Bone densitometry and digital x-ray provider Hologic has moved aggressively to broaden the scope of its women’s health and x-ray equipment business, announcing an agreement today to buy the U.S. assets of x-ray and mammography firm Trex Medical. The $55 million cash and note deal is expected to close in September, subject to regulatory approvals and conditions.
The deal would make Bedford, MA-based Hologic a leading women’s health equipment manufacturer, adding mammography and breast biopsy equipment to its product portfolio, according to David Ellenbogen, Hologic chairman and CEO.
"These mammography markets go hand in glove with Hologic’s bone densitometry products," Ellenbogen said. "This will increase our ability to bundle products."
In addition, the Trex acquisition will complement Hologic’s 1999 purchase of digital x-ray developer Direct Radiography Corp. In May, DRC announced that it is developing a digital mammography system based on its amorphous selenium flat-panel detector technology. Upon closure of the Trex acquisition, development of that initiative will be shifted to Trex’s Lorad facility in Danbury, CT, according to Hologic vice president of finance Glenn Muir.
Since DRC’s technology will be the basis of the combined firm’s digital mammography efforts, the deal will mark the death knell for Trex’s CCD-based digital mammography system. Trex in the mid-1990s appeared to be the leader in the race to commercialize a full-field digital mammography system, but the company was ultimately never able to win Food and Drug Administration clearance. The system is being sold in Europe, however.
Hologic may still use data collected through the CCD-based system to help prepare a pre-market approval (PMA) application for its digital mammography system, although that decision has not yet been made, Ellenbogen said. Hologic plans to showcase the digital mammography system as a work-in-progress at this year’s RSNA meeting, and hopes to receive FDA clearance in 18 to 24 months. To prepare the market for the launch of the digital mammography product, Hologic anticipates offering customers a conventional mammography unit that can be upgraded to digital capability upon FDA clearance, Ellenbogen said.
"We will offer an upgradable system that you can buy for a ballpark price of $75,000 to $100,000, and it will be upgradable when cleared by the FDA at a (price) probably on the order of $200,000 to $300,000, so we can be in the market and developing sales for digital mammography," Ellenbogen said.
In addition to the mammography business, Hologic plans to continue Trex’s activities in mobile x-ray, x-ray systems for nondestructive testing, cardiac catheterization systems, digital R/F systems, electrophysiology products, and general radiography systems.
Hologic will not move forward with Trex’s 4000M CCD-based digital chest x-ray system, Ellenbogen said. Trex had partnered with Finnish firm Imix and U.S. distributor Advanced Instrument Development of Melrose Park, IL, for 4000M.
If completed, the Hologic/Trex deal will close the door on the x-ray and mammography conglomerate built by Thermo Electron through a series of acquisitions, including Lorad, Bennett X-Ray, Continental X-Ray, and XRE in 1995 and 1996. Faced with Trex’s poor financial performance and millions in losses in 1999, parent company Thermo Electron put the division up for sale in January as part of a corporate restructuring to focus on its core measurement and detection instruments businesses.
Hologic will take on approximately 550 employees at Trex’s 62,500-square-foot R&D, manufacturing, and administrative site in Danbury, CT. It will also retain Trex’s 156,000-square-foot leased facility in Littleton, MA, as well as Trex’s 49 U.S. and international patents. Trex’s Trophy dental imaging business in France was not included in the deal.
Under the terms of the agreement, Hologic will pay $30 million in cash and issue a secured note in the amount of $25 million (with a term of three years) upon completion of the deal. As Trex is not currently profitable, Hologic expects the deal will initially be dilutive to earnings. In 2001, however, Hologic hopes to generate sales of more than $200 million from bone densitometry, mammography, and digital radiography, Ellenbogen said.
By Erik L. Ridley
AuntMinnie.com staff writer
August 15, 2000
Related Reading
Trex losses balloon in third quarter, August 7, 2000
Hologic adds Paris DR installations, August 3, 2000
Investment widens net loss despite gains, August 1, 2000
Direct Radiography gets import approval in Japan, June 23, 2000
Hologic taps Janer for mammography post, May 5, 2000
Trex revenues slump in Q2, May 5, 2000
Hologic launches distributor network for upgrade sales, May 1, 2000
Hologic reports loss despite revenue gains, April 27, 2000
Trex net loss widens in Q1, February 9, 2000
Thermo Electron seeks buyer for Trex Medical, January 31, 2000
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