I sincerely doubt you are correct. This does not likely need to be sold as it is already sold. I was administratively responsible for many of these types of agreements in multiple hospital departments over a 35 year admin healthcare career. My longest association with any one department was with Radiology (my last 22 years) and its complex imaging agreements. The agreements we fashioned with imaging companies always included refresh clauses for software to the latest and greatest. At least one software refresh was in every agreement I was involved with. Keeps the vendor from springing new software on you soon after purchase. The cost was included in the original agreement so no selling to the hospital or clinic is needed. In other words, the transaction for the software will likely be between Novorad and Sphere and already has been determined. Novorad will pay Sphere as the refreshes occur.
I read this as a big endorsement of Glassware, with the multi-device solution physicians demand in this day and age. Also, in our agreements there were accession charges - for each and every image accessed through the system, so it is quite likely structured in this way which provides recurring revenue.
In the last agreement I was a party to there were also charges for storage - a flat fee for the first 2 million images and then decreasing cost/scan tiers beyond that. The word image is key - in CT and MRI scans there can be many images for one patient. For instance a routine brain scan (nothing special) can be about 60 images. And you keep them all as, once taken, there are legal ramifications and restrictions in getting rid of any as you might do with your digital camera.
Storage will be interesting as to how it plays out. The trend favors the integrated solution Sphere offers but it may not be built in to a refresh like software commonly is. My last agreement handled this as a separate negotiated issue in the contract. Still, the integrated solution will be attractive and, in my experience, facilities will likely want it. It was alluded to in the CC. Even if a facility does not start with the whole package they may well end up there as the inexorable need for good storage solutions, preferably fully integrated, becomes pressing.
It is a huge oversight, and actually naive to not see the import of this announcement. I worked in a large hospital but our bill for these services when I left 3 years ago was about $3.5 million a year. The refresh alone will be huge as I can't imagine the 400 facilities left refresh out of their agreements with Novorad. Just doesn't happen. The tab to refresh 400 facilities is going to provide substantial cash upfront and on an on-going basis.
Also, Novorad benefits with the refresh as they gain new healthcare facilities with state of the art technology their competitors cannot offer. They will likely use their early refresh sites as demo sites. This will open the door for Sphere to obtain new Novorad sites. Novorad's competitors will take notice and may come knocking on Sphere's door too.
No doubt-the biggest announcement by Sphere yet and Peter noted that in the CC. He said to his knowledge he had never seen a contract of this scope in the virtualization space or something to that effect. Just huge.
AI
