Good day, and thank you for standing by. Welcome to the Nano-X Imaging Ltd. Q1 2025 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Cavanaugh, of Investor Relations. Please go ahead.

Good morning, and thank you for joining us today. Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ended March 31, 2025. The release is currently available on the Investors section of the company's website. With me today are Erez Meltzer, Chief Executive Officer and Acting Chairman, and Ran Daniel, Chief Financial Officer. 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 commercialization activities, regulatory process and clinical activities, 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 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 administrative expenses, and non-GAAP gross loss per share. With that, I'd now like to turn the call over to Erez Meltzer.

Good morning, everyone. Thank you for taking the time to review Nano-X Imaging Ltd.'s Q1 2025 financial results with us today. I'm pleased to report that we have made progress in our mission to improve medical imaging and enhance patient outcomes. At Nano-X Imaging Ltd., we pride ourselves on our comprehensive end-to-end solution that supports preventive health care and expands access to imaging services. With that goal in mind, we made two strategic acquisitions in 2021: USARad, our teleradiology business, and Zebra Medical Vision, which is now Nano-X AI, to build out our end-to-end solution around the core Nano-X ARC technology. Integrating AI-powered imaging analysis and a global teleradiology solution with our groundbreaking Nano-X ARC technology takes us one step closer to creating a global connected medical imaging solution with the potential to meaningfully expand the delivery of health care. These acquisitions have proven to be good strategic decisions. Since the acquisitions less than four years ago, we have doubled the revenues generated by USARad, and at the same time, Nano-X AI has progressed from a pre-revenue business to one that is now generating growing revenue. To highlight another benefit of our end-to-end solution, most of our Nano-X customers also use our teleradiology services, and this not only provides more effective imaging and diagnosis for providers and patients but also increases revenues per customer and creates value for our shareholders. Nano-X AI continues to be a key part of our strategy, driving forward our commitment to integrating artificial intelligence into medical imaging. By leveraging advanced AI capabilities, we aim to streamline workflows, support clinical decision-making, and improve efficiency across the imaging ecosystem. Our innovative technologies, including Nano-X ARC and our AI solutions, are gaining traction in the market, and we are excited about the future of our company. Let's review some operational highlights. Beginning with our commercial efforts, we are employing a multi-pronged strategy to generate a robust sales pipeline. This has been led not only by our direct sales force in the US and in the EU, which calls on imaging providers directly, but also by forming business collaborations that leverage the marketing expertise of our medical imaging companies. We've also begun to engage with distributors worldwide, especially in the EU, which we believe will be an efficient way of potentially penetrating a market comprised of 27 different countries. Complementing our efforts to commercialize Nano-X ARC, we are benefiting from steady revenue growth driven by our USARad teleradiology business and growing revenues from the sales of AI solutions. We are also supporting these marketing initiatives with marketing campaigns, and I'll touch on these aspects of our commercial plan today. We've seen an increase in the number of scans performed by our systems, both in the U.S. and worldwide, and we are beginning to see initial revenue streams for Nano-X ARC customers, reflecting that we are gaining traction with our Nano-X ARC systems, and customers can see the value in using the system. Our sales pipeline has doubled since January 2025, and our sales team, as of today's call, is handling over 1,000 leads. Our growing pipeline primarily consists of standalone multi-specialty small and medium-sized health clinics not only from the US but also from countries around the world such as Peru, France, Azerbaijan, Hungary, and Poland, and various countries in the EU. Since its commercial deployment at the beginning of this year, there are now over 60 units that are in various stages of implementation and execution of the deployment plan for commercial demo and clinical use. For the operational units, we are achieving an average target of seven scans per day. As we grow, we intend to share more information as our business evolves, and with a promise previously made to provide more details, we will do so today. We are targeting over 100 ARC systems in various stages of deployment by the end of 2025 worldwide. We are happy to now be in a position to share guidance on our commercial progress. But as we are all aware, recent market uncertainties could make our guidance subject to change as the year progresses. Introducing new and innovative technology in the US market is always challenging. However, we are encouraged by the growing base of early adopters that have ordered and are using the Nano-X ARC. Furthermore, the nature of our sales process is clinical, meaning that with dedicated time and resources to our prospective customers, we educate them on the benefits of the Nano-X ARC to their practices, how to use it, and why they should use it. All of which takes time. The US deployment of Nano-X ARC is progressing, and we are preparing to ship the first systems to Puerto Rico. From the beginning of the year, we continued to strengthen our sales team with representatives now covering the West, East, and Mid Coast regions. Additionally, we continue to expand our clinical team by structuring a continuous professional group along with continued enhancement to our operational team and an efficient interface with our local services partner. As we continue our accelerated U.S. commercialization, we provide all the necessary resources to our sales and services personnel in the US to support our expanding client base. Along with various channel partners, our team on the ground will be critical to our accelerating rollouts. And we will steadily but clearly continue to add to this team. We are making hiring decisions wisely, with 22 US personnel on the ground, and we are moving ahead towards our target of 30 to 40 sales, service, marketing, and support personnel in place by the end of 2025, depending on needs and progress. Now let's move on to some specific U.S. market commercial accomplishments and updates. We have made notable progress in forming solid distributor partnerships while continuing to pursue commercialization options. Beyond the engagement we announced last quarter with Advanced Southern Imaging, known as ASI, we have expanded the third-party service and support agreement with Swissray in Bridgewater, New Jersey. Swissray is one of the foremost experts in digital radiography, from sales through installation, setup, training, and service. This relationship is off