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has designed a robust content management solution that allows hospitals to store images
from all sources in one central place with access points throughout the enterprise and be
available in 3-D
Business Software & Services
1200 Corporate Drive Suite 200
Birmingham, AL 35242
W. Randall Pittman
Chief Financial Officer
Interview conducted by:
Lynn Fosse, Senior Editor
October 12, 2006
W. Randall Pittman
Randy Pittman joined Emageon Inc., a healthcare
information systems company, as Chief Financial Officer in November, 2002. Randys
career in corporate finance spans thirty years. He previously served as Chief Financial
Officer of BioCryst Pharmaceuticals, Inc., a publicly held biotechnology company, and
ScandiPharm, Inc. a privately held pharmaceutical sales company. He also served as Senior
Vice President Finance for CaremarkRx, a NYSE listed pharmacy benefits management
company, and Executive Vice President and Controller for AmSouth Bancorporation, a NYSE
listed bank holding company. Randy is a Certified Public Accountant, beginning his career
at Ernst & Young in 1976.
Randy has a B. S. degree in Business Administration
from Auburn University, and has successfully completed advanced business programs at the
Stonier Graduate School of Banking at the University of Delaware and the Goizueta Graduate
School of Business at Emory University.
Randy is a member of the Board of Directors of the
Regions Morgan Keegan Select Funds and the Board of Trustees at Samford University.
About Emageon Inc.
Emageon provides an enterprise-level advanced visualization and infrastructure solution
for the clinical analysis and management of digital medical images within multi-hospital
networks, community hospitals and diagnostic imaging centers. Emageons software,
including its HeartSuite set of cardiology solutions from its Camtronics subsidiary,
provides physicians in multiple medical specialties such as cardiology, radiology, and
orthopedics, among others, with dynamic tools to manipulate and analyze images in two and
three dimensions. With these tools physicians have the ability to better understand
internal anatomic structure and pathology, which can improve clinical diagnoses, disease
screening and therapy planning. Emageons open standards-based solution is
designed to help customers improve staff productivity, automate complex medical imaging
workflow, lower total cost of ownership and provide better service to physicians and
CEOCFO: Mr. Pittman, will you tell us about your background
with the company?
Mr. Pittman: I was an investor in Emageon in the
earliest days as a private company, and then joined the company as CFO in 2002.
CEOCFO: What attracted
you as an investor enough to want to be on-board?
Mr. Pittman: The opportunity in digital imaging in
hospitals appeared to be an early-stage technology opportunity that could grow into
something very substantial. The team that Chuck Jett, our CEO, was developing to manage
the business and grow it was impressive.
CEOCFO: Where is that
Mr. Pittman: Since 2000, when the company had
essentially no revenues and only one customer, the company has grown in 2005 in revenue
and customer relationships. We have relationships with almost 600 hospitals and we had
revenue in 2005 of $73.8 million and now our projection for 2006 is $ 122 million plus.
The growth has been phenomenal.
CEOCFO: Will you explain
what it is that you actually provide?
Mr. Pittman: Emageon provides content management and
visualization software for hospitals. What that means is we take any kind of visual image,
be it from a CT scan, MRI, ultrasound, x-ray; we digitize it and store it electronically
through our content-management solution in one central repository in the hospital. We then
distribute it back out via the web to work stations, not only in the department of
radiology, for review and diagnosis, but also throughout the rest of the hospital
enterprise for referring physicians to use in corroborating diagnosis as well as treatment
planning and even using it in explaining treatment protocols to patients.
CEOCFO: Is this done
industry-wide, or is this unique to Emageon?
Mr. Pittman: Many hospitals have what is known as a
PACS (picture archive communications systems), but often times it is located only in the
department of radiology, so that the radiologists can see images in electronic format and
maybe even manipulate them in a 3-D rendering. What is unique about Emageon is our ability
to bring that out to the entire healthcare enterprise and make it available to the
referring physicians in emergency departments, operating rooms, ICU, and the normal
patient floors, so that they can see the images as part of the overall visual medical
record for the patient. In addition, they have a tool set that comes with the images that
allows them to look at it in 3-D as well as 2-D format. In addition, we have acquired in
the last year, some significant assets around cardiology imaging with our acquisition of
Camtronics Medical Systems, Ltd., in November of 2005, which was a subsidiary of Analogic
Corporation (NASDAQ: ALOG). We have imaging software for the cardiac Cath-Lab, for the
Hemodynamics lab and for Echo Cardiography.
CEOCFO: Are there other
areas you would like to add through acquisition or development?
Mr. Pittman: Ultimately, there will be additional areas
where we would like to have solutions that we could offer our customers. They might be
more in-depth software related to cardiology around a cardiovascular information system
that ties the cardiologists and surgeons electronic medical records to those of the
hospitals so that they would have information to serve the long-term nature of the
cardiology patient relationship. We also have interest in seeing additional functionality
that can make our visualization technology more effective in other specific areas like
orthopedics, neurology and oncology.
