Bio-Imaging Technologies, Inc. (NDAQ: BITI) shares moved higher after a large shareholder recommended changes to improve the firm in a
Schedule 13D filing with the SEC. Heathinvest Partners disclosed a 5.3% stake in the firm and said they are very frustrated with the recent performance of the company that has resulted in the deterioration of value in 2008. Although the Imaging Services division, which has grown 19%, and the newly acquired Phoenix Data Systems unit seem to be developing well, the company's share price has declined 66% year-to-date.
"We believe that the source of the problem lies in the CapMed division," said Anders Hallberg of Healthinvest. "Despite allocating large resources to this loss-making unit for several years, significant revenues have failed to materialize. For example, in the most recent quarter, the division posted revenues of a mere $11,000 despite incurring approximately $776,000 in operating expenses. If the Company had sold CapMed to a third party or closed it down before the start of this year, the Company’s operating earnings for the first nine months in 2008 would have been around 43 percent higher without significant impact on revenues.
"CapMed is an expensive development project with no synergies with Imaging Services and Phoenix Data Systems. If CapMed cannot be sold, it should be closed down. While the decision to divest or close a division is always difficult, it should now be evident to the Company’s Board and senior management that CapMed is having a significant, negative impact on shareholder value, which should be the Board’s highest priority. Surely, the Company’s Board and senior management agree that it is imperative that investor confidence in the Company not be undermined any further. Committing to either divest CapMed or close it down before the end of 2008 would go a long way in this direction."
Combined, Healthinvest believes that these changes could help boost the company's troubled shares.
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