Intelligent Ultrasound Share Discussion Threads

[bamboo2] 23/7/2024 15:41

40F, agree. I think management would have included tax liabilities when they announced a net figure.

We'll be reducing/removing reliance on GEHC from now on.

Looks like a willing buyer out there at 10p+ as I could get instant quotes [dummy trades] to sell six figure amounts.

[40 fathoms] 23/7/2024 14:31

Masarap, I don't think there will be any tax to pay on net proceeds. They have said that net proceeds will be @GBP 39.5 million. They have said that @GBP 9.5 million of the EV will be treated as the repayment of a company loan. So the equity value will be @GBP 30 million. From that number you will need to deduct the capital of @GBP 12.5 million deployed in the Clinical AI business. So that reduces the gain to GBP 17.5million. The accumulated losses at a group level are @GBP 33 million.

You also make a good point about the risks or otherwise of working with a GEHC or other large multinational. They will allow you to make a decent return but will not allow much more.

[masarap] 23/7/2024 07:41

I am not an accountant so I am open to correction, but I assume 19% tax after deductible losses from the £40m minus the inevitable legal expenses as well.

Not a disaster for shareholders by any means but a disappointing return nonetheless. It shows the issues that can arise from having such a powerful partner as GE Healthcare. They have also flagged up the issues with the NHS which, of course, may change over time with the new Govt. Interesting that the explanation for the sale has only emerged now. Sounds like a material issue that should have been relayed to the market before.

[oliversydney] 23/7/2024 06:31

The current valuation is now 34 million but considering there is a cash offer of 40 million and a retained business with a 10 million turnover and good prospects the share price does look too low

[bamboo2] 22/7/2024 12:44

Hi 40F and bmc, thank you for your thoughts.

GEHC had flagged up a supply backlog, which led to reduction in Ultrasound deliveries on their Q1 update. They have some very long lead times for certain machines, and this won't have helped our sales.

It's a shame that the two co's could not find a way to agree on new terms, however this sale does remove much of the reliance and focus on a single customer.

I would have preferred GEHC to take the whole co really, and this was my hope when first getting involved back in late 2022 and early 2023.

With regard to other possibilities, TRX is at a similar point in maturity to IUG as they move into profit. I also like FNX. Parent and co-owner of IUG, IPGroup [IPO] is at all time lows, and may be worth a look, although management come across as weak.

[40 fathoms] 22/7/2024 12:22

@ 20p per share I think most of us here will have made very decent returns but will all be left with a brief thought that it could of/should of been more.

The slow ramp in the AI sales vs the development costs is really what has done it for us. If you look at the 1st half sales in the trading up date and back out needle trainer, which is going great guns and we keep, the real clinical AI sales were pretty measly.

A win is a win, so need to keep an eye here to make sure it goes to plan but time to start thinking how we will deploy our capital distribution !

[bmcollins] 22/7/2024 10:24

@40 Fathoms
I take my hat off to you for sharing your thoughts on our "rump business"now that GEHC have got their hands on the one I'd have preferred we kept.
Certainly your input on this co has been very much on the money, GEHC deal being the proof there. I guess if we do get out of the rump for circa £30m that won't be such a bad result, all things considered, though I suspect most shareholders would have preferred to see IUG develop organically, but it is what it is...
Thanks again for sharing your knowledge with us.

[40 fathoms] 22/7/2024 09:47

So the Simulation Business is EBITDA and cashflow breakeven at £10 million of revenue.

With a normalisation of NHS sales they should do £12.5 million pa comfortably. That puts them on a net profit of @£1.5 million and cash flow a little higher.

With the current platforms and mainly driven by Needle Trainer, it is easy to see how they would get revenue up to @£18 million and net profit up @£4.75 million pa by 2027. After that growth from these platforms will reduce significantly. Further significant growth beyond this level would need to come from acquisitions or require decent levels of investment in new platforms.

There are 4 or 5 large players who will have a strong interest in the simulation business. I assume the for sale sign is already up and if they can get a decent price it will be sold for between £25 million and £35 million before the end of this year.

