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

Good day, and welcome to your participation in today's virtual event. Up next, we are pleased to introduce Nano-X Imaging Limited. [Operator Instructions] At this time, it is my pleasure to hand over the session to Ran Daniel, CFO at Nano-X Imaging Limited, who will lead the presentation. Sir, the floor is yours.

Thank you very much, and thank you for hosting us today. I'm the CFO, not the COO. Before I'm starting, I would like to remind everyone that I will be making statements during this presentation that may be deemed forward-looking statements regarding the company's commercialization activities and other matters. This is our disclaimer. Please do [indiscernible] seconds and read it. I'm very pleased to say that we are making progress in our mission to progress the emdical imaging and improve patient outcomes. Our innovative technologies, including Nanox.ARC and our AI solutions are gaining traction in the market. I'm going to start with who we are and from where we came. So short history, the company's histories come from Sony on the -- from the days for the race for thin TVs. The group of scientists developed this chip, which you can see over here on the bottom, which this is our source, and at some point, Sony retired from the race and spun off this technology to this group of scientists that went to the University of Tokyo. In December of -- during 2018, the current Nanox was established after development of the technology by our founder and those group of scientists, which were our partner together a long time ago. And the application of their technology was applied in a medical device sector. You can see here this is our flag product. This is the Nanox.ARC 3D digital multi-source products. We developed these systems, which are, actually, you can see behind me. It combines the multisource Nanox.ARC imaging device with our cloud-based Nanox.CLOUD platform. The system uses a proprietary digital X-ray source, which you can see over here, our source as opposed to warm, hot cathode. In our case, it's a cold cathode. It's the source itself. This is the NEMS chip that was developed by us and Nanox.TUBE, which also are proprietary tube that we also developed in our fabbing career. The system actually produces 3D tomosynthesis images and I'll show you some example later in this presentation. With multiple stationary tubes arranged around the patient. Now if you consider the machine, the machine itself actually, if you see on the bottom of the slide, you can see the tube and the source, which goes in together, we put 5 tubes space evenly on the assembly house of the tubes. And obviated over its camera. This is the bed simply goes back and forward with the patient on it, and the arc itself gets into 18 degrees to each side, which creates the tomosynthesis effect. What it brings us...

Excuse me, Ran. Your slides didn't go.

