In Q1 2024, Medicalgorithmics—a medtech company listed on the sWIG80 index—successfully focused on acquiring new customers. The company has established 9 new partnerships so far, including five in the USA. According to the strategy, new clients are expected to replace a former exclusive partner in the USA. Only three of the already commercially launched projects will bring the company about 440,000 PLN in average monthly recurring revenue, which is nearly 50% of the sales in Q4 2023 for the former client. Thus, the company is consistently transforming its business model. In the first quarter of 2024, its revenue amounted to 7 million PLN. The Medicalgorithmics Management expects significant sales growth in the coming quarters due to the commencement of services for new clients.
– “As announced, in Q1 2024, we saw the first significant revenues from new partners in the USA. We expect that in the coming quarters, revenues from ECG analysis services will steadily increase thanks to the growing number of tests analyzed with our AI and the launch of commercial services for new clients. In the USA, we are building a broad base of partners to provide Medicalgorithmics with a long-term, stable revenue stream from AI services. We have already established partnerships with 9 new partners worldwide, including five in the USA. Three of them are already commercially using our technology. We estimate that revenues from these partnerships will bring approximately 5 million PLN over the next 12 months,” says Maciej Gamrot, Chief Financial Officer of Medicalgorithmics.
On May 20, Medicalgorithmics published an estimate of a stable revenue stream from ECG data analysis services for three new clients in the IDTF market in the USA. According to the estimate, from May 2024 to April 2025, the company expects to achieve 110.1 thousand USD (approximately 440,000 PLN) in average monthly revenue from these contracts, nearly 50% of the average monthly revenue from service sales in the US market in Q4 2023.
In Q1 2024, Medicalgorithmics had consolidated revenue of 7 million PLN, compared to 12.5 million PLN in the previous quarter. The decrease is due to lower revenues from the US market, which amounted to almost 1.2 million PLN in the first quarter (over 0.4 million PLN from AI services and over 0.7 million PLN from devices), entirely from contracts with new IDTF clients.
The global market (excluding the USA) generated more revenue than the USA, similar to the entire 2023. Medicalgorithmics achieved 5.9 million PLN in revenue in the global market in Q1 2024 (4.5 million PLN from services and 1.4 million PLN from equipment), compared to 9.8 million PLN in the fourth quarter of the previous year (5.2 million PLN from services and 4.6 million PLN from equipment). The decline in global market revenue on a quarterly basis is due to lower equipment sales, which reached a high, above-standard level in Q4 2023 due to a generational equipment replacement campaign among clients. This year, the company has acquired several new partners in the global market, such as the Finnish company Bittium and the Canadian Cardiac Centre, and is working on launching commercial services for them and expanding its business scale in newly acquired markets like the UK and Israel.
The session index, which indicates how many ECG tests were analyzed by Medicalgorithmics’ AI software, increased for the second consecutive quarter. In the January-March 2024 period, the company conducted 47,000 sessions for active clients, a 29% increase from the fourth quarter of 2023 (36,200 sessions).
As a result of the anticipated temporary revenue decline and the implementation of planned development projects, the company closed Q1 2024 with a net loss of 4 million PLN, compared to a loss of 0.7 million PLN in the last quarter of 2023 and a net profit of 1.5 million PLN in Q1 2023. Its own costs amounted to 12.0 million PLN in Q1 2024, slightly lower than the costs in the last quarter of 2023 (12.3 million PLN).
– “Our operating costs are relatively constant and related to the implementation of our strategy. In Q1, the company could not temporarily reduce them due to ongoing projects integrating AI services with new clients’ systems. These projects will generate a growing revenue stream in the second and subsequent quarters, allowing us to dynamically improve the operating result and net profit. Additionally, our cash position remains safe. Our short-term strategic goal is to quickly rebuild the revenue base in the USA. As previously declared, we aim to acquire at least two new clients quarterly to achieve monthly revenues in the second half of the year at the level of Q4 2023 and ultimately start generating positive total cash flows,” says Maciej Gamrot.
As of the end of March 2024, the company’s cash balance was 16.4 million PLN, compared to 39.0 million PLN at the end of March 2023.
In accordance with the development strategy announced in June 2023, created with the involvement of Medicalgorithmics’ main shareholder, Biofund Capital Management LLC, the company changed its business model. Moving away from offering exclusively a closed cardiac diagnostic system linked to its own heart monitoring devices, the new strategy focuses on selling a platform for analyzing multi-day ECG recordings with proprietary AI algorithms as a standalone product, as well as integrating these with devices and IT systems of partners. Medicalgorithmics software can be licensed by clients, with the company earning fees in various models, including those based on the number of ECG data analyses performed.