[bamboo2] 22/7/2024 08:49

40F, you seem to have a good grasp of the business here, so I was wondering if you had thought about how the figures might stack up for a simulation only type business, given the lower overheads and further reduction in cashburn?

[bamboo2] 21/7/2024 17:14

Medtech firm Intelligent Ultrasound in £40.5m deal to sell clinical AI arm to GE HealthCare
Sion Barry Fri 19 July 2024


Cardiff-based ultrasound AI software and simulation company, Intelligent Ultrasound, has confirmed the conditional sale of its clinical AI arm to US giant GE HealthCare for £40.5m.

Subject to shareholder approval the deal will see the firm’s chief technology officer Nick Sleep transferring over with the clinical AI business to GE. The proposed acquisition doesn’t cover Ultrasound’s NeedleTrainer and Needle Trainer Plus products which will remain within the company alongside its simulation business. Once the deal is completed the board will lconfirm planned levels of investment from the proceeds to support investment and growth.

The medtech venture acquired its clinical AI business in October 2017 through the takeover of a University of Oxford spin-out company, for £3.6m and had committed capital to date of £12.2m.

Riccardo Pigliucci, chairman of Intelligent Ultrasound, said: “We 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 £40.5m 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 chairman said the remaining simulation business will boosted by the inclusion of the NeedleTrainer range previously reported in its clinical AI business.

He added: “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.”

Phil Rackliffe, president and CEO of ultrasound and image-guided therapies at GE HealthCare, said: “We are pleased to bring innovative technology from Intelligent Ultrasound into our ultrasound portfolio, allowing us to fully integrate these solutions into our systems to help clinicians improve workflow, reduce repetitive tasks, and simplify exams.

“This technology and the experts who developed it will help enhance our portfolio of AI-enabled devices and accelerate our pace of development of next-generation AI tools.”

[bamboo2] 21/7/2024 17:09

UK Investor


Intelligent Ultrasound (LON: IUG) is selling its Clinical AI operations to GE. The payment will be £40.5m. So far, £12.2m has been invested in the development of AI. The consideration is equivalent to 12.4p/share. This deal does not include the NeedleTrainer and NeedleTrainer Plus products or the simulation business. The remaining business had annual revenues of £10m last year. Lower simulation sales meant that the latest interim revenues fell from £6.1m to £5.3m. That includes £1.5m from Clinical AI, compared with £2m for the whole of the previous year. There are plans to return a substantial amount of this cash to investors. The share price jumped 44.8% to 10.5p.

[bamboo2] 21/7/2024 17:03

GE Healthcare to buy AI software from Intelligent Ultrasound for $51M
After purchasing Caption Health last year, GE Healthcare plans to add another artificial intelligence acquisition to the company. Published July 19, 2024
By Nick Paul Taylor

Use link for full article


GE Healthcare has agreed to buy Intelligent Ultrasound Group’s clinical artificial intelligence software business for approximately $51 million, the companies said Thursday.

The takeover will give GE control of AI-driven image analysis tools that it will incorporate into its ultrasound portfolio. GE said the tools could improve workflows and ease of use.

Intelligent Ultrasound agreed to sell the assets because clinical AI sales growth has been slower than expected and insufficient to fund developments to increase the value of the business.

GE already has one piece of Intelligent Ultrasound software integrated into its portfolio. Scannav Assist AI powers GE’s SonoLyst AI software on its Voluson range of ultrasound machines. The software, which supports obstetric ultrasound, was exclusive to GE before the company moved to buy the clinical AI business. GE launched an ultrasound system that incorporated Intelligent Ultrasound’s software in 2020.

Intelligent Ultrasound sold the clinical version of its Scannav Anatomy Peripheral Nerve Block software to other customers. The company identified clinical AI software as its main market for future growth and began developing products such as Scannav FetalCheck for gestational age estimation and Scannav Liver.

However, Riccardo Pigliucci, chairman of Intelligent Ultrasound, said in a statement that sales growth was slower than expected, and development of additional products “would require the sort of funding levels that are outside the Group’s current cash resources or capital raise capabilities.”

