Earnings Call Transcript - QTI Q1 2026

Operator, Operator

Good day, and welcome to the QT Imaging Holdings First Quarter 2026 Financial Results Conference Call. Operator instructions were provided. Please note this event is being recorded. I would now like to turn the conference over to Bruce Voss. Please go ahead.

Bruce Voss, Investor Relations

This is Bruce Voss with Alliance Advisors IR. Thank you for participating in today's call. Joining me from QT Imaging Holdings are Dr. Raluca Dinu, Chief Executive Officer; and Jay Jennings, Chief Financial Officer. I would like to remind listeners that comments made during this call by management will include forward-looking statements within the meaning of federal securities laws. Any statements that are not statements of historical facts should be deemed to be forward-looking statements. Such statements involve known and unknown risks, uncertainties and other factors that may cause actual results, performance or achievements to be materially different from those implied by such statements. All forward-looking statements are based on QT Imaging's current beliefs as well as assumptions made by and information currently available to QT Imaging and relate to, among other things, QT Imaging's Breast Acoustic CT scanner, including its product commercialization and manufacturing; the evolution of QT Imaging into a scalable imaging platform; the QTI Cloud Platform and SaaS model; performance of software enhancements, new product development and introduction; and product sales growth and projected revenues. For a list and description of the risks and uncertainties associated with the company's business, please see its filings with the Securities and Exchange Commission. Furthermore, the content of this call contains information that is accurate only as of the date of the live broadcast, May 13, 2026. QT Imaging disclaims any obligation, except as required by law, to update or revise any financial or operational projections or other forward-looking statements, whether because of new information, future events or otherwise. And now I'd like to turn the call over to Dr. Raluca Dinu. Raluca?

Raluca Dinu, Chief Executive Officer

Thank you, Bruce, and good afternoon, everyone. Thank you for spending the time with us and for your interest in QT Imaging. The first quarter of 2026 was a highly productive period for QT Imaging as we continue to execute across commercialization, clinical validation, reimbursement, regulatory expansion and software innovation. We believe that the progress achieved during the quarter further strengthens the foundation for the long-term adoption of our technology and supports our strategy of building a leading quantitative breast imaging platform. During the quarter, we shipped 13 QT Breast Acoustic CT systems, which was in line with our commercial distribution commitments. These shipments reflect continued operational execution and growing commercial activity as we expand our installed base, both domestically and internationally. We're also pleased to announce that subsequent to the close of the quarter, the maturity date of our senior secured term loan with Lynrock Lake was extended by 2 years from March 31, 2027, to March 31, 2029. We would like to thank Lynrock Lake for their continued support and confidence in QT Imaging. This extension provides the company with additional financial flexibility as we continue executing on our commercial, clinical and strategic growth initiatives. On the reimbursement front, we achieved an important milestone with the approval by the American Medical Association of a new Category III CPT code for our technology, effective January 1, 2027. We believe this is a meaningful step toward broader clinical adoption, standardized reporting, utilization tracking and future reimbursement pathways for our technology. We also received FDA 510(k) clearance for enhancements to our Breast Acoustic CT scanner and platform designed to improve visualization and imaging coverage of posterior breast tissue. This region has historically been challenging to evaluate with traditional breast imaging technologies, and we believe the updated configuration further improves the clinical utility and overall performance of our system. On the international regulatory front, we secured official classification and clearance in the United Arab Emirates for both our QT Breast Acoustic CT scanner and the QTI SaaS Cloud Platform under our distribution agreement with Al Naghi Medical Company. We also continue to advance our software ecosystem and imaging capabilities. During the quarter, we launched the QT Imaging-Olea Viewer, an innovative multi-modality imaging platform designed to support efficient review and correlation of imaging findings across modalities while enabling longitudinal patient evaluation and quantitative analysis. In parallel, we released software version 4.5.0, a next-generation image reconstruction update that improves spatial resolution and reflection imaging, and enhances image quality while maintaining efficient processing time. We believe continued software innovation will remain a key differentiator and advantage for QT Imaging as we expand our installed base and advance toward a more scalable imaging and data platform. Importantly, our commercial efforts continue to be supported by growing clinical evidence generated at leading institutions. For example, at the Mayo Clinic, a prospective feasibility study evaluating QTscan as a supplemental screening tool compared to an MRI in high-risk women provided encouraging early validation of the technology. The study demonstrated absolute agreement between QT Imaging and MRI, suggesting comparable effectiveness of QT Imaging and MRI in identifying positive findings. We also continue to strengthen our clinical and medical advisory team. During the quarter, we welcomed Dr. Mary Yamashita as Senior Clinical Adviser to support our clinical strategy, lead our training activities and development of structured interpretation pathways for QTscan. More recently, we welcomed Dr. Barry Roseman as Senior Medical Adviser. Dr. Roseman is a breast surgical oncologist with more than 25 years of experience treating breast cancer and breast disease. He currently operates Advanced Breast Care Surgical Oncology of North Georgia, which is a comprehensive breast imaging and diagnostic center. His engagement with QT Imaging includes implementation of QTscan within his busy clinical practice to support physician training, workflow integration, patient access and the collection of real-world clinical and operational experience with the technology. Given his extensive experience treating women with dense breast tissue, Dr. Roseman understands firsthand the limitation of existing imaging modalities, which can miss cancers in dense breast and the need for additional technologies capable of providing more quantitative and clinically meaningful information. We believe QT Imaging technology is uniquely positioned as a radiation-free, compression-free true 3D breast imaging platform capable of delivering quantitative information that may improve clinical decision-making, particularly for women with dense breast. More broadly, we believe QT Imaging sits at the intersection of advanced imaging, quantitative diagnostic and AI-enabled health care infrastructure. Overall, we remain focused on disciplined execution as we continue expanding commercialization efforts, advancing our technology platform and building long-term value for patients, providers and shareholders. Now I'll turn the call over to our CFO, Jay Jennings, to review our financial results. Jay?

