Earnings call transcript Q2 2023

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Operator

Good morning, and thank you for standing by. Welcome to the Nano-X Second Quarter 2023 Earnings Call. At this time, all participants are in a listen-only mode. After the speakers presentation there will be a question and answer session. [Operator Instructions] Please be advised that today's conference is being recorded.

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

Mike Cavanaugh

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

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

expenses, refer and filed press to expenses, administrative other loss of include nearest also profit GAAP non-GAAP company's non-GAAP measure non-GAAP profit, expenses gross per and certain attributable investors. will loss financial non-GAAP the margin, to sales to expenses, measure revenue, The non-GAAP information measures to marketing release the development to non-GAAP Management and provided and net financial ordinary gross general non-GAAP gross cost non-GAAP A non-GAAP shares, each share. non-GAAP research provide additional non-GAAP non-GAAP financial financial reconciliation of today. is measures in

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

Erez Meltzer

segments. more delve our aim Nanox achieved the all to I the I Thanks, chain beyond advancements our manufacturing will across U.S. to Mike, earnings offer duration will process. specifics, today's as business including we call a quarter, the to regulatory our multiple significant call. of highlight our insights. extend Throughout supply that comprehensive I second this XXXX welcome would and reinforcement quarter and typical bit and strategic conference approach market, to like into

During we to the by are following the our U.S. U.S. market initiatives efforts non-U.S. the ongoing commercial FDA U.S. preparing foothold the establish Today, efforts ended quarter, our multi-source clearance our complemented we in now June into excited to to our both XX, this With continue delve XXXX, advance Nanox.ARC. market, markets. commercialization we in outside the are to the clearance, U.S. outside the commercialization and

Obtaining XXX(k) for long-standing been the to of company enabled clearance goal the deployment us Nanox.ARC for indication About and use U.S. strategic and the FDA the multi-source by a in from has the the deploy FDA. Nanox.ARC cleared for strategy. U.S. the the the

establishing commercial strategic As we as process our previously U.S. the our demo are of part of a approach activities. announced, U.S. in for

install to commercial to shift unit a a first We and planning unit now setting the stand-alone than rather have decided this in are clinical site.

and we believe hospital the clinical health can believe purposes live systems; personnel. we with leaders, buyers center acquisitions this as The secondly, a the site to revenues practices, will a East care demonstrations. and system provide generate alongside demonstration for and training for planned to which in serve is technology hospitals potential raise facility which opinion the will informed believe to We expect first, awareness health purpose: key of Nanox.ARC of installed system Nanox.ARC, dual an is Coast start by and that and among site be training essential first radiologists demonstration will

the and we analysis of clinical arrived Nanox.CLOUD clinicians, clinical market this first was expect on open system site Based of during the installation to Israel market of fourth in from site, year. the approach the to imaging clinics which imaging quarter for U.S. facilities, directors, administrators benefits facilities advanced as shipped preliminary The the in Furthermore, techniques. the and Nanox.ARC. in U.S. of and outpatient nursing such affordable showed and more stakeholders skilled clinical the it's adopting interest freestanding Nanox.ARC recognize emergency clinics the

of city imaging with affordable also in clinical cost such that our expressed evidence do X-D technology. facilities interest because purchase equipment the strengthen believe our an way X-ray. support on a model, a in-house use. based potential Nanox.ARC Outpatient more business to because typically such MSaaS advanced We facilities the believe we will risk is keep upfront Specifically, the believe have as needs, further not combined capabilities the view reduces patients facilities we and for which of gathering

go-to-market hybrid using a strategy model. primary U.S. X of the comprised and Our business targeting, customer building sales is components: team

capabilities including imaging In current terms imaging of geographic several to the namely versus of system, rural the and impact the customer we adapt urban. facility, willingness locations, our targeting, factors volumes and type to believe

orthopedic care such to facility, is aim clinics, adoption facilities. show that segments Our freestanding strategically emergency nursing as skilled departments early engage potential and urgent

with build to U.S. particularly system commercial with payers. the to intend our of clinical market, well reimbursement as the adoption as evidence, mechanisms, We to continue support specifically

in enhance market. We U.S. to our realigned the have strategically our focus presence

customer the states. deployment on This select Our be to allows within and initial term. delivery commercialization near the optimize and us U.S. support concentrated service efforts in approach will in

