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OneMedNet, a company best known for its image exchange solutions, has announced that it is set to become publicly traded via a SPAC acquisition by Data Knights Acquisition Corp, with the deal set to close in the second half of 2022.
The move will give OneMedNet a pro forma enterprise valuation of $317m, and the money generated is hoped to help the vendor grow as it increasingly focuses on the provision and commercialisation of imaging data for real-world evidence (RWE). According to the vendor this focus will help it target the clinical trial and clinical research industries and use imaging data to assist in bringing diagnostics and therapeutics to market quicker.
The Signify View
As a vendor progresses it must be ready to adapt. If it is to grow beyond an embryonic stage, it must be prepared to react to changes in the market and pivot to capitalise on opportunities as they arise.
OneMedNet’s IPO announcement highlights a vendor that is willing to make such a change. It is a company that has grown to its present size, primarily by leveraging its technical nous to develop capable medical imaging software, with a particular focus on image exchange and data management. However, regardless of its capability, and specialisation, this is a competitive space with comparatively low growth prospects. Instead of toiling away for single-digit percentage improvements in annual revenue, OneMedNet has chosen to turn its attention to a market that has the potential to be altogether more lucrative.
For pharmaceutical and AI firms, the potential reward for the successful development of, for example, a new drug, is enormous. But the process for such development is arduous and expensive, with many once-promising innovations resulting in little more than a costly dead-end. These companies are therefore looking for tools that can help them undertake these processes more effectively, and have the financial clout to be able to pay handsomely for them.
Getting Data to Deliver
Real-world imaging data is one such tool that meets this need, giving OneMedNet impetus to increasingly focus on that area. Using its technical imaging know-how, the firm intends to act as an intermediary between providers and customers. Creating a platform that can curate anonymised patient data for hospitals, cleaning and organising it to allow hospitals to license the de-identified data to pharmaceuticals and AI vendors. OneMedNet is far from the first vendor to see the value in this provider data, however its approach is novel for imaging IT vendors. At present, AI development typically relies on publicly available datasets, although other approaches, such as provider partnerships are also used. There are several downsides to these models. It can, for example, be relatively inefficient and provide data that are poorly organised, inaccurately labelled or very homogenous, potentially limiting the utility and universality of any tools developed using them. Other vendors are also focused on a platform approach, but this is more commonly utilised for broader patient clinical data, rather than imaging-specific data. As such, OneMedNet is not following a well-trodden path, it is not an aspirant data-broker, instead its goal is to become a technology enabler, facilitating the increased use of RWE.
Other vendors will also seek to capitalise on this opportunity. Large healthcare IT vendors which already have strong access to a large number of hospitals through their installed bases, as well as nimbler pure-play specialists, could bring together significant amounts of data in agnostic data management platforms. In many cases, however, these vendors will offer generalist solutions, broader and more versatile but lacking the imaging data specialism that OneMedNet can offer.
The Scale of the Problem
With this new funding, OneMedNet has the power to extend its reach, granting it the ability to invest in its commercial operations, and giving the vendor the tools it needs to scale and increase its customer base. There are several ways this can be achieved, including direct sales, white labelling its products for incorporation into broader packages from other larger vendors, and partnerships.
The last of these was realised recently, with the vendor announcing a partnership with generalist data aggregator Flywheel. This tie-in, according to the announcement, enables customers to combine “OneMedNet’s de-identified clinical images and associated patient data, and Flywheel’s comprehensive research data management solutions”. Effectively, OneMedNet will be responsible for the imaging data element of a much broader RWE package. For Flywheel, it is hoped that the added capability offered by OneMedNet will enable it to make more deals of a higher value, while OneMedNet intends to grow through its exposure to Flywheel’s larger customer base.
However it is achieved, this scaling up is essential. There are numerous companies circling the space, such as established imaging IT vendors and some, like OneMedNet that are also well endowed with cash from IPOs or VC rounds. To be successful, OneMedNet needs to grow quickly and establish itself as the leading imaging data specialist. In matters of data, trust is essential, so quickly building its reputation is necessary.
Trust could become a thorn in OneMedNet’s side in another crucial way if providers are unwilling to allow the imaging data specialist access to their imaging data. The solution to this problem is, as yet, uncertain. While there are some very lucrative deals to be made for providers willing to share their data, there is still some reluctance. Many providers are uncomfortable with the idea that big pharma is profiting off their precious data, particularly if they aren’t adequately recompensed. This sentiment could be compounded if hospitals don’t see clear returns for their participation. Payment aside, providers could feel that their data would be better used by themselves or trusted partners to develop tools that would bring direct returns to the hospital. They may, in essence, feel their data are simply too valuable to sit as a tiny fraction of an enormous dataset. Either way, if OneMedNet is to scale quickly and succeed, it will need a vast amount of data, so provider reticence could present a huge stumbling block.
Even without this active impedance, providers may simply lack the capacity to undertake the commercialisation of their data. Instead of mulling over the strategic opportunities presented by their vast archives of imaging data, many providers will have their hands full with more routine issues, not to mention the challenges presented by the post-Covid backlog of patients, for example.
The Mercy of the Markets
Despite these challenges, OneMedNet’s new focus on RWE and its decision to list are sound. The shift gives the vendor the opportunity to target a market in which it has better prospects for significant growth, rather than working away for safer, but slimmer returns.
The timing of the listing will be challenging. While it makes sense in terms of the vendor’s own chronology, OneMedNet will still be battered by the broader headwinds that have hindered other disruptive health tech vendors (Butterfly Network, Hyperfine and HeartFlow, for example). The vendor may also regret its decision to list via a SPAC acquisition given recent caution surrounding these blank cheque companies. Not only are many investors becoming increasingly wary of the deals, but institutions are also starting to formalise their objections. The SEC recently proposed updated rules to regulate SPAC deals, and Goldman Sachs, one of the more enthusiastic proponents of the acquisitions, announced it is withdrawing from the space.
These difficulties aside, OneMedNet has positioned itself well. The market for RWE is very nascent, access to data is limited, many use cases are still being formally established, and numerous competitors are entering, or could enter the space in the coming years. Despite this, the opportunity is profound given that the importance of data will only increase. If OneMedNet can ride out the turbulence of the market, and convince providers of its vision, this listing could be the start of a successful journey.
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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