Earnings call transcript Q4 2022

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Operator

Good day, and welcome to the Nano-X Q4 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Mike Cavanaugh

currently afternoon Officer; and today, for us Earlier Officer, this Erez release for quarter of host Investors the will company's Ran thank Imaging Limited Daniel, you website. is The Nano-X XXXX. results Chief December joining on released the ended section Executive today. Meltzer, XX, Good call. available and its the Financial morning's financial Chief

during assumptions statements the I started, company's results, are relied updated not will date. would like call on everyone statements are representing remind be based expectations forward-looking management statements manufacturing research and should financial get to upon the as of and be commercialization as subject process that and management's Therefore, future. regarding making not These matters. activities, we other may to in statements risks, this development, company's be include that these regulatory that Before the subsequent and operations any as uncertainties views current of today and

may that to, include, filings but company's the and a cause the difference limited Securities in described Commission. with those Exchange are not such Factors

We will to additional measures non-GAAP also certain investors. to to financial information provide refer

sales with of attributable profit being margin, to measures reconciliation loss gross our marketing per gross and non-GAAP and diluted non-GAAP research non-GAAP non-GAAP primary and profit, non-GAAP ordinary GAAP expenses, administrative A expenses share. cost the non-GAAP press development shares, non-GAAP is non-GAAP with to provided release, general loss non-GAAP expenses, basic the differences net and of and revenue,

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

Erez Meltzer

today. joining for you Thank you, And thank us on Mike. the call all

to of the Ran a before a Daniel business previous session to by close. in will review calls, results over to As financial followed Q&A turning be call a for overview I our provide

alongside more efforts our first and move team our our year Nano-X, multiple into also a the year quarter of commercialization regulatory our a marked progress this which fronts, the full transformation and with pleased system had CEO as on as we year the Reporting US the mature my XXXX, in towards full Nanox.ARC forward on I'm organization. first of made Europe. of was

Nanox.ARC commercialization work market production Key new establishment commercial first deploying Africa, in facilities the the include additional the of and to in begin work the to collaborations.

year, put the forward. and company We efficiencies, organizational we initiatives will more established work a us During help the good a to processes, that cost-saving in position. our infrastructure business has create believe efficient that drive integrations

both priority our with start to Europe, for clearance are which regulatory and efforts I'll us. high the of obtain US in

announced Nanox.ARC submitted for notification As digital XX, September we of previously on XXXX, a XD our version FDA second multi-source system. premarket to tomosynthesis XXX(k) the the

address have As when additional the we manner past in questions and part few the weeks. continuous and during requested FDA providing dialogue any FDA, been with information timely the with provide to of valuation the in its continue the including process,

currently upgrading We with decision the and we continue engaged. Regulation, with body, Europe. Device the Nanox the the a comply requirements its will we On Medical to news, in in systems announce notified who it. is the final mark CE other regulatory perceive European once receive new to MDR previously Union processes of FDA

the regulation marking be and for the are determined the files high-volume from requests timeline the to and notified yet marking the bodies body. and are to of notified changes to CE EU due to MDD that understand, experiencing CE updating Therefore, process We technical by MDR.

Nigeria report our I'm the of last for Nanox.ARC demonstration to Nigeria purposes first commercialization to discuss and update our happy would now of and progress on and take to stories we system to minutes Ghana. training shipments I few call, Ghana. are aiming which in system, a begin Nanox.ARC our to of like first Since

licenses import University clearance. installment Limited, received and including pending Demo for Ghana one been of units in and In has UGMC, testing Medical the Nanox.ARC both for local the Ghana demo hospital is and use, installed purposes, unit clinical Nigeria. training of the which Nanox.ARC Ghana in and advanced the most in Center Ghana, have of largest regulatory

recently I attendance. UGMC. with was ARC representatives event distributor launch for by with Ghana organized was visited Learning of Radiology and Center division it the the local in team successful Particular our full

in to Both solution review system without undergoing Nuclear patient by take Nigeria, areas before and to is In of education currently needs. NNRA. will regulatory the to Regulatory as training rollout to Authority, and locations serve steps systems access we medical imaging the imaging medical and our commercial for Nanox.ARC installation the partners Nigerian is installments address process testing, the expect current

of West where first closing advanced the with goal many by in Africa, detection imaging improving first x-ray health communities line is care to Launching the the Imaging. steps increase conditions health vision for many and our imaging. These early medical Medical our medical like are to in toward equity by Nanox.ARC that discoverable gap of are access in

expert-led also ideas. health and first In and non-profit forming line Health, African professionals BIO we've education between seminar care on people, to training connections an program of near topics. and resources organization which issues for a series This efforts, its with by is these health train Global phase, completion to Ventures includes imaging the of Nigeria dedicated with partnership previously announced BVGH, launched solving global

like now provide few would updates regarding R&D to manufacturing. I and

will of now located different a in process the Korea our facilities and property with and around R&D that in knowledge world in of establishment the are will locations of center, serve Japan. the as We have in Israel consolidating goal we and facility intellectual which complement R&D

