Good afternoon, and welcome to the Spectral AI Fourth Quarter and Full Year 2025 Financial Results Conference Call. Please note that this event is being recorded. I would now like to turn the conference over to Devin Sullivan, Managing Director of the Equity Group. Please go ahead.

Thank you, Gary. Good afternoon, everyone, and thank you for joining us today for Spectral AI's 2025 Fourth Quarter and Full Year Financial Results Conference Call. Our speakers for today will be Vincent Capone, the company's Chief Executive Officer; and Thomas Speith, our Corporate Controller. Before we begin, I'd like to remind everyone that during this call, certain statements made are forward-looking statements within the meaning of the safe harbor provisions of the United States Private Securities Litigation Reform Act of 1995, including statements regarding the company's strategy, plans, objectives, initiatives and financial outlook. When used in this call, the words estimates, projected, expects, anticipates, forecasts, plans, intends, believes, seeks, may, will, should, future, propose and variations of these words or similar expressions or the negative versions of such words or expressions are intended to identify forward-looking statements. These forward-looking statements are not guarantees of future performance, conditions or results and involve a number of known and unknown risks, uncertainties, assumptions and other important factors, many of which are outside the company's control that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. As such, listeners are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the Risk Factors section of the company's filings with the SEC, including the registration statement and other documents filed by the company. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. With that, I'd now like to turn the call over to Vincent Capone, Spectral AI's Chief Executive Officer. Vince, please go ahead.

Thanks, Devin, and thank you all for joining us today. We issued our earnings release this afternoon, which contains additional details of our operating results. We will also file our 10-K with the SEC later this evening. Today, I will focus my remarks on our year-end review and corporate developments, and our Controller, Tom Spieth, will take us through our key financial metrics. We will then open the conference call up for questions. 2025 was a pivotal year for Spectral AI, in which we made great progress along a number of fronts in support of achieving our primary goal of commercializing the DeepView system for the burn indication. The DeepView system is a diagnostic tool that empowers medical personnel to make quick, data-driven decisions regarding whether a burn wound will heal on its own or if it requires significant medical intervention. This currently unmet clinical need is dramatically magnified in the event of a mass casualty burn incident, where the ability to triage burned patients rapidly and properly would be crucial in allocating valuable resources and managing the surgical burden. Our DeepView system is designed to assist the U.S. government in preparing for any such mass casualty event. As many of you may be aware, a hallmark event for our company was the June 2025 submission of our de novo application to the FDA. This submission was the culmination of years of work by our talented, hard-working and dedicated team. Following our submission and as anticipated, we received an additional information notification letter from the FDA, which we timely and completely responded to just earlier this month. We are maintaining an active dialogue with the FDA, and its feedback has been consistent with our expectations. We are hopeful for a positive response from the FDA before the end of the second quarter of this year. Now to give a review of the 2025 year. In March 2025, we completed our burn validation study. This 15-month study represented one of the largest burn trials ever conducted in the United States with data obtained from 164 adult and pediatric patients across 15 burn centers and emergency departments in the United States. In this study, the DeepView system significantly outperformed the clinical judgment of burn physicians. Following our anticipated FDA clearance, we will initiate an outcome study to measure the real-world impact of the DeepView system within the hospital setting. This study will focus on the benefits across patients' journeys and clinician workflows. The results of the burn validation study were submitted as part of our de novo application to the FDA. More broadly, the use of our DeepView system in these burn centers and emergency departments raised awareness of the technology among a larger set of likely users of the device if approval from the FDA is ultimately obtained. By way of scale, in the United States, there are approximately 125 burn centers, 700 trauma centers and 5,400 federal and community hospitals with emergency rooms where the burn patients are most likely to present upon injury. Let me next turn to a discussion regarding our BARDA contract. We have had a long-term significant and strong partnership with the Biomedical Advanced Research and Development Authority since 2013. Its support has been instrumental in our product development to date and most notably related to the Project BioShield contract that we signed in September of 2023 with a value of up to $150 million, $55 million of which were awarded at that time as part of the contract's base phase. This BARDA funding has supported product development as well as funding extensive U.S.-based studies to validate our DeepView technology and our AI algorithm in emergency departments, trauma and burn centers. Last week, as we announced, BARDA reaffirmed its commitment to the development of the DeepView system by awarding Spectral AI $31.7 million of advanced funding to accelerate and support additional feature aspects of our innovative AI-driven diagnostic device. In connection with this award, we have also committed to provide an additional $9.7 million to the total overall development costs associated with these advancements. The acceleration of the second phase of our BARDA contract will enable us to expedite further development of the DeepView system, most notably with our total body surface area measurement tool and our EHR integration. Our contract with BARDA upon FDA approval of our device also includes a provision that will allow BARDA to subsidize an initial sale and distribution of up to 30 DeepView systems in burn centers in key regions across the United States. This contract also allows a further subsidy by BARDA for an additional 140 DeepView systems in burn centers and trauma Level 1 emergency departments across the United States. Internationally, the DeepView systems that we have placed in the United Kingdom have generated positive user feedback. As previously shared, we have obtained UKCA authorization for the burn indication in 2024. In 2026, following a positive FDA determination of our de novo submission, we will be updating our UKCA authorization to include the improved DeepView system as we have submitted it to the FDA. Thereafter, we anticipate initial sales in the U.K., Australia or the Gulf Cooperation Council nations to begin in late 2026 following such UKCA expanded authorization. While there will be a transition phase following our anticipated FDA approval, we will begin commercial activities in earnest in 2026 with our existing manufacturing relationships and expanding our sales team to facilitate the first commercial sales in our company's history. We believe we have a clear strategy to drive rapid market adoption, both inside and outside of our BARDA relationship. I would also like at this time to share some additional information about our handheld device, which we continue to develop as part of our Department of Defense contract through the contracting consortium called MTEC. In late 2025, we signed a no-cost extension of our current Phase II contract to extend it through June 30, 2026. Consistent with our current contract requirement, we anticipate delivering a fully functioning prototype of our handheld device by the end of the second quarter of 2026. After such time, we will also determine if there are any additional scope items that we can complete as part of that contract before the end of the third quarter of 2026. Phase II of the MTEC contract is scheduled to be reviewed and awarded by the end of the fourth quarter of 2026, and we are hopeful that we will be asked to bid on such work. We also anticipate leveraging any approvals at the FDA for our cart-based DeepView system as a predicate to our handheld device. At such time, we will look to obtain a 510(k) approval of our handheld device after receiving approvals for the cart-based DeepView system, currently under review by the FDA. Before turning things over to Tom, I am happy to say that we entered 2026 in the strongest liquidity and financial position in our recent history, and certainly during my tenure with our company. Our cash position of more than $15 million at year-end tripled from December 31, 2024, and we have aligned our operating expense profile with our strategic priorities. This allows us to pursue our growth objectives, both pre-approval and hopefully, post-approval from a position of strength and with a sufficient cash runway. While I have participated on numerous calls in the past, I also want to recognize that this is my first call as the company's Chief Executive Officer; I want to thank the Board for their continued confidence in me as well as the amazing team of people I am fortunate to work with every day. They are driving our success. I am grateful to lead Spectral to bigger and better things. With that said, I'll now turn over the conference call to Tom for a review of our financial results.

