Nano-X Imaging Ltd. (NNOX) Q4 2024 Earnings Call: Full Transcript Revealed

Nano-X Imaging Ltd. (NASDAQ: NNOX Q4 2024 Earnings Call Transcript from March 31, 2025

Nano-X Imaging Ltd.'s reported earnings match market expectations. The company posted an EPS of $-0.23, which aligns exactly with what analysts had anticipated.

Operator: Good morning and thank you for joining us. This is the Nano-X Q4 2024 Earnings Call. Currently, all attendees are in listen-only mode. Following the presentation, we'll have a question-and-answer session. [Operator Instructions]. Today’s call is being recorded. Now, let me turn things over to Mike Cavanaugh from Investor Relations. Over to you, sir.

Mike Cavanaugh: Good morning, and thanks for being with us today. Nano-X Imaging Limited has just published their financial outcomes for the period ending December 31, 2024. You can find these details now within the Investor area of their official site. Joining us presently are Erez Meltzer, who serves both as CEO and interim Chairperson; along with Ran Daniel, CFO. Prior to beginning our discussion, please remember that representatives from management might make projections ahead concerning corporate fiscal performance, R&D efforts, production capabilities, marketing endeavors, supervisory procedures, and medical ventures throughout this conference call. Such forecasts could vary due to inherent uncertainties tied closely to present managerial outlooks and aren’t guaranteed updates going forward.

As a result, these statements ought not to be taken as reflections of the company’s perspectives after their issuance date. Various factors could lead to discrepancies from what was stated, including—but not restricted to—those detailed in the company's submissions to the Securities and Exchange Commission. Additionally, we'll utilize specific non-GAAP financial metrics to offer further insights to investors. The conversion between non-GAAP and GAAP measurements can be found alongside our press release; notable distinctions encompass non-GAAP net loss attributed to common stockholders, non-GAAP costs associated with revenues, non-GAAP gross profits, non-GAAP gross margins, non-GAAP expenditures for research and development, non-GAAP spending on sales and marketing, non-GAAP overheads related to general administration, along with non-GAAP losses per share.

With that, I would now like to hand the call over to Erez Meltzer.

Erez Meltzer: Mike, thank you for participating in our financial results discussion today. We truly value your ongoing support of Nano-X. Throughout this meeting, I’ll be using my prepared statements to share key updates about operations since our previous briefing in November. Following me, Ran will go over the financial details before we wrap up with a brief Q&A segment. Since our last conversation, theNano-X team secured two important regulatory milestones. First, we received broad-use approval from the FDA back in December. Shortly after that, in February 2025, we learned that theCE marking had also been awarded forNanox.ARC. These recognitions aside, the final months of 2024 and early 2025 have marked substantial strides forward both strategically and operationally at Nano-X as we push boundaries within the realm of medical imagery through cutting-edge innovations.

In my upcoming comments, I'll address various subjects broadly. Within the crucial U.S. marketplace, we're continuing to push forward with deploying the Nanox.ARC systems. Feedback from initial clients using the Nanox.ARC has been favorable, and simultaneously, we've secured contracts with fresh distribution allies; negotiations for more such partnerships are ongoing at this moment. Such accords should boost our visibility in the market swiftly. Additionally, we’re initiating steps toward entering the European arena following receipt of the necessary CE certification, whereupon I’ll delve deeply into these developments alongside advancements beyond America’s borders. Our efforts regarding [Nanox.8 IT] persistently move ahead as we welcome further consumers aboard. To conclude my discussion points, updates shall be provided concerning both our original equipment manufacturer collaborations and our clinical studies aimed at fortifying evidence backing the application of Nanox.ARC tech within diversified medical service contexts.

Let’s get started then. As mentioned earlier, we hit a crucial regulatory mark when we obtained the SBA general use approval back in December. This 510(k) clearance covers broad applications such as conditions affecting the human musculoskeletal system, lungs, abdominal area, and sinuses—supplementing traditional x-ray methods. We think this will boost our market presence since it confirms and expands potential uses for our Nanox.ARC technology. Moving forward with discussions at the FDA regarding our Nanox.ARC systems, we've filed for additional clearance specifically for the Nanox.ARC X model, enriching our range of products. Compared to current models, the upcoming Nanox.ARC X will feature a more compact design—a standout advantage. Additionally, setting up this new device should be straightforward; expect installation within just a day along with user-friendly plug-and-play capabilities.

