O.C.’s Imagyn’s Hopes Boosted by $14.5 Million
Imagyn Medical Technologies Inc. said Tuesday it has received a $14.5-million shot of new financing that should help the ailing medical products company resolve a severe cash crunch and give it more time to rebuild sales.
The infusion from an unidentified lender comes after the Newport Beach company encountered liquidity problems from mounting losses and shrinking revenue.
Imagyn’s auditors recently questioned whether the company can remain in business. And a company official said Tuesday that some of its vendors aren’t offering credit anymore and insist on cash payments.
The stock closed Tuesday at 44 cents a share, off 6 cents.
Analysts once saw promise in company chairman Charles A. Laverty’s ambitious plans to build the company into a maker of products to treat male impotence, female incontinence and other delicate problems.
The company snapped up more than 15 providers of medical products in three years. But sales and earnings failed to take off.
A contract to supply a major hospital buying group never panned out. The introduction of the drug Viagra to treat male impotence hurt sales of Imagyn’s once-promising vacuum erection devices. And sales of other items didn’t live up to expectations.
Imagyn officials said Tuesday that the $14.5 million in new financing should help the company bring to market half a dozen new products recently cleared by regulators. The company considers two items particularly promising: a minimally invasive device to detect breast cancer and an implantable capsule to irradiate prostate cancer.
As is true for many companies with cash problems, every quarter now counts for Imagyn.
In the last year, company revenue has plummeted. For the three months ended June 30, the company generated revenue of $12.8 million, far below the peak of $43.1 million for the quarter ended Sept. 30, 1997.
The company posted losses of $18.8 million for the recent quarter, and $34.4 million for the three months ended in March.
The company’s vacuum erection device--a mechanical pump--leads its line of treatments for male impotence. At one point these treatments generated most of Imagyn’s sales. But these devices now account for less than a third of the company’s sales--a trend that can be traced to Viagra sales and other factors.
Earlier this summer, Laverty agreed to reach into his own pocket to support the company financially, a company securities filing shows. He guaranteed a $3-million increase in the company’s borrowing agreement with a major lender.
The company has already slashed its payroll this year to about 600 employees from about 1,000. It plans to continue cutting expenses, but Michael Montevideo, the company’s chief financial officer, said no more job cuts are planned.
Imagyn also aims to sell off certain assets, but Montevideo wouldn’t disclose which ones.
In Orange County, the company employs 150 to 175 people and operates a corporate headquarters in Newport Beach, a factory in Costa Mesa, a research lab in Laguna Niguel and a warehouse in Irvine.
It remains to be seen whether the company’s plans to right itself will reawaken interest on Wall Street.
Montevideo acknowledged Tuesday that none of the four analysts who tracked Imagyn in better times follow the company now.
Mike Petusky, an analyst at Richmond, Va.-based Branch, Cabell, quit following the company in the last year.
“I didn’t have any confidence they’d be able to turn things around in a short period of time,” he said.
