Nano-X Imaging Q1 2025 Earnings Call Transcript

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Provided by Quartr
May 22, 2025
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Operator

Good day, and thank you for standing by. Welcome to the Nano QX Q1 twenty twenty five Earnings Conference 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 your speaker today, Mike Cavanaugh of Investor Relations. Please go ahead.

Mike Cavanaugh
Managing Director at ICR Healthcare

Good morning, and thank you for joining us today. Earlier today, Nanox Imaging Limited released financial results for the quarter ended 03/31/2025. The release is currently available on the Investors section of the company's website. With me today are Erez Meltzer, 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 commercialization activities, regulatory process and clinical activities, and other matters.

Mike Cavanaugh
Managing Director at ICR Healthcare

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 administrative expenses and non GAAP gross loss per share.

Mike Cavanaugh
Managing Director at ICR Healthcare

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

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Good morning, everyone. Thank you for taking the time to review Nanox Imaging's Q1 twenty twenty five financial results with us today. I'm pleased to report that we have made progress in our mission to improve medical imaging and enhance patient outcome. At Nanox, we pride ourselves on our comprehensive end to end solution that supports preventive healthcare and expand access to imaging services. With that goal in mind, we made two strategic acquisitions in 2021.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

USA RUD, our teleradiology business, and Zebra Medical Imaging, which is now Nanox AI, to build out our end to end solution around the core Nanox R technology. Integrating AI powered imaging analysis and the global teleradiology solution with our groundbreaking Nanox R technology takes us one step closer to creating a global connected medical imaging solution with a potential meaningfully expand the delivery of healthcare. These acquisitions have proven to be good strategic decisions. Since the acquisitions less than four years ago, we have doubled the revenues generated by USEROD, and at the same time, Nanox AI has progressed from a pre revenue business to one that is now generating growing revenue. To highlight another benefit of our end to end solution, most of our Nanox ARC customers also use our teleradiology services, and this is not only provides more effective imaging and diagnosis for providers and patients, but also increases revenues per customer and creates value for our shareholders.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Nanox AI continues to be a key part of our strategy, driving forward our commitment to integrating artificial intelligence into medical imaging. By leveraging advanced AI capabilities, we aim to streamline workflows, support clinical decision making, and improve efficiency across the imaging ecosystem. Our innovative technologies, including Nanox ARC and our AI solutions, are gaining tructions in the market, and we are excited about the future of our company. Let's review some operational highlights. Beginning with our commercial efforts, we are employing a multi per node strategy to generate a robust sales pipeline.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

This is led not only by our direct sales force in The US and in The EU, which calls on imaging providers directly, but also by forming business collaborations, which leverage the marketing expertise of our medical imaging companies. We've also begun to engage with distributors worldwide, especially in The EU, which we believe will be an efficient way of potentially penetrating a market comprised of 27 different countries. Complementing our efforts to commercialize Nanox Arc, we are benefiting from a steady revenue growth driven by our U. S. Eraud Teleradiology business and growing revenues from the sales of AI solutions.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

We are also supporting these marketing initiatives with marketing campaigns, and I'll touch on these aspects of our commercial plan today. We've seen an increase in the number of scans performed by our systems, both in The US and worldwide. And we're beginning to see initial revenue streams for Nanox ARC customers, reflecting that we are gaining tractions with our Nanox ARC systems and customers can see the value in using the system. Our sales pipeline has doubled since January 2025, and our sales team, as of today's call is handling over 1,000 leads. Our growing pipeline primarily consists of standalone multi specialty, small and medium sized health clinics, not only from The US, but also from countries around the world, such as Peru, France, Azerbaijan, Hungary, and Poland, and various countries in the EU.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Since its commercial deployment at the beginning of this year, there are now over 60 units that are in various stages of implementation and execution of the deployment plan for commercial demo and clinical use. For the operational units, we are achieving an average target of seven scans per day. As we grow, we intend to share more information as our business evolves and with a promise previously made to provide more details, we will do so today. We are targeting over 100 ARC systems in various stages of deployment by the end of twenty twenty five worldwide. We are happy to now be in a position to share guidance on our commercial progress.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

