In recent decades, numerous companies all over the world have been implementing cutting-edge technologies in the healthcare sector. Particularly during and after the coronavirus pandemic, the improvement of medical technologies and equipment was given a significant boost.

The most noticeable area is diagnostic equipment, which makes sense, as the earlier the disease is revealed, the more chances for successful treatment. In this article, we'll talk about the global medical imaging market and the business of one of its representatives, Aclarion Inc.

What we know about Aclarion

Aclarion is an American company that manufactures diagnostic apparatuses. It was founded in 2017 with headquarters in San Mateo, California. Aclarion's Chief Executive Officer, President, and Director is Brent Ness, who earlier worked at Cleerly, Inc.

The issuer has already raised $19 million of investments from SC Capital, NuVasive, and James Peacock. On 22 April, Aclarion is planning to go public on the NASDAQ under the "ACON" ticker symbol.

A spine X-ray made by Aclarion equipment
A spine X-ray made by Aclarion equipment

Aclarion offers NOCISCAN-LS, a platform that helps doctors to find the source of pain. The equipment uses magnetic resonance spectroscopy (MRS) and a patented biomarker for the improvement of clinical treatment methods.

The company's major goal is to show the advantages of its equipment to as many diagnostic facilities as possible and teach their doctors and medical personnel how to unlock all the features and benefits the platform has to offer.

Aclarion sells its product to hospitals and medical centres directly or via intermediaries. One of them is NuVasive, which invested in Aclarion and is now engaged in distributing the platform for a 20% commission.

The optimisation of this partner scheme is one of the issuer's top priorities. Aclarion is planning to expand its partner network and attract new investors,  which will help to enhance the business model efficiency and increase sales.

What are the prospects of Aclarion’s target market?

According to the report released by Grand View Research state, the global medical imaging market in 2020 was estimated at $15.9 billion. The same report states that the market is expected to reach $23.9 billion by 2028. As a result, the average annual growth rate could be 5.2%.

The key factors for target market growth are the rising demand for diagnosis during the early stages of illnesses, and the ageing of the population. The diagram below shows the segments of the global medical imaging market in 2020.

Aclarion’s target market
Aclarion’s target market

How Aclarion performs financially

According to the S-1/A report, Aclarion's sales in 2021 were $60,260 – this is a 24% increase in comparison with 2020. As we can see, the revenue is not very high, but the growth rate is quite impressive.

Financial performance of Aclarion
Financial performance of Aclarion

The financial report indicates that the company spends a lot of money on scientific research ($0.78 million) and administration expenses ($1.83 million).

If we compare the above numbers with 2020, scientific research costs have been reduced by 33%, while administration expenses have increased 71%.

As of 30 September 2021, Aclarion's total liabilities were $12.1 million, while the cash equivalents on its balance sheet were $1.3 million. This implies a negative cash position of $1.9 million for the 12-month period from 30 September 2020 to 30 September 2021.

The company's business is in its early stages and requires additional financing to expand the market share and clear debts. The financial report demonstrates low revenue, heavy gross, operational, and net losses; and also substantial sums of money used in operational activities.

Strengths and weaknesses of Aclarion

The company’s strengths are:

  • Prospective target market
  • High revenue growth rate
  • Sound management
  • Smart financial policy
  • Innovative products

Among the investment risks, we would name:

  • The company is loss-making and doesn't pay out dividends
  • Very low revenue
  • Strong competition

What we know about the Aclarion IPO

The underwriter of the IPO is Maxim Group LLC. The issuer is looking for state investment capital to finance further research and developments.

Aclarion has recently announced that it was going to sell two million shares at the price of $4.5-6.5 per share. If the shares are sold at the medium price in the $5.5 range, the IPO volume might be about $11 million.

The underwriter has a 45-day option for purchasing up to 341,000 extra shares. If shares are sold at the highest price in the above-mentioned range, Aclarion's market capitalisation might reach $48.5 million.

The upside for the company's shares might be hundreds of percent. Buying Aclarion shares is a classic venture investment, meaning we should not invest more than 1% of the portfolio in this IPO to mitigate the risks involved.

Material is prepared by

Vadim has a higher education in finance and economics. He started becoming familiar with financial markets in 2012, and now specialises in analysing IPOs and portfolio investments.