Nano-X Imaging Q4 2024 Earnings Call Transcript

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Operator

Good day and thank you for standing by. Welcome to the Nanox Fourth Quarter twenty twenty four Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session. Please be advised that today's conference is being recorded.

Operator

I would now like to hand the conference over to Mike Cavanaugh, Investor Relations. Please go ahead.

Mike Cavanaugh
Mike Cavanaugh
Investor Relations at Nano-X Imaging

Good morning, and thank you for joining us today. Earlier today, Nanox Imaging Limited released financial results for the quarter ended 12/31/2024. The release is currently available on the Investors section of the company's website. With me today are Erez Melter, Chief Executive Officer and Acting Chairman and Ron Daniel, Chief Financial Officer. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward looking statements regarding the company's financial results, research and development, manufacturing and commercialization activities, regulatory process and clinical activities, and other matters.

Mike Cavanaugh
Mike Cavanaugh
Investor Relations at Nano-X Imaging

These statements are subject to risks, uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company's views as of any subsequent date. Factors that may cause such a difference include, but are not limited to, those described in the company's filings with the Securities and Exchange Commission. We will also refer to certain non GAAP financial measures to provide additional information to investors. A reconciliation of the non GAAP to GAAP measures is provided with our press release with the primary differences being non GAAP net loss attributable to ordinary shares, non GAAP cost of revenue, non GAAP gross profit, non GAAP gross profit margin, non GAAP research and development expenses, non GAAP sales and marketing expenses, non GAAP general and administrative expenses, and non GAAP gross loss per share.

Mike Cavanaugh
Mike Cavanaugh
Investor Relations at Nano-X Imaging

With that, I'd now like to turn the call over to Erez Melter.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Thank you, Mike. Thank you for joining us today for our financial result call. As always, we appreciate your continued support of Nano. During our call today, I will use my prepared remarks to provide selected operational updated covering the time since our last update call in November. Then Ron will review our financials and we will close the call with a quick question and answer session.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Since our last call, the Nanox team achieved two notable regulatory successes. The first being the general use clearance from the FDA in December. Subsequent to the FDA clearance, we were informed that the CE Mark designation was granted for Nanook's ARC in February 2025. Beyond these notable regulatory achievements, the fourth quarter and beginning of twenty twenty five has been a period of significant progress and strategic advancement for Nanox across our business areas as we continue to revolutionize the field of medical imaging with our innovative technology. I will cover a wide range of topics in my prepared remarks.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

In the key U. S. Market, we continue to advance NanoxArch system deployment. We received positive feedback on the NanoxArch for our first customers, while we also signed agreements with new channel partners and we are negotiating additional ones as we speak. These agreements are expected to accelerate our market presence.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We are also beginning our entry into the European market now that we have obtained the CE Mark and I will talk about that in some detail along with our progress outside of The U. S. Market. Our Nanox8 IT continued to make progress as we added new customers. I will wrap up my remarks with an update on our OEM relationship as well as our clinical trial, which are designed to build on the body of the data supporting the use of Nanox R technology in the delivery of healthcare across various settings.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

With that, let's begin. As was previously announced, we achieved a significant regulatory milestone with the FDA General News Clearing received last December. The five ten clearance is for general use including human musculoskeletal system, pulmonary, intra abdominal and paranasal sinus indication, adjunctive to conventional radiography. And we believe that will advance our commercialization as it validates and expand the use cases for our NanoXR. Advancing our regulatory discussion with the FDA, we have submitted the Nanox ARC X for FDA clearance, which will further enhance our product portfolio.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

The Nanox Arc X will have an even smaller footprint than the existing Nanox Arc system, enhancing one of our key differentiation. The new system will also be easy to deploy and use with an anticipated one day setup time and plug and play functionality. Equally exciting is the announcement made just a few weeks ago that we received the CE Mark certification to market the multi source Nanox Arc system including the Nanox Cloud, it's a company cloud based infrastructure. Pursuing the CE Mark was a key priority to enable to market our device in The EU. With this in mind, we remained highly focused on fulfilling our promise to our investors that we would do everything within control to ensure a successful outcome in this crucial review process.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

