Q4 2021 Nano-X Imaging Ltd Earnings Call
Ladies and gentlemen, please stand by your conference call will begin momentarily once again, ladies and gentlemen, please stay on the line.
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Ladies and gentlemen, thank you for standing by and books of the Nasdaq's imaging Q4, and full year 2021 earnings conference call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer.
Session to ask a question during the session need to press star one on your telephone if you require any further assistance. Please press star zero I would now like to turn the call over to Mike Cavanaugh Investor Relations you may begin.
Thank you good afternoon, and thank you for joining us today earlier today Nasdaq's imaging limited released financial results for the full year and quarter ended December 31 2021.
The release is currently available on the investors section of the company's website.
Erez Meltzer, Chief Executive Officer, and Ron Danielle Chief Financial Officer will host this afternoon's call.
Before we get started I would like to remind everyone that management will be making statements. During this call that include forward looking statements regarding the company's financial results research and development manufacturing and commercialization activities regulatory process operations the impact of COVID-19 on its business and other matters.
These statements are subject to risks uncertainties and assumptions that are based on management's current expectations as of today and may not be updated in the future.
Therefore, these statements should not be relied on as representing the companys views as of any subsequent date.
Factors that may cause such a difference include but are not limited to those described in the company's filings with the Securities and Exchange Commission.
We'll also refer to certain non-GAAP financial measures to provide additional information to investors.
Reconciliation of the non-GAAP to GAAP measures is provided with our press release with the primary differences being stock based compensation and class action related expenses.
Now like to turn the call over to Nan Axis CEO Erez Meltzer.
Thank you Mike and thank you all for joining the call today.
As most of you know I assume my role as CEO of Jennifer It's first it's what I consider to be a pivotal time in homage development trajectory.
We have made several advancements since our last earnings call. We look forward to sharing some exciting developments with you today.
We will give an overview of our achievements since our last earnings call as well as share our outlook on the year ahead.
Before turning the call over to run Daniel our CFO to review our financial results.
We will then open the call up to questions.
I would like to start by providing an update on our regulatory and commercialization progress.
As it pertains to our conversations with the FDA around the oryx system.
We announced last quarter that we would be reviewing feedback from the FDA.
Retaining two our first submission relating to a remote stores none of spark.
In January of this year.
After careful review of the U S.
On our first ambition, we filed a pre submission towards an additional five 10-K application.
For the second version of <unk>.
Our our a high performance multi store system.
The agencies use the beta program.
We are continuing in continuous communication with the FDA and <unk>.
Believe that these routes will be the most expeditions pathways to further FDA feedback.
Which will be followed by a formal submission.
We expect that the accused submission will lead to thoughtful improvements to dynamics are.
And that is cleared by the FDA the system will be suitable for development later this year.
We have made considerable headway towards commercialization over the past year.
And our team remains committed.
The deployment of the novel arguably at least.
Focus on execution in the months.
We are pleased to report that we began generating revenues in large part due to our three previously announced strategic transactions the combination of which great about to streamline commercialization.
Combined with our Pennington X Ray technology, the acquisition of Zephyr on medical piece right now Alex a lot of deep learning machine analytics company.
<unk> W. L. L C a decentralized marketplace connecting imaging facilities, where the geology.
And yours, but rather holdings, Inc.
A leading provider of Teleradiology services.
We are well on the pad.
To provide more accessible and affordable health care.
We believe that integrating AI powered imaging analysis.
When global Teleradiology solution with our novel <unk> technology.
Thanks, Doug.
One step closer to creating a global streamlined medical imaging continuum from image capture right.
Analysis to intervention by trained radiologists.
Under one umbrella, we now have the potential capability.
Significantly improve access reduce costs and enhance efficiency.
Which could increase the chances of early detection as well as patient access to care in a meaningful manner.
We are pleased with our ongoing integration of the company we acquired at the end of 2021 .
Taken a number of cost reduction measure in all.
Order to streamline operations and benefit from synergies.
As these companies begin to contribute to announce top line. We believe we will enhance the services provided by non existent.
