Hoana plans to go public for future cash needs

The medical-device firm has raised $62 million since 2001 in private deals

Medical device maker Hoana Medical Inc., which received an award yesterday for raising $20.9 million in its fourth round of financing, plans to rapidly expand sales this year with an eye toward going public.

The Honolulu-based startup spawned by the local engineering and technology firm Oceanit Laboratories Inc., this year is aiming to sell 1,500 units of its flagship product, which allows doctors and nurses to track the vital signs of patients in bed with no electrodes, cuffs or other direct connections.

Hoana CEO Patrick Sullivan yesterday declined to specify a target date for an initial public offering, but said that Hoana doesn't plan another private equity round.

Hoana's latest round won it the Hawaii Venture Capital Association's 2006 Deal of the Year award.

Since inception in 2001, Hoana has raised nearly $40 million in private equity and $12 million in federal money for clinical evaluation and testing.

"The issue is when is the right time (to go public)?," Sullivan said. "It's easy to be swept away by emotion versus what makes sense for the business. We want to make sure we create value for shareholders by doing it in a smart way. We've been focused on executing in the field."

He said the company is consulting with large banks about the right time to issue an initial public offering.

Hoana had sold about 200 monitoring devices to five hospitals at the end of 2006 for use in medical surgical units.

Another 20 hospitals throughout the country this year are expected to be using the device, which fits over a mattress.

The U.S. Food and Drug Administration approved the device in 2006, and sales began shortly after.

The company, in its latest round of financing, had set out to raise $15 million, selling shares at $1.43 per share.

The company sold its shares at 34 cents in 2002.

"We had to shut the round down because it was so interesting for investors," said Sullivan, adding that Hoana turned away about $4 million.

Investors included Tokyo-based Global Venture Capital and Servco Pacific Inc.

"Now the risk in the business is much lower," he said. "If we're thinking long-term what's important is to create value consistently year after year."

Hoana is working with a number of large health-care systems this year, though Sullivan declined to disclose the names of those clients.

The company has grown to 50 employees, up from 30 to 35 a year ago.