mach7 technologies (m7t) speculative buy on the cusp of a ...david chambers was appointed chairman...

1 August 2019

Taylor Collison Limited: ABN 53 008 172 450, AFSL 247083 Participant of the Australian Securities Exchange, CHI-X Australia Pty Limited.

Adelaide: GPO Box 2046 Adelaide SA 5001. Level 16, 211 Victoria Square Adelaide SA 5000 Telephone: (08) 8217 3900 Fax (08) 8231 3506 Sydney: GPO Box 4261 Sydney NSW 2001. Level 10, 167 Macquarie Street Sydney NSW 2000 Telephone: (02) 9377 1500 Fax: (02) 9232 1677

Mach7 Technologies (M7T) Speculative BUY On the cusp of a material uptick in market share growth

John Copley [email protected] +61 2 9210 1335

Summary (AUD) Market capitalisation ($m) $97M

Share price $0.65

52 week high $0.92

52 week low $0.16

Ordinary shares (million) 149.5

Fully diluted ordinary shares (million) 152.7

Ave Daily Vol (3 Months) 579,708

Key Financials (AUD)

FY18 Actual

FY19 Est.

FY20 Est.

CARR ($) 5.30 7.95 11.33 Revenue ($m) 8.64 9.81 13.52 Op Ex ($m) 11.58 12.39 12.43 EBITDA ($m) (2.64) (2.57) 1.17 EBIT ($m) (6.34) (6.02) (2.34) NPAT ($m) (4.95) (5.87) (2.69) EPS Adj. (c) (3.92) (3.93) (1.80) NTA ($m) 0.03 1.38 3.05 Current ratio 1.6 1.4 1.7 EBITDA margin (%) -31% -26% 9% EBIT margin (%) -73% -61% -17% EV ($m) 95.3 94.9 95.3 EV/CARR 18.0 11.9 8.4 EV/Revenue 11.0 9.7 7.1 EV/EBITDA 81.6

Share Price Graph (AUD)

Our View We initiate coverage with a speculative BUY recommendation. Further upside exists for M7T in accelerating market share growth. The driver is rising recognition of M7T’s medical imaging IT software as a viable (even preferable) alternative to software from larger suppliers (IBM, GE etc). Until recently, M7T’s growth was hindered by diversion of IT capex towards the rollout of electronic medical records (EMRs). With the rollout complete, EMRs are highlighting a need for better interoperability of health IT systems. M7T possesses one of the strongest software suites in this area compared to competitors. Healthcare executive surveys and recent large-scale contract wins provide support for this thesis. Additionally, the new large-scale rollouts give comfort to risk-averse healthcare CIOs who are watching the projects closely to verify M7T is capable of delivering successfully. Feedback thus far is positive. The near-term catalyst is announcement of new contract wins – particularly at large healthcare enterprises where M7T’s potential is significant.

Key Points

Healthcare executives are observing projects with Hong Kong Hospital Authority ($15M over 5 years); Advocate Aurora Health ($5.7M over 5 years); and Sentara Health ($2.1M over 5 years). M7T’s largest rollouts to date are critical tests of capability. Healthcare providers are highly risk-averse due to the capex required and potential for disaster when switching imaging IT suppliers. A track-record of successful large-scale implementations is essential. Along with Advocate Aurora, Hong Kong was a major win for M7T’s credibility and provides a foothold in Asia – the fastest growing imaging IT market globally. Feedback thus far is positive, increasing the likelihood of even higher value contract wins.

M7T possesses an award-winning and unique product suite servicing a growing global market for enterprise-wide imaging IT (independent estimates are for 16% CAGR to 2023). Healthcare CIOs want single-vendor solutions to unlock and consolidate imaging data held captive in vendor-specific formats. M7T’s software meets this need and facilitates the use of imaging data in electronic medical records or advanced analytics applications (e.g. AI).

Board changes and a restructure for greater sales focus are positive steps. David Chambers was appointed chairman and Mike Lampron CEO and Managing Director in June. Restructuring completed 1H19 shifts focus from software development to sales and service delivery – a welcome change given the strength of the existing software suite.

Recent pull-back is a buying opportunity. M7T is now trading at more attractive levels following 4Q cash flow numbers ($2.3M in cash receipts and $10.3M in total for FY19 - a new record for the company). The decline in cash on hand was slightly disappointing after March’s $650k inflow but M7T is still on target for free cash flow breakeven over the 12-months to March 2020.

Valuation

We value M7T at $0.77 using a DCF model with moderate assumptions and supplement this estimate with a comparable company analysis. Another win on the scale of Hong Kong (or larger) would result in a material increase in our valuation range. Sensitivity analysis of 3-year market share and terminal growth rates outline possible scenarios (page 16). Management estimates that stripping out all early-stage growth and software development costs gives an EBITDA margin of 70%. Considering July 23’s CARR figure of $8.5M, our FY20 and FY21 EBITDA forecasts of $1.2M and $5.5M appear achievable.

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Investment thesis M7T’s target for free cash flow breakeven over the 12-month period to March 2020 is likely to be achieved and this is reflected in current prices. We believe upside exists in underestimated earnings potential from higher than expected market share growth. Upside would be significantly higher still should more large healthcare providers (at the scale of HK Hospital Authority) recognise M7T as a viable supplier.

Tailwinds from a rapidly expanding enterprise imaging and vendor neutral

archive market… FY16-FY18A CAGR 12% FY19-FY22E CAGR 16%

Source: TC, M7T, Signify Research

Combined with accelerating market share and recurring revenue growth…

FY16-FY18A market share CAGR 30% FY19-FY22E market share CAGR 36%

FY16-FY18A CARR CAGR 27% FY19-FY22E CARR CAGR 42%

FY16-FY18A total revenue CAGR 22% FY19-FY22E total revenue CAGR 34%

Source: TC estimates

Results in EBITDA margin expansion and strong operating cash flow.

EBITDA margin to trend towards 70% over the long term.

FY19e UFCF -$3.0M FY20e UFCF $233k FY21e UFCF $4.4M FY22e UFCF $9.6M


Investment horizon Near-term catalysts Risks

The tender process for medical IT contracts is lengthy (12-18 months).

New large-scale contract wins could be announced from late 1H FY20 (i.e. 12

months since the Hong Kong deal announcement).

New contract wins

Better than expected free cash flow

Decrease in CIO risk-aversion and/or increase in M7T credibility

No new contract wins

Free cash flow guidance miss

Increase in CIO risk-aversion and/or little/no increase in M7T credibility

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Summary of supporting material The healthcare industry is demanding greater interoperability and vendor neutrality to optimise ineffective electronic medical records and standardise datasets for future applications of artificial intelligence (AI). Trusted IT suppliers with interoperable and scalable solutions will take market share.

M7T is on the cusp of a material uptick in market share growth.

Healthcare CIOs increasingly prefer M7T's software over solutions from competitors

Large IT suppliers (IBM, GE, Hyland etc) acquired VNA/EI software from smaller suppliers and modified it extensively (but poorly)

resulting in persistent bugs and interoperability issues.

Our industry contacts confirm providers are increasingly seeking solutions like M7T’s over larger suppliers. This view is supported by

industry surveys of healthcare executives.

M7T has an award-winning and unique product suite to service this market

Awards: Leading VNA provider (2016), Asia Pacific Medical Imaging Informatics Company of the Year (2015), Enterprise Imaging

Informatics Company of the Year (2012).

The only supplier with a complete enterprise imaging solution built with interoperability the principal goal and developed entirely in-

house (not acquired and developed through M&A).

Industry expectations are for high growth in enterprise imaging and vendor neutral archive markets

In the primary market for M7T (enterprise imaging and vendor neutral archives) forecast annual growth rates to 2022 are 17.3%

and 9.8% respectively.

Longer term (10+ years), enterprise imaging and VNA markets are projected to overtake and fully consume the US $1.7 billion

standalone PACS market.

Enterprise-wide imaging software is the solution for imaging IT interoperability

Few providers have adopted complete enterprise imaging solutions. Now centralisation of general health functions is

complete, the foundation is laid for centralisation of imaging.

Providers prefer a single supplier for their vendor neutral archive (VNA), imaging workflow management and universal viewer.

The healthcare industry is demanding greater interoperability, particularly in imaging IT

Readily interoperable systems are required to populate EMRs and realise their value. Image-enabled EMRs are likely to be mandatory

for US healthcare providers in future.

Healthcare CIOs see imaging IT as the greatest challenge for interoperability. CIOs, not radiologists, are responsible for imaging

IT in enterprise-wide implementations.

Electronic Medical Records (EMRs) are ineffective

Healthcare enterprises were incentivised to adopt EMRs in unreasonable time-frames on top of patchworks of disparate and

aging IT systems.

Since data was unable to be communicated in standardised formats, EMRs were ineffective and produced substandard

outcomes.



Company overview M7T offers an end-to-end enterprise imaging solution to unlock and connect patient data scattered within disparate, vendor-specific imaging IT systems.

Product overview

Source: M7T

Award winning, modular software

suite grouped under 4 “Studios”

Zero-footprint – runs in web

browsers with no additional hardware

Implementable in stages according to

provider needs

Interoperability is the primary

objective making for a scalable and future

proof system

M7T develops data management solutions that create a clear and complete view of the patient to inform diagnosis, reduce care delivery delays and costs, and improve patient outcomes. The award-winning enterprise imaging platform provides a vendor neutral foundation for unstructured data consolidation and communication to power interoperability. Workflow tools, clinical viewer and vendor neutral archiving solutions unlock silos of legacy systems; permitting healthcare providers to own, access and share patient data without boundaries. Detailed product descriptions are available in appendix 1-4 according to “Studio”.

