Tag Archives: Caption Health

Signify Premium Insight: Exo Focuses on Ultrasound Acquisition with Medo.ai

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here.

Last week, Exo made headlines in the blossoming handheld ultrasound segment by announcing the acquisition of AI specialist, MEDO. The deal seeks to make Exo’s as-yet unreleased handheld ultrasound system easier to use, and therefore accessible to a wider range of professionals.

MEDO’s Sweep AI solution achieves this by automating parts of the ultrasound image capture and interpretation workflows, which, according to the vendor, lowers the level of expertise required to diagnose common and critical conditions.

As well as gaining Sweep AI, Exo will also pick up MEDO’s two US-FDA-approved AI algorithms, one for hip dysplasia screening and one for thyroid imaging, and its library of millions of ultrasound images and longitudinal health data.

The deal will set Exo apart from its competitors, who have so far tended to only partner with AI firms, but will it be enough to elevate it beyond them?

The Signify View

Apocryphal though it is, a quote attributed to iconic IBM CEO and Chairman Thomas J. Watson about there only being a world market for “maybe five computers” would have seemed plausible enough in 1943 when it is alleged to have been said. Not only were these machines vast, fragile and fickle, more akin to a plant room than a modern laptop, but they were also horrendously complicated to operate. While computers got smaller and less temperamental, and sales rose at major corporations and research institutions, they very much remained the preserve of professionals trained in their use. It wasn’t until the 1980s, when graphical user interfaces started to emerge, that more inexperienced users, who could then interact with a computer through icons rather than codes, started to purchase systems en masse. In making devices easier to use, computer manufacturers were able to sell to an entirely new market, the home market, rather than squabbling to take business customers off one another.

This is akin to the opportunity Exo has with its acquisition of MEDO. Exo is looking to sell its as-yet-unreleased handheld ultrasound scanner, a device that will be competing with second and third generation devices from its competitors, so needs to represent a compelling proposition from the outset.

While Exo is not looking to sell ultrasound systems to consumers, it aims to simplify image capture through the use of AI, thereby hoping to avoid a ruthless race to the bottom against the world’s largest ultrasound imaging vendors. Instead, it aims to open new markets, selling a clinician their first hand-held ultrasound device, rather than having to displace a rival. As such, while MEDO does bring with it two US-FDA-cleared algorithms, of greatest appeal to Exo will be its Sweep AI image capture technology.

Buy or Borrow?

Exo isn’t the only vendor to realise this opportunity, with what is likely to become the vendor’s closest competitor, Butterfly Network, also seeking to simplify image capture through a partnership with AI-developer Caption Health. However, while partnering has its own advantages, including the requirement for less investment and less commitment, acquisition could, in the longer term, give Exo the edge.

The instantaneous nature of ultrasound means that many of the modality’s most valuable solutions will be those that are embedded on devices and used during image acquisition rather than being utilised post-acquisition on the PACS. By acquiring MEDO, Exo will gain granular control over its technology, enabling the ultrasound vendor to more effectively integrate its Sweep AI into the upcoming handheld device. Instead of being constrained by the limitations of a partnership, even an exclusive one, Exo can put MEDO’s technology and approach at the heart of its device. It can intertwine hardware and software in such a way that a partnership, where there is always the risk of separation, simply cannot offer.

Acquisition also grants the acquisitor strategic control. Caption Health’s primary focus is cardiac imaging. Through its exclusive partnership, Butterfly Network will likely have some influence over Caption Health’s strategy, but this will fall far short of the absolute control that Exo will command over MEDO. This could prove crucial. Cardiology is a sizeable and significant imaging target, but it is still only one clinical area, a factor that could prove limiting over time.

Bigger is Better

The low cost of handheld ultrasound devices means that, unless sold as part of a particular programme or as an add-on to a larger medical imaging deal, scale is essential for commercial viability. Achieving this volume by selling to existing ultrasound users will be nigh-on impossible, particularly as the segment becomes more competitive and providers become increasingly entrenched in their vendor of choice.

Instead, this scale needs to be attained through new users, such as GPs, nurses and midwives. MEDO’s Sweep, with its universal applicability, as well as Exo’s ability to direct software development into any particularly lucrative burgeoning opportunity could grant it an opportunity to make money where others have been forced to accept losses. This is particularly true as the low cost of the devices themselves means that additional services such as add-on solutions and software subscriptions will be critical. For these opportunities to be leveraged, a critical mass of users must be reached.