But as we are all aware, recent market uncertainties could make our guidance subject to change as the year progresses. Introducing new and innovative technology in The US market is always challenging. However, we are encouraged by the growing base of early adopters that have ordered and are using the Nanox Arc furthermore, the nature of our sales process is clinical, meaning that we dedicated time and resources to our prospective customers to educate them on the benefits of the Nanox Arc to their practices, how to use it, and why they should use it. All of which takes time. The US deployment of Nanox ARC is progressing, and we are preparing to ship the first systems to Puerto Rico.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

From the beginning of the year, we continue to strengthen our sales team with representatives now covering the West, East And Mid Coast regions. Additionally, we continue to expand our clinical team by structuring a continuous professional group along with continued enhancement to our operational team and an efficient interface with our local services partner. As we continue our accelerated US commercializations, we provide all the necessary resources to our sales and services personnel in The US to support our expanding client base. Along with various channel partners, our team on the ground will be critical to our accelerating rollout, and we will steadily, but clearly continue to add to this team. We are making hiring decisions wisely With 22 U.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

S. Personnel on the ground, we are moving ahead towards our target of 30 to 40 sales, service, marketing and support personnel in place by the end of twenty twenty five, depending on needs and progress. Now let's move on to some specific US market commercial accomplishments and updates. We have made notable progress in forming solid distributor partnerships, while continuing to pursue commercialization options. Beyond the engagement we announced last quarter with Advanced Southern Imaging, known as ASI, we have expanded the third party service and support agreement with Swiss Re in Bridgewater, New Jersey.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Swiss Re is one of the foremost experts in digital radiography from sales through installation, setup training and service. This relationship is off to a good start, and in addition to the support and services agreement, we enter into a non exclusive distribution agreement for the sales of our system and services to government, official public health authorities, and medical institutions in The US. Furthermore, we are in negotiation with additional leading national distributors. And finally, we are in the finalization stages of a new project around workers compensation segments. With over 100,000,000 workers estimated to be covered under workers' compensation in The US, this business segment presents a large potential opportunity for Nanox, helping to promote the recovery of injured workers by providing imaging services to individuals and insurers.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

The project is structured to build a network of medical imaging centers, starting with two to three proof of concept sites with plans to expand from there. Did the POC be completed successfully? The collaboration will kick off its commercial binding level. The engagement relies on attractive terms based on contractual rates of 120 to 180 per patient. If achieved, this potential line of business will be part of the Nanox services division, which will oversee the program's development.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Turning to our efforts in markets outside of The US, we've also made strides in deploying our Nanox ARC system since our last update call. Our efforts in The EU have been assisted by the recent key milestones of securing the CE Mark for the Nanox ARC in February. As of today's call, we are ready to ship Nanos ARC and make our first installations in Europe subject to local approvals by country with our distributors. We are working on deploying systems to Greece and Romania with demo units expected to be shipped to those countries soon, and we are also preparing for demo units to be shipped to Mexico. These are necessary steps to create a commercial presence that we can build from in which of these countries, and we will work hard to maintain this momentum.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Turning to our AI solutions business, we are seeing tremendous momentum. Trial data has shown that our AI solutions provide strong and proven data, and customer feedback has been overwhelming. We are seeing strong interest in our solutions as they grow and the sales pipeline expense. I believe that our AI business is also getting an added boost from the secular growth of AI in the broader economy, as well as the excitement surrounding AI in general. On our last call, we announced an agreement with ESRA AI, a healthcare artificial intelligence company revolutionizing early detection through full body MRIs and low dose chest CT screens.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

This agreement is moving ahead, and we expect to expand the use of our AI solutions in dozens of Ezra locations throughout The US. Continue with our commercial efforts, we have engaged with new AI marketplaces and are currently in negotiation with several companies. These collaborations will help us expand on a global scale, especially in The US, providing a steady stream of new client referrals. We also have three pilot programs running with similar AI platform companies, and we will provide more details once these pilots are completed. As previously mentioned, we continue to cooperate with various prestigious academic centers that are using our AI solutions, including Oxford University Hospitals, NHS Foundation Trust in The UK, which has published trial data on the HealthHost bone solution.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

And following that secured a three year contract for HealthHost. We are also working with Duke University Hospital in North Carolina, UVA Health in Virginia, UW Health in Wisconsin on various AI related projects. With respect to regulatory, we have also had some notable regulatory success recently. And in April, we were proud to announce that we have received five ten ks clearance from the FDA for the Nanox Arc X, our updated multi source digital tomosynthesis systems. Now for an update on our clinical work, which is always going on behind the scenes, and the reason is simple.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Clinical validation is one of the key drivers of our future growth. It is imperative to generate fresh clinical data to support the use of a medical device, especially when introducing new technology and to encourage a change to the standard of care. Recognizing this reality, we continue to expand our efforts to implement our clinical trials with the goal of producing a robust database supporting the use of the Nanox Arc. Regarding our ongoing multi site trial, we are working on clinical sites collaboration in two new sites in Europe, a leading teaching hospital, as well as a large private hospital. We are excited to welcome these two prominent healthcare providers into our trial.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