Market1 Primary market: Standalone VNA3 (worth US $152M and growing at 9.8% p.a2) and Enterprise Imaging (US $458M and

growing at 17% p.a.2)

Secondary market: Image exchange (US $68M2) and Standalone PACS3 (US $1,740M2) markets.

All market value figures exclude hardware capex (i.e. they include only new and recurring software capex and opex)

Revenue model Over 90% of M7T’s contracts are capital sales – the model traditionally preferred by healthcare providers.

For capital sales, 20% of the total contract value (on average) represents the recurring support fee.

Contract terms are typically 5 years. Customers are required to purchase a new licence when renewing a contract.

Revenue Type Capital Sales Subscription Sales

Priced by Revenue recognised Priced by Revenue Recognised

Software License fees Procedure

volume Upfront when licence

provided Procedure

volume Monthly (recurring)

Annual Support % of license fee Monthly (recurring) Procedure

volume Monthly (recurring)

Professional Services (implementation, training) Labour hours As services are

delivered Labour hours

As services are delivered

Customer profile Large healthcare enterprises:

In possession of large datasets strewn widely across a range of departments, formats, time periods and vendors.

Growing organically or inorganically; needing to reduce costs and leverage scale; looking to transition to enterprise imaging; and seeking standardisation of imaging data and workflow to take advantage of AI applications.

Value proposition Image-enable the EMR and allow graphical programming of workflow rules.

Consolidate and share data across an enterprise in native and proprietary formats from a single integration point.

Very little investment in hardware required.

Attractively priced relative to competitors.

Replace patchworks of custom code implemented by various vendors trying to achieve some level of interoperability.

1 See appendix 6 for a description of each market

2 Signify Research & M7T 3 See appendix 6 for a description of PACS and VNA



Major contract wins The past 12 months saw almost AU $23 million in new contracts. Higher value wins should be on the horizon as M7T builds a proven track record as a capable supplier.

N.B. Major contract wins are only those announced on the ASX. Smaller deals and additional revenue from existing customers are ordinarily disclosed via the M7T blog (e.g. Children’s of Alabama in June 2019). A list of major customers and all new contracts thus far in calendar year 2019 are in appendix 9.

Large-scale contract wins (last 12 months) Advocate Aurora Health – 9 July 2019

Total contract value of AUD $5.7 million over 5 years, including AUD $550,000 in ARR.

To provide the Enterprise Imaging Platform and Migration Engine for migration of ~3.5 petabytes (1 petabyte = 1 million gigabytes) of imaging data, the company’s largest migration to date.

Advocate Aurora is one of the US’s top 10 largest not-for-profit health systems (28 hospitals and 500 outpatient centres).

Sentara Healthcare – 27 March 2019

Total contract value of AUD $2.1 million over 5 years with potential additional revenue from volume expansion.

To provide PACS modernisation products and services. M7T is replacing 8 PACS systems (incl. GE, Agfa, Fuji, Medstream).

Existing customer since 2014 with a hospital system in Virginia and North Carolina (16 hospitals and 56 imaging centres).

20 million studies are to be migrated to M7T’s VNA solution.

Hospital Authority of Hong Kong (HAHK) – 27 October 2018

Total contract value of HKD $81 million (AUD $15 million) over 5 years.

To provide Enterprise Imaging and Viewer for the entire Hong Kong Territory.

HAHK manages 43 public hospitals and institutions, 48 specialist outpatient clinics and 73 general outpatient clinics

Major contract timeline (since listing on ASX) Date Contract Details

May 2016 Implementation of the Enterprise Imaging Platform across 25 sites at Premier US Radiology Group. Up to US $500k p.a. in subscription revenues expected.

Aug 2016

Selected by Virginia University Medical Centre to provide the Enterprise Imaging Platform under a 5 year licence. Total contract value in excess of US $800k with recurring annual support fees.

MaineHealth purchased both the Enterprise Imaging Platform and Clinical Studio over a 7 year term for US $2.9M with an opportunity to earn and additional US $4.2M. Additionally, annual support fees between US $260k and $390k will be earned over the contract term.

Sep 2016 Implementation of the Enterprise Imaging Platform is completed for Sidra Medical and Research Centre in Qatar with a minimum contract value of US $2M plus ongoing support fees.

Jun 2017 Two successful expansion software licence deals completed with existing customers for at least US $2.7 million

US based Radiology Associates select M7T for a contract worth at least US $1.3 million over 3 years.

Sep 2017

A perpetual software licence agreement is made with University of Vermont Medical Centre making the entire suite of M7T products available to 144 sites across Vermont and Northern New York. First year deal value was US $1.2M with recurring annual support fees thereafter.

Nov 2017 Sentara Healthcare selects M7T to migrate over 20 million images to a vendor neutral archive. The deal is worth over US $1.8M.

Jun 2018 Raleigh Radiology in North Carolina selects M7T’s Data services Platform as the foundation of their enterprise imaging strategy. The solution is expected to generate revenues of at least US $1 million over the next 5 years.

Aug 2018 Hamad Medical Centre adds M7T’s Business Continuity Solution to its existing M7T clinical imaging platform. M7T’s Data Services Platform manages more than 20 million images (90%) of Qatar’s clinical imaging requirements.

Oct 2018 M7T wins a 5-year enterprise imaging contract with the Hospital Authority of Hong Kong for HK $81M.

Nov 2018

Sentara Healthcare selects M7T for a PACS modernisation program. This project continues the partnership that started in 2014 with the implementation of Sentara’s VNA facility. An M7T “innovation-lab” is expected to go-live at Sentara in October 2019.

Jan 2019 New contract wins from 1H FY19 include Mississippi State University College of Veterinary Medicine, Loyola University Health System and Radlink Philippines.

Mar 2019 New contract win from 3Q FY19 is Sampson Regional Medical Centre (AU $365k over 5 years).

Jun 2019 Children’s of Alabama selects M7T to provide a VNA for a scalable base for future expansion (total deal value of AU $800k).

Jul 2019 Advocate Aurora Health selects M7T to provide an enterprise imaging platform and DICOM data migration. Total deal value of AU $5.7M over 5 years.



Ineffective EMRs – from headwind to tailwind The rushed rollout of EMRs in the US failed to deliver the benefits originally promised. The diversion of health IT capex to EMRs was a headwind for M7T, but a shift in focus towards EMR optimisation and system interoperability will now increase demand for M7T’s software. A major future catalyst is the possibility image-enabled EMRs are made mandatory in the US.

Electronic Medical Records (EMRs) are a digital repository of patient data shared through enterprise-wide information systems. They incorporate demographics, medical history, medication and allergies, lab test results, radiology images and vital signs. The value of an EMR depends on how complete it is.

US healthcare market ≈ global healthcare market The USA spent US $3.65 trillion on healthcare in 2018 (17% of GDP) equating to $11,212 per capita.4

Other developed countries spend an average of half as much per capita and considerably less in total.

The second biggest healthcare market globally is China (2015: US $594 billion) growing at 17% YoY.5

Suppliers to the medical sector focus on the US market as it is by far the largest and most lucrative.

Timeline of EMR adoption

2005 US $81 billion annually in cost

savings projected from a transition to EMRs in the US. 6

2009 US Congress authorised “Meaningful Use” giving

financial incentives for EMR adoption.

2017 99% of US hospitals

demonstrated “Meaningful Use” or were using an EMR.7

Today EMRs are still in the growth stage – the APAC region will

see most growth. 8

Percent of all eligible and critical access hospitals in the US using EMRs (2017)

Source: HealthIT.gov

Global EMR market (USD billion)

Source: TC, Research&Markets

EMRs failed to produce patient benefits and may have increased healthcare price inflation

EMRs failed to produce any cost savings at all for health consumers9 and some reports even claimed EMRs increased costs for both patients and providers.

US health expenditure is forecast to increase 5.5% p.a. to 2027 (2007-2018 growth rate was 4.7% p.a) and become 20% of US GDP.4

Growth is forecast to be a result of higher prices and not increased use of services.4

Reported IT related safety incidents have increased ~1000% in 10 years.

Ineffective EMRs were directly responsible for 7 deaths in the US.7

4 https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05499 5 http://kraneshares.com/resources/presentation/2018_06_30_kure_presentation.pdf 6 https://www.rand.org/pubs/external_publications/EP20050904.html 7 https://fortune.com/longform/medical-records/

8 https://www.researchandmarkets.com/research/gfbxnf/18_3_billion?w=12 9 https://www.nytimes.com/2013/01/11/business/electronic-records-systems-have-not-reduced-health-costs-report-says.html

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No. safety incidents US healthcare expenditure (USD million)

Basic EMR % adoption Certified EMR % adoption

Source: TC, healthaffairs.org, healthIT.gov

8.8% CAGR

https://www.healthaffairs.org/doi/10.1377/hlthaff.2018.05499

http://kraneshares.com/resources/presentation/2018_06_30_kure_presentation.pdf

https://www.rand.org/pubs/external_publications/EP20050904.html

https://fortune.com/longform/medical-records/

https://www.researchandmarkets.com/research/gfbxnf/18_3_billion?w=12

https://www.nytimes.com/2013/01/11/business/electronic-records-systems-have-not-reduced-health-costs-report-says.html



Healthcare industry demands better interoperability, particularly in imaging Greater interoperability of IT systems (particularly in imaging) is necessary across the healthcare industry to generate value from EMRs. M7T will benefit as a leading supplier of software systems designed to maximise interoperability of imaging departments.