to a good start. And in addition to the support and services agreement, we entered into a non-exclusive distribution agreement for the sales of our system and services to government official public health authorities and medical institutions in the US. Furthermore, we are in negotiation with additional leading national distributors. And finally, we are in the finalization stages of a new project around the workers' compensation segment. With over 100 million workers estimated to be covered under workers' compensation in the US, this business segment presents a large potential opportunity for Nano-X Imaging Ltd. Helping to promote the recovery of injured workers by providing imaging services to individuals and insurers. The project is structured to build a network of medical imaging centers starting with two to three proof of concept sites with plans to expand from there. Should the POC be completed successfully, the collaboration will kick off its commercial binding level. The engagement relies on attractive terms based on contractual rates of $120 to $180 per patient. If achieved, this potential line of business will be part of the Nano-X services division, which will oversee the program's development. Turning to our efforts in markets outside of the US, we have also made strides in deploying our Nano-X ARC systems since our last update call. Our efforts in the EU have been assisted by the recent key milestones of securing the CE Mark for the Nano-X ARC in February. As of today's call, we are ready to ship Nano-X ARC and make our first installations in Europe, subject to local approvals by country with our distributors. We are working on deploying systems to Greece and Romania, with demo units expected to be shipped to those countries soon, and we are also preparing for demo units to be shipped to Mexico. These are necessary steps to create a commercial presence that we can build from in each of these countries, and we will work hard to maintain this momentum. Turning to our AI solutions business, we are seeing tremendous momentum. Trial data has shown that our AI solutions provide strong and proven data, and customer feedback has been overwhelming. We are seeing strong interest in our solutions as they grow and the sales pipeline expands. I believe that our AI business is also getting an added boost from the secular growth of AI in the broader economy as well as the excitement surrounding AI in general. On our last call, we announced an agreement with Ezra AI, a healthcare artificial intelligence company revolutionizing early detection through full-body MRI and low-dose chest CT screens. This agreement is moving ahead, and we expect to expand the use of our AI solutions in dozens of Ezra locations throughout the US. Continuing with our commercial efforts, we have engaged with new AI marketplaces and are currently in negotiation with several companies. These collaborations will help us expand on a global scale, especially in the US, providing a steady stream of new client referrals. We also have three pilot programs running with similar AI platform companies, and we will provide more details once these pilots are completed. As previously mentioned, we continue to cooperate with various prestigious academic centers that are using our AI solutions, including Oxford University Hospitals NHS Foundation Trust in the UK, which has published trial data on the HealthOS BONE solution. And following that, secured a three-year contract for HealthOS. We are also working with Duke University Hospital in North Carolina, UVA Health in Virginia, and UW Health in Wisconsin on various AI-related projects. With respect to regulatory, we have also had some notable regulatory success recently. And in April, we were proud to announce that we have received 510(k) clearance from the FDA for the Nano-X ARC, our updated multi-source digital tomosynthesis systems. Now for an update on our clinical work, which is always going on behind the scenes. And the reason is simple. Clinical validation is one of the key drivers of our future growth. It is imperative to generate fresh clinical data to support the use of a medical device, especially when introducing new technology and to encourage a change to the standard of care. Recognizing this reality, we continue to extend our efforts to implement our clinical trials with the goal of producing a robust database supporting the use of the Nano-X ARC. Regarding our ongoing multisite trial, we are working on clinical sites collaboration in two new sites in Europe: a leading teaching hospital as well as a large private hospital. We are excited to welcome these two prominent healthcare providers into our trial. I can also announce that the Nano-X ARC system was installed successfully in the Shamir Hospital to be used for a multisite trial. It is now being used to actively scan patients. Finally, USARad, our teleradiology subsidiary, continues to provide valuable outsourced radiology services to healthcare imaging centers, and most of our Nano-X ARC customers also utilize this service. We have recently signed an agreement with a large US-based company to provide teleradiology services for their self-insurance program, which will further strengthen our position in the market. Our Second Opinion service is a consumer-oriented platform provided by USARad, which connects patients with radiologists and other subspecialty physicians for additional consultation on their medical diagnosis. Second Opinion has integrated all three of Nano-X Imaging Ltd.'s FDA-cleared AI solutions and is now generating revenues and interpreting approximately 20,000 scans per month. We are very active with our OEM partners, particularly to ensure adequate supply of components for the ARC, but also with the intention of finding additional applications for our Nano-X proprietary technology. One such active engagement is with the US government agency Oak Ridge National Laboratories, to develop novel and compact mobile X-ray technologies. We began our partnerships in Q2 of last year and have progressed to developing and building prototypes due to be completed this summer. More good news is from Varex, who recently delivered to Israel several tubes for our next-generation ARC. They also passed incoming inspections and are now being assembled into ARCs to complete system-level integration. Additionally, we have technical staff at Varex this month for validation and training on multisource demonstration units we are producing for future applications developers. The Nano-X Imaging Ltd. team is excited to attend the RSNA 2025, which is the annual meeting of the Radiological Society of North America to be held in Chicago from November 30 through December 4. We are especially excited for RSNA 2025 as we will be presenting the full Nano-X end-to-end solution at this high-profile industry event for the first time. Our booth will feature the new Nano-X ARC core tomography system and our AI teleradiology services and AI solutions. We hope to see some of you there, and we welcome you to stop by the Nano-X booth to meet some members of our team and see the Nano-X solution for yourself. With that, I will close my prepared remarks and turn the call over to Ran Daniel to review our financials.