I can also announce that the Nanox ArcX system was installed successfully in the Shamir Hospital to be used for a multi site trial. It is now being used to actively scan patients. Finally, USEROD, our teleradiology subsidiary continues to provide valuable outsourced radiology services to healthcare imaging centers, and most of our NanoxR customers also utilize this service. We have recently signed an agreement with a large US based company to provide the radiology services for their self insurance program, which will further strengthen our position in the market. Our second opinion services is a consumer oriented platform provided by USERRad, which connects patients with radiologists and other subspecialty physicians for additional consultation on their medical diagnosis.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Second Opinion has integrated all three of Nanook's AI, FDA cleared AI solutions, and is now generating revenues and interpreting approximately 20 scans per month. We are very active with our OEM partners, particularly to ensure adequate supply of components for the ARC, but also with the intention of finding additional applications for our Nanox proprietary technology. One such active engagement is with the US government agency, Oak Ridge National Laboratories, to develop novel and compact mobile X-ray technologies. We began our partnerships in Q2 of last year and have progressed to developing and building prototypes due to be completed this summer. More good news is from Varis, who recently delivered to Israel several tubes for our next generation ARCHX.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

They also passed incoming inspections and are now being assembled into Arcs to complete system level integration. Additionally, we have technical staff at Varex this month for validation and training on multi source demonstration units we are producing for future application development. The Nanooks team is excited to attend the RSNA twenty twenty five, which is the annual meeting of the Radiological Society of North America to be held in Chicago from November 30 through December 4. We are especially excited for RSNA twenty twenty five, as we will be presenting the full Nanox end to end solution at this high profile industry event for the first time. Our booth will feature the new Nanox ArcX cold tomography system, and ArcAI teleradiology services and AI solutions.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

We hope to see some of you there, and we welcome you to stop by the Nanox booth to meet some members of our team and see the Nanox solution for yourself. With that, I will close my prepared remarks and turn the call over to Rand Daniel to review our financials. Rand, over to you.

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

Thank you, Erez. We reported a GAAP net loss for the first quarter of twenty twenty five of $13,200,000 which is the reported period compared with a net loss of $12,200,000 in the first quarter of twenty twenty four, which is the comparable period. The increase of $1,000,000 was largely due to an increase of $1,100,000 in our gross loss. Revenue for the reported period was $2,800,000 and gross loss was $3,000,000 on a GAAP basis. Revenue for the comparable period was $2,600,000 and gross loss was $2,100,000 on a GAAP basis.

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

Non GAAP gross loss for the reported period was $400,000 as compared to a gross profit of $600,000 in the comparable period, which represents a gross margin of approximately 15% on a non GAAP basis for the reported period as compared to a gross profit margin of 22% on a non GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $2,600,000 with a gross profit of 400,000 on a GAAP basis, as compared to revenue of $2,400,000 with a gross profit of $300,000 on a GAAP basis in the comparable period, which represents a gross profit margin of approximately 17% on a GAAP basis for the reported period, as compared to 14% on a GAAP basis in the comparable period. Non GAAP gross profit of the company's teleradiology services for the reported period was $1,000,000 as compared to $900,000 in the comparable period, which represents a gross profit margin of approximately 39% on a non GAAP basis for the reported period, as compared to 37% on a non GAAP basis in the comparable period. The increase in the company's revenue and gross profit margin from the teleradiology services was mainly attributable to customer retention, increased rate and increased volume of the company's reading services during the weekdays shift.

