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

Good day, and welcome to the iAccess Alpha Virtual Best Ideas Fall Investment Conference 2026. Our next presenting company is QT Imaging Holdings, Inc. [Operator Instructions] I'd like to turn the floor over to today's host, Jay Jennings, CFO, Q2 Imaging Holdings, Inc. Please go ahead.

Thank you. Good afternoon. I'm Jay Jennings, the Chief Financial Officer of QT Imaging Holdings, Inc., which is listed on NASDAQ and simple QTI. Our mission is straightforward, transforming breast health for every woman. We do this by delivering safe, high resolution and cost-effective solutions where the traditional technologies fall short. Our goal is to replace outdated breast imaging workflows with the first scalable 3D SAFE imaging platform for dense breast diagnostics and precision breast oncology. QT Imaging began with an FDA-cleared imaging technology. We are now evolving into a commercial quantitative breast imaging platform that combines proprietary hardware, advanced image reconstruction, cloud infrastructure and over time, AI-enabled clinical applications. That evolution matters because we're not simply introducing another imaging machine. We are building a platform designed to improve the patient experience, provide physicians with objective and reproducible information and create value across a growing installed base. I'll cover some of these important milestones later in this presentation. The current breast imaging pathway has important limitations. Mammography uses ionizing radiation, requires compression and misses cancers in dense breasts. MRI can be expensive, time-consuming and uncomfortable and typically requires contrast. Conventional ultrasound is highly operator-dependent. Together, these limitations can create fragmented workflows, mutation anxiety, recall and attrition. It is important to note that 1 in 5 women of established screening age in the United States are not receiving recommended breast cancer screenings with screening gaps even greater among women in their 40s. The industry is ripe for disruption. We are addressing these challenges with a differentiated 3-dimensional approach that uses low frequency sound ways. The exam involves no ionizing radiation, no breast compression and no contrast injection. It is also operator independent and designed to provide consistent, quantitative imaging, particularly for women with dense breasts. It is important to note that in the United States, approximately half of the women over 40 have dense breasts, and this percentage is even higher internationally. We streamlined what was a multistep supplemental screening and diagnostic imaging process into a single step, patient-friendly process, with the additional potential to reduce unnecessary biopsies. The goal is a simpler pathway. One, patient-friendly examination that can support supplemental in diagnostic imaging while potentially reducing unnecessary follow-up procedures. For clinicians, the system provides multiple sources of information, including reflection images and quantitative biomarkers such as speed of sound, attenuation and breast density measures. For administrators, the model can deliver attractive scan economics, lower labor requirements and a potential 3-year investment recovery at approximately 5 patients per day. This is one of the rare opportunities in health care, where the patient, the clinician and the administrator can all [indiscernible]. Breast Acoustic CT Scanner is FDA cleared and patent protected. It uses a CT-like configuration with ultrasound to provide 2 independent complementary sources of information, transmission imaging that measures the speed of sound through tissue and high-resolution reflection imaging that reveals tissue structure and lesion characteristics. This allows us to deliver MRI like diagnostic performance in a safer, more scalable and more patient-friendly platform. The patient experience is equally important. The typical exam takes approximately 10 to 12 minutes per breast. It is quiet, comfortable and suitable for women with dense breasts or implants without the compression associated with mammography, for the contrast, noise in confined environment associated with MRI. More than 12,000 women have now been imaged using Breast Acoustic CT. That bring real-world experience is an important foundation for broader clinical adoption. The market opportunity is supported by several trends. Breast density notification is increasing awareness that density effects both cancer risk and the sensitivity of the mammogram. Radiology is leading clinical AI adoption, and oncology is moving towards biomarker-guided personalized treatment and earlier assessment of treatment response. We sit at the intersection of these trends, patient-centered breast imaging, quantitative radiology and precision oncology. The 2026 total addressable market is estimated to be approximately $2.5 billion, growing to approximately $3.8 billion by 2030, with the reimbursed segments of the addressable market estimated at $1.7 billion in 2026 and $2.6 billion by 2030. There are 3 tailwinds that are positioning us for growth. Regulatory, the FDA has recognized the importance of breast density in breast cancer screening. AI, radiology is the leading specialty for clinical AI adoption. And oncology, which is moving from one size fits all treatment towards biomarker-guided therapy. Our near-term sweet spot includes women with dense breasts and women at intermediate or high lifetime risk who may benefit from supplemental imaging. Longer term, we believe quantitative biomarkers and treatment response monitoring and extend the platform's role in breast cancer care. We have assembled an impressive Clinical Advisory Board with expertise across breast imaging, breast surgery and clinical practice, including Dr. Mary