LONDON: Intelligent Ultrasound Group plc (AIM: IUG), the ultrasound AI software and simulation company, has entered into a conditional sale and purchase agreement for the sale of its Clinical AI business to GE HealthCare for an enterprise value of £40.5 million on a cash free/debt free basis.

The proposed transaction excludes the NeedleTrainer and NeedleTrainer Plus products which will remain within the company along with the Simulation Business.
The consideration represents a implied value of 12.4p per Ordinary Share on current issued share capital and a premium of 70.9 per cent to the Ordinary Share price on 17 July 2024 and a premium of 30.9 per cent to the volume weighted share price for the last 12 months.

The proposed transaction also values the Clinical AI Business at 33.8 times full year 2023 revenues of that business.

The Board of Intelligent Ultrasound is committed in its duty to provide value to shareholders and therefore has continually sought to evaluate strategic options available to the Company to do so.

For some time the Board has been considering how best to optimise and accelerate the growth of the Clinical AI Business.

The Company acquired its Clinical AI Business in October 2017 through its purchase of Intelligent Ultrasound Limited, a University of Oxford spin-out company, for £3.6 million and has committed capital to it to date of approximately £12.2 million (as adjusted to remove NeedleTrainer development costs but including the £3.6 million initial purchase price).

Whilst the Board takes great pride in the development capability that has been created in the Clinical AI Business, to date, the growth of the ScanNav related AI revenue streams has been slower than was originally forecast.

Furthermore, the Company has not yet reached commercial terms with GE HealthCare for all the future products on its women’s health roadmap.

Materially growing the value of the Clinical AI Business therefore relies on also developing products outside the existing relationship with GE HealthCare, including ScanNav FetalCheck (for gestational age estimation) and ScanNav Liver (to support hepatologists diagnose and monitor MASH and MAFLD).

Riccardo Pigliucci, Chairman of Intelligent Ultrasound said: “At Intelligent Ultrasound Plc we have spent the last seven years successfully creating first-to-market AI products and have built a strong capability in real-time automated ultrasound image analysis.

When GE HealthCare offered us £40.5 million to acquire our Clinical AI Business, we were pleased that our achievements were recognised but it presented us with the very difficult decision to exit the main market we had chosen for our future growth.

To date, the growth of our current ScanNav related clinical AI revenues has been slower than we had originally expected and, most importantly, insufficient to fund the developments needed to materially increase the value of the Clinical AI Business. We have had to recognise that developing products such as ScanNav FetalCheck for gestational age estimation and ScanNav Liver is costly and would require the sort of funding levels that are outside the Group’s current cash resources or capital raise capabilities. The Board has therefore concluded that accepting GE HealthCare’s offer is in the best interest of the Company’s shareholders and represents a fair net present value for these potential future revenue streams and recommends it to shareholders for their approval.

The remaining Simulation Business, which will be boosted by the inclusion of the NeedleTrainer range previously reported in our Clinical AI business, is a solid one and the Board will use the time between signing and completion of this Proposed Transaction to conduct a comprehensive review of the business. It is the Board’s intention to make a material return of capital following a review of the growth potential and capital requirements of the post-transaction business and taking legal and tax advice on structure of a return. An announcement detailing the proposed use of funds and strategic direction for the Company is expected to be made by the time the Proposed Transaction completes.”