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Mike Cavanaugh; RI; Nano-X Imaging Ltd.
Erez Meltzer; executive director and director; Nano-X Imaging Ltd.
Ran Daniel; CHIEF FINANCIAL OFFICER; Nano-X Imaging Ltd.
Ross Osborn; Analyst; Cantor Fitzgerald
Jeff Cohen; Analyst; Ladenburg Thalmann
Antonio Petronio; Analyst; Mizuho Americas
Operator
Have a great day and thank you for being here. Welcome to Nanox’s Q4 2023 earnings call. (Operator Instructions) Please note that today’s conference is being recorded. Now I’d like to pass it on to Mike Cavanagh from Investor Relations. Please come in.
Mike Cavanaugh
Hello and thank you for joining us today. Earlier today, Nanox Imaging Limited released its monetary statements for the quarter ended December 31, 2023. The statement is now available in the Investors segment of the company’s website. Erez Meltzer, President and CEO; and Ran Daniel, CFO, will host this morning’s call. Before we begin, I would like to remind everyone that Control will make statements on this call and then come with forward-looking statements related to monetary effects, studies and progression, the company’s production and marketing activities, a variety of provisions consistent with the regulatory procedure and others. affairs. These statements are subject to risks, uncertainties and assumptions that are based on existing expectations of control and may not be updated in the future. Therefore, such statements should not be relied upon as representing the Company’s consistent views as of any subsequent date. Factors that may also cause such a difference include, but are not limited to, those described in the Company’s filings with the Securities and Exchange Commission. We may also reference certain non-GAAP financial measures to provide further information to investors. A reconciliation of non-GAAP and GAAP measures is provided with our press release, with the primary differences being non-GAAP net loss attributable to non-unusual actions, non-GAAP revenue charge, non-GAAP gross profit, and gross profit margin. non-GAAP. , non-GAAP studies and progression expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, and non-GAAP gross loss consistent with participation. That being said, I would now like to hand over the field to Erez Meltzer.
Erez Meltzer
Daniel Ran
THANK YOU. We reported a GAAP net loss for the fourth quarter of 2023 of $10. 2 million, the existing era, compared to a net loss of $52. 8 million in the fourth quarter of 2022, which are the comparable eras. The cut is largely due to a goodwill impairment of $36. 5 million and an accrued liability of $8 million similar to the forbearance agreement that were identified in the comparable generation and a $4. 4 million cut in expenses general and administrative. Fourth quarter 2023 currencies were $2. 4 million and gross loss was $1. 7 million on a GAAP basis. Revenue for the comparable period was $2. 1 million and gross loss was $1. 8 million on a GAAP basis. Non-GAAP gross profit for this era under review was $0. 9 million, compared to $0. 8 million for the comparable era, representing a gross profit margin of approximately 36% on a non-GAAP basis for the era under review, compared to 39%. on a non-GAAP basis. -GAAP Foundation for the Comparable Era. Teleradiology Services currencies entered for the reporting era were $2. 3 million with a gross profit of $0. 3 million on a GAAP basis, compared to currencies of $2. 1 million with a gross profit of $0. 3 million on a GAAP basis for the comparable era, which represents a gross profit margin. of approximately 14% on a GAAP basis for the current era, compared to 13% on a GAAP basis for the comparable era. The Company’s non-GAAP gross profit on radiology facilities for the current era was $0. 9 million, compared to $0. 8 million for the comparable era, representing a gross profit margin of approximately 38% on a non-GAAP for the era presented. compared to 40% on a non-GAAP basis in the comparable generation. The decrease in GAAP and non-GAAP gross profit margin is primarily due to an increase in the Company’s radiology class due to increased reimbursement and incentive bonus payments that the Company paid to the Company’s cardiologists. worrying about it is done overnight and we can ship it. During the reporting era, the company generated $84,000 worth of AI response coins, compared to $53,000 coins in the reporting era. In the first quarter of 2024, the HealthCCS nano cardiac solution will be available immediately in the United States for an annual payment of $8,500 or the first year of commitment and an annual payment of $75,000 beginning with the first anniversary of commitment and thereafter. During the reporting era, the Company generated similar coins from the sale and implementation of image formulas amounting to $17,000 with a gross loss of $44,000 on a GAAP and non-GAAP basis. These currencies in flows come from the deployment of our formula in Africa. Research and development expenses for the period presented were $6. 8 million compared to $7. 1 million for the comparable period, a cut of $0. 3 million primarily due to a cut in the Company’s expense growth. Sales and marketing expenses for the reporting era were $1. 0 million compared to $1. 5 million for comparable times. The reduction was primarily due to reduced expenses similar to our sales and marketing activities. General and administrative expenses for the reporting era were $3. 8 million, compared to $8. 2 million for the comparable era. A reduction of $4. 4 million is primarily due to a reduction in our legal expenses of $4. 0 million, largely due to the completion of the SEC investigation and settlement of the appeal. collective, a relief in the reimbursement based on inventories in the amount of $0. 