Thank you, Erez. We reported a GAAP net loss for the first quarter of 2025 of $13.2 million for the reported period, compared with a net loss of $12.2 million in the first quarter of 2024, which is the comparable period. The increase of $1.0 million was largely due to an increase of $1.1 million in our gross loss. Revenue for the reported period was $2.8 million, and gross loss was $3.0 million on a GAAP basis. Revenue for the comparable period was $2.6 million, and gross loss was $2.1 million on a GAAP basis. Non-GAAP gross loss for the reported period was $0.4 million, as compared to a gross profit of $0.6 million in the comparable period, which represents a gross margin of approximately 15% on a non-GAAP basis for the reported period, as compared to a gross profit margin of 22% on a non-GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $2.6 million, with a gross profit of $0.4 million on a GAAP basis, as compared to revenue of $2.4 million with a gross profit of $0.3 million on a GAAP basis in the comparable period, which represents a gross profit margin of approximately 17% on a GAAP basis for the reported period, as compared to 14% on a GAAP basis in the comparable period. Non-GAAP gross profit of the company's teleradiology services for the reported period was $1.0 million, as compared to $0.9 million in the comparable period, which represents a gross profit margin of approximately 39% on a non-GAAP basis for the period, as compared to 37% on a non-GAAP basis in the comparable period. The increase in the company's revenue and gross profit margin from the teleradiology services was mainly attributable to customer retention, increased rate, and increased volume of the company's billing services during the weekday shift. During the reported period, the company generated revenues through the sale and deployment of its imaging systems and OEM services, which amounted to $33,000 for the reported period, with a gross loss of $1.16 million on a GAAP basis and $1.5 million on a non-GAAP basis, compared to revenue of $47,000 with a gross loss of $0.4 million on a GAAP basis and $0.3 million on a non-GAAP basis in the comparable period. The company's revenue from its AI solutions for the reported period was $0.2 million, with a gross loss of $1.9 million on a GAAP basis, compared to revenue of $0.1 million with a gross loss of $2.0 million in the comparable period. Non-GAAP gross loss for the company's AI solutions for the reported period was $0.1 million, compared to a gross profit of $29,000 in the comparable period. Research and development expenses net for the reported period were $5.0 million, compared to $5.2 million in the comparable period, reflecting a decrease of $0.2 million. The decrease was mainly due to a decrease of $0.2 million in share-based compensation and a decrease of $0.8 million in expenses related to our research and development activities, which were offset by a decrease of $0.8 million in grants received due to the completion of the NHS X project and the commencement of its commercial phase. Sales and marketing expenses for the reported period were $0.9 million, compared to $0.8 million in the comparable period. The general and administrative expenses for the reported period were $5.1 million, compared to $5.0 million in the comparable period. The increase of $0.1 million was mainly due to an increase of $0.2 million in salaries and wages, an increase of $0.2 million in our IT expenses, and $0.2 million in our reporting expenses to our commercialization effort in the US market. The increase was offset by a decrease of $0.5 million in our legal expenses and a decrease of $0.2 million in our P&O insurance expenses. Turning to our balance sheet, as of March 31, 2025, we had cash, cash equivalents, restricted deposits, and marketable securities of approximately $72.9 million, and we had $3.1 million in short-term loans from a bank. We ended the quarter with property and equipment net of $45.3 million. As of March 31, 2025, and December 31, 2024, we had approximately 63.8 million shares outstanding.

