QT Imaging Holdings, Inc. (QTI) Earnings Call Transcript & Summary

Welcome to the QT Imaging Fourth Quarter 2025 Financial Results Conference Call. [Operator Instructions] Please also note, today's event is being recorded. At this time, I would like to turn the floor over to Jody Cain. Please go ahead.

This is Jody Cain with Alliance Advisors IR. Thank you for participating in today's call. Joining me from QT Imaging are Dr. Raluca Dinu, Chief Executive Officer; and Jay Jennings, Chief Financial Officer. I would like to remind listeners that comments made during this call by management will include forward-looking statements within the meaning of federal securities laws. Any statements that are not statements of historical facts should be deemed to be forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. All forward-looking statements are based on QT Imaging's current beliefs as well as assumptions made by and information currently available to QT Imaging and related to, among other things, QT Imaging's breast acoustic CT scanner, including its product commercialization and manufacturing, the evolution of QT Imaging into a scalable imaging platform, the QT Imaging cloud platform and SaaS model, performance of software enhancements, new product development and introductions, product sales growth and projected revenues and QT Imaging's industry and future events. For a list and description of risks and uncertainties associated with the company's business, please see its filings with the Securities and Exchange Commission. Furthermore, the content of this call contains information that is accurate only as of the date of the live broadcast, March 25, 2026. QT Imaging disclaims any obligation, except as required by law, to update or revise any financial and operational projections or other forward-looking statements, whether because of new information, future events or otherwise. And now I'd like to turn the call over to Dr. Raluca Dinu. Raluca?

