Aether shares spurt 27.7%

New alliance promises health care revenue

June 03, 2000|By Mark Guidera | Mark Guidera,SUN STAFF

Shares of Aether Systems Inc. rose 27.7 percent yesterday after the Owings Mills wireless data company said it has struck an alliance with a provider of wireless services to hospital-based physicians.

Aether executives said the agreement with Bothell, Wash.-based Data Critical Corp. will give it a foothold in the potentially lucrative health care market.

Aether's shares closed at $186.50, up $40.50.

Data Critical, which reported a loss of $2 million on sales of $1.8 million in its last quarter, sells a proprietary wireless device to hospitals and other health care providers that allows doctors and nurses to access patients' medical information remotely, without having to use a PC.

The device is designed for use within a hospital, but Aether plans to help Data Critical establish a network that can provide data to physicians in offices, using virtually any type of mobile device, from cell phones to personal digital assistants.

Data Critical shares rose yesterday, too, gaining $3, or 37 percent, to $11.125.

The alliance is another move by Aether in its quest to build relationships with leading data and information providers in a range of industries.

David Oros, company founder, president and chief financial officer, said Aether has been seeking a way to enter the health care market in order to tap the potential market for physicians and other health care workers.

The company, Oros said, has found health care a complex market to enter, but one that it believes abounds with opportunity.

Steve Bass, vice president of business affairs, said the relationship with Data Critical opens a considerable market opportunity for Aether. "This gives us really good potential to break into the acute and sub-acute realm," said Bass. "This is a highly mobile population. We want to provide them with the ability to access patient data from wherever they might be."

Under the agreement, Data Critical will license use of Aether's proprietary software program, which allows data to be received by virtually any type of mobile device.

In particular, said Bass, Aether has its eye on expanding wireless data services into the office-based physician market.

There are about 500,000 physicians in the United States, Aether estimates.

Data Critical devices are used in about 150 U.S. hospitals.

Aether, which lost $33 million on sales of $5.4 million in its last quarter, hopes to make money from the deal through signing up doctors and others for monthly wireless data subscriptions. Data Critical, said Bass, hopes to generate new income from transaction fees charged for prescriptions and diagnostic services ordered through the devices, a capability the companies hope to add.

Aether said that as part of the deal, it took a $10 million equity stake in Data Critical, with an option for up to an additional $10 million investment.

As Aether is moving quickly to enter such "vertical markets," it is also moving quickly to build and expand its infrastructure to handle an anticipated explosion in customers for wireless data.

In interviews this week, executives disclosed the company's next big step in expanding Aether's physical capabilities.

The company, they said, is close to signing a deal to lease space for a $10 million wireless data networks facility in the Southwest, most likely in Tempe, Ariz.

Aether hopes to have the facility operational by the end of the year, said Thomas Lupica, vice president of systems technology. Aether's current wireless data facility is in Owings Mills. It handles 15,000 customers, but could handle as many as 1.9 million.

The company wants a second network facility as a backup to ensure data transmission isn't interrupted or lost in the event of a natural disaster or other catastrophe. Company executives said Las Vegas is also a potential site for the new center.

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