I'm happy to say that we delivered on this and we view it in another current validation of our unique and possible transformative technology. I would also like to emphasize that due to differences in standard of care approaches, the CE Mark alone does the market and none of us are in Europe as a stand alone modality, which does not require objective use. Our primary focus remains on accelerating the deployment of the Nanox ARC and our AI solution in The United States. As I have mentioned on previous calls, we have been carefully expanding The U. S.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Based commercial team to help ensure that we have the appropriate sales clinical education and support infrastructure necessary to drive our deployment in The U. S. An important element of our go to market strategy in The U. S. As it will be another market is to pursue the education of our potential customer base and key opinion leaders in medical imaging.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Education and raising awareness are therefore key elements of our marketing efforts as we are expanding our key opinion leaders ecosystem and increasing clinical value evidence. Since its commercial deployment, there are a few dozens of systems in various stages of shipment and deployment for both commercial and clinical use in The U. S. We are deployed across several states. We are focusing on expanding our network of strategic collaboration, channel partners and client base.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

As of today, I can report that we added another state, Tennessee to our commercial coverage. Of these units deployed, I can share that in one of the multi specialty clinics, we scan about 10 scans a day, out of which twenty percent are chest scans. Our NanoxR pipeline remains robust and we are currently targeting a few hundreds of clients. We are continuously recruiting to expand our sales and clinical support team in The U. S.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

And this expansion is crucial to support our growing customer base and ensure the successful deployment of our technology. We see a lot of interest from prospective and current customers and professional healthcare facilities. Introducing new innovative technologies into the conservative U. S. Market is always challenging.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

However, we have a growing base of early adapters that have ordered and are using the ARC. As a result, we have seen an increase in the number of referrals, scans and additional use cases. As we continue to pursue multiple avenues of commercialization, we made significant strides in establishing strong distributor partnerships, working with well known players in the durable medical equipment space makes good business sense as these companies are recognized by Medical Imaging customers and can rapidly enlarge our sales presence. We have recently engaged with advanced Southern Med Imaging known as ASI based in Georgia. They will support the commercialization of the NanoxR and this is additive as it gives a new presence in the Southern United States.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Additionally, we are in advanced negotiation with more channel partners and I will provide updates on our next calls. I would like to focus now on our strategy for penetrating the European market. As you all know, we recently got the very welcome news that the Nanox ARC was granted the CE mark, expanding our total addressable market. Our regulatory team has worked long and hard to secure this and it is another strong validation of our technology. It also paves the way for our entry into a large and influential market, which has long and strategic goal for our company.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

This achievement represent a significant milestone in our global expansion effort and build on the strong momentum we have generated since securing multiple FDA clearances. This certification for a whole body imaging in Europe combined with our existing infrastructure and ongoing pursuit of strategic partnerships positions us to accelerate the Nanook's R commercial introduction across the region. Just days after we announced that we received the CMR, represented data supporting the NanuXR performance at the twenty twenty five European Congress of Radiology, the ECR, which took place recently in Vienna, Austria. New data was shared around three different abstracts at the conference. You can find the full details on this scientific abstract on our website.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We take pride in our robust clinical efforts to generate data supporting the use of NanoxR. We understand that bringing a new technology into the healthcare continent as we are doing introducing the Nanox ARC to medical imaging industry requires a great deal of data generation, clinical validation and education. While we are bringing a valuable new tool to the radiology profession, the burden of proof is on Nanox to demonstrate why hospitals and imaging centers need to add this new technology. While prioritizing clinical needs and development efforts in collaboration with the medical community, we ensure that our innovations are not only advanced, but also relevant and visible to those we serve. As the population ages and the demand for medical imaging increases in lockstep, there is an increasing need for accessible advanced imaging solutions across various care settings.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We expect the NanoxArc to be a good fit for these spectra because at its core, the Nanox Art offers an advanced medical imaging solution that is more accessible and affordable. We expect that most of the initial sales in The EU will be through the CapEx model, meaning the systems will be purchased outright with no per scan charges. However, there will be additional revenues generated through the use of service contracts and Nanox Cloud's connectivity. We will also of course be seeking to sell our growing number of AI solutions and 10 of our geology services into our customer base as well. At this time, we anticipate that our sales strategy in The EU will mainly work indirectly through distributors.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