Interoperability is the ability of different information systems, devices or applications to connect within and across organisational boundaries to access, exchange and cooperatively use data.10

Three perspectives on interoperability as the foundation for effective EMRs Physicians

62% of physicians believed interoperability should be the top priority for EMRs in 2016, the same proportion as in 2018.11

EMRs are the top contributor to physician “burnout” and EMR optimisation is the most effective fix.

Regulatory bodies

“We didn’t think about how all these systems connect with one another. That was the real missing piece.” Seema Verma (CEO of the Centres for Medicare and Medicaid Services – the body responsible for EMR adoption) on EMR ineffectiveness.12

In 2018, “Meaningful Use” (the program incentivising EMR adoption) was continued beyond its planned end date as “Promoting Interoperability Programs”12.

The program was re-focused to promote interoperability and the efficient exchange of digital information.12 Elements of the program not emphasising interoperability were removed.

Healthcare Chief Information Officers (CIOs)

Interoperability is consistently ranked as one of the top concerns of healthcare CIOs in annual executive surveys (see appendix 11).

Other top concerns, cyber security and patient engagement, cannot be addressed without interoperability.

Demand for interoperability in imaging IT

90% of health data by file size is medical imaging information.13

In a survey of 100 healthcare CIOs14:

>50% said patient care is impacted when image data is inaccessible...

>50% are unable to move imaging data between systems and applications.

This is despite... 58% having an enterprise-wide imaging strategy.

86% reported IT, not radiology, is responsible for imaging IT.

Top 5 challenges for EMRs

Source: TC, LifeImage

10 https://www.himss.org/library/interoperability-standards/what-is-interoperability 11 Deloitte 2018 Survey of US Physicians 12

https://www.himss.org/news/cms-finalizes-changes-interoperability-initiatives-and-ehr-incentive-program-hospitals 13 http://newsroom.gehealthcare.com/beyond-imaging-ai-imaging-innovation/ 14 LifeImage survey of healthcare CIOs 2016

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Speech recognition

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Poorly functioning viewers

Insufficient vendor support

Data security issues

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Other

Source: TC, Center for Connected Medicine

https://www.himss.org/library/interoperability-standards/what-is-interoperability

https://www.himss.org/news/cms-finalizes-changes-interoperability-initiatives-and-ehr-incentive-program-hospitals

http://newsroom.gehealthcare.com/beyond-imaging-ai-imaging-innovation/



Enterprise imaging is the solution Very few providers have achieved full enterprise imaging (EI) integration with their EMR15. Since centralisation of general health functions is complete, the foundation is laid for centralisation of imaging functions. Providers prefer a single supplier for their VNA, imaging workflow management and universal viewer.

Enterprise Imaging (EI) systems make data available to the EMR in standardised, vendor-neutral formats. They consist of a Vendor Neutral Archive (VNA)16, zero-footprint universal image viewers and an image-enabled Electronic Medical Record. See appendix 12 for an explanation of the challenge in delivering interoperability in imaging IT.

Enterprise imaging and EMR interoperability

Source: HIMSS-SIIM whitepaper. Journal of Digital Imaging. 29 (5): 530–8

Providers prefer a single source approach to EI

Healthcare executives’ preferred enterprise imaging approach

Source: TC, Reaction Data

Radiologists and CIOs are reluctant to take risks with their imaging data.

Single-vendor solutions are preferred to minimise risk.

M7T now offers a single-source EI solution after a partnership agreement in 2018 with universal image viewer supplier Client Outlook (eUnity is the name of the viewer). See appendix 10 for details.

Other drivers of EI Hospital Consolidation: formation of regional healthcare networks pushes providers toward enterprise wide solutions to

leverage economies of scale.

Simplification of supply chains: healthcare providers prefer single-source software solutions where practical to cut costs and simplify operations.

Sharing, outsourcing and case load balancing: remote access to imaging systems offers the potential to outsource cases to reduce high radiology workloads.

Need for scalable storage: increasing number of scans and file size per scan (single studies may be several gigabytes).

% of US community hospitals belonging to healthcare enterprises

EI adoption (based on share of radiology/cardiology market revenue)

Source: TC, American Hospital Association Source: TC, Signify Research

15 Signify Research 16 See appendix 1 for an explanation of VNAs.

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Imaging IT market The total addressable market for M7T is projected to grow by 3% YoY with Asia-Pacific seeing most growth17. In the primary markets for M7T (EI and VNA), the outlook is even brighter with forecast CAGR of 17.3% (EI) and 9.8% (VNA)17. Longer term (10+ years) the EI market is projected to overtake and eventually fully consume standalone PACS17.

APAC will drive the majority of global growth in imaging IT

The standalone PACS market is shrinking, EI and VNA solutions are reclaiming the share

The enterprise imaging and VNA markets (ex-hardware) are projected to grow rapidly (US $m)

17 Signify Research, M7T

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Source: TC, M7T, Signify Research Source: TC, M7T, Signify Research




Product Recognition M7T was awarded the leading provider of Vendor Neutral Archives (2016), Asia Pacific Medical Imaging Informatics Company of the Year (2015), Enterprise Imaging Informatics Entrepreneurial Company of the Year (2012).

The leading provider of Vendor Neutral Archives International Data Corporation (IDC) conducted an analysis of the VNA market in 2016. Vendors were evaluated on:

functionality and patient-centricity of the product;

underlying technology;

market knowledge and reach of the vendor;

deployment capabilities;

value relative to price; and

customer references for the product.

Marker size in the chart below represents the market share of each vendor within the standalone VNA market.

Source: IDC (2016)

IDC’s two categories for success:

1) Capabilities (y-axis): current capabilities, menu of services and how well aligned the vendor is to customer needs. 2) Strategies (x-axis): how well future strategy aligns with what customers will require in three to five years.

Recognition by Frost and Sullivan 2015: Asia Pacific Medical Imaging Informatics Company of the Year

Outstanding achievement and performance in the field of medical imaging informatics.

“M7T moves imaging data from monolithic, interoperability-resistant PACS to modular, customized enterprise image management solutions through a PACS-neutral back-end-infrastructure with sophisticated enterprise PACS viewers. Not only does this make imaging data highly accessible, it also improves mobility and quality of service for radiologists.”

2012: Global Enterprise Imaging Informatics Entrepreneurial Company of the Year

Awarded for entrepreneurial spirit by devising a strong growth strategy and robustly implementing it.

Strength in terms of innovation in business processes, leadership in customer value as well as market penetration.



M7T vs. competitors – product features Comparison of advertised features between M7T and competitors highlights the company’s ability to compete with (and replace) larger players.

Foreword on product comparisons in imaging IT An IT decision maker’s belief that a vendor will be capable of delivering the contracted solution and be in a position to

provide recurring support services is more important than a vendor’s claimed capabilities.

Based on industry consultation, suppliers promise to meet almost any need health providers have during the contracting/tender process.

Large-scale medical IT software, particularly in imaging, is rarely an out-of-the-box solution.

Implementations require customisation and development work during and after rollout to integrate with existing systems.

M7T vs. multinational, diversified IT suppliers (IBM, GE, Afga, Philips, Toshiba etc) M7T is the only supplier with a complete enterprise imaging solution built entirely in-house (without M&A) and with

interoperability the primary objective.

Larger suppliers offer similar services to M7T but have relied upon acquisitions of smaller players in the VNA market rather than developing their own software.

Our industry contacts confirm providers are increasingly seeking solutions like M7T’s due to continual problems with bugs and interoperability with larger suppliers. These issues are direct result of suppliers tacking bits and pieces onto older software acquired from M7T’s former peers. More details are on page 15.

Large suppliers have relied upon their existing PACS install-base to build market share in the VNA and EI markets (page 13).

M7T vs. Hyland M7T management flagged Hyland as their main competitor.

After the release of ImageNext (April 2019), Hyland now advertise very similar functionality to M7T and promise largely the same benefits (see appendix 5 for a full product comparison).

Hyland more effectively communicate the benefits of their product line (at least publicly). For example, Hyland promote a listing of integrations between their systems and each of the three major EMR vendors. We do note M7T is in the process of a website refresh as part of the shift in focus to sales and customer service.

Hyland’s size (US $500 million in revenue) and diversity of product lines means greater comfort for clients concerned about financial stability or track record.

Hyland have over 1000 installed sites and claim over 50% of the US hospital market uses their solutions.

We believe Hyland’s future focus is not in imaging IT. They appear to be shifting towards integration of other medical content (documents and records) with market leading EMRs (e.g. Cerner and Epic). Evidence of this is in their acquisition of a division of AllScripts in 2018.

M7T vs. BridgeHead Hold similar market share to M7T in the standalone VNA market where they were also named a “leader” by IDC.

BridgeHead provide identical functionality to Mach7’s Management Studio. Replacing pink rectangles in the diagram below with Management Studio modules (Priors fetching = Fetching engine, Migration = Migration Engine, Image Routing = Routing engine) gives an identical representation of workflow in an M7T implementation.

We don’t believe BridgeHead have an attractive offering in today’s market as they lack a single-vendor EI solution. Additionally, BridgeHead is mainly confined to the UK only. They are not competing with M7T in the US and Asia.

Source: BridgeHead



M7T vs. competitors – market share A 2018 survey of 297 imaging IT decision makers highlights the historical difficulty for M7T in gaining market share without a PACS product. Providers prefer their existing PACS vendor to supply their VNA to minimise risks in the short run. M7T already has a partnership with Client Outlook (eUnity) in the universal viewer market.

Providers prefer existing PACS vendors to supply a VNA, but do switch for a better partner

When transitioning from standalone PACS to PACS+VNA (a stepping stone to EI, see appendix 13), providers prefer their existing PACS supplier to provide the VNA.

