Research & News

Picture This: A Snapshot of the Radiology Software Landscape

The radiology technology landscape has consistently stood at the forefront of healthcare innovation and technological advancements, a trajectory that was propelled by demands and challenges posed by the COVID-19 pandemic and further accelerated by the significant progress achieved in artificial intelligence throughout 2023. From the consolidation strategies of industry leaders to the emergence of innovative startups, the evolution of radiology technology illustrates a path towards enhanced patient care, streamlined workflows, and improved integration across the imaging ecosystem. Reviewing companies that transacted from January 2019 – November 2023, several noteworthy trends standout:

• The heightened role of AI in enhancing clinical efficiency and streamlining workflows.
• A growing need for workflow orchestration and coordination to address challenges posed by a fragmented imaging ecosystem.
• The rise in adoption of cloud-based PACS systems as radiology practices aim to optimize efficiency and scalability by eliminating siloes between modalities.
• Increased adoption of teleradiology as a means to expand access to care and address staffing shortages.

These trends, among others, can be observed in HGP’s market landscape, which segments 83 identified American and Canadian radiology technology companies that underwent M&A, buyout, or institutional funding transactions between January 2019 and November 2023.

Below are select notable transactions that illustrate the trends observed in the radiology industry:

M&A/Divestiture/Buyout

• Through a series of strategic acquisitions, Intelerad has solidified itself as a prominent global provider of enterprise medical imaging solutions and a prevalent consolidator of the radiology market. Since the strategic investment in February 2020 from HG Capital, Ardan Equity, and ST6 Partners, Intelerad has completed 8 acquisitions – Radius, Digisonics, Lumedx, Heart Imaging technologies, Insignia Medical Systems, Ambra Health, PenRad Technologies, and Life Image.
• With progressive advancements in PACS technology, a persistent drive towards unified imaging strategies, and the consolidation of platforms, the PACS market remains in a state of constant evolution as practices and health systems seek to upgrade outdated systems. A recent KLAS survey found that ~20% of organizations have plans to replace their PACS. With a highly competitive and dynamic landscape, several PACS vendors have looked to M&A to add capabilities and expand their foothold in the imaging landscape. Two notable transactions include Change Healthcare’s acquisition of NucleusHealth’s cloud-based imaging platform, Nucleus.io, in August 2020 and Philips’ acquisition of Carestream’s HCIS business in March 2019.
• The medical imaging industry is projected to reach approximately $70 billion by 2032. The sector’s rapid growth has amplified the need for automation to streamline operations, particularly in the billing space. Specialized vendors such as Imagine Software, which secured a strategic investment from Marlin Equity in November 2021, are continuously innovating to help radiologists improve cash flow and simplify processes.
• Medical images play a crucial role in diagnosing and treating diseases, providing care teams with essential information to make informed decisions about patient care. The acquisition of Arterys by Tempus in February 2023 was driven by this thesis, acknowledging that integrating imaging data is a fundamental aspect of the mission to harness AI for precision medicine.
• Teleradiology has emerged as a crucial solution in healthcare due to its numerous benefits: 1) increased access to sub-specialty expertise, 2) expedited turnaround times for diagnostic results, promoting faster decision-making and enhanced patient care, 3) improved collaboration and consultation among healthcare professionals, 4) geographical flexibility, enabling care in rural areas and minimizing patient travel time, and 5) continuous coverage, ensuring prompt review of critical medical images. Premier Teleradiology, which was acquired by Grovecourt Capital Partners in June 2023, is one of the key players dedicated to advancing patient care with their teleradiology services.
• The PACS competitive set is comprised of various enterprise technology companies that have, in recent years, made substantial investments to expand their presence in healthcare. A notable example is IBM, which made a bold bet in 2015 with Watson Health. The initiative fell short of expectations, and was divested in July 2022 to Francisco Partners, which relaunched the assets as a new standalone data analytics company, Merative. A recent KLAS report found that organizations remain cautious about Merative as a PACS vendor as they await to see the results of the Francisco Partners acquisition.
• Utilization management in radiology is crucial for optimizing imaging resources, controlling costs, and prioritizing the appropriateness of diagnostic procedures with a key emphasis on minimizing radiation exposure to enhance patient care quality. Companies such as National Imaging Associates, acquired by Evolent Health from Centene in January 2023, offer solutions aligned with these industry-wide efforts to improve quality and cost management.

Investments

• One of AI’s most promising roles in healthcare is clinical decision support at the point of care. While skepticism remains regarding the improved accuracy resulting from the use of AI, many innovative companies have been making significant and promising advancements. One of the prominent players in stroke care is Viz.ai, which raised a $100 million Series D led by Tiger Global and Insight Partners in April 2022. With 12 FDA-approved algorithms, the Company is regarded as a visionary in leveraging AI to optimize treatment for stroke patients.
• Heart disease is the leading cause of death in the U.S. and cardiology care is the single largest driver of healthcare spend, making cardiology a ripe specialty for AI-based imaging innovation. Elucid, a leading provider of cardiovascular imaging analysis software, raised $80 million in Series C funding at a post-money valuation of $175 million in November 2023 led by Elevage Medical Technologies.
• Generative AI has swiftly proven itself as a valuable tool in optimizing workflows and driving increasing productivity in all industries. Rad AI, which raised a $25 million Series A in November 2021 led by ARTIS ventures, is regarded as a pioneer in introducing LLMs in radiology. The company leverages this emerging technology to streamline repetitive tasks to save time, alleviate burnout, and improve quality of care.
• The medical imaging ecosystem has been fragmented for decades, creating interoperability challenges that impede daily workflows and complicate image management. Sirona Medical is among the vendors aiming to solve interoperability challenges with their unified cloud-native platform. The Company has raised a total of $75 million, notably $40 million in November 2021 at a post-money valuation of $172 million led by GreatPoint Ventures.