Good day, and thank you for standing by. Welcome to the Nanox Imaging Second Quarter 2025 Earnings Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand it over to your first speaker, Mike Cavanaugh, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today. Earlier today, Nanox Imaging Limited released financial results for the quarter ended June 30, 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 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. Good morning, and thank you all for joining our second quarter 2025 call. As we enter the second half of 2025, the entire Nanox team remains focused on disciplined execution and expanding our commercial footprint across our entire ecosystem, including AI and teleradiology solutions as we pursue our vision of making medical imaging more accessible and thereby improving patient outcomes. In line with the commitments outlined during our May 2025 earnings call, we are making steady progress toward our goal of 100 Nanox.ARC systems installations. Expanding our commercial footprint remains a top priority, and our sales team continues to expand the pipeline of qualified leads and successfully convert those leads into systems being shipped to customers. While most leads and new customer activity is now being sourced from the U.S. market, we also continue to expand our network in different countries outside of the U.S., including various European countries such as Romania and Greece on the heels of obtaining the CE mark designation earlier this year. We are well on our way to meeting our target of 100 systems installed or being deployed by year's end. As previously indicated, revenues are expected to grow in the second half of 2025. We are also advancing our clinical strategy on multiple fronts as we seek to strengthen our position as a transformative force in medical imaging. To support this movement, we are acting on multiple fronts, clinical data and publication collaboration with global academic institutes, hands-on clinical education initiatives and expanding our key opinion leaders network. In other words, our commercial rollout involves bringing new technology to the market while also working to change the habits of health care providers. With respect to academic partners, supporting our transformative vision, we seek to partner with organizations that are leaders in…

Thank you, Erez. We reported a GAAP net loss for the second quarter of 2025 of $14.7 million, which is the reported period compared with a net loss of $13.6 million in the second quarter of 2024, which is the comparable period. The increase in net loss was mainly due to the increase of $0.4 million in our gross loss and $1.0 million in our finance expense net, which was mitigated by a decrease of $0.4 million in our operating expenses. Revenue for the reported period was $3.0 million and gross loss was $3.2 million on a GAAP basis. Revenue for the comparable period was $2.7 million and gross loss was $2.9 million on a GAAP basis -- non-GAAP gross loss for the reported period was $0.6 million as compared to a gross loss of $0.2 million in the comparable period, which represents a gross loss margin of approximately 21% on a non-GAAP basis for the reported period as compared to a gross loss margin of 9% on a non-GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $2.7 million with a gross profit of $0.5 million on a GAAP basis as compared to revenue of $2.5 million with a gross profit of $0.4 million on a GAAP basis in the comparable period, which represents a gross profit margin of approximately 18% on a GAAP basis for the reported period as compared to 15% 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 38% on a non-GAAP basis for the reported period as compared to 37% on a non-GAAP basis in the…

Thank you all for joining us today quarterly call. We appreciate the ongoing support from our investors, which is vital in helping us achieve our vision of making medical imaging more accessible worldwide and improving patient outcomes. Nanox has made progress advancing our Nanox.AI business on multiple fronts and the deployment of the Nanox.ARC system in the second quarter, and we are on pace to meet our target of 100 units in the deployment by year's end with revenues expected in the second half of 2025. We are seeing a growing and increasingly robust manufacturing pipeline, and we are proud to mark a breakthrough in the European market with the first system ready for shipment and working on enlarging our network. By expanding our systems output with a 2D view image, we reaffirm our commitment to continuous product enhancement in line with the evolving market needs. Alongside our commercial efforts, we are executing a robust clinical program designed to product dating supporting the use case of Nanox.ARC technology. We continue to partner with leading academic institutions that are leveraging our AI solution and engaging key opinion leaders who can partner with Nanox to drive behavioral change in the medical imaging sector. I'm proud of our team's diligent execution of our multifaceted growth strategy. If you would like an update call with the team, please contact our Investor Relations partners at ICR Healthcare. Thanks again for your time and attention today, and we look forward to our next update.

[Operator Instructions] Our first question will come from the line of Ross Osborn from Cantor Fitzgerald.

So starting off, how many systems were operating during the quarter that resulted in $221,000 in imaging-related revenue?

Can you repeat the question?

Yes. How many systems were operating during the quarter, [ meeting ] scans were being performed that resulted in your reported $221,000 in imaging-related revenue?

Out of the 100 that we are currently targeting for the end of the year and the more than 60 that we published last time?

Yes. So I guess out of those 60 or however many are in the field, how many systems were operating, meaning that patients were being scanned?

Okay. So right now, more than 20 are operating and scanning patients. And all the numbers that we gave last time have increased. So the number of operating system, the number of the systems which are being in the process to install, the number of fleets have grown exponentially that we are currently dealing with, namely the deal flow. Right now, as previously indicated, we are -- we can say that the 100 that we are talking about are identified. So we know each one of them, almost each one of them, when it's going to be installed and when it's going to be shipped and start to operate.

Okay. That's great to hear. And then looking at those 100 leads, are you expecting any of those to be capital sales? Or should we assume they will all be placed via the MSaaS model?

I would say that a part of them will be CapEx.

Great. And then lastly, how many states in the United States are you now approved in for users to operate a system?

Right now, 8.

Our next question will come from the line of Scott Henry from AGP.