The PACS+VNA market is difficult for M7T without an existing install-base.

Providers will risk a multi-source solution for highly-regarded VNAs/suppliers.

The strength of the M7T VNA has enticed some providers away from their existing PACS suppliers.

Market share (by number of implementations) of PACS and VNA suppliers (sample size = 297)

Source: Reaction Data. Ideal approach to radiology IT

The growing enterprise viewer market should work in M7T’s favour

Market share (by number of implementations) of VNA and universal viewer suppliers (sample size = 297)

Source: Reaction Data. Ideal approach to radiology IT

M7T’s platform permits a single-vendor solution for a range of third party universal viewers (eUnity, Visage etc).

This means a pre-existing install base on par (or even greater) than the largest PACS suppliers.

Potential exists for a future acquisition of Client Outlook.

0% 5% 10% 15% 20% 25%

NovaRad

CareStre…

Intelerad

Siemens

Sectra

Agfa

McKesson

Mach7

Fuji

Other

Philips

IBM

GE

Hyland

VNA usage PACS usage

0% 5% 10% 15% 20% 25%

NovaRad

CareStream

Intelerad

Siemens

Sectra

Agfa

McKesson

Mach7/eUnity

Fuji

Other

Philips

IBM

GE

Hyland

VNA usage Viewer usage



M7T vs. competitors – provider perceptions of suppliers Imaging IT products are customised and delivered based on client needs. A vendor’s perceived competence, experience and ability to deliver interoperable solutions is the most important factor in supplier selection decisions. The main suppliers in the medical image management market are (alphabetically):

Agfa HealthCare

BridgeHead Software

Cerner Corporation

FUJIFILM

GE Healthcare

Hyland Software

IBM/IBM Watson/Merge Healthcare

INFINITT Healthcare CO.

Konica Minolta

Life Image

Mach7 Technologies

McKesson Corporation/Change Healthcare

Novarad

NTT Data

Philips/Carestream Healthcare

Siemens Healthineers

Sectra AB

Toshiba/Vital Images

“Best in KLAS” trends “Best in KLAS” scores are produced by KLAS research and based on surveys of healthcare executives at the manager and

director level.

Historically, M7T has received high scores and positive feedback – consistently well-above the industry average.

In 2016, M7T scored highest against all competitors but an insufficient number of reviewers meant the company was ineligible for inclusion in the Best in KLAS awards.

M7T is currently ranked 2nd behind Sectra. Based on score trends, there is a possibility M7T receives Best in KLAS in 2020.

Reviewer sentiment analysis M7T comes second behind Sectra. IBM and GE score lowest, followed by FujiFilm, Philips and Hyland.

Review sentiment is categorised as positive, neutral or negative.

Scores are compared based on the proportion of non-negative customer reviews posted to KLAS.

Supplier satisfaction survey M7T and Philips/Carestream both have a 15% rate of “Unsatisfied” customers, inferior only to Agfa (14%) and Sectra (0%).

This metric is an overall score based on categories surveyed by KLAS (value, relationship, product, operations, loyalty and culture).

NPS scores18 Average NPS score of imaging IT suppliers is 5.

Healthcare CIOs are unsatisfied with their existing imaging IT providers. Scores in the 0-6 range mean customers are “detractors” and will actively instruct peers to avoid their current supplier.

NPS scores are calculated by taking the percentage of detractors and subtracting it from the percentage of promoters.

Score range: 0-6 = net detractors, 7-8 = neutral, and 9-10 = promoters.

18 Reaction Data. Ideal approach to radiology IT



Mergers and acquisitions in imaging IT Consolidation in the imaging IT market makes M7T the only truly vendor-neutral supplier offering a complete enterprise imaging solution.

Consolidation of the imaging IT industry is a tailwind Despite consolidation, providers have more choice as there are more suppliers able to meet their needs. Although we believe this is a positive for the following reasons:

M7T is now the only supplier with a complete enterprise imaging solution built entirely in house.

Our industry discussions have indicated providers are increasingly seeking solutions like M7T’s due to continual problems with bugs and interoperability resulting from suppliers tacking bits and pieces onto older software purchased from small suppliers/start-ups.

Supporting Evidence Historical M&A activity in imaging IT

Up until 2013, independent suppliers with software built in-house were the major providers of VNAs and PACS migration services19.

Since 2013, independent vendors have been acquired by larger suppliers seeking to protect their PACS market share and meet growing demand for VNA and EI solutions.

Target Acquirer Date announced Deal Value ($ USD M) Valuation Multiples

Carestream Healthcare Philips March 2019 Undisclosed N/A

Lexmark’s Acuo, PACSgear, Nilread products

Hyland (Thoma Bravo)

July 2017 $1,500 N/A

Karos Health Vital Images

(Toshiba/Canon) November 2016 Undisclosed N/A

Vizteck Konica Minolta October 2015 Undisclosed N/A

Merge Healthcare IBM August 2015 $957 EV/Sales (LTM) = 4.2x

EV/EBITDA (LTM) = 21.0x

Teramedica FujiFilm May 2015 Undisclosed N/A

DR Systems Merge Healthcare February 2015 $83 N/A

PACSgear Lexmark October 2013 $54 N/A

Acuo Technologies Lexmark January 2013 $45 N/A

AMICAS Merge Healthcare February 2010 $177 EV/Sales (LTM) = 2.4x

EV/EBITDA = 84.6x

Freeze in R&D Immediately post acquisition, the focus of the acquirer was always on integration of the new business and cross-selling newly acquired products to existing customers19. The consequences were:

1) Slowing innovation due to diversion of R&D spend away from product development and towards product integration; and

2) A shift towards servicing and protecting the acquirer’s existing customer base rather than winning new business.

Approximately one to two years post acquisition product development is resumed and focused on development of EI solutions:

In April 2019 Hyland released ImageNext (a universal worklist and workflow router).

Vital Images expanded/integrated the Karos Health product suite (originally only an image exchange platform and mobile image viewer) to be a complete EI solution only 6 months after acquisition.

IBM unveiled Watson-powered imaging solutions built atop the Merge Healthcare platform.

Remaining independents (including M7T)

M7T

Bridgehead Software

Bridgehead has not built out a product suite beyond the M7T Management Studio and only competes in the basic VNA market primarily in the United Kingdom.

Despite large suppliers acquiring VNA and EI software, M7T is still unmatched as a provider of interoperable solutions for enterprise-wide imaging.

19 Signify Research



Valuation We value M7T using a DCF methodology and assume a gradual uptick in market share growth. It is important to note additional large-scale contract wins within the next 12 months would require higher market share growth assumptions. Our current valuation could be revised downwards should momentum in new contract wins fade.

Key DCF assumptions

WACC Beta Long-term growth MRP Risk-free rate

9.47% 1.33 4.0% 6.0% 1.5%

N.B. A long-term growth rate of 4% is reasonable since:

1) The US healthcare market is projected to grow by 5.5% p.a. to 2027. 2) EI and VNA markets are currently growing at 16% p.a. and projected to fully consume the US $1.7 billion PACS market.

DCF valuation N.B. Due to the mechanics of our model, revenue CAGR runs broadly in line with market share growth to 2023 (i.e. market share CAGR of 48% = 46% revenue growth, 28% = 26% etc).

Valuation Summary (AUD)

Sensitivity analysis – M7T diluted share price (AU $)

Enterprise Value ($) 116,139,685

Plus: Cash ($) 2,262,012

Less: Debt ($) 600,538

Implied Market Cap ($) 117,801,159

Equity Value per Share ($) 0.79

Equity value per share (diluted) ($) 0.77

Terminal value (FY23+)/EV (%) 93%

Terminal growth rate

3.50% 3.75% 4.00% 4.25% 4.50%

Mar

ket

Shar

e

CA

GR

24.00% 0.55 0.57 0.60 0.62 0.65

30.00% 0.63 0.65 0.68 0.71 0.75

36.00% 0.71 0.74 0.77 0.81 0.85

42.00% 0.80 0.84 0.87 0.91 0.96

48.00% 0.90 0.94 0.98 1.02 1.07


Unlevered free cash flow forecast

Free Cash Flow Forecast FY19e FY20e FY21e FY22e

EBIT (6,024,980) (2,341,540) 1,878,913 7,995,626

Add: Depr & Amort (3,458,148) (3,511,761) (3,591,211) (2,741,584)

Less: change in working capital 332,612 821,669 915,373 882,370

Less: Capex (70,500) (85,358) (83,544) (79,801)

Less: Interest earned 33,779 29,548 58,711 159,650

Unlevered FCF (3,003,724) 233,646 4,412,495 9,615,389

EBITDA (2,566,833) 1,170,220 5,470,124 10,737,210

Net Cash from operations (2,929,472) 317,847 4,553,397 9,853,486

5.83

10.27 8.64 9.81

13.52

18.14

23.48

3.30 4.20 5.30 7.95

11.33

15.65

21.63

0.10% 0.13%

0.17%

0.23%

0.31%

0.43%

0.58%

0.00%

0.10%

0.20%

0.30%

0.40%

0.50%

0.60%


M7T total revenue and CARR (AU $m) vs market share (%)

Revenue (AU $m) CARR (AUD $m) Market Share (%)



Comparables analysis

Key Risks

1) CIOs remain hesitant to partner with M7T despite a growing track record of excellent results. Gaining the trust of decision makers in the healthcare IT sector is necessary for the company to continue growing market share. We believe this to be the major risk for M7T in the foreseeable future. CIOs consider the needs of the enterprise not just in the next five years but far into the future and this uncertainty is one of the reasons why executives prefer to select the “safer” option of a larger, established supplier. The Hong Kong Hospital Authority, Sentara Health and Advocate Aurora Health rollouts are major steps towards eliminating credibility issues. Achieving cash flow breakeven will also help in this regard.