Nanox.ARC process sales sales leverage to a seek that and order are the for team To close leads, the execute enhancing have will penetration manage network USARAD resources, service U.S.-based and we planning provide of the services generate installed allocated in in to the sales, we we Furthermore, and market. relationships our internal initial in to accelerate our strategy, base. are

provider remote provide geographies We an equipment are engaging and also downtime. in of the in process independent service to needs service decrease to

expect contracting organization. medical Nanox regulatory, affairs, will areas as be finance existing other the operating the by that We international billing, supported such and

CapEx intend promote help on use adoption we to model usage-based U.S., a the model hybrid with to a in based combining model different business our approach For a segments. MSaaS

We to and These help sales marketing pilot a the a Nanox.ARC. aspects customer We of strategy urgent to will physicians, have needs. be business to development require us operators training of systems among will awareness combination use business our care to hospitals, staff health professionals efforts the USA. who designed training, Nanox.ARC with charged additional and hire program care promote intend experienced of meet the raising large throughout health

to and commercial strategic to make future meetings my look in about further conversation customers have important support like available as would and presence efforts, in an U.S. providing well for upcoming To We in-depth the intend months. with these to forward increase investors meeting plans. myself of -- who as I personal strategy details our technology, potential the

of outside U.S. to of respect the to rest With world our commercialization deployment, turning the the efforts

to continue Africa. multiple in principally make We in progress countries, significant

As we to previously working are accelerate announced, have have Morocco in an we deployments. and with agreement a distributor

in including country. has appropriate Nanox.ARC at a prominent hospital chest. The major with to that human Morocco generated care certain of distributor the clearance, system incoming images Nanox.ARC a in the the deployed a have clearance Subject the in to patients health hospital, conduct on system received We in the scans Morocco provider region is the southern Nanox.ARC.

we certification to NNRA, begin the to which authorities, We future. in of regulatory In Nanox.ARC to the we has human hope clinical system, and operational very the been Nigeria, facilitate activities. necessary that installed the will generating submitted upon access approvals an have images become near formally receipt local

And and As XXXX. purposes, Food regulatory device subject organization use. a Hospital to both approvals. quarter We submitted local addition, previously in engaged Ghana to an have reported, clinical initial training and commercial Drug Ghana, clinical anticipate the approval response system we Ghana receiving the has of a the hold trials UGMC in Nanox.ARC in have at in our we potentially mainly for to already for placed fourth the distributor research for Meantime, specific Authority Morocco

established and excited alignment first the our which on series involves nonprofit to train seminars and and series few other people, partnership by completed Global BIO of export-led a announced this in phase topics. as forming solving of for health a a weeks, In Ventures Nigeria program begin resources professionals we care the health We Health, the just ideals. second global African are between imaging and with BVGH, to dedicated with issues to a organization in connections initiatives global past,

host and I'm conduct resulted detail from Nanox hospital at representatives in into analysts positive investors system on distributors, report very in the the these demonstration Nanox.ARC capabilities Nanox.ARC. meetings also headquarter that radiologists, and of in systems, the live feedback writing. systems the We Israel happy to firsthand regularly of to in insight providing discuss site,

efforts people to goal our health just better All those of outcomes. the achieve beginning constitute help

the and generate medical global Lastly, part our MSaaS. we on front, revenues commercialization, as initial this equipment imaging from have started to of

respect the OEM. With to

The and that manufacturing have equipment I'd the with share referred entered original has news OEM, next manufacturing, we in that provide and scanning Before to to we update and on I to our for testing an have agency U.S. a front, systems The like relationship technology month. assessment. agency develop. Their working government are project production an [indiscernible] signed is the government next-generation the interest procured security I of is scheduled Nanox nondestructive purposes developing for to applications. commence

our chip partner real out partners, break-through. of which units and efforts, examined cathode of a we several OEM Nanox reported As leading sent industry cold to have part a independently technological demo

like Nanox.ARC to and to prepare mass updates provide regarding the development to manufacturing. research begin would for respect mass and With production, the I as and production, we deploy

We system. our are produced in fabrication currently our facility Nanox.ARC using by Korean chips

commercialization manufacturing located recently supply maker However, an additional to in chips secure into of Switzerland. and entered activity, CSEM, acceleration anticipation we agreement chip with in scale-up of

QX proceeded end expected lab X We sample XXXX. in to pay this and chips the year of have of fab chips production to which manufacture development, provide a phase is to by

effectiveness. our Nanox.ARC, to production we among other suppliers use plan for in third-party For the based commercial things, and of manufacturers X-ray cost engage digital on, tubes

and X-ray in We are Nanox.ARC. glass-based ceramic developing both tubes use for currently digital

production and our Korean our and ceramic manufacturer third X-ray for tubes. digital x-ray supplier is tubes, primary glass-based Our we the party currently facility working are for with a of digital