In this regard, acquisition could also prove preferable to partnership, albeit at the expense of greater developmental resource. It is likely that Exo will continue to offer MEDO’s hip dysplasia and thyroid applications, although, as niche use cases, they will not be as high priority as its Sweep AI technology, while also continuing to add additional clinical applications over time. It would be both quicker and cheaper to offer additional tools through partnerships. But while boasting about additional capability might entice some customers, taking a modest percentage of a relatively small sum from the sale of a partner’s solution is unlikely to hold much sway for a handheld vendor such as Exo, leaving it a long way off the elevated service revenues it seeks.

Deals to be Done

While there has been collaboration between AI developers and handheld ultrasound vendors before, until now, most of these relationships have taken the form of partnerships. Given the advantages acquisition could offer in terms of tighter integration, the growing competitiveness of the handheld market and the need to target new users to reach the necessary sales volumes, other handheld companies could look to forge similar deals.

Price could be a barrier. Terms of Exo’s deal haven’t been disclosed, but the cost of the relatively modest AI outfit will have been easily absorbed by Exo’s total funding of more than $320m. Other vendors may not be so lucky. If their chosen targets have already had more commercial traction or been able to secure significantly higher funding than MEDO, or if an ultrasound vendor has raised less money, or is taking heavy losses, such a purchase could be well out of reach.

There are other options, with a large international imaging vendor like GE HealthCare currently having the means to pick up an AI specialist. The vendor currently partners with Intelligent Ultrasound, a London-listed ultrasound AI and training simulators specialist. The healthcare giant could be tempted to purchase the AI developer, which has a market capitalisation of around $43m. GE does, after all, pride itself on its global ultrasound market leadership position, has recently refreshed its own handheld offering, and, with its acquisition of BK Medical and its investment in Pulsenmore shown its willingness to invest in ultrasound. However, other ways to formalise the partnership are also possible, with licensing agreements, for example, another way to shore up the use of Intelligent Ultrasound’s technology for the long term.

Whether such deals come to pass remains to be seen. Doubters will continue to see the handheld ultrasound market as a niche, a $200m fragment of a $7.1bn market, in which even the most prodigious player is floundering financially. With such a worldview, the flexibility and affordability of partnerships continue to be the preferred practice. For believers however, Exo has been shrewd. In the same way ‘home computing’ grew out of improvements in affordability and, crucially, usability, MEDO’s technology could help handheld ultrasound find its way into the pockets of countless doctors, nurses, and other clinicians. In such a way a lucrative new customer base could be created, and those vendors that seized an early opportunity to access this base could rally.

In acquiring MEDO, Exo has revealed its hand and quietly raised the stakes. Now it can wait to see if others share its convictions.

About Signify Premium Insights

This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here

Signify Premium Insight: The Puzzles of Partnerships – Ultromics & Caption Health Combine

This Insight is part of your subscription to Signify Premium Insights – Medical ImagingThis content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here.

In a recent announcement, AI developers Caption Health and Ultromics revealed that they were entering into a strategic partnership. The move, which will bring together the two firms’ expertise in AI-assisted image acquisition and interpretation, will, according to the vendors, grant more providers the opportunity to perform ultrasound examinations and help them automatically calculate key indicators of heart function. This should facilitate the earlier and more accurate identification of heart disease. The vendors say the partnership will also help bridge the gap between acquisition and diagnosis, with the solutions, alongside hardware from Caption Health partner Butterfly Network, strengthening the capabilities of a greater range of clinicians.

 The Signify View

As Butterfly Network, and other handheld ultrasound vendors seek growth, they are casting their eyes away from established imaging markets and radiology departments and targeting new customers. These companies are looking to introduce ultrasound into both new geographies and to new clinical settings. In doing so, these handheld systems will, for many users represent their first-time using ultrasound, or indeed, any medical imaging system at all.

These new users require support and guidance, vendors and providers have a role in providing this market education, but AI tools can also play their part, helping inexperienced users capture and interpret diagnostic images. This, as Signify Research wrote in August, was the rationale behind Butterfly Network’s partnership with Caption Health. However, given that ultrasound is much more of a ‘real-time’ modality, than others whose images are typically reviewed after acquisition, the ability to capture images alone is of limited clinical value. Caption Health’s partnership with Ultromics aims to address this gap, by allowing those with the Butterfy iQ+ to not only capture images, but also to discern several key cardiac measurements from them.

The partnership improves the clinical value of both developers, as well as that of Butterfly Network, as an entire package comprised of a device, acquisition and analysis tool, the product is arguably more attractive to a new user than any individual component individually.

 A Tough Sell?

While the capabilities of these partners are well aligned, there are some commercial challenges that must be considered. One of these centres on Ultromics and Caption Health’s revenues. If the two vendors’ products are to be sold alongside Butterfly Network’s handheld systems then there is little room for all three vendors to raise reasonable revenues from a device that, according to the IQ+’s webpage, costs customers $102 per month on a 36 month payment plan, including a three year subscription to Butterfly Network’s ‘Pro’ service. The ability to raise these prices is also limited, as doing so will undermine the scanner’s value proposition, one of its key selling points. Providers’ ability to claim the CMS’ new technology add-on payment (NTAP) for the use of Caption Health’s software will sweeten this deal somewhat, but would still leave them having to pay for the devices initially.

