Nano-X Imaging Ltd. Q4 FY2024 earnings call

• Regulatory Successes: Achieved FDA general use clearance in December and CE Mark for Nanox.ARC in February 2025.
• U.S. Market: Deployed several Nanox.ARC systems across multiple states, added Tennessee to commercial coverage, and signed new channel partners. Targeting hundreds of clients and expanding sales/clinical support team.
• European Market: Obtained CE Mark, signed distribution agreements in Romania and Greece, and presented data at the European Congress of Radiology (ECR).
• AI Commercialization: Engaged with new customers, AI customer and pilot-based projects increased by 25%, and collaborating with Ezra for early detection.
• OEM Partnerships: Working with partners like Varex and others on tube and module development, and advancing U.S. government security application project.
• Clinical Activities: Clinical trials advancing, independent review confirmed Nanox.ARC's digital tomosynthesis provides superior detail and clinical value.

Teleradiology services: Revenue for the reported period was $2.8 million with a GAAP gross profit of $0.6 million. Non-GAAP gross profit was $1.1 million, representing a gross profit margin of approximately 41% on a non-GAAP basis. Imaging systems: Revenue from the sale and deployment of imaging systems was $136,000 in the reported period with a GAAP gross loss of $1.5 million. AI solutions: Revenue was $83,000 with a GAAP gross loss of $2.0 million. Non-GAAP gross profit for AI solutions was $6,000.

• Management views 2025 as a strong year for AI.
• The Imaging Solutions line is expected to grow, but no specific timelines or guidance provided on inflection points.

Q: Could you expound 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? Or could DMEs place that under the imaging-only scenario?

A: 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 MSaaS, the typical MSaaS model that we currently have.

Q: Starting off, how many systems were deployed and operating in the U.S. during the quarter that resulted in $136,000 in system revenue?

A: 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. This is -- these are that are ready to be installed in the -- when the rooms are getting ready. We are adding states. We expect that the channel partners will add another value. 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.

Q: How should we think about pricing for ARC 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 and next?

A: 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. The show that we attended in Vienna was very successful. We have engaged with quite a lot new distributors that we will work with them. In the -- so right now, we have 3 salespeople, regional salespeople. 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 installations probably sometimes during the next 6 months or quarter or 2 quarters that we'll start to install systems and sell systems. In Europe, I would say that it will be -- probably a major part of it will be CapEx sales and a smaller part of it will be the [indiscernible] Q: 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.

A: What specifically are you referring to?

Q: Well, I guess if we go by category, it looks like Teva 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?

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

Q: And I won't ask for guidance. But just in terms of directionally in 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?

A: Well, as you remember, in the third quarter, we saw a one-time 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 -- may be translated into an increase in the revenue. But of course, we'll give better numbers when we publish the upcoming quarter results. But from a general perspective, we view 2025 as a strong year for AI.

Q: 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 2025 event or second half? Just trying to get a sense of when we should see that really kind of curve upwards.

A: Again, we don't provide any kind of 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 FDA. So that may be also an inflection point, once we get the clearance for that device. And I think as the time goes and we accumulate more experience and expanding our team and our effort 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 coming towards the inflection point.

Q: 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?

A: It's -- again, we don't provide any guidance. But you can look at our earnings release and analyze it and come to your own conclusion.

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

A: But again, we don't give any indication on any forward-looking actions that we may take. 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.