Nanox Announces Third Quarter of 2024 Financial Results and Provides Business Update

Made progress deploying all components of the Nanox solution including Nanox.ARC and Nanox.AI

Expanded US sales and support staff a key component of global strategic growth plan

Management to host conference call and webcast Thursday, November 21, 2024 at 8:30 AM ET

PETACH TIKVA, Israel, Nov. 21, 2024 (GLOBE NEWSWIRE) — November 21, 2024 — NANO-X IMAGING LTD (NASDAQ: NNOX) (“Nanox” or the “Company”), an innovative medical imaging technology company, today announced results for the third quarter ended September 30, 2024 and provided a business update.

Recent Highlights:

• Generated $3.0 million in revenue in the third quarter of 2024, compared to $2.5 million in the third quarter of 2023.

• Continued to expand the US sales and support teams, and made progress in deployment, with dozens of units deployed globally.

• Growth of the Nanox.AI business continued apace, signing new distribution agreements with SpinexMedical, and extending our agreements with users such as: Corewell Health, Dandelion health and Oxford University Hospitals extending the use of the Nanox.AI solutions.

• Multi-site clinical trial aimed at generating data supporting the clinical value of the Nanox.ARC is in progress at Beilinson hospital in Israel and in Ghana.

“I am more confident than ever in the future of Nanox as we accelerate the deployment of our Nanox.ARC and Nanox.AI technologies across the U.S. and international markets.” said Erez Meltzer, Nanox Chief Executive Officer and Acting Chairman. “The positive feedback from healthcare providers and patients underscores the transformative potential of our solutions across the healthcare continuum. On the regulatory front, we are working closely with the FDA on our application for full body scanning, and the European Union regulatory bodies to complete the CE Mark designation process. We believe securing these approvals will further solidify our position in the market, while significantly expanding our total addressable market. Coupled with our growing sales and support infrastructure we have established this past year, we are well-positioned to maintain our strong commercial momentum into 2025 and beyond.”

Financial results for three months ended September 30, 2024

For the three months ended September 30, 2024 (the “reported period”), the Company reported a net loss of $13.6 million, compared to a net loss of $21.4 million for the three months ended September 30, 2023 (which is referred as the “comparable period”), representing a decrease of $7.8 million. The decrease was largely due to a decrease of $7.4 million in expenses related to the impairment of Goodwill which were recorded in the comparable period.

The Company reported revenue of $3.0 million in the reported period, compared to $2.5 million in the comparable period. During the reported period, the Company generated revenue through teleradiology services, the sales of its Imaging devices and services and the sale of its AI solutions. 

The Company’s gross loss during the reported period totaled $2.8 million (gross loss margin of 93%) on a GAAP basis, as compared to $1.7 million (gross loss margin of 67%) in the comparable period. Non-GAAP gross loss for the reported period was $0.2 million (gross loss margin of approximately 6%), as compared to Non-GAAP gross profit of $0.9 million (gross profit margin of approximately 37%) in the comparable period.

The Company’s revenue from teleradiology services for the reported period was $2.6 million, compared to revenue of $2.2 million in the comparable period. The increase in the Company’s revenue from teleradiology services was mainly attributable to customer retention and increased volume of the Company’s reading services during the weekdays shifts.

The Company’s GAAP gross profit from teleradiology services for the reported period was $0.3 million (gross profit margin of approximately 13%), compared to $0.2 million (gross profit margin of approximately 11%) 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 35%) compared to gross profit of $0.8 million (gross profit margin of approximately 36%) in the comparable period.

During the reported period the Company generated revenue through the sales and deployment of its imaging systems which amounted to $29 thousand for the reported period, with a gross loss of $1.5 million on a GAAP and non-GAAP basis compared to revenue of $99 thousand with a gross profit of $36 thousand (gross profit margin of approximately 37%) on a GAAP and Non-GAAP basis in the comparable period. The revenue stems from the sale and deployment of our 2D systems in Africa and our Nanox.ARC systems in the U.S.

The Company’s revenue from its AI solutions for the reported period was $0.4 million with a gross loss of $1.6 million on a GAAP basis, compared to revenue of $141 thousand with a gross loss of $1.9 million in the comparable period. Non-GAAP gross profit of the Company’s AI solutions for the reported period was $0.4 million, compared to $0.1 million in the comparable period.

Research and development expenses, net, for the reported period were $4.7 million, compared to $6.0 million in the comparable period, reflecting a decrease of $1.3 million. The decrease was mainly due to a decrease of $0.3 million in salaries and wages and a decrease of $0.4 million in share-based compensation and $0.6 million in expenses related to our research and development activities.