The company reported 2 million pounds of clinical AI sales in 2023, a 203% increase over the prior year.

Intelligent Ultrasound tried to reach commercial terms with GE for all the future products on its women’s health roadmap. The failure to reach an agreement led the company to conclude that it would need to develop products outside its existing relationship with GE. With financing conditions “uncertain,” the company decided to sell the business rather than try to develop the products independent of GE.

GE said the acquisition “adds an AI innovation pipeline that serves to help advance future development.” R&D experts from Intelligent Ultrasound will join GE as part of the deal. GE previously added to its AI capabilities by acquiring Caption Health in 2023.

Intelligent Ultrasound will stop selling Scannav Anatomy Peripheral Nerve Block but will continue to support existing customers. NeedleTrainer and NeedleTrainer Plus are unaffected by the GE acquisition.

GE plans to fund the transaction with cash on hand and expects the deal to close in the fourth quarter.

[bamboo2] 19/7/2024 08:06

Anything under 10p, and it's worth following timbo003 and buying more.

[40 fathoms] 19/7/2024 00:07

Having thought about it a bit, I think we might see the sale of the simulation business happen pretty quickly.

The board will need to consider the likelihood of getting revenue up to GBP+15mn and profit of GBP+3mn in the next couple of years and that should be worth between 12p and 15p per share. This would need to be considered against an achivable sales price today of @8p per share.

My guess is, if someone were to turn up with an 8p per share offer for the simulation division the board would accept it. When added to the proceeds of the Clinical AI business that would equate to total proceeds of about 20p per share.

[bamboo2] 18/7/2024 20:25

Worth checking out the Cavendish note.

[chester9] 18/7/2024 17:02

Sad to see this go at this price. GE got a great deal.

[multibagger] 18/7/2024 14:47

IMHO...with regards to "irrevocable" in the announcement - it means precisely that and the very foundation of the bid.

The 54.6% cannot renege on their acceptance of the deal, even if a much higher bid comes in. They are locked in and that is how GE would have played it as they would not have wanted to start a bidding war. If the 54.6% did not give their "irrevocable" and hence legally binding guarantee, the deal would have been a non-starter.

[kingston78] 18/7/2024 14:22

I think that there is tax to pay on the profit of selling the business, but no idea as to the quantum of it. Only appointed tax professionals will know, and to structure a more tax efficient deal if possible. I think that is one of the reasons that the market does not value the whole company at 15 p a share as indicated in today's announcement. The whole company is worth 15 p a share if someone bids for it at that price.

[bamboo2] 18/7/2024 12:43

I would imagine that GEHC will be buying at these prices.

[bmcollins] 18/7/2024 12:06

Sorry if I am asking a stupid question here but as 54.6% of some shareholders & directors have approved this deal if a third party happened to bid for the whole company would the "irrevocable" mean just that or would the circumstances have changed so much that a different bid would/could be considered ?
I know a bit about the takeover code to realise that there are a lot of arcane clauses in it & I wondered if anyone here knew for sure what the answer would be ?

[kingston78] 18/7/2024 09:57

Profit taking has reduced the gain to half the highest point. Now it settles midway.

You may say that the company is worth 15 p a share, but that really has been discounted unless the whole company is sold at that price.

[40 fathoms] 18/7/2024 09:13

I am sure they will, it will also become very attractive to someone like Surgical Science.

[bamboo2] 18/7/2024 09:09

I wonder if as part of the review the management may consider taking it private?

[timbo003] 18/7/2024 08:55

I cannot believe that the MMs just let me top up with 20K shares at 9.88p/share!

[40 fathoms] 18/7/2024 08:50

Timbo, that sounds about right to me. I think it is really interesting that they get to keep Needle Trainer (a bit positive in my view). The simulation business should be cable of revenue of about GBP15 million per year and a net profit of GBP 3 to 4 million per year. That should be worth 10p to 15p per share, everyday of the week.

The value of the cash and the existing business fits nicely in to the 20p to 25p that bamboo has always suggested