Nanox.ARC performance, we X-ray testing. additional support are in with our tubes. testing both negotiating tubes, the Furthermore, chip key manufactured glass-based the manufacturing Along with started Israel of testing recently we units. digital to and scaled Korea, future the digital deployment Nanox.ARC For strengthens we radiation further these party X supplies CEI. X-ray tubes third of to The components existing example, of by includes developments facilities and produce the believe integration our

assembly It towards India, in years we technological capabilities provider parent plan digital tubes. X-ray the CEI, manufacturing leverage Nanox.ARC deployment. entities. of also of the robust medical glass-based company an ScanRay global to have we our requirements manufacturing systems and coming of capabilities, Italian the is as supplier meets a for in Nanox.ARC with standard With serve initiated medical a optimizing In collaboration mass additional central step at manufacturer, scale. ScanRay, our for prominent equipment

patients. Regarding clinics, Nanox.CLOUD, capabilities subject approvals. professional hospital, market the the update. to the to as we Nanox.ARC, The to images radiography attention and of radiology to facilities The like and to to clearance health conventional provide on used system our approved now regulatory, MSK produce a clinical FDA practices required regulatory such I'd medical obtained the local and MSK care in it's of abdomen to XX, be for is images, has XD including a to chest the device adult version intended Nanox.ARC and XXXX, and trained physicians. other turn is X-ray imaging intends radiographers, to This April from system trials company Nanox.ARC radiologists demographic stationary X-ray centers conventional by scan radiological human the regulatory a environment cloud-based infrastructure. On adjunctive XXX(k)

in XXXX, We In to XXXX. QX mark pursue during are with the the European device a our and expect Union submit AMAR we the Israel, the continuing required body, CE July notified technical and Israeli was to the submitted completed months. we medical listing. pursuing The are in of few file aiming decision in also clearance, early

Clinical.

started was a previously that under deployed hospital our permit, the multiple Helsinki with Nanox.ARC system human As in in Israel. we anatomies clinical collect of to Shamir discussed body sample images

and sampling have have the the second phase phase. first begun We clinical completed of

quarter. IRB. the in in additional institutional aims sites stages are Israel, this the aim utilize trial and approval subject to trial We receiving will the to to final clinical Nanox.ARC, the final approval Installation of to of This completed additional from capabilities in its is and in commencement, lung Nanox.ARC a assess scheduled third from diseases. within the itself and is to detecting trial diagnostic the of expected Nanox.ARC be month commence the chest of

have the share With signed X the and the sites integrated Hampton a Nanox.CLOUD the to begin the the Health and testing respect date, to in sending in in excited trial XX in and with in in in engaged U.K. images in to sites Nanox.AI, the Cambridge, X we and very both more Bradford, the of delivery progress have we the I'm all addition, sending product is other the expect ADAPT soon. X showcasing to collaboration of begun U.K. made To Service South Nottingham sites: National images States currently platform. And Nanox.AI to has regions. across platforms range agreement, networks Cardiff United

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

Ran Daniel

offset of a Thank you, GAAP to XXXX. second million part was of in ended loss of $XX.X X of quarter was The Erez. XXXX, liabilities in for of compared the impairment largely in the a second quarter June comparable decrease the XXXX amount reported by $XX.X which net We versus million of $XX.X earn-out was in loss in goodwill the with second of net company's increase a million the the effect in quarter an of XXXX not $XX.X that recorded in $X.X the and XXXX. period million a quarter second million the XX, in of decrease months due

radiologist second in XX% the basis. on profit the non-GAAP basis engaged the $X.X radiology is gross to was the and on XXXX overnight approximately services reading non-GAAP GAAP were during in gross the The engage for from Revenues basis million million the million overnight company's of basis in quarter incentive profit margin on mainly an the weekend $X.X basis, that GAAP a margin of The revenue quarter a on in decrease the was gross a shift. gross the weekend $X.X $X.X profit represents with cost due XX% second loss which period a pays the basis. which a million of to and non-GAAP and profit the company's increase to GAAP million gross the due teleradiology in is of same a mainly in Revenues a $X.X a of the company and in reading of during and shift. of the increase for number GAAP a to payments on on a and XXXX increase due the to the radiologists

connection in million an in our development development expenses increase company's and $X.X the to the research due of mainly of the $X.X increase partially million. the to company with headcount mainly comparable part which in for XXXX. $X.X XXXX second The was system, Research share-based labor the compared $X.X for million, quarter in in the grants of and in received million, in development that increase $X.X expenses were million to a cost amount and of decrease the of compensation million $X.X Nanox.ARC an an in period in as of by increase the was in due has offset development research of the amount

