Nano-X Imaging Ltd. (NNOX) Earnings Call Transcript & Summary

Thank you. So now we already know that we have the chip, we have the tube, we have the Nanox.ARC. However, I still feel that something is missing. Don't you feel so? Okay. So we spent a lot of time thinking about the second gap, the lack of radiologists. Actually, we did that not by ourselves, but with our partner, USARAD, and the CEO of USARAD, Michael Yuz. As you recall, USARAD has been a partner with our journey from the get-go. They are a network of hundreds of radiologists in and outside of the U.S. that are providing already cloud-based diagnosis to different customers around the country and in other countries other than the U.S. We spoke to Michael and we tried to solve the problem of lack of radiologists. And through this discussion, we came to the conclusion that we better come together in a deeper way. So we're talking about a binding LOI that we signed, that's talking about the full acquisition that if closed actually upgrade the relationship to the level that Nanox now can, outside of the technology, provide a full solution, not only the technology, but also what comes out of the X-ray. So I'm very pleased and happy to announce that this deal is in the making. And together with us today is Dr. Michael Yuz, my partner and the CEO of our USARAD. Michael, please?

Hello, Ran. It's such a pleasure to be with you again, and thank you for this opportunity. I would like to state that I've been in the teleradiology and radiologist space for over 12 years when I started USARAD. We are a company that's backed by Siemens Healthineers. We're very fortunate to work with them, and we have a network of over 300 radiologists. The synergies between Nanox and USARAD are obvious, but the most important point that I would like to cover are education. It's so important for us to educate hundreds and hundreds and even thousands of doctors, especially radiologists, throughout the world. And the way we are going to approach this, we're going to start educating our own internal network of hundreds of radiologists that we have. By educating this network, this will help to propagate the knowledge of this very important modality, which is tomosynthesis. Certainly, tomosynthesis has been existed for a number of years. But because of expense, it really did not become mainstream. And because we're able to lower the costs and combine it into a very exciting opportunity in terms of radiology as a service or MSaaS model, we're able to tremendously drop the costs and propel this technology and the service combination throughout worldwide. So the way we're doing it is by creating a continuous medical education, or CME credits, for radiologists and other physicians, and we're also working on creating the educational content for various sectors in the industry. For example, we're creating material for physicians in urgent care industry, as well as primary practitioners, as well as urgent care and imaging centers. So we create -- orthopedic surgeons and even pulmonologists. So we are working on creating this educational material for various specialists and various sectors in the industry. We also working on putting together a very educational material for our new website, our educational website that is coming very shortly. The other synergy that I'd like to mention is creation of this MSO, or Medical Service Organization, between the USARAD and Nanox. And what this will allow us to do is to control quality, credentialing, billing. So we'll be able to do the global billing of the full component, not just technical or professional, but a full component when we install this exciting new equipment. We also have a lot of experience in AI or creating artificial intelligence algorithms. For example, with Siemens, we've been working over several years in providing data and providing our radiologists to create these algorithms via annotations. And this is something that's on our road map to do for tomosynthesis. Now the -- we have signed an agreement in January of this year, announcing a deal between Nanox and USARAD as well as multiple vendors. So this is -- these integrations are well on its way and will be an important part of what we're trying to do with our synergies. Now finally, I would like to mention that USARAD has been a global company since the early days. And today, we are -- we provide our services in the numerous countries throughout the world, including Middle East. For example, we have active clients in Kuwait for years. But also in the area of second opinion, where we have customers in over 120 countries. And so this is a really beautiful strategic fit in various aspects. And thank you so much, Ran, for this opportunity. I'm really excited. I'm excited about the future and opportunity to help so many people -- countless people throughout the world and save countless lives. Thank you so much.