It's okay. I'm still on the same slide. It's the system is designed -- you don't see the -- you see the picture, correct? With the Nanox.ARC. Okay. All right. So what's so unique about our system is small, it's lighter. You can see the system over here. And it's -- it's similar from -- it's a simpler x-ray system. It's not complex. There's no requirement to -- all the system is designed to streamline the medical imaging from scan to diagnosis. We're offering a scalable cost, cost-effective solution for an early global detection. If you think about you see only the machine over here, but on the top of the machine, you should -- you should imagine our platform, our cloud platform, which contains all of our various solutions such as, first of all, the processing of the imaging is being done on our cloud platform, on our own proprietary software that we have developed, then you can also find over the AI solutions and also our teleradiology solution has also been done in the cloud. Even our billing system has been down on a cloud. So you can think of it once the image goes to our cloud, then it's everything is really done on a real-time basis. I want to show you a demonstration of how the scan has been done. Now you can see over here that all you need over here is a technician with an iPad. I have the iPad over here, you can see its size. It's a regular iPad, the technician program software, the patient lays on the bed and then the bed is moving. And you can see -- in this case, it's a chest scan, and the arc is simply tilting to each direction, 15 to 18 degrees, which creates the tomosynthesis effect. And the end result is 30 to 62 images that are going to our cloud and we constructed to 1 3D images. I'll let the illustration finish, and I'll move back to presentation mode with your permission. So what are the tomosynthesis clinical benefits? First of all, the visuality is much better, it's a reduced superimposition of the normal structure that may reduce false positive cases, it's some details, more sensitivity, depth view. And as I said, it gives you the opportunity to expedite a diagnosis, which is important. Actually, we are in -- as I said, we are in the tomosynthesis world, but we're actually between the spectrum of an X-ray and the CT machines. So while an X-ray produces only 1 image, the reading time is relatively short and the dose amount is relatively short. It's low. The CT machine produces hundreds of images. The reading time is much longer and the dose is much higher. You can see that with regards to the images, we are somewhere between the X-ray and the CT, and the reading time and the dose were very close to the X-ray. So actually, the main benefit -- you can see it as the main benefit of our machine that gives 2 main benefits. First, economically, our cost and the cost for the patient is much lower than the CT. On the other hand, we produce 3D images such as CT. We don't cover 1% of the procedures or the intended use of the CT, but we do cover various cases that you -- that can be done in lieu of the CT. This is just an example of a compression between a 2D and our image. You can see over here a patient with a cast usually when the patient comes with the case for a checkup or a follow-up, it needs to remove the cast, then it goes through the examination and then they put the cast again in our case. You can see that there's no need to remove the cast because simply the machine reads through the cast. Actually, it reads through, as I said, it's way through the layers of the human body. This is another example of a hip fracture. And my favorite example which is this one. You can see over here ,a little over here. Which simply cannot see -- can be seen in a regular X-ray image. Okay. What we have done, what we have achieved regulatory-wise, we have achieved, first of all, we got this machine the FDA -- the 510 clearance of the FDA in the U.S. for MSK in May 2023 and in general, in 2024. We also got in February of 2025. We got CE for all body. In April of 2025, we actually got a second general use clearance for the next version of this -- of our machine. I will discuss it later. And we have a clearance -- we have clinical claims in other various countries. We also with regards to our AI solutions, most of our ad solutions are cleared by the FDA and CE. So regulatory wise, we are in a very progressive status. Commercialization. We're currently planning to target in the U.S. market where we work direct imaging center, multi-special -- specialty medical centers, orthopedic groups, urgent carers and et cetera. We do have our internal sales team and consultants and business partner, actually, I'm sitting -- I'm based in New Jersey in -- Richfield, New Jersey, where our headquarter in the U.S. is based. We have a team that includes a sales marketing -- sales team meeting person and clinical support personnel, technical support personnel are very important to us because those are the guys that goes from 1 customer to another and goals on the functionality and the clinical value that our devices have. Other than our direct sales force, we have -- well, we have -- we have also -- we have also partnered with some distributors and business partners in the U.S. Those are covering geographic carriers and some other niche that we don't cover directly. We have a deployment in the U.S. of 8 states, and we are going forward, in other, in ex U.S., we work usually only via distributors. This is just an illustration pretty straightforward going forward. By the way, you can find this presentation on our Investors section on the website. So I'm just going to explain things that needs to be explained. Over here, you can see our business models. We do work on -- in a various business model. First of all, of course, we have the regular CapEx sales model where you can come by the machine. On the top, you will also offer the client maintenance contract and multi-year maintenance contract. On the other hand, and this is the more cost of the transaction that we have right now in the U.S. And they are actually our MSaaS model, medical scan as a service or simply paper used. We do charge $30 per scan. We require a minimum scans per day of 7 scans per day with a multiyear agreement. As for the rationale that goes behind our pay per use model in the U.S. just as a general explanation, our system is covered procedure with his established CPT code of 76100 in the U.S. It actually covers most, if not all of the tomosynthesis internal use that we are doing. The global RIM amount the end user totals approximately $88 to $109 depending on the location. The total -- the amount -- the portion of the professional amount is usually $30 per procedure, which leaves $58 to $79 for the technical portion for the operator. We charge $30 per scan for the technical portion for the scan itself for the usage of this machine. And we also charge $20 for the reading itself through our teleradiology division, which is based in Florida. All in total, you can see that it is net to a very hefty margin to the operator, somewhere between 43 to 54 -- estimate 43 to 54 -- it's a win-win situation. We -- the operator enjoy an FT margin, and it doesn't need really to invest a big CapEx, outlay and doesn't need to go through all the sales process. It's actually you can deem it as an operational lease. And for us, we have a pretty nice margins from the service that we provide. We have a few installations in -- within some hospitals worldwide. We have 3 installations in the U.S. We have -- mostly, they are been used for clinical trials that we conduct in braving Medical Center in Israel. We have 2 devices. One is this version and the other one is the new version, which I'll explain later. In Shamir Medical Center have one machine and the largest hospital in Ghana, we have another machine. Okay. So the Nanox.ARC. We always -- we're constantly working on product and technology future developments. After we got our FDA clearance for that version, we worked and our created an upgraded version of the machine. This -- it's our latest -- this is going to be our latest 3D digital multisource tomosynthesis system. It's improved design, which results in a smaller footprint. And enables us for more software outrates and more new capabilities to be added remotely following future regulatory clearances, namely some of the outputs at the moment, both version comes with the same output. On the other hand, this version -- you can see that it's a smaller footprint. This version, the new version, it actually comes with 15 foot span of the bed. It may be very long. We found out that some locations it simply, it doesn't fit to the rooms because sometimes real estate in New York City, for example, it's very expensive. We want to get the full utilization. So this version, actually, with the smaller footprint of 9-foot will enable us to even to install it in March smaller rooms. It's, of course, it's a multi-access tomographic systems, same as the other version. It has 5 tubes, 5 cold cathode tubes. The main difference that these systems we use our own proprietary ceramic tubes in this version, we use our own glass tubes, which are much cheaper. It makes these systems more cheap...

Excuse me Ran.

Yes?

They were asking me if you could show them the other slides.

There are the slides of what?

Of your presentations.

I'm showing the other slides.

All right. Yes, go ahead.

You don't see the slides with the machine?

We can see it now.

Because that's what I see. It's a lot of work over. It's just it's not convenient, but it's okay.

Yes. Thanks, Ran.

All right. So this is -- so this is -- I can't say it, it's a little bit too small for me. But okay. So it's a smaller footprint, multi-demographic system. And yes, I tried the presentation, Mo. That's what it is. And it's a plug-and-play. If you can see this version, we have the electric covenant in the other side of the room in the new version, the electric covenant and all the other parts are simply going into the bed. So actually, what we created, it's a one sleek design that goes into a corner of the room. You simply need to plug and use it. Okay. Tell me if I'm going to flip into the next slide, you can see that. You can see the slides on our AI solutions.

