IMRIS Files for Bankruptcy Protection

Steadily falling revenue from high-priced advanced medical imaging systems have pushed Minnetonka, Minn.-based Imris Inc. to seek Chapter 11 bankruptcy protection and potential sale of the company to an investor group.

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, N.Y.-headquartered 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 May 26 in Delaware.

The company’s shares have plummeted 90 percent in the last four years, to about 6 cents per share. In 2011, it was trading at more than $8.

“IMRIS, like many of its competitors, has been undergoing rapid changes which have hindered its ability to operate profitably on a long-term basis as currently structured,” said Jay D. Miller, IMRIS CEO.   “A combination of significant fixed operating costs allocated to research and development of new technologies and variability in timing of receipt of customer payments as a result of the long and delayed installation timeframes of the company’s products have contributed to on-going operating losses, a deterioration in liquidity and an erosion in equity value for IMRIS.” 

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. 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 U.S. 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 indicate.

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.