2 million and a relief in the collection of the capacity insurance premium for administrators and officers in the amount of 0Array4 million dollars. Another source of coins was $2. 7 million for the era presented, compared to an expenditure of $7. 8 million for the comparable era. Other expenses in the comparable period included an accrual for the settlement of legal action against the Company in the amount of $8 million, which was reversed in the amount of $3 million in the period. presented since the Company earned this amount. of its insurance company DNO under the settlement agreement in the elegance action opposed to the Company. Let’s move on to our assessment. As of December 31, 2023, we had cash, money equivalents, limited deposits and marketable securities of approximately $82. 8 million, to which we charged $3. 5 million in funds from a bank. We ended the quarter with net property, plant and apparatus of $42. 3 million. As of December 31, 2023, with approximately 57. 8 million notable inventories compared to 55. 1 million notable inventories as of December 31, 2022, the accumulation is primarily due to the sale of approximately 2. 1 million inventories and guarantees to acquire up to 2. 1 million inventories. in a direct provision recorded for a gross profit of $30 million and net profits of approximately $27. 1 million. The issuance of approximately 255,000 non-unusual shares to former US shareholders is being made pursuant to the amendment to the US Stock Purchase Agreement. With that, I’ll call Erez again.
Erez Meltzer
Thank you all. Once again, for joining our call today and continuing Nanox’s project to make medical imaging more effective, available and affordable around the world. It’s been two years since I became CEO. And when I was delivered here, Nanox was in a very different place. This year alone, we reached a vital FDA approval milestone and are looking to potentially expand the ARC use case with the FDA. We are also involved in the SeaMark designation procedure in the European Union and have obtained local regulatory approvals in other countries such as Ghana. We have also begun commercialization in earnest and ARC formulations are now deployed for use in imaging centers and hospital formulations in Israel and three countries in Africa. And from today’s call, we know that we have many formulas implemented in the United States. Over the course of two years, we embedded our AI strategy across the company. Our leading AI solution, Nanox, provides the ability to use AI to highlight and help identify patients with undetected asymptomatic chronic diseases, thereby initiating early diagnosis and management of presentations. This year, we also received two FDA approvals, providing really extensive clinical validation of our AI solution. We realize it’s been a long road, but our progress is tangible and we’re very excited to make even more progress in 2024. Before we end the call, I have one last bit of news to share, and that’s something many of you have anticipated. . On Wednesday, April 10, we will demonstrate the use of the installed ARC system, a dynamic medical imaging formula in Union, New Jersey, starting at 9:30 a. m. m. The demonstration will be followed through a circular table. Please contact our Investor Relations partners at ICR if you wish to finalize and note that selling options are limited. With that, I thank you once again and close our call for investors for the fourth quarter and 2023.
Operator
(Operator’s Instructions)
Erez Meltzer
Just before we move on to the Q&A session, I’d like to mention that we’ve updated our online page with attractive clinical pathologies from the U. S. business side. and our clinical sites. In the U. S. sample. In the U. S. , we noticed improved visualization compared to classic radiography, for example cervical spine scanning. In addition, in critical clinical trials, the chest examination can be localized from the balance and into the thoracic body, while the x-ray only shows a fatal injury. This lesion was obviously visualized in the Nanox ARC photographs and in the CT scan of the patient’s biopsy program. So check it out and feel free to check it out too.
Operator
Ross Osborn, singer of Fitzgerald.
Ross Osborne
Hey guys, congrats on the quarter. Thank you for answering the questions and getting started with ARC. Could you tell us how many systems in the U. S. are up and running in five deployed states and in the fourth quarter and also how does the year 2024 look forward so far in terms of locations and visibility?in your backlog or order book? Thank you.
Erez Meltzer
So, Ross, we’ve already indicated that throughout the year we’ll be adding more main points so far. We haven’t indicated precisely how many formulas there are. We’re just saying that lately we have formulas installed in five states. The only thing I would say is that we have already manufactured a few dozen formulas and the formula is installed in the clinical facility, as stated. Then I would say that in long-term meetings, I’ll probably mention and give you have more numbers. The numbers we’ve given so far are scans consistent with the day, dollars consistent with the scan, and a few dozen already sold, as well as on other sites.
Daniel Ran
And Ross, keep in mind that the difference between the number or number of systems installed and those that have been running advertising since that period is due to local or national registration requirements.
Ross Osborne
Perhaps you can give us an idea of what types of centers are adopting ARC, how usage has increased so far, and what the convenience of $30 per scan is?