Thank you, Jody. Good afternoon, everyone, and thank you for joining us for our second quarterly conference call. On behalf of our Board of Directors, management team and everyone at QT Imaging, I would like to thank you for your interest in our company. And for those of you who are shareholders, we appreciate your support. This earnings call marks an important moment for QT Imaging as we continue to build a new category in breast imaging, safe volumetric wave-based 3D imaging that delivers MRI-like information in a clinical and patient-friendly system. Our focus is execution, reliability and commercial expansion in markets where access to advanced imaging has historically been limited. As we evolve from a hardware equipment company into a global data-driven platform, each exam is becoming an even richer source of quantitative AI-enabled insights that can inform care over time. I am proud of the transformation QT Imaging achieved over the past year. In 2025, we exceeded our revenue target, increased scanner deployments, laid the foundation for our cloud SaaS platform, expanded internationally through new distribution partnerships and significantly strengthened our balance sheet. This progress reflects disciplined execution across our commercial and product strategies. The momentum has carried into 2026 as we continue building a stronger and more scalable business. Let's go over the progress and the vision in detail. To recap, our strategy is focused on addressing a significant gap in breast imaging. We are positioning our technology as a preferred screening solution for 2 key populations, intermediate-risk women and younger high-risk women under 40 identified through established risk assessment models. Together, these groups represent roughly 70% of the screening population when accounting for intermediate risk patients and the large number of women with dense breast tissue who require enhanced screening approaches. This creates a substantial opportunity for increasing access to screening and improving clinical outcomes. Our imaging platform is designed specifically to perform well in dense breast tissue while capturing physiological information about the breast in a way that is close to MRI functional imaging. In a single exam, the system is able to capture multiple physiological biomarkers that reflect vascular, structural and mechanical characteristics of the tissue. These biomarkers are derived directly from the imaging data itself rather than from laboratory or tissue testing. The result is what we described as one scan multiple biomarker approach that can provide clinicians with deeper functional insight while potentially reducing the need for additional follow-on tests. Beyond QT Imaging Breast Acoustic CT scanner as an imaging system itself, we are building a precision diagnostic ecosystem around the platform using our SaaS model, the QT Cloud platform. This software environment analyzing the physiological biomarkers generated during each scan and converts them into quantitative clinical insights. By leveraging the geometric, elastic and spectral properties of the tissue captured during imaging, the platform can support diagnostic interpretation, longitudinal monitoring and clinical decision-making. Over time, this software layer is designed to continuously expand the clinical value of every scanner we deploy. Another important advantage of the system is workflow consistency. The imaging process is designed to be largely operator independent, which reduces variability and helps produce more consistent imaging results across different sites and patient population. From an economic perspective, the platform is designed to lower overall cost of imaging. It reduces capital equipment requirements, simplifies operations and decreases reliance on highly specialized personnel. At the same time, it participates in existing reimbursement pathways for physiological imaging with potential incremental reimbursement opportunities tied to the advanced physiological insights generated through the software platform. Equally important is the patient experience. The system eliminates breast compression, ionizing radiation and contrast injection. That makes the scan significantly more comfortable and less intimidating for patients. We believe this can improve adherence to screening programs, reducing anxiety associated with repeat imaging and support more consistent long-time monitoring. Finally, because the modality is completely noninvasive and does not rely on radiation or contrast agents, it is particularly well suited for therapy monitoring. Clinicians can perform scans more frequently without the limitation that exists with modalities such as mammography or MRI. That allows physicians to track treatment response more closely and potentially gain earlier insight into whether a therapy is working. Let's cover now our results and business partnerships. We entered 2026 with strong business and financial momentum, thanks to the many accomplishments our team delivered in 2025. I'm proud to report that last year, we shipped 40 scanners, more than tripling the 12 scanners shipped in 2024. We also delivered record revenue of $18.9 million, surpassing our guidance of $18 million. These gains reflect the growing demand of our radiation-free compression-free 3D breast imaging platform and heightened interest in our technology. Revenue growth in 2025 was primarily driven by our exclusive distribution agreement with our United States distribution partner, NXC Imaging, which is a wholly owned subsidiary of Canon Medical Systems USA. Last August, we expanded geographically, naming Gulf Medical as our exclusive partner for commercialization of the breast acoustic CT scanner in Saudi Arabia, leveraging their strong relationship with hospitals, clinics and government health institutions. This partnership is expected to drive adoption across both public and private health care sectors and aligns with Saudi Arabia's ongoing investment in women's health and advanced imaging. Distribution partnerships like NXT Imaging and Gulf Medical are central to our strategy of scaling the business while maintaining a capital-efficient model. In line with this strategy, we expanded our presence in the Gulf region this January through an exclusive distribution agreement with Al Naghi Medical Company, a leading medical device distributor in the United Arab Emirates. This new agreement covers QT Imaging breast acoustic CT scanners and our QTI Cloud platform. The agreement calls for minimum order quantities totaling 43 scanners over 3 years, representing more than $24 million in minimum contracted revenue. We will continue to use the strategy of contracting for minimum order quantities to expand in other regions. In October, we entered into a strategic collaboration with Intelerad Medical Systems, now GE, to enable seamless integration of QT Imaging breast acoustic CT scanners with their secure cloud-based platform. Intelerad is a global leader in medical imaging solutions and their enterprise picture archiving and communication systems, PACS, and cloud backbone serves as the delivery infrastructure for the QTI Cloud platform to support clinical and research deployment, facilitate secure data management, streamline workflows and support