IMRIS seeks protection from bankruptcy

MINNETONKA, Minn. – IMRIS Inc., the high tech image guided surgical technology company that was formed in Winnipeg in 2005 has filed for bankruptcy protection. The company evolved from research conducted through the National Research Council of Canada.

IMRIS has always struggled with a very long sales cycle and lengthy installation process for its large MRI-guided surgical suites. The system – sold as VISIUS Surgical Theatre – integrates magnetic resonance imaging (MRI) and computed tomography (CT) into the operating room.

These large and sophisticated systems are moved on rails into the surgical suite, so that the patient doesn’t have to be moved during operations. The equipment is expensive, and the company moved its operations from Winnipeg to a Minneapolis suburb in 2012.

At the time, its founder, Winnipeg entrepreneur David Graves, said the move was necessary to have better access to the U.S. capital markets. The technology gained strong acceptance in the medical community but the $5-million-plus cost made it challenging for hospital budgets.

The filing documents include an offer from hedge fund creditor Deerfield Management to take over ownership and operation of IMRIS. The sale to Deerfield will be subject to a marketing process and approval by the U.S. bankruptcy court and is expected to close sometime in late summer, 2015.

In a statement Jay Miller, chief executive officer of IMRIS, said, “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.”

Deerfield was a senior secured lender and has extensive experience investing in the healthcare business. IMRIS’s shares have been declining for a couple of years down from a high of over $8 in 2011 to 72 cents today. It is expected the company will be able to continue operating business as usual during the bankruptcy protection process.