Excitingly, we recently announced that we obtained the CE-mark certification for marketing the multi-source Nanox.ARC system along with the Nanox.CLOUD, which serves as our company’s cloud-based platform. Achieving the CE mark has been essential for entering the European market with our equipment. Keeping this objective in focus, we maintained intense concentration on meeting investor expectations by ensuring all efforts contributed positively towards successfully navigating this critical approval phase. Happily, we achieved this milestone, viewing it as further confirmation of the potential impact of our innovative technology. Additionally, because standards of care vary across regions, obtaining the CE-mark enables us to promote the Nanox.ARC in Europe independently without needing supplementary applications.

Our main priority continues to be speeding up the rollout of Nanox.ARC and our AI technologies within the United States. Similar to what was discussed earlier, we've meticulously grown our U.S.-based commercial workforce to guarantee that we possess adequate resources such as sales teams, clinical educators, and support structures essential for driving this expansion in America. A crucial aspect of our approach here—and similarly planned for additional markets—is educating prospective customers along with influential figures in radiology about these innovations. Thus, fostering knowledge and heightening public understanding play pivotal roles in our promotional strategies as we broaden our network of leading voices in medicine and bolster proof of increased clinical benefits. Currently, several dozen units are at varying points during transportation or installation phases throughout multiple American states for purposes related to commerce and patient care.

Our focus is on broadening our network through strategic collaborations, channel partnerships, and increasing our clientele. To date, we have extended our commercial reach into an additional state: Tennessee. Among the units deployed, at one of the multispecialty clinics, we perform approximately ten scans daily, with twenty percent being chest scans. The Nanox.ARC pipeline continues to be strong, and we aim to target several hundred clients moving forward. We are actively hiring to grow both our sales and clinical support teams within the U.S., as this growth is essential for supporting our burgeoning customer base and ensuring smooth deployments of our technology. There’s considerable enthusiasm among potential new customers and existing ones along with various medical institutions.

Bringing fresh technological advancements into the traditionally cautious U.S. marketplace poses considerable challenges. Nonetheless, we've witnessed growth among our initial adopters who have purchased and utilize the ARC system. Consequently, this has led to more recommendations, examinations, and expanded applications. While pursuing various routes for broader adoption, we’ve achieved notable progress in forming robust distribution alliances. Partnering with prominent firms within the durable medical equipment sector is strategically sound since they enjoy credibility with medical imaging clients and can swiftly expand our market reach. Recently, we connected with Advanced Southern Medical Imaging—ASI—which operates out of Georgia. This partnership aims at facilitating the rollout of the Nanox.ARC technology across the South, thereby enhancing our regional footprint significantly.

Furthermore, we are engaged in advanced talks with additional channel partners, and I’ll keep everyone updated during our upcoming discussions. Now, let’s shift our attention towards our plan for breaking into the European market. You’re aware that we received excellent news about the recent approval of the Nanox.ARC receiving the CE mark, thereby broadening our potential customer base significantly. The regulatory team deserves credit for their extensive efforts to achieve this milestone, further underscoring the robustness of our technology. This accomplishment opens doors to entering an expansive and critical marketplace—a key objective for us as a business. Achieving this marks a crucial step in our international growth initiatives and reinforces the positive trajectory established following several successful FDA approvals.

This certification for whole-body imaging in Europe, along with our current facilities and continued search for strategic alliances, will help speed up the commercial launch of Nanox.ARC throughout the area. Shortly following our announcement about receiving the CE mark, we showcased evidence demonstrating the capabilities of Nanox.ARC at the recent 2025 European Congress of Radiology, known as the ECR, held in Vienna, Austria. The conference featured findings from three distinct studies. For more comprehensive information regarding these research presentations, visit our website. We are proud of our extensive clinical endeavors aimed at producing supportive data for Nanox.ARC usage. Recognizing that integrating innovative technologies like ours into the healthcare sector demands substantial data collection, rigorous clinical verification, and educational initiatives, we remain committed to these processes.

Although we're introducing a significant new asset to the field of radiology, Nanox must prove why healthcare facilities like hospitals and imaging centers should integrate this fresh tech. Ensuring alignment between clinical demands and developmental initiatives alongside medical professionals allows us to confirm that our advancements aren’t just cutting-edge but pertinent and apparent to those benefiting from them. With aging populations driving up demand for medical imagery in tandem, there’s growing necessity for readily available sophisticated imaging options throughout different treatment environments. The Nanox.ARC seems well-suited for these circumstances since fundamentally, it provides state-of-the-art medical imaging at greater accessibility and lower costs. Our forecast indicates that early sales within the European Union will predominantly occur via Capital Expenditure models, implying direct purchases without additional fees tied to each scan conducted.

