City-bred Visicu to launch IPO

Its system monitors intensive-care patients

December 01, 2005|By M. WILLIAM SALGANIK | M. WILLIAM SALGANIK,SUN REPORTER

Visicu Inc., a company founded seven years ago by two Johns Hopkins intensive care specialists, has decided to go public after becoming profitable this year.

The Baltimore company, which makes systems for remote monitoring of hospital intensive care units, filed a registration statement for an initial public offering with the Securities and Exchange Commission late Tuesday.

The preliminary filing left key details blank, such as the number and price of shares and the timing of the IPO.

Funds from the offering will be used to expand the company's business. Frank T. Sample, Visicu's chief executive officer, declined to comment yesterday.

The two Hopkins doctors, Brian Rosenfeld and Michael J. Breslow, based the company on a monitoring system that extends the reach of doctors specially trained to watch over critically ill patients.

There are only about 6,000 "intensivist" physicians in the county, according to Visicu's filing, but up to 25,000 would be needed to provide round-the-clock coverage in all intensive care units.

Only 10 percent to 20 percent of hospitals, the company estimates, are fully staffed by intensivists.

The Visicu system sets up a remote monitoring station, where a doctor and two nurses can oversee 100 patients at a time.

The monitors show a patient's vital signs and flash alarms when, for example, they detect a dangerous increase in heart rate or drop in blood pressure. The doctor can use a camera and microphone to talk to the patient.

The system isn't designed to replace live treatment. Most of the hospitals that have installed the system use it for evening and weekend coverage of intensive care units. Other clients use the system at rural hospitals that don't have an intensivist on staff.

Visicu's founding doctors and several co-authors published a study in a medical journal in 2004 that reported a 25 percent drop in costs and mortality in intensive-care units in three hospitals after its system was installed. In the same journal, however, two professors from the Mayo Clinic sounded a note of caution, saying it wasn't clear how the Visicu system had achieved those results.

The founding doctors hired Sample as CEO in 2001. He'd previously worked at several health-information companies. Early investors included Sterling Partners, a Baltimore private equity firm that has provided venture capital to several health startups, and the Abell Foundation of Baltimore.

Sterling owns 15.7 percent of the company. The largest stake - 16 percent - is held by Cardinal Health Partners, a venture capital firm in Princeton, N.J. Sample, Rosenfeld and Breslow together own 15.3 percent. The SEC filing said that even after the initial offering, officers, directors and principal shareholders will continue to own a "significant," although unspecified, share of the company.

Existing shareholders paid $26.3 million, or an average of $1.12 per share, according to the filing.

Visicu has grown rapidly in recent years - from one control center monitoring 65 beds in 2003 to 23 monitoring 1,850 beds as of Sept. 30, according to the registration statement.

The SEC filing also shows that the company, which ran a cumulative deficit of $35 million as it was developing the system and had few customers, showed an operating profit of $315,000 in the quarter that ended Sept. 30.

With tax losses from past years carried forward, the company posted net income of $10.4 million for the first three quarters of 2005.

Revenue has been growing rapidly as more intensive care beds come on line - from $1.4 million in 2001 and 2002 to $2.2 million in 2003 to $5.5 million in 2004 - and $12.6 million in the first nine months of this year. Visicu collects its revenue by charging hospitals a licensing fee for the system and signs three-year contracts that generate service fees.

Visicu now has 92 employees, most in its offices on Redwood Street, but some in the field providing support to hospitals.

bill.salganik@baltsun.com

Visicu facts

What it does:

Remote monitoring systems for intensive care units

Founded:

1998 by Hopkins intensive care specialists Brian A. Rosenfeld and Michael J. Breslow

CEO:

Frank T. Sample

Headquarters:

217 E. Redwood St., Baltimore

Employees:

92

Beds monitored

(as of 9/30): 1,850 in 82 hospitals

Revenue (9 month):

$12.6 million

Profit (9 month):

$10.4 million

Proposed ticker:

EICU

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