Million dollar pictures

Philips is to acquire the US-based medical imaging outfit Stentor in a $280 million deal.

Philips is to acquire US-based Stentor, a developer of picture archiving and communication systems (PACS) used for storing, managing and distributing digital radiology images throughout hospitals and healthcare facilities, in a $280 million deal.

The company expects its 2005 sales to be $50 million and 2006 sales annual growth is projected at 50% based on the company’s unique “pay-per-study” business model, in which customers pay a fee to view, distribute and store medical images rather than purchase a PACS system outright.

Stentor will be incorporated into the Healthcare IT business of Philips’ Medical Systems division. From its headquarters location in Brisbane, CA, Stentor will become the global headquarters of Philips’ overall PACS business.

The healthcare IT market is attractive given that US and European healthcare industries have traditionally underinvested in IT. According to an October 2003 report by the US General Accounting Office, less than 10% of hospitals had replaced paper charts with EHR, and the US Center for Medicare & Medicaid estimated that in 2004 less than 5% of US healthcare spending went into IT – much lower than in financial institutions and other service industries.