Medical imaging stock Singular Health seals US deal and locks in $3.7m raise

Medtech Singular Health Group has signed an MOU with Provider Network Solutions and received binding commitments for a $3.7 million capital raise.

Singular Health has sealed a significant US deal and a $3.7m capital boost. Pic: Getty Images

• Singular Health has signed an MOU with US-based Provider Network Solutions

• The medtech is undertaking a $3.7 million capital raise with PNS to become cornerstone investor

• The MoU builds on a collaboration between Singular Health and PNS throughout 2024

Special Report: Singular Health Group has signed a memorandum of understanding (MOU) with Provider Network Solutions (PNS) to collaborate on a technical proof of concept and commercial pilot and has locked in a $3.7 million capital raise.  

In a big day of news for Singular Health Group (ASX:SHG), US-based PNS has agreed to a $500,000 cornerstone equity investment in the medical imaging stock, which has received binding  commitments for the multimillion placement.

The company will issue 41,111,111 new fully paid ordinary shares at 9 cent/share, a 6% premium to the 15-day and 30-day VWAP of 8.5 cents.

Along with PNS, existing shareholder Marin & Sons subscribed for $200,000 worth of shares with the remaining $3m allocated to sophisticated and wholesale investors and institutional funds.

Singular Health said the PNS investment was set to settle in mid-February 2025 with its shares subject to a nine-month escrow from their date of issue.

The company's share price jumped to an intra day high of 14c in early trading off the news, around a 44pc increase, with the rest of the placement due to settle on November 27.

Wallabi Group acted as lead manager for the capital raising and will receive 9,000,000 options, exercisable at 15 cents each, on or before three years from the date of issue.

Collaboration with PNS to advance Singular Health’s US growth

Founded in 1998, PNS has become the leading management service organisation for specialty care in the US state of Florida.

The organisation is engaged by health insurers to manage administration of healthcare and benefits for members patients.

In recent years, PNS has expanded to Puerto Rico and Texas, and in August 2023, it established a joint venture with America’s largest orthopaedic value-based care organisation, Healthcare Outcomes Performance Company (HopCo), to create HopCo Network Solutions.

Through that JV, PNS and Singular Health have access to a nationwide network of payors, tens of thousands of specialist providers, and tens of millions of potential patient users.

MOU builds on collaboration

The MOU builds on a collaboration between Singular Health and PNS throughout 2024, in which the companies co-designed a forward work plan and bespoke solution to demonstrate the feasibility of Singular Health’s 3Dicom solution.

The aim was to target a reduction in duplicate imaging and improve access to imaging across disparate picture archiving and communications systems (PACS), along with applying analysis to historical and recent images.

Singular Health’s Medical File Transfer Protocol (MFTP) enables access to imaging data across different PACS networks, regardless of location, resulting in a potential reduction of duplicate imaging costs to payors, risk providers and other MSOs across the US healthcare industry.

The MOU involves four stages:

Phase 1: Technical proof of concept

Singular Health will deploy a bespoke solution, leveraging existing 3Dicom functionality, within a sandboxed environment in Puerto Rico or the US mainland.

Importantly, Singular Health said its technical staff have already demonstrated all sub-components of the proof of concept and it’s therefore anticipated that the solution, as a whole, will be deployed in early 2025.

Phase 2: Commercial planning and budgeting of pilot program

Following satisfaction with Phase 1, if agreed a pilot program will be established in Puerto Rico or the US mainland.

Ongoing pricing discussions in relation to software licensing, fee-for-clicks and any bespoke development will take place and finalised during Phase 2, which is forecast to be completed by mid-CY25.

Phase 3: Implementation of pilot program

Singular Health and PNS will implement the pilot program, which includes customising the radiology imaging repository, integrating it with existing PACS systems, and monitoring key metrics such as reduction in duplicate imaging.

This phase runs concurrently with Phases 1 and 2 and is expected to complete by mid-CY25.

Phase 4: Upon success of pilot program – planning of national rollout

Upon success of the pilot program, the two companies will develop a plan for scaling the solution across additional facilities and end users with different use cases, potentially scaling up to a nationwide USA rollout.

They will also allocate resources and budget for scaling the project, including payment of any development work, software licence and network fees payable to Singular Health as previously agreed.

The fourth phase is earmarked to be completed during H2 CY25.

Potential to slash duplicate imaging costs

PNS CEO Dr Jose Pelayo said 3Dicom software had shown promise in being able to reduce duplicate imaging, which is a significant cost burden within the broader US healthcare system.

“Duplicate imaging results in a cost of approximately US$35 per member per month and we currently have over 3.7 million member plans managed directly under PNS alone,” he said.

“We estimate ~25% to 30% of our annual cost of imaging relates to unnecessary, duplicate imaging.

“As a leading MSO in Florida, focused on efficient and seamless customer care practices, Provider Network is looking to address this significant cost issue via Singular Health’s MFTP solution.”

Singular Health’s managing director and CEO Denning Chong said the company was pleased to announce the strategic agreement with PNS.

“Our focus on providing solutions to MSOs is part of Singular’s scalable business model that would ultimately lead to significant contracts,” he said.

“Our collaboration with PNS during 2024 has given us confidence in our 3Dicom software and its application to other MSOs in the substantial US market.”

This article was developed in collaboration with Singular Health Group, a Stockhead advertiser at the time of publishing.

This article does not constitute financial product advice. You should consider obtaining independent advice before making any financial decisions.