Nanox announces Q4 of 2023 financial results and provides business update

Nano X Imaging Ltd announced results for the fourth quarter ended December 31, 2023 and provided a business update.

“I am incredibly proud to announce another strong quarter and year for Nanox,” said Erez Meltzer, Nanox Chief Executive Officer. “First and foremost, we achieved a pivotal milestone in fiscal year 2023, getting FDA clearance for the Nanox ARC systems and deploying them in the key US market. With significant regulatory successes in hand, Nanox is committed to accelerating the execution of our commercial infrastructure and strategic plans in the US. Our mission is to provide healthcare practices with a transformative advantage through the Nanox.ARC – an accessible, end-to-end, and cost-effective solution that not only provides advanced diagnostic imaging capabilities but also elevates overall patient care. Additionally, we are constantly advancing our AI solutions as we truly believe early detection, precise diagnoses, effective treatments and ongoing medical monitoring can be life-changing.”

Financial results for three months ended December 31, 2023
For the three months ended December 31, 2023 (the “reported period”), the Company reported a net loss of $10.2 million, compared to a net loss of $52.8 million for the three months ended December 31, 2022 (which is referred as the “comparable period”), representing a decrease of $42.6 million. The decrease was largely due to a goodwill impairment of $36.5 million, an accrual of $8 million in connection with the settlement of the class action which were recorded in the comparable period, other income of $3.0 million recorded from the D&O insurance carrier under the settlement agreement in connection with the class action lawsuits and a decrease of $4.4 million in general and administrative expenses offset by a decrease in the change in contingent earnout liability of $9.1 million.

The Company reported revenue of $2.4 million in the reported period, compared to $2.1 million in the comparable period. During the reported period, the Company generated revenue through teleradiology services, the sales and deployment of its imaging systems and AI solutions.

The Company’s gross loss during the reported period totaled $1.7 million (gross loss margin of (72%)) on a GAAP basis, as compared to a gross loss of $1.7 million (gross loss margin of (82%)) in the comparable period. Non-GAAP gross profit for the reported period was $0.9 million (gross profit margin of approximately 36%), as compared to $0.8 million (gross profit margin of approximately 39%) in the comparable period.

The Company’s revenue from teleradiology services for the reported period was $2.3 million, as compared to revenue of $2.1 million in the comparable period. The increase in the Company’s revenue from teleradiology services was mainly attributable to increase in the facilities in the reported period as compared to comparable period. The Company’s GAAP gross profit from teleradiology services for the reported period was $0.3 million (gross profit margin of approximately 14%), as compared to $0.3 million (gross profit margin of approximately 13%) in the comparable period. Non-GAAP gross profit of the Company’s teleradiology services for the reported period was $0.9 million (gross profit margin of approximately 38%) as compared to $0.8 million (gross profit margin of approximately 40%) in the comparable period. The decreases in the gross profit margins on a non-GAAP basis was attributable mainly to an increase in the cost of the engaged radiologists due to increases in reading rates and incentive payments which the Company paid to radiologists to engage during overnight and weekend shifts.

As mentioned above, during the reported period the Company generated revenue through the sales and deployment of its imaging systems which amounted to $17 thousand for the reported period, with a gross loss of $44 thousand on a GAAP and non-GAAP basis. The revenue stems from the sale and deployment of our 2D systems in Africa.

The Company’s revenue from its AI solutions for the reported period was $84 thousand with a gross loss of $2.0 million on a GAAP basis, as compared to revenue of $63 thousand with a gross loss of $2.0 million in the comparable period. Non-GAAP gross profit of the Company’s AI solutions for the reported period was $21 thousand, as compared to a profit of $4 thousand on a non-GAAP basis in the comparable period. During the fourth quarter of 2023, Nanox AI continued to complete pilot programs with marketplaces, marketplace costumers and health organizations in anticipation of full deployment of its products. During the first quarter of 2024, Nanox AI sold its HealthCCS cardiac solution to a second IDN in the U.S for an annual fee of $ 8.5 thousand during the first year of engagement and annual fee of $75 thousand from the first anniversary of the engagement and after.

Research and development expenses, net for the reported period were $6.8 million, as compared to $7.1 million in the comparable period. The decrease of $0.3 million was mainly due to a decrease in the cost of the Company’s development expenses of the Nanox.ARC system in the amount of $0.4 million.

