Tomahawk, WI 03/15/2014 (Basicsmedia) – IMRIS Inc (NASDAQ:IMRS) is facing difficulties in selling its Surgical Theatre and associated equipment on account of the high capital investments that are required to set these up.

A Fully Integrated Surgical Suite

The VISIUS Surgical Theatre includes MR, CT, and other equipment and is meant for neurological, cardiovascular, spinal and cerebrovascular procedures. These systems require a large capital outlay ranging anywhere from $5 million to $10 million depending on product configuration and other factors.

Revenue Decline in 2013

Revenues for 4Q2013 declined to $10.0 million on account of shipping timings while revenues for FY2013 were $46.0 million compared with $52.4 million for FY2012. Net loss in 4Q2013 was $21.6 million. However, it had gross profit of $2.8 million in 4Q2013. The order book for 1Q2014 looks good. Operating expenses for 4Q2013 were $22.6 million including R&D expenses of $8.3 million. Gross profit for FY2013 amounted to $15.7 million.

Growth in service revenue is one positive aspect of the quarterly results. Maintenance contracts have expanded because of a larger installed base of the VISIUS Surgical Theatres. Full-year service revenue for FY2013 increased by 88% to $9.6 million. The company also has a total order ‘backlog’ of $102.4 million.

In the short term, analysts have downgraded the stock from ‘buy’ to ‘hold.’

Being in the medical equipment business, IMRIS is pitted against giants such as Toshiba, Koninklijke Philips NV (ADR) (NYSE:PHG), and General Electric Company (NYSE:GE). The market for MRIs and CTs is highly competitive and hospitals are under pressure to limit the rising cost of healthcare in America. In such a scenario, IMRIS Inc (NASDAQ:IMRS) will certainly find it tough to find willing buyers for its expensive and high-end products. The good news is that IMRIS has equipment installed even in emerging markets such as China. If it can grow in different geographies, then it has better chances of being able to maintain high growth rates and riding out economic cycles.

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