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

During the reported period, the company generated revenues through the sale and deployment of its imaging systems and OEM services, which amounted to $33,000 for the reported period with a gross loss of $1,600,000 on a GAAP basis and $1,500,000 on a non GAAP basis, compared to revenue of $47,000 with a gross loss of $400,000 on a GAAP basis and $300,000 on a non GAAP basis in the comparable period. The company's revenue from AI solutions for the reported period was $200,000 with a gross loss of $1,900,000 on a GAAP basis compared to a revenue of $100,000 with a gross loss of $2,000,000 in the comparable period. Non GAAP gross loss of the company's AI solutions for the reported period was $100,000 compared to a gross profit of $29,000 in the comparable period. Research and development expenses net for the reported period were $5,000,000 compared to $5,200,000 in the comparable period, reflecting the decrease of $200,000 The decrease was mainly due to a decrease of $200,000 in share based compensation and a decrease of $800,000 in expenses related to our research and development activities, which were offset by a decrease $800,000 in grants received due to the completion of the NHS X project and the commencement of its commercial phase.

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

Sales and marketing expenses for the reported period were $900,000 compared to $800,000 in the comparable period. General and administrative expenses for the reported period were $5,100,000 compared to $5,000,000 in the comparable period. The increase of $100,000 was mainly due to an increase of $200,000 in salaries and wages, an increase of $200,000 in our IT expenses and $200,000 in our recruiting expenses through our commercialization efforts in The U. S. Market.

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

The increase was offset by a decrease of $500,000 in our legal expenses and a decrease of $200,000 in our D and O insurance expenses. Turning to our balance sheet. As of 03/31/2025, we had cash, cash equivalents, restricted deposits and marketable securities of approximately $72,900,000 and we had $3,100,000 in short term loan from a bank. We ended the quarter with a property and equipment net of $45,300,000 As of 03/31/2025 and 12/31/2024, we had approximately 63,800,000.0 shares outstanding. With that, I will hand the call back over to Erez.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Thank you, Ron. To close our call, I would like to extend our appreciation for your continued support of Nanos. We understand that our investors are key to the journey that Nanox is undertaking to transform medical imaging. Like many companies over the past several years, we have experienced challenges. But our belief in the Nanox vision, as well as the support of our investors encourage us to keep pushing ahead.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

We are making steady progress commercializing the Nanox R and Nanox AI utilizing multiple different initiatives. Now, teleradiology business continue to provide a revenue base to help fund our continued growth. We are also doing much work behind the scenes to support our commercialization through clinical data generation, securing more regulatory clearances and marketing campaigns designed to raise awareness of the NanoX end to end solution. We are advancing our clinical trials with promising initial results. We continue to increase the number of our commercial collaborations, and we are working with our growing customer base to help them integrate the Nanooks Arc into their practices.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

In closing, we remain committed to making medical imaging more accessible and improving patient outcomes through innovative technologies and strategic collaborations. We thank you for joining us today and look forward to providing additional updates on our next call. Operator, please open the call for questions.

Operator

Certainly. As a reminder, to ask a question, please press 11 on your telephone and wait for your name to be announced. And our first question will be coming from Jeffrey Cohen of Ladenburg Thalmann and Company. Your line is open.

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

Good morning, and Rand. Thanks for taking our questions. I wondered, Erez, if you could talk about the fleet by the end of the year where you're speaking of 100 units. Could you give us a sense or flavor for geographies at which point you anticipate placements to occur during this year or already placed? Thank you.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Okay.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Still, the majority of the units will be in The US. Based on the progress of the regulation approvals in the countries that we are planning to place ARCs in Europe, it seems that, I would say maybe 15 or or 20% will be in Europe. And and I would say Israel and other probably 10% will be, in other places like Israel, like Africa, like Latin America. It all depends on the progress of the, ability to, speed up the regulation approvals and the imports license in the various countries we operate. So that's, and of course, the other thing which is very important is how fast are we going to be able to install the system that we currently have in the orders, agreements that were signed, the projects that we mentioned.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

In a nutshell, I would say that this is a very important element of what I was trying to deliver in this earnings, that the feeling of the building blocks of our future, short term future in terms of the ability to generate, the ARCs that are going to be installed from the sales team, from the campaigns that we are leading, one of them, each one of these campaigns generate about 1,000 leads and we're starting the process to implement them. The workers' comp portion, the business partners that we work with, and of course, the Europe and the rest of the world that that we do the these installation. But in a nutshell, it's what I gave you.

