Good day, and thank you for standing by. Welcome to the Nano-X Fourth Quarter 2024 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mike Cavanaugh, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today. Earlier today, Nano-X Imaging Limited released financial results for the quarter ended December 31, 2024. 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 and 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 and administrative expenses and non-GAAP gross loss per share. With that, I'd now like to turn the call over to Erez Meltzer.

Thank you, Mike. Thank you for joining us today for our financial results call. As always, we appreciate your continued support of Nano-X. During our call today, I will use my prepared remarks to provide selected operational updates covering the time since our last update call in November. Then Ran will review our financials, and we will close the call with a question-and-answer session. Since our last call, the Nano-X team achieved 2 notable regulatory successes. The first being the general use clearance from the FDA in December. Subsequent to the FDA clearance, we were informed that the CE Mark designation was granted for Nanox.ARC in February 2025. Beyond these notable regulatory achievements, the fourth quarter and beginning of 2025 have been a period of significant progress and strategic advancements for Nano-X across our business areas as we continue to revolutionize the field of medical imaging with our innovative technologies. I will cover a wide range of topics in my prepared remarks. In the key U.S. market, we continue to advance Nanox.ARC system deployment. We received positive feedback on the Nanox.ARC for our first customers, while we also signed agreements with new channel partners, and we are negotiating additional ones as we speak. These agreements are expected to accelerate our market presence. We are also beginning our entry into the European market now that we have obtained the CE Mark, and I will talk about that in some detail, along with our progress outside of the U.S. market. Our Nanox.AI team continued to make progress as we added new customers. I will wrap up my remarks with an update on our OEM relationship as well as our clinical trials, which are designed to build on the body of the data supporting the use of Nanox.AR technology in the delivery of…

Thank you, Erez. We reported a GAAP net loss for the fourth quarter of 2023 of $14.1 million, which is the reported period compared with a net loss of $10.2 million in the fourth quarter of 2023, which is the comparable period. The increase was largely due to an increase of $1.2 million in the gross loss and increase of $2.7 million in other expenses, mainly due to a one-time income in the amount of $3 million that was recorded in the comparable period since the company received that amount in the fourth quarter of 2023 from its D&O insurance carrier under the settlement agreement in connection with the class action lawsuit against the company. Revenue for the reported period was $3.0 million and gross loss was $2.9 million on a GAAP basis. Revenue for the comparable period was $2.4 million and gross loss was $1.7 million on a GAAP basis. Non-GAAP gross loss for the reported period was $0.3 million as compared to a gross profit of $0.9 million in the comparable period, which represents a gross loss margin of approximately 9% on a non-GAAP basis for the reported period as compared to a gross profit margin of 36% on a non-GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $2.8 million with a gross profit of $0.6 million on a GAAP basis as compared to revenue of $2.3 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 21% on a GAAP basis for the reported period as compared to 14% on a GAAP basis in the comparable period. Non-GAAP gross profit for the company's teleradiology services for the reported period was $1.1 million as compared to…

Thank you, Ran. To close my prepared remarks, I want to thank you all for your continued support of Nano-X. Our team continues to deliver in its promises with advance on the AI technology, regulatory and clinical fronts during the quarter. And at the beginning of 2025, we advanced U.S. commercializations and have entered a new market in the EU. I'm especially proud for our FDA general use clearance and the recent CE Mark designation for the Nanox.ARC. We added new deployments, distribution agreements, and new customers for the Nanox.AI technology. Nano-X's strategic approach to regulatory milestones and commercial rollout, including targeted installations and phase of scaling underscore a disciplined path to sustainable growth. I'm proud of what we have accomplished so far, and I look forward to sharing details of more successes to come on our Q1 2025 investor call. Thanks again for joining us today. And operator, please open the call for questions.

[Operator Instructions] Our first question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.

Erez, could you expound upon the DME partners in the U.S. under DMEs, will you be selling the ARC outright with the opportunity for imaging revenue behind it? Or could DMEs place that under the imaging-only scenario?

So we have both options. Part of them will be that we're going to sell CapEx direct. They will do their installation and the selling process. And part of them will be the MSaaS, the typical MSaaS model that we currently have.

Could you talk about the...

You asked about the U.S., yes?

Yes. And in the U.S., it looks like congrats, I think you're up to 7 states, I believe. Can you give us a sense of the platform in the U.S.? And you just talk about the target market in the U.S. and how we may expect placements to occur during 2025?