Nonetheless, extra income will come from service contracts and Nanox.CLOUD’s connectivity. Additionally, we plan to promote our expanding array of AI solutions and teleradiology services within our client base. Currently, we expect that our primary approach for sales in the European Union will involve indirect methods via distributors. As outlined earlier, we’ve assembled a varied collection of distribution partners across different regions and intend to continue doing so as we expand into Europe. Now that we hold the CE marking, we’re moving swiftly; we’ve already secured new distribution deals for Nanox.ARC in Romania and Greece, serving as further gateways into these markets. Furthermore, we're actively negotiating more distribution agreements with various nations throughout the EU.

Although the U.S. market remains central, Europe is set to become even more prominent in 2025 as we ramp up our commercial initiatives and bolster our specialized sales force. This expansion also includes continued advancement into additional global markets where securing regional regulatory clearances continues to be key. In terms of advancements in artificial intelligence commerce, our Nanox.AI image analysis software has gained momentum. Recently, we welcomed two fresh clients from the American continent; notably, one is among the biggest independent radiology service suppliers in America—Find App under HealthOST. Their setup will integrate the Nanox.AI diagnostic support system via the Blackford Platform Marketplace. Emphasizing the significance of this collaboration, following earlier triumphs in Britain, this achievement signifies our initial substantial breakthrough in the U.S. through HealthOST’s network within imaging facilities. It stands out not only for Nanox.AI but equally so for Blackford—an innovative corporate AI developer—which provides every Nanox.AI solution such as HealthOST globally across health services sectors.

We have completed the partnership between Nanox.AI and Ezra, a healthcare AI firm, aiming to transform early disease detection via advanced CT-Scan technologies. According to the agreement, the Nanox.AI Population Health Solution will be incorporated into Ezra’s diagnostic procedures at 28 imaging centers nationwide, where they use AI-driven full-body MRIs and CTs scans to detect cancers and critical health issues during their initial phases when treatment can be highly effective. This connection with Ezra holds particular significance because it allows us access to the broader consumer healthcare sector through our collaborator. Nowadays, individuals possess greater knowledge about health matters, and advancements in tech empower them to take charge of various elements within their own care processes.

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Against this background, we recognize a growing chance to offer imaging and early detection services to consumers as part of their regular health routines. As technological costs typically decline over time, proactive scans could become crucial for sustaining a healthy life in the future. Our ongoing exploration aims at using our AI capabilities to enhance access to timely diagnoses and preventative care. We continually seek new collaborations across various customer segments and global sectors. The potential offered by our Nanox.AI solutions is truly exciting. To conclude regarding Nanox.AI, I'll mention that our number of AI customers and pilot projects has risen by 25%.

As previously stated, we're working on a pulmonary solution that aims to become the initial AI application tailored explicitly for the Nanox.ARC system. The identification of this necessity underscores the urgent requirement for a tomosynthesis AI solution to cater to the escalating demands for cancer-screening programs within the European Union. Such initiatives necessitate quicker responses from radiographers and radiologists due to higher reading volumes. Our Nanox.ARC solution seeks to address these needs effectively by enhancing imaging capabilities. Additionally, collaborating closely with our original equipment manufacturer (OEM) partners remains crucial to ensure access to all essential components required to fulfill the rising demand for Nanox.ARC systems. Lastly, I wish to offer an update regarding the advanced technology development center established at our corporate office, aimed at propelling technological advancements forward towards meeting future requirements.

Beyond inexpensive and adorable assessments, this facility features a robotics lab. In the near future, we plan to leverage this lab for multi-source application development. This method entails positioning multiple emitters within a singular container equipped with operational pumps to maintain ideal conditions for emissions. Advantages of adopting a multi-source strategy encompass reduced image acquisition time, smaller system dimensions, simplified weight management complexities, and increased flexibility in imaging techniques. By integrating a multi-source setup onto our robot and adjusting its position accordingly, we aim to effortlessly model and fine-tune numerous imaging configurations. Our objective is to develop superior solutions tailored specifically for medical diagnostics and industrial examination purposes.