Erez Meltzer
Yes, we can, Array. Lately we have small and medium-sized medical imaging centers, one of them is giant and the other thing we can point out is that: where else do we have?I think they’re the maximum, if I look at everybody, everybody, those kinds of clinical areas. The other one we have is 626 in Georgia and I would say, yes, a couple of tiered services in orthopedic care, clinical centers and, yes, those are the numbers.
Ross Osborne
They gave it to me. And finally, for us, could you remind us of the economics of Connect, given your deals in Peru and Mexico, if it’s going to be an equity sale or an MSaaS, and if it’s an MSaaS, how do we think. . .
Daniel Ran
Most of them are MSaaS styles in the same way that we applied it to the CRA and we apply this capital style now in relation to Connect. But like I said, most of them are MSaaS styles.
Erez Meltzer
Ross, also in the country, in some countries, especially in Africa, we made the resolution to sell the formula in some of them, we sell it for our partial quantity and then we qualify according to the scan, we have other models and the Connect.
Ross Osborne
Ok, I get it. Thank you for answering my questions.
Operator
Jeff Cohen, Ladenburg Thalmann.
Jeff Cohen
Hi, how are you? I wanted to go back to a couple of questions about lists. Can you tell us about Kenexa built-in as well a little bit to scale and give us an idea of Connect instead of ARC and how you expect either of those platforms to work?in the U. S. Are there any U. S. and U. S. ties?
Erez Meltzer
Alright. Connect is currently sold outside the United States. Once Connect obtains FDA approval in the United States, we will also manufacture silicon in the United States. Lately we are connected in more than 10 countries. And many of them are African. Some of them are in Latin America and Israel. Firstly, the goal of Connect was to grow or expand the diversity of products we have available. And the great thing about what we sell at Connect is that we sell it not only as a team, but also with the AI formula included in what we sell. The formula can then parse the symbol itself. Additionally, we have formulas that were sold to Morocco, for example, they were used in the earthquake, Craig, through the visitor whose framework I was used there is also Israeli in various excessive conditions where a box check or a box inspection can be done . And the concept behind them is twofold: the first is that, infrequently, we get Connect and then we get ARC. And secondly, there is inclusion or how to integrate the AI formula into the symbology itself. And in terms of the login process, it’s the same process, infrequently they get registration right before the ARC, infrequently after the ARC. If we take the examples of Connect in Africa in one or two countries, we achieved with Connect, in one of the countries, in a few days, the number of scans per day was greater than 120. And those are examples that can Help us avoid access to certain clinics in advance. I’ll also reiterate the fact that it’s literally gratifying to see ARC and Connect announced together. As we saw from the beginning, it is fundamentally complementary and very favorable to what we do. The fact that we are very flexible in terms of business style and hybrid style, MSaaS and CapEx. And that also has a lot of price for us.
Jeff Cohen
So, I’m guessing the spaces you’re saying are those kinds of permissions that you’d expect for a lot of sites or most have demonstrated the robustness of either type of deployment, Arch and Connect.
Erez Meltzer
I wouldn’t say majority because some countries would like to use this Connect more than the ARC. But I would say that in Latin America and the United States, it will basically be the CRA and the rest of the world. We’re going to see a lot of countries promoting Connect to prepare us for access to medical imaging, because that’s the project we’ve set for ourselves. And we try to achieve that in other ways, as we do. But what we know in some countries is that in the We started with the Connect and then we were able to enroll in the ARC.
Jeff Cohen
And could you explain an earlier comment about formula production that dates back to the year 2000?
Erez Meltzer
No no no. We said we already had a few dozen systems manufactured. We are in the process of making a few dozen, let’s say a few dozen more. And if you think about parts with long lead times rather than lot availability, this has allowed us to optimize the speed of the installation we’re doing lately. If you don’t forget we said at Investor Day that you were taking a very, very conservative approach. We can’t, we can’t do it, we don’t have the chance to give you a first impression, especially in the United States. Then we install the systems. We analyze the data we uploaded and we can carry out the installation procedure. We have been able to reduce the time it takes to install the systems and lately we are exchanging with other service companies that will have greater coverage for the United States. We have gained a lot of sense of access or ability to control systems. You too from a distance. We are in the process of opening the call center that will allow us to better serve those units. We are exponentially expanding the number of people in the sales and service team. And we continue to expand our professional groups and application and recruit Shell staff. And last but not least, of course, we want to work on the benchmarks and make sure that other people are aware of the changes we are making to the care criteria. And we will do it promptly.
Jeff Cohen
Finally, to us on any feedback on 2024 in terms of sequential adjustments in first quarter revenue, etc. , thank you.