Thanks, Vince. As Vince noted, we had a strong year and believe that we have the financial performance in place to continue our R&D efforts and evolve into a commercial business. Beginning with the fourth quarter. Research and development revenue for Q4 2025 was $3.8 million, compared to $7.6 million, reflecting the anticipated reduction in research direct labor, clinical trial and other reimbursed study costs relative to 2024, as the company moved closer to completion of the base phase under our contract with BARDA, we call the BARDA PBS contract. Gross margin for Q4 2025 was 39.8% compared to 44.0%, due primarily to a lower percentage of reimbursed direct labor as a component of overall revenue from the BARDA PBS contract. General and administrative expenses in Q4 2025 were $4.0 million, down from $4.5 million in Q4 of 2024, and reflecting lower spend on third-party accounting and legal providers. Net income for Q4 2025 was $0.6 million, or $0.02 per diluted share compared to a net loss of $7.7 million, or a negative $0.41 per diluted share in the fourth quarter of 2024. Net income in Q4 2025 included a $4 million gain in the fair value of the company's warrant liability as compared to a net loss of $5.4 million. Now we turn to the full year. Research and development revenue decreased to $19.7 million from $29.6 million reflecting the anticipated overall reduction in the company's reimbursed costs associated with the BARDA PBS contract during 2025, following the company's submission of its de novo application to the FDA. Gross margin was stable at 45.4%, compared to 44.9%, reflecting a consistent mix of direct labor as a percentage of the total work performed on the BARDA PBS contract from the prior year. G&A declined to $17.5 million from $19.9 million, reflecting a continued focus on operating efficiencies at the company. Our net loss for the year was $7.6 million, or a negative $0.29 per diluted share compared to a net loss of $15.3 million, or a negative $0.85 per diluted share, primarily due to the change in the fair value of the company's warrant liability, reduced borrowing related costs of $1.5 million, net of amortization of debt discount and improved operating efficiencies. As of December 31, 2025, we had approximately 30.7 million shares outstanding. With respect to our financial condition, as of December 31, 2025, cash improved to $15.4 million from $5.2 million in December 31, 2024, reflecting previously announced debt and equity financings completed during the year as well as warrant and stock option exercises. Total debt was $8.5 million. I will now turn the call back to Vince.