We intend to explore collaborations for additional solutions and a wider product offering.
In December 2021, we were excited to announce that used to run well.
Was rectified with the joint Commission gold seal of approval, which reflects the high standards that you would say rod is maintained.
<unk> inspection.
By the end of the quality standards of most widely recognized.
Medical Credentialing program in the country.
Are there more I am pleased to share that we have strengthened the leadership team.
Effective March one 2022, we appointed Peter <unk> as general manager of not I'm, sorry go ahead.
Mr. Binner, Lothar brings 20 years of strategic and commercial expertise in the health care industry.
Uniquely equipped to help drive the integration of Malibu collective roadmap and vision.
Having served on the board of Zebra medical Guslan since its inception, Mr. Brad Alexander and the funds the joint vision and mission of the merged company.
When you step into Lazard was one of the architects of Zebra to elite health services.
Clearly it is the largest health maintenance organization in Israel innings, the second largest H M ore in the world.
Strategic collaborations.
Mr. Bill DARR previously also served as CFO of more research application and technology transfer organizational squarely.
We are confident that he has the vision and the expertise to help drive that looks like into the global market.
I would like to also highlight a few other achievements since our last report.
In January 2022, we announced that the American Medical Association issued a new category three Kelly.
Procedural terminology CPT code for our quantitative 50 tissues capitalizations.
Namely potentially broader yours Osama so young.
Health cardio calcium scoring our FDA cleared AI enabled cardiac imaging solution.
<unk> coronary.
Andre calcium CHP.
CHP for patients of the U S.
The code will become effective on July one 2022.
We consider these important validation of our technology.
And a key step towards advancing detection and treatment of cardiovascular diseases.
We believe focusing on reimbursement of our technology.
Salt.
Further interest and demand for the Nellix system.
I would like to announce another agreement.
Nathan.
For now, let's say that earlier this month.
<unk> entered into an agreement with a large integrated health care organization based in the U S.
<unk> coverage with the potential to create a more equitable.
Our clinical model.
Health and wellness.
Under this agreement the healthcare organization will deploy the balance sheet enabled software designed to promote increased early detection of race for cardiovascular diseases.
The Perot systems.
Computerizing.
Demography safety scans.
We believe that the partnership between now let's see.
In the integrated health care organization will enable physicians.
Towards recently.
Densify, many previously under infected patients.
Who may be at Frisco, cardiovascular diseases, and or most of the boroughs, which could improve individual patient lines as well as having broader implications for population health and management of chronic disease.
Limitation will begin immediately and the tools are expected to be rolled out to hospitals within the organization's network of hospitals and the <unk>.
Coming months.
As for our <unk> arc as previously reported we have signed 11 agreement for global deployment of 6500 units.
Our multi store system.
These agreements are for different territories, including Africa Central America and Europe .
And the system will be deployed.
In such markets. According to the local regulation subject to requisite clearance.
In each market.
Since the beginning of the year, we have made significant progress.
To realizing our vision, both within the company and outside of it.
We've been focused mainly on establishing our production capabilities towards the deployment of products. Our system later this year, establishing new partnerships and the one thing a regulatory path.
Our assembly efforts.
Primarily conducted the guest facilities Zurich.
Since the beginning of the year, we have been improving our production line capabilities and establishing an operational assembly line to enable the expected ramp up in production exploration for shipments although non absorbed system later this year.
Operationally, our technology transfer to another wholly owned Korean subsidiary.
Payable production of the Silicon chip sets.
When completed.
This is an integral piece of the non ops.
X Ray source.
And with the launch of the production at the facility now underway, we anticipate being at full production by mid year 2022.
The key initiative, especially important given the current supply chain shortages for chips worldwide.
We believe this will help to secure a stable supply of chips that we need for the production of the amount of stock while ensuring the quality of our chips for us.
The health care professionals, who will use our non acquired systems.
With that I would like to turn the call over to <unk> Chief Financial Officer.