Yamashita of USC, Dr. Barry Roseman and Dr. John Tanager who is a Mayo Clinic trained radiologist and early adopter of our technology. Our regulatory foundation continues to expand. In addition to our existing FDA clearance, we have received regulatory authorizations in Saudi Arabia, United Arab Emirates and Israel. In the U.S., the AMA approved a dedicated Category III CPT code for Breast Acoustic CT. The code was released in July, and it will become effective January 1, 2027. It does not itself guarantee coverage, but it creates a standardized mechanism for reporting, utilization tracking and evidence generation, an important step on the path towards broader reimbursement and adoption. We also have a number of ongoing clinical studies, which I'll cover next. At Mayo Clinic, a prospective feasibility study evaluated QT scan against MRI in 26 women at high lifetime risk. Across 52 breasts, the study reported breast level agreement and QT scan identified all lesions considered suspicious on MRI. These pilot findings support the rationale for a larger follow-on study aimed at expanding QT Imaging adoption in high-risk and supplemental screening. At Sunnybrook Cancer Center, an ongoing 100-patient program is evaluating CT scan versus MRI and studying quantitative ultrasound findings in relation to treatment response for women receiving neoadjuvant chemotherapy. The objective is to assess whether quantitative imaging can help evaluate response in days or weeks rather than waiting months. We also completed a multisite repeatability and reproducibility study. Beta Sound, which is our core tissue biomarker, demonstrated less than 1% variability across scanners under the study conditions. That consistency is critical for distinguishing biological change from measurement noise and supports the platform's potential for consistent, data-driven breast health assessment. Together, these clinical studies are building evidence across supplemental imaging, diagnostic performance, high-risk populations, reproducibility and treatment response monitoring. As a reminder, we received regulatory approvals in Saudi Arabia, the UAE and Israel so far this year. We are also pursuing a CE mark in Europe with a target of the second quarter of 2027. Our business model begins with hardware revenue and is designed to expand through recurring cloud software and over time, a higher-margin AI diagnostic layer. But simply, hardware gets us in the door, software builds the company. Our go-to-market approach has been primarily distributor-led giving us broad coverage, capital efficiency and rapid deployment. We are now evolving toward a hybrid model. Our direct sales team can lead strategic accounts, enterprise health systems and key clinical relationships. All distributors continue to provide reach, service and financing support. This hybrid approach is intended to increase customer control and support our margin expansion over time. In the United States, we work with NXC Imaging, which is a subsidiary of Canon Medical Systems. Internationally, our partners include Gulf Medical in Saudi Arabia, AlnagiMedical in UAE and reinvent Pharma in Pakistan. The QTI Precision Pathway cloud platform is the connected later. It is being developed to support software updates, secure image management, clinical collaboration, quantitative analysis, precision reporting and future AI-enabled tools. The objective is to preserve the relevance of every installed scanner while increasing its clinical and economic value. We are demonstrating meaningful commercial scale. Our revenue increased from $4.9 million in 2024 to $18.9 million in 2025. For the first 6 months of 2026, revenue was $14 million, which was an increase of 116% from the first half of 2025. We shipped 28 scanners, twice the prior year number. We are affirming 2026 revenue guidance of approximately $39 million, which would represent more than double our 2025 revenue. This guidance remains forward-looking and is based on expected distributor minimum order quantities and contributions from our direct sales. We also strengthened our financial foundation. During the second quarter, we completed a $10 million underwritten public offering, and we extended the maturity of our $10.1 million senior secured term loan by 2 years to March 31, 2027. As of August 7, 2026, our cash and restricted cash totaled approximately $14.2 million. These actions provide additional flexibility for us to invest in commercial expansion, clinical evidence, manufacturing capacity and product innovation while maintaining disciplined capital allocation. We are also demonstrating strong improvement in our unit economics as the business scales, with revenue per scanner increasing from $407,000 in 2024 to $473,000 in 2025 to an estimated $488,000 in 2026, all while maintaining gross margins of approximately 45%. At the same time, adjusted EBITDA per scanner improves dramatically, illustrating a clear path for his profitable commercial scale. We are also investing in the operational foundation needed to support growth. Our new 22,000 square foot headquarters and manufacturing facility in Petaluma, California, provides us more than 2.5x our current operational space, while reducing our lease cost per square foot by approximately 55%. But this expands capacity and efficiency at a comparable overall real estate cost. In July, we completed our first routine FDA inspection with 0 form FDA 483 observations. We believe that outcome reflects the strength of our quality management system and the quality culture supporting [indiscernible]. Creating a new category also requires awareness. Through our engagement with the shift and participation in forms at Harvard and during Wimbledon Week, we are helping elevate the conversation around breast density, patient choice and patient-centered imaging. Intend to keep these