Q1 2022 Nano-X Imaging Ltd Earnings Call
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Good day, and thank you for standing by and welcome to the <unk> imaging first quarter 2022 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 this session you will need to press star one on your telephone.
Please be advised that today's conference may be recorded I would now like to turn the conference over to your speaker today, Mike Kevin All Investor Relations. Please go ahead.
Good afternoon, and thank you for joining us today.
Earlier today Nasdaq's imaging limited released financial results for the quarter ended March 31 2022.
The release is currently available on the investors section of the company's website.
Erez Meltzer, Chief Executive Officer, and Ron Daniel 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 upon as representing the company's 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 will also refer to certain non-GAAP financial measures to provide additional information to investors.
A reconciliation of the non-GAAP to GAAP measures is provided with our press release with the primary differences being stock based compensation.
Amortization of intangible assets and class action related expenses.
I'd now like to turn the call over to Erez Meltzer.
Thank you Mike and thank you all for joining the call today.
As always we appreciate your continued support of genomics.
On our last call I will give an overview of our recent achievements and share our outlook on the year ahead before turning the call over to ran Daniel our Chief Financial Officer to review our financial results.
We will then open the call up to questions.
Overall I am pleased with our performance in the first quarter is.
<unk> experience accelerating revenue growth.
Continue to advance the design and deployment of the Nellix system.
And we continue to make headway in the FDA clearance process.
The first quarter of 2022 was our first full quarter of revenue generation.
The company generated topline revenue of $1.8 million compared to $1 $3 million revenue in Q4 2021.
It's in the previous quarter. The revenue growth was due to the acquisition of Zebra medical visit vision now Nellix AI deep learning machine analytics, our company MPW no not a marketplace, which is the a centralized marketplace connecting imaging facilities with the radiologists.
And use of Rod Holdings, Inc, a leading provider.
Federated Yalu services.
The acquisitions were completed at the end of 2021 and started to generate revenue in mid Q4.
Beyond the acquired revenue streams. We are pleased to note that we also experienced organic growth in the Delaware geology of business, which accelerated in the first quarter of 2022.
The sales and marketing efforts around our Teleradiology solution, which began in November of 2021 has begun to produce results. During the first quarter our team generated growth from existing clients. While also implementing new contracts, where there are new imaging centers.
Our Teleradiology solution now consist of a network of more than 300 independent radiologists that are certified by American border for geology, and we provide our telerik <unk> service to over 500 imaging facilities, including hospitals.
We believe that the progress in our Teleradiology business will strengthen the Memex end to end medical imaging platform and will support our global deployment efforts and ultimately helped to increase the accessibility of medical imaging solutions.
These acquisitions are important pieces that we have put in place around the innovative networks, our technology and we believe they will help prepare none oaks to advance our vision democratizing health care around the world.
It is gratifying to see our AI powered software adopted by large hospital systems designed to promote increased early detection of risks for cardiovascular disease, and osteoporosis, which was first announced on our last call.
We believe the value of our AI solution will become stronger once it is being compared with a non arc to create end to end connected.
Portable streamlined medical imaging solution from image capture through analytics to intervention by train radiologists.
It is well known that early detection saves lives and.
And we believe that the increasing use of advanced AI enabled to diagnostic equipment for the rapid diagnosis will shift healthcare from predictive to preventive.
In developed countries. This is one of the major factors anticipated to contribute to the rising product demand.
As this technology continues to gain momentum with health care providers.
Currently.
On a handful players operating in the market are providing Abe AI enabled imaging technologies to the health care industry.
We believe that these successes demonstrates the integration of the acquired companies is going smoothly.
As part of our integration effort, we are focused on improving our internal controls.
By implementing procedures processes and policies, we are continued to invest.
And improve our human capital and technological infrastructure.
We plan to continue to evaluate our potential additive technologies that may enhance the value of an IMAX ecosystem.
With that I'd like to turn to the regulatory update.
Our continuing dialogue with the F D. A enabled us to receive feedback on our acute submission and we expect that the next step in the process to be the submission of the supplement to this Q submission followed by a formal five 10-K application to the FDA for the <unk>.
Multi source nooks arc.
That will have the power levels and indication that we believe will result in a successful deployment of the <unk> arc.
Okay.
And another related matter to our regulatory efforts, we announced several weeks ago that <unk> say I had secured another F. D. A five 10-K clearance.
This time for our health <unk> device and AI software that provide qualitative and quantitative analysis of the spine from CP to support <unk>.
Clinicians in the evaluation and assessment of vertebral compression fractures and low bone density.
This is our 10th clearance with our innovative portfolio of AI powered clinical decision assistance.
