Kromek Group has announced a major, seven-year agreement to supply its CZT-based detectors to a Tier 1 OEM manufacturer of medical imaging scanners. The client has a market-leading position across a range of healthcare technology markets. Although specific details are not yet available, we regard this as a ‘breakthrough’ development for the medical imaging arm of Kromek’s business which underlines the significance of its leadership in CZT-based detector technology.
The medical imaging market is broadly divided between CT- (computed tomography) and SPECT-based (single photon emission CT) products and dominated by four Tier 1 suppliers - Philips Medical Systems Inc., Siemens Healthineers GmbH, Canon Medical Systems Corp., and GE Healthcare. The difference in scale is striking, with a Tier 1 having an estimated market share of between 15% and 30%, and a Tier 2 player estimated to have a single digit percentage market share.
The group has also announced an agreement to collaborate with the Tier 2 medical imaging specialist Analogic Corporation in the application of CZT-based detection technology to next-generation photon counting CT (PCCT) imaging - for both medical imaging and security applications.
In addition, it issued a Trading Update which underpins our FY23 outlook. Kromek reports that Q3 revenue rose +50%YoY (ED FY23 estimate is +49%YoY) with a gross profit margin expected in the high 40% range (ED FY23 estimate is 47.0%). The Group reports being ‘broadly cash neutral’ in Q3, continuing into Q4.
Whilst awaiting further details of the agreements we maintain our near-term outlook and a Fair Value of 26p/share.