As I've just described, we have been gathering a geographically diverse group of distribution partners and we will aim to do the same as we begin to penetrate the EU. With the CE mark in hand, we are not wasting any time and have already signed new distribution agreements for NanoXR in Romania and Greece, which will be our additional entry point into the market. We are also in advanced stages of additional negotiations of distribution agreements in additional countries in The EU. While The U. S.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Market has been a major focus, the European Union is going to be a larger focus in 2025 as we increase our commercialization efforts and our dedicated commercial team and continued progress with our efforts in other international markets focusing on receiving local regulatory approvals in various countries. Turning now to our AI commercialization VENSES, our Nanox AI powered images interpretation algorithms continue to gain traction. We've engaged with two new customers in The U. S. The first is one of the largest outpatient medical imaging providers in The U.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

S. Which is signed up for health hosts. The installation will utilize Nanop's AI imaging analytics platform within the Blackford platform marketplace, Highlighting the strategic value of our partnership followed by the success we already experienced in The UK, this represents our first significant success in The U. S. With the health host in the imaging centers market and marks an important milestone for both Nanox AI and Blackford, the pioneering enterprise AI platform and solutions provider, which offers all Nanox AI solutions including HealthHouse to healthcare providers worldwide.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We also finalized the collaboration between Nanox AI and Ezra, a healthcare artificial intelligence company revolutionizing early detection through full body CT screens. Under the terms of the collaboration, Nanox AI Population Health Solution will be integrated into Ezra's medical screening process at 28 imaging center locations across The United States, which feature AI powered full body MRI and CT scans to screen adults for early detection such as cancer and other serious conditions at their earliest and often most treatable stages. We are particularly excited about the EZAR collaboration as it connect us to a consumer healthcare market indirectly through our business partner. Individuals today are better informed and technology enable people to manage more aspects of their healthcare journey themselves. Given this backdrop, we can see an emerging opportunity to provide imaging and early detection to consumers as part of their routine healthcare activities.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We know the cost of technology tend to decrease over time and in the future proactive scanning would be an important part in maintaining a healthy lifestyle. We will continue exploring opportunities to leverage our AI technology to promote accessible early diagnosis and preventative management. We're constantly working on additional collaboration with different customers types and industries worldwide. We clearly have a lot to be excited about with our Nanox AI solutions. I will close my comments on Nanox AI by sharing that our total AI customer and pilot based project has increased by 25%.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

As previously reported, we are developing a pulmonary solution, which is expected to be the first AI application designed specifically for the Nanox Art. Nanox identified the need for tomosynthesis AI solution, its prime requirement to support the growing market demand for cancer screening initiatives in The EU. These initiatives will increase the need for our geographers and radiologists to respond in a faster way for the increased readings. Nanoxar solution will provide the pulmonary proper solution to increase imaging capacity. Another important aspect of our work is with our OEM partners, which is critical to ensuring that we have the components necessary to meet our growing demand for Nanoxx Arc System.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