In addition to these FDA clearances Nymex has secured the CE Mark in Europe for 11, Radiology AG solutions as well as numerous regulatory approvals in other countries for a radiology AI solutions.
I'd like to finish up the regulatory update by announcing another new initiative on the regulatory front.
We are now in discussions with several notified bodies in the European Union to begin the process of securing the CE mark in the EU for the deluxe Nanak system.
This is an important step towards achieving our global footprint.
We are pleased with our regulatory developments and we are committed to continue our efforts diligence.
Diligently to meet the goals, we have set for ourselves.
We took another important step to workovers commercialization.
With the commencement of large scale production of our Mems chips at our new semiconductors fabrication plant in South Korea.
Ounce at the beginning of April .
The facility will be the production site for the NAMIC source. The chip that produces the digital X Ray source and lies at the heart of the company's <unk> arc system.
We continue to prepare for.
For full scale production soon.
And this is this facility will support our manufacturing needs for the foreseeable future.
Once we begin deployment.
As we also reported last month, we are continued to build our production lines for the <unk> systems at our Israeli facility in anticipation of the thirst Knox art shipments.
With that I'd like to turn the call over to run Daniel Chief Financial Officer to review our financial results.
Thank you Erin we reported a GAAP net loss for the first quarter of 2022.
One $7 million.
Compared with a net loss of $12 7 million dogs in the first quarter of 2021 our revenues for the first quarter of 2022 were one point to $8 million and the gross loss was one 9 million below our revenue stems from the sounds of Teleradiology services.
Little Chin and those revenues will present, the full quarter of operation of thoughts revenue our revenue from kilowatt. The audit services for the same periods was one $7 million with the gross profit.
0.1, CEO daus on a GAAP.
And the gross profit of 0.7 million daus.
Basically when we present the Gulf profit margin of approximately 79%. In addition, our revenue from licensing of <unk>.
<unk> for the same periods was 0.1 thing at all with the golf balls from 2.0 dollars.
On a GAAP basis, and zero point zero.
On a non-GAAP basis.
Research and development expenses for the first quarter, 'twenty, 'twenty, two where the $8 million compared to $2 7 million for the comparable period.
In 2021 increase in our research and development expenses was mainly due to the consolidation of manner with the company development of our multi source and cloud system and share based compensation.
Sales and marketing expenses for the first quarter of 2022 were $1 1 billion as compared to $1.7 million for the comparable period in 'twenty 'twenty. One the decrease was due to the decrease in share based compensation.
General and administrative expenses for the first quarter of 2020 to $11 3 million.
As compared to $8 2 million for the comparable period in 2021, the increase was due largely to the based on the number and U S. All being with the company and the acquisition of the efforts and the W. E T.
With no labor cost due to the increase in our headcount in connection with the expansion of the Companys management team and the overall organization infrastructure and legal fees with the connection to the equal weight and class action litigation.
Although expenses for the three months ended March 31, 'twenty, 'twenty, two where zero point $8 million as compared to none for the three months ended March 'twenty.
2021 the increase was mainly due to the relocation of our fabrication facility in Korea.
Location and changing our contingent earn out liability.
The non-GAAP net loss for the first quarter of 'twenty to 'twenty, two was $12 2 million compared to a need up net loss of seven point.
For the same period.
2021.
The nation between metal and non-GAAP net loss for the first quarter of 'twenty, two and 'twenty 'twenty. One is provided in the financial result, but the part of the press release we.
We issued this morning, the difference between GAAP and non-GAAP net loss is mainly due to amortization of intangible assets share based compensation fees related to our secondary share offering which was closed during the first quarter of 2021 and legal fees in connection with the equilibrium and class action.
Turning to our balance sheet.
As of March 31, 2022 we had cash cash equivalence and marketable securities of approximately.
$139 $4 million, and we had $3 7 million dollar loan from bank.
We ended the quarter with property and equipment net of $41 2 million dollar increase of 3.8 dogs. During the first quarter of 2022 is mainly due to the completion of the construction of our fab in South Korea, and the preparation for multiple docks some of our Mems chips.
As of March 31, we had approximately.
Two 1 million shares outstanding as opposed to 51 8 million shares outstanding as of December 31, 2021 incremental mainly due to the exercise of warrants and issuance of shares to the former shareholders of non oxide.
The microphone.
With that I will end the call back over to Aaron.
Thank you Ron for the financial update and once again, thank you all for joining us today.
I feel very good about networks results of the first quarter as CEO , but all of US recognize there is more to do.
We hope to provide additional updates in the coming weeks and months.
I would also like to share with you all.
The <unk> management team.
