March 11

4DMedical (4DX) – A new dimension

4DMedical is a medical research technology and development of a non-invasive respiratory imaging solution using four-dimensional imaging. This four-dimensional lung imaging technology utilises proven, patented mathematical models and algorithms to convert X-ray scans into quantitative data to enhance the capacity of physicians to manage patients with respiratory diseases and diseases of the lung. The company is based in Melbourne in Australia and Los Angeles in the US. We recently initiated coverage of 4DMedical with a Speculative Buy recommendation and a target price of $1.20.

In our view, the company is strongly positioned to disrupt the US$31 billion global respiratory diagnostics market, with its software products offering a step-change in diagnostic capability versus incumbent modalities, e.g. chest X-rays, CT scans. We see CY24 as an inflection point for the business, noting three key drivers: 1) leveraging recent wins, i.e. Veterans Affairs, Philips, reimbursement, to drive rapid growth in the US, which has a total addressable market (TAM) of more than US$14 billion; 2) executing on Imbio revenue and cost synergies to drive the group toward breakeven at the free cash flow level; 3) maintaining recent momentum in Australia ($400 million TAM) and pushing towards 150 installed sites. We view 4DX’s risk-reward as compelling at current levels, with a forecast FY25 enterprise value-to-sales multiple of 6x comparing favourably with its peers on a growth-adjusted basis. 4DX has been successful in partnering with two of the largest diagnostic imaging groups in Australia – I-MED and Integral Diagnostics (collectively around 25% market share). An ongoing roll-out at I-MED, coupled with rapid growth via Integral Diagnostics and other smaller operators, should see 4DX reach 150 installed sites in FY24/25.


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