This will serve as a crucial resource in advancing further sophisticated tomosynthesis techniques and possibly developing static CT systems. Previously mentioned, tube-based chip systems have been constructed and thoroughly tested; we anticipate achieving preliminary sub-production grade chips within this quarter according to plan. This underscores the commitment of the Nanox.ARC team toward locking down manufacturing contracts ensuring sufficient availability of the Nanox.ARC system to satisfy projected demand. Regarding one significant Original Equipment Manufacturer partner, Varex continues with preparations for launching production even as we move forward with integrating at the system level and conducting pre-FDA submission tests on components destined for use in the Nanox.ARC setup. Additionally, Varec is involved in crafting multi-source units employing the previously referenced Nano-X emitters which they intend to incorporate into certain test models of our applications development robotics prototypes.

Furthermore, a prominent international supplier of medical and diagnostic solutions has created the initial prototype tubes featuring the Nano-X emitter. Our collaboration with them remains strong, and we've provided a Nanox.ARC demonstration kit to act as a platform for evaluating these developing prototypes. As we move forward, we plan to carefully yet proactively forge alliances with cathode tube producers and X-ray service companies since their involvement is crucial for overcoming challenges related to proprietary tech in the marketplace. Regarding our initiative aimed at enhancing U.S. government security applications, the team has accomplished building components, assembling systems, and conducting tests. They are now advancing towards finalizing two distinct tube models for further prototyping stages. It brings us satisfaction knowing that our demo kits—including emitters, tubes, high-voltage power supplies, and software—are facilitating easier access to experiencing our innovations among prospective customers and collaborators alike.

To summarize, we are actively cultivating strategic Original Equipment Manufacturer (OEM) collaborations aimed at strengthening our Nanox.ARC supply chain and broadening market access. Our efforts include augmenting resources dedicated to OEM business development and expanding our pipeline of prospective opportunities, updates on which will be provided when suitable. Concluding my formal comments, I’ll share an overview of our recent clinical endeavors, intended to offer additional verification and explore new applications for Nanox.ARC technology. Earlier this year, during the European Congress of Radiology (ECR), held in February, Nano-X achieved notable success. Most recently, members of our Independent Review Committee (IRC)—a group comprising several radiologists—have validated that Nanox.ARC’s digital tomosynthesis (DTS) offers enhanced clarity and greater diagnostic utility compared to traditional X-rays.

Every specialist separately examined more than 80 DTS studies, highlighting excellent picture clarity and proficiency in identifying abnormalities along with negligible training requirements. This reinforces DTS as a sophisticated diagnostic tool. Our Nanox.ARC clinical study is progressing smoothly. The Nanox.ARC multicenter trial keeps moving forward at the UGMC and Wellington Medical Centre, and negotiations are underway with leading medical facilities in two European cities to include them in our multilocation test. So far, we've registered over 100 participants across these clinical trials. Overall, we're making considerable headway in rolling out our cutting-edge imaging technologies, broadening our market reach, and achieving key clinical and regulatory benchmarks. We stay dedicated to delivering better healthcare services and enhancing global patient care outcomes.

At this point, I'd like to hand the call over to Ran to go through our financial overview.

Ran Daniel: Thank you, Erez. For the fourth quarter of 2023, we reported a GAAP net loss of $14.1 million, as opposed to a net loss of $10.2 million during the same quarter last year. This rise can primarily be attributed to a $1.2 million increase in gross losses and a $2.7 million hike in other expenses. Notably, this change includes a one-time income of $3 million recognized in the prior-year period when the firm received funds from its directors' and officers' liability insurer following the resolution of related litigation. In terms of revenue, our latest reporting shows $3.0 million, alongside a gross loss of $2.9 million based on GAAP standards.

For the corresponding period, revenues stood at $2.4 million, resulting in a gross loss of $1.7 million under Generally Accepted Accounting Principles (GAAP). On a non-GAAP basis, however, the gross loss for this reporting period amounted to only $0.3 million, contrasting sharply with a gross profit of $0.9 million during the same quarter last year; this equates to an approximate gross loss margin of 9% based on non-GAAP metrics for the current term versus a 36% gross profit margin using similar criteria previously. Regarding tele-radiology service earnings over the recent timeframe, they reached $2.8 million accompanied by a GAAP-based gross profit totaling $0.6 million, marking significant progress against figures from one year ago where income hit $2.3 million alongside a smaller gross gain of just $0.3 million on a GAAP foundation—thus indicating respective margins of roughly 21%, up from about 14%.

