VitalCom to Go Public, Citing Favorable Market

By BARBARA MARSH

Jan. 16, 1996 12 AM PT

TIMES STAFF WRITER

TUSTIN —

VitalCom Inc., a quiet biomedical outfit that makes computerized systems for tracking patients’ vital signs, on Monday announced plans to go public.

The profitable, growing Tustin-based company does not particularly need the money. But executives figure the firm might as well fatten its finances at a time when the stock market seems fond of firms that help hospitals cut costs.

“It’s a good moment for us,” said Donald W. Judson, the company’s chairman.

VitalCom, which also said it changed its name from Accucore Inc., plans to raise about $20 million through the sale of 1.75 million shares, at a price ranging from $9.50 to $11.50 a share. Proceeds would be used to pay debt, develop products and make acquisitions.

Judson noted the success of recent initial offerings by two other health-care information tracking companies, Enterprise Systems Inc. of Wheeling, Ill., and Summit Medical Systems Inc. of Minneapolis.

Enterprise, which sells software for managing hospital inventories, scheduling and financial accounts, raised more than $38 million in its Oct. 20 sale. The stock, offered that day at $16 a share, closed Monday at more than $26 in Nasdaq trading.

Summit, which sells software that helps hospitals and doctors track patient outcomes, went public Aug. 4, raising more than $23 million. Initially offered at $9 a share, the stock was trading Monday on Nasdaq at $20 to $21.

One of VitalCom’s key investors, Elizabeth Weatherman, managing director at New York-based Warburg Pincus & Co., noted that these and other successful new issuers she has followed in the last year all have “systems that are helping hospitals understand their costs in order to reduce them.”

VitalCom, also previously called Pacific Communications Inc., was founded in 1971. It originally made radio-related products, including radio transmitters used in monitoring heart patients and systems used to help locate an aircraft after a crash. In recent years, the company branched into computer networking systems.

VitalCom’s latest system tracks vital signs through a monitoring device, the size of a pack of cigarettes, that the ambulatory patient can wear around the neck. The device transmits data by radio waves to a central bank of personal computers. If a patient develops a problem, a computer technician can alert the physician to check a remote viewing station, elsewhere in the hospital.

An average system, including half a dozen computers, 40 to 60 monitors and any number of remote viewing stations, runs $500,000.

The technology allows certain patients on monitors to occupy beds throughout the hospital, instead of being stationed in high-cost critical-care units.

One VitalCom customer, Geoff Tarbox, nursing director at Dartmouth Hitchcock Medical Center in Lebanon, N.H., estimates that the hospital saves $35,000 a year for every patient it can care for on its less-intensive cardiac-care floor, rather than in its critical-care area.

That means, he added, the patient runs up a bill of $500 to $600 a day, instead of about $1,500 a day.

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VitalCom at a Glance

* Founded: 1992

* Headquarters: Tustin

* President/CEO: David L. Schlotterbeck

* Employees: 147

* Business: Acquires, interprets and distributes physiological data generated by patient monitors in health-care facilities.

* 1995 revenue: $23.9 million

* 1995 net income: $1.6 million

* Offering: Proposed sale of 1.75 million common shares at initial public offering price of $9.50 to $11.50 per share. Underwriter has option to purchase an additional 262,500 shares of common stock.

Source: VitalCom Inc.; Researched by JANICE L. JONES / Los Angeles Times

Timing the Market

VitalCom’s decision to go public was influenced by the results of initial public offerings last year by two similar firms. Details on the two companies:

Enterprise Systems Inc.

Headquarters: Wheeling, Ill.

Market: Nasdaq

Went public: Oct. 20, 1995

Results: Shares originally priced at $16 closed at $21.25 on the first day of trading

Net proceeds: $38 million

Monday’s close: $26.50

Summit Medical Systems

Headquarters: Minneapolis

Market: Nasdaq

Went public: Aug. 4, 1995

Results: Shares originally priced at $9 closed at $13.50 on the first day of trading