Thank you Erez and we reported a GAAP net loss for the full year of 2021 up $61.2 million compared with a net loss of 43 point million Daus for 2020, we reported a GAAP net loss for the fourth quarter of 2021 of $22 million compared to a net loss of $19 million for the same period.
In 2020.
Revenue for the year ended on December 31st 2021, and for the fourth quarter of 2021 was $1 3 million daus and our gross loss was $1 $5 million.
Revenue stems from the sales of the all of those services in the area I used solutions, resulting from the acquisitions of U S Rod and dynamic marketplace platform, which we closed during the fourth quarter of 2021 and in fact, those revenue represent two months of operation.
Such revenue or revenue from radiology services for the same period was $1 million with a gross profit of 0.0 million daus on not on a GAAP basis and aggressive organic gross profit of zero point $4 million in a non-GAAP basis, which represents a gross profit margin of.
Approximately 40%. In addition, our revenue revenue from licensing of AI application for the same period.
Zero point $3 million with a gross loss of $1.5 million on a GAAP basis, and a zero point $2 million on a non-GAAP basis.
Research and development expenses for the year ended on December 31st 2021 were $17 $1 million compared to a $9 $2 million and 2020 research and development expenses for the fourth quarter of 2021 were $6 5 million as compared to three.
3.0 meaningful loss for the same period in 2020 the increase in research and development expenses was mainly due to the merger merger with Nat I'll say I bet developments of our multi source and cloud systems, increasing our R&D head count share based compensation and costs related to the ongoing.
Regulatory approval process.
And marketing expenses for the year ended on December 31st 2021 were $7.0 million as compared to $12 $4 million in 2020 , one marketing expenses for the fourth quarter of 'twenty, 'twenty, one where $1 $9 million as compared to eight point to the $1 million for the same period.
2020, the decrease was mainly due to the decrease in share based compensation general and administrative expenses for the you ended on December 31st 2021, with $34 $7 million as compared to $22.3 million in 2020.
General and administrative expenses for the fourth quarter of 2021 were $10 $9 million compared to $8.2 million for the same period went to 20 increase what Julie largely to the mergers.
Acquisitions of U S rather than the assets of the MPW, increasing our labor cost due to an increase in our headcount in connection with the extension of the company's management team and the overall organization infrastructure and increasing our legal fees in connection with the FCC drove and class action litigation Nam.
non-GAAP net loss applicable to the old and the ordinary shares for that you ended on December 31st 2021 was $39 2 million compared to $18 $9 million in 'twenty 'twenty non-GAAP net loss for the fourth quarter of 2021 what 15.0 million dull arms compared to a non-GAAP net loss of.
Following $4 million for the same with fewer than 2020, a reconciliation between the GAAP net loss and a non-GAAP net loss for the full years ended the fourth quarter of 'twenty to 'twenty, one and 2000 Twenty's provided in the financial results that are part of the press release that we have it.
Should this morning, the difference between GAAP and non-GAAP net loss is mainly due to the amortization of intangible assets share based compensation fees related to the Ottawa second door, a secondary offering which was closed during the first quarter of 2021.
And legal fees in connection with the FCC probe and the class action litigation.
Turning to our balance sheet as of December 31st 2021, our cash cash equivalents in marketable securities were $156 $6 million and we had 3.18 million daus in loans from banks.
We ended the year with plant property and equipment net of 37.4 million dollar increase of $23 4 million during the year of 'twenty to 'twenty. One is mainly due to the completion of the construction of our fabrication facility in South Korea. We also ended the year with intensive.
The assets of $161 million as opposed to none at the end of 2020.
This is due to the merger with none of the acquisitions of U S roads and the assets of MPW as of December 31st 2021, with approximately 51.8 million shares outstanding.
Third to $46 1 million shares outstanding as of December 31st 2020, the increase was mainly due to the issuance of shares in connection with the three acquisitions that we have completed during the fourth quarter of 2021 .
With that I will end.
The call back over to Eric.
Thank you for the financial update.
I was delighted to assume the role of CEO for this exciting company and.
I'm pleased to have so much positive news to report in my first earnings call as non ops leader.