Thank you, Ran. To close our call, I would like to extend our appreciation for your continuous support of Nano-X Imaging Ltd. We understand that our investors are key to the journey that Nano-X Imaging Ltd. is undertaking to transform medical imaging. Like many companies over the past several years, we have experienced challenges. But our belief in the Nano-X Imaging Ltd. vision, as well as the support of our investors, encourages us to keep pushing ahead. We are making steady progress commercializing the Nano-X ARC and Nano-X AI utilizing multiple different initiatives. Our telemedicine business continues to provide a revenue base to help fund our continued growth. We are also doing much work behind the scenes to support our commercialization through clinical data generation, securing more regulatory clearances, and marketing campaigns designed to raise awareness of the Nano-X Imaging Ltd. end-to-end solution. We are advancing our clinical trials with promising initial results. We continue to increase the number of our commercial collaborations, and we are working with our growing customer base to help them integrate the Nano-X ARC into their practices. In closing, we remain committed to making medical imaging more accessible and improving patient outcomes through innovative technologies and strategic collaborations. We thank you for joining us today and look forward to providing additional updates on our next call. Operator, please open the call for questions.

And our first question will be coming from Jeffrey Cohen of Ladenburg Thalmann and Company. Your line is open.

Good morning, Erez. So, Ran, thanks for taking our questions. I wondered if you could talk about the fleet by the end of the year where you're speaking of a hundred units. Could you give us a sense or flavor for geographies at which point you anticipate placements to occur during this year or already placed? Thank you.

