Wednesday, June 25, 2008

Emageon's stall

As we discussed yesterday, Emageon is in the business of allowing easy access to medical imaging.

To an utter outsider like yours truly, this business sounds like it would be a great profit opportunity. It must seem that way to Oliver Press, likewise, or they wouldn't have put the money into this position that they have, (they purchased 12% of Emageon's equity last summer) or bothered to wage the proxy fight to get representation on the board.

Nearby you can see a price chart for Emageon covering the last two years. The stock price (Nasdaq: EMAG) was securely in double-digit terrain through 2006, began a step-like descent, entered the high single digits in April 2007, and took a sharper fall, into the bottom half of single-digit territory, in November.

What's going on? I don't know and looking through the SEC filings so far hasn't told me.

OPP claims that the market has lost confidence in the Emageon management. As explanations go, that one's just a waste of oxygen. What if anything has that management done wrong, in an operational sense, that could warrant such a 'loss of confidence' and that new-blood board members might help to fix? I have no idea.

For the record, management says their record should be measured against their peer group. Some of the companies in their peer group, as they understand it?: Vital Images Inc., Amicas Inc., Emageon Inc., Merge Technologies Inc., Nighthawk Radiology Holdings Inc., and Virtual Radiologic Corporation.

All these companies are suffering "from similar market conditions and decreases in government reimbursement programs in recent years."

But even sticking to the company's own comparisons, Emageon seems to be suffering somewhat more than those peers. So ... what is going on? I'm open to thoughts from the public. Comment away.

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