I would like to provide an update on the aforementioned technology development center in our headquarters, which was created to advance the development of our technology into the future. In addition to chip and tube level testing, this center includes a robotic laboratory. We will soon utilize the lab to perform multi source application development. Multi source involve placing several of our amateurs into a single vessel with active pumping mechanism to ensure an optimal operating environment for emission. The benefit of a multi source approach can include minimized imaging times, system size, WAN complexity reduction and more flexible approaches to imaging.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Attaching a multi source to our robot and manipulating the robot into different positions allow us to easily simulate and work to optimize various imaging positions and quantities towards developing the best solution for medical security and industrial inspection applications. This will become an important tool towards the development of additional advanced tomosynthesis and potentially stationary CD solutions. As reported before, tube utilizing CSEM chips have been successfully built and tested and we remain on schedule for initial sub production quality chips this quarter. This is another example of the Nanox team dedication to securing manufacturing agreements to ensure the supply of Nanox Arc system can meet our expected demand. Turning to one of our key OEM partners, Varex continue its production launch preparation as we continue system level integration and pre FDA submission testings on cubes to be used in NanoxRx.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Varex is also engaged in development of multi source modules for us utilizing the aforementioned Nanox emitters and will include their module in some of our application development robot testing referenced above. Additionally, a leading global medical and diagnostic solution provider has assembled the first prototype tubes utilizing the Nanox Amaker. We are working closely with them and have delivered a Nanox Art demo kit to serve as a test bench for prototypes that are under development. We will continue to actively, but selectively develop partnerships with two manufacturers and X-ray solution providers as they will serve an important challenge to the market for our proprietary technology. An update on our U.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

S. Government security application project, the team has successfully completed component build, assembly and testing and move to finalize two unique tube designs for advanced prototyping. We are pleased that our demo key inclusive of our emitter tube, high voltage power supply and software continue to enable potential clients and partners to more easily experience our technologies. In summary, we continue to develop strategic OEM partnerships both to enhance our Nanox Art supply chain as well as develop channels to the various markets. We are increasing our resources and focused on OAR and business development opportunities and continue to expand our funnel of potential opportunities.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We will update on them as appropriate. I will close my prepared remarks with an update on our clinical activities, which are designed to provide further validation and extended use cases for Nanox R. As I mentioned earlier, Nanox attended ECR, the European Congress of Radiology in February, which was very successful. Recently, radiologists in our independent review committee, the IRC confirmed that Nanook's Arc Digital Tomosynthesis, DTS provides superior detail and added clinical value over X-ray. Each expert independently review over 8,080 BTS studies, noting good image quality and ability to detect lesions and minimal learning curve.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

These insights further validate DTS as an advanced imaging solution. Our NanoxR clinical trials are advancing well. The NanoxR multisite trial continues to progress in the UGMC and Bellingham Medical Center and we are in discussion with prominent clinical sites in two locations in Europe to add them to our Multi Site trial. To date, we have enrolled more than 100 patients into the various clinical trials. In conclusion, we're making significant strides in deploying our innovative imaging solution, expanding our market presence and advancing our clinical and regulatory milestones.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We remain committed to our mission of preventive healthcare and improving patient outcomes worldwide. With that, I would like now to turn the call over to Ren for a review of our financials.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Thank you, Erez. We reported a GAAP net loss for the fourth quarter of twenty twenty three of $14,100,000 which is the reported period compared with a net loss of $10,200,000 in the fourth quarter of twenty twenty three which is the comparable period. The increase was largely due to an increase of $1,200,000 in the gross loss and increase of $2,700,000 in other expenses, mainly due to a one time income in the amount of $3,000,000 that was recorded in the comparable period since the company received that amount in the fourth quarter of twenty twenty three from its DNO insurance carrier under the settlement agreement in connection with the class action lawsuit against the company. Revenue for the reported period was $3,000,000 and gross loss was $2,900,000 on a GAAP basis. Revenue for the comparable period was $2,400,000 and gross loss was $1,700,000 on a GAAP basis.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Non GAAP gross loss for the reported period was $300,000 as compared to a gross profit of $900,000 in the comparable period, which represents a gross loss margin of approximately 9% on a non GAAP basis for the reported period as compared to a gross profit margin of 36% on a non GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $2,800,000 with a gross profit of $600,000 on a GAAP basis as compared to revenue of $2,300,000 with a gross profit of $300,000 on a GAAP basis in the comparable period, which represents a gross profit margin of approximately 21% on a GAAP basis for the reported period as compared to a 14% on a GAAP basis in the comparable period. Non GAAP gross profit for the company's Tele Radiology Services for the reported period was $1,100,000 as compared to $900,000 in the comparable period, which represents a gross profit margin of approximately 41% on a non GAAP basis for the reported period and as compared to 38% on a non GAAP basis in the comparable period. The increase in the company's revenue and gross profit margins from the Tera Radiother services was mainly attributable to customer retention, increased rates and increased volume of the company's bidding services during the weekdays shift.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