Have a non deal roadshow in person with investors in late June .
If you would like to schedule a meeting please contact our Investor Relations partners at ACR.
With that I'd like now to open the call for questions. Operator, please begin the Q&A session.
Thank you.
As a reminder to ask a question you will need to press star one on your telephone to withdraw your question press the pound key.
Our first question comes from Suraj Kalia with Oppenheimer. Your line is open.
Good morning, Erez wrong.
Right.
Good morning.
Good morning.
Hey, so or sorry.
Thank you Ron.
Thanks.
It sounds simple.
Sure.
Michigan.
CE Mark.
Give us toward online.
C J.
Hum.
For some reason unfortunately.
I can hear you.
Mike can you repeat the coal terminal.
Yes.
Yeah could you.
Thanks, Suraj is that being kind of a broad timeline on the 10-K.
Submission downloads.
Down the road.
Yeah.
I can't hear for some reason.
Can you ask can you repeat once again sorry.
Can you repeat that sorry.
Sure.
There is a lot of noise in the bedrock.
Forgive me here is there's no.
Noisier.
Inquiring about the timing of the actual five 10-K submission under CE Mark.
Okay, Okay I understood.
So basically right now.
We always think that week.
Whoa.
Maybe my in my.
One second.
Okay.
Right now we don't we don't pay more than what we're seeing right now in the personally will be India.
And the.
And in the earnings.
The only thing I'm, saying is that the fact that we have change or a way to communicate with the FDA.
To an ongoing dialogue with the Q sub.
We are waiting for the Green light from the FDA.
To the approval of the <unk> and then it will be submitted okay.
We have provided in the last few months all the information that we were requested.
Following the last two questions two sessions that we had with the SBA.
D a.
We have a lot of supplemental information we are virtually shared this information with the FDA and right now we are waiting for the okay.
He will take their time.
Last time, the only thing I would say the last time.
Like 75 days before the response to the submission and they responded after 35 days what would be now good question as soon as we have.
As soon as we have their response.
It will be very shortly after that we will do the submission.
Fair enough areas hopefully you can hear me.
I'll just ask one more question.
And I'll hop back in queue.
Has there been any validation testing done by declines on the multi source. Thank you gentlemen.
First of all I'd like to compete one question that you had before with with respect to the C. C. What we said is exactly the situation. We are evaluating a few notified bodies in Europe . So hopefully shortly we will be able to finalize and go head with a C submission as well.
In terms of the in terms of the.
What do you say the customers the the real implementation, we obviously cannot do anything before we get the approval of the SBA or an approval to do the clinical trials. What we can do is once we get the clearance from the.
Those countries that we're playing with the deployment that do not require the FDA.
Approval, they have a different regulation that.
It will apply.
The answer is that this will be shortly after that we will do the the trials that the customers' sites.
Yeah.
Thank you. Our next question comes from Jeffrey Cohen with Ladenburg Thalmann. Your line is open.
Oh, hi, errors and Ron how are you.
Alright. Thanks.
Yes, hi.
I'm going to.
Follow up with Suraj, just follow up so well.
What I was hearing was that you will receive some feedback from the agency on your last.
Q submission.
You should get feedback in the.
Maybe near or medium term and then Hugh again submit.
Now Theres supplement from their feedback no queues.
The coming months.
No the right.
Right now what we know is basically we have provided and submitted oldest.
Oldest supplemental information that they are required they.
They're required.
And we're waiting for their.
So we had to do the submission now they may ask a few more questions. We are planning to do a session with them similar to.
Those that we had in the last few months since we.
We went through the Q sub process.
And based on this we're waiting for the go ahead and.
Do the submission.
More information will be required then.
We'll submit it but right now we are also doing all the.
Taking all the necessary steps.
To provide the.
Some more.
Kind of simulations and supporting evidence for what is needed so.
Thank <unk>.
The process as it is go as it's going right now.
From at least from our point of view and especially due to the fact that it's a kind of a new technology that they haven't experienced.
In the past, yet and that seemed a lot of from the American questions I think it will enable us.
To move pretty quickly with a good win to get to go ahead and move forward.
Okay. So they may require.
Or maybe going through one more iteration, perhaps or at some point they will inform us to go ahead and file.
Okay.
Mark.
Yeah the.
They are a few options of course.
We hope that it will the next step we will do this will be the submission.
They may ask for it at the same time that we do the submission to go with clinical trials.
Probably.
No we are not sure yet, but this is something that we.
We think that.
We'll be shortly after that.
The one thing that we hope is that it will go directly to submission.
Start the.
Picking the clock in order to get the the approval as soon as possible.
Got it Okay, and then as far as your commentary.