2) Product performance and implementation risk. Major product related problems will be detrimental for the firm. Failure on

a large-scale implementation will likely eliminate any chance of M7T becoming a serious competitor to larger suppliers. Given the level of contract growth expected, it is reasonable to assume some pressure to build in delivering solutions and servicing existing clients. M7T have indicated implementations are largely managed by the provider once delivered and that resources needed to complete a rollout are relatively small with contractors brought onboard as required. The company has brought on a small number of contractors to assist with the delivery of the Hong Kong Hospital Authority deal and M7T are on schedule with this implementation. Additionally, the company has a solid record thus far which alleviates concerns regarding performance.

3) Contract renewal/customer churn. Apart from Capital Health (ASX: CAJ), M7T has never lost a customer. The loss of larger

contracts or a mass exodus in favour of existing PACS providers will impact revenue and cause significant strain on cash flows. Given the company’s excellent track record we don’t expect to see clients taking business elsewhere unless there are insurmountable product or management related concerns.

4) Regulatory change. The rollout of EMRs was highly profitable for suppliers of “certified” systems (e.g. Epic and Cerner). We

do believe there is a small chance of further regulatory disruption and another diversion away from interoperability and enterprise imaging towards an area of healthcare IT larger companies can successfully lobby governments to implement. This was essentially what occurred with EMRs in the US and during this rollout M7T’s growth was negatively impacted. The EMR headwind has now turned positive for the firm though as interoperability becomes a priority.

5) Key person risk. M7T’s founder, Ravi Krishnan, continues to play a key role for M7T and we would be concerned if Ravi was

to exit the firm after 12 years. Additionally, managing director Mike Lampron is highly regarded by the board, leadership team and employees making him another potential “key person” risk.



Appendix 1 - Management Studio (product overview) The M7T management studio puts healthcare providers back in control of their data. Imaging information can be migrated out of proprietary formats scattered across the enterprise and intelligently routed to the right place, at the right time – all via a user interface (UI).

Source: TC, M7T

Intended user IT administrators in large healthcare enterprises.

Healthcare IT problem Departmentalised PACS servers lock data away in vendor and department specific formats preventing enterprise-wide data sharing and centralised management. When data cannot be considered by physicians during patient assessments, quality of care is reduced and unnecessary expenses are incurred due to duplicate or irrelevant imaging. In the US an estimated 32% of duplicate tests occur due to lack of information sharing at a cost of about US $12 billion annually20.

PACS systems have serious limitations in data sharing, but providers have spent millions on their PACS technology and are often engaged in 5 year contracts with suppliers. It does not make economic sense to abandon existing PACS systems altogether when in addition to the cost of new systems, providers must retrain staff and deal with disruptions from the switchover. However, the cost of migrating existing image archives is increasing as the volume and complexity of data stored in the PACS server expands.

Source: TC

M7T’s solution Management Studio provides a simple user interface for managing data sharing via workflows, rules and triggers. It unlocks data sets by facilitating efficient communication of imaging data strewn between disparate and siloed PACS. Providers can also control the migration of data from legacy PACS servers to a VNA in preparation for complete PACS modernisation/replacement.

Data unlocked by the Management Studio can be integrated with EMRs.

20 Hyland. Enterprise Imaging eBook.

DICOM data

PACS workstation

Proprietary data format

PACS archive



Technical details (simplified)

The graphic above is a simplification of the workflow controlled via the Management Studio.

When a request for medical imaging is created via a patient’s EMR, the order is sent to the modality worklist of the relevant department. At the same time, the M7T management studio automatically pre-fetches and normalises prior studies stored in any of the legacy PACS systems anywhere in the enterprise and routes them to the correct location in time for review before the requested imaging procedure is undertaken. Reviewing priors reduces the possibility of conducting unnecessary imaging.21

When the procedure is complete the imaging data and priors are routed to an appropriately specialised radiologist to prepare a report. Automatic routing and pre-fetching means radiologists no longer have to wait for data to be transferred.

The results of the study and the images are then made available to the EMR via the vendor neutral archive. Management Studio controls the data lifecycle and ensures images are stored according to need and location of access across the enterprise.

Features and benefits - Unlock data for access across departments, an enterprise or anywhere in the world. - Reduce Storage Carrying Costs: easily add storage in only one location (the VNA). - Simplify migrations: reduce future PACS transition costs by beginning migration while still utilising existing PACS systems. - Standardize Storage: resolve proprietary formats enabling standards-based storage and interoperability. Easily cleanse,

audit, and consolidate imaging databases from disparate sources. - Lifecycle Management: control storage needs and comply with regulation as data ages. - Security & HIPAA Compliance: auditing controls and a centralised location ensure security and compliance is easily

administered. - Plug and play best-of-breed solutions: a platform for enterprises expanding capability beyond traditional PACS or

transitioning to enterprise imaging. - Centralised image communication rules: Simplifies communication to and from remote sites. - Translate data to standardised formats: using DICOM translation tables. - Image level routing: studies can be segmented and routed according to type or content - Data requests by triggers: easily configure HL7 order feeds or DMWL queries to trigger pre-fetch of data from disparate

PACS to ensure imaging information is served to the right location days or hours before needed. - Real-time monitoring: monitor, track and audit data. - Graphical management: rules are managed through simplified workflow diagrams rather than via custom coding.

21 https://www.healthimaging.com/sponsored/1077/topics/practice-management/reviewing-priors-avoid-unnecessary-scans-how-it-can

Source: M7T

https://www.healthimaging.com/sponsored/1077/topics/practice-management/reviewing-priors-avoid-unnecessary-scans-how-it-can



Appendix 2 - Clinical Studio (product overview) A zero-footprint dashboard for clinical staff to view, navigate and share patient data. M7T can rollout the clinical portal across an enterprise in as little as 30 days. The portal includes telehealth features for sharing images with patients via email or URL.

Intended user Clinical staff and patients (access restrictions are built in and customisable).

Healthcare IT problem Imaging data needs to be shared with clinical staff, physicians and patients to fully realise the benefits of enterprise imaging. Currently, accessing such data is limited to PACS systems and the handful of clinicians using them. Hospitals need to image-enable their EMRs to meet regulatory requirements, deliver effective patient care and generate cost savings resulting from the elimination of duplicate imaging procedures.

M7T’s solution Clinical Studio is a zero-footprint, zero-hardware dashboard incorporating the following:

Clinical Viewer is a universal, zero-footprint medical image viewer supporting both DICOM and non-DICOM formats. It supports viewing on hospital information systems, EMRs, the M7T Clinical Portal, a patient portal and even a mobile device. The viewer enables universal access and sharing over the web regardless of the media format and can integrate with a range of diagnostic viewers including eUnity and Visage.

Clinical Portal provides a comprehensive patient care record with cross-speciality information available (where permitted) all in one location. Physicians can view up-to-date lab results, prescribed medication, allergies, cross-specialty images, reports and clinical notes.

iModality is an app for clinical staff to capture clinical information (photo, video and notes) and directly connect that data to a patient’s EMR. Information is automatically categorised and stored under the correct patient and procedure record via the M7T workflow engine.

Features and benefits Web-based solution with a visual UI. For quick navigation and ease of access.

User specific permissions. Helps CIOs address cyber security concerns – 58% of security breaches are initiated by insiders.22

Thumbnail viewing. Designed for use on a mobile device.

Simple sharing and communication tools. For physicians to share images with colleagues and patients by email or secure time-destroyed web URLs.

22 https://www.forbes.com/sites/louiscolumbus/2018/08/31/58-of-all-healthcare-breaches-are-initiated-by-insiders/#1eaf0205601a

Source: TC, M7T

https://www.forbes.com/sites/louiscolumbus/2018/08/31/58-of-all-healthcare-breaches-are-initiated-by-insiders/#1eaf0205601a



Appendix 3 - Diagnostic Studio (product overview) When combined with the Management Studio, the Diagnostic Studio offers a complete, single-vendor PACS replacement product with advanced analytical capabilities available as add-ons. Inclusion of the Clinical Studio means an end-to-end enterprise imaging system that is deliverable by a single-vendor with minimal interoperability issues.

Intended user Radiologists and Imaging Technologists.

Healthcare IT problem Legacy PACS can be forced to give up their data and continue working in an enterprise imaging rollout using a VNA and software like the M7T Management Studio, however, to create a true enterprise imaging solution legacy PACS need to be replaced entirely with cheaper, more efficient, zero-footprint solutions which are interoperable with the rest of the enterprise. CIOs prefer solutions that are almost plug-and-play with their existing VNA and DICOM workflow tools.

M7T’s solution The Diagnostic Studio is intended to bolt onto the Management Studio to create a complete PACS replacement incorporating the added benefits of integrating with intelligent vendor neutral workflows and data management products.

Features and benefits M7T PACS (powered by eUnity) provides a 10-20% cost reduction and one hour of efficiencies daily (M7T estimates) over

traditional PACS. The M7T PACS has a range of other features, many of which are not present in legacy PACS: o Integration with a range of AI data platforms to facilitate AI assisted diagnosis. o Compatibility with a range of 3rd party clinical tools including 3D and Advanced Visualisation. o Cloud ready and runs on existing infrastructure requiring no hardware investment. o Analytics dashboard to understand and improve workflow efficiency.

M7T QC (Quality Control) module is designed for the technologist – the person who takes the patient image. After a study is completed, technologists can view, modify (split, merge etc) and annotate images all from a single zero-footprint viewer. Every change is logged and an audit trail recorded. Using this software technologists no longer need to log into a PACS just to perform these everyday tasks.