Erez Meltzer
So, first of all, some of the indications I’ve given imply where we are so far, and therefore the number will increase. Our goal is to generate more revenue, more installations, and more analysis into the existing installation of the systems we are going to install. And in the next quarter, we’ll be able to get a percentage of a more detailed update, as well as numbers on where we are and what procedure we’re moving towards right now. moving forward according to plan and precisely what was presented at Investor Day. As you can imagine, we are the most productive experience there is. We are much more cautious and conservative in what we say, what we say, and what we verify to make sure that everything we promise will be fulfilled.
Jeff Cohen
Great, thanks for answering our questions.
Operator
(Operator’s Instructions) Anthony Petrone, Mizuho.
Antonio Petrone
Thank you and congratulations on a smart and intellectually strong start to the year. Perhaps, Erez, just for the patience of Nanox ARC, you discussed $30 per scan and some early systems perform seven scans per day. Do you expect this to evolve and where do you see its use?Are you looking at a chest X-ray?Just a little bit about where you see the early use cases of Nanox ARC and how you see that scaling throughout 2024 and the few nuances of the follow-ups. Thank you.
Erez Meltzer
Alright. No disrespect to others, but the right question. First of all, I can say that seven scans per day is the best, that is the style we have created and it turns out that from the first installations that is what we are seeing. But I would say more than that, that we have medical imaging centers, that I would run and that they are professionals. And there are other people who literally understand what we do. We had days with 15 scans per day. First of all, in dollar terms consistent with scanning, it costs $30 if you remember, compared to $14-17 in the rest of the world. So the US is around $30. And that’s consistent with the CPT code and the reimbursements that can be generated, which leaves us a lot of room at Ocean Medical Imaging Center and the radiologist. As for. . . Those are the numbers we’re looking at right now. And in relation to the clinical indications, I would like to reiterate the following, well, in the United States lately we have the FDA of MSK, unlike the rest of the world, where we do a lot of things in Israel, Africa and other places. we do the chest, we do the abdomen, we do a skull, we do it from any other type of indications. Our 2024 FDA submissions will come with other indications, as noted in the comment I made at the beginning. So, based, for example, on hospital costs in Israel, we perform lung cancer screening. And that’s part of the breast samples we take. And we have published those examples, as well as the research we conducted on the cervical spine, on our online page. And I have to be very careful, you know, because of FDA regulations and all the clinical charting that we do with other products. But right now, it looks like we’re going to have even more clinical indications as we move forward than was originally anticipated. Even some of them were not part of the original plan.
Antonio Petrone
That’s helpful. And I have some follow-ups on AI solutions. Specifically, HealthCCS, or coronary artery calcification at InterMountain, is implemented there and appears to be already up and running. How do you think this will evolve in 2024? And when you think about winning Mountain, just in terms of the volume of patients you see with coronary artery disease, how many cases do you think will be analyzed at the CCS over the next few months?And how will that evolve in the coming months?Years as this collaboration with InterMountain Health evolves?Thank you.
Erez Meltzer
Alright. So with AI, I now recommend reading an article that our medical director wrote and another that I wrote at the pass on the use of AI. It turns out that not only we, but also other companies in the AI sector, have maximum power engines. But now they are due to implementation, deployment and adoption through a component of the fitness economy, namely in the United States, which is not fast enough, which will generate more benefits for both institutions. But other people fear this situation. By the way, I think it suits at most both one and other activities in other places. But the adoption of healthcare is slower than the ability to deliver services. As for CCS, the calcium score, in the offer, it makes the most of the experience we have mainly from Corewell’s Spectrum, to whom we have given this guide, as well as from the United Kingdom. So if I talk about them, if I talk about the solution for cardiac care, I would say that 60% of the patients examined had not been detected before and there was a risk. And finally, those are cardiovascular diseases caused by Chester CDs that have not been diagnosed. And the other, the other delight that we have had with many other people who have been diagnosed, one of them, by the way, in the PV in the middle, it is balanced in Israel and the United Kingdom, was basically for the year for bones by osteoporosis. But what you can see is that, I think, we post the effects of the product and the others on our online page. Yes. Can you take a look at the online page and see the indication we gave there, the number of patients who were not detected and in the detectors as for the disease of the center? And I think that provides an indication of the ability to do that. The one that was discussed in relation to bone solution is about the University of Oxford and was perhaps published and met with up to six times as many patients in terms of compression fracture. This was then demonstrated on the other CT scan. So I think AI and what we’re doing is getting a lot of attention and we’re moving to supplying more as we go into the future, we’re moving to supplying as much as we can because it’s subject to a lot of privacy restrictions. However, the more we can share with the public and the more the institution, adding InterMountain, which is new, gives us the opportunity to share, in fact, with the public.
Antonio Petrone
Thanks again.
Operator
This concludes the convening of today’s convention. Thank you for participating. You can now log out.