Enlitic raising $35m to tackle US$3.7bn healthcare AI market

Healthcare AI software business Enlitic (ASX: ENL) is knocking on the door of a US$3.7 billion opportunity to standardise medical imaging data for radiology exams – streamlining the diagnostic process for radiologists for improved patient care.

Its software uses computer vision, natural language processing and deep learning techniques to analyse medical images from X-rays, MRIs and CT scans. The software takes care of the time-consuming tasks to allow radiologists to focus on their expertise.

Enlitic currently offers the following key products:

• ENDEX standardises and structures data from medical images. This is Enlitic's core product

• ENCOG de-identifies and protect patient information. De-identified data can be used for a variety of purposes such as research, quality improvement and benchmarking

• ENCODE seeks to improves data quality that impacts coding and reimbursement. This product is under development and expected to be realised in the second half of 2024

• ENSIGHT seeks to leverage interoperability with data analysis to provide insights that can help radiologists and other healthcare providers make more informed decisions. The product is under development and expected to be released in the second half of 2025

Example of output following Data standardisation by Endex (Source: Enlitic)

Enlitic is seeking to raise between $20 million to $35 million at an offer price of 83 cents per Chess Depositary Interest for an indicative market capitalisation between $70.5 million and $85.5 million. The company plans to make its ASX debut on 18 December 2023.

The offer is set to close on Tuesday, 5 December. You can view the prospectus here.

The company's prospectus guides to US$645,000 (A$1 million) revenue in FY23, but had a US$96.7 million pipeline across 118 opportunities, which it was actively pursuing.

ENDEX and ENCOG is currently being used by one of Europe's largest teleradiology reporting providers, TMC, which delivers over one million specialist reports annually. Seven more clients have been added so far this year, including Japan's Marubeni, UK's Multi Inc and US-based healthcare providers Sentara Health and SEARHC.

Enlitic believes there are no competitors to its ENDEX product in the global healthcare IT market (radiology sub-sector). To delve deeper into this opportunity, we posed the following questions to CEO Michael Sistenich.

Why did you decide to IPO? 

Enlitic has decided to IPO to pursue our growth strategy and expenditure program, including further development of our product range and core technology platform and sales growth and market penetration through business development activities in the United States, Europe and other critical markets.

The IPO is also intended to provide Enlitic with continued and easier access to equity capital, provide existing shareholders with liquidity, allow Enlitic to motivate our staff with equity-based remuneration more effectively and pay the costs of the IPO.

What are the emerging trends in your industry and how is Enlitic positioned to benefit? 

The emergence and growth of AI in the global healthcare IT market, and more specifically, the radiology sub‑sector, is being driven by the application of machine learning technology in diagnostic imaging procedures, as well as the rising demand for quantitative medical imaging solutions in clinical practices. Enlitic focuses on data standardisation within this broad market with our product ENDEX.

Total Serviceable Market – To provide an insight as to the magnitude of the opportunity for Enlitic (Source: Enlitic)

The competitive landscape for data standardisation in radiology involves various organisations, initiatives and technical standards aimed at establishing consistent and interoperable data exchanges within the healthcare and radiology sectors.

However, when it comes to standardising nomenclature and medical image study and series descriptions, there are no vendors with a go-to-market strategy that address the enterprise challenges that data standardisation can solve.

Unlike ENDEX, other vendors that use medical image data do not provide value propositions or marketing content that speaks to solving issues such as hanging protocols, data routing or billing and coding.

What accomplishments demonstrate the management team’s track record of leading companies to success? 

Enlitic has a highly experienced management team with substantial industry knowledge. The Company is led by CEO Michael Sistenich, who has over 24 years of experience in the investment banking, corporate finance and asset management industries and backed by a highly experienced Board including Lawrence Gozlan, a leading biotechnology investor and advisor.

How does the company plan to use its IPO proceeds to achieve its objectives and deliver returns to shareholders? 

Enlitic plans to use the proceeds of the IPO, along with our existing cash reserves, towards our sales and marketing activities, as well as towards strategic development.

In addition, we will continue to focus on research and development reflecting our dedication to revolutionising healthcare through the application of AI technology. Enlitic will also apply funds towards quality and regulatory compliance costs, customer service, corporate costs, working capital and the costs of the IPO.

We are focused on growing our underlying customer base, while seeking to drive additional revenue growth through increasing volumes. We also seek to cross-sell and up-sell opportunities with these customers. Additionally, we are working with customers to develop a data monetisation strategy in collaboration with healthcare providers and will continue to monitor potential adjacent M&A opportunities across new geographies, service capabilities and industry segments.

In addition to selling directly to the end users of medical images, key partnerships play a pivotal role in Enlitic’s market expansion strategies (Source: Enlitic)

What are some upcoming catalysts and when will they happen?

Enlitic has announced that it will engage in a project with RadLex, an RSNA committee, to align the ENDEX outputs to the RadLex standards.

In addition, TMC, one of Enlitic’s first customers to implement ENDEX, has achieved initial results that demonstrate great improvements and time savings in radiologists’ reporting workflows and, as they expanded the usage of ENDEX, even more significant improvements were observed.

These positive outcomes have motivated TMC (with the support of Enlitic) to conduct a scientific paper to thoroughly assess the accuracy and efficiency gains achieved by the use of ENDEX. The findings from this scientific paper will provide valuable insights into the benefits of employing ENDEX in the healthcare setting.

The expected date for the commencement of trading of the relevant securities in Enlitic on the ASX is 18 December 2023, but this is indicative only and may change.