After a relatively short search, Intelerad has found a new majority stakeholder, Hg Capital. The London, UK based investment firm already has invested over $1B in the healthcare and life sciences sector, including firms such as Rhapsody + Corepoint (healthcare data interoperability), Allocate Software (healthcare workforce management) Evaluate (Pharmaceutical commercial information and advisory) and Medifox (ambulatory care services). The deal is expected to close by the end of 1Q 2020, providing Intelerad with a substantial new investor and war chest. So, what will Intelerad do with the new funds and what challenges lie ahead?
The Signify View
Short Term: Foundation laid, time to grow
Intelerad has been one of the success stories of the imaging informatics market in recent years. While still relatively small, the Montreal-headquartered firm has been steadily gaining market share, a product of the relatively early evolution of its portfolio towards a platform-based solution to support enterprise radiology IT. This has brought success in the outpatient imaging and private radiology reading group segment in the US, Australia, and New Zealand, while also supporting a disruptive entry into the US and UK acute hospital market.
In the short-term, the focus will remain along similar lines, especially given the changing shape of imaging services in the US, the largest single market for imaging IT globally. The provision of imaging services in the US is in a period of transition; increasing scan volumes, limited reading resources and declining reimbursement on account of changing care models is causing many large health systems to revaluate their imaging services.
We see three major trends that Intelerad will be looking to leverage:
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1. Greater scrutiny on operational efficiency and workflow for imaging and diagnostic radiology services by large health systems and acute hospitals
Consolidation of the approximately 14,000 private radiologist reading groups into much larger regional and national entities, many of which have acquired or are acquiring outpatient imaging centers
Growth in the use of teleradiology services
The firm is well-positioned in the near-term to capitalize on these trends; the late 2018 acquisition of Clario has added capabilities supporting organizations measuring and tracking the operational performance of imaging service lines, which will only start to be realized this year following a period of integration. This will be a useful asset for one of the key battlegrounds for the market this year – radiologist productivity. Given the fierce competition for deals and growing tendency for competitors to “race to the bottom” on the price to win customer share, being able to prove clear return-on-investment (ROI) over the contract term helps differentiate the offering.
The platform-based portfolio and relatively early move offering SaaS contracting will also play well with the outpatient and small community hospital market, ensuring a degree of budget predictability. Intelerad already has reference customers established at some of the largest regional and national radiology reading groups.
Opportunities in the acute segment will be harder to come by; while there is a growing focus on outsourcing imaging services (both in terms of image acquisition and diagnostic reading), few acute hospitals have taken the plunge yet. Moreover, contracts in this segment are more complex and influenced by a broader criterion, including capability in advanced visualization, artificial intelligence, modality fleet management, and professional services.
Here Intelerad is up against some of the giants in Healthtech, including GE Healthcare, Philips, Siemens Healthineers, Canon Medical Systems, and Fujifilm Medical. Further intensifying competition, incumbents such as Agfa Healthcare, Change Healthcare, and IBM Merge also have a significant customer base in the hospital segment.
However, as one of the earlier movers to an enterprise radiology focused portfolio, Intelerad does have the opportunity to disrupt; the penetration of Sectra into a number of US acute hospital deals and Visage Imaging into the academic hospital segment in the last three years has shown the market-leading incumbents do not have the market locked-down.
Artificial intelligence is also a growing differentiator in purchasing decisions; while most customers don’t expect vendors to be offering a full portfolio of AI-based image analysis tools yet, there is growing expectation to see a clear pipeline and strategy for integration or orchestration of AI into imaging IT products. Intelerad has already taken a first step with the launch of Odyssey, an “AI-Augmented workflow” triage tool that selectively and adaptively routes images to a range of clinical AI algorithms (utilizing Zebra’s AI1 algorithm bundle). Boldly, the firm has also offered the new tool on a one year subsidized “try before you buy” option.
Combined, we think the progress made in portfolio development fits well with current and near term customer trends; therefore, we expect to see Intelerad continue to gain momentum and market share in the near term.
Source: HIT Consultant
