Steadily falling revenue from high-priced advanced medical imaging systems have pushed Minnetonka’s Imris Inc. to seek Chapter 11 bankruptcy protection and potential sale of the company to an investor group. Company shares sank nearly 90 percent on the news.
Imris is attempting to restructure its debts and avoid interrupting its day-to-day operations while it investigates a sale to an affiliate of New York investment fund Deerfield Management Co.
Deerfield has agreed to provide more than $9 million in financing to keep the company running, in addition to the $26.9 million that Imris already owes Deerfield for investments in 2013, according to Imris’ Chapter 11 bankruptcy petitions filed Tuesday in Delaware.
On Tuesday, the company’s shares sank 90 percent, to about 6 cents per share. In 2011, it was trading at more than $8.
Imris was formed in 2005 in Canada, and moved to Minnetonka in 2013 with the help of a $500,000 no-interest, five-year loan from the city for furniture, machinery and infrastructure improvements at 5101 Shady Oak Road. The city is listed as a creditor.
The 120-person company makes an expensive imaging system called the Visius Surgical Theater that allows multiple types of diagnostic imaging to take place inside special operating rooms. That allows physicians to get images of patients immediately, rather than waiting for surgery to end and the patient to be moved to an imaging suite. The company also has invested heavily in research on a robotic arm.
The imaging systems alone cost between $1.5 million and $12 million each, and typically require a year from initial contact to purchase order, according to Imris’ filings with the Securities and Exchange Commission. Imris has 17 pending installation contracts, and is seeking quick court approval to keep serving those customers.
As of Dec. 31, the company had sold 87 of its imaging systems, including those not yet installed. Yet annual revenue fell from $70 million in 2010 to $29 million 2014, and the number of common shares grew more than 50 percent in that time, securities filings say.
The sale to a Deerfield affiliate is expected to close sometime in late summer, pending court approval. The company asked for “first day” permission to pay its employees, continue its customer programs, and pay its normal creditors.