Respiratory tech group 4DMedical to acquire US-based Imbio for up to $68m

Respiratory imaging technology company 4DMedical (ASX: 4DX) is acquiring US medtech Imbio in a deal that could be worth up to US45 million ($68.4 million) with the target’s AI-driven scanning technology said to complement the Australian group’s cutting-edge capabilities in assessing lung function.

The acquisition is expected to also help the Melbourne-based 4DMeedical accelerate commercialisation of its XV Technology in the US by opening up opportunities for patient screening programs for chronic lung and heart conditions and chronic obstructive pulmonary disease in Australia and the US.

The acquisition is initially pitched at US$25 million ($38 million) with 4DMedical agreeing to pay an additional US$10 million ($15.2 million) earn-out premium should certain financial targets be met in calendar 2024, plus two further tranches of US$5 million ($7.6 million) each in calendar 2025.

Imbio expects to report revenue of US$3 million ($4.56 million) in CY23, rising to US$6.3 million ($9.6 million) in CY24, driven by contracted revenue and a ‘significantly expanded’ pipeline.

Imbio generates a healthy gross margin of 84 per cent from sales, with 4DMedical anticipating further margin accretion.

The company says the acquisition will accelerate 4DMedical’s pathway to profitability as Imbio is expected to be cashflow positive in its first full year of integration.

“The acquisition also presents significant revenue and cost synergies, with the combination of complementary products, extended reach of 4DMedical products, a sophisticated platform and technical efficiencies,” says the company.

The cash component of the acquisition will be funded via a $35 million capital raise comprising a placement of 44.3 million shares at 79c each. The offer price represents a 17.3 per cent discount to the last closing price of 4DMedical shares on 6 December 2023.

The placement also has a free option attached for every two new shares issued, with an exercise price of $1.365 expiring on 31 December 2025.

Shares in 4DMedical today dropped about 15 per cent to a low of 80.5c after they resumed trading following a trading halt last week.

“I am extremely excited to join forces with the incredibly talented and committed Imbio team,” says 4DMedical founder and CEO Andreas Fouras.

“Imbio's market-leading suite of AI solutions provide life-changing insights from CT scans, and perfectly complement 4DMedical's functional imaging technology.

“We now offer a comprehensive cardiothoracic imaging solution set to providers and their patients. Importantly, the Imbio acquisition also significantly boosts our capacity to improve the respiratory health of veterans, especially for those impacted by toxic exposures during service.”

4DMedical sees the Imbio acquisition providing and entry point into the United States Department of Veterans Affairs through an existing agreement. The company says the combined product offering will create further opportunities to deliver comprehensive diagnostics screening programs for the department.

“Solving the clinical conundrum for doctors across multiple care areas Imbio's current portfolio provides validated and market-leading insights, working with a subset of highly specialised healthcare providers,” says the company.

“By combining this toolset with 4DMedical's novel technology and automated point-of-care radiology workflows, 4DMedical will revolutionise lung disease diagnosis by making it simultaneously more comprehensive, objective, personalised, and, most importantly, more widely available.

“The combined technology offering holds the potential to turn standard-of-care chest CTs into a much broader cardiothoracic analysis, immediately providing functional, structural, and risk-based analysis for both lung and heart disease.”

4DMedical says it heads into 2024 with ‘accelerating momentum’ on the back of major milestones achieved in the second quarter of FY24, including a memorandum of understanding secured with healthcare company Philips, Imbio and the US department of Veteran Affairs to provide 4D lung imaging for veterans exposed to toxic burn pits.

4DMedical’s key scanning technology is able to accurately and quickly understand the lung function of patients with respiratory diseases. The company’s flagship patented XV Technology allows physicians to understand regional airflow in the lungs and identify respiratory deficiencies earlier and with greater sensitivity as they breathe.