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VeriChip Sells an RFID Business, More Change May Come

VeriChip, maker of controversial human-implantable RFID tags by the same name, sold a subsidiary that provides patient protection solutions and said the entire company could be available for sale. It also announced former chairman and CEO Scott Silverman will no longer serve as an officer of the company.
Tags: Privacy
May 19, 2008This article was originally published by RFID Update.

May 19, 2008—In an eventful day for the company last week, healthcare-oriented RFID provider VeriChip: announced the sale of its Canadian subsidiary Xmark, said it is exploring the sale of its VeriMed Health Link division and would consider an outright sale of the entire company, released first-quarter results, and announced that former chairman and CEO Scott Silverman would no longer serve as a company director or executive.

VeriChip is headquartered in Delray Beach, Florida, and manufactures RFID systems to identify people and assets such as patient ID systems to alert healthcare facilities to wandering patients or possible infant abductions. It is perhaps best known for its namesake product, the controversial human-implantable VeriChip. The company was restructured last fall (see VeriChip Parent Buys Out Animal Chipping Subsidiary) after going public in February. Digital Angel, which manufacturers the pet and livestock RFID chipping technology upon which VeriChip is based, owns 48.2 percent of the company.

Stanley Works, parent company to the popular Stanley tool brand, announced it paid $45 million cash for Xmark and would integrate the company into its security business. In the press release, Stanley Works said Xmark has annual revenues "in excess of $30 million." Based on that statement, it appears Xmark was responsible for most of VeriChip's total revenues. VeriChip reported company-wide revenue of $32.1 million for fiscal year 2007 in its 10K statement filed March 28, 2008.

Last week VeriChip reported first-quarter revenues of $8.6 million, with healthcare security operations accounting for $6.6 million of the total. There was a meager $3,000 in implantable RFID sales, and $2 million in industrial products and services.

In its announcement of the Xmark sale, VeriChip said the proceeds will be used to retire all outstanding debt. Much of the remainder -- $15 million -- will be distributed as a special dividend to shareholders, and another $4.5 million will be held in escrow for a year.

As part of the same announcement, the company also said it has retained investment firm Kaufman Brothers to assist in selling its VeriMed Health Link business and to explore a sale of the entire company. Scott Silverman will remain with VeriChip as a consultant for the VeriMed sale, but is no longer the chairman or CEO. Digital Angel CEO Joseph Grillo is replacing Silverman as chairman of the VeriChip board.

The VeriChip stock price has tumbled about 18 percent since Friday, from about $2.55 to $2.13 at time of publication.
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