X-ray adequate additional goals the effectiveness enhancement entering in cost with based on and other manufacturers among an production of over our systems things, to for MEMs third-party chips into time. help facilitate process agreements tubes to ensure are meet and future We supply

Nanox the business, were Nanox which teleradiology to organization integrated of turning our course Now the AI XXXX. fully over and into

segments. USARAD conserve additional services help continue and value cash XXXX, Nanox these systems will generation November Nanox teleradiology deployment. we that in learning belief These system to continue important significant analytics revenues to revenue of and healthcare and integrated the and see acquisitions utility these to -- AI the to Following the business demonstrate support ARC fully add upon our services deep our complementary from

partnership. Reporting facilities use month, PowerShare Network, we very a excited collaboration now AI a solutions. company, and able we announced Nuance Imaging more Sharing will also Solution seamlessly Image between about Microsoft Last be US new PowerScribe Nanox healthcare a Precision of excess key I'm Nanox XX% than AI Radiology and XX,XXX radiologists, and a the Nuance to

Chief I the our review results. Financial With turn over like call financial to to Ran that, Officer, would to Daniel,

Ran Daniel

a of decrease related fourth acquisitions the with mainly XXXX to and in of increase reported due $XX.X mitigated which merger AI, which the We connection and with was settlement largely our obligation by in to Erez. net of the Nanox to GAAP expenses and Nanox administrative of development research due fourth quarter former expenses of and to an the acquisitions, a the you, loss for was loss with expenses related of the increase impairments XXXX, goodwill general in our in million AI. shareholders Thank net and $XX.X quarter compared million, increased

basis. is in of margin and GAAP gross basis XX% in XXXX profit of Revenues quarter quarter gross of a for the a on $X.X on profit profit the the not from same basis. quarter represents fourth in margin which in amount services were non-GAAP $X.X of gross of the profit revenue was GAAP a a $X.X fourth decrease the project to million Revenue the revenues $X.X $X.X a company's mainly non-GAAP did million gross recur was million loss monetization from approximately XXXX. on fourth on a and for period that The and the XXXX teleradiology data million of the basis, the gross with due million million $X.X of a

$X.X for the to million of Research development in the ARC comparable XXXX. quarter our due the development period and mainly and were and development CLOUD. as expenses to of million multi-source Nanox fourth was $X.X increase the expenses Nanox for The compared the in research XXXX

due XXXX million a of and were compared in $X.X the Sales and comparable to as expenses mainly share $X.X quarter our period XXXX. cost marketing for million labor was to for compensation. fourth based the decrease in The decrease of

expenses a mitigated decrease to administrative as company's legal Exchange litigation filed to due from quarter period compared X-K fourth $XX.X litigation XXXX described cost class SEC ended Commission. comparable X, of the largely XX-F $X.X our and for filings by was XX, Securities XXXX, the million, with million were the year the in today for subsequent filed and US XXXX, on Form labor and due action fees May the which decrease December in as company's to and and and the was for in compensation, General of XXXX. The share-based the

Turning to our balance sheet.

securities cash, cash cash are December had and of marketable XX, we XXXX, marketable of composed securities. which of of million, approximately cash, As long-term and and million from $XXX.X securities $XX.X equivalents $XX.X marketable million short-term equivalents

bank $X.X from Further, we million had as of XXXX. December loan XX,

of had December equipment $XX.X and net of approximately XXXX, As XX, we million. property

facility we our year, of Korea completed the in the During purchased be equipment and machinery the construction operations. in fabrication company's primarily to used

dated to XX.X X.X approximately mainly as of due increase outstanding, As of outstanding The December we compared XX, to XXXX. XXXX, December XX, million shares the additional could million shares issuance with of respect had was as shares be under settlement the that ordinary to merger agreement agreement shareholders granted Nanox.AI August X, XXXX. former million of the X.X under any a to amount

that, will back With over call to I hand Erez. the

Erez Meltzer

our XXXX productive and USARAD end-to-end Ran. XXXX. are commercializing the success, an and good regulatory our EU. for which Ghana We for year our work that we which toward was the US we integrated and imaging and to We components laid during successfully multiple are added made in in Nigeria. the believe a we good we acquisitions, in important future you, Nanox.ARC progress equally in our solutions, position anticipated a Nanox.AI advancing blocks importantly, Thank building

markets work to be and to FDA clearance Nanox.ARC has point, a in and to working this we to taken receive in Africa deploying excited lot first units get It the demonstration the our of are in US. of

with your management March the for be through and coming March meetings. City As New to always, we in I months. XX Nano-X forward engaging like XX mention York support investors from investor appreciate Nano-X would that in our the of will you to look team

Westwicke. contact at would ICR partner If meet us our Relations please like an you Investor there, to with

up open the questions. for call please Operator,

Operator

question Thank Instructions] with Ladenburg. will Jeff from Cohen line the come today's [Operator And of you.

line open. Your is

Jeff Cohen

and Ran. are How Erez Hi, you?