Sales and marketing expenses for the reported period were $0.9 million compared to $1.1 in the comparable period.

General and administrative expenses for the reported period were $5.7 million, compared to $5.0 million in the comparable period. The increase of $0.7 million was mainly due to an increase of $0.5 million in share-based compensation, increase in our legal expenses in the amount of $0.5 million which was offset by a decrease in the cost of the directors’ and officers’ liability insurance premium in the amount of $0.3 million.

Non-GAAP net loss attributable to ordinary shares for the reported period was $8.7 million, compared to $9.4 million in the comparable period. The decrease of $0.7 million was mainly due to a decrease in non-GAAP operating expenses of $1.8 which was offset by a decrease of $1.1 million in our non-GAAP gross profit.

Non-GAAP gross loss for the reported period was $0.2 million, compared to a Non-GAAP gross profit of $0.9 million in the comparable period. Non-GAAP research and development expenses, net for the reported period, were $4.0 million, compared to $4.9 million in the comparable period. Non-GAAP sales and marketing expenses for the reported period were $0.6 million, compared to $0.9 million in the comparable period. Non-GAAP general and administrative expenses for the reported and comparable periods were $4.5 million.

The difference between the GAAP and non-GAAP financial measures above is mainly attributable to amortization of intangible assets, share-based compensation, change in contingent earnout liability, impairment of Goodwill, expenses related to an offering and legal fees in connection with the class-action litigation and the SEC investigation. A reconciliation between GAAP and non-GAAP financial measures for the three- and nine-months periods ended September 30, 2024, and 2023 is provided in the financial results that are part of this press release.

Liquidity and Capital Resources

As of September, 30, 2024, the Company had total cash, cash equivalents, restricted deposits and marketable securities of $57.1 million, compared to $82.8 million as of December 31, 2023. The decrease of $25.7 million during the reported period was primarily due to negative cash flow from operations of $26.1 million.

Other Assets

As of September 30, 2024 the Company had property and equipment of $44.7 million, compared to $42.3 million as of December 31, 2023.

As of September, 30, 2024, the Company had intangible assets of $72.6 million compared to $80.6 million as of December 31, 2023. The decrease was attributable to the periodic amortization of intangible assets in the amount of $8.0 million.

Shareholders’ Equity

As of September 30, 2024, the Company had approximately 58.5 million shares outstanding. As of December 31, 2023, the Company had approximately 57.8 million shares outstanding.

Conference Call and Webcast Details

Tuesday, November 21, 2024 @ 8:30am ET

Individuals interested in listening to the conference call may do so by joining the live webcast on the Investors section of the Nanox website under Events and Presentations. Alternatively, individuals can register online to receive a dial-in number and personalized PIN to participate in the call. An archived webcast of the event will be available for replay following the event.

About Nanox:

Nanox (NASDAQ: NNOX) is focused on driving the world’s transition to preventive health care by bringing a full solution of affordable medical imaging technologies based on advanced AI and novel digital source. Nanox’s vision encompasses expanding the reach of Nanox technology both within and beyond hospital settings, providing a seamless end-to-end solution from scan to diagnosis, leveraging AI for smarter diagnostics and maintaining a clinically-driven approach. The Nanox ecosystem includes Nanox.ARC – a multi-source Digital Tomosynthesis system that is cost-effective and user-friendly; Nanox.AI – an AI-based suite of algorithms that augment the readings of routine CT imaging to highlight early signs often related to chronic diseases; Nanox.CLOUD – a cloud-based software platform that manages and stores data collected by Nanox devices, and provides users with tools for in-depth imaging analysis; Nanox.MARKETPLACE – a proprietary decentralized marketplace through Nanox’s subsidiary, USARAD Holdings Inc., that provides remote access to radiology and cardiology experts, and a comprehensive teleradiology services platform. By improving early detection and treatment, Nanox aims to enhance its better health outcomes worldwide. For more information, please visit www.nanox.vision.

Forward-Looking Statements:

This press release may contain forward-looking statements that are subject to risks and uncertainties. All statements that are not historical facts contained in this press release are forward-looking statements. Such statements include, but are not limited to, those relating to the initiation, timing, progress and results of the Company’s research and development, manufacturing, and commercialization activities with respect to its X-ray source technology and the Nanox.ARC, the ability to realize the expected benefits of its recent acquisitions and the projected business prospects of the Company and the acquired companies. In some cases, you can identify forward-looking statements by terminology such as “can,” “might,” “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “should,” “could,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. Forward-looking statements are based on information the Company has when those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that could cause actual results to differ materially from those currently anticipated include: risks related to (i) Nanox’s ability to continue to develop of the Nanox imaging system; (ii) Nanox’s ability to successfully demonstrate the feasibility of its technology for commercial applications; (iii) Nanox’s expectations regarding the necessity of, timing of filing for, and receipt and maintenance of, regulatory clearances or approvals regarding its technology, the Nanox.ARC and Nanox.CLOUD from regulatory agencies worldwide and its ongoing compliance with applicable quality standards and regulatory requirements; (iv) Nanox’s ability to realize the anticipated benefits of acquisitions, which may be affected by, among other things, competition, brand recognition, the ability of the acquired companies to grow and manage growth profitably and retain their key employees; (v) Nanox’s ability to enter into and maintain commercially reasonable arrangements with third-party manufacturers and suppliers to manufacture the Nanox.ARC; (vi) the market acceptance of the Nanox imaging system and the proposed pay-per-scan business model; (vii) Nanox’s expectations regarding collaborations with third-parties and their potential benefits; and (viii) Nanox’s ability to conduct business globally; (ix) changes in global, political, economic, business, competitive, market and regulatory forces, including the continuation and escalation of the military conflicts in Israel and current war between Israel and Hamas; (x) the costs incurred with respect to and the outcome of litigation Nanox is currently subject to and any similar or other claims and potential litigation it may be subject to in the future; and (xi) risks related to business interruptions resulting from the COVID-19 pandemic or similar public health crises, among other things.

For a discussion of other risks and uncertainties, and other important factors, any of which could cause Nanox’s actual results to differ from those contained in the Forward-Looking Statements, see the section titled “Risk Factors” in Nanox’s Annual Report on Form 20-F for the year ended December 31, 2023, and subsequent filings with the U.S. Securities and Exchange Commission. The reader should not place undue reliance on any forward-looking statements included in this press release.

Except as required by law, Nanox undertakes no obligation to update publicly any forward-looking statements after the date of this press release to conform these statements to actual results or to changes in the Company’s expectations.

Non-GAAP Financial Measures

This press release includes information about certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), including non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses and non-GAAP basic and diluted loss per share. These non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. These non-GAAP measures are adjusted for (as applicable) amortization of intangible assets, share-based compensation expenses,impairment of Goodwill, change in contingent earnout liability and legal fees in connection with class-action litigation and the SEC investigation. The Company’s management and board of directors utilize these non-GAAP financial measures to evaluate the Company’s performance. The Company provides these non-GAAP measures of the Company’s performance to investors because management believes that these non-GAAP financial measures, when viewed with the Company’s results under GAAP and the accompanying reconciliations, are useful in identifying underlying trends in ongoing operations. However, these non-GAAP measures are not measures of financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP measures as indicators of operating performance. Further, these non-GAAP measures should not be considered measures of the Company’s liquidity. A reconciliation of certain GAAP to non-GAAP financial measures has been provided in the tables included in this press release.

Use of Non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with GAAP. The Company uses information about certain financial measures that are not prepared in accordance with GAAP, including non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, Non-GAAP other expenses (income) and non-GAAP basic and diluted loss per share. These non-GAAP measures are adjusted for (as applicable) amortization of intangible assets, share-based compensation expenses, impairment of Goodwill, change in contingent earnout liability, expenses related to an offering and legal fees in connection with the class-action litigation and the SEC investigation. The Company believes that separate analysis and exclusion of the one-off or non-cash impact of the above reconciling items (as applicable) adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measures for planning, forecasting, and measuring results against the forecast. The Company believes that the non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance. However, these non-GAAP measures are not measures of financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP measures as indicators of operating performance.

Reconciliation of GAAP net loss attributable to ordinary shares to Non-GAAP net loss attributable to ordinary shares and Non-GAAP basic and diluted loss per share (U.S. dollars in thousands)

Reconciliation of GAAP cost of revenue to Non-GAAP cost of revenue (U.S. dollars in thousands)

Reconciliation of GAAP gross loss to Non-GAAP gross profit (U.S. dollars in thousands)

Reconciliation of GAAP gross loss margin to Non-GAAP gross profit margin (in percentage of revenue)

Reconciliation of GAAP research and development, expenses to Non-GAAP research and development expenses, net (U.S. dollars in thousands)

Reconciliation of GAAP sales and marketing expenses to Non-GAAP sales and marketing expenses (U.S. dollars in thousands)

Reconciliation of GAAP general and administrative expenses to Non-GAAP general and administrative expenses (U.S. dollars in thousands)

Reconciliation of GAAP other expenses to Non-GAAP other expenses (income) (U.S. dollars in thousands)

CONTACT: Investor Contact:
Mike Cavanaugh
ICR Healthcare
mike.cavanaugh@westwicke.com