Kodak is looking at a major restructuring or possible sale of its health imaging group. "We haven't said that we are going to sell the health group. The board has authorized us to explore strategic alternatives. We will explore them all and selling will be one of them but it's not the only one," Antonio M. Perez, Kodak's chairman and CEO, told investors and analysts on May 4.

Kodak's health group had 2005 revenue of $2.7 billion, and is a worldwide leader in health imaging, including digital x-ray capture, medical printers, and x-ray film. However, first quarter earnings for the health group decreased from $78 million last year to $48 million this year.

"The health group experienced continued growth in its key digital businesses for the future--the digital capture and the healthcare information businesses, offset by declines in traditional radiography and digital output products," Perez said. "The output products, although using a digital printer, are attached to the analog workflow of the hospital and therefore are declining. Digital capture and health information systems will continue to have a strong market growth. In this business, in parallel with our investigation of strategic options, we will work on adjusting its cost structure to improve its overall margin performance and continue to drive the growth of its digital workflow portfolio."
The situation could go either way--Kodak may sell the business outright, which would wipe out the company's debt. Or, it might form a business relationship to help leverage the valuable brand.

"At this point all options are on the table," spokesman Robert Salmon told DOTmed. "That includes everything from a partnership to a joint venture to investment capital to a divestiture so we're not ruling out any option at this time."

Industry trends have led to waves of consolidation in medical imaging. "It's resulted in much bigger players. In order for us to compete, we need to build a business that has more scale to it," Salmon said.

What will happen to Kodak customers? Perhaps now more than ever, the company must support and protect its brand value. "Our people are hand-delivering the message that it's business as usual and we will continue to offer a broad portfolio of medical imaging and information products and solutions," Salmon said. "We will continue to provide software upgrades and products. Our service continues uninterrupted. Essentially at the end of the day, nothing has changed."

Kodak has been in the medical imaging business since the x-ray was invented a century ago. "We have a long heritage in radiology. We have hundreds of world-class PACS installations around the world. We still have a very strong film business," Salmon said.

In March, DOTmed reported that Kodak implemented double-digit increases in its imaging film prices as a result of the high cost of silver. The health group represents Kodak's most silver-intensive business.

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