Erez Meltzer

okay. Thank We Jeff. are you,

Jeff Cohen

Great.

the talk Could could cetera? out you've know, there also, you some facilities about in singular. far et as And firstly, consolidation? been and on talk both facility consolidation the devices, you R&D I about the building facility manufacturing in as throughput Japan, Korea. MEMs, So have tubes, you

Erez Meltzer

course. of Yes,

that from I knowledge. as thought tubes you same all tubes all, Korea. the I in have developing we activities the same mentioned time, the we we are are in Korea. as it to Right tubes At we future, for we at last facility chips manufacturing therefore, future the First And especially now, and we in sources that, future and knowledge the think Europe. the the the of are what go and chips centralize other And for know, both is are in we the building time, call, and the the believe in and MEMs US we of the what of Israel. the center getting

semiconductors in will in and would products. be future we the [ph] have more hardware, about we future, from Rx we we since are the x-Ray who spoke MEMs, consolidated we develop as the hired expert will be more that as people products Israel. of there, will In well and in And are Everything hiring the already not – tubes. Israel. The basically part and plan that Israel we that to own our ensure have We advanced one explore on to in from to rely source all the and as have suppliers, mentioned like knowledge tubes to to subsidiary tubes, all in mentioned, but supplying and of various most will mentioned. be the as source and to this addition

Jeff Cohen

you that fourth conclude on that Got that the non-cash in in XX.X, cash quarter? a charge, the the And impairment hand does Okay. Ran, and took or case was the charge it.

Ran Daniel

And you is it find know, of No, as non-GAAP It's this non-cash adjustments, you non-GAAP – part a the X-K, is you'll non-GAAP. item. and our is the in see can the this schedule a charge. as of

Jeff Cohen

it. Got Okay.

Ran Daniel

A adjusted purposes. for GAAP non-GAAP item, sorry. It's

Jeff Cohen

and one units Got it. in territory Ghana, the Nigeria thus each it's far? in And

Erez Meltzer

getting mention, because more ago. the a are can in yes. other I thing, shipped two first that be process that and Ghana. territories organization, weeks will the it first system. with, of about Ghana in we operating a And is begin units The had medical medical to I was there opening, actually We was planned one hospital. are To or approvals. the to probably the the elaborate I

interesting that a right the us, sustainable quick. thing. now As system. you very installation part The can more for have was -- big or it's imagine we The was product

course, And with the a kinds with few bankers, with government the of in radiologists, of these organized hundred And with people clinicians, that distributor near already and of it we type with there. center launches was was was And financial financial, event training with type We people. have impressive. of by these the all from the started managers, or have to future. very hospital events people, very

a radiologists getting and part it's training there room So that physicians training of and the and is the education facility the are there.

Jeff Cohen

commentary outlook, general but read you as about as grow? could you -- it. look how then XXXX the there's us or business? any AI like far give doesn't it for Got some guidance And could or may out lastly talk And us,

Erez Meltze

the is, we the announced of Nuance. answer agreement so course, with First,

was think something weeks week, signed new two that. Only the it like I or agreements. ago last we two in

We the a have and and board, over full with that now we engaged us group the strategy the effort get strategic right a help with and steam to to team build have in ahead on full the on US also plans. action go-to-market ground

we So all full engines stream ahead. the -- are are

Jeff Cohen

Got it.

for Perfect. question. Thanks Okay. does the for taking That us.

Erez Meltze

you. Thank

Ran Daniel

you, Thank Jeff.

Operator

Thank moment line come you. for And of Cantor Osborn question. Ross with that Fitzgerald. next from One the our will

line is Your open.