Okay. So right now, it seems that we are sort of doubling the team like every quarter. We have right now 5 salespeople that are currently working. We are extending the support, the clinical support and clinical education in order to build the market and brand and value awareness and to ensure that we expand the number of physicians who will be able to refer to the tomosynthesis to the ARC. This seems to be very successful. One of the examples I gave in the call that in one of the clinics that we started to work, we have been facing that a lot of physicians have been referring, and we achieved like 10 scans per day, which is more than the average that we expect. This is with respect to the team. We are planning to get a major impact as a result of the channel partners that we signed with in specific states or coverage or states that we want to extend our coverage, and we're not planning specifically with our own salespeople. And a lot of introduction. We have people who are actually working on building the deal flow that currently is pretty large. And I gave an indication also in the comments about what do we expect in 2025 in terms of the numbers that we are either negotiating or starting the process of either building the room or getting the regulation, the local regulation of the approval of the state or approval of the city and the physics that are coming to check, et cetera, the whole process that we mentioned. Right now, what we can see definitely is that the sectors who are the early adopters are either small and medium-sized medical imaging centers in orthopedic clinics and chiropractors. And in addition, the one that we are accelerating right now, and we expect more to be built on the success of the first one is what is called the multi-specialty medical centers. This is definitely an area where we can add value to their X-ray capability. And in some of them, we are replacing the city, the old city that they had in the past. Last but not least is the one that we mentioned is the medical imaging chains. We have already a few that were signed. We have placed systems also in a few of them already. And this is an area that we are working and we have a focus on in order to extend the number of chains that we're going to be in touch with and place our system.

And one more quick one. Could you talk about the manufacturing sites out there for tube chips and other components? And has there been any material change on any of those channels in the past quarter?

No. We work according to the plan that was presented. CI in Italy are manufacturing the tubes for us. Varex started to ship tubes also for us, both manufacturing facilities, the Nano-X in Korea and System in Switzerland are both manufacturing the chips. And we are building that. And we are working right now while we do the scale in the manufacturing facility and the future manufacturing of the ARC-X to have the low-cost manufacturing facility in addition to the one that we have in Israel.

Our next question comes from Ross Osborn with Cantor Fitzgerald.

Starting off, how many systems were deployed and operating in the U.S. during the quarter that resulted in $136,000 in system revenue?

So we have already indicated that we don't give the exact numbers. They are all in various stages of those that were already installed. This is -- these are that are ready to be installed in the -- when the rooms are getting ready. We are adding states. We expect that the channel partners will add another value. What we see also that every salesman that we are hiring is able to expand the number of places that we are installing. And I think that the more we go into the 2025, we'll give more details on this one. By the way, one thing we actually also mentioned in the call that the pipeline that remains pretty robust. And the only thing that we're trying to do is make sure that they are going to be converted to installations and scans that they are going to create. And also, I gave an education of the scans that we're able to create in the places that the system is installed.

And then how should we think about pricing for ARC in Europe, given you're going to be selling the system there as a capital sale? And how do you think this will impact gross margin this year and next?

I hope that I heard the question. So in Europe, we have also -- last month, we have extended the team when we got the CE clearance. The show that we attended in Vienna was very successful. We have engaged with quite a lot new distributors that we will work with them. In the -- so right now, we have 3 salespeople, regional salespeople. We have added Romania and Greece, as mentioned, to the new distributors. We are working with the distributors in Italy and Spain. And we have also a few more distributors in the pipeline, and we do hope that this will extend our presence. I think that it's fair to say that we will start installations probably sometimes during the next 6 months or quarter or 2 quarters that we'll start to install systems and sell systems. In Europe, I would say that it will be -- probably a major part of it will be CapEx sales and a smaller part of it will be the [indiscernible]

Our next question comes from Scott Henry with Alliance Global Partners.

I guess the first question, and then I'll go in a little more detail, but do you want to give any thoughts to the outlook for 2025 in terms of big picture, any guidance, or if you're going to provide any -- and then I did have a couple more specific items on that.

What specifically are you referring to?

Well, I guess if we go by category, it looks like Teva radiology services tends to grow around the 10% range. Is anything changing there? Or should we expect that to continue to grow at similar rates?

Scott, we don't provide guidance, as you remember. But if you look at the consensus of the analysts, I think that the service segment of the company actually was -- came out in line with the consensus.

And I won't ask for guidance. But just in terms of directionally in magnitude, AI solutions, should we -- I mean, that's moved around a lot. It dipped down in Q4 after a very strong Q3. Should we expect a strong year for that in 2025? Just not specific numbers, but what are you seeing there that would indicate how we should think about it?

Well, as you remember, in the third quarter, we saw a one-time income over there as we completed the projects as we noted then. But as we mentioned -- as Erez mentioned in the portion of the call, we do see an increase in the number of the clients and the number of the pilots. So you can assume that, that will be translated -- may be translated into an increase in the revenue. But of course, we'll give better numbers when we publish the upcoming quarter results. But from a general perspective, we view 2025 as a strong year for AI.

And then probably the most important question that I have is when we look at the Imaging Solutions line, the percent gains have been substantial, doubling year-over-year, but the numbers are still relatively small. Obviously, as the rollout goes, we'll start to reach an inflection point where those numbers will get bigger. When would you expect that inflection point? Is that a kind of a middle of 2025 event or second half? Just trying to get a sense of when we should see that really kind of curve upwards.

