Full Press Release Details
Nanox Announces Third Quarter of 2023 Financial
Provides Business Update
Reports progress towards global supply chain
development and commercial deployment
Ended the third quarter of 2023 with cash, cash
equivalents, restricted cash and marketable securities of $95.6 million
Management to host conference call and webcast
Tuesday, November 28, 2023 at 8:30 AM ET
Management to host investor
day on December 4, 2023
NEVE ILAN, Israel- November 28, 2023 -
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, 2023 and provided a business update.
Third Quarter 2023 Highlights and Recent Developments:
| On September 29, 2023, the Company entered into a manufacture and supply agreement with Varex Imaging Corporation ("Varex," Nasdaq: VREX), a leading innovator, designer and manufacturer of X-ray imaging components, under which Varex will supply X-ray tubes utilizing the Nanox digital X-ray source for the Nanox.ARC system. Under the agreement, the Company may order X-ray tubes from Varex for use in its Nanox.ARC system. Varex agreed to manufacture and supply the X-ray tubes in exchange for payment therefor in the form of a revenue-sharing fee (subject to a minimum annual amount per system) based on the Company's pay-per-scan revenue from Nanox.ARC systems using Varex X-ray tubes worldwide. Subject to receipt of requisite local regulatory clearance, Nanox has also agreed to use Varex X-ray tubes in a minimum percentage of all Nanox.ARC systems that are deployed and operating. | ||
| Generated $2.5 million in revenue in the third quarter of 2023, compared to $2.4 million in the third quarter of 2022. |
"The Nanox team made tremendous progress
toward commercialization of the groundbreaking Nanox.ARC technology in the third quarter, capped off by the first US system deployment
in a commercial imaging center in New Jersey. The Nanox.ARC system at this site will be used for patient imaging as well as serve as our
demonstration center for the Nanox.ARC and marks the beginning of Nanox' commercial expansion into the U.S. market," said Erez Meltzer,
Chief Executive Officer of Nanox. "Alongside this initial system deployment, we have partnered with 626, an established Florida-based
firm that will provide the necessary installation and support services for future Nanox.ARC users. Outside of the U.S., we continued
to advance the deployment of the Nanox.ARC system globally. These efforts include multiple initiatives such as receiving regulatory
clearance in Israel, formally kicking off the process of submitting our technical file for obtaining a CE mark with the Notified Body
and receiving regulatory clearance for the Nanox.ARC system that was placed in Ghana earlier this year. It is truly an exciting time for
results for three months ended September 30, 2023
For the three months ended September 30, 2023
(the "reported period"), the Company reported a net loss of $21.4 million, compared to a net loss of $19.1 million for the
three months ended September 30, 2022 (which is referred as the "comparable period"), representing an increase of $2.3 million.
The increase was largely due to a goodwill impairment of $7.4 million and an increase of $0.4 million in sales and marketing expenses,
which was offset by a decrease in the general and administration expenses in the amount of $5.6 million.
The Company reported revenue of $2.5 million in
the reported period, compared to $2.4 million in the comparable period. During the reported period, the Company started to generate revenue
through the sales and deployment of its imaging systems while continuing to generate revenues through the sales of teleradiology services
The Company's gross loss during the reported
period totaled $1.7 million (gross loss margin of (67%)) on a GAAP basis, as compared to a gross loss of $1.5 million (gross loss margin
of (60%)) in the comparable period. Non-GAAP gross profit for the reported period was $0.9 million (gross profit margin of approximately
37%), as compared to $1.1 million (gross profit margin of approximately 46%) in the comparable period.
The Company's revenue from teleradiology services
for the reported period was $2.2 million, as compared to revenue of $2.4 million in the comparable period. The decrease in the Company's
revenue from teleradiology services was mainly attributable to customer attrition.
The Company's GAAP gross profit from teleradiology
services for the reported period was $0.2 million (gross profit margin of approximately 11%), as compared to $0.6 million (gross profit
margin of approximately 26%) in the comparable period. Non-GAAP gross profit of the Company's teleradiology services for the
reported period was $0.8 million (gross profit margin of approximately 36%) as compared to $1.2 million (gross profit margin of approximately
49%) in the comparable period. The decreases in the gross profit margins on a GAAP and non-GAAP basis were attributable mainly to an increase
in the cost of the engaged radiologists due to increases in reading rates and incentive payments which the Company paid to radiologists
to engage during overnight and weekend shifts.