Thanks, Tom. Before turning things over for questions, I would like to address our 2026 outlook. For 2026, we are forecasting revenue of approximately $18.5 million, which includes the effect of the new BARDA funding. This guidance does not include any significant contributions from the sale of the DeepView system. With that, I will open up the floor to any questions.

Our first question is from Ryan Zimmerman with BTIG.

And let me just start by saying congrats on the BARDA funding, and Vince for your new role. Maybe as we think about your transition into a commercial organization this year, Vince, you could talk to us a little bit about kind of how you're thinking about preparing for commercialization, what you need to do to get the organization ready to be a commercial organization and so forth. And then I have a few follow-ups.

Sure. Good to hear from you, Ryan. So I mean, there's a few things that we're working on in preparation for what we believe will be hopefully, FDA approval. Some of that is, we've already started our search for a new Chief Commercial Officer. We have also engaged Deloitte Consulting to help us with our strategic plan for commercialization moving forward, both in the U.S. and overseas. That is already underway. We continue to have plans in place to expand our sales team. I'd like to do that in concert with the hiring of a new Chief Commercial Officer and that should get us in a position where we're ready to see sales inside and outside of BARDA in late 2026.

And just to be clear, let's assume that the approval comes on time, the 30 systems that are distributed to burn centers around the U.S. How do you think about the commercial activity that is generated from that? Because if you're not necessarily selling those systems, maybe because, again, BARDA is distributing them. Just how do you think about kind of what that does to the business model? Or how should investors think about that over time?

Ultimately, each health system will decide how to manage the device installation in their facilities, whether through purchase or lease. This will affect our revenue recognition differently, but we believe there is a strong opportunity to have our devices in each center. We aim for contracts that last three years, which will cover software improvements, licensing, and device maintenance. The specifics will depend on the health systems and how we recognize that revenue, but we feel we are well positioned. While I don’t expect it to significantly impact our revenue in 2026, it should have a notable effect in 2027, and even more so in 2028 as more installations occur.

Okay. With the new BARDA contract, which is great to see, we certainly didn't expect this kind of guidance, and it's very positive for 2026. What initiatives will you pursue with the additional funding from BARDA to enhance DeepView? I imagine you'll be accelerating some projects and perhaps advancing certain opportunities because of the development revenue from this contract. What impact will this have on DeepView by this time next year, considering the capabilities and investments made throughout 2026?

We appreciate that question. There are many initiatives on our radar. One of the first things you will notice is our plan to expand our labeling to cover different areas of the body. We are also focused on enhancing our total body surface area offering to improve usability for doctors, physician assistants, and nurses. This has been a significant effort that we have included in our FDA submission, and the next version will be a substantial upgrade, with future iterations likely being even better. Additionally, we are working on improving electronic health record integration and addressing feedback from users to enhance the battery and user interfaces as well. These refinements will significantly increase the value of our device in burn centers.

The next question is from Carl Byrnes with Northland Capital Markets.

Congratulations again on the BARDA advance, particularly prior to DeepView's approval here, and also Vince your promotion in your new role, congrats there. But with respect to the 31.7 BARDA advance, I'm wondering if you can kind of tell us a bit how you expect that to hit in '26 and '27. And the same with respect to the $63 million remaining on the contract or thereabouts in terms of filling Clin2, Clin3, and Clin4, I would call them obligations, but the buckets there over fiscal '26, '27 and '28. I know that's a lot. But any sort of visibility you can give would be awesome.

Well, I think we're clearly pleased that BARDA was able to accelerate the second phase of the contract for us in advance of FDA approval. They've been a valued and frankly, a very supportive partner for us. This does a number of things for us. It's going to open up the opportunity for us to really begin if we can gain FDA approval to really start to manufacture devices with the new de novo system in place, really start in earnest with hospital systems for the placement of these devices, and that's part of the contract acceleration. I can't get into too many weeds on the terms of the contract as to what it will do in 2028, but we have economic outcome studies that we plan on doing. We have an expanded label work that we're going to do internally for expanding our label on what the indication is for, there's outcome studies that we were going to start in earnest sooner rather than later. All of this is great for us as an acceleration and providing us with getting to the part where we can provide better patient outcomes to burn patients and providing a better alternative so that we can help the health care system be in a position to really treat these patients in a more timely and more efficient manner.

