InSight Health Services Holdings Corp., a Lake Forest provider of medical scanning services, has formally offered creditors nearly all of the company in exchange for forgiving a huge amount of its debt.
InSight offered 87% of its common stock to bondholders in exchange for $200 million in debt due in 2011.
For each $1,000 of debt tendered, bondholders will receive 40 shares of InSight’s common stock, the company said. The offer and consent solicitation will expire on April 19, unless it was extended, and that notification of any extension would be made public, according to the company.
InSight first filed its plans with the Securities and Exchange Commission in February. Close to half of the company’s debt holders were on board with the offer, Chief Executive Bret Jorgensen said in an interview last month.
The company was looking to get 95% of its debt holders on board and complete the offering in the second quarter, Jorgensen said.
The offer is considered the carrot. The stick: a possible bankruptcy filing if the offer doesn’t pan out, InSight said in its filing.
“That’s not the path we’re on, but if we choose to, we could use that as a tool to force any holdouts to do the exchange,” Jorgensen said. “We’re parallel-pathing just to make sure the exchange offer remains on track.”
InSight, a private company, runs about 220 diagnostic medical imaging centers, including some mobile units that call on hospitals and other healthcare facilities. It has more than 2,100 workers.
The company is trying to get its debt down to $300 million,a number that’s manageable, Jorgensen said. As of Dec. 31, InSight had $503 million in debt.
In its filing, the company illustrated its predicament in a table that outlined cash from operations and expenses. It generated $64 million in cash in the 12 months through June 2005, enough to cover $45 million in interest payments during the period.
By contrast, the filing showed that InSight’s cash from operations fell to $38 million in the 12 months through June 2006, while its interest payments rose to $51 million.
“Where we found ourselves as a company is simply with a level of debt that’s not sustainable in the future,” Jorgensen said.
He also noted that the Deficit Reduction Act of 2005, which President Bush signed early last year, included “very significant (reimbursement) reductions for the diagnostic imaging industry.”
Edwards’ Core
Irvine-based Edwards Lifesciences Corp. took another step toward focusing its product lines.
The heart device maker said earlier this month it was selling the U.S. distribution rights and inventory related to its transmyo-cardial revascularization laser line to Toronto-based Novadaq Technologies Inc.
Franklin, Mass.-based PLC Medical Systems Inc. makes the system, which offers a treatment for patients with severe angina or chest pain, and who are not candidates for bypass surgery or angioplasty.
“We are sharpening our focus on unique and less invasive technologies that advance the field of cardiac surgery,” Chief Executive Michael Mussallem said.
Edwards said it expects to see $8 million to $9 million from the deal, including the purchase of inventory valued at about $1.4 million.
The TMR heart laser accounted for some $12 million, or only 1%, of Edwards’ $1 billion in 2006 sales.
In recent months, Edwards has concentrated on sharpening its core valve business. Its moves included selling a gene-based heart drug development program back in December.
Bye Bye Bailey
Bary Bailey resigned as chief financial officer at Aliso Viejo-based drug maker Valeant Pharmaceuticals International.
Bailey, who previously worked for PacifiCare Health Systems Inc., joined Valeant in 2002 after a shareholder revolt that led to the removal of the previous management team.
Valeant Chief Executive Timothy Tyson praised Bailey.
“He has guided us through some very complex financial issues and we will all miss his leadership and counsel,” Tyson said in a statement.
Peter Blott, Valeant’s group financial controller, is Bailey’s replacement. Blott’s been with Valeant since 2003. He previously held jobs with Otsuka Pharmaceuticals Europe Ltd., as well as GlaxoSmithKline PLC.
Valeant said Bailey’s staying through May 31 to assist with the transition.
Bits and Pieces:
Cogent Healthcare Inc., an Irvine provider of hospitalists, or doctors who practice exclusively in inpatient settings, launched a consulting division to assist hospitals in developing program strategies. Ron Greeno, Cogent’s chief medical officer, and Beth Hawley, a senior vice president, lead the group Richard Simmons, a partner at Sheppard, Mullin, Richter & Hampton LLP, discusses “Legislative Updates and Their Impact on Health Care” at the April 12 breakfast meeting of the Orange County Employee Benefit Council from 7:30 a.m. to 9:30 a.m. at the Hilton Hotel, 3050 Bristol St., Costa Mesa. Information: www.ocebc.org Several Orange County hospitals, including UCI Medical Center, Hoag Memorial Hospital Presbyterian, the three St. Joseph Health System facilities and five Tenet California hospitals, are participating in CalHos-pitalCompare, a report card project that distributes quality and performance information on 212 hospitals throughout the state. CalHospitalCompare is a service of the California HealthCare Foundation USGI Medical Inc., a venture-backed medical device maker from San Clemente, said its incisionless EndoSurgical gastrointestinal operating system was used in a pair of different surgical procedures VQ OrthoCare, an Irvine device maker, said it launched a line of off-the-shelf ligament knee braces.