Non-GAAP gross profit for the company's teleradiology services for the reported period was $1.1 million, as compared to $0.9 million in the comparable period, which represents the gross profit margins of approximately 41% on a non-GAAP basis for the reported period, and as compared to 38% on the non-GAAP basis in the comparable period. The increase in the company's revenue and gross profit margins from the Teleradiology Services was mainly attributable to customer retention, increased rates, and increased volume of the company's bidding services during the weekday shift. During the reported period, the company generated revenue through the sale and deployment of its imaging system, which amounted to $136,000 for the reported period, with a gross loss of $1.5 million on a GAAP basis and $1.4 million on a non-GAAP basis, compared to revenue of $17,000 with a gross loss of $44,000 from a GAAP and non-GAAP basis in the comparable period.

The rise in revenue primarily comes from selling and deploying our 2D systems as well as the sale of our OEM project within the U.S. For the reviewed timeframe, the firm’s income generated through AI solutions stood at $83,000, showing a gross deficit of $2.0 million under Generally Accepted Accounting Principles (GAAP), which mirrors the figures from the corresponding prior period where they also had revenues totaling $84,000 alongside an identical gross shortfall amounting to $2.0 million. On a non-GAAP basis, however, during this reporting term, the company managed a modest non-GAAP gross gain of just $6,000 contrasted against $21,000 recorded over the same duration last year. Expenses allocated towards research and development came down to $5.4 million throughout this interval versus $6.8 million previously; marking a reduction of $1.4 million overall. This decline can largely be attributed to lower costs associated with staff pay ($0.2 million less) along with reduced share-based remuneration fees ($0.5 million lesser). Additionally, expenditures linked directly to R&D pursuits decreased significantly by another $0.7 million.

For the reporting period, sales and marketing expenditures amounted to $0.9 million, as opposed to $1.0 million in the corresponding prior period. In terms of general and administrative costs, they reached $5.8 million for the current period versus $3.8 million previously. This additional expense of $2.0 million primarily stemmed from a rise of $1.7 million in legal fees because last year’s figure included a reduction of similar magnitude following receipt of funds totaling $2 million from the firm’s directors and officers’ liability insurance provider. Regarding our financial position at the end of December 31, 2024, total liquidity stood at around $83.5 million when combining cash, short-term investments, and restricted deposits; this sum also incorporated a further $3.9 million provided through a banking facility.

At the end of the quarter, our net property and equipment stood at $45.4 million. By December 31, 2024, we had around 63.8 million shares outstanding. This compares to roughly 57.8 million shares as of December 31, 2023. Under the Controlled Equity Offering Sales Agreement signed with both agents on June 7, 2024, the firm has the option to issue and offload common stock worth up to $100 million periodically via these agents based on the terms outlined in the agreement. These agents will receive remuneration equivalent to 2.5% of the total gross revenue generated from every sale of the common stocks. Over this reporting interval, the corporation released about 5 million standard shares for a gross income totaling $38.8 million and a net consideration amounting to $37.8 million according to the provisions laid out in the sales pact.

In addition, during 2024, around 1 million share options were exercised for ordinary shares with a total value of about $1.7 million. This includes 706,000 options exercised by the state as part of the late company’s Chairman of the Board compensation worth approximately $1.6 million. Now, let me return the floor to Erez.

Erez Meltzer: Thank you, Ran. In closing my prepared comments, I would like to express my gratitude for your ongoing support of Nano-X. Over this period, our team has successfully delivered on several key commitments related to advancements in AI technology, as well as progressions in both regulatory and clinical areas. At the start of 2025, we made significant strides toward U.S. commercialization and also expanded into a new European market. It gives me great pride to highlight our successful attainment of FDA general-use clearance along with receiving the recent CE mark approval for the Nanox.ARC system. During this time, we secured additional placements, signed various distribution deals, and welcomed numerous new clients using the Nanox.AI platform. Our strategy regarding regulatory goals and business expansion, which includes carefully planned site activations followed by incremental scalability measures, demonstrates a focused pathway towards enduring development. I am very pleased with these achievements thus far and eagerly anticipate discussing further accomplishments during our Q1 2025 investor conference. Once more, thanks to everyone who joined us here today. Operator, could you now proceed to take questions from participants?

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