I guess, first, a follow-up on the placements of units. Could you talk about the current revenue model? Is it mostly subscriptions versus CapEx in licensing? Just trying to get an idea of how that model has evolved as the launch has continued.

Okay. You want to go ahead, Ran?

So Scott, as we have discussed in the past, our leading model is the MSaaS model. But as we said also in the past, we are -- we do want to do some CapEx sales. Just to remind you, we said in the past that all the sales in the European countries will be in a CapEx sales model to our distributors. And in the U.S., we expect to be a mixture of CapEx sales and MSaaS model. Some other territories will be probably MSaaS or CapEx sales depends on the traits of the geographics.

Okay. Great. On -- just looking at the quarterly revenues, the AI solutions line, it moves around a lot, and the numbers are pretty small. But I'm just -- that would be the 96,000 reported in 2Q. Could you give us a sense of where that number should go going forward? I mean, should we start to see more trends evolve as opposed to kind of a lot of volatility in it currently?

The answer is yes. From the AI point of view, we have indicated already that 2026 will be breakeven in terms of revenues and expenses of the AI. We see a continuous growth in almost each one of the places that they are located, the system. Bear in mind that with respect to the AI, we have a lot of -- we have a lot of impact coming from the revenue recognition policy. So although, for example, we do install the systems, we get annual payments right now. So from a cash flow point of view, we are by far more than the number that you see in the quarter. And the other thing that should be noticed is the fact that, for example, Ezra Medical, the one that was mentioned last time and this time as well, is growing exponentially in terms of the numbers. And this is going to be part of the really growing activities that we see, the B2B2C. And we have a similar agreement that we announced today that was signed that is going to be, from our point of view, even double than the revenues, which will be generated from Ezra Medical. With respect to the OEM, it's basically -- it's when it comes, we register and only when we ship the numbers. So I think that the 2026 will probably be more of an indication of the numbers that will show the growth that we're talking about in the agreements that we signed.

Okay. Great. And then just quickly on operating expenses. Any trends we should expect? I mean it's been pretty consistent around that kind of $11 million to $12 million a quarter range. Should we expect that to continue going forward? And I guess it's probably the 2026 time frame as well. When would you expect to start seeing the quarterly losses start to decline? I know it's an expensive business model, but at some point, you reach that inflection where the revenues start to outweigh the cost. Just trying to get an idea of when that is. Sorry, there's 2 questions in there.

Yes. So with regards to the OpEx itself, you see there it's correct that it's maintaining the same level in the past few quarters, and that comes from more efficiencies and more measurements that we do to maintain the level of the expenses and to keep our brand to the minimum. On the other hand, you see an increase of our sales and marketing expenses as a result of the deployment in the U.S. market and the increase in our sales and marketing activities. All in all, we -- it's a trade-off. Once we increase in one place, we do decrease in one place, and we're trying to maintain the same level of expenses. And as we have said before and in the past, once you see, especially in the second half of this year and going forward, when you're going to see the revenue alleviating, then you should see a decrease in the operating loss and the burn, et cetera.

Our next question come from the line of Jeffrey Cohen from Ladenburg.

Firstly, could you talk about studies and submittals and publications and presentations in the back half of the year, specifically around RSNA and your activities headed into RSNA?

So towards the RSNA, we have -- we're going to submit -- we have submitted already. Actually, we will present the full Nanox end- to-end solution and the high-profile industry event in the first time that we're going to be there. We are going to present the ARC X, including -- we are going to show the first installation of the first AI interpretation on the -- as part of the ARC X systems. And we are planning to -- we have submitted one clinical paper that is going to be on the MSK. I mentioned it to you earlier in the in the -- and when we are -- I was talking about a few minutes ago in the earnings prepared remarks. And we are going to present at the AI theater. We're going to have a presentation made by our Chief Medical Officer, and we are going to include our key opinion leaders that will talk in various stages during the show, especially Dr. Tanenbaum and [Technical Difficulty]. Jeff?

Yes. Okay. Sorry, I'll just lost you there for a second. So -- and as a follow-up there, could you talk about geographies specifically as far as both ARC placements as well as the AI solutions into the balance of this year and throughout perhaps '26 and '27 as far as countries and regions of geographical presence where we expect some nice uptake?

Okay. So first of all, we have indicated today in my remarks that the focus will be in the U.S., both for the AI and for the ARC as well. And this will be a major part of our efforts, including the number of people that are going to be dedicated to the sales and marketing efforts. In addition, we are planning to focus on the EU countries. Right now, we have in our list approximately 8 countries. A few of them already signed and a few of them are in the process of being signed very shortly. We are very proud about the fact that less than half a year from the CE marks, the first system is going to be sent to Europe and installed in Romania at our distributor. Next probably in the line will be Greece. We are talking about a few like 3 or 4 countries in Europe. And this will be the second part. In addition, we are going to spend or dedicate efforts, including salespeople and the channel managers, people that will focus on Mexico. Mexico is the country that we have already an agreement for quite some time, but the permit, the import license and the local certification takes time. The system is -- we are talking about a few systems that will be sent to Mexico. They are ready to be shipped. We are waiting for the permit in the very near future. We are negotiating right now for another few countries in Latin America that will be part of it. The one thing that I'm saying is that right now, the Far East is going -- is not going to be the first priority, although we have already a distributor that is working on the license in Korea, but the…

And with that, this concludes the question-and-answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect. Everyone, have a great day.