integration into existing radiology IT environments. In January, we announced a partnership with Olea Medical to enhance the QTI Cloud platform by integrating Olea Medical advanced visualization, quantitative analytics and AI-ready imaging technologies to support clinical interpretation, research workflows and quantitative imaging assessments. Olea Medical software uses advanced mathematical modeling and AI-assisted tools to generate robust imaging biomarker visualization. We believe this technology will further strengthen the clinical utility of our QT scans and enable future AI and machine learning applications. In regards to our regulatory applications and approvals, we have submitted our documentation to Saudi Arabia FDA, SFDA, for regulatory approval in Saudi Arabia as well as to the Ministry of Health and Prevention for UAE regulatory approval. We received UAE regulatory approval on March 17. We will continue the same regulatory strategy for other Gulf states. Later in the year, we plan to apply for CE Mark regulatory approval for European expansion. Additionally, this month, we have also received the FDA 510(k) clearance for an enhanced configuration of our breast imaging scanner. The updated system incorporates a tilted transmitter geometry that improves tomographic coverage of tissue close to the chest wall. This part of the body anatomy has been extremely challenging to capture with standard imaging approaches, and our enhanced design provides more complete posterior breast coverage and improved overall diagnostic utility. Regarding the reimbursement codes, in November 2025, we applied for a Category III current procedural terminology, CPT code from the American Medical Association, which is designed to support emerging technologies and procedures while further evidence is gathered. On February 23, 2026, the American Medical Association CPT Editorial Panel approved a new Category III CPT code for 3D quantitative transmission volumetric ultrasound tomography of the breast. The new Category III code, X579T, represents a significant milestone in the clinical and commercial advancement of QT Imaging technology, recognizing the distinct clinical evidence enabled by its radiation-free compression-free 3D breast imaging platform. The new CPT code ensures standardized reporting of this emerging imaging service, supporting data collection, utilization tracking and continued evaluation by clinicians, payers and health systems. The code is scheduled for release on July 1, 2026, with an effective date of January 1, 2027. The reimbursement code will support adoption in hospitals. I'm happy to report a few major updates in our clinical studies. Firstly, Mayo Clinic prospective pilot study evaluated the effectiveness of QT scans compared with MRI as a supplemental screening tool for patients with a high risk of breast cancer. The study enrolled 26 women with an elevated lifetime risk of breast cancer, more than 20% from July to October 2025. All patients underwent a bilateral breast MRI and QT scan, where the QT scan was performed within 30 days of the MRI. Images of both modalities were independently interpreted by 4 breast radiologists. This pilot study demonstrated a high absolute agreement between MRI and QT scan, suggesting their comparable effectiveness in identifying positive findings. Secondly, Sunnybrook Cancer Center prospective observational early validation study evaluated the use of QT scan in detecting, characterizing and measuring the volume of breast masses in comparison to MRI. QT scans demonstrated good performance in identifying relatively small tumors, multiple lesions, satellite lesions, intraductal extensions and classifications as well as offering valuable diagnostic insights. MRI with contrast offered a broader distribution in size classification. In summary, the study found good overall agreement between MRI and QT scans for assessing breast mass volume. This results suggest that the QT scan could excel in specific diagnostic scenarios, particularly when evaluating advanced and multifocal disease and may serve as an important alternative breast imaging option when MRI is not feasible due to availability or patient counterindications. To report now on our cash position, we strengthened our balance sheet through an $18.2 million oversubscribed private placement that was completed in October. This financing was led by Sio Capital with participation from other institutional and existing investors, positioning us to support continued growth and invest in our platform. We ended 2025 with $10.5 million in cash. We also made important progress at the corporate level. We successfully uplifted the trading of our common stock to the NASDAQ Capital Market after meeting all applicable financial, corporate governance and regulatory requirements. This is an important milestone that we believe expands our visibility and access to capital markets, both now and in the future. We returned to NASDAQ after less than 1 year due to our very strong turnaround momentum. Regarding our team, we continue to strengthen our clinical and scientific expertise by naming the renowned breast cancer researcher, Dr. Mary Yamashita, as medical adviser. Dr. Yamashita will support us across several key areas, including optimizing clinical integration, refining user experience and ensuring that our technology not only meets, but exceeds the expectations of clinicians and patients. Her deep experience in breast imaging and clinical research will be invaluable as we broaden our installed base and continue to generate data in both community and academic settings. We also continue to strengthen our operations team, having recently hired the Vice President of Manufacturing and Vice President of Quality and Regulatory and plan to add the Vice President of Supply Chain and Production Planning. Regarding media and IR, recently, we partnered with The Shift, which is an intergenerational interdisciplinary media platform featuring Gloria Steinem as their inaugural Shift maker in cover star alongside other preeminent prominent women to broaden awareness of QT Imaging technology and our scanner as a safe, comfortable imaging modality and to spotlight our growing global commercial momentum. This collaboration aligns our women center radiation-free imaging platform with The Shift's influential voice to help reach and educate women who shape conversations around health and innovation. As part of this partnership, we will participate in The Shift Makers Awards and Gala at Harvard University this week. Our advances in breast imaging will subsequently be featured in The Shift publication to further the education and impact for early detection and prevention, extending our message to a broader audience of women that would benefit from the QT Imaging technology. Additionally, we engaged Alliance Advisor IR team to broaden our outreach to investors and enhance our presence in the capital markets. Communicating our strategy, execution and long-term value proposition more effectively supports our focus on establishing a shareholder base that fully understands and embraces our growth trajectory and the transformative potential of our technology. Now I'd like to turn the call to our CFO, Jay Jennings, to review financial results. Jay?