as compared XXXX the were second period XXXX. General marketing quarter $X.X and for million for to were million in million the compared to administrative as XXXX $XX.X second for the quarter comparable increase comparable and The $X.X headcount expenses the the of period $X.X XXXX. expense of of efficiencies. Sales $X.X for million general amount company's and a expenses cost the in the decrease of due in reduction administrative plan labor to in a of mainly in $X.X as to was in company's to due decrease of part the million million

the in of premium in $X.X million. the amount decrease the and insurance directors had of we decrease officers compensation a liability cost In in and of addition, million our a $X.X amount share-based in

expenses quarter accrued future the million investigation. the second During SEC had with in connection we the $X.X of settlement XXXX, for

of preparation of to team, Directors, and authorization with to by SEC, our the including SEC of will in Chairman with agreement principle is matter all of As Board by in to $X.X any subject respect company case the well by SEC finalization, court. [Indiscernible] investigation. the the in of million Board which resolution Directors, the to the disclosed, district penalties approval of company a documentation estimates of federal staff and the the reached approximately as including the company, commission the settle agreements the subject parties, this approval our previously remedies, the and Final the company. The are to negotiation as company's from civil be financial

change As mentioned earnout XXXX. $X.X incurred and contingent in months above, of we million X the XX, June in an expense ability ended

amendment, their During the million company we approximately agreement of purchase of amendment $X.X second this with to USARAD. quarter former entered an Under of XXXX, amount aggregate stock into the paid an the stockholders the shares milestones the as for stock USARAD certain in in of agreement. the consideration earn-out cash USARAD XX,XXX the purchase to former defined in with stockholders achievement period ordinary of in and connection first of

of and we the to stockholders million as USARAD of of addition, purchase under in and shares consideration stock for applicable USARAD an paid In the $X.X former ordinary cash remainder the XXX,XXX aggregate agreement. milestones earn-out the

our to sheet. balance Turning

add As XXXX, million. marketable a equipment cash of banks. ended equivalents, loans cash, approximately and securities $XX.X cash We we of of $X.X June quarter and million million XX, and had property restricted from $XX.X with the

amendment As XXXX. XX, shares previously mainly shares million XXX,XXX due to we the of had increase to million stock of XX, compared USARAD discussed. purchase approximately approximately primary ordinary as for outstanding stockholders XX.X of outstanding issuance XXXX, June to of XX.X the was the as The as December USARAD under shares the agreement

shares. of be X.X we up are and and development XXXX, deployment systems. further in approximately to million commercial restructuring On to our million raise offering July warrants a $XX XX, intended to direct registered through proceeds The X.X the shares of used purchase million raised by selling net

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

Erez Meltzer

for world. around being multiyear journey our today with Once to on you again, imaging more make here being and all the medical for accessible Nanox I want to thank

year, at our this I'm our our doorstep in made proud to what vision tremendous of team done has have to bring the system strides We commercializing of and scale. company ARC realizing

the the And call, September Investor we of at be great Day end to partner XXXX. announce ICR if be attend in a I Relations held the please New in will day. or that or to want like contact we City Before virtually, Have either would October end at West. our of York Investor beginning an person you hosting to

Operator, please open call questions. the for

Operator

come [Operator question from with Cantor will first The Ross Instructions] Fitzgerald. Osborn

Ross Osborn

the progress. on Congrats

to which discuss scans is day? starting level terms So off, Nigeria in you would your system operating per of the in

Erez Meltzer

indicated now is human in getting think I -- images. operating one approval patients final Nigeria was the human, or getting for or to for without for for the approval we're right that in the NNRA of human the scans scans it waiting and

Ross Osborn

I Apologies, missed have may it.

Ghana scans is human on is operating also So that or waiting?

Erez Meltzer

Ghana is commercial the for use. approval final for waiting

Ross Osborn

And Understood. Okay. then following on

Erez Meltzer

in the it's full Morocco with with human like the scans operation is one at operating images, in hospital. The

Ross Osborn

Great. Would provide Okay. be able you to

Erez Meltzer

the beg all With your -- I pardon?