During the reported period, the company generated revenue through the sale and deployment of its imaging systems, which amounted to $136,000 for the reported period with a gross loss of $1,500,000 on a GAAP basis and $1,400,000 on a non GAAP basis compared to revenue of $17,000 with a gross loss of $44,000 on a gas and non GAAP basis in the comparable period. The increase in the revenue stands mainly from the sales of and deployment of our two d systems and the sale of our OEM project in The U. S. The company's revenue from its AI solutions for the reported period was $83,000 with a gross loss of $2,000,000 on a GAAP basis compared to a revenue of $84,000 with a gross loss of $2,000,000 in the comparable period. Non GAAP gross profit for the company's AI solutions for the reported period was $6,000 compared to $21,000 in the comparable period.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Research and development expenses net for the reported period were $5,400,000 compared to $6,800,000 in the comparable period, reflecting a decrease of $1,400,000 The decrease was mainly due to a decrease of $200,000 in salaries and wages, a decrease of $500,000 in share based compensation and $700,000 in expenses related to our research and development activities. Sales and marketing expenses for the reported period were $900,000 compared to $1,000,000 in the comparable period. General and administrative expenses for the reported period were $5,800,000 compared to $3,800,000 in the comparable period. The increase of $2,000,000 was mainly due to an increase of $1,700,000 in our legal expenses since the company received $2,000,000 from the company's director and officer of liability insurance carrier during the comparable period under the company's policy and the settlement agreement, which reduced the company's legal expenses in the same amount during the comparable period. Turning to our balance sheet.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

As of 12/31/2024, we had cash, cash equivalents, restricted deposits and marketable securities of approximately $83,500,000 and add $3,100,000 in loan from a bank. We ended the quarter with a property and equipment net of $45,400,000 As of 12/31/2024, with approximately 63,800,000.0 shares outstanding. As of 12/31/2023, we had approximately $5,057,800,000.0 shares outstanding. Third, the controlled equity offering sales agreement with our two agents dated 06/07/2024, the company may offer and sell ordinary shares up to $100,000,000 from time to time through the agents pursuant to the sales agreement. The agents are entitled to compensation at the commission's rate of 2.5% of aggregate gross proceeds from each sales of the ordinary shares.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

During the reported period, the company issued approximately 5,000,000 ordinary shares in cost consideration of $38,800,000 and net consideration of $37,800,000 under the sale agreement. Additionally, during 2024, approximately $1,000,000 option to purchase ordinary shares were exercised to ordinary shares in consideration of approximately $1,700,000 including 706,000 options to purchase ordinary shares that were exercised by the state of the late company's Chairman of the Board in consideration of $1,600,000 With that, I will hand the call back over to Erik.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Thank you, Ron. To close my prepared remarks, I want to thank you all for continued support of Enenemps. Our team continues to deliver in its promises with advance on the AI technology, regulatory and clinical fronts during the quarter and at the beginning of twenty twenty five. We advanced U. S.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Commercialization and have entered a new market in The EU. I'm especially proud for our FDA general use clearance and the recent CE Mark designation for the NonOps R. We added new deployments, distribution agreements and new customers for the Nanox AI technology. Nanox strategic approach to regulatory milestones and commercial rollout, including targeted installations and phases scaling underscore a disciplined path to sustainable growth. I'm proud of what we have accomplished so far and I look forward to sharing details of more successes to come on our Q1 twenty twenty five investor call.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Thanks again for joining us today. And operator, please open the call for questions.

Operator

Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Hey, good morning. Thank you for taking our questions. Eris, could you confound upon the DME partners in The U. S. Under DMEs, will you be selling the ARC outright with the opportunity for imaging revenue behind it?

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Or could DMEs place that under the imaging only scenario?

