Verichip Files $47.8 Million IPO

Verichip, the Applied Digital(ADSX Quote - Cramer on ADSX - Stock Picks) unit that makes and sells radio-frequency chips for use in humans, filed for an initial public offering Friday.

The subsidiary, which has lost about $7.7 million since being founded four years ago, registered the $45.8 million deal via a Form S-1 with the Securities and Exchange Commission. Merriman Curhan Ford & Co. and Kaufman Bros. were listed as underwriters.

The company's flagship product is a microchip that is implanted under the skin to identify incapacitated patients in emergency rooms. Systems using the chip are installed in 4,000 North American hospitals, Verichip said.

Proceeds from the offering will be used to pay down debt to Applied Digital, with the rest going to general corporate purposes including research and development, capital expenditures and sales and marketing. The company plans to facilitate a subscription to the offering by Applied Digital shareholders.

"We believe that our patient identification solution is compelling for emergency room physicians as well as for patients who have cognitive impairment, chronic diseases or implanted medical devices," the prospectus says. "Using our scanners, an emergency room physician can rapidly obtain the patient's name, primary care physician, emergency contact and other pertinent pre-approved data, such as personal health records. We expect that this rapid and accurate identification process will reduce the risk of a patient being misdiagnosed and the potential liability associated with medical errors."

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