Ross Osborn

provide level it's to day? able which to in you Would terms be the of per scans operating

Erez Meltzer

I or per in indication we don't for what's even the per in day initial the we Investors we earlier, that number provide probably scans scans will the that now, the in of next disclose Day, the the Right day. call installed. think units But have all

Ross Osborn

for XXX I up Morocco following you then we for expect to this, XXX and operating commercialized calls Ghana X,XXX, countries? to systems can deliver when believe more your for on systems. Nigeria And for

Erez Meltzer

quarters start sure. First basically in the as But X of we the this final for next will soon as approvals. get all,

Ross Osborn

training delay you U.S., turning calling the could in believe this operating? us it for rationale summer. then center I the And was the just previously the walk for to through

Erez Meltzer

systems. The the is that going had early one we're to thing send first that indication an we've

to the said the But waiting center we as my the the clinics the -- the -- operation what itself. operating install I the in have mentioned earlier U.S. we are of installed be in or -- the start actually would weeks demo locations system for approval decided, We we of generate preliminary, will revenues. willing of in -- U.S. system full to we and to to wanted first a -- systems one make in before first site earlier to clinical be both, we to generate in clinical original installed system Since few first that the even that operation, scan have meanwhile, all, we and few plan. a in the it decided already the locations then have have are patients to that and commercial to next today, preferred than these

Ross Osborn

your you you basis? And I'll the then and the of are we're today? back Or on U.S. your sign stand-alone did for same us the And a now contract you on discuss chips last page, jump the just system? for comprehensive size one Would your announced selling OEM in so queue. on

Erez Meltzer

the OEM mean agreement? You

Ross Osborn

Yes.

Erez Meltzer

OEM, it's for and few The arrangements that have chip collaboration. a one we the The was only. OEM mentioned,

The chip tube. others either are into chip and or

say, in itself, months. a are the we the the X tube be only demo, full addition, having I not tested process will of In in that next, would

Ross Osborn

And size you the to with agency? are the then able U.S. government contract of the disclose

Erez Meltzer

are not allowed to. We

Operator

Jeff next The with Ladenburg. from question comes Cohen

line Your is open.

Unidentified Analyst

on This start will how curious, to a of initial for this demo are is more Jeff. by Destiny welcomed be one-to-one going this the sites? of a is you last I your be that demonstration? Or into is actually kind going to I'm questions. on on will of And physicians basis? kind group group continuing determining be of the

Erez Meltzer

full actually, First shared, -- now, range. we of all, have as it's right it's a

see systems individuals the to coming to the have are see coming and be system. will we So that

We XX even XX like have or some them delegations, was people. one of

be host see any willing able and willing will are do. size to of what group will to we be that We

Unidentified Analyst

And single there a I could be site, assume. would people multiple from

sense. makes that So

Erez Meltzer

Absolutely.

Unidentified Analyst

marketing team, then sales team, the modeling force purposes. about your initial sales of sales mentioned reps of the I'm going direct a you to about then and size forward timing and U.S. how onboarding should for the the the sales expense in the be sales impact we thinking And wondering that of

Erez Meltzer

the question. with start first Let's

I've the full what I've plan we of and U.S. Day that this, indications in and the we say, further the I already have So Investors in earlier with shared numbers the today. mentioned the the deployment most work. indicated, the the are of plan the past By to detailed team of going end team we would process in final will we Part are as are building probably -- complete plan We in execution presented of as full, that speak. planning be then, September. of to more conclude ready do the of action the including were to And or

kickoff the the U.S. October planning few early already In the U.S. are A of working the engaged have We and people in

this, at think that details of will on on we by able hear NASDAQ the XX are have And come the the I planning. So to be this. to September more more you way, -- talking, Investors Day we're that to

Unidentified Analyst

Excellent.

Looking Investor of for capture and of some kind that then real-world you're if clinical data. a of And I'm us, to forward registry you'll that. collecting Day. all to create kind lot lastly of some wondering

Erez Meltzer

answer website. on allowed, it our based yes. it what in related based is Part be Everything be we can, on will The and shown this is regulation will disclosure. of presented what to

that collected We the to prepare preparing paper are we're process data release. also all going the in clinical of and the

are the we're at we to time emphasize actually, a clinical that the the of efforts lot is deployment, and we this what make all So going commercial same doing. do side of

I've today we think world do abdomen do but know, other we are in bit rest a of right as the little I the to in shared the anatomies. you MSK, now U.S. allowed that that, and chest, the

already have used. in the other and Israel tested anatomies in humans scanned we in and Morocco, both So

to intended ability this future to opportunities explore the plan use. the clinical and enhance in the provide is to do basically, clinical move for -- that the So data we the our forward order

Operator

you. questions. This participation the Thank Thank we your in today's for you for all is conference. time have

You may a disconnect. great Have day.

Nano-X Imaging (NNOX) 17 Aug 232023 Q2 Earnings call transcript