Jay Jennings, Chief Financial Officer

Thank you, Raluca, and good afternoon, everybody. Revenue for the first quarter of 2026 was $6.5 million, up 133% from the prior year quarter. The increase was primarily attributable to the shipment of 13 Breast Acoustic CT scanners during the quarter, up from 6 scanners in Q1 2025. Cost of revenue for Q1 2026 was $3.9 million compared with $986,000 for Q1 2025, resulting in a gross margin for the 2026 quarter of 41% compared with 65% for the 2025 quarter. The higher gross margin in the 2025 quarter was primarily due to the sale of 2 scanners with a lower cost basis. Total operating expenses for the first quarter of 2026 were $5 million versus $2.9 million a year ago. The increase was primarily attributable to higher employee compensation and professional and outside service costs. Net loss for the first quarter of 2026 was $3.4 million, which is a substantial reduction from a net loss of $11.1 million for the first quarter of 2025. EBITDA for Q1 2026 was negative $2.5 million compared with negative $10.4 million for Q1 2025. Excluding stock-based compensation and other noncash expenses, such as the change in fair value of the warrant and earn-out liabilities, adjusted EBITDA for Q1 2026 was negative $1.5 million compared with negative $903,000 for Q1 2025. Net cash used in operating activities during the first quarter of 2026 was $3.7 million compared with $3.5 million used during the first quarter of 2025. As of March 31, 2026, the company had cash, restricted cash and cash equivalents of $7 million. Please see our Form 10-Q filed earlier today for further details regarding our first quarter financial results. Subsequent to the close of the quarter, we amended our credit agreement with Lynrock Lake, extending the maturity date of the $10.1 million senior secured term loan to March 31, 2029, and increasing the interest rate from 10% per annum to 12% per annum. Turning now to 2026 financial guidance. We are affirming our expectation for revenue of approximately $39 million for the year, more than double 2025 revenue. This guidance is based on the expected shipment of scanners under distributor minimum order quantities as well as the early monetization of cloud-based services as we bring our platform online across clinical and research customers. Under our distribution agreements, in addition to the 60 scanners contracted by NXC Imaging for 2026, Gulf Medical is contracted for 20 scanners in 2026, 32 scanners for 2027 and 40 scanners for 2028 for a total exceeding $51 million. Al Naghi Medical is contracted for 7 scanners in 2026, 16 scanners in 2027 and 20 scanners in 2028 for a total of approximately $24 million. And now I'll turn the call back to Raluca.

Raluca Dinu, Chief Executive Officer

Thanks, Jay. So in summary, QT Imaging is building a leading platform in breast imaging and quantitative imaging-based precision diagnostics. We have done the following: one, we have a differentiated technology addressing a large unmet need in dense breast imaging with greenfield opportunities in adding biomarkers and precision breast technology. Two, we have a strong clinical, regulatory and reimbursement momentum, including our new Category III CPT code. Three, we have strategic manufacturing, distribution and software partners that support global scale and a SaaS-enabled business model; and four, we have a clear road map from hardware to recurring software and AI revenue as we expand our installed base and data assets. We are excited by the progress we've made, and we are confident in the path ahead. Thank you so much for your interest in our company and for your support. And with that, we are now ready to take questions. Operator?

Operator, Operator

We will now begin the question-and-answer session. Operator instructions were provided. The first question today comes from Jeffrey Cohen with Ladenburg Thalmann.

Jeffrey Cohen, Analyst

Congrats on all of your accomplishments in the quarter. So firstly, can you touch upon Gulf Medical? What's the regulatory status in Saudi? Is it approved? And then could you talk about the updated and amended agreement that expands the units and the timeline and maybe give us a sense of how those financials work as far as units and/or the additional software, AI or SaaS model that may be included?

