In 2022, the top five health problems plaguing the Australian population most were cancer, muscle and bone issues, heart diseases, mental health problems plus drug use disorders, and neurological conditions. Together, they made up about 62% of all health problems in the country. Clearly then, the neurological disease prevalence prevents a notable market opportunity—one which medical products developer BTC Health (ASX: BTC) does not want to miss out on.
Through its subsidiary BTC Speciality Health, the Company has entered into distribution agreements with IZI Medical Products Inc (USA) and its wholly-owned company Ilumark (Germany). Under these agreements, BTC Speciality Health has gained exclusive distribution rights for IZI Medical Products’ offerings in the Australian and New Zealand markets. This move helps BTC Speciality Health in its efforts to expand its product distribution within the region.
Executive Chairman, Dr Richard Treagus, commented, “This is a decisive step for us to establish a presence in the neuro-spinal medical product field. It creates diversification, scale, and contributes immediately to the bottom-line profitability of our business. Importantly this transaction also delivers the crucial expertise and clinical relationships which we expect to leverage as we execute on our growth strategy with the introduction of additional neuro-spinal products.”
The IZI product line comprises a variety of high-quality, single-use tissue and bone biopsy needles, used for various medical procedures, like sampling and injecting cement into collapsed spinal vertebrae. Meanwhile, the Ilumark product range consists of disposable needle kits and radiological markers designed for use alongside image-guided navigation systems, ensuring precise surgical access during neuro-spinal procedures.
Until now, the distribution of both the IZI and Ilumark product ranges in Australia has been managed by bone biology specialists Point Blank Medical (PBM). This responsibility will now shift to BTC Speciality Health, including product registrations, inventory management, and customer service functions. These functions will seamlessly integrate into BTC Speciality Health’s existing operational framework.
The Company will pay a maximum of $720,000 for this acquisition. This sum will be divided as follows: an initial payment of $200,000, due within seven business days; an additional $120,000 to be paid upon the successful completion of specified transition conditions; and a potential amount of up to $400,000, referred to as the “Performance consideration”, to be disbursed in installments over three years. The disbursement of the Performance consideration will hinge on the companies achieving minimum gross profit milestones.
The Performance consideration will be structured as 90% in cash and 10% in BTC Health shares, subject to the requisite approvals and fulfillment of specified conditions.
What’s more, professionals from the PBM team, with expertise and relationships in the neuro-spinal medical field, will remain a vital part of this transition. They will collaborate closely with BTC Speciality Health to offer sales, marketing, and training support to customers, aligning with the shared growth objectives for the business. PBM’s services will be compensated on a commission basis, directly tied to the monthly sales and gross profit of the products.
In FY23, BTC’s operating revenue declined by 86% on FY22 to $13.2k. Making matters more concerning, its loss saw a major increase from $576k to $10.16 million as a major US supplier stopped supplying products. This caused quite a bit of turbulence in BTC’s operations as its net assets stood at $2.7 million, down from FY22’s $12.8 million.
Since then, BTC has been focusing on optimising the business, extending cash reserves, upholding customer service standards, and seeking alternative supply options for infusion pump products. Despite recent challenges, the investee companies are prepared to introduce new products and partnerships in the Australian and New Zealand hospital markets, with a foundation built on the recent IZI and Ilumark acquisitions.
Alinda is a Business Reporter for The Sentiment
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