Compumedics (ASX: CMP) has entered into an agreement with leading China-based health-check organisation Meinian Onehealth Healthcare Holdings (Health 100) to work together over the next 90 days to finalise a formal joint venture that enables the companies to commercialise Compumedics’ Somfit technology in China.
The Somfit platform is a mobile wearable system that monitors sleep and provides personalised analysis of people’s sleep patterns, as well as associated disorders.
Compumedics chief executive officer Dr David Burton said both companies had been in discussions for “some time” about how they can work together in China with Compumedics’ Somfit technology.
Dr Burton said the duo aims to “transform sleep and brain healthcare” in China.
“Getting to this point has taken Compumedics 30 years of product and technology innovation and development, and together with Health 100, we will make history transforming health and leading the way of the future for primary, secondary and tertiary community-wide healthcare,” Dr Burton said.
“Importantly, both Health 100 and Compumedics share common values regarding people, ethics and each parties’ contribution. This, coupled with a formidable driving force to build a great joint venture, will positively transform the world of sleep, brain and associated healthcare in China,” Dr Burton added.
Proposed joint venture
It is the intent of both parties to execute formal agreements to establish the proposed joint venture no later than 16 August 2018. During this period, both parties will work to finalise all legal arrangements, including payment of the funds to establish the formal joint venture.
“Compumedics is very pleased to be taking this significant and transformative step forward with Health 100,” Dr Burton said.
“We are also honoured that the Premier of Victoria, the Hon Daniel Andrews MP, and Victoria’s Commissioner to China, Tim Dillon, have attended today’s signing ceremony between Health 100 Chairman, Dr Rong Yu, and myself, on behalf of Compumedics,” he added.
According to Dr Burton, the proposed joint venture arose out of the Victorian Premier’s trip to China last year.
Some of the key points of the proposed agrement include Compumedics owning approximately 49% of the joint entity, while Health 100 will hold 51%.
Compumedics will receive an A$11.3 million (US$8.45 million) pre-tax payment upfront as imbursement, in part, for providing the joint venture with the Somfit-related intellectual property and technology rights for the greater China region.
Health 100 will commit to purchasing an initial 1 million Somfit devices for the China market in the first two years, following the device receiving China Food and Drug Administration approval.
This is anticipated to generate at least A$133 million (US$100 million) in revenue to the joint venture over this period.
“This announcement marks the commencement of substantial and reciprocal trade and investment between Victoria and China, particularly as it relates to positive health-care transformation and associated knowledge-based job-generation,” Dr Burton noted.
“We look forward to completing the formalities over the next month or two to enable this important journey to commence, while we plan and commence delivery of major healthcare outcomes,” he added.
The market reacted positively to today’s news, with Compumedics’ share price rocketing more than 64% to reach A$0.675 in late afternoon trade.