CEOCFO: Is there much
training involved for the doctors?
Mr. Pittman: The software is very intuitive. You pick
an image off a work list that looks just like your email. The image pops up on the screen
in a way that has been programmed to display according to your individual preference, if
you are a credentialed physician looking at it. In other words, if you like to see prior
studies on the left vs. the right, yours will always pop up on the left. You will see it
the way you want to see it. There are icons that you can click on and it tells you exactly
what you need to do to see an image in a certain way to look at the notes that have come
from the radiologist, to look at notes from other corroborating physicians, to call up a
separate prior study and those types of things. It is very intuitive and physicians can be
trained in a very short timeframe.
CEOCFO: Will you tell us
about your revenue model?
Mr. Pittman: The customer buys a perpetual license to
use our system. In delivering that, we deliver a complete package to the customer, which
includes our software, some third-party components that are the hardware platform that the
software runs off of and stores images to. It also includes fees for implementation,
integration with other healthcare systems in the hospital, and training. They will
typically sign a longer-term support maintenance agreement for us to support the system
and provide upgrades for a period of usually five years.
CEOCFO: Is there a
typical size hospital or geographic area that use your products?
Mr. Pittman: Our customers are all over the United
States. We have focused primarily on developing relationships with large hospital networks
that own a group of hospitals. In doing that, you develop the relationships at the
executive levels of the Integrated Delivery Networks, or IDNs as they are known. Typically
we will sign a master contract with a large network of hospitals and then each individual
hospital within that network would as their budget allowed, prioritize and acquire our
system over time off of an order addendum to that master contract.
CEOCFO: You had a record
first quarter; what accounted for that and how do you continue?
Mr. Pittman: Our penetration of the relationships that
we had with those integrated delivery networks has gotten deeper. We for our enterprise
visualization software have contractual relationships today with about 285 hospitals and
as of the end of Q-1, 155 of those had implemented our software in their hospital. We have
continued to grow by extending further into those networks, hospital-by-hospital.
Secondly, with the acquisition of Camtronics Medical Systems, we have now been able to add
to our products set, the cardiology solutions and broaden the number of customers that were
able to serve, because Camtronics had a nice customer base as well. Thirdly, if you look
at statistics around this industry, Frost & Sullivan, Inc., which is a market research
firm that follows this industry, felt that the digital imaging sector is growing at about
15% per year and should continue to do that for several years. Digital imaging specific to
cardiology is growing even faster than that. That is a healthy growth rate. If you take
that and add what we feel is a better more complete set of products and services for the
specific space that we are in, we have been able to grow at even a faster pace than the
CEOCFO: Are you
concerned about competition?
Mr. Pittman: We compete everyday with some of the
largest companies in the world; GE (General Electric Company NYSE: GE), and
McKesson Corporation (NYSE:MCK) are probably our two largest competitors that we see most
often. We also compete with Siemens AG (NYSE: SI), and Philips Medical Systems (Philips
Electronics N.V. NYSE: PHG). Those are large companies and they certainly could
provide formidable competition, however we have been able to grow at a faster pace than
they have in the last several years in this particular industry, so we feel confident that
we can continue to compete effectively against them.
CEOCFO: Why would a
hospital chain choose you above your competitors?
Mr. Pittman: We feel like we have been able to
demonstrate an early understanding of the importance of imaging being used enterprise-wide
in hospitals as opposed to companies that have sold PACS systems only to the department of
radiology. We have, from the beginning, tried to design a robust content management
solution that allows hospitals to store all images from all sources in one central place
and then have access points throughout the enterprise to retrieve that data and use it not
only in a flat panel image but in a 3-D rendering. It provides them the ability to do
better surgical planning and those kinds of things. We feel like our service group has
done a very nice job in the implementations that we have put in hospitals throughout the
country. We get very high marks from customers on our implementation, integration with
other systems, timeliness, hitting deadlines and most of all the training of the staff
within the facility, which not only includes the physicians, but the radiology
technologists, systems administrators and other users.
CEOCFO: In closing, why
should potential investors be interested and what should people realize about Emageon that
does not jump off the page?
Mr. Pittman: Our growth prospects are still quite
substantial. Hospitals throughout the country have recognized the need to automate their
digital imaging in a fashion that equates to what they are doing with the electronic
medical record. The industry itself provides some wind at our back in terms of us being in
a space that is growing rapidly. Our solutions have proven over time that they are very
robust and scaleable to the largest hospital institutions in some of the finest names in
medicine. For instance, our system is now being deployed across the entire hospital at
Johns Hopkins, which has been named the top hospital in the United States for 15 out of
the last 16 years. We have gotten the seal of approval, if you will, from some of the
largest and most sophisticated healthcare delivery networks in the United States as to
having a great product and a great solution. With a customer base like ours that is based
around hospital networks, we have an opportunity to continue to grow within our own
customer base, a depth and breadth of product offerings that integrate well with digital
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