We thank you for joining us today and as always appreciate your continuous support.
We will now open the call for questions. Operator, please begin the Q&A session.
Ladies and if you have a question or a comment at this time. Please press. The Star then Chi on you touched on telephone. If your question has been answered or you wish to move yourself from the queue. Please so pound key.
Our first question comes from Suraj Kalia with Oppenheimer.
Good morning, Good afternoon, Erez, Ron hope, everyone is safe and healthy.
Yes, we are.
Hey, so areas.
Historically, Q subs, usually use the pathway by it.
At least by guidelines by around 75 days.
And by Art insulation, you learn something around 77.
Maybe if you could give us some additional color on the type of communications patent need written feedback.
And specifically as we stand today.
What is your.
Expectation on approval or clearance for multi source.
Okay.
Hum.
Thank you Suraj.
Yes.
First of all with respect to the 75 days.
When we.
Decided.
A few months ago.
To go through the Q subs.
Pathway.
We indeed saw that it will be 75 days before they get a response to us.
Having said that I think it took us it took them about.
Four to five weeks to respond.
<unk> meeting.
We have already.
A few discussions with them over time, the one singular they said.
Over the few times.
The decision to go to a continuous dialogue with the FDA.
Has proven to be the right one.
We are talking today quite a lot, which not only Q sub waiting for the answers respond et cetera. The.
The Q sub that we have made was based on the indications all the all the comments that they have.
In the past when when when we initially Cindy.
The submission for the multi source they send us a lot of.
Comments in the Q sub we are already fixed all the comments.
Comments.
It seems that right now.
Their point of view, especially due to the fact that it's a new technology.
It seems that.
They are now internalizing what are we are trying to do and.
They the decision last time was that.
Give us a few.
Guidance guidelines.
What to do and for supplement.
Information as part of the <unk>.
So this is this will be and I don't think that I don't expect that as they hit the 75 day, but I don't expect that.
Peter will take the 75 day, they will probably respond at least based on the notion of the calls that we had it will respond earlier.
<unk> said that right now you know we hope for the booth for the good that we can estimate exactly what will be the what will be the time, but.
The one thing I would reiterate the fact that first of all we are making a lot of progress in this area and the fact that we have decided to go to continuous dialogue.
<unk> proven to be the right one.
It was heska discussion.
Come up for bid.
No vote by turnkey.
Can you please say it again I couldn't hear.
Sorry.
What I was asking is do you.
Do you think there is a chance that the FDA might cause <unk> to go down a de novo pathway.
Uh huh.
Right now the answer is no.
And.
And.
You know, we are not going into the details but it.
It seems that.
It's not going to be.
This week, it's going to be I would say.
It's going to be.
<unk> identified as such.
Okay.
And just one quick one for you and Ron I'll throw in one for you also.
What are the yields now on the mens chips, but this technology transfer to your Korean partners because if memory serves me right in Japan, the yields were roughly around 50%. So I'm curious in that and Ron If you could what is the annualized revenue run rates and go.
Both rates that we should assume for the nano.
In the U S. A rad segments for FY 'twenty two gentlemen, thank you for taking my questions.
Okay, so with respect to the.
With respect to the Korean.
Since we have indicated that in the very near future.
Going to go for the mass production.
Once we started the midst production with no to indicate what's the yield.
Definitely it's better than it used to be in the past of course, but.
The Miss production will.
We'll be the ones that will indicate where we are.
Okay and with respect to run would you like to address the.
So you would expect the growth rate of growth, 50% a growth of more than two lines that you mentioned.
That's one of the questions Greg.
Right.
So how should we think about the revenue run rate for the AI in the USA.
Okay.
And about the revenue out.
The revenue run rate.
You should expect for them.
$8 million to $9 million on an annual basis and as for the Asics and the.
Expect two $3 million to $4 million a year.
No.
Thats right Thats correct.
Thank you.
Our next question comes from Jeffrey Cohen with Ladenburg Thalmann.
Yeah.
Oh, Hi, Eric how are you.
Good.
Oh sure.