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

Got it. And then as a follow-up, could you talk a little more about the USA RAD second opinion services? Is there a particular list price for that service? And is it being reimbursed by the payers out there? Any, further color would be appreciated. Thank you.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Okay. You and Sirodh, we are, lately, we have achieved, I would say, some peaks or high numbers in terms of the weekly revenues, which are being generated or scans that, they are, reading. In addition, the, it seems that the, what we were trying to do, and we have been amazingly successful in implementing the end to end solution where USERAD are doing a lot of the readings, of the, places that we are installing the ARCs. So we are generated from the same unit and the same scan, more revenues to the company. In addition, the workers' comp is going to be based, initially, or to begin with, at least, based on your several radiologists that are going to read.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Last but not least is what you have asked, is the second opinion. Second opinion is about $300 It's mostly private. It's growing, business. And, yeah, so that's It's

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

a retail model.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Yeah, it's more of a retail model. By the way, in addition, you know, by the same token, I would say that it's interesting to see that the part of the increase in revenues or business that we're doing is what we call the B2B2C. So we are serving someone who is serving the consumer or the retail, and this is what we do with ESRA. In ESRA, for example, every reading is about $75 right now, and if we do more applications of AI other than the CCS, it's going to increase above the $100 per scan. As you remember, the workers' comp I mentioned around one.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

And so basically, it's it's growing this part of the business.

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

Perfect. Thanks for taking our questions. Good quarter.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Thank you.

Operator

And one moment for our next question. Our next question comes from Ross Osborne of Cantor Fitzgerald. Your line is open, Ross.

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

Hey, guys. Thanks for taking our questions. So starting off, you mentioned 60 units in various stages of deployment. How many of these were placed, approved and operating in The U. S?

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

And why have we not seen the associated inflection revenue based upon those units being used?

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

So I'll start with the first number. Right now, to your reference of the question, it's more than 20, as some of them are being installed as we speak. Some of them are installed, waiting for approval from regulation or physicists or the building or the city or the state, I think we passed most of the approvals. This is with respect to the numbers. Randy, would you like to address the revenues?

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

Yes. You have to bear in mind that since from the time that as our SSR, from the time that we deploy the machine until we generate revenue, there's a few phases that we need to go through with the machine. First of all, it's the registration with the state and all kinds of other permits. Sometimes there's a setup to be made, and more importantly, it's all the process with getting the approved EOB for the procedure itself. But once we get the EOB that we've seen in certain places, then the number of the scans increased, and then the revenue generation is falling down.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

The interesting part there, Ross, is that we have indeed mentioned the average of the seven scans per an operating day, which was the base of the model. But definitely, would say that we can see that in the segment of the market that we are putting the systems in a multi specialty medical centers, we can see days with 11 scans per day, even days with 17 scans per day. The workers' comp probably will generate more than seven scans per day. So the ramp up takes time and although there is a CPT code and all of this, the reimbursement and the EOB sometimes takes time and the increase the revenue following after.

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

Yeah, but once we get the EOB, we do see a mining inflection point where the operator increased significantly the number of the skin.

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

Understood. Appreciate the color there. And then moving down the p and l to gross margin, how should we be thinking about you guys getting to a breakeven point or turning positive between your three business lines?

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

Okay. So so if if you look if you look at the twentieth, so you can see that our teleradiology and I'm talking about on a non GAAP basis because you have to if you look at the face of the P and L, so you look at the measurement, you look at the numbers on a GAAP basis, and there's all kinds of amortization of intangible and share based compensation and all kinds items that we actually adding back when we talk about the non GAAP basis. But even when we talk about non GAAP basis, you can see that our teleradiology division is already profitable, and the gross profit margin starts between 36%, thirty seven % to 41%, forty two %. The AI business should be with the higher gross profit margin, And the ARC division will be somewhere between. Of course, once we'll transition from to the ARCICs, where we have the glass tube rather the ceramic tube, then you should expect our, our gross profit margins to increase order, since as you know, the cost of the machine of the architects is much lower.

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

Thanks for taking our question.

Operator

Thank you. And our next question will be coming from Scott Henry of AGP. Scott, your line is open.