Thank you, Raluca, and good afternoon, everyone. I'll start with a review of our fourth quarter financial performance, followed by our full year results. We reported record revenue of $8.3 million for Q4 2025, up 877% from the prior year and up 97% versus Q3 2025. The year-over-year increase was primarily attributable to the shipment of 17 breast acoustic CT scanners during the quarter, fulfilling the 2025 minimum order quantity under the NXC imaging distribution agreement. Cost of revenue for Q4 2025 was $5.1 million compared with the $447,000 for Q4 2024, resulting in a gross margin for the 2025 period of 38% compared with 47% in the 2024 period. The decrease was primarily attributable to the shipment of 2 scanners in the 2025 quarter built by our contract manufacturing partner at a higher cost due to tariffs and other fees. Total operating expenses for the fourth quarter of 2025 were $3.8 million compared with $2.5 million for the same period of 2024. The increase was primarily attributable to increases in employee compensation and professional and outside service costs, partially offset by an increase in the allocation of overhead expenses from operating expenses to cost of revenue. Our operating loss for Q4 of 2025 was $700,000, substantially narrowed from $2.1 million in Q4 2024. Net loss for Q4 of 2025 was $1.4 million, which is a substantial reduction from a net loss of $3.5 million for the fourth quarter of 2024. EBITDA for Q4 2025 was negative $371,000 compared with negative $2.1 million in Q4 2024. Excluding stock-based compensation and other noncash expenses, such as the change in fair value of earn-out liability, adjusted EBITDA for Q4 2025 was negative $400,000, an improvement from negative $1.5 million for Q4 2024. Net cash used in operating activities during the fourth quarter of 2025 was $3.1 million compared with $1.2 million for the fourth quarter of 2024. The increase was primarily due to an increase in accounts receivable to $5.8 million as of December 31, 2025, which was subsequently collected in full, partially offset by a lower net loss as adjusted for noncash expenses. Turning now to the full year. We shipped 40 systems in 2025. Revenue was $18.9 million for 2025, exceeding the company's guidance of $18 million and representing 288% growth over 2024. Gross margin for 2025 was 45% compared with 54% for 2024. The decline was primarily attributable to the 3 scanners built by our contract manufacturing partner at a higher cost due to tariffs and other fees that I mentioned earlier. Total operating expenses for 2025 were $13 million, a 12% improvement from $14.8 million in 2024. The decline was primarily attributable to a $4.3 million decrease in transaction expenses related to the business combinations in 2024, a $1.7 million increase in the allocation of overhead expenses from operating expenses to cost of revenue and a $300,000 reduction in insurance expense. These reductions were partially offset by a $3 million increase in compensation and benefits, a $1 million increase in professional and outside services and a $200,000 increase in technology infrastructure expenses. Net loss for 2025 was $21.1 million, which included other expense of $8.8 million, consisting of noncash expense of $6.6 million incurred at the issuance of the Lynrock Lake term loan, an extinguishment loss of $2.1 million for the Yorkville note and Cable Car note and a $100,000 extension fee for the cable car note as well as a $3.6 million increase in the fair value of warrant liabilities and a $1.8 million increase in the fair value of earn-out liability. This compared with a net loss of $9 million for 2024. EBITDA for 2025 was negative $18.3 million compared with negative $4.3 million for 2024. Non-GAAP adjusted EBITDA for 2025 of negative $3.5 million improved 52% with negative $7.4 million for 2024. Net cash used in operating activities for 2025 was $9 million compared to $10 million in 2024. As of December 31, 2025, the company had cash, restricted cash and cash equivalents of $10.5 million. Please see our Form 10-K filed earlier today for further details regarding our financial results. Turning now to 2026 guidance. We are affirming our expectation for revenue of approximately $39 million for the year, more than doubling 2025 revenue. This guidance is based on the expected shipment of scanners under current distributors' minimum order quantities as well as the early monetization of cloud-based services as we bring our platform online across clinical and research customers. Under our distribution agreements, in addition to the 60 scanners contracted by NXC Imaging for 2026, Gulf Medical is contracted for 20 scanners in 2026, 32 scanners in 2027 and 40 scanners in 2028. Al Naghi Medical is contracted for 7 scanners in 2026, 16 scanners in 2027 and 20 scanners in 2028. And now I'll turn the call back to Raluca.

