17 Jun 2002
Losses, lawsuits, loans and a financial investigation fuel concern in a difficult week for Lumenis.
Israel-based Lumenis, the world's biggest medical laser manufacturer, has posted a yearly net loss of USD 146 million following a week of mounting tension surrounding the company.
As it presented its year 2001 earnings to investors, Lumenis also revealed that it is to pull out of a laser hair-removal joint venture in the UK. Then it emerged that the company faced counterclaims from its smaller US competitor Trimedyne over patent infringement.
Lumenis began a flurry of activity last week when it announced on Monday that the US Securities and Exchange Commission (the financial regulations body) had requested documents dating from 1998 relating to its relationships with distributors. Later the same day, the company said that it had agreed a refinancing deal with Bank Hapoalim of Israel that increases its available credit from USD 20 million to USD 35 million from April 30 this year.
Coming in the wake of the Enron scandal, that news precipitated a 30% plunge in Lumenis' share price.
On Tuesday, the firm finally appointed a new chief financial officer, Kevin Morano, ending an eight-month search.
Then on Thursday, just as the Lumenis earnings presentation was about to begin, Trimedyne announced its counterclaims, alleging "trade libel, intentional interference with prospective economic advantage and unjust enrichment" by Lumenis, and that the original Lumenis claims were "completely without merit".
Trimedyne chairman Marvin Loeb said: "We hope other laser manufacturers will join us in a petition to take action against Lumenis' alleged unfair business practices."
Highlighting the chasm in size between the two companies, Loeb added: "Lumenis is the Goliath of the medical laser business. According to published reports, Lumenis had revenues of USD 478 million and a net profit of USD 35 million for the year ended September 2001, while Trimedyne had revenues of only USD 7.5 million."
At its earnings presentation, Lumenis said it decided to pull its resources out of the UK-based joint venture Aculight because of conflict with other products for hair removal procedures. However, Lumenis will remain a passive interest in the company as a 6% shareholder.
Senior management blamed company restructuring following last year's takeover of Coherent Medical Group for the yearly loss, but the efforts to reassure investors were met with concern - one investor said that he could not remember a conference call "where there were more questions to be asked".
Michael Hatcher is technology editor of Opto & Laser Europe magazine.