Yes.

Okay. All right. So as I said, we have today, we have 3 business divisions. The first 1 is the hardware, which I just explained. The flat product is the Nanox.ARC and the Nanox.ARCX. We also acquired in November of 2021 our AI division formally from Zebra Medical Solutions in Israel. And we also acquired our teleradiology division in the same time. I'll explain a little bit of what we offer with our AI slows and where as of that because I see that the time is getting short. We have several solutions that were cleared. As I said, but today, we are offering 3 main solutions. The first 1 is the bone health solutions. This is actually the second version of this product actually is made to address vertical compression fracture and low bone mineral density. The second product is cardiac solution, which works on a coronary artery culture measurement. And the third one is the liver solutions. In the pipeline, we have also future applications that can be applied to the [ author ] and the full body compostion, which we do in venture with some universities in the U.S. We have a few customers in the U.S. The largest one is [ Coral Health ], which entered into his fourth year engagement with us. He actually expected scope of AI portfolio from the 3 that you can see on the screen. Those 3 solutions actually compose our broad suite of population of solutions, which will add the future development, as I said before, Besides [ core solutions ], we see we have clients such as InterMountain, Covera Health, Dandelion Health. And recently, we also engaged with [ Ezra Medical ] as well as our Medical in New York City. Mostly, mostly, this is a standard solution. But in the future, it can also -- will work on our tomo images, right? But you can also use it on your pack systems. Usually, the customers will take it and install it on the PAC system to scan all those city scans that they do to their patients. of course, in those specific applications. In the U.K., we had a big project with the U.S. Health Minister for quite a while, which we installed our bond sale solution in 5 different locations in the U.K. As of this year, this project went into its commercialization phase. Since the time is short, I'm just going to -- I don't know what -- if you can see the slides, I'm just going to say some more words about -- some about our financials. Besides that, we have also our teleradiology division, and we also have our OEM business, where we have partnering with different customers regarding our core technology, which is the cheap and the tube that I showed before. Some financial highlights. As of March 31, 2025, we had $73 million in cash and cash equivalents. We have a run rate of $3 million a quarter. We inspire to increase it, of course. And we have approximately 165 full time employees. Now I'm open for questions, if there are some. I see how we can get a user manual for the new ARCX. There's a lot of materials that is available on our website, but usually, you use the manuals going to goes to our consumers. So I think it's our customers. Is there any other questions over here? Stefan?

You can look it up in the Q&A section.

Okay. the Q&A session. All right. Okay. I'm going to open it I'm going from the last one. Can you provide a clear time line for the world of the Nanox.ARC systems. As for the time out and the milestones of the rollout of the Nanox.ARC systems, I refer you to our latest earnings, we gave some kind of guidance in our earnings. We said that we estimate to have more 100 units or more deployed in the U.S. and the rest of the world. We do report revenues from the arc. Maybe they are not significant, but there are some revenue from the arc and the OEM business. We don't engage with veterinary solutions, although it's an option for the future. As for the how many arcs, again, I will refer. I'll refer to the language that we had in the latest earnings. I think you should read over there. It's -- there's a few dozens of systems that are deployed in various stages of deployment, but the accurate language is there. Is there any other questions?

have you also received any buyout offers? Someone is asking from the chat.

Even if we receive the buyout offers and well, first of all, we have to disclose it first, if we are about to talk about something like that. So I assume there will be -- if there was something that we had to report through the SEC and according to all the regulations and the laws of security laws that I know. So I think it will be public information by now. Any other questions?

There's also someone from Alistair, from the chat.

From the chat. All right. I'm going back to the chat. Alistair. At what stage of industrialization is the Nanox.ARC systems? The company's spend seems very low on this. I think that what Alistair refers to is commercialization. We are in the beginning of the commercialization in the U.S. market. We have received the FDA clearance for an MSK only in mid of 2023, and we have started the commercialization in the U.S. market only in the beginning of 2024. So it's a very short time. Of course, with the new -- with the additions of the clearance for the general use. So we have more opportunities in the U.S. market. We have received only to see this February. So for the European market, obviously, we are only at the beginning over there. What is the Nanox portable device? Can you be more specific questions for Gilly. If you are referring to the connect, so there's no new -- any other new updates. You can read all about it in our 20-F.

Any other questions, guys?

As I said, you can find a copy of the deck in our Investors section on our website. If anyone wants to have a call with me is more than welcome to contact our IR person. His name is Mike Cavanaugh. He's contact details is also on our website. We would love to answer any questions that any investor has Okay. Thank you very much.

Thank you, Ran. You have a good one.

You too.

I appreciate you.

No problem.

That concludes Nano-X Imaging Limited's presentation. You may now disconnect. For details on upcoming presentations, please refer to the conference agenda. Thank you for your participation, and we look forward to welcoming you to the next session.