Universal Worklist is designed for physicians to streamline their workflow. It optimises reading efficiency across the enterprise, within specialities and between users. The worklist personalises radiologist workflow with automated reading assignments directed to the most appropriate physician. The software identifies priors and learns and weights relevancy. It also has the ability to normalise technologies and ensure hanging protocols are consistent. Managers can set up rules to elevate workflows that are overdue or urgent.

Source: M7T

Source: M7T



Appendix 4 - Analytic Studio + AI capability (product overview) Enterprise imaging systems deal with in standardised forms which is essential groundwork for utilising artificial intelligence algorithms. M7T already uses “operational AI” to automatically deliver insights into operational metrics and predict workloads. However, the real artificial intelligence capability is provided through partnerships with Zebra and Envoy AI to assist radiologists in delivering a diagnosis more quickly and accurately.

Intended user Radiologists and IT administrators

Healthcare IT problem The number of CT and MRI exams are growing rapidly and the number of radiology experts is not keeping pace. Consequently, radiologist’s workloads have increased substantially making a 12+ hour workday containing 100 studies not unusual.23 The retrospective error rate of radiological exams is currently 30% and studies have shown that cutting in half the interpretation time of radiologists increases the interpretation error rate percentage by 16.6%.23 AI has the potential to reduce the workload of radiologists and improve the accuracy of image interpretation.

M7T’s solution Building effective machine learning algorithms for clients to run out of the box is not feasible for even the biggest imaging IT suppliers. Training and testing algorithms without access to relevant, large, standardised and labelled imaging datasets will not produce satisfactory outcomes. Healthcare providers have these datasets already – they just require the right set of tools. M7T has partnered with a couple of independent leaders in the imaging AI field to provide AI capability for customers: Zebra Medical Vision and Envoy AI.

AI algorithms are not perfect and they are currently best at performing repetitive tasks for which there is a large amount of data available (e.g. offering a second or third opinion to a diagnosis). The AI providers M7T has partnered with are mostly still in the development stage. We do see value in these partnerships in future, however, our current models do not include any benefits from AI applications.

Features and benefits EnvoyAI

M7T customers can access 71 products from 30 AI algorithm development partners (a large proportion of which are already FDA approved and ready for application).

EnvoyAI already integrates with the M7T platform and a direct, serverless deployment of the software is in development. Zebra Medical Vision

Zebra has worked with millions of imaging and correlated clinical records to create algorithms to detect medical conditions

These algorithms can detect visual signs of different diseases, such as osteoporosis, fatty liver, emphysema and coronary artery disease.

Zebra’s algorithms are still in the development stage.

23 https://www.siemens-healthineers.com/no/infrastructure-it/artificial-intelligence/ai-rad-companion

0%

5%

10%

15%

20%

25%

30%

35%

2013 2014 2015 2016

% growth in the number of consultant radiologists and imaging examinations in England

Consultants (FTE) MRI scans CT scans

Source: M7T

A growing gap between growth in radiology consultants and

study volumes

Source: TC, Siemens Healthineers

https://www.siemens-healthineers.com/no/infrastructure-it/artificial-intelligence/ai-rad-companion



Appendix 5: Hyland’s claimed capabilities vs M7T

Hyland ImageNext An integrated, universal patient worklist that connects to virtually any PACS or VNA. Intelligently route, sort and

distribute imaging studies based on custom preferences. M7T Capability

Workflow Orchestration: ImageNext’s Workflow Optimizer engine matches the right study with the right physician to improve accuracy and throughput. Equitable distribution and load balancing: ImageNext’s proprietary load balancing algorithm uses complex rules to provide real-time distribution to any number of assigned users across the enterprise. Interrupted workflow management: ImageNext recognizes interruption events (e.g. when an exam has been launched with full integration or in “view-only” mode, but hasn’t been signed) and sends these exams to a personal interruption list that maintains the context and state of these interpretations. From this list, the exam can be restored and the radiologist can resume the interpretation from where he or she left off.

Colour coded SLA tracking: ImageNext comes equipped with a color-coded timing functionality that helps you achieve target turnaround times (TATs). Colored badges on each worklist provide an on-the-fly visual representation of the remaining time left before a service-level agreement (SLA) is reached.

Hyland Acuo VNA Hyland’s secure enterprise-grade image storage, distribution and workflow platform embraces the industry’s

DICOM standard and IHE profiles. Acuo harnesses medical imaging records from a wide range of imaging modalities, clinical scopes, connectivity tools and mobile devices deployed throughout healthcare enterprises.

M7T Capability

Declare independence from proprietary PACS: Acuo supports every major PACS and a wide range of related technologies, providing a foundation for a best-of-breed redefined PACS solution that drives cost savings. Avoid costly PACS migrations: Acuo’s multi-tiered VNA database architecture retains a full history of image ownership, allowing images to move easily with a hospital through mergers, acquisitions and new business models.

Neutralize and centralize image archiving: Whatever the original format, Acuo automatically transforms images into universally accessible files through DICOM tagging and morphing or publishing in native format (TIFF, JPG, MPG, AVI, GIF, etc.) to an XDS repository, allowing them to be easily shared throughout the continuum of care.

Image-enable an EMR: Acuo provides a single point of integration for all of your images and an electronic medical record (EMR) Drive consistent imaging workflows hospital-wide: Acuo’s centralized image control enables standardized policies and procedures for handling shared patient data across all clinicians to efficiently identify and move studies among destinations with web-based technology.

Support image exchange across affiliated hospitals: Sharing images means associating them with the appropriate patients across IT systems, health information exchanges and unaffiliated providers. Deliver departmental control: Acuo allows you to take advantage of centralized image management while continuing to support individual departmental and clinician preferences, workflow and data ownership. Consolidate archive management, security and disaster recovery: Centralized image management allows you to consolidate data security, back-up, disaster recovery and system upgrades. Streamline compliance, search and configuration: Because Acuo supports the aggregation and federation of multiple PACS, you can separate image ownership or access by entity or department when needed for policy or regulatory purposes

Simplify system integration: Acuo provides built-in migration tools that give you complete ownership and control over your imaging data.

Hyland PACSgear Access data, film, video, visible light and other media across any department and from any EPR/PACS

M7T Capability

Capture, view and share medical images and results across the enterprise

Easily scan documents and create electronic forms from any department to any EPR/PACS

Quickly import and localise images (JPEG/AVI/MPEG) and DICOM CDs/DVDs

Connect images and video across OR/Surgery, speech pathology, wound care, dermatology, ED and more

Record DICOM compatible media for importing into PACS, referral or legal purposes or patient copy

Provide order and worklist information for non-scheduled departments



Appendix 6 – Product and market definitions

PACS PACS (Picture Archiving and Communication System) are generally described as healthcare IT systems which capture, store, view and share DICOM images/data. PACS can be deployed for a range of clinical specialities.

Traditionally, a PACS system will facilitate:

Communication with imaging hardware for the capture of DICOM image data.

Image viewing including diagnostic, clinical, 2D and 3D viewing and some image tools (advanced tools are generally provided as add-ons as required).

Modality worklist, reading worklist and a number of other management and workflow software tools (peer review, reporting etc).

Storage and archive management of medical images.

Vendor Neutral Archive (VNA) A Vendor Neutral Archive provides the ability to ingest, store, archive, manage and retrieve any file of clinical relevance in a standard format with a standard interface to facilitate access in a vendor-neutral manner by other systems. VNAs are used distinctly from PACS and replace/fulfil the “Archiving” and “Communication” functionality of a PACS system.

A VNA will:

Offer a scalable, standardised approach to storage and retrieval while complying with data security requirements.

Be scalable at the departmental and/or enterprise level.

Support DICOM and non-DICOM data (e.g. text information, audio files, visible light images).

Provide a data migration engine for transfer of existing non-vendor neutral data.

Facilitate data lifecycle management.

Implementing an enterprise-wide VNA requires migration and collation of data from various sources and vendors. This includes the re-formatting of data to standardised formats.

VNAs can be delivered as:

Hosted solution: data is stored in the public cloud or a private, hosted cloud and no information is stored in the healthcare providers internal servers.

Non-hosted solution: the healthcare provider stores all data in their own datacentre using their own infrastructure. This solution is most common as healthcare providers have this infrastructure already in place and prefer to retain full control.

Hybrid solution: data is stored in both hosted and non-hosted infrastructure. This setup is utilised for disaster recovery and backup.

Image Exchange IT solutions to replace traditional methods of communicating imaging data (DVD, CD, film) between physicians and patients. Solutions may be email, app or web-based and sold as a standalone product. However, like most products in the medical imaging field, such solutions are increasingly being integrated within PACS and EI solutions.

Market definitions Standalone VNA: Vendor Neutral Archives sold as standalone products without additional modules (enterprise viewing, workflow tools etc).

Standalone PACS: PACS sold as standalone products and not bundled with VNAs, workflow tools etc.

Standalone Image Exchange: Image Exchange solutions sold as stand-alone products.

Enterprise Imaging: Imaging IT products sold as bundled, single solutions involving a VNA, complete PACS replacement/universal viewers and capability for integrations with the wider healthcare enterprise.