Okay. Still the majority of the units will be in the US. Based on the progress of the regulation approvals in the countries that we are planning to place ARCs in Europe, it seems that, I would say, maybe fifteen or twenty percent will be in Europe. And I would say Israel and other probably ten percent will be in other places like Israel, like Africa, like Latin America. It all depends on the progress of the ability to speed up the regulation approvals and the import license in the various countries that we operate. So that's and, of course, the other thing which is very important is how fast are we going to be able to install the system that we currently have in orders agreements that were signed, the projects that we mentioned. In a nutshell, I would say that this is a very important element of what I was trying to deliver in this earnings, that the ceiling of the building blocks of our and the future of short-term future in terms of the ability to generate the ARCs that are going to be installed from this sales team, from the campaign that we are leading. One of them, each one of these campaigns generates about one thousand leads, and we're starting the process to implement them. The workers' comp portion, the business partners that we work with, and, of course, the Europe and the rest of the world that we do these installations. But in a nutshell, it's worth I gave you.

Got it. And then as a follow-up, can you talk a little more about the USARad Second Opinion services? Is there a particular list price for that service, and is it being reimbursed by the payers out there? Any further color would be appreciated. Thank you.

Okay. With USARad, we are lately, we have, I would say, some peaks or high numbers in terms of the weekly revenues which are being generated or scans that they are reading. In addition, it seems that what we were trying to do, and we have been amazingly successful in implementing the end-to-end solution where USARad is doing a lot of the readings of the places that we are installing the ARCs. So we are generating from the same unit and the same scan more revenues to the company. In addition, the workers' comp is going to be based initially or to begin with at least based on USARad that are going to read. And last but not least is what you have asked is the Second Opinion. Second Opinion is about $300. It's mostly private. It's a growing business. And yeah. So that's it's a retail model. It's more of a retail model. By the way, in addition, if you know, by the same token, I would say, that it's interesting to see that part of the increase in revenues or business that we're doing is what we call the B2B2C. So we are serving someone who is serving the consumer or the retail, and this is what we do with Ezra. In Ezra, for example, every reading is about $75 right now. And if we do more applications of AI other than the CCS, it's going to increase above the $100 per scan. As you remember, the workers' comp, I mentioned around one. And so basically, it's growing this part of the business.

Perfect. Thanks for taking our questions. Good quarter.

Thank you.

And one moment for our next question. Our next question comes from Ross Osborn of Cantor Fitzgerald. Your line is open, Ross.

Hey, guys. Thanks for taking our questions. So starting off, you mentioned sixty units in various stages of the how many of these were placed, approved, and operating in the US? And why have we not seen the associated influx revenue based upon these units being used?

So I'll start with the first number. Right now, to your reference of the question, it's more than twenty. As some of them are being installed as we speak. Some of them are installed but waiting for approval from regulation or the building or the city or the state, I think we passed most of the approvals. So this is with respect to the numbers. Ran, would you like to address the revenues?

Yes. You have to bear in mind that since from the time that as Erez mentioned, from the time that we deploy the machine until we generate revenue, there's a few phases that need to go through with the machine. First of all, it's the registration with the state and all kinds of other permits. Sometimes there's a setup to be made, and more importantly, it's all the process with getting the approved EOB for the procedure itself. Once we get the EOB that we see in certain places, then the number of scans increases, and then the revenue generation is following up.

The interesting part there, Ross, is that we have indeed mentioned the average of the seven scans per an operating day, which was the base of the model. But definitely, I would say that we can see that in the segment of the market that we are putting the systems in multi-specialty medical centers, we can see days with eleven scans per day, even days with seventeen scans per day. The workers' comp probably will generate more than seven scans per day. So the ramp-up takes time, and the reimbursement, although there is a CPT code and all of this, the reimbursement and the EOB sometimes take time, and the increase in revenue follows after.

Yes. But once we get the EOB, we do see a mining inflection point where the operator increases significantly the number of the scan. Okay. Understood. I appreciate the color there.

And then moving down the P&L to gross margin, how should we be thinking about you guys getting to a breakeven point or turning positive between your three business lines.

