[Edaily Reporter KIM JI-WAN ] Coreline Soft Co., Ltd.(384470)An analysis suggests that the company is establishing a business structure that can increase the proportion of recurring revenue following Germany’s decision to include national lung cancer screening in its health insurance coverage. As the business model shifts away from a focus on software supply toward a revenue model based on the number of screenings performed, growth opportunities are expanding not only in Europe but also in Japan and the United States.

Heo Seon-jae, an analyst at SKSecurities, highlighted the potential for Coreline Soft Co., Ltd.’s overseas business expansion in a corporate analysis report published on the 23rd. The analysis suggests that the simultaneous implementation of Germany’s lung cancer screening coverage, medical device approvals in Japan, and the introduction of new AI-related billing codes in the U.S. is laying the groundwork for revenue growth across these countries.

Coreline Soft Co., Ltd. is a medical AI company that analyzes CT images using artificial intelligence (AI) to support medical professionals’ diagnoses. Its flagship product, “AVIEW LCS Plus,” can analyze not only lung cancer but also emphysema and coronary artery calcification in a single chest CT scan. The company also offers “AVIEW HUB,” which connects the image interpretation processes across multiple medical institutions, and “AVIEW NeuroCAD,” which assists in the analysis of cerebral hemorrhages.

The market that SKSecurities focused on most is Germany. Last April, Germany included lung cancer screening using low-dose CT scans in its statutory health insurance coverage and established a separate reimbursement system for screening and interpretation.

Previously, hospitals often had to bear the costs associated with using AI in lung cancer screening on their own. However, with the introduction of a separate fee schedule for the screenings themselves, the economic conditions for medical institutions to utilize AI solutions have improved compared to the past.

Changes are also expected in the revenue model. If Coreline Soft Co., Ltd. expands from a one-time software sale to hospitals to a model where it charges usage fees based on the number of screenings performed, it can create a structure where increased screening volume directly translates into higher revenue.

The operational model for lung cancer screening in Germany is also seen as a potential opportunity for Coreline Soft Co., Ltd. Local screening is conducted with primary and secondary readings handled by different medical institutions, creating a strong need for a system that efficiently links imaging and reading data across hospitals. This suggests that Coreline Soft Co., Ltd.’s multi-institution screening management platform could be utilized in this process.

The company is already expanding its customer base, focusing on major hospitals in Germany. As it is also participating in national lung cancer screening pilot programs in France and Italy, there is potential for the track record established in Germany to facilitate entry into other European countries.

In Japan, regulatory approvals are expected to serve as a catalyst for business expansion. This month, Coreline Soft Co., Ltd. obtained approval from Japan’s Pharmaceuticals and Medical Devices Agency (PMDA) for its lung nodule detection solution, “AVIEW Lung Nodule CAD.”

The company secured local customers and distribution channels last year by acquiring VUNO, Inc.’s assets related to its chest CT AI business in Japan. With the approval of its own product in Japan now complete, analysts say the company is now positioned to supply additional products to its existing customer base.

Analyst Heo highlighted that the company is now able to sell its own products as the number of hospitals in Japan using its solutions has grown to about 70. He forecasts that sales growth in Japan could accelerate if the company secures new customers through local distribution networks, such as those of M3 AI and Konica Minolta.

In the U.S., increased usage among existing customers was cited as a positive sign. Coreline Soft Co., Ltd. indirectly supplies its AI solutions through local medical imaging storage and transmission system (PACS) and image post-processing companies.

One of its major clients, 3DR Labs—a company that provides image analysis services to approximately 1,000 hospitals in the U.S.—has renewed its subscription contract with Coreline Soft Co., Ltd. for the fourth consecutive year. Based on the most recent contract, annual usage volume is estimated to have increased by about 60% compared to the previous contract.

Changes to the U.S. fee-for-service system are also a factor driving additional growth. Last April, Medicare introduced a separate billing code for AI-based cardiovascular analysis using chest CT scans. From the perspective of healthcare institutions, the increased likelihood of recouping costs associated with AI adoption could provide an incentive to expand the implementation of related solutions.

SKSecurities forecasts that national screening programs and recurring billing models in Germany, regulatory approvals and existing sales networks in Japan, and increased usage and new reimbursement codes in the U.S. will each serve as growth drivers. The analysis suggests that rather than concentrating overseas operations in specific countries, a structure is emerging where business is expanding simultaneously across Europe, Japan, and the U.S.