Daxor Corporation

What they do

Daxor develops and sells the BVA-100 Blood Volume Analyzer, an instrument that measures human blood volume, used with the single-use Volumex radiopharmaceutical diagnostic injection and collection kit. It also provides cryobanking services for blood storage through Scientific Medical Systems and for semen storage through Idant, and runs the Daxor Oak Ridge Operations (DORO) facility in Oak Ridge, Tennessee, which manufactures, tests and develops next-generation BVA-100 models. The company says it has focused on the BVA-100 for the past 16 years and is dependent on earnings from its investment portfolio to fund operations.

Revenue drivers

• BVA-100 Blood Volume Analyzer and Volumex kits — The instrument and its single-use diagnostic injection and collection kit are the company's stated main focus and primary operating product, sold to hospitals and clinicians.
• Cryobanking services — Blood storage is offered through wholly-owned subsidiary Scientific Medical Systems, and semen storage through Idant, a subsidiary of Scientific Medical Systems.
• Investment portfolio income — The company disclosed it is dependent on earnings from its investment portfolio to fund operations, with all investment decisions made by President and CEO Dr. Joseph Feldschuh.

Recent performance

Annual revenue was $1.4M in 2011, down from $1.6M in 2010. Net income swung to a loss of $7.2M in 2011 from income of $5.0M in 2010, and diluted EPS was -$1.70 versus $1.17. Operating cash flow was -$6.5M in 2011 and -$5.7M in 2010. At December 31, 2011 the company reported total assets of $85.7M, total liabilities of $49.5M, shareholder equity of $36.2M, and cash and equivalents of only $59,625.

Strategy

Daxor says it is actively supporting blood volume research in Heart Failure, Critical Care/Trauma, and Transfusion Decisions during Surgery. It is enrolling 300 patients at thirteen medical centers in the TEAM-HF study, comparing management based on clinical assessment versus direct BVA-100 measurement, with Dr. Stuart Katz as National Principal Investigator. It is also supporting a 50-patient study on using blood volume measurement to guide ultrafiltration in decompensated heart failure. After an SEC Administrative Law Judge found Daxor to be an Investment Company on August 31, 2011, the company said it planned to file Form N-8A and Form N-2 and begin reporting as an Investment Company effective January 1, 2012.

Risks

• Investment Company Act reclassification — An SEC Administrative Law Judge found on August 31, 2011 that Daxor is an Investment Company because more than 40% of its assets are investment securities, forcing a shift to investment-company registration and reporting.
• Thin liquidity — Cash and equivalents were just $59,625 at December 31, 2011 against total liabilities of $49.5M, and operations used $6.5M of cash in 2011.
• Narrow product base — Revenue of $1.4M in 2011 depends mainly on the BVA-100 and Volumex, with quarterly revenue declining to $340,907 in the September 2011 quarter from $453,281 a year earlier.
• Key-person concentration — The company disclosed that a single individual, Dr. Joseph Feldschuh, its President and CEO, makes all investment decisions.

Outlook

Management stated it plans to file Form N-8A shortly after the 2011 Form 10-K and then Form N-2, and to begin reporting as an Investment Company effective January 1, 2012. Management believes the additional disclosures required as an Investment Company will not materially affect current investment policies and practices. The company is continuing to enroll patients in the TEAM-HF study and supporting a 50-patient ultrafiltration study in decompensated heart failure.