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 Research. To view other recent Premium Insights that are part of the service please click here.
Medical imaging AI has a new unicorn, after Viz.ai secured $100m in funding at a $1.2bn valuation. The series D round brings Viz.ai’s total funding raised to more than $250m. This figure places it higher than almost all other vendors, with only HeartFlow and Shukun Technology having declared greater funding totals.
In the funding announcement, Viz.ai also revealed that more than 1,000 sites are now using its care coordination platform, which aims to expand on the vendors’ current focus on stroke detection and triage in order to aid and improve decision making in other clinical areas.
The Signify View
Viz.ai has, over the last two years, been on something of a roll. In August 2020 the Centers for Medicare & Medicaid Services (CMS) granted the vendor’s diagnosis and triaging solution (as well as others functionally equivalent) the first New Technology Add-on Payment for artificial intelligence software. This ruling meant that unlike almost all other AI solutions, providers could be reimbursed for the use of Viz’s tool. The vendor followed this up with a $71m series C funding round in March 2021 to finance Viz.ai’s expansion of its Intelligent Care Coordination platform into both other areas of clinical care and into other global markets. This round also propelled the vendor into the $100m club, of vendors with more than $100m of funding. Adding another $100m pushes Viz.ai into even more rarefied air, but also begs the question of what a vendor which has raised $170m in little over twelve months will do next.
This rapid progression suggests that Viz.ai could be heading towards listing publicly, with the vendor utilising its series D funding to pay for expensive product development to target other clinical areas, and sales activities to capitalise on other territories beyond the US. With these initiatives underway the time would be for ripe for Viz.ai to target an IPO and raise the capital it needs to attempt a rise to dominance. However, in reality, this path could prove to be problematic. One need only look at the attempts to list publicly by other large medical imaging AI vendors to see the challenges that could lie in Viz’s future. HeartFlow, example, raised more than $540m, with its latest funding round, a post series E, completed in 2019. In 2021 the vendor then decided to list publicly via a SPAC merger. However, this plan was ultimately unsuccessful with the vendor abandoning the move earlier this year, citing unfavourable marketing conditions and an inability to properly value the company. More generally review of broader healthcare technology sector in 2022 year to date versus 2021 has seen a collapse of IPO and SPAC deal volume.
The Demands of the Market
A similar fate could befall Viz.ai, with the appetite of VC investors not necessarily translating into demand from public investors. However, there are differences between the two vendors. If Viz.ai decided to go public now it would be doing so with a valuation, that, while significant, is still more than half that given by HeartFlow when it announced its IPO. This could make such a move more manageable, with the more modest valuation more attainable than that of HeartFlow. Alternatively, Viz.ai could follow HeartFlow’s lead and continue to secure funding privately for several years, potentially even ultimately transitioning to private equity ownership, similar to Circle Cardiovascular Imaging. While the potential to raise significant amounts of capital is diminished by such a strategy, in the young and still maturing medical imaging market answering only to a handful of private investors, satisfied with nuanced yet strategic progress, rather than being obliged to deliver headline-grabbing figures to countless unsympathetic shareholders may be preferable.
There are also technological differences between the two vendors that could grant Viz.ai a very different experience to HeartFlow. While the latter remains, in essence, a vendor with a single tool, albeit one which is clinically very valuable, with a strategy to add other tools targeted at cardiovascular disease, the former is a vendor which has already progressed from offering a single algorithm into a vendor with a fleshed-out stroke care coordination platform, expanded beyond neurology. Conversely, HeartFlow is reliant on a single FFR-CT tool, this is an area with, at present, less competition. While there are vendors such as Keya Medical offering similar functionality, they remain focused on the Chinese market. Several young heart health AI developers could begin to offer their own alternatives, but at present HeartFlow is at limited risk from other vendors. In the stroke care space, however, there are numerous competent competitors, some such as RapidAI have already made headway in the US, Viz.ai’s key market, while others are operating and growing in other territories; potentially a significant challenge to Viz.ai’s international ambitions.
Options & Opportunities
This availability of other stroke detection algorithms could also prove a challenge for other reasons. Viz.ai’s image analysis capability is solid and dependable, but not unique. Instead, what presently sets Viz.ai’s Care Coordination Platform apart is the solution’s workflow element. Instead of focusing myopically on the tool’s diagnostic capabilities, the vendor sought to improve stroke diagnostic capabilities into a clinical care pathway, ensuring that the results of the diagnostics could actually benefit doctors, providers and patients. Even if Viz.ai’s stroke detection algorithm could be technically bettered, its integration may allow it to have a greater impact.
Successful integration also breeds new challenges in terms of regulation and changing care workflows. While not specifically targeted at Viz.ai, the US-FDA’s recent public reminder on April 11th 2022 was a clear warning to vendors of AI-based triage tools for stroke care to be clear on intended use when marketing to providers, while also reminding providers that adoption of CADt must not replace radiologist diagnostic reporting on potential stroke cases regardless of triage prioritisation result.
Viz.ai has gained significant traction by touting its workflow capabilities more so than its AI image analysis capabilities. However, by securing sales based on this workflow integration, Viz.ai leaves itself more open to competitors. These, on the one hand could be other stroke solution providers, RapidAI for example has worked to improve the analytics and prehospital elements of its own product. As Viz.ai boasts of ever-increasing user numbers and ever higher valuations, other vendors, even those outside of stroke imaging could also be attracted to the space. Large healthcare IT vendors could use their scale and breadth of capability to target the market, offering solutions that link stroke care to other departments and either utilising in-house stroke detection algorithms or partner with one of Viz.ai’s competitors.
Electronic Health Record (EHR) vendors are another type of company that could be interested, these vendors are deeply integrated into hospital networks, but could use workflow tools as an opportunity to expand their reach. There is some precedent for this, with several EHR vendors already offering breast imaging modules for mammography reporting as part of their Radiology Information System (RIS) modules.
With this heritage there is opportunity for the likes of Cerner or Epic, for example, to build on their existent platforms and develop workflow modules, leaving providers to simply partner with a stroke detection algorithm vendor of their choosing. The impetus for such moves will only increase should reimbursement become permanent, rather than the temporary NTAP at present. Although with this reimbursement being renewed for 2022, all signs point to reimbursement for stoke imaging AI becoming permanent. Not only would such a move make the space more lucrative, but including stroke detection within broader tools could make billing and claiming reimbursement more straightforward, attracting provider’s interest.
Suffering from Success
Despite the potential of such prospects, they remain in the longer-term future. For the time being Viz.ai will continue to gain traction. The company now has the necessary funds to enact its short and medium-term strategic objectives, adding significantly to the list of 1,000 sites it caters for and expanding beyond stroke care to take advantage of other lucrative clinical segments. What’s more, through its own activities as well as through partnerships, such as that with medical device company, Medtronic, Viz.ai should increasingly gain a footing in new markets, e.g., Europe, going toe-to-toe with local stroke detection algorithm developers.
How long these good times can continue to roll remains to be seen. Viz.ai has successfully built a useful and commercially viable product, which is enjoying great success in the meeting rooms of VC investment firms. This success, however, could bring more attention to the space and ultimately be responsible for a humbling of the vendor. Viz.ai must acknowledge this threat and act to capitalise on its current momentum and look to make itself indispensable. Now, like HeartFlow before it, Viz.ai will find that more money, really can mean more problems.
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 Research. To view other recent Premium Insights that are part of the service please click here