Tag Archives: Viz.ai

Signify Premium Insight: Viz.ai and the Perils of Success

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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 

Signify Premium Insight: VC’s $3.6bn in a Quickly Maturing Market

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.

Co-written by Dr. Sanjay Parekh

In our recently released analysis of venture capital funding for medical imaging AI vendors (download free report here – note this report was published prior to Viz.ai’s very recent $100m series D funding round), Signify Research found that venture capitalists’ appetite for medical imaging AI is yet to be satisfied. Total VC investment in medical imaging AI has reached almost $3.6bn since 2015. What’s more, despite a dip in 2019, overall levels of funding have continued to rise making 2021 a record year in terms of investment raised at $815m.

This record-breaking year also saw the emergence of the ‘$100m club’ of vendors which have raised more than $100m in capital funding. Many of the vendors also highlight another trend detailed in the report; the eastward transition of funding, with companies from Asia and especially China accounting for an increasing and significant proportion of investment.

In this more nuanced analysis for Premium Insights clients, we dig deeper into these findings.

The Signify View

These headline figures only tell half the story, with large numbers of vendors choosing not to reveal the levels of funding they have secured. Circle Cardiovascular Imaging, for example, has reported raising almost $20m in funds, however, their latest undisclosed funding is estimated to be in the range of $75m-$100m, pushing the Canadian vendor’s total funding above $100m. This is a trend that is mirrored across the world. China’s Infervision raised $70m in series B funding, and $140m in series D funding, but did not disclose the results of its series C round. If this undisclosed round is taken into account, it is likely that the vendor has raised upwards of $300m in total, far higher than the $225m disclosed. Other vendors also share this dynamic, with Shukun Technology and Deepwise both harbouring far higher sums than publicly disclosed.

These high figures show the strength of these vendors and the emergence of prominent market leaders. Already members of the ‘$100m club’, these vendors are sitting on cash piles while also having NMPA Class III approvals, allowing commercial operation within China. This makes them formidable competition in the market, especially given that their lack of disclosure makes them difficult to accurately assess and limiting most international vendors from targeting the Chinese market.

Had these rounds been disclosed, we would be discussing a group of unicorns (those estimated to be worth more than $1 billion). However, other vendors have been more transparent. Viz.ai is an example of one vendor that can lay claims to this status, having confirmed its series D funding round of $100m itself earlier this week. This funding round took the total the company has raised to over $250 million, valuing it at $1.2 billion.

Chinese Action

More broadly, these funding rounds for Chinese vendors evidence the trend identified in Signify Research’s 2021 report, which showed that China is increasingly the hotbed of medical imaging AI VC funding. This is expected to continue, with 2022 likely to surpass other years as more vendors mature and secure larger, later-stage funding rounds. As detailed in a recent Premium Insight which addressed trends in regulatory clearances, more solutions are receiving Class III NMPA approval in China, a factor that is likely to encourage investment, with approved solutions often a more attractive investment target than those with no approvals. This growth in funding will also be compounded by the possibility that the Chinese market offers. As well as its insular nature, which makes penetration difficult for non-Chinese vendors, limiting competition, the market is also the world’s second-largest.

AI uptake has, so far, been very regionalised, with vendors targeting specific patient cohorts in certain areas. In China, where there are 15 provinces with populations of more than 40 million, sub-regionalisation is likely, with vendors targeting specific diseases based on provincial priorities, providing VC investors with plenty of viable targets, even if they are, individually, unlikely to become global powerhouses.

However, investment will peak, potentially as soon as 2022. In the US, VC investment peaked in 2018, at over $400m, after which it slipped backwards, plateauing around $150m. This is a result of market leaders emerging, securing later stage funding, increasingly growing revenues, and then receiving undisclosed private equity investments or attempting to list publicly. The Chinese market is approaching a similar scenario, with market leaders being established and some reaching the end of their VC funding journeys.

Lapping the Shore

These dynamics in funding, show that so far, there have been two waves of funding for medical imaging AI. The first peaked in 2018 (total funding of $772m; average deal size of $16.4m), but the second peak in 2021 was far greater (total funding of $875m) with an average deal size more than double ($33.6m) that of 2018.