As mentioned above, during the reported period the
Company started to generate revenue through the sales and deployment of its imaging systems which amounted to $99 thousand for the reported
period, with a gross profit of $36 thousand (gross profit margin of approximately 37%) on a GAAP and Non-GAAP basis. The revenue stems
from the sale and deployment of our 2D systems in Africa.
The Company's revenue from its AI solutions for the reported
period was $141 thousand with a gross loss of $1.9 million on a GAAP basis, as compared to revenue of $87 thousand with a gross loss of
$2.1 million in the comparable period. Non-GAAP gross profit of the Company's AI solutions for the reported period was $75 thousand,
as compared to a loss of $41 thousand on a non-GAAP basis in the comparable period. During the third quarter of 2023, Nanox AI continued
to complete pilot programs with marketplaces, marketplace costumers and health organizations in anticipation of full deployment of its
Research and development expenses for the reported
period were $6.0 million, as compared to $6.1 million in the comparable period. The decrease of $0.1 million was mainly due to a decrease
in cost of labor of $0.6 million, which was offset by an increase in the Company's development expenses of the Nanox.ARC system
in the amount of $0.5 million.
Sales and marketing expenses for the reported period were $1.1 million,
as compared to $0.7 million in the comparable period. The increase was mainly due to an increase in the Company's marketing expenses
in preparation of its entrance into the U.S. market.
General and administrative expenses for the reported period were $5.0
million, as compared to $10.6 million in the comparable period. The decrease of $5.6 million was mainly due to a decrease in legal expenses
in the amount of $2.9 million, largely as a result of the finalization of the SEC investigation and reaching a settlement of the class
action litigation, a decrease in share-based compensation in the amount of $2.7 million and a decrease in the cost of the directors'
and officers' liability insurance premium in the amount of $0.3 million.
Goodwill impairment for the reporting period was $7.4
million, which was resulted from the goodwill impairment related to the teleradiology and Nanox.AI reporting units. The impairment was
largely due to the increased discount rate and management estimates that it would take longer than
we originally expected to generate revenues, gross profit, and positive operating cash flows in the AI and Teleradiology business segments.
As previously disclosed, the Company and Ran Poliakine,
Chairman of the board of directors of the Company, reached final agreements with the SEC staff to settle the SEC investigation. The agreements
were approved by the United States District Court for the Southern District of New York in October 2023. The Company agreed to pay a civil
penalty in the amount of $0.7 million, which was paid during October 2023.
Non-GAAP net loss attributable to ordinary shares
for the reported period was $9.4 million, as compared to $8.1 million in the comparable period. The increase of $1.3 million was mainly
due to the decrease in the non-GAAP gross profit of $0.2 million and increase of $1.1 million in our operating expenses. Non-GAAP gross
profit for the reported period was $0.9 million, as compared to $1.1 million in the comparable period. Non-GAAP research and development
expenses for the reported period were $4.9 million, as compared to $5.0 million in the comparable period. Non-GAAP sales and marketing
expenses for the reported period were $0.9 million, as compared to $0.4 million in the comparable period. Non-GAAP general and administrative
expenses for the reported period and the comparable period were $4.5 million.
The difference between the GAAP and non-GAAP financial measures above
is mainly attributable to amortization of intangible assets, goodwill impairment, share-based compensation, change in contingent earnout
liability, legal fees in connection with the class-action litigation and the SEC investigation, accrual in connection with the settlement
of the SEC investigation. A reconciliation between GAAP and non-GAAP financial measures for the three- and nine-month periods ended September
30, 2023, and 2022 is provided in the financial results that are part of this press release.
Liquidity and Capital Resources
As of September 30, 2023, the Company had total cash,
cash equivalents, restricted cash and marketable securities of $95.6 million, compared to $102.9 million as of December 31, 2022.
The decrease in the Company's cash, cash equivalents,
restricted cash and marketable securities of $7.3 million during the nine-month period ended September 30, 2023, was primarily due to
negative cash flow from operations of $32.3 million and the purchase of property and equipment of $2.8 million, which was offset by cash
flow from financing of $27.2 million largely from the capital raise that the Company consummated during the third quarter of 2023, as
On July 26, 2023, the Company raised $30 million in a registered direct
offering by selling 2,142,858 of the Company's ordinary shares, together with warrants to purchase up to 2,142,858 ordinary shares
at a combined purchase price of $14.00 per share. The net proceeds of the offering were approximately $27 million, excluding any proceeds
that may be received upon the exercise of the warrants, after deducting placement agent fees and other offering expenses payable by the
Company. The warrants have an exercise price of $19.00 per share, are exercisable immediately upon issuance and will expire five years