Business Model and Revenue Streams

iCardio.ai will earn revenue by providing AI-powered, automated echocardiogram interpretation services in partnership with point-of-care ultrasound (POCUS) hardware distribution companies. Further, they have a compelling opportunity to sell aggregated data to pharmaceutical companies to inform the need for regional targeted sales. 

10.1 - Distribution

iCardio.ai has a highly diversified distribution portfolio and have begun partnerships with large providers of portable, point-of-care ultrasound devices such as Butterfly Network (2023), Clarius (2022), and GE Healthcare (2021). In particular, Butterfly Network (NYSE: BFLY) is the first mover in POCUS, and has a global fleet of 145,000 handheld ultrasound devices serving their user base of over 100,000 providers. This partnership grants iCardio.ai access to the largest POCUS customer base today. AI compatibility with Butterfly in particular drastically increases the global scalability of their automated interpretation services. 

iCardio.ai has established relationships with a growing list of PACS (Picture Archiving and Communication System) companies operating in the ultrasound services space; their AI interpretation service can currently be utilized at UltraLinQ, HeartLab, deepc, and Viz.ai. Once FDA 510K clearance is achieved, they will distribute with Butterfly (NYSE: BFLY), GE Healthcare, Clarius, Vave, and Ferrum.

10.2 - Revenue Streams

Pre-FDA clearance, iCardio.ai has in February 2024 begun collecting minimum revenue payments of iCardio.ai partnered with UltraLinQ in 2024, a platform used by over 2,000 institutions worldwide. The company currently has 40,000 end customers and is paying iCardio.ai $6,000 per month to access iCardio.ai’s product for educational use. Through this partnership, iCardio.ai’s interpretations are pushed through to all UltraLinQ users, amounting to 30,000 scans monthly. 

iCardio.ai has been working closely with the FDA to achieve their recent FDA Breakthrough Designation, the first of its kind for POCUS/handheld ultrasound. Given this designation, they are confident in the pathway forward to achieving FDA 510K clearance within 6 months conservatively, and within 2-4 months with minimal processing issues (initial submission June 8th, 2023). Once clearance is achieved, they will take advantage of the New Technology Add-on Payment (NTAP), which is the first reimbursement directly related to use of handheld ultrasound in the primary care setting. Importantly, this form of FDA designation is often chronological, meaning iCardio.ai has true first mover advantage and the company’s algorithm will be inducted into standard of care. Following competitors would need to exhibit clinically significant improvement in order to achieve the same designation for aortic stenosis.

Post-FDA 510K clearance, established revenue streams will be as follows:

iCardio.ai will engage in revenue sharing in accordance with agreements with each distributor. Distributors will charge clinical providers (medical centers, clinics, community hospitals, etc.) a tiered pricing base charge of $6,000-15,000 per month for providing POCUS and AI interpretation. In addition, there will be a price per scan charged at a minimum of $2-4 per scan (and current access to 500K scans/month via existing distribution partners). 

Distributor agreements are as follows:

Rationale: NTAP reimbursement is $100 per scan. In addition, iCardio.ai and its partners agree that increased diagnosis resulting from such screening can result in upwards of $100,000 per diagnosed AS patient (further indications to come in future). These fees consist of the TAVR procedure, AS diagnosis and associated referrals, cardiologist visit, CT scan, and more. From the impact and payor standpoint, accessible screening efforts would improve patient outcomes by diagnosing early. This will avoid costly hospital stays for severe conditions diagnosed at a late stage.

Demand for POCUS with AI interpretation exists from all stakeholders, including providers, payors, medical device developers/distributors, and pharmaceuticals. In particular, iCardio.ai’s ability to diagnose puts them in an intensely data-rich position within the clinical workflow. A future and significant potential revenue stream involves informing pharmaceutical companies of demand for their medications. 

iCardio.ai intends to provide regional data on diagnoses numbers to pharmaceutical companies, who will not only gain real-time data on demand, but also pinpoint targeted sales regions. Ultimately this can positively impact physicians and patients who would benefit from new therapeutics. 

As an example, iCardio.ai has engaged in multi-stakeholder conversations between Butterfly and Bristol-Myers Squibb. There is demonstrated interest and use case with multiple pharmaceutical and medical device companies. Further agreements will solidify after FDA 510K clearance and subsequent progress made in clinical adoption. They have also engaged in conversations with AstraZeneca and Abbott.

We differentiate ourselves from other offerings in the market via three means:

To expedite the long hospital sales cycle, we will work directly to integrate our initial product, the iCardio.ai Brain v1, into downstream systems already behind the hospital firewall. These include ultrasound manufacturers and PACS systems. To that end, we have already established a revenue-sharing agreement with Clarius, one of the largest POCUS manufacturers with a 12k install base. The agreement specifies a 70%-30% revenue split (70% to iCardio.ai). We also have a 5 year R&D contract with GE and are working to integrate our product into their EchoPAC system. On the PACS side, we are working to integrate with HeartLab and are in talks with several others. By integrating into these systems, we will substantially lower the IT burden of onboarding our product and thus shorten the sales cycle. We will also offer a browser-based version of our software designed for direct use by cardiologists. 

Additionally, we plan to leverage our network of hospital systems and offer six-month free trials to demonstrate value and increase hospital revenue. Our sales team will identify and target hospitals with high volumes of echocardiograms and underserved populations, offering them the opportunity to test our product with no financial risk. The trial will include access to our full suite of features, including our AI-driven detection of missed revenue-generating conditions such as aortic stenosis. During the trial period, our team will work closely with the hospital's physicians and IT staff to ensure smooth integration and provide training on how to use our software. 

By offering a free trial, we can demonstrate the value of our product and its potential to improve patient care and hospital revenue. We anticipate that hospitals will see a significant increase in revenue by identifying and treating previously missed conditions such as aortic stenosis. After the trial period, we will work with the hospital to determine the best pricing model based on the volume of studies processed and the value created.

Overall, our go-to-market strategy will focus on leveraging our network of hospital systems, integrating into existing ultrasound and PACS systems, and offering feasibility trials to demonstrate the value of our product. By doing so, we aim to establish iCardio.ai as a leading provider of AI-driven cardiac analysis and improve patient care and hospital revenue.