August 19, 2014 — iCAD Inc. announced the signing of a definitive agreement to acquire DermEbx, an electronic brachytherapy services and technology provider, and Radion Inc., a cloud-based oncology collaboration software solution. Total consideration at closing is approximately $12.6 million, consisting of $3.8 million in cash and 1.2 million shares of iCAD common stock.
The acquired companies are expected to be immediately accretive to revenues and operating cash flow. The current annual recurring revenue run-rate for DermEbx and Radion is between $12 and $14 million, with EBITDA margins greater than 25 percent. DermEbx and Radion currently service 23 locations with an active backlog of new customers.
The acquisition closed July 15, 2014 and will expand the company’s Xoft Electronic Brachytherapy (eBx) System offering to include all the necessary components to enable dermatologists and radiation oncologists to develop, launch and expand their electronic brachytherapy programs for the treatment of non-melanoma skin cancer (NMSC).
iCAD and DermEbx entered into a strategic alliance in 2013, through which DermEbx offered the Xoft System to treat NMSC throughout its growing customer base of dermatology centers. This acquisition will expand the Xoft offerings to include physics support, billing support, assistance with radiation oncology provider selection, as well as the Radion Hub cloud-based oncology collaboration software solution. The Radion Hub is a Web-based platform that enables centers to improve patient safety, conduct treatment planning, enhance and monitor workflow, and improve communication between clinical specialists. The Radion Hub contains the largest repository of clinical evidence supporting the use of the Xoft System for NMSC, and is growing daily.
iCAD will become the only electronic brachytherapy company to offer a comprehensive solution to radiation oncology and dermatology practices that includes electronic brachytherapy equipment, software, services and support. iCAD’s acquisition of these two companies is expected to increase iCAD’s profitability and cash position through enhanced recurring revenue opportunities driven by the new platform of comprehensive eBx solutions.
“Since we began our alliance with DermEbx in early 2013, we have experienced great momentum with the adoption of our eBx technology for the treatment of non-melanoma skin cancer, which resulted in a record number of systems placed that year. We are pleased to see this positive trend continuing well into 2014. The strategic rationale for these acquisitions is clear and its potential to iCAD and the treatment of non-melanoma skin cancer is significant as we expand our comprehensive solution offering to radiation oncology and dermatology practices,” said Ken Ferry, president and CEO of iCAD Inc.
For dermatologists who are interested in starting an eBx practice, one of the biggest barriers has been access to the radiation oncology services and support necessary to begin treating with this innovative treatment modality.
“We have been impressed with the total solution and workflow benefits DermEbx and Radion have provided to their customers. By streamlining these solutions and services into one seamless offering, we expect to accelerate market adoption. We are very excited to be enhancing our eBx offering and strengthening our leadership position in eBx skin radiation therapy,” added Ferry.
“We have worked well with iCAD during our partnership, in large part, because we share a commitment to increasing market access to skin eBx as an alternative to MOHS surgery for the treatment of non-melanoma skin cancer,” said Kamal Gogineni, president of DermEbx and Radion Inc. “This transaction builds upon our established collaborative foundation to provide state-of-the-art technology supported by patient-centric solutions and services through a proprietary oncology solution.”
The Xoft System is a U.S. Food and Drug Administration (FDA)-cleared and CE-marked isotope-free radiation treatment approved for use anywhere in the body, including for the treatment of early-stage breast cancer, gynecological cancers and NMSC. It utilizes a proprietary miniaturized x-ray as the radiation source that delivers precise treatment directly to cancerous areas while sparing healthy tissue and organs. The Xoft System requires only minimal shielding and therefore does not require room redesign or construction investment. Minimal shielding also allows medical personnel to remain in the room with the patient during treatment. The mobility of the Xoft System makes it easy to treat patients at multiple locations and to conveniently store the system when not in use. The Xoft System is the only eBx system with clinical data published in peer-reviewed journals supporting its use in NMSC patients, including data that demonstrate excellent cosmesis, low toxicity levels and no recurrences at three years post-treatment.
For more information: www.icadmed.com