Sure you have a bunch of questions. So firstly, what we're seeing here on the litigation expense in the fourth quarter.
Are you referring to the OCC probe in the transaction.
Yes.
But it's actually mentioned in our non-GAAP .
The adjustments between GAAP and non-GAAP at about $455000 for the quarter.
Okay got it and they know that.
We've heard about a manufacture and delivery so.
Any commitment on our deliveries are units for 2022 from the company as far as production and ore deliveries.
Right now, we don't change anything with respect to what they've been indicated.
Right now I would say that due to the fact that.
We have identified what are the lead items.
In the to be ready for the assembly, we have already ordered what is needed for the for the foreseeable future as we can say the other thing that we have indicated that in the first quarter will lower assembly line in the.
Doug ish will.
We will be ready.
For hundreds of machine on a quarterly basis so.
Right now that's that's where we are.
Okay. So with the the Korean facility up you would anticipate.
This quarter there and.
And few hundred could be produced by the end of this year.
We haven't disclosed it but I think that in the very.
In the very near future.
We'll hear.
Something about it which will not be far away from what do you anticipate I believe.
Got it Okay and could you talk about there's some.
Large integrated health care organization in the vacation of cardiovascular instead could.
Could you give us a sense of a number of large covered by this organization as it should over a million issued over $10 million.
You mean, the number of subscribers.
Just to I'm trying to get a sense of the size of the integrated health care organization.
I would say that it's among the top.
Uh huh.
I would say top 30 in the in the U S.
I would even dare to say that it's amongst the top 25.
Pizza.
The advance in the way they think about.
And.
Healthcare provider.
Providing providing health care.
<unk>.
It's a pretty sizeable.
We have also indicated that.
We are in continuous dialogue with a few others.
And.
One of them is they've been more sizable than the ones that we've signed already.
Okay got it.
One more if we could you could you give us a sense of initially.
The initial period is as far as our org placements for system purchases.
Any insight there into our one over the other or what we should anticipate.
For the coming year.
We have indicated already.
We have orders for these six to 500.
None of which have been.
Either canceled or so we'd still it's still a what we currently have and.
Since we have already indicated then we repeatedly say that the first country that we are going to install.
In store our countries with different regulation.
The FDA is not necessary another regulation is necessary over there and the indications that we currently have that the regulation that we wouldn't be required for the.
First part of the deployment, which hopefully will be shortly announce.
It will be.
We will get it.
Again, once again into very near future I don't have the exact date, but once we have it with us.
Okay, and one more if I may I wish you a resolution on the glass versus ceramic treat manufacturing or is your currently.
Two sources on the manufacturing front for the church.
Okay. So right now we are really working on a very wide.
Our range of solutions, Okay, and I'm not talking about one or two suppliers.
Talking about Oh five.
Four or five suppliers that we're currently exploring.
One or two of them is exploring the ceramic solution in one or two of them are slowing in some gas solutions.
Now we are we're doing borst both.
The decision on which one we actually focused well.
Probably be in the next few months once we get the yields once we got the the power and once we are past the.
The FDA as well.
Okay and could you give us a sense of which one was filed with the F D a queue.
We don't we don't disclose it.
I think that shortly which will be this dose.
Perfect. Okay that those are frozen thanks for taking the questions.
Thank you. Thank you.
And I'm not showing any further questions at this time I'd like to turn the call back to Earth for any final remarks.
Okay. So thanks.
Thank you all for being with US today, we are really appreciate the support the continuous support in the company and its future.
The it's interesting that the ecosystem that we're building with the combination of the Knox art.
With other equipment that will be joining this.
In the future.
Future and with the <unk>.
Reading by deliver geology provided by USA, Rod and DW and of course the.
The layer that we're adding with the AI.
Currently something that we see when we talk to customers and to potential players and two.
Partners that it's something that resonate quite well to say, the least and we hope that it will be fulfilled in the very near future.
We will generate the expected outcome for the company. Thanks, once again and we'll talk soon.
Ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.
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Yes.
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Yeah.
Okay.
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Okay.
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