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

Thank you. Good morning or afternoon, depending where one is. It seems to me in the quarter that a lot of really strong technological progress, and people that have the machines are using it. But the quarterly placement level of 10 to 15 per quarter, it's going to take a while to get to breakeven. How should we think about when there may be an inflection point to get to higher placements per quarter? Thank you.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

I would like to answer your question and by the same token to also to refer to the tale of Ross' Ross question. Okay? Under all the fact that, you know, the safe harbor and the uncertainties in the market and all the results that what is happening right now in the markets, etcetera. We are indicating expectations that US Surab is making money right now. The AI is going to break even.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

Our AI business is going to be break even next year, 2026. And ARG business are going to break even in 2027. So, that's actually right now the plan, and that's the these are the indications that we expect. We work hard in order to be there. In terms of the, you like the word inflection point, I would say that inflections point will be probably the second half of twenty twenty five, where we are going to see a lot of the results.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

You're right that there are a lot of progress in the technology in this quarter. But if you notice, we made progress in the ARC, we made progress with the AI customers and revenues. We made progress with the second opinion. We made progress with the teleradiology. We made progress with the clinical, efforts and clinical education and, brand awareness.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

We have made progress with regulatory. We've made progress with cooperation, with new market segments, with the OEM business, with the implementation of the end to end solution, and also with what we call the cost of the product. So I think that what this quarter actually shows, first of all, that we are delivering what we promise. But second, we are making progress all the time. Yet, we are saying getting a medical, a new medical equipment to the market is not an easy one.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

And getting, something which is, as you all write, disruptive, changing the standard of care is not an easy one. It requires a lot of education, a lot of efforts in terms of the clinical support, but that's what we are doing. And that's the reason why we have indicated that in the RSNA this year, we're going to present the new product that we're going to install the ARC AI or the solution of the AI to the ARC that is going to be built in in the system. The fact that the ARC is going to do, two d, X-ray as well, built in in the system and a lot of other goodies, which are part of the, ARC X.

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

Okay, great. Thank you. A lot in that answer. I appreciate that. If I could just double click on one thing you mentioned.

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

You said ARK business potentially profitable or cash flow breakeven in 2027. Would should we be thinking about of at a quarterly run rate exiting 2027 as breakeven? And I don't know if you want to answer this question or not, but could you give us a sense of what kind of revenue run rate it would take to breakeven? We could do the math ourselves, but I thought I would ask. Thank

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

you for taking the So it depends on the mixture of the revenue. And this is not really a formal guidance, but we previously, you know, we have spoken, we gave some unit numbers of 1,500 to 2,000 units that's been deployed in order to get to a breakeven point. And of course, if we get more attraction from the televariability business rather than AI and AR, so it comes with low gross margin, but we will get more from the hardware and the AI, and we'll see more growth over there, then the breakeven point will be even faster, just because it comes with the higher gross profit margin.

Erez Meltzer
Erez Meltzer
CEO & Acting Chairman of the Board at Nano-X Imaging

It really depends on the mix between the CapEx sales, hybrid sales, and the MSA sales, which right now, I don't think that we are in a position to indicate the mix between these three elements. But the more we get into getting more experience in the market and starting to penetrate to the European market, as well as the Latin America market, I think that we will be able to shed some more light and just to give some more guidance with respect to what will be the mix of these type of sales. But it definitely depends on mix.

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

Okay, great. Thank you for taking the questions.

Operator

Thank you. And I'm showing no further questions. This will conclude today's conference call. You for participating. You may now disconnect.

Executives
    • Erez Meltzer
      Erez Meltzer
      CEO & Acting Chairman of the Board
    • Ran Daniel
      Ran Daniel
      Chief Financial Officer
Analysts
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Key Takeaways

  • Nanox is executing an end-to-end medical imaging solution by integrating its ARC hardware with the teleradiology business (USERAD) and AI arm (Zebra/Nanox AI), and has doubled USERAD revenues since acquisition.
  • Commercial traction accelerated with 60 Nanox ARC units in deployment stages, a sales pipeline that has more than doubled to over 1,000 leads, and a target of over 100 systems installed by year-end across the US, EU (CE-marked) and other markets.
  • Nanox AI moved from pre-revenue to generating $200K in Q1, with strong trial data, academic and commercial partnerships (e.g., ESRA AI, Oxford NHS, Duke) and an expanding pipeline expected to reach break-even in 2026.
  • Q1 GAAP net loss rose to $13.2 M versus $12.2 M a year ago, with a non-GAAP gross loss of $0.4 M (versus a $0.6 M profit prior year), as hardware and AI segments remain loss-making despite USERAD’s profitability.
  • The company ended Q1 with approximately $72.9 M in cash, cash equivalents and marketable securities, providing runway for ongoing R&D, regulatory clearances (including FDA 510(k) for Nanox Arc X) and commercialization efforts.
AI Generated. May Contain Errors.
Earnings Conference Call
Nano-X Imaging Q1 2025
00:00 / 00:00

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