Full Press Release Details
Nanox Announces Fourth Quarter 2022 Financial
Provides Business Update
Reports progress towards global supply chain
Ended the fourth quarter of 2022 with cash,
cash equivalents and marketable securities of $102.9 million
Management to host conference call and webcast
Thursday, March 9, 2023 at 8:30 AM ET
NEVE ILAN, Israel- March 9, 2023 -- NANO-X
IMAGING LTD (NASDAQ: NNOX) ("Nanox" or the "Company"), an innovative medical imaging technology
company, today announced results for the fourth quarter ended December 31, 2022 and provided a business update.
Fourth Quarter 2022 Highlights and Recent Developments:
| Generated $2.1 million in revenue in the fourth quarter of 2022 compared to $2.4 million in the third quarter of 2022, $2.2 million in the second quarter of 2022 and $1.8 million in the first quarter of 2022 and total of $8.6 million in revenue in 2022. | ||
| Initially deployed a Nanox.ARC system at the University of Ghana Medical Centre for training and demonstration purposes. | ||
| A Nanox.ARC system has been shipped to Nigeria and is undergoing regulatory review by the Nigerian Nuclear Regulatory Authority. | ||
| Announced a collaboration with Nuance Precision Imaging Network, a Microsoft company, which makes Nanox AI solutions available through its marketplace to thousands of healthcare facilities and providers who use Nuance's reporting and image sharing solutions. |
results for three months ended December 31, 2022
For the three months ended December 31, 2022, the Company reported
a net loss of $44.8 million, compared to a net loss of $22.0 million for the three months ended December 31, 2021 (which is referred to
as the "comparable period"), which increase was largely due to a goodwill impairment in the amount of $36.5 million for the
three months ended December 31, 2022, an increase in the Company's research and development expenses in the amount of $0.7 million,
which was mitigated by a decrease in the Company's general and administrative expenses in the amount of $2.7 million, a decrease
in the Company's sales and marketing expenses in the amount of $0.4 million and $9.3 million income due to change in the Company's
contingent earnout liability.
For the three months ended December 31, 2022, the Company reported
revenue of $2.1 million, compared to $1.3 million in the comparable period. During the three months ended December 31, 2022, the Company
generated revenues through the sales of teleradiology services and AI solutions. The Company's gross loss during the three months
ended December 31, 2022, totaled $1.7 million on a GAAP basis as compared to a gross loss of $1.5 million in the comparable period. The
Company's revenue from teleradiology services for the three months ended December 31, 2022 was $2.0 million with a gross profit
of $0.3 million on a GAAP basis as compared to $1.0 million with a gross profit of $0.0 million on a GAAP basis in the comparable period.
The Company's revenue from its AI solutions for the three months ended December 31, 2022, was $0.1 million with a gross loss of
$2.0 million on a GAAP basis as compared to $0.3 million with a gross loss of $1.5 million on a GAAP basis in the comparable period. Non-GAAP
cost of revenue of the Company's teleradiology services for the three months ended December 31, 2022 was $1.2 million, as compared
to $0.6 million in the comparable period, resulting in a non-GAAP gross profit of $0.8 million for the three months ended December 31,
2022 as compared to $0.4 million in the comparable period on a non-GAAP basis, which represents a gross profit margin of approximately
40% on a non-GAAP basis for the three months ended December 31, 2022 as compared to 39% in the comparable period. The increase in gross
profit margin on a non-GAAP basis is attributable mainly to the increase in our rates for teleradiology services. The Company's
non-GAAP gross profit from its AI solutions for the three months ended December 31, 2022 was $0.0 million as compared to $0.2 million
for the comparable period. In total, non-GAAP cost of revenue for the three months ended December 31, 2022 was $1.3 million, as compared
to $1.1 million in the comparable period, resulting in a non-GAAP gross profit of $0.8 million for the three months ended December 31,
2022, as compared to $0.4 million in the comparable period which represents a gross profit margin of approximately 39% on a non-GAAP basis
as compared to 40% on a non-GAAP basis in the comparable period.
Research and development expenses for the three
months ended December 31, 2022 were $7.1 million, as compared to $6.4 million in the comparable period. The increase of $0.7 million
was mainly due to an increase in our cost of labor in the amount of $0.2 million and the cost of development of our systems in the amount
of $0.5 million due to the development of the multi-source Nanox.ARC and the Nanox.CLOUD.
