
institutions worldwide," said Dr. Menashe Benjamin, founder and Chief
Executive Officer of Algotec, who will join Kodak in a senior R&D
and strategic-business advisor role following the acquisition. "Everyone
at Algotec is excited about joining a company that is on record as wanting
to be a top-tier PACS provider."
Algotec, with 70 employees
worldwide, is based in Raanana, Israel, which will remain its principal
location. Its technology will continue to support product development
for Health Imaging's Healthcare Information Systems (HCIS) business. "The
Algotec team will align tightly with HCIS," Jackman said, "helping
Kodak augment its leadership in PACS."
One of six product groups in
Health Imaging, HCIS develops and markets image-and-information management
systems and software for use in radiology departments of healthcare institutions.
These products include PACS and radiology information systems (RIS). RIS
(information-management systems) when combined with PACS (image-management
systems), enable the simultaneous management and archiving of medical
images (such as digital x-ray images, MRI images and CT images) and information
(such as radiology reports on patients), thus helping medical facilities
improve productivity and, ultimately, patient care.
In a related announcement,
Kodak recently said it will expand the availability of its successful
Radiology Information System 2010 to customers in the United States during
2004. This product - already available in Europe and Australia - will
debut in countries beyond the U.S. at a later time.
"PACS-RIS systems continue
to be one of the most important segments in healthcare information technology,"
Kerpelman said. "Such systems can serve as the central repository
for all medical images and radiology information in a hospital. They also
enable radiologists to organize patients' radiology records and to share
these via the Internet with referring physicians and other colleagues.
In effect, PACS-RIS are at the very core of the radiology operations of
hospitals and imaging centers, and our pending acquisition of Algotec
will enable us to compete more aggressively in this arena."
About Kodak's Health Imaging
Group
Kodak's Health Imaging Group is a world leader in developing, manufacturing
and marketing intelligent imaging products from analog to digital. Its
portfolio includes computed radiography (CR) and digital radiography (DR)
systems, laser imagers, picture archiving and communications systems (PACS),
radiology information systems (RIS), traditional mammography and x-ray
film systems, dental imaging products and various services offerings.
The group, with 2002 revenues of $2.27 billion, has served the global
healthcare community for more than 100 years.
The Health Imaging Group and
Kodak's other major businesses - Commercial Printing; Commercial Imaging;
Display & Components; and Digital & Film Imaging Systems - together
are leading participants in infoimaging, a $385 billion industry created
by the convergence of image-and-information technology. Infoimaging unites
three closely related imaging markets that enable end users to more easily
capture, process and share images and information: devices (such as Health
Imaging's CR and DR systems), infrastructure (online networks and delivery
systems for images, including PACS) and services & media (software,
film and paper).
For more information about
Kodak's Health Imaging Group, contact your Kodak representative or visit
Kodak's web site at www.kodak.com/go/health.
About Algotec Systems Ltd.
Since its inception in 1993, Algotec Systems Ltd. has been an internationally
recognized leader in the field of PACS and 3D Processing of CT and MRI
data. Algotec's families of products, sold under the name ImagiNet™,
are installed in over 1200 healthcare institutions worldwide and provide
state-of-the-art Web-based clinical image management, archiving, processing
and communication solutions. Algotec was and continues to be one of the
pioneer companies in the area of 3D image processing, and was among the
first to introduce advanced imaging techniques into its diagnostic reading
products. In 1997, Algotec was the first company to receive FDA clearance
for a Web-based image distribution and display system - MediSurf™.
Algotec's products have been
sold over the years directly and by key industry leaders, including Kodak.
Algotec's ImagiNet™ family includes a diagnostic reading, processing
and reporting station, Web-based image display and data access engine,
multi-tier archive, and various workflow management and integration applications.
ImagiNet also features various integrated image and report distribution
products, such as automatic emailing, CD writing, or the Web.
Algotec is headquartered in
Israel, with subsidiaries in the US, France and Germany. For more information
about Algotec, visit www.algotec.com.
KODAK and DIRECTVIEW are trademarks
of Eastman Kodak Company.
2003
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