Appendix 7 – Management and Board

Management Mike Lampron –Chief Executive Officer and Chief Operating Officer With over 20 years of experience in business and operational management for Healthcare IT companies, Mike brings a broad experience ranging from private start-up organisations as well as long established companies such as IBM and GE. Mike was previously the Chief Executive Officer for a National Teleradiology Company and has a proven ability to drive results through a combination of astute analysis, innovative execution and cross-functional teamwork. Mike is responsible for our customers’ success while driving excellence throughout M7T. Jenni Pilcher – Global CFO, Corporate Secretary Prior to joining M7T, Jenni was the CFO of Alchemia and the CFO and Company Secretary for biotechnology company Mesoblast. Prior to joining Mesoblast, Jenni spent six years with ASX 200 Company, Spotless Group. Jenni has worked in the finance teams at Cadbury Schweppes plc. and international pharmaceutical group Medeva plc., both based in London, United Kingdom. She has completed the Graduate Diploma of Applied Corporate Governance and been admitted to the Governance Institute of Australia and the international Institute of Chartered Secretaries & Administrators (ICSA). She qualified as a Chartered Accountant with Price Waterhouse in 1998. Ravi Krishnan – Chief Strategy Officer and Founder Ravi is a founding partner of M7T and is an accomplished image management professional with nearly 2 decades of experience with the technology intricacies that drive medical imaging. Ravi is a DICOM and image workflow expert. He has been instrumental in the growth of industry leading healthcare teams including GE Healthcare and Agfa Healthcare. As one of the two co-founders of M7T, Ravi has built the design philosophy and technical strategy for M7T. Tony Palmer – VP, Engineering Tony has a proven history of success in each of his past roles. He has over 20 years of software development history, much of which has focused on the move to digital imaging in one form or another. His 11 years as a software engineer and software architect at IDX and GE Healthcare provided the strong basis in healthcare imaging integration using both HL7 and DICOM. During his time at IDX/GE, he spent 5 years on the IHE Radiology Technical committee, and drove the adoption of IHE integration and workflow through the RIS-IC product line. This broad integration/workflow experience continues today, using that knowledge to build and architect solutions to solve problems for customers on a regular basis. Tony received his degree in Computer Science from the University of California, Irvine.

Board of Directors David Chambers – Non-Executive Chairman Mr. Chambers has more than 30 years’ extensive experience in the Healthcare and Life Science industry and a proven track record in healthcare IT systems through a series of senior executive roles in Australia, North America, Europe, and Asia. Mr. Chambers is currently Managing Director, Asia-Pacific, of Allscripts Healthcare Solutions, a NASDAQ listed billion-dollar global leader in Healthcare Technology. Mike Lampron – Managing Director See above for biography. Damien Lim – Non-Executive Director Mr. Lim is the co-founder of Singapore-based BioVeda Capital. He has more than 21 years of experience in equity and investment banking with Director level roles at Prime Partners, Vickers Ballas and Morgan Greenfell Asia. Mr. Lim serves on a number of boards as well as grant and advisory committees. Eliot Siegel, MD – Non-Executive Director Dr. Siegel is a well-known thought leader in the world of radiology and imaging informatics. He is currently Professor and Vice Chair at the University of Maryland School of Medicine, Department of Diagnostic Radiology, and the Chief of Radiology and Nuclear Medicine for the Veterans Affairs Maryland Healthcare System, both in Baltimore, MD. Under his guidance, the VA Maryland Healthcare System became the first filmless healthcare enterprise in the United States. Wayne Spittle – Non-Executive Director Mr. Spittle is a Non-Executive Director of M7T and brings extensive industry experience in the global healthcare sector including all imaging modalities, IT solutions and patient monitoring. He has served as Executive VP with Samsung Medison and Health and Medical Equipment division of Samsung. Previously, he was Senior VP at Philips Healthcare for Asia Pacific and CEO for Philips Electronics for ASEAN Pacific. He has extensive experience in acquisitions, product development, marketing and sales. Currently Mr. Spittle remains as a consultant at Samsung Medison and Advisor at Novum Waves.



Appendix 8 – Company Timeline Date Event

2007 Mach7 Technologies is founded.

2008 Opened US office.

2009 Initial Patents filed. First global customers deployed in Middle East, South East Asia and the USA.

2010 Expanded R&D. First cloud-based solution deployed.

2011 Launched Version 11. Opened Indonesia office. Achieved the first year of 100% growth in orders, licences and revenues.

2012 Opened Australian office. Obtained global ISO Certification. Wins the Frost and Sullivan 2012 Best Practices Award. Deployed first VNA in India and Indonesia.

2013 Opened Saudi Arabia office. M7T’s app for mobile image capture – iModality – is released.

2014 Expands into new corporate headquarters in Burlington, Vermont. Physician and Patient Portal released.

2015 Introduces image sharing. Universal Worklist is introduced.

April 2016 M7T QC Module is launched. Awarded US Patent for Medical Image Capture on Mobile Device. M7T goes public on the ASX.

June 2016 IDC MarketScape names M7T a leader in US Healthcare provider unstructured data platforms for integrated care.

Nov 2016 Awarded NHS approved supplier status.

Jun 2017 Divestment of 3D Medical business. Michael Lampron appointed Chief Operations Officer.

Jul 2017 Michael Jackman appointed as CEO.

Nov 2017 M7T partners with Zebra Medical Vision.

May 2018 M7T and Client Outlook partner to deliver a complete PACS solution.

Aug 2018 Partnership with EnvoyAI to bring AI to Enterprise Imaging.

Mar 2019 M7T announces restructuring to achieve cash-flow break even. Appointment of Mike Lampron as interim CEO.

May 2019 Appointment of Travis Nuzzi as Vice President of Sales and Marketing.

June 2019 Appointment of Mike Lampron as CEO and Managing Director. Appointment of David Chambers as Non-Executive Chairman.



Appendix 9 – major customers Customer Since Size Hamad Medical Corporation (Qatar) 2009 12 hospitals

Massachusetts General & Brigham and Women’s Hospital (US) 2010 3 hospitals + 10 health centres

Montefiore (US) 2010 11 hospitals

University of Virginia Health System (US) 2012 1 hospital: 645 beds

HCA (US & UK) 2013 185 hospitals + 119 surgeries + 121 access centres

Penn Medicine (US) 2014 6 hospitals

Sentara Healthcare (US) 2014 16 hospitals + 56 imaging centres

San Diego Imaging (US) 2014 8 hospitals + 4 imaging centres

Broward Health (US) 2015 5 hospitals

MaineHealth (US) 2016 30 hospitals/clinics

University of Vermont Medical Centre (US) 2017 Academic medical centre – 130 sites

El Camino Hospital (US) 2018 1 hospital: 443 beds

Hospital Authority of Hong Kong (Hong Kong) 2018 43 hospitals + 121 outpatient clinics

Children’s of Alabama 2019 1 hospital: 332 beds + 48 neonatal intensive care units

Advocate Aurora Health 2019 28 hospitals + 500 outpatient centres

Source: M7T

New contract wins – calendar year 2019

Source: M7T

$5.7M / 5 yrs.



Appendix 10 – M7T Partnerships Partnering with a universal viewer vendor – Client Outlook – has potential to create value for both firms. Partnerships with artificial intelligence software providers (Zebra Medical Vision and EnvoyAI) have potential to generate significant value in future, although benefits remain uncertain at this stage so we have not ascribed any value to these partnerships. Agreements with Leben Care and SirenMD have unclear benefits and are unlikely to be pursued. Any costs incurred were one-off and recognised in FY18.

Client Outlook M7T and Client Outlook entered into a reseller agreement in May 2018 whereby M7T is permitted to resell the eUnity zero-footprint viewer. eUnity is designed to replace traditional single-vendor PACS with a universal viewer and to scale across enterprises. eUnity is the market’s only zero-footprint viewer that can be used for both enterprise and departmental diagnostic reading.

When combined with the M7T platform, customers can access a complete legacy PACS replacement solution that is fully compliant with HL7 and IHE standard for a single, bundled fee. The PACS market is estimated to be in excess of US$3 billion globally.

This solution is being deployed across the entire territory of Hong Kong and in Sentara Health’s network of 8 hospitals and 56 imaging centres in the United States. For Sentara, M7T is replacing 8 separate PACS providers (incl. GE, Agfa, Fuji).

From FY19 onwards we expect to see revenue result from this partnership and the COGS line to return to the income statement as M7T ‘clips the ticket’ on eUnity subscriptions.

EnvoyAI This distribution deal was agreed in August 2018. M7T customers gain access to 71 products from 30 AI algorithm development partners (a large proportion of which are already FDA cleared). Envoy AI easily integrates with the M7T platform already, however, a direct integration between with the EnvoyAI cloud is in development to enable a serverless deployment of the EnvoyAI software meaning M7T customers can test algorithms without any additional hardware installation.

This AI partnership shows the most promise in comparison to those below. However, we still have not (yet) ascribed any value from it.

Zebra Medical Vision M7T signed a strategic partnership deal with Zebra Medical Vision in November 2017 to give customers access to an AI algorithm for medical imaging analysis. Zebra analyses millions of images and clinical records to train a machine learning algorithm to detect medical conditions more quickly and provide insights to radiologists across various modalities. The value in this product is its potential to alleviate dangerously high workloads for radiologists and reduce time to completion of imaging studies.

Zebra’s algorithms are still in the development stage and we are therefore unable to attribute any value to the partnership at this point in time.

Leben Care Technologies Leben Care Technologies is the developer of Netra.AI: software employing artificial intelligence to enable automated and point of care retinal image analysis.

We have not ascribed any value from this partnership in our valuation.

SirenMD SirenMD is a workplace collaboration platform to facilitate coordinated communication between caregivers and patient advocates (doctors, nurses, athletic trainers, and other medical personnel) using mobile and web systems.

An investment in SirenMD was made by M7T in FY18 for US$318,016. We believe this investment is likely to be fully written off.