Selling the solutions individually could allow the developers to charge higher prices for the tools, but sales would be lower, and these additional costs for the AI tool’s capture and analysis capability would reduce their appeal in the new markets that handheld ultrasound looks to target. Instead, these vendors must rely on high volumes to be successful. This is possible. Butterfly Network’s most recent financial results, for Q3 2021 show product revenue for the quarter of $10.8m. Although there is some ambiguity brought in by products such as cases and straps, the majority of this revenue will come from the vendor’s iQ+ devices, suggesting sales of around 4,500 units for the quarter. With Signify Research forecasting a CAGR of more than 25% for the sector in its latest Ultrasound Equipment report between 2020 and 2025, Butterfly Network could yet be on track to deliver high sales volume.

A reliance on high sales volume may yet prove prudent given the forecast increase in handheld system unit shipments over the coming years

A Preference for Portfolio

This is one area where larger vendors, which offer a full range of ultrasound products could hold an advantage over the handheld specialist vendors. GE and Philips, for example, have both formed partnerships with DiA Imaging Analysis, currently focused on their point of care offerings. However, these vendors could, in future, also open up the partnerships to their broader ultrasound ranges, potentially offering opportunities across a wider range of devices, rather than relying on handheld ultrasound growth. With handheld devices forecasted to account for just 6% of the total ultrasound market by 2025, in the long term this could prove to be a useful option.

A further challenge will be adding further capability to the software tools. The use of Caption Health’s tools to enable new users to capture cardiac ultrasound images will be of limited benefit if those same users don’t have a fully fledged suite of analysis tools. The partnership with Ultromics, and its EchoGo solution brings analysis of ejection fraction, left ventricular volumes and cardiac strain, but the vendor will need to continue to develop its toolkit if it is to make echocardiography truly accessible.

 A Marathon not a Sprint

These challenges, however, don’t take away from the significance of the partnership between Caption Health and Ultromics. The former’s ties to Butterfly Network means that if all works as it should, an inexperienced user can purchase an affordable ultrasound system, perform an examination of a patient’s heart and almost instantaneously garner certain key metrics. Hardware and software has aligned to offer new diagnostic capabilities to whole swathes of new users. Whether this can be done profitably is another matter.

Butterfly Network’s original approach was to develop the majority of its software, as it does with its hardware, in house. The vendor’s partnership with Caption Health signalled an end to this approach, and the use of Ultromics EchoGo system emphasises it. While these moves significantly add to the vendor’s capability and keep it in step with some competitor vendors such as EchoNous, which has recently partnered with US2.ai for cardiac analysis, it does mean sharing revenues with third parties, which, for a vendor focused on affordability, could prove difficult if sales don’t live up to expectations. Moreover, Butterfly Network is potentially losing out on the opportunity to upsell AI software applications and services compared with competitors such as Clarius who have a stronger focus on developing their own applications.

Despite this, the move remains sound for the AI developers. Sales of relatively narrow AI solutions directly to providers could prove challenging, and direct sales to users in new markets doubly so. By partnering to create a package that is more clinically valuable, the vendors are able to strengthen Butterfly Network’s commercial proposition whilst leveraging it as a potentially far-reaching sales channel.

For handheld vendors such as Butterfly Network and imaging AI developers alike, this increasingly collaborative approach is not a magic bullet. This seems well understood by Ultromics in particular, which, unlike Caption Health, did not enter into an exclusive partnership, suggesting that the vendor sees the handheld market as an additional, rather than integral revenue stream.

As such, collaboration will not completely solve all the issues that the relatively young segment is facing. Despite the AI assistance, market education is still a hurdle to adoption, technical barriers remain with image quality potentially hindering the usefulness of the tools, and other factors, such as the inability of a provider to act upon the results of an exam could undermine the utility of AI-equipped handheld systems in new settings.

But, as the value of the solutions is bolstered by developments such as Ultromics’ and Caption Health’s partnership, the motivation to address the other challenges will increase. The first pieces are being laid, now the rest of the puzzle can start to fall into place.

About Signify Premium Insights

This Insight is part of your subscription to Signify Premium Insights – Medical Imaging. This content is only available to individuals with an active account for this paid-for service and is the copyright of Signify Research. Content cannot be shared or distributed to non-subscribers or other third parties without express written consent from Signify ResearchTo view other recent Premium Insights that are part of the service please click here