Compumedics buys US company, eyes Nasdaq

Developer of sleep disorders devices Compumedics (ASX: CMP) has completed its first acquisition with the $US4 million purchase of Texas-based neurological instruments business Neuroscan.

The buy-out includes all intellectual property, together with selected assets and staff with Neuroscan's manufacturing base in El Paso to be relocated to a combined facility in Melbourne.

Compumedics executive chairman David Burton said the purchase would help take the company to an international level as well as presenting the option of a Nasdaq listing in the future.

"Compumedics has always focused on the clinical diagnostic markets," Burton said. "Neuroscan's primary focus over the years has been in products for neurological research. The combined company will have a product offering that spans clinical and research markets in both sleep diagnostics and neurodiagnostics.

"This deal will advance our Melbourne-based company into the billion dollar market for global medical technology instruments and give Australia a boost in terms of technology transfer and export action."

News of the deal came as Compumedics revealed its full-year figures were unlikely to meet those forecast in its prospectus last year. The company said its full-year revenues to June 2002 would range between $22 million and $24 million, compared to the forecast $25 million, while its profit after tax would be $2.2 million to $3.2 million, rather than the expected $4.4 million.

A statement from the company explained that while the year's second half was tracking to plan, Compumedics experienced a failure to achieve plan in the first half "primarily as a result of international events at that time."

Burton said the company was currently working on a number of major initiatives that were yet to be announced. "These, coupled with the acquisition of the Neuroscan business, provide a platform for the ongoing growth of the company into a global medical device business," he said.

The Neuroscan purchase is to be paid over two years and will include an extra $US500,000 payment dependent on the performance of the business.

Neuroscan, founded in 1986, is a manufacturer and distributor of neurodiagnostic and neuroimaging systems, including electroencephalograph (EEG), electromyograph (EMG) and evoked potential (EP) systems, for measuring electrical signals generated by the brain and nervous system.

The company, founded by Dr Steven Sands and which last year turned over $US6.5 million, was the first to commercialise high-density EEG/EP recordings, electromagnet source localisation, merging of multi-modal neuroimaging data (MRI, EEG, fMFR, PET and MEG), and recording EEG/EP information in the MRI environment.

Burton said these products were complimentary to Compumedics' suite, with substantial synergies existing between sleep diagnostics and EEG diagnostics including identical demographics in diseases such as stroke, clinical depression and Alzheimer's disease in the ageing population.

"Neuroscan will become an important contributor to Compumedics' growth in revenues and earnings," he said. "The combined companies will acquire the critical mass needed to maintain the high growth profile that Compumedics has experienced over the last few years."

He said Sands would remain as president of Neuroscan, retaining overall management of the company, while Compumedics chief financial officer David Lawson will be seconded to the US to oversee the acquisition.

At the time of writing, Compumedics shares were trading slightly higher at 61 cents.