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

So we have both options. Part of them will be that we're going to sell CapEx direct. They will do their installation and the selling process. And part of them will be the MSYS, the typical MSYS model that we currently have.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Got it. Okay. Could you talk about the

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

You talked about The U. S, yes?

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Yes.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Yes. Okay.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Okay. And in The U. S, it looks like, congrats, I think you're up to seven states, I believe.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Can you give us a sense of the platform in The U. S? You need to talk about the target market in The U. S. And how we may expect placements to occur during 2025?

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Thank you.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Okay. So right now, we have

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

it seems that we are sort of doubling the team

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

like every quarter. We have right now five sales people that are currently working. We are extending the support, the clinical support and clinical education in order to build the market and brand and value awareness and to ensure that we expand the number of physicians who will be able to refer to the stomosynthesis, to the ARC. This seems to be very successful. One of the examples I gave in the call that in one of the clinics that we started to work, we have been facing that a lot of physicians have been referring and we achieved like 10 scans per day, which is more than the average that we expect.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

This is with respect to the team. We are planning to get a major impact as a result of the channel partners that we signed there with in specific states or coverage or states that we want to extend our coverage, and we're not planning specifically with our own salespeople. And a lot of introduction, we have people who are actually working on building the build flow that currently is pretty large. And I gave an indication also in the comments about what do we expect in 2025 in terms of the numbers that we are either negotiating or starting the process of the either building the room or getting the regulation, the local regulation of the approval of the state or approval of the city and the physics that are coming to check, etcetera, the whole process that we mentioned. Right now, what we can see definitely is that the sectors who are the early adapters are either small and medium sized medical imaging centers in orthopedic clinics and chiropractors.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

And in addition, the one that we are accelerating right now and we expect more to be built on the success of the first one is the what is called the multi specialty medical center. This is definitely an area where we can add value to their X-ray capability. And in some of them, we are replacing the CT, the old CT that they had in the past. Last but not least is the one that we mentioned is the medical imaging chains. We have already a few that were assigned.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We have placed systems also in a few of them already. And this is an area that we're working and we have a focus on in order to extend the number of chains that we're going to be in touch with and place our ARC system.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Perfect. And one more quick one. Could you talk about the manufacturing sites out there for tube ships and other components? And has there been any material change on any of those channels in the past quarter?

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

No. We work according to the plan that was presented. CEI and Italy are manufacturing the tubes for us. Varex started to ship tubes also for us. Both manufacturing facilities.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

The Nanox in Korea and the system in Switzerland are both manufacturing the chips, and we are building that. And we are working right now while we do the scale in the manufacturing facility and the future manufacturing of the ARCX to have the low cost manufacturing facility in addition to the one that we have in Israel.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Perfect. Thanks for taking our questions.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Thank you.

Operator

Our next question comes from Ross Osborne with Cantor Fitzgerald.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Hi, good morning and thank you for taking our questions. Starting off, how many systems were deployed and operating in The U. S. During the quarter that resulted in $136,000 in system revenue?

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

So we have already indicated that we don't give the exact numbers. They are all in various stages of those that were already installed. These are ready to be installed in the when the rooms are getting ready. We are adding states. We expect the that the channel partners will add another value.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

What we see also that every salesman that we are hiring is able to expand the number of places that we are installing. And I think that the more we go into the 2025, we'll give more details on this one.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Okay, got it. And then how should we think about the

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

price of the And actually, one of the things we actually also mentioned in the call that the pipeline that remains pretty robust. And the only thing that we're trying to do is make sure that they are going to be converted to installations and scans that they are going to create. And also, I gave an indication about the scans that we're able to create in the places that the system is installed.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Understood. And then how should we think about pricing for ARG in Europe, given you're going to be selling the system there as a capital sale? And how do you think this will impact gross margin this year or next?

