Ansys Diagnostics Plans Stock Offering

Ansys Diagnostics Inc., a developer and manufacturer of drug testing products, will seek to raise about $25 million through an initial public offering of stock, a regulatory report said.

The Lake Forest company plans to sell 2.5 million common shares at $10 to $12 each, according to the report, filed Monday with the Securities and Exchange Commission. The offering will equal about 31% of 8.01 million shares outstanding after the IPO.

Organized in 1988 to acquire the analytical-systems division of Marion Laboratories Inc., Ansys has been profitable for the last five years. Sales surged more than 75% last year.

The company’s products are used in pre-employment screening, random employee testing, government-mandated testing, parole and probation monitoring and hospital-based testing.

Ansys developed some of its products in cooperation with Roche Diagnostic Systems Inc. Roche holds the ownership rights to several of these products, including TesTstik and TesTcup, and pays Ansys to manufacture them under exclusive agreements that expire in 2002 and 2003.

TesTcup and TesTstik are urine-based testing devices that detect drugs of abuse in about five minutes. The market for this type of product totaled about $628 million in 1996 and is expected to reach $900 million by 2002, according to the registration statement.

Potential customers include corporations and government agencies that test their employees for drug use. For example, the U.S. Postal Service has put in place a pilot drug-screening program using TesTcup that will require about 250,000 on-site drug tests.

TesTcup and TesTstik products, along with a third kit called On-Site Alcohol, accounted for about 65% of net sales at Ansys last year. In addition to the on-site items, Ansys also manufactures products for clinical and environmental testing laboratories and pharmaceutical and biotechnology companies.

Net income at Ansys totaled $2.69 million last year, up from $1.21 million the year before. Sales rose to $18.9 million from $10.7 million.

Ansys will use about $2.3 million of proceeds from the stock sale to redeem its Series A preferred stock and pay accumulated dividends. The company will devote another $1.9 million to repaying bank debt, with the balance earmarked for general corporate purposes, including possible acquisitions.

Vector Securities International Inc. and Sutro & Co. will underwrite the stock sale.

Ansys will seek to have its shares trade on the Nasdaq market under the symbol ANSD.