Sales and marketing expenses for the reported period were $1.0 million, as compared to $1.5 million in the comparable period. The decrease of $0.5 million was mainly due to a decrease in the Company’s marketing expenses and a decrease in share-based compensation expense.

General and administrative expenses for the reported period were $3.8 million, as compared to $8.2 million in the comparable period. The decrease of $4.4 million was mainly due to a decrease in legal expenses in the amount of $4.2 million, largely as a result of the finalization of the SEC investigation and reaching a settlement of the class action litigation and the receipt of $2 million from the Company’s directors’ and officers’ liability insurance carrier during the reported period under the Company’s policy and the settlement agreement.

There was no Goodwill impairment for the reported period as compared to $36.5 million in the comparable period, which was resulted from the goodwill impairment related to the Nanox.AI reporting unit.

Other income was $2.7 million for the reported period, as compared to other expenses that was $7.8 million for the comparable period. Other expenses in the comparable period included an accrual for settlement in connection with the class action lawsuit against the Company in the amount of $8 million, which was reversed by the amount of $3 million in the reported period since the Company received that amount from its D&O insurance carrier under the settlement agreement in connection with the class action lawsuits against the Company.

Non-GAAP net loss attributable to ordinary shares for the reported period was $10.4 million, as compared to $9.9 million in the comparable period. The increase of $0.5 million was mainly due to a decrease in our tax income of $1.0 million and increase in the non-GAAP other expenses of $0.5 million which was mitigated by an increase of $0.5 million in our interest income, a decrease of $0.3 million in our non-GAAP research and development expenses and a decrease of $0.3 million in our non-GAAP sales and marketing expenses.

Non-GAAP gross profit for the reported period was $0.9 million, as compared to $0.8 million in the comparable period. Non-GAAP research and development expenses for the reported period were $5.9 million, as compared to $6.2 million in the comparable period. Non-GAAP sales and marketing expenses for the reported period were $0.8 million, as compared to $1.1 million in the comparable period. Non-GAAP general and administrative expenses for the reported period and the comparable period were $4.7 million.

The difference between the GAAP and non-GAAP financial measures above is mainly attributable to amortization of intangible assets, goodwill impairment, share-based compensation, change in contingent earnout liability, legal fees in connection with the class-action litigation and the SEC investigation, accrual in connection with the settlement of the SEC investigation and class action. A reconciliation between GAAP and non-GAAP financial measures for the three and twelve-month periods ended December 31, 2023, and 2022 is provided in the financial results that are part of this press release.

Liquidity and capital resources
As of December 31, 2023, the Company had total cash, cash equivalents, restricted deposits and marketable securities of $82.8 million, compared to $102.9 million as of December 31, 2022.

The decrease in the Company’s cash, cash equivalents, restricted deposits and marketable securities of $20.1 million during the twelve-month period ended December 31, 2023, was primarily due to negative cash flow from operations of $44.8 million and the purchase of property and equipment of $3.3 million, which was offset by cash flow from financing of $27.3 million largely from the capital raise that the Company consummated during the third quarter of 2023.

Other assets
As of December 31, 2023, the Company had property and equipment of $42.3 million as compared to $43.5 million as of December 31, 2022. The decrease was mainly attributed to period depreciation.

As of December 31, 2023, the Company had intangible assets and goodwill of $80.6 million as compared to $98.6 million as of December 31, 2022. The decrease was attributable to the periodic amortization of intangible assets in the amount of $10.6 million and goodwill impairment of $7.4 million.

Shareholders’ equity
As of December 31, 2023, the Company had approximately 57.8 million shares outstanding as compared to 55.1 million shares outstanding as of December 31, 2022. The increase was mainly due to the issuance of 2,142,858 of the Company’s ordinary shares in consideration of net proceeds of $27.1 million, the issuance of 286,141 shares upon the exercise of options and RSUs, which generated, in the aggregate, approximately $0.9 million in gross proceeds to the Company and the issuance of 255,392 ordinary shares to the former stockholders of USARAD, in consideration for the achievement of certain milestones in connection with the first earn-out period, as defined in the USARAD Stock Purchase Agreement and a global settlement of both parties’ performance obligations under the USARAD Stock Purchase Agreement.
MB Bureau