A Familiar Image On This X Ray?

Three years ago, Diasonics broke itself into three companies. One of them, OEC Medical Systems (OXE), is now trading on the Big Board at 10 a share. Some investors are betting that OEC Medical is the target of a larger medical-equipment company. Indeed, one of the products of the split-up, Diasonics Ultrasound, was acquired by Israel's Elbit in late 1994.

OEC Medical, which makes computer-based medical devices--primarily X-ray imaging systems--had an informal offer last year from a major medical-equipment company, says one investment manager. But OEC and the suitor couldn't agree on a price.

Now, he thinks the suitor has decided to come back to the table. OEC is a lot more attractive buyout target today, he argues, with practically no debt and with lots of cash on hand. In a buyout, the pro figures OEC is worth 17 to 19 a share.

The company has been expanding its product line. OEC currently makes urological X-ray systems that combine radiographic and fluoroscopic imaging with digital imaging-processing capabilities used by hospitals and outpatient and surgical centers. It has subsidiaries located in France, Germany, Italy, and Switzerland.

OEC recently signed a $10 million, two-year contract with Columbia/HCA Healthcare to supply mobile fluoroscopic imaging equipment--known as mobile C-arms--and urological imaging tables.

One analyst expects OEC Medical to post earnings of $1.30 a share next year and $1.10 this year, vs. last year's 94 cents. OEC Chief Financial Officer Randy Zundel says the company is aggressively scouting for acquisitions, but he declined comment on rumors that OEC is a buyout target.

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