Nano-X Imaging (NNOX) - 2023 Q1 - Quarterly Report

Report Overview and Business Update This section provides an overview of Nanox's Q4 2022 performance, highlighting key operational achievements, strategic partnerships, and the CEO's outlook on future system deployments and FDA progress Q4 2022 Highlights and Recent Developments Nanox reported Q4 2022 revenue of $2.1 million, highlighting significant progress in the initial deployment of Nanox.ARC systems in Ghana and Nigeria, and expanding Nanox AI solution availability through a partnership with Nuance Precision Imaging Network 2022年第四季度及全年营收 | Period | Revenue (Millions USD) | | :----- | :--------------------- | | Q4 2022 | $2.1 | | Q3 2022 | $2.4 | | Q2 2022 | $2.2 | | Q1 2022 | $1.8 | | Full Year 2022 | $8.6 | - Nanox.ARC systems have been initially deployed for training and demonstration at the University of Ghana Medical Centre and shipped to Nigeria for regulatory review[4] - A partnership with Microsoft's Nuance Precision Imaging Network was established to offer Nanox AI solutions to thousands of healthcare facilities and providers through its marketplace[4] CEO Statement CEO Erez Meltzer expressed satisfaction with the company's progress in Nanox.ARC deployment, Nanox AI expansion, and FDA review, noting 2022 focused on FDA 510(k) submission, cost rationalization, and manufacturing infrastructure, with 2023 anticipated as a significant year for initial Nanox.ARC system shipments - The company achieved significant progress in the initial deployment of Nanox.ARC systems in Ghana and Nigeria, expanded Nanox AI solution availability through key commercial partnerships, and advanced the FDA review process for Nanox.ARC[3] - 2022 was a successful year for Nanox, focusing on FDA 510(k) submission, cost rationalization to extend cash runway, and strengthening manufacturing infrastructure[3] - 2023 is expected to be a highly impactful year, with the goal of announcing the first shipments of Nanox.ARC systems[3] Financial Performance - Fourth Quarter 2022 (GAAP) This section details Nanox's GAAP financial results for Q4 2022, including a significant net loss driven by goodwill impairment, changes in revenue and gross profit, and shifts in various operating expense categories Net Loss Analysis Nanox reported a net loss of $44.8 million in Q4 2022, a significant increase from $22.0 million in Q4 2021, primarily due to a $36.5 million goodwill impairment 净亏损 (2022年第四季度 vs. 2021年第四季度) | Period | Net Loss (Millions USD) | Change (YoY) | | :----- | :---------------------- | :----------- | | Q4 2022 | $44.8 | +$22.8M | | Q4 2021 | $22.0 | | - The increase in net loss was primarily attributable to a $36.5 million goodwill impairment recorded in Q4 2022[5] Revenue and Gross Loss Q4 2022 revenue increased to $2.1 million (+$0.8 million YoY), driven by teleradiology services and AI solutions; GAAP gross loss increased to $1.7 million, while non-GAAP gross profit rose to $0.8 million, with teleradiology non-GAAP gross margin around 40% due to higher service rates 营收 (2022年第四季度 vs. 2021年第四季度) | Period | Revenue (Millions USD) | Change (YoY) | | :----- | :--------------------- | :----------- | | Q4 2022 | $2.1 | +$0.8M | | Q4 2021 | $1.3 | | - Q4 2022 revenue was primarily generated through teleradiology services ($2.0 million) and AI solutions ($0.1 million)[6] GAAP毛亏损 (2022年第四季度 vs. 2021年第四季度) | Period | GAAP Gross Loss (Millions USD) | Change (YoY) | | :----- | :----------------------------- | :----------- | | Q4 2022 | $1.7 | +$0.2M | | Q4 2021 | $1.5 | | 非GAAP毛利润 (2022年第四季度 vs. 2021年第四季度) | Period | Non-GAAP Gross Profit (Millions USD) | Change (YoY) | | :----- | :----------------------------------- | :----------- | | Q4 2022 | $0.8 | +$0.4M | | Q4 2021 | $0.4 | | - The non-GAAP gross margin for teleradiology services was approximately 40% in Q4 2022, an increase from 39% in the prior year period, primarily due to higher teleradiology service rates[6] Operating Expenses In Q4 2022, R&D expenses increased due to higher labor and system development costs, while sales and marketing, and general and administrative expenses decreased due to reduced labor, share-based compensation, and legal fees 运营费用概览 (2022年第四季度 vs. 2021年第四季度) | Expense Category | Q4 2022 (Millions USD) | Q4 2021 (Millions USD) | Change (YoY) | | :--------------- | :--------------------- | :--------------------- | :----------- | | R&D | $7.1 | $6.4 | +$0.7M | | S&M | $1.5 | $1.9 | -$0.4M | | G&A | $8.2 | $10.9 | -$2.7M | Research and Development Expenses R&D