Appendix 11 - Know your customer: healthcare CIOs After collating the findings of the largest annual healthcare CIO surveys and discussing results with a number of industry executives, the top two areas of focus were: interoperability and cyber security. Patient engagement/telehealth also featured strongly. Each of these issues requires a solution like M7T’s.

Know your customer: CIOs are... Increasingly compensated based on business performance, not IT operational measures (80% by 2020).24

Under pressure from legislators, directors/shareholders, patients and clinical staff to deliver systems that are scalable, future proof and readily interoperable with other systems.

Not convinced by marketing, buzzwords or well-presented slideshows – they value very highly the opinions of other CIOs and evidence of successful prior implementations.25

Regular participants in peer-networking via mailing lists, online discussions, industry surveys and events/open forums.25

Highly risk-averse when choosing suppliers (likely a factor of past failings - e.g. EMRs). It is easier to shift blame for a poorly implemented system to a large supplier who should have known better than to shift blame to a smaller supplier that didn’t know to begin with.

Top priorities 1) Interoperability

EMRs were only the first small step to data-driven health care.

Health data needs to be freed from proprietary, department specific systems and migrated to centralised repositories in standardised formats. Only then can its value be fully realised across the enterprise in a wide number of applications.

When health data cannot be consolidated in standardized formats, it is difficult to employ advanced analytics that could promote network integration, improve efficiency, find cost reductions, and deliver better patient care.

The complexity of developing and scaling a clinically integrated network is increased and the speed of scaling is impaired without sufficient interoperability.26

The cost of migrating data only increases as the size and complexity of databases increases.

Source: Center for Connected Medicine. Top of Mind Survey 2019

Source: Center for Connected Medicine. Top of Mind Survey 2019

2) Cyber security

Healthcare is an attractive target for cyber attacks. Between 2010 and 2017, 2,149 breaches occurred compromising a total of 176.4 million records. The number of breaches rose in almost every year from 199 in 2010 to 344 in 2017.26

The goal of cyber security is not an impenetrable platform – simply having stronger security than a competitor is generally sufficient to avoid being a target.

87% of healthcare CIOs expect cyber security spending to increase in 2019.26

The linking of disparate servers running vendor-specific software to implement EMRs means holes in security have been opened up (before EMRs, disparate systems were often not interlinked and only accessible to a handful of internal users).

Cyber security concerns will also be a driver in the rise of interconnected and centralised data sets since the provision of effective security requires a centralised, homogenous infrastructure to efficiently administer security updates and respond to threats.

3) Patient engagement/Telehealth

The top challenge in delivering telehealth services was interoperability and the top priority was workflow integration.26

Providers generally use standalone software to deliver services. This software requires standardised access to datasets and a high degree of interoperability.

24

Spok. 2019 CIO priorities 25 Healthcare Innovation. The Evolving Healthcare CIO: Innovation Over Information 26 Center for Connected Medicine. Top of Mind Survey 2019

20%

10%

60%

10%

Where do you expect the majority of your organisation's data to be stored in 3 years?

On-premises data centers

Public cloud

Hybrid/private cloud

Unsure

25%

25%

18%

14%

12%

5%

Improved efficiency

Advanced analytics

Clinician workflow

Patient engagement

Quality reporting

Other

What is your organisation unable to accomplish due to lack of interoperability?



Appendix 12 – Understanding DICOM: the problem and solution to EI Understanding the complexities and variable data storage methodologies within the DICOM standard is the key to understanding both the need for enterprise imaging and the challenge of delivering it. Medical imaging data is highly complex and varied making protocols for transmission and storage difficult to define. Additionally, vendors have each interpreted the DICOM standard differently – presumably in an effort to retain market share by holding data captive in formats specific to their own products.

Overview of DICOM DICOM (Digital Imaging and Communications in Medicine) is a universal standard for medical imaging data. The core application of the DICOM standard is to capture, store and distribute medical images. The Standard also deals with services related to imaging such as managing imaging procedure work lists, printing images on film or digital media (like DVDs), reporting procedure status, confirming successful archiving of images, encrypting datasets and storing/removing patient identifying information.

A DICOM file contains pixel data and data pertaining to a patient packed into a single .dcm file using data elements or attributes. The DICOM data elements are managed through a DICOM dictionary which specifies several thousand potential tags to encode information about an image, patient or physician in addition to diagnosis information. A single DICOM file can store many images (also known as “frames”) and pixel data may be stored in either compressed or uncompressed formats depending on storage and transmission requirements.

DICOM files are not just used to store images but can also store reports (as PDFs, text files etc), electro-cardiogram signals and audio. Virtually any file type can be “DICOM wrapped” to be stored and communicated using the DICOM standard.

History and objective of the standard The DICOM standard was created by the American College of Radiology (ACR) and the National Electrical Manufacturers Association (NEMA) as part of a vision to achieve enterprise imaging back in 1983. Although the term “enterprise imaging” was not in existence then the goal was the same: a universal format for the storage and transmission of medical imaging data to allow communication of information between equipment supplied by different vendors and across regions and modalities.

Prior to the introduction of the DICOM standard, it was virtually impossible to decode medical imaging data and communicate or store it in a format readable by other medical imaging equipment. Imaging data was essentially only retrievable and viewable directly from a PACS27 or post-processing workstation provided by the original equipment manufacturer. The DICOM standard was designed to enable the integration of image data between modalities, PACS and within the wider healthcare organisation by specifying a single format for storing, retrieval, sharing and display of image data.

The problem with DICOM today Since its introduction in 1985, DICOM has achieved near universal acceptance among equipment vendors and healthcare organisations. However, DICOM is only a voluntary standard and is not administered or policed by any organisation. Since DICOM is a very large standard (with over 2000 possible data attributes) there are a wide array of possible interpretations and implementations. Having a DICOM-compatible device does not necessarily mean image data is stored in a DICOM conformant format and nor does it mean that when DICOM data is imported or exported from a device that the DICOM file will conform to another system’s interpretation of the standard. The DICOM standard specifies that data is to be populated in attributes (or tags). However, the ability to interpret the attribute data depends on what the sending DICOM device has decided to include in each of the recommended attributes. The same goes for the receiving DICOM device, as it may not process all the data in each of the attributes.

Assuming there are only 10 or so large manufacturers of DICOM compliant equipment does not mean that there are only 10 or so different interpretations of DICOM. Most deployments of DICOM-compatible devices are unique with data stored differently under the various DICOM attributes depending on the implementation and use case. Furthermore, there has never been any practical way to verify DICOM conformance claims made by suppliers.

In summary, vendors clearly have an incentive to hold healthcare organisations captive by locking away their data in such a way that it is incredibly costly to unlock meaning medical image files and associated data are held captive within departmentalised or vendor-specific silos and only accessible to a select few practitioners.

DICOM is still the solution Despite its short comings, the DICOM standard has brought the industry just within reach of true interoperability as the presence of a standard does at least provide the potential to implement enterprise imaging solutions by interpreting each department/vendor’s version of the standard. M7T was among the first to offer this service.

27 PACS: Picture Archiving and Communication System. See appendix 4 for further explanation.



Appendix 13 – Stages of enterprise imaging implementations M7T’s solution is for large enterprise healthcare customers implementing enterprise imaging strategies in stages. M7T is continuing to build a portfolio of successful implementations on a large-scale and, except for Capitol Health in Australia28, the company has never lost a customer – a testament to an excellent track record.

Types of implementations available M7T can implement the following:

Standalone VNA and existing PACS augmentation solutions comprised of the Management Studio suite of products.

Enterprise imaging solutions using both the Management Studio and Clinical Studio modules.

PACS replacements/modernisations using the Diagnostic and Clinical Studios and (optionally) the Analytic Studio.

Complete end-to-end EI solutions using the Management, Clinical and Diagnostic Studios. Analytic Studio is optional.

Stages of customer implementation Healthcare enterprises rarely implement end-to-end EI solutions in one sitting. This is due to complexity, budgeting, existing contract constraints, high staff training costs and the need to host/manage two platforms while a new system is rolled out. Providers generally implement EI solutions in stages:

1) Installation of general Hospital Information Systems (HIS) and Electronic Medical Records (EMR). 96% of US hospitals have implemented an EMR.29

2) Migration of data to a VNA (either in the cloud, a private server or a combination). As of 2016, only 26% of US hospitals claim to have implemented a VNA for non-radiology images.30

3) Integration of standardised imaging data with the HIS/EMR. 4) Complete PACS replacement/modernisation to create a complete enterprise imaging network.

The medical IT contracting process Enterprise healthcare providers with imaging IT projects go to market with a request for tenders. For suppliers, the process normally takes 1-2 years from application to final approval. Industry discussions have highlighted the importance for suppliers of pre-market engagement with healthcare providers as it allows them to guide expectations on requirements and objectives. M7T actively participates in this process and is seeking to improve its performance in this area. The Hong Kong contract was awarded partly as a result of successful pre-market engagement.

The stages of the contracting process are: 1) Healthcare providers identify requirements and their desired outcome. 2) Providers research and analyse the supply market and develop selection methodology. 3) Providers go to market with a request for tenders. 4) Suppliers submit bids and proposals. 5) Providers evaluate proposals and approach the market for discussions. 6) Contract is awarded pending approvals. 7) Legal review and final approval. Only at completion of this stage can a contract win be disclosed to the market. 8) Supplier implements the proposal. 9) Provider conducts a post implementation review.

28 M7T management stated the reason for the loss of Capitol Health was due to a shift in Capitol’s operational performance, management and strategy. 29 https://fortune.com/longform/medical-records/ 30 Dell. The State of the Medical Imaging Market

https://fortune.com/longform/medical-records/



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Date Prepared: July 2019 Analyst: John Copley

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