In the first half of 2024, Medicalgorithmics – a technology company listed on the sWIG80 index – successfully continued acquiring new clients, focusing on monetizing signed contracts and increasing sales. Since announcing its 2023-2026 strategy last year, the company has secured 13 new partners, including five in the U.S., and expects to sign additional contracts soon. As a result of the strategy, developed in cooperation with BioFund – the company’s largest shareholder – there has been a significant increase in U.S. revenue from AI-based ECG signal analysis services, which now stands as the company’s primary product. In Q2 2024, revenues grew by 132% compared to Q1, with the number of patients examined in the U.S. rising by over 200%.
“A key element of the current Medicalgorithmics strategy is the transformation of the business model. In the global medtech market, we are no longer seen as just another ECG device manufacturer but as a provider of cutting-edge diagnostic software based on proprietary artificial intelligence algorithms, developed by the company following BioFund’s 2022 investment. Thanks to this shift, we now have vastly greater potential for global business growth. In the U.S., we are already seeing dynamic growth in the number of patients served, with nearly three times as many in Q2 2024 as in Q1 2024. Despite short-term weakening financial indicators, we are not slowing down development or investment in new technologies, maintaining business costs at a steady level. We expect these indicators to improve through further revenue growth from new clients and organic growth with existing partners”, said Maciej Gamrot, CFO of Medicalgorithmics.
Medicalgorithmics’ revenue growth will be driven by its collaboration with 13 new key partners and additional partners acquired since implementing the current strategy. Currently, some projects are in the integration or pilot phase and will move to commercial stages in the coming months, generating revenue. The company is working to acquire new clients in ECG analysis in the U.S., EU, and APAC markets and is expanding its cardiac safety services for clinical trials. In September, Medicalgorithmics signed an agreement with its third client in this important segment – Canada’s Population Health Research Institute. Simultaneously, the company is intensifying efforts to increase revenue from its existing client portfolio by offering services such as third-party ECG data analysis and the new Kardiobeat.ai patch.
In Q2 2024, the company completed a technological transformation in arrhythmia diagnostics, obtaining FDA approval for its DRP platform, previously CE-certified in Europe, and CE certification for the DRAI algorithm, which was FDA-approved in 2022. The certification of DRAI algorithms allows them to be offered as a standalone product, sold in the U.S. and globally, alongside the DRP platform or PCClient integrated with clients’ devices.
An independent DRAI MARTINI scientific study, presented in early September at the ESC Congress 2024 in London – the largest cardiology conference in Europe – showed, based on a sample of over 14,000 patients (with the participation of over 50 cardiologists from the U.S., Canada, and Europe), that DRAI algorithms make 14 times fewer errors in confirming critical cases of cardiac arrhythmia in patients than ECG specialists. The groundbreaking results of the study will soon be published in a leading medical journal, showcasing how the company’s cutting-edge technology will improve ECG analysis efficiency once implemented by clients.
The company’s ECG technology offering will soon be significantly enhanced after the expected CE certification for the revolutionary VCAST technology. This will allow the company to offer a unique combination of AI-supported arrhythmia diagnostic solutions and AI-based non-invasive coronary artery stenosis diagnostics, which are the primary cause of ischemic heart disease leading to heart attacks.
According to the published Q2 2024 results, Medicalgorithmics achieved sales revenue of PLN 5.9 million, compared to PLN 7 million in Q1 2024 and PLN 9.7 million in Q2 2023. The quarter-on-quarter decline is solely due to lower sales of proprietary devices, which had been a significant source of the company’s revenue for years. It is also a result of the generational replacement of PocketECG devices at client sites in Q1 2024 (fourth-generation devices replaced third-generation ones). As a result, the sale of proprietary devices in Q2 brought in PLN 488,000, compared to PLN 2.1 million in Q1 2024. According to the current strategy, device sales are an optional offering alongside high-margin diagnostic software as the leading product.
According to the strategy, diagnostic service sales are growing dynamically, and the development of these services, along with systematic cooperation with new partners, is one of the main strategic goals. In Q2 2024, Medicalgorithmics achieved PLN 5.4 million from this segment, 11% more than in Q1 2024 (nearly PLN 4.9 million). Compared to Q2 2023, sales are down by 41%. This is due to the termination of long-standing exclusivity with a U.S. partner in December 2023, which limited the company’s growth opportunities in the U.S. market. The company has already recovered 53% of these revenues (Q2 2024 vs. Q4 2023) based on five contracts in the U.S. IDTF market. It also saw a 132% increase in AI service revenue in the U.S. in Q2 2024 compared to Q1. The company is working on acquiring additional contracts in the U.S. market. Medicalgorithmics’ management expects that new agreements, which could be signed, will allow U.S. revenue to return to at least second-half 2023 levels and enable the generation of positive cash flow and financial results.
As of the end of June 2024, the company’s cash balance was PLN 10.5 million, compared to PLN 33.2 million a year earlier. After the end of the first half of the year, the company received PLN 2.3 million from the price adjustment of Medi-Lynx’s sale, and additionally strengthened its financial position through a loan line of up to USD 3 million from BioFund Capital Management LLC, the company’s largest shareholder.