Thank you very much, Mike. Indeed, very exciting. I mean I'm sure you now realize why USARAD relationship is so important. All of a sudden, Nanox is becoming from a technology company to a full solution company. Before, we could provide excellent brilliant images, even if we have 15,000 units and even more to the cloud. Now we have someone on the other end to read it. And that's very exciting. However, because we are thinking very, very large, and our vision is really grand, we were thinking, what if we're going to place many more devices. What if Nanox.ARC is becoming a standard of care globally? And all of a sudden, we have many, many of those, every school, every community center, every place of public medical imaging will have Nanox.ARC. Then we're going to deal with tera -- mega-tera of data that someone needs to read. And when you have that type of problem, you need technology. So we're looking, and quite quickly, we realized we're looking at AI medical imaging companies or solutions. And the first company that came to mind is Zebra Medical Vision. They've been in leadership. They've been a leader in this domain, and they have technologies that already cleared FDA. I think, several products that cleared the FDA, and they are a true leader of this domain. So I'm very happy to say that Nanox signed a deal to acquire Zebra Medical Vision. And if this deal will close, I think we have all the elements needed in order to address the second gap. So with that in mind, I'm very happy, and I want to introduce you to the CEO of Zebra Medical Vision, Zohar, that will tell us a bit about Zebra and why the synergies are so massive when you talk about Zebra and Nanox. Please, Zohar.

Thanks much for the intro, and I appreciate the opportunity to talk about our joining forces to tackle the AI and imaging space, coupled with the medical device strategy. As you know, to truly lead the AI-enabled diagnostic space, we need to have both superb hardware, medical device capabilities, which Nanox has brought to the table, coupled with AI and cloud delivery capabilities with a proven regulatory and quality framework, which we have built over many years of operation. Over the past 8 years, we've pioneered the market for AI in medical imaging. We have over 7 FDA clearances with a pending application submissions that we have, 10 CE marks as well as a new CPT category 3. It's the first in radiology using an AI application to detect vertebral compression fractures as a trigger, as a sign for osteoporosis, as part of our population health offerings. This is geared to establish a reimbursement strategy for the use of AI by radiologists. So we're very proud of that, and we look forward to substantiating that with other solutions as well. We've also led clinical research in the areas of AI, recently in Nature magazine for automated opportunistic osteoporotic fracture risk assessment using ordinary CTs. And that's another element that we feel would substantiate the use of AI by having strong clinical evidence and research to back it. We have dozens of patents, and we continue to leverage our IP. We also delivered to Nanox clinical regulatory and cloud deployment credibility, already deployed with some of the world's largest health care brands and customers such as Apollo Hospitals in India, Intermountain Health in the United States, [ Arasmus ], the NHS in both Scotland and England, Albert Einstein Brazil, Johnson & Johnson and many others. Last but not least is the all-in-one per scan model that we brought to the market early on for radiology back in 2015. We believe it has shaped how AI products will be priced in the market. And of course, with the combination of Nanox' full service, the per scan model and the vision to democratize diagnostics in the space and accessibility to everyone using cloud infrastructure is highly relevant. So we look forward to working collaboratively and combining both the AI solution in software with the hardware both disruptive. And again, Ran, I thank you for the opportunity to speak here and look forward to our continued collaboration. Thank you very much.

Thank you very much, Zohar. Okay, guys. I hope we established with you how deep we think about this problem. When we spoke about 3 gaps that we need to bridge, so 2021 was devoted actually to bridge the first gap. The second gap is the ability to read and to diagnose whatever comes out of these brilliant X-ray images. And with those potential 2 acquisitions, USARAD and Zebra, we hope we can fulfill the gap short term but also long term. And the third one is actually coming and talking about connectivity and big data analysis, let's call it this way. So connectivity is something pretty simple. Both companies have cloud capabilities, specifically USARAD has HIPAA compliance. As HIPAA compliance platform that is working already, we're going to utilize it. And with Zebra, I think Zohar has established with you the fact that population has -- is a rising force in health care, and we have all the tools, and we will strive to provide sense with all this data combined with other data inputs coming into the system, all managed by AI, top-of-the-line platform to provide some sense. Looking forward, let's talk about 2022. For Nanox, 2022 is going to be the year of execution. Execution, execution and execution. We started out all the other things. We should be ready to execute our plan globally. And this is exactly the reason why I ask Erez Meltzer to join as Nanox' CEO starting January of 2022. Erez comes with extensive experience in scaling up organization, and we will work together in order to fulfill this vision. Erez, please.

Thanks, Ran. It's a great honor, along with the huge responsibility to take on this important role. I have known Nanox for a long time. I'm actually part of it. I share its vision, values and the great message it brings for a better future for all of us. Together with you, Ran, as Chairman, I know we will do all in our power to execute an effective and seamless launch of our novel technology and enable access to medical imaging worldwide. Ran, I'm confident that collectively, we will materialize our mission, scan globally to protect one's health.

Thank you very much, Erez. Stay tuned for what's coming from Nanox and thank you for joining our journey.