Again, we don't provide any kind of guidance. So I can't tell you exactly when it will be the inflection point, but you should look at some about the trend about how we work together with channel partners in the U.S. market, including distributors and with distributors in the Europe. We also announced that we submitted the new version of the ARC to the FDA. So that may be also an inflection point, once we get the clearance for that device. And I think as the time goes and we accumulate more experience and expanding our team and our effort and the market education and the market awareness and increase and showing the clinical value in our devices, that should be translated into what you call coming towards the inflection point.

Just a couple of modeling questions. Typically, OpEx, operating expenses, we think about growth with inflation, all else being equal. Is there anything unique in the OpEx that we should factor into 2025 or maintain similar trends?

Not really. But don't forget that some of our labor costs and other overhead is actually linked to the Israeli shekels and some of it a little bit to the Korean currency. So in terms of any kind of impact on the OpEx, it's only there's going to be some kind of sharp fluctuations with those currencies. Other than this, everything is in line. You can see that our G&A -- actually our G&A are more so in the range in the past 2 years. It's actually decreasing with the completion of the SEC and the class action lawsuit last year. So it's more of the same of the same. Of course, once we'll issue the 20-F, you can have more details about it.

[Operator Instructions] Our next question comes from Jason Kolbert with D. Boral Capital.

I basically have the same question that Scott does, which is I'm looking for guidance. I'm trying to understand system placement and when we're going to see that inflection point. I understand that you don't want to provide that. The problem is it's very hard to kind of understand as an analyst following the company, where that inflection point is. And given the fact that the stock is down by almost 50% from its recent high, I think investors are trying to understand where that inflection point is also. You raised some capital in the period. Can you talk a little bit about the capital you raised and how you might deploy that capital in order to drive system placement? Thanks.

Okay. I'll give you an answer about the second part of your question. You raised approximately 38 gross, $37 net million during the fourth quarter of 2024, and that was under the ATM programs that are in place. That's a program that we already put in place already in mid-2024. We had an opportunity to use it in -- after we announced the general use clearance that we have received in the U.S., and we have done so. What is going to be used, of course, is going to be used for the acceleration of the commercialization of our products, both the imaging and the AI. And we don't think that -- we do think that most of the efforts will be concentrated in commercialization at the moment.

The one other thing, Jason, that I would say that you have enough -- not enough, always not enough for analysts. But I would say that we have a lot of indications that can explain or give you an indication of where the inflection point will be as a result of the fact that the increase in revenue will be generated from the EU penetration, from the fact that we moved in the U.S. and the FDA for general use from the MSK only in the past and the fact that we are going to have the ARC-X clearance from the FDA sometimes in the -- during 2025, and this will be part of the scale that we are doing. We also gave some indication about the pipeline. We gave an indication about the number of scans that we are going to generate. Right now, for us, it's hard to predict what will be the percentage of the CapEx sales, namely that the system will be sold and served and what will be the part which is going to be based on the MSaaS. Right now, almost all of our systems are MSaaS model, but EU probably will be more of a CapEx sales and last but not least, I think that what we are trying to show that basically, we say something and we ensure that we are delivering. And this went from the regulation point of view, from building the clinical validation point of view, the clinical trials, the market awareness of the ARC and its clinical use, the key opinion leaders that are joining us all the time, the number of salespeople that were very -- we are very conservative in adding expenses to the -- so when we see that the salesman is generating enough sales and revenues, then we will add and not flooding the company with people that before we know that we're going on a very strong base moving forward. So this with respect to the teams that we have. So yes, we always said that 2025 will be a meaningful year for us going forward. And that's where we are.

Can you give us some idea of either how long the existing cash on the balance sheet will last you or when you think you're going to be cash flow positive?

It's -- again, we don't provide any guidance. But you can look at our earnings release and analyze it and come to your own conclusion.

I think the positive and very supportive feedback that we mentioned in the very beginning of the call that we're getting from the customers and people are -- really believe that it's a game changer in this medical imaging market. And the value that we saw in the review that -- the independent review that we had in Europe and what we see right now following the CHEST approval that we see the for pulmonologists and for the lung screening and what we see in terms of the MSK and as mentioned, sinusitis and kidney stones and other indications or use cases. I think this actually gives us a lot of positive and backwinds to move forward and to ensure that we're going to add value to our customers and ensure that we are going to make a change in the health and standard of care.

Do you anticipate continuing to use the ATM facility this year?

But again, we don't give any indication on any forward-looking actions that we may take. Yes, there are a lot of investors that are pushing us to go with them and raise and take money, but we are very conservative, and we also consider very carefully the existing shareholders. So when the stock is down, the decision is accordingly.

I'm showing no further questions in queue at this time. This concludes today's conference call. Thank you for participating. You may now disconnect.