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Okay. I hope that I heard the question. So in Europe, we have also last month, we have extended the team when we got the CE clearance. We show that we attended in Vienna was very successful. We have engaged with quite a lot

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

new distributors

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

that we will work with them In the so right now, we have three salespeople, original salespeople. We are we have added Romania and Greece, as mentioned, to the new distributors. We are working with the distributors in Italy and Spain. And we have also a few more distributors in the pipeline, and we do hope that this will extend our presence. I think that it's fair to say that we will start the installations probably sometimes during the next six months or quarter or two quarters that will start to install systems and sell systems.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

In Europe, I would say that it will be probably major part of it will be CapEx sales and smaller part of it will be the EBSAS.

Ross Osborn
Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald

Okay. Thank you for taking our questions.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Thank you.

Operator

Our next question comes from Scott Henry with Alliance Global Partners.

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Thank you and good morning or afternoon depending on your location. I guess the first question and then I'll go in a little more detail, but do you want to give any thoughts to the outlook for 2025 in terms of big picture, any guidance or if you're going to provide any? And then I did have a couple more specific items on that.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

What specifically are you referring to?

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Well, I guess if we go by category, it looks like tele radiology services tends to grow around the 10% range. Is anything changing there? Or should we expect that to continue to grow at similar rates?

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Scott, we don't provide guidance, as you remember. But if you look at the consensus of the analyst, I think that the service segment of the company actually came out in line with consensus.

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Okay. And I won't ask for guidance, but just in terms of directionally and magnitude, AI solutions, should we I mean, that's moved around a lot, it dipped down in Q4 after a very strong Q3. Should we expect a strong year for that in 2025? Just not specific numbers, but what are you seeing there that would indicate how we should think about it?

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Well, as you remember in the first quarter, we saw a onetime income over there as we completed the projects as we noted then. But as we mentioned as Erez mentioned in the portion of the call, we do see an increase in the number of the clients and the number of the pilots. So you can assume that, that will be translated maybe translated into an increase in the revenue, but of course, we'll give better numbers when we publish the upcoming quarter results.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

But from a general perspective, we view 2025 as a strong year for AI.

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Okay, great. And then probably the most important question that I have is when we look at the imaging solutions line, the percent gains have been substantial, doubling year over year, but the numbers are still relatively small. Obviously, as the rollout goes, we'll start to reach an inflection point where those numbers will get bigger. When would you expect that inflection point? Is that a kind of a middle of twenty twenty five event or second half?

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Just trying to get a sense of when we should see that really kind of curve upwards?

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Again, we don't provide any guidance, so I can't tell you exactly when it will be the inflection point, but you should look at some about the trend, about how we work together with channel partners in The U. S. Market, including distributors and with distributors in the Europe. We also announced that we submitted the new version of the ARC to the FBI. So that may be also an inflection point once we get the clearance for that device.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

And I think as the time goes and we accumulate more experience and expanding our team in Air Force and the market education and the market awareness and increase and showing the clinical value in our devices, that should be translated into what you call accounting towards the inflection point.

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Okay. Thank you for that color. Just a couple modeling questions. Yes, typically OpEx operating expenses, we think about growth with inflation, all else being equal. Is there anything unique in the OpEx that we should factor into 2025 or maintain similar trends?

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Not really. But don't forget that some of our labor costs and other overhead is actually linked to the Israeli shekels and some of it a little bit to the Korean currency. So in terms of any kind of impact on the OpEx, it's only if there's going to be some kind of sharp fluctuations with those currencies. Other than this, everything is in line, you can see that our G and A actually, our G and A are more so in the range in the past two years. It's actually decreasing with the completion of the SEC and the class action lawsuit there last year.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

So it's more of the same of the same. Of course, once we'll issue the twentieth, you can have more details about it.

Scott Henry
Managing Director & Senior Research Analyst at Alliance Global Partners

Okay, great. Thank you for taking the questions.

Operator

Our next question comes from Jason Colbert with DeBoro Capital.

Jason Kolbert
Managing Director at D. Boral Capital

Hi, guys. I basically have the same question that Scott does, which is, I'm looking for guidance. I'm trying to understand system placement and when we're going to see that inflection point. I understand that you don't want to provide that. The problem is it's very hard to kind of understand as an analyst following the company where that inflection point is.