expenses increased by $0.7 million, driven by higher labor costs and development for Nanox.ARC and Nanox.CLOUD systems - Research and development expenses increased by $0.7 million, primarily due to a $0.2 million increase in labor costs and a $0.5 million increase in development costs for the multi-source Nanox.ARC and Nanox.CLOUD systems[7] Sales and Marketing Expenses Sales and marketing expenses decreased by $0.4 million, primarily due to lower labor costs and share-based compensation - Sales and marketing expenses decreased by $0.4 million, mainly due to a $0.1 million decrease in labor costs and a $0.2 million decrease in share-based compensation[8] General and Administrative Expenses G&A expenses decreased by $2.7 million, mainly due to reductions in labor, share-based compensation, D&O insurance, professional services, and legal fees - General and administrative expenses decreased by $2.7 million, primarily due to a $0.5 million decrease in labor costs, a $2.3 million decrease in share-based compensation, a $0.3 million decrease in D&O insurance premiums, a $0.4 million decrease in other professional services, and a $2.0 million decrease in legal fees related to the SEC investigation and class action lawsuit[9] Change in Contingent Earnout Liability In Q4 2022, the company recognized $9.1 million in income from a decrease in contingent earnout liability, primarily due to a settlement agreement with former Nanox AI Ltd. shareholders - In Q4 2022, a $9.1 million income was generated from the change in contingent earnout liability, primarily due to a decrease in the company's contingent earnout liability[10] - The decrease in liability was mainly attributable to a settlement agreement with former shareholders of Nanox AI Ltd. (formerly Zebra Medical Vision Ltd.) regarding additional amounts potentially payable under the merger agreement[10] Goodwill Impairment In Q4 2022, the company recorded a $36.5 million goodwill impairment related to the Nanox AI reporting unit, as its population health applications are taking longer than expected to generate substantial revenue and positive cash flow - The goodwill impairment in Q4 2022 amounted to $36.5 million, related to the Nanox AI reporting unit[11] - The impairment resulted from the annual impairment test, indicating that the Nanox AI reporting unit, particularly its population health applications, is taking longer than anticipated to generate substantial revenue, gross profit, and positive operating cash flows[11] Financial Position and Non-GAAP Performance This section analyzes Nanox's financial position and non-GAAP performance, detailing liquidity, capital resources, changes in assets like property, equipment, intangible assets, and goodwill, alongside shifts in shareholders' equity Non-GAAP Financial Performance Overview In Q4 2022, Nanox's non-GAAP net loss narrowed to $9.9 million, and non-GAAP gross profit increased to $0.8 million, with differences from GAAP primarily due to adjustments for goodwill impairment, intangible asset amortization, share-based compensation, and legal fees 非GAAP净亏损 (2022年第四季度 vs. 2021年第四季度) | Period | Non-GAAP Net Loss (Millions USD) | Change (YoY) | | :----- | :------------------------------- | :----------- | | Q4 2022 | $9.9 | -$5.1M | | Q4 2021 | $15.0 | | 非GAAP毛利润 (2022年第四季度 vs. 2021年第四季度) | Period | Non-GAAP Gross Profit (Millions USD) | Change (YoY) | | :----- | :----------------------------------- | :----------- | | Q4 2022 | $0.8 | +$0.6M | | Q4 2021 | $0.2 | | - The differences between GAAP and non-GAAP financial measures are primarily attributable to adjustments for goodwill impairment, intangible asset amortization, share-based compensation, secondary offering expenses, changes in contingent earnout liability, and legal fees related to class action lawsuits and SEC investigations[14] Liquidity and Capital Resources As of Q4 2022, Nanox held $102.9 million in cash, cash equivalents, and marketable securities, a $53.7 million decrease YoY, mainly due to operating cash outflows and capital expenditures, while working capital increased to $65.4 million 现金、现金等价物和有价证券 (截至年末) | Period | Amount (Millions USD) | | :----- | :-------------------- | | Dec 31, 2022 | $102.9 | | Dec 31, 2021 | $156.6 | - As of December 31, 2022, the company's working capital was $65.4 million (current assets of $82.5 million and current liabilities of $17.1 million)[15] - For the twelve months ended December 31, 2022, the company's cash, cash equivalents, and marketable securities decreased by $53.7 