Just over 2 weeks into the new year and we've already got ourselves some fresh IPOs, one of the first being the Singular Health IPO. The company opened its initial public offering on 4 January in an effort to raise $6 million at a price of 20 cents per share. The placement implies a market capitalisation of nearly $20.5 million, as detailed in the company's prospectus.
The offer has since closed early due to significant demand. Setting the stage for another ASX listed medical imaging technology company.
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What is the Singular Health IPO bringing to the table?
2D, or not 2D, that is the question
Rather than the traditional 2D medical images that are still popular to this day (CT and MRI), Singular Health's technology produces viewable 3D objects from its 2D counterparts. This is made possible by the group's proprietary volumetric rendering platform.
The technology, enabled by the MedVR software, allows immersive viewing through the use of virtual reality. This software is currently a TGA IVD Medical Class 1 Software and is listed on the Australian Register of Therapeutic Goods.
MedVR has already been commercialised and is generating revenue, albeit $22,609 unaudited for the 2020/2021 financial year to date. The software is currently used by medical practitioners, medical students, hospitals, and universities; both locally and abroad.
Revenue is expected to be generated predominantly through a Software-as-a-Service (SaaS) model. For the VR related products, the company will also make one-off revenue through reselling and installing MedVR compatible virtual reality hardware.
The medical imaging landscape
With Singular Health gearing for official quotation to the ASX on 4 February, the microcap will be joining giants at its sides. Most notably, the long time listed healthcare imaging software provider, Pro Medicus Ltd (ASX: PME). As well as, the not so long-listed, small-cap, XV Technology developer, 4DMedical Ltd (ASX: 4DX).
Firstly, the Pro Medicus share price has returned 43.1% in the last 12 months. The $3.3 billion company has built out a suite of cloud-based medical imaging software products. These cover the imaging organisation process, communication between radiographer and radiologist, and viewing of images even on mobile devices.
Pro Medicus has also recently benefitted from a slew of new contracts in recent months. The biggest being announced yesterday, a A$40 million, 7 year contract with Intermountain Healthcare to provide Pro Medicus' Visage software across more than 200 clinics.
Singular Health's offering is differentiated from Pro Medicus, given that the Visage software is focused on the handling of medical imaging, whatever form that may take. Whereas, Singular Health wants to produce 3D interactive scans that are distributed through its own software.
Secondly, the 4DMedical share price has returned 43.4% since listing just over 5 months ago. 4DMedical's secret sauce is its proprietary XV Technology. This is used to convert sequences of X-ray images into 'four-dimensional' quantitative data. The company utilises this process to assess lung function by using existing clinic equipment through its cloud-based SaaS offering.
4DMedical successfully obtained TGA approval for its XV lung ventilation analysis software on 30 September 2020, reportedly 6 months ahead of schedule. Although, despite its $409.82 million market capitalisation, 4DMedical reported $1.23 million in sales revenue for FY20.
Foolish takeaway
Timely detection is crucial in most cases where medical imaging is employed. Appropriate imaging distribution, interaction, and presentation is critical. In that case, it is phenomenal that we have innovation in this space right on our doorstep.
With the addition of Singular Health, it appears we have the 2D, 3D, and 4D listed trio in medical imaging. Whether the Singular Health Group's debut will resonate with the market, or not, is in the hands of the IPO gods.
Longer-term, it will be interesting to see if VR in the health space gains traction.