Sales and marketing expenses for the three months
ended December 31, 2022 were $1.5 million, as compared to $1.9 million in the comparable period. The decrease of $0.4 million was mainly
due to a decrease in the cost of labor in the amount of $0.1 million and a decrease in share-based compensation in the amount of $0.2
General and administrative expenses for the three
months ended December 31, 2022, were $8.2 million, as compared to $10.9 million in the comparable period. The decrease of $2.7 million
was mainly due to a decrease in the Company's cost of labor in the amount of $0.5 million, a decrease in share-based compensation
in the amount of $2.3, a decrease in our cost of the Company's directors' and officer's liability insurance premium
of $0.3 million, a decrease in other professional services in the amount of $0.4 million, and a decrease in the Company's legal
fees due to the U.S. Securities and Exchange Commission ("SEC") investigation and class-action litigation as described in
this Company's Form 6-K filed on March 9, 2023 in the amount of $2.0 million.
Change in contingent earnout liability was $9.1
million in the three months ended December 31, 2022, as compared to none in the comparable period, due to the decrease in the Company's
contingent earnout liability , largely due to a settlement agreement entered into with the former shareholders of Nanox AI Ltd. ("Nanox
AI") (formerly named Zebra Medical Vision Ltd. ("Zebra")) with respect to any additional amount that could be granted
under the Agreement and Plan of Merger, dated August 9, 2021, as amended, among the Company, Zebra and Perryllion Ltd., as representative
of Zebra's equity holders..
Goodwill impairment for the three months ended December 31, 2022, was
$36.5 million due to the goodwill impairment related to the Nanox AI reporting unit as a result of the annual impairment test on goodwill.
As part of this analysis the Company considered the potential impact of the sensitivity of certain estimates and assumptions. These considerations
resulted in an estimate of longer than expected time to generate material revenues, gross profit, and positive operating cash flows of
the Nanox AI reporting unit, especially with its population health applications. Therefore, the
Company determined that the value of the Nanox AI reporting unit decreased below its
carrying value, and the Company recorded a goodwill impairment charge of $36.5 million in the fourth quarter of 2022.
Non-GAAP net loss applicable to ordinary shares
for the three months ended December 31, 2022, was $9.9 million, as compared to $15.0 million in the comparable period. Non-GAAP gross
profit for the three months ended December 31, 2022 was $0.8 million, as compared to $0.2 million the comparable period. Non-GAAP research
and development expenses for the three months ended December 31, 2022 were $6.2 million, as compared to $5.4 million in the comparable
period. Non-GAAP sales and marketing expenses for the three months ended December 31, 2022 were $1.1 million, as compared to $1.4 million
in the comparable period. Non-GAAP general and administrative expenses for the three months ended December 31, 2022 were $4.7 million,
as compared to $7.2 million in the comparable period.
A reconciliation between GAAP and non-GAAP financial
measures for the three-month periods ended December 31, 2022 and 2021 is provided in the financial results that are part of this press
release. The difference between the GAAP and non-GAAP financial measures above is mainly attributable to goodwill impairment, amortization
of intangible assets, share-based compensation, secondary offering expenses, change in contingent earnout liability and legal fees in
connection with class-action litigation and the SEC investigation.
Liquidity and Capital Resources
The Company ended the fourth quarter of 2022 with
total cash, cash equivalents and marketable securities of $102.9 million. As of December 31, 2022, the Company had $77.7 million of cash,
cash equivalents and short-term marketable securities and $25.2 million of long-term marketable securities. As of December 31, 2022, the
Company had total current assets of $82.5 million and total current liabilities of $17.1 million, creating a working capital of $65.4
As of December 31, 2021, the Company had $88.7 million of cash, cash
equivalents and short-term marketable securities and $67.8 million of long-term marketable securities and in total, $156.6 of cash and
marketable securities. As of December 31, 2021, the Company had total current assets of $94.9 million and total current liabilities of
$52.8 million, creating a working capital of $42.1 million.
The decrease in the Company's cash, cash
equivalents and marketable securities of $53.7 million during the twelve-month period ended December 31, 2022 was primarily due to negative
cash flow from operations of $43.4 million and purchase of property and equipment of $7.2 million for the Company's fabrication
facility in South Korea and long lead items for the Company's multi-source systems.
As of December 31, 2022, the Company had property
and equipment, net of $43.5 million as compared to $37.4 million as of December 31, 2021. The increase is mainly attributed to the completion
of the construction of the Company's fabrication facility in South Korea and purchase of machinery and equipment.
As of December 31, 2022, the Company had intangible
assets and goodwill of $98.6 million as compared to $160.1 million as of December 31, 2021. The decrease is attributable to the periodic
amortization of intangible assets in the amount of $10.6 million and impairment of goodwill in the amount of $50.9 million.
Shareholders' Equity
As of December 31, 2022, the Company had approximately 55.1 million
shares outstanding as compared to 51.8 million shares outstanding as of December 31, 2021. The increase was mainly due to the issuance
of 89,286 shares to the former shareholders of Nanox.AI (formerly named Zebra) due to the achievement of a milestone pursuant to the terms