Thanks, Jay. As we execute our strategy, QT Imaging is now defined by our scanners as well as by data, quantitative biomarkers and cloud-based tools. By combining a radiation-free compression-free 3D imaging modality with secure cloud delivery, advanced visualization and quantitative analytics, we are building a differentiated, scalable data-centric ecosystem that supports a broad range of clinical research and AI-driven applications in breast imaging. Every exam we will generate is reaching quantitative data such as speed of sound, attenuation and reflection that power Bio-Rad's aligned tools and probability of cancer maps. This delivers to clinicians more than images alone, but also actionable AI-ready information. Our business model is structured on the installed scanners forming the base and cloud, SaaS and AI modules, driving recurring revenue through ongoing software and analytics upgrades. I am proud of our team's performance and dedication as we work to transform breast imaging through safer, quantitative and more accessible technologies. We believe QT Imaging is well positioned to become the breast imaging platform of choice for women, clinicians and the health systems. With strong momentum, expanding partnerships and growing adoption, our company is well positioned for another year of meaningful growth and innovation. On behalf of our Board of Directors, management team and everyone at QT Imaging, thank you for your interest in our company and for your support. With that, we are now ready to take questions. Operator?

[Operator Instructions] Our first question this afternoon comes from Ben Haynor from Lake Street Capital Markets.

First off for me, I just wanted to get a sense of what you're seeing in terms of utilization ramps as these new installs kind of come online. Is it -- does it track similar to what you've seen in the past? Is it quicker? Any color there would be helpful.

Ben, thank you so much. I appreciate you joining us. I appreciate all the great conversations we have across the course. So Ben, we do see a pickup of installations from our distributor in the United States of various scanners in the field. We are not keeping up with the updates on the website that -- we're not current today necessarily. But I have a few other thoughts to share. So today, we are only working through NXC Imaging as our exclusive distributor in the United States, as you've seen and you and I have discussed in the past, we've gotten our Category III CPT code, which will open doors for us in hospitals in United States. As we discussed, we have hired Satrajit Misra. Satrajit is our Chief Commercial Officer, and he is doing a fabulous job opening up opportunities in United States in parallel with and coordinated, obviously, with our distributor, NXC Imaging. Very important for us because, as you know, this is a new technology. So sales into hospitals would be able to be done in coordination with the company. One other point, I discussed in the call about our 2 major clinical studies comparing QT with MRI. We're very proud of both of them. We will continue putting data into the -- clinical data into the market, comparing this imaging technology to MRI and to other imaging modalities with the support of our collaborators that they are doing an incredible job, and we are very grateful for that. Last one, Dr. Mary Yamashita, she joined the team. She's an incredible radiologist with deep knowledge of various imaging modalities and will rely on her expertise to guide us further. So we do have great traction in United States, and we'll do even better in the future.

Excellent. And then just thinking about the kind of the biopharma usage opportunity, being able to repeat this -- repeat QT scans really as much as you want and the applications for potentially tracking treatment response. Are you having conversations there? What are your thoughts kind of around that segment or opportunity out there?

Yes. So Ben, very dear to our heart. So as we know, this is a quantitative technology. So we can measure the volume of the finding and obviously, the medication that provided to the patient will be able to -- the effect of that medication will be able to be tracked very fast since it's a modality that's not exposed the body to any radiation. So if it works, the doctor or the oncologists will know in a few weeks if it's the right medication or not. So we do have this on our radar. Satrajit and I discuss it all the time. We will address it within this year for sure. There are so many clinical studies going on in the United States that we could be participating with this scanner to be able to offer this imaging modality as a tool to the oncologist checking -- and the pharma companies checking various medications for the patients. We will follow on this one then and update in our future calls for sure. Thank you so much for bringing it up.

Yes, it makes sense. So stay tuned there. And then on CE Mark, is that the clearance of the approval that you're going for there, is that kind of straight up the system? Or are there -- are you going to do any sorts of biomarkers alongside that? What's kind of the -- what does that submission look like?