awareness initiatives closely connected to our clinical reimbursement and commercial objectives. In summary, we are executing on our early commercial scale with multiple near-term value inflection points. First, we have an FDA-cleared and commercially validated technology, addressing clear limitations in breast imaging. Second, our commercial infrastructure is in place through partnerships for manufacturing, distribution and international expansion. Third, we have established our direct sales force based on strategic sales industry leaders. Fourth, commercial adoption is scaling, with revenue growing from $4.9 million in 2024 to a 2026 forecast of approximately $39 million. Fifth, reimbursement and global regulatory expansion is underway. And sixth, our platform creates upside beyond hardware through cloud software, AI diagnostics and quantitative biomarkers. In addition, we've strengthened our balance sheet and are allocating capital towards the milestones that can create durable value. Our priorities for the remainder of 2026 and into 2027 are clear, accelerated adoption and installed base growth, strengthen the clinical and scientific evidence, expand global market access, advance the quantitative imaging platform in scale with operational discipline. We recognize that establishing a new category in breast imaging takes time and rigorous execution. But today, QT Imaging is a stronger company with commercial momentum, a growing clinical foundation and multiple potential value inflection points ahead. Thank you for your time and interest in QT Imaging. I'd be happy to answer your questions.

The first question is regarding our revenue stream. How much of the revenue in 2026 is hardware versus software recurring? And as we scale, how do we expect that mix to change? So as mentioned in the presentation, we're still working on the AI platform. We're expecting that to come out beginning of next year. Currently, the revenue we're generating in 2026 is primarily hardware based, so scanners and consumables. But as we release the AI platform, we anticipate the shift to more of the recurring revenue and less on the hardware and consumable revenue. And how do you expect gross margins to trend as your commercial model transitions to a hybrid model? So currently, we're primarily selling to a distributor in the U.S. They obviously mark up the scanners when they sell them to their customers by selling directly rather than through a distributor, we can bring in that profit, which would be a considerable bump-up from the, they say, 41% gross margin on the hardware that we're realizing in the U.S. currently. So higher price point will bump up the margin. In addition, as we start selling the AI platform beginning of next year, then obviously, that will further increase the gross margin. So we're expecting a pretty sizable increase in our margin next year with the direct model and with the AI SaaS platform. So my question is how important will the Category I CPT code to broader clinical adoption beginning in 2027? It will be very significant. Currently, there is some reimbursement under more of a generic code at about $200 a scan. Out-of-pocket imaging centers are charging $500 to $550 per scan. So this Category 3 code will allow us to start collecting data that will allow us to move towards the CPT1 code to set -- hopefully set the price point for reimbursement and working with payers to have them accept the code and provide reimbursement. They're still could be out of pocket. But I think moving towards reimbursement of the scans would be a significant step forward. How are we balancing continued commercial investment with the current debt load and future capital needs? So as mentioned, we raised $10 million earlier this year. We raised $18 million last year. We had $10 million of long-term debt that was coming due at the beginning of next year that we've pushed out 2 more years to 2029. We are progressing with the increase in scanner shipments and revenue. We are progressing towards profitability. We're not actively pursuing additional capital, although we're always mindful of that. And I think as opportunities arise, we will consider them. How much visibility do distributor minimum order commitments provide into future revenue? So the NXE minimum order quantities extend through this year. We do have minimum order quantities with AlnagiMedical and Gulf Medical that go another couple of years. But as I was saying in the presentation, our shift is more to direct sales. So we still want to leverage distributors, but more so internationally and really focus on our increasing our direct sales. Obviously, we can maximize our margin. And what needs to happen to improve utilization of scanners already installed in the field? I think some of that is through the clinical studies that we have underway, demonstrating the Q2 scan versus existing modalities, being mammography, MRI, handheld ultrasound. I think as we continue to do those studies, release information, I think that will help. Obviously, I think with the work we're doing with the shift, I think getting more information out there generally, where women understand that there's additional options for supplemental imaging compared to just mammography and MRI and realizing also that the experience that's no ionizing radiation, no compression, no contrast that it's just a much better overall patient experience. So I think as that -- all those, I think, will continue to lead towards higher utilization of the scanners that are already installed in the field. And with that, I will wrap up the presentation. Thank you for your interest in QT Imaging. Thank you, operator. You can now close the call.

Thank you. That concludes QT Imaging Holdings, Inc.'s presentation. You may now disconnect. Please consult the conference agenda for the next presenting company.