million, primarily due to negative cash flow from operating activities of $43.4 million and $7.2 million in purchases of property and equipment for the Korean manufacturing facility and multi-source system[17] Other Assets At year-end 2022, net property and equipment increased due to the completion of the Korean manufacturing facility and equipment purchases, while intangible assets and goodwill significantly decreased due to amortization and impairment Property and Equipment, Net Net property and equipment increased by $6.1 million, driven by the completion of the Korean manufacturing facility and equipment purchases 物业和设备净值 (截至年末) | Period | Amount (Millions USD) | Change (YoY) | | :----- | :-------------------- | :----------- | | Dec 31, 2022 | $43.5 | +$6.1M | | Dec 31, 2021 | $37.4 | | - The increase was primarily attributable to the completion of the company's manufacturing facility in South Korea and the purchase of machinery and equipment[18] Intangible Assets and Goodwill Intangible assets and goodwill decreased by $61.5 million, primarily due to amortization and a significant goodwill impairment 无形资产和商誉 (截至年末) | Period | Amount (Millions USD) | Change (YoY) | | :----- | :-------------------- | :----------- | | Dec 31, 2022 | $98.6 | -$61.5M | | Dec 31, 2021 | $160.1 | | - The decrease was attributable to the periodic amortization of intangible assets ($10.6 million) and goodwill impairment ($50.9 million)[19] Shareholders' Equity As of December 31, 2022, the number of outstanding shares increased to approximately 55.1 million, mainly due to common stock issued for Nanox.AI milestones, settlement agreements with former shareholders, and warrant and option exercises 已发行股份数量 (截至年末) | Period | Shares Outstanding (Millions) | Change (YoY) | | :----- | :---------------------------- | :----------- | | Dec 31, 2022 | 55.1 | +3.3M | | Dec 31, 2021 | 51.8 | | - The increase in shares was primarily due to the issuance of 89,286 ordinary shares to former Nanox.AI shareholders for milestone achievement and an additional 2,648,424 ordinary shares under a settlement agreement[20] - Additionally, 192,927 ordinary shares were issued upon the exercise of warrants and 372,159 ordinary shares upon the exercise of options, collectively generating approximately $0.9 million in gross proceeds for the company[20] Conference Call and Webcast Details This section provides details for the conference call and webcast held by Nanox to discuss its financial results and business updates, including access information for interested parties Conference Call and Webcast Details Nanox held a conference call and webcast on Thursday, March 9, 2023, at 8:30 AM ET to discuss financial results and business updates, with investors able to participate via the company's website or by registering for dial-in details - The conference call and webcast were held on Thursday, March 9, 2023, at 8:30 AM Eastern Time[21] - Interested individuals could join the live webcast via the "Events & Presentations" section of the Nanox investor relations website or register online to receive dial-in numbers and a personalized PIN[22] - An archived webcast replay was made available after the event[22] About Nanox This section offers a company overview, highlighting Nanox's mission to enhance global diagnostic medicine accessibility and affordability through its proprietary X-ray technology and comprehensive imaging solutions Company Overview Nanox is a medical imaging technology company dedicated to making diagnostic medicine globally accessible and affordable through its proprietary X-ray technology and solutions, aiming to improve early detection of diseases discoverable by X-ray medical imaging - Nanox is dedicated to applying its proprietary medical imaging technology and solutions to make diagnostic medicine globally accessible and affordable[23] - The company's vision is to increase the early detection rates of diseases discoverable by X-ray medical imaging to facilitate early prevention and treatment, improving health outcomes[23] - Nanox is developing an end-to-end imaging solution, including the Nanox.ARC system utilizing novel MEMs X-ray source technology and the Nanox.CLOUD companion cloud software integrating AI solutions and teleradiology services[23] Forward-Looking Statements This section outlines the forward-looking statements disclaimer, emphasizing the inherent risks and uncertainties that could cause actual results to differ materially from expectations, and advises readers to review the company's Form 20-