Venn Brown initates coverage of Artrya (ASX:AYA), developer of Salix, an AI-enabled cardiac imaging diagnostic and workflow platform. We value Artrya at $2.35 per share, offering 5.1x upside to the current share price.
Cloud base, AI-driven cardiac imaging diagnostics
Artrya is the Perth-based developer of Salix. Salix is a cloud-based, AI-dirven imaging diagnostic tool that integrates with the existing imaging systems used in hospitals and clinics to more quickly and accurately analyse and report on the condition of a patient’s coronary arteries.
Salix ingests the standard scans taken by a CCTA machine and identifies and, importantly, quantifies and categorises the key risk factors of coronary artery disease including stenosis, high risk and calcified plaque. Unlike existing products, Salix analysis is completed in around ten minutes compared to existing products which take 24 hours. Salix automated report generation is also fully editable by the treating imaging specialist.
The integration of Salix's comprehensive workflow into healthcare centre's existing systems allows clinicians to analyse, annotate, edit, share, triage and write diagnostic reports all within the single interface. Salix's workflow provides a platform on which Artrya can roll out new products, and once installed and integrated into a hospital or clinic's workflow is a highly sticky and difficult to dislodge.
Australian clinicians Venn Brown spoke with report that the time Salix saves in analysis and reporting would allow clinics to perform at least 2-4 additional scans a day, equating to $2,600 - $3,500/day of additional revenue. In the US, Salix turns a healthcare provider’s cost centre into a revenue centre, earning them ~US$200-300 per scan, rathe than costing a similar amount.
The 10 minute turn around also opens up new use cases while also improving patient outcomes through better, more consistent and faster diagnosis.
$3-$4 billion addressable market
Using on the number of CCTA procedures completed in 2021, a conservative estimate of Salix’s existing addressable imaging market is $2.7 billion in annual revenue. This does not include the 7-15% annual growth of CCTA imaging seen across Australia, the US, and most of Europe. CCTA imaging accounts for only around 10-15% of cardiac diagnostic testing, with leading cardiac specialists expecting this share to grow to 80% over the coming years.
Applying the procedure numbers expected in 2025, Salix's TAM for just the products either already launched or expected to launch over the next 18 months is $4.1 billion.
Land and expand
Salix is the first near real-time AI-enabled cardiac imaging solution to offer integrated workflow management and plaque assessment, providing Artrya a platform to roll out additional imaging products. As a SaaS, Salix offers enormous economies of scale. Once adopted and installed, Salix workflow is a highly sticky base on which Artrya can build additional products to capture a greater share of cardiac imaging spend.
Valuation: $2.35 per share, offering a 4.3x return
Based on our DCF, we value Artrya at $2.35 per share, nearly 5.1x the group’s current share price. The value is based on conservative assumptions around pricing, the speed of the group’s rollout and costs, and assumes a 20% cost of equity and a 2.5% terminal growth rate. Our valuation is supported by the valuation of AYA’s competitors, which, if applied to Artrya, would value the company upwards of $3.51 per share.
Catalysts
We see several catalysts that will progressively see AYA’s share price more accurately reflect the company’s fair value, including: FDA clearance (expected1Q 2025), reporting its first revenues, the launch of US sales activities, further FDA regulatory approvals, launch of Salix Coronary Plaque and Salix Coronary Flow and ongoing US customer wins.
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