The next question is from Ram Selvaraju with H.C. Wainwright.

Just 3 quick ones. Firstly, can you just remind us of the time frame within which you anticipate the entirety of the BARDA funds to ultimately be disbursed? Secondly, I was wondering how you're looking to approach the fine-tuning or revising of revenue guidance as and when the DeepView system achieves FDA licensure. And then lastly, with respect to the potential optimization of DeepView's value outside of the United States. I was wondering if you could perhaps say a few words on that.

Sure. I'm happy to address your questions. The BARDA contract itself is set to extend until 2030, but the acceleration of benefits from this contract will primarily occur through 2028. This means we can expect revenue generation to start sooner rather than later as a result of this contract. While the timeline remains as outlined, there's potential for advancement if progress allows it. I want to clarify that our revenue projections will depend significantly on how health systems choose to implement the deployment of the device, which in turn will influence when we recognize that revenue. The installation into burn centers is a critical milestone, even if revenue recognition happens over a 36-month period. Additionally, we anticipate a combination of software licensing that will benefit our clients as we enhance our offerings, resulting in a stack of installations in 2027 and 2028 across burn centers, emergency departments, and Level 1 trauma centers, both under BARDA and beyond. Our aim is to commercialize within the United States with BARDA's help but we will not rely solely on that. The same strategy is applied to our opportunities in the U.K., GCC, and Australia, where we will adjust our UKCA authorization to reflect the current DeepView system, which is undergoing de novo review with the FDA. Once completed, we'll aim to deploy those devices internationally. The revenue models may vary internationally depending on the health systems, especially those that are nationalized, and their approach to the sales of DeepView systems. While I don't place much emphasis on the revenue figures for 2026, they may fluctuate; however, we expect a more substantial contribution to revenue in 2027 and 2028.

The next question is from John Vandermosten with Zacks.

Vince, what does the training force look like? And how will you go about training the trainers for this? Because I assume you're going to have a group go out and get everybody up to speed on how to use them when you do the implementations.

John, it's great to connect with you. We currently have a solid team of biomedical engineers in place, and we plan to expand this team as outlined in our budget for 2026. This expansion will include increasing both our sales representatives and biomedical engineers at Spectral. Our goal is to ensure that both the engineers and our sales force collaborate effectively to train many centers on how to use the device once they adopt it. The device is very intuitive, and we plan to make certain that the image capture is at the correct distance in Q4. We're also working on adding several features to enhance user-friendliness. Therefore, we definitely see the need to grow our training team along with our sales force. I'm excited about the outcome of 2025; our cash position is strong, and I believe we are in the best financial standing in my five years here. I'm enthusiastic about our future and plan to align our training team with our growth objectives.

And do you have a number in mind in terms of how many individuals that might be for to train?

I don't have a specific number. I have an estimate in my mind, and it's definitely not in the hundreds; it's a much smaller figure. However, I am pleased that we are collaborating with Deloitte Consulting to ensure we have the correct strategy moving forward.

Okay. And how much time after clearance do you think you'll need to place the first units?

John, I wish I had a crystal ball, right? All I know is it's going to take us a little while to manufacture the devices. But my hope, and as we've said this before, my hope is that we place devices in late 2026 and you'll see a significant pivot in 2027.

And last question is just on looking forward in terms of the allocation of R&D spend. I know you've got snapshot. There are some indications outside of burn. And then also, you've talked about the future evolution of the DeepView cart. And then perhaps, I guess, development of AI technology or just the AI ML side of things, how do you see that breaking down going over the next year, 2027, perhaps and beyond in terms of that R&D spend.

We are definitely planning a label expansion for head, hands, and feet. We have explored various opportunities, with several being presented to us by third parties. I believe the most accessible option will be the label expansion work. There may also be another indication, such as critical limb ischemia or related issues like amputations. We might collaborate with a wound care company to assess biofilm markers or wound bed preparedness, which we view as a near-term additional indication. Overall, we are enthusiastic about our progress as we approach 2025, especially with BARDA's commitment of nearly $32 million. We are eager to serve the burn community and expand beyond that.

This concludes our question-and-answer session. I would like to turn the conference back over to Vince Capone for any closing remarks.

Gary, thanks. In closing, I would like to again thank our investors for their continued support of our company. I'm excited to deliver on our commitment to develop and commercialize our DeepView system, which we believe will significantly improve patient outcomes. With our strong cash position and continued advances in our product development, I am pleased with where we are to date and where we are going in the near future. Thank you all for your attendance and interest in our company. Have a good evening.

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.