Raluca Dinu, Chief Executive Officer

Great. Jeff, great to hear you, and thank you so much for joining us. So going back to the beginning of your question: we received the UAE regulatory approval from MOHAP in the UAE, and we have not yet received SFDA approval in Saudi Arabia. We've gone back and forth several times with them; we're down to one or two questions remaining. We do hope within the next month or so to receive our SFDA approval. I'm sorry, please.

Jeffrey Cohen, Analyst

No, go ahead.

Raluca Dinu, Chief Executive Officer

Yes. Regarding the Gulf, in Saudi Arabia and the UAE, we are discussing operational details with our distribution partners there. As soon as the regional situation gives us a little bit of a break, we'll start shipping in the UAE. And as soon as we get our SFDA approval, we'll start shipping in Saudi Arabia.

Jeffrey Cohen, Analyst

Okay. Would you anticipate Saudi approval this calendar year?

Raluca Dinu, Chief Executive Officer

Saudi Arabia SFDA approval, Jeff, should be within a month or so. Hopefully no later than that.

Jeffrey Cohen, Analyst

Okay. Got it. And then I wanted to jump over to your Canon agreement. So could you talk about—it was mentioned in the press release, you called an amended distribution agreement. Maybe talk about that and tell us if there's been any updates recently as far as timeline and cadence and perhaps beyond this year?

Raluca Dinu, Chief Executive Officer

So Jeff, we've pushed out the maturity of the company's debt from March 31, 2027 to March 31, 2029. The team at Lynrock Lake has been constructive, and they have continued trust in the company and in our strategy. In terms of NXC Imaging, the contract is for 2026. We are discussing with NXC Imaging and Canon USA further business beyond 2026. We'll update on future developments in the next call as we have more data. We've met in Seattle at the SBI conference and will continue meeting to work through what's happening beyond 2026. Thank you so much for the question.

Operator, Operator

The next question comes from Ben Haynor with Lake Street Capital Markets.

Benjamin Haynor, Analyst

So first one for me on the software improvements that you bumped up the imaging quality on. Beyond—obviously, just improving the image quality is a good in and of itself. But are there any sort of edge cases, whether it's like calcification or things of that nature where the updated image algorithms do a much better job of helping folks identify important structures or findings?

Raluca Dinu, Chief Executive Officer

Ben, it's a great question. First of all, we have improved the resolution of our reflection images in the X, Y and Z directions—meaningful, approximately 40% to 50% improvement in resolution. That's critical as we are looking into the morphological shapes of various findings in the breast. So, to your point, we are achieving better resolution across all findings that result from reflection imaging in the breast. Calcification is a particularly important finding that is discovered via our reflection imaging, not via our transmission imaging. The 4.5.0 software version directly improves resolution for us to get calcification.

Benjamin Haynor, Analyst

Okay. Great. And it sounds like a great update. And then on the longitudinal imaging/biopharma front, I know the applications there are potentially pretty exciting. Any more to share that investors will be interested in on that front?

Raluca Dinu, Chief Executive Officer

Ben, we are ready to submit a manuscript for a paper with clear results that show nonresponders to various therapies. These are results from our Sunnybrook Cancer Center research program. I think everybody will be very pleased reading the paper. It's exactly what we discussed in the past. The patients are being tracked and the volume of findings is being measured under certain treatments. Rather than linear dimensions, which have much higher measurement error, volume clearly shows increases or decreases with much higher precision. The white paper is going out. We have one other very large institution in Boston that is going to be working with us on a very similar study. We continue to get a lot of interest in precision therapy monitoring, and we're tracking this as a very important direction for us.

Benjamin Haynor, Analyst

Great. Looking forward to seeing that. And then lastly, and I apologize if you already mentioned this, but on the new distribution agreements front, obviously, you've got a couple of Middle East distributors and then NXC Imaging. Are there other discussions that are ongoing that folks should maybe think about new countries coming on this year, next year, what have you?

Raluca Dinu, Chief Executive Officer

Yes. We would like to cover the Gulf region fully for obvious reasons, and we have other countries in the Gulf region that we are covering from a regulatory perspective; this will take a quarter or two. We have applied for AMAR regulatory approval in Israel; that process will probably take until August or September to complete. We'll work through the year to prepare paperwork for CE Mark as we discussed previously. That's tracking as promised; we expect CE Mark to be up and running in Q2 next year. We have a lot to do in the United States, but we are also tracking international expansion.

Operator, Operator

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

Raluca Dinu, Chief Executive Officer

Thank you so much, Letty. Once again, I'd like to thank you for joining us today and for your interest in QT Imaging. We are energized by our momentum with more to come. We look forward to discussing our progress during our next conference call in August and when we can report the second quarter results. Until then, have a nice afternoon, and thank you so much.

Operator, Operator

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