Okay. So if you look at the twentieth, so you can see that our delivery, all and I'm talking about on a non-GAAP basis because you have to if you look at the base of the P&L, so you look at the measurement you look at the numbers on a GAAP basis, and there's all kinds of amortization, of intangible and share-based compensation and all kinds of items that we actually add back when we talk about the amount of bases. But even when we talk about non-GAAP basis, you can see that our teleradiology division is already profitable. And the gross profit margins start with between thirty-six, thirty-seven percent to forty-one, forty-two percent. The AI business should be with the higher gross profit margin. And the ARC division will be somewhere between. Of course, once we transition from to the ARCX where we have the glass field rather the ceramic tip, then we should expect our gross profit margins to increase over there. Since as we know, the cost of the machine of the ARCX is much lower.

Thanks for taking our question.

Thank you. And our next question will be coming from Scott Henry of AGP. Scott, your line is open.

Thank you. Good morning or afternoon to depending where one is. It seems to me in the quarter that there's a lot of really strong technological progress. And people that have the machines are using it. But the quarterly placement level of you know, ten to fifteen per quarter, it's gonna take a while. To get to breakeven. How should we think about when there may be an inflection point to get to higher placements per quarter? Thank you.

I would like to answer your question and by the same token to also refer to the tail of Ross to Ross question. Okay? So under all the the fact that, you know, the safe harbor and the and the uncertainties in the market and all the results that what is happening right now in the market, etcetera. We are indicating expectations that USARad is making money right now. The AI is going to break even. Our AI business is going to be breakeven next year, 2026. And the ARC business is going to breakeven in 2027. So that's actually right now the plan, and these are the indications that we expect. We work hard in order to be there. In terms of the you like the word inflection point. I would say that inflection point will be probably the second half of 2025. Where we are going to see a lot of the results. You are right that there is a lot of progress in the technology in this quarter. But if you notice, we made progress in the ARC. We made progress with the AI customers and revenues. We made progress with the Second Opinion. We made progress with the teleradiology. Made progress with the clinical efforts and the clinical education and brand awareness. We have made progress with regulatory. We've made progress with cooperation, with new market segments. With the OEM business, with the implementation of the end-to-end solution, and also with what we call the cost of the product. So I think that what this quarter actually shows first of all, that we are delivering what we promised. But second, we are making progress all the time. Yet, we are saying getting a medical a new medical equipment to the market is not an easy one. And getting something which is as you all write, disruptive changing the standard of care is not an easy one. It requires a lot of education, a lot of efforts, in terms of the clinical support, but that's what we are doing. And that's the reason why we have indicated that, in the RSNA this year, we're going to present the new product that we're going to be to install the ARC AI the solution of the AI to the ARC that is going to be built in in the system. The fact that the ARC is going to do to the X-ray as well. Built in in the system, and a lot of other goodies which are part of the ARCX.

Oh, okay. Great. Thank you. A lot in that answer. I appreciate that. If I could just double click on one thing you mentioned. You said ARC business potentially profitable or cash flow breakeven in 2027, should we be thinking about at a quarterly run rate exiting 2027 as breakeven? And, you know, I don't know if you want to answer this question or not, but could you get a bit a sense of you know, what kind of revenue run rate it would take to breakeven? We could do the math ourselves, but I thought I would ask. Thank you.

So it would depend. It really depends on the mixture of the revenue. And this is not really a formal guidance, but we previously know, we have spoken. We gave some unit numbers of 1,500 to 2,000 units being deployed in order to get to a breakeven point. And, of course, if we get more attraction from the teleradiology business rather than AI and ARC. So it's a bit it comes with low-cost margin, but we will get more from the hardware and the AI. And we'll see more growth over there than the breakeven point will be even faster. Just because it comes with the higher gross profit margin.

It really depends on the mix between the CapEx sales, hybrid sales, and the EMSAS sales. Which right now I don't think that we are in a position to indicate the mix between these three elements. But the more we get into getting more experience in the market and starting to penetrate to the European market, as well as the Latin America market. I think that we will be able to shed some more light and give some more guidance with respect to what will be the mix of these types of sales. But it definitely depends on the mix.

Okay. Great. Thank you for taking the questions.

Thank you. And I'm showing no further questions. This will conclude today's conference call. Thank you for participating. You may now disconnect.