Intelligent Ultrasound announces strong revenue growth in FY21 and expands AI portfolio
(IUG ), the 'classroom to clinic' ultrasound company, specialising in artificial intelligence (AI) software and simulation, has released its unaudited results for the year ended 31 December 2021 today (FY21).
The AI-focused ultrasound company achieved impressive revenue growth despite severe pandemic restrictions during 2021, impacting regulatory clearances for clinical studies and introduction/presentation of new products at technology shows and medical conferences.
has two primary sources of revenue:
- Development of high-fidelity VR simulators for the ultrasound training market, currently used by 650 medical institutions worldwide.
- AI-based clinical image analysis, utilising deep learning technology to develop smart ultrasound machines. The Company's ScanNav AI technology is currently used by GE Healthcare, a major producer in the space.
Both businesses grew to a total of £7.6m, a 47% increase YoY (FY20: £5.2m). While the bulk of sales growth came from the more established simulation division, the company has a bold vision for its AI business and continues to expand its portfolio of AI-related products. Growth was distributed globally with revenue increasing 76% in the UK, 18% in North America via direct sales and 53% across rest of the world via distributors.
Simulation
Simulation is a more mature market and the primary revenue source for who design, develop and sell some of the world's leading real-time, hi-fidelity ultrasound training simulators for teaching ultrasound scanning to medical professionals and medical device companies.
As such, the division is considered a large capital item purchase operation with direct sales forces in the US and UK, as well as through a network of resellers covering the rest of the world.
During the period, simulation revenue grew by 43% to £7.4m (FY20: £5.2m) and contributed £4.5m (FY20: £3.2m) of gross profit towards the Group overheads.
The division now boasts a user base of over 650 medical institutions around the world.
Clinical AI
's proprietary AI technology is currently licensed by GE Healthcare's SonoLyst software within their ultrasound machines.
also continues to expand its ScanNav portfolio with ScanNav Assist, ScanNav Anatomy PNB, NeedleTrainer, as well as ScanNav Detect and ScanNav HealthCheck, the last two being in early stages of development.
GE continues to roll out its Voluson SWIFT ultrasound machine, utilising ScanNav Assist. ScanNav Anatomy PNB received CE approval and launched in the UK. It is currently awaiting FDA approval in the US. NeedleTrainer was soft launched in October as well, expanding the Company's portfolio to three clinical AI-related software products with more in the pipeline.
Revenue for the division increased marginally during the period with the Company investing £2.1m in R&D, comprising 2/3rds of its R&D budget for 2021.
Outlook
With a growing range of both simulation and AI-related products, with pandemic related restrictions around the world relaxing, the Company reported a a "strong start to 2022" with a "high number of NHS financial year-end orders" in the first quarter.
Overall, the Company therefore expects revenue for FY22 to be ahead of current market expectations for FY22E of £10m.
The Company is now focussed on growing sales in both the more established simulation market and the newer, potentially higher-growth AI imaging market, and remains "excited about the potential of our 'Classroom to Clinic' business."
Riccardo Pigliucci, Chairman of Intelligent Ultrasound, commented: "This has been a positive year for the Group. We have increased Group revenue by almost 50% and we expect this growth to continue in 2022.
In addition, we are building an excellent partnership with GE Healthcare, the world's leading ultrasound company, and have launched two new AI-related products into the exciting real-time ultrasound imaging market, as well as introducing a number of product extensions to our simulation portfolio.
.........with restrictions around the world relaxing, we are focussed on growing sales in both the more established simulation market and the newer, but potentially higher growth AI imaging market.
We therefore continue to balance cash, R&D investment in new AI products and expansion of our sales networks against this anticipated sales growth curve, but we remain excited about the potential of our 'Classroom to Clinic' business."
View from Vox
Clearly a strong set of results from the Company for FY21 in line with the positive trading update announced earlier in the year, with further growth expected in 2022 and beyond. The update was well-received by markets with shares up 5.26% in early trading.
Importantly for investors, 's supply chain or sale pipeline does not include Ukraine, and whilst it had forecast sales to its Russian reseller, these have now been adjusted out of their FY22/23 forecasts accordingly. Russia accounted for 2% of sales in FY21.
Analysts at Cenkos have upgraded FY22E revenues to £10m from £9m (+11%) driven by increased expectations for simulation revenues, based upon a high number of NHS financial year-end orders received in the first quarter. With operating cost remaining broadly in-line, analysts model a £0.5m improvement in adjusted EBITDA.
Cenkos retains its near-term price target of 38p, suggesting c. 165% upside to the current price, while in the medium-term believes the group could achieve a market capitalisation of over £250m, offering strong mid-term returns.
Clearly the Simulation market is recovering strongly post pandemic and 's products have a significant advantage over the competition. delivering double-digit growth expectations. However, investors will be looking for further rewards once the Company announces the first significant royalty revenues from its AI software with GE or an additional AI licensee such as Siemens or even Phillips Healthcare.
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