The quantity of deals was higher in 2018 (47 deals), as a higher number of vendors looked to secure their initial rounds of funding, fostering the creation of the market for radiology AI. Since then, some tools have matured, and in a bid to increasingly add value to clinicians, become more sophisticated. The vendors who have developed these tools have grown and are facing significant costs in the commercialisation of their products. Resultantly, they have needed to raise more capital to fund this expansion and commercialising, spurring the recent second wave.

One indicator of this current wave is the growth in the number of vendors entering the ‘$100m club’. As vendors have matured and sought out later-stage rounds, the number of deals has declined (26 deals in 2021). However, these deals are frequently for very sizable amounts, taking increasing numbers of vendors past the $100m mark (ten vendors to date), a barrier that, until recently had only been broken by a very select few vendors, which met a very demanding criteria.

Vendors that have entered the ‘$100m Club’ of VC funding raised

These dynamics are, of course, not immune to wider influences, with the Covid-19 pandemic also playing its part. Part of the second peak rebound in 2021 was due to the market emerging from the pandemic, and investors were once again able to confidently invest in medical imaging AI start-ups. After husbanding cash throughout the pandemic VC investors could once again seek opportunities and take on more risk. Healthcare technology would also have been an attractive sector in which to invest, given the Covid-induced excitement around digital healthcare. Investors, with available cash and looking for companies in which to invest, bought into the story of AI helping radiologists become more efficient and deal with the backlogs they were left with. The pandemic had created a problem, which radiology AI could aid in solving.

The Looming Threat

These trends could contribute to the growing spectre of consolidation that is hanging over the medical imaging market, with a distinct gap between the minority of vendors that have secured sizable funding rounds and the long tail of vendors which have not. Since 2015, the top 10 vendors have, after all, raised an overwhelming 55% of all funding, while the top 25 vendors account for almost 80% of funding. These larger, better-funded vendors look set to increasingly take control of their specific market segments, making life difficult for smaller vendors to gain any traction and increasing the risk of casualties in this market.

Life could yet be difficult for larger vendors too, though, with higher VC investment rounds representing greater pressure on these vendors to start delivering the sizable revenues that they have promised. Reimbursement for medical imaging AI also remains limited and sporadic; the question of who will pay for AI, in many instances, is still unanswered. This may prove more of a challenge than expected, leaving many investors disappointed.

As these problems are worked through, vendors will go on to list publicly, as some including Keya Medical and HeartFlow have already unsuccessfully attempted; some may also be bought out by private equity, giving early VC investors the sizable returns they were hoping for. As this happens, there could be another wave of VC investment in medical imaging AI, given the technology’s transformative potential. However, the next cohort of start-ups backed by VC funding is unlikely to be in any of the established clinical segments (e.g., breast imaging, neuroradiology, cardiac imaging, chest imaging) as the opportunity for a start-up to break into these well-catered segments is negligible. This future wave of funding, as VC firms look to find the next stalwarts of medical imaging AI, could catalyse interest in tools targeting different clinical specialities or different regions. Tools for liver imaging, for example, could blossom, as drugs to manage fatty liver disease become increasingly available and backing from VC firms looking to capitalise is forthcoming. Additionally, the use of MR imaging as a first-line diagnostic imaging procedure for prostate cancer may create an opportunity for vendors with prostate imaging AI tools, a niche segment targeted by advanced visualisation incumbents today. The small wave of regulatory approvals for prostate AI solutions in the past 12-18 months may be indicative of this trend.

In the more immediate future however, funding in the US and Europe should continue its plateau, while funding in Asia is expected to continue to grow, with the country accounting for an ever-greater share of imaging AI funding. The size of these deals is also set to grow, albeit there will be fewer of them, as VC investment continues assist in the forging of medical imaging vendors. From this, vendors will be able to establish clear market leadership positions, and, assuming vendors live up to their own ambition drive significant revenues. At this point, the VC’s job will be complete, and the medical imaging AI market, established.

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