Jason Kolbert
Managing Director at D. Boral Capital

And given the fact that the stock is down by almost 50% from its recent high, I think investors are trying to understand where that inflection point is also. You raised some capital in the period. Can you talk a little bit about the capital you raised and how you might deploy that capital in order to drive system placement? Thanks.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Okay. I'll give you an answer about the second part of your question. We raised approximately $38,000,000 growth, $37,000,000 net, dollars 10,000,000 during the fourth quarter of twenty twenty four, and that was under the ATM program that's been in place. That's a program that we already put in place already in mid of twenty twenty four. We had an opportunity to use it in after we announced the general use clearance that we have received in The U.

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

S, and we have done so. What is going to be used, of course, is it's going to be used for the acceleration of the commercialization of our products, both the imaging and the AI. And we don't think that we do think that most of the efforts will be concentrating commercialization

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

at

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

the moment.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

One other thing, Jason, that I would say that you have enough not enough, always not enough for analysts. But I would say that we give a lot of indications that can explain or give you an indication of where the inflection point will be as a result of the fact that the increase in revenue will be generated from the EU penetration, from the fact that we moved in The U. S. And the FDA for general use from the MSK only in the past, and the fact that we are going to have the ARC X clearance from the FDA sometimes in the during 2025, and this will be part of the scale that we are doing.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

We also gave some indication about the pipeline. We gave an indication about the number of scans that we are going to generate. Right now for us, it's hard to predict what will be the percentage of the CapEx sales, namely that the system will be sold and serve and what will be the part which is going to be based on the MSaaS. Right now, almost all of our systems are MSaaS similar, but you probably will be more of a CapEx sales. And last but not least, I think that what we are trying to show that basically we say something and we ensure that we are delivering.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

And this is where I went from the regulation point of view, from building the clinical validation point of view, the clinical trials, the market awareness of the ARC and its clinical use, the key opinion leaders that are joining us all the time, the number of salespeople that were very we are very conservative in adding more expenses to the so when we see that the salesman is generating enough sales and revenues, then we will add and not flooding the company with people that before we know that we're going on a very strong base moving forward. So this with respect to the teams that we have. So yes, we always said that 2025 will be a meaningful year for us going forward, and that's where we are.

Jason Kolbert
Managing Director at D. Boral Capital

Can you give us some idea of either how long the existing cash on the balance sheet will last you or when you think you're going to be cash flow positive?

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Again, we don't provide any guidance. But you can look at our earnings release and analyze it and come to your own conclusion.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

I think the positive and very supportive feedback that we mentioned in the very beginning of the call that we're getting from the customers and people are really believe that it's a game changer in this medical imaging market. And the value that we saw in the review that's the independent review that we had in Europe and what we see right now following the chest approval that we see the for a pulmonologist and for the lung screening and what we see in terms of the MSK and as mentioned, sinusitis and kidney stones and other indications or use cases, I think this actually gives us a lot of positive and back wins to move forward and to ensure that we're going to add value to our customers and ensure that we are going to make change in the in the health and standards of care.

Jason Kolbert
Managing Director at D. Boral Capital

Do you anticipate continuing to use the ATM facility this year?

Ran Daniel
Ran Daniel
Chief Financial Officer at Nano-X Imaging

Again, we don't give any indication on any forward looking actions that we may take.

Jason Kolbert
Managing Director at D. Boral Capital

Okay. Thank you.

Erez Meltzer
Erez Meltzer
Chief Executive Officer at Nano-X Imaging

Yes, there are a lot of investors that are pushing us to go with them and raise and take money, but we are very conservative and we also consider very carefully the existing shareholders. So when the stock is down, the decision is accordingly.

Operator

I'm showing no further questions in queue at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.

Executives
    • Mike Cavanaugh
      Mike Cavanaugh
      Investor Relations
    • Erez Meltzer
      Erez Meltzer
      Chief Executive Officer
    • Ran Daniel
      Ran Daniel
      Chief Financial Officer
Analysts
Earnings Conference Call
Nano-X Imaging Q4 2024
00:00 / 00:00

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