For.
The European Union.
With that with your commentary refers to the org.
Submission.
Your commentary about single source.
No no no multi source.
The states there'll be some that will that is going to the FDA, it's going to be with the <unk> with the SEC.
As you probably know they have changed are they.
The the guidance.
In Europe , they had limited.
The amount of notice notified body that can actually approved.
The overload of work of the Covid following the Covid was enormous so basically.
Sometimes it takes it takes more time that didn't used to be before when they have like 40 or 50.
Notified bodies and right now I think that like 20.
But I think that.
I believe that the the efforts, we're making right now will.
Get the result, and we hope to do.
To move forward.
In the foreseeable future would you see as well.
Okay got it and then.
Her ran any commentary I think that our estimate for the first quarter.
Were slightly lighter.
The overall Opex front could you give us any.
Indication or flavor of cadence on how opex in your view currently should roll out for the balance of the year would you expect that to come off a little bit.
Due to a lower.
Charges that are onetime in nature.
Well I think first of all that you in general the thing that you should expect to see Hum.
Being more efficient.
We're going through a lot of processes and a lot of.
A lot of steps that were taken in order to be more efficient which will come.
In effect with the office itself Hum of course.
Hum the current are the common trend in market, where the dollar is strengthening and.
Hum is helping us a little bit with regards to the opex.
As you know most of our eight countries in Israel and yeah. So all the dough, we enjoying we enjoyed it.
Some in some periods of the queue up the first quarter of the strengthening of the dollar.
And probably it will be the same in the second quarter, but is that all we are in line with our annual operating.
Glen.
Okay got it and what's been the net SG&A change over the past quarter or so from end of year to now is the organization continuing to grow or stabilize at the same size.
Sorry can you repeat the question.
Total employee count.
The total employee count.
We had a decrease in the total employee count but of course, the Pearl our annual operating plan, we do plan to recruit.
With more people.
And and two in order to exercise our airplane.
Okay, perfect that dose of Ross, thanks for taking the questions.
You're more than welcome to different.
Thank you. Our next question comes from Rahul rocket with lifestyle capital. Your line is open.
Okay.
Hey, guys.
Just a couple for me I know.
You mentioned that certain countries don't require the FDA approval in order for you to get regulatory clearances there.
Could you comment on what the regulatory process.
Process looks like in those countries and when do you anticipate receiving those regulatory clearances.
So the processes.
These countries are what I would call local processing.
Special.
Approval that.
Our required.
At least on a one or two of them we hope we.
We hope to get it.
Shortly.
They are by far.
I would say is the.
By far, but a little bit more simple than the usual FDA and CE.
We are in the process to.
To get them as soon as possible it will enable us to actually to start the <unk>.
Hey can you guys hear me.
Yep.
Sorry.
So I think it cut off for a second apologies.
And then last one is do you guys expect to define any additional SaaS agreements through the year I know there were two last year.
I guess, maybe you can kind of just touch on on your efforts, there and what that pipeline might look like.
The short answer is yes, a little bit longer answer that we are negotiating right now with few more agreements.
I don't think that I can actually share when they are going to be signed but.
Please name one or two of them.
It's an advanced process.
Got it Okay and last one for me you know I know a few of the contracts you guys signed back in 2020 had a three year initial terms is realistically how many would you expect to renew.
The ones that do renew should we expect any changes seeing the terms of these contracts in terms of the minimum numbers of units. They may deploy here or the minimum annual fee that might be agreed upon.
Thank you.
Okay.
So right now we don't have any reason to.
We expect that to any of them.
We'll change.
The one thing that we are pushing one.
This is kind of right now.
In the cooking stage, but.
Once we start Dore and received the deployment I think it will enable us to analyze in a better way what will be the minimum and what will be the church for skin.
Bear in mind that those scans that were going to add the reading.
We're going to charge by far of three or four times more than the current charge.
This is the right now the discussion.
I think that.
We may want to change first of all the mid the mood for a scan.
<unk>.
And the minimum scans per day.
Got it that's helpful. I appreciate it thank you guys.
Thank you.
That's all the time, we have for questions I'd like to turn the call back over to Erez Smeltzer for closing remarks.
So once again, thank you all for joining us today.
We do hope to give you some more good news in the.
Next a few months and as always what I am trying at least to ensure that I'm, saying or.
Forming only think that that's a 1% sure that are going to be implement or have been implemented already.
Sometimes it's a more careful to be here to be like this but at the end that's the better way so.
All four.
Today, and we'll be in touch, we'll see probably sometimes in late June .
This concludes today's conference call. Thank you for participating you may now disconnect.
Okay.
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