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On Wednesday, BTIG analyst Marie Thibault adjusted the rating for iCAD Inc . (NASDAQ:ICAD), shifting from Buy to Neutral. The decision comes in the wake of the announcement that RadNet (NASDAQ:RDNT, Not Rated) intends to acquire iCAD in an all-stock transaction. The deal values iCAD at approximately $3.61 per share, totaling around $103 million, representing a premium to the current market cap of $88 million. iCAD shareholders are set to receive 0.0677 shares of RadNet common stock for each share of iCAD common stock they own. According to InvestingPro data, iCAD maintains a strong financial health score of 2.84, with more cash than debt on its balance sheet. The acquisition is expected to be finalized in the second or third quarter of 2025.
Earlier today, RadNet conducted a conference call to elaborate on the motivations for acquiring iCAD. RadNet’s management emphasized that the acquisition would enable the company to scale and broaden the reach of its comprehensive Breast AI portfolio, ensuring compatibility with additional vendors. The target company boasts impressive gross profit margins of 87% and generated revenue of $19.6 million in the last twelve months. The transaction is also anticipated to generate over $7 million in cost synergies, comprising about $4 million in direct savings and roughly $3 million by fulfilling existing hiring plans. The deal is expected to bolster RadNet’s sales force in the Digital Health segment by adding another 12-13 salespeople to the current team of 11. Get deeper insights into iCAD’s financial metrics and 8 additional key ProTips with InvestingPro.
RadNet management projects that iCAD’s portfolio and development pipeline will accelerate their product roadmap and sales growth. iCAD’s pipeline includes updates to the recently launched ProFound Detection v4.0 in the U.S., plans to apply for a CE Mark for the same version, and has completed preliminary FDA submission work for ProFound Heart Health, with approval anticipated in 2025. Additionally, iCAD plans to submit ProFound AI Risk for FDA approval next year. The company has also partnered with Google (NASDAQ:GOOGL) Health for the development of the ProFound Detection for 2D algorithm, which is expected to take another 2-3 years to commercialize.
iCAD’s shares are currently trading at $3.07, close to the proposed acquisition price, representing a significant 21% return over the past year. Given the transaction’s perceived reasonable valuation, at approximately a 5.2x EV/Sales multiple based on consensus 2025 iCAD revenue, BTIG does not foresee other companies making competing offers. Therefore, the firm has downgraded iCAD’s stock rating to reflect the impending acquisition and its implications on the stock’s future potential. For comprehensive analysis of iCAD and other healthcare technology companies, access the detailed Pro Research Report available exclusively on InvestingPro.
In other recent news, iCAD Inc. reported fourth-quarter 2024 earnings that surpassed expectations, with revenue reaching $5.41 million, exceeding the anticipated $4.5 million. The company’s earnings per share (EPS) were -$0.03, outperforming the forecasted -$0.06. This performance was bolstered by a 14% year-over-year revenue increase, largely attributed to strong product sales. Additionally, BTIG maintained its Buy rating and a $3.00 price target on iCAD shares following these results.
In a significant development, RadNet Inc. announced a merger agreement to acquire iCAD in an all-stock transaction valued at approximately $103 million. This merger is expected to close in 2025, subject to customary conditions and iCAD stockholder approval. The acquisition is projected to enhance RadNet’s capabilities in AI-powered cancer screening.
Furthermore, iCAD appointed Mark Koeniguer as its new Chief Commercial Officer to spearhead global revenue growth initiatives. Koeniguer’s extensive experience in the medical technology sector is anticipated to drive iCAD’s expansion and innovation in AI-powered breast health solutions.
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