Ross Osborn

Thank questions. for progress. our you In taking

initial So pleased deployments. to the see

when there. you them expect Ghana Nigeria? When transition So training to from would in to maybe and commercial? the start And deployed systems I'll were

Erez Meltze

in -- first, few steps system a The process. are the these

in demo you get first the installed both Ghana built license, which which build First, received unit, we the in being have import to both is the were later Then in then countries, center countries. an you in in or demo Nigeria. unit

for -- following sell. we process the to The And soon are then are and for Ghana, ship to we sell. license as get the more the we already Nigeria to Same then Ghana operate and Ghana the system approval the to operating, with as soon units it. waiting is to [ph] as in waiting license, is we system this as to of NNAR license we can on the license to have import

Ross Osborn

Thanks, further along. Erez. A bit

So there. believe maybe includes systems it I'll XXX start I to operate.

Erez Meltzer

there. is will question. we I that the it said with local yes, we approval as XXX deployment the I hope and your agreement as Ghana have I heard start soon regulatory

One things previous the the you that already Israel. have of regarding one question that the of we hospitals to said, a system in in

other start we install one, another this from We’re the in the are as operation we Israel. this approval one, to another in the we'll other got another the in unit. final Israel to is of as soon And just process do In hospital get it, to a getting get as lot from of samples about system hospital the the well. first We or samples operating. hospitals

Ross Osborn

your on expanded indication? for update there the is any us, work AI For Nanox

Erez Meltzer

Ross, question? was the on question? any update AI? the was Is Nanox what there What

Operator

[Operator though Ross. as have seems we Instructions] It lost

Erez Meltzer

What try we as try question. address I'll revenues, which to say, think in a for do, year about, about have about generated – was they are would signed have agreement Nanox With Ross’s hospital. agreement of with and I'll respect the XX% one I extended to a year from AI, already to -- year the Lately, a indicated, I IDNs. signed the another ago even increase with the being the what

in the to marketplace, clients. we another agreement signed are work as one -- first We another get agreement And of well. access days, signed which few the week, marketplace last This with in with implementation system. the with agreement, Micros, we we're AI their another And the Microsoft the the to and for Nuance. customers the one also Nanox the Europe, their signed of to with going starting our we

addressed So it? that hope question was this I that I hope actually what the understood I

Operator

you. Thank

of from Rahul will come with question Capital line LifeSci Our next the Rakhit

Rahul Rakhit

touch guys. help the But quarter, get some wondering progress the the in hoping EU and your I'm there the just a but on a bouncing you just on I maybe asked I it New as Year couple already. if to timing I calls. Thanks kind Hey, between know were last in of apologize well. was updates taking there? if us read could for of question. understand

Erez Meltzer

Yes.

that there think letter call, are basically, engagement the the the I news previous notified no body. real from we signed with

for And units, -- to We lot by are the mention be people the be respect it. we submitted lot information get, aware get process will have as on is requests. soon that all of these understand initiated waiting shipped pressure with package or the And shortly. not has we and to to there their soon with the right ready CE, a the a lot hope a -- and to the for are as resources pressure of all that process that FDA and as that this -- with we start and the of way, start already but now, to we as we we

Rahul Rakhit

Thank it. more. one you. Got then And

you of more in come ultimately those? think wondering forward. drive what that that clinical you images could business a what additional Israel. a on bit in the on use provide I guide And ultimately the those would if would -- talked images color quarter, moving images you any out you little about were clinical I trials, to previous plans contracts of and kind how future the conducting bit trials was

Erez Meltzer

Okay.

basically the one permit body right clinical in And the of many -- we BMI collect images multiple we hospital, of samples. first that anatomies. a human that organs, lot under already many Helsinki types body with started lot – received a this of to samples now, so of the -- So we are

scans few collected to okay? far toe, scalp a so volunteers from dozen healthy have of including probably chest, We

And indicated to all us received. another the are to next take angle go the bodies now, to planning, of kinds shortly samples official allow planning of right to one before, kinds will would I inspection modalities say, of we permit hospital and which we following are Israel, in as going of get to independent depth, the that in the be we're in really Israel, all of

will two we another to -- in it's -- take don't the in to do samples, So all of to the Israel, clinical -- modalities. the take end we location -- samples mentioned at maybe what have year, are because altogether, do is that and planning locations the really to with trials. it, the We clinical clinical and right we third now trials need not clinical do as

to the samples now, or educational the a get working in one Right to once to with also get the the special get US, in to be expand to the the to by to we start like hospitals special it presence but way, all, working Ghana, all other Rahul? hospital ready way, the are a them taken by clinical or ensure understanding Europe what are order tomosynthesis and that in we variety, clinical permit with the offices, to first trials permit of the in art get and the process and the expand we is mass in deployment. of and the and the

Operator

you. Thank

today's conference this I'm as As all queue call. no at questions time. for participating the in Thank today's as program. today's concludes you well session question-and-answer showing This further in

disconnect. now may You

Erez Meltzer

Thank very you much.

Nano-X Imaging (NNOX) 9 Mar 232022 Q4 Earnings call transcript