Dr Boreham’s Crucible: Mach7 Technologies

Small Caps | Nov 14 2022

Medical imaging is back in demand in the post-covid world and Mach7 Technologies seems an undervalued player

By Tim Boreham

Observers of the medical imaging space - your columnist included - have delighted in highlighting the yawning gap between Mach7 Technologies’ ((M7T)) $126 million market valuation and the $5.5 billion worth of similarly US-focused ASX-listed ‘cousin’ Pro Medicus ((PME)).

In reality, there are key differences in their business models, but the companies share the common trait of being moulded via pivotal acquisitions.

In an extraordinary deal, Pro Medicus acquired the ailing California-based Visage Imaging at the height of the global financial crisis, for $5 million. Visage’s research arm subsequently was divested for $15 million and today the Visage products are central to the Pro Medicus business.

In the case of Mach7, in June 2020 the company completed the $40.9 million purchase of Canada’s Client Outlook, despite the pandemic preventing Mach7’s Burlington, Vermont-based management from ducking over the border to check out the business.

Mach7 chief Michael Lampron dubs the purchase as “transformational” because it expanded the company’s repertoire from the ‘back end’ - the archiving of images and other data - to image viewing.

Previously, Mach7 competed in a sub-section of the enterprise (hospital) imaging market; now it can offer products covering image archiving, viewing and workflows.

Buying Client Outlook wasn’t quite the ‘Alan Bond’ moment for Mach7 in the same way as Pro Medicus’s Visage steal was, but it sure bolstered Mach7’s revenue pipeline.

“We are seeing that growth and opportunity because we broadened our products,” Mr Lampron says.

Catering to the ‘ologies’

Mach7 provides diagnostic and imaging tools to all the “ologists”; radiologists, oncologists, cardiologists, pathologists, ophthalmologists, etcetera.

Mach7 provides picture archive communications system, or PACS, the diagnostic tool used by clinicians. But it also provides vendor-neutral archives, or VNAs, which allow any provider’s imaging tools to be integrated on the platform.

In effect, the company takes images, videos and documents and consolidates them on the one platform. The data can then be managed and accessed via phones, devices or web browsers.

The company has surfed the move to digital records, which allows hospitals and clinics to aggregate an individual’s medical history for easier consumption by the medicos (and hopefully not by hackers, as well).

The company also strives to present data in a clinically meaningful way that also consolidates supply chains and reduces costs.

In the beginning…

Mach7 was founded in 2007 by image workflow expert Ravi Krishnan, who has held roles at GE Healthcare and Agfa Healthcare (Mr Krishnan remains the company’s Asia-Pacific head).

Mach7 launched its first product in 2012. In March 2016, the company merged with the ASX-listed diagnosis house 3D Medical - a reseller of Mach7’s products - in a share deal.

But both sides of the merged business were bleeding money and a year later, Mr Lampron was brought in as chief operating officer to “professionalize” the management team.

A former US air force medic, Mr Lampron took over the top job from former GE Healthcare bigwig Mike Jackman in February 2019.

“My focus was on right-sizing the business; we couldn’t keep burning cash.”

Mr Lampron also had roles at GE as well as with IBM and tele-radiology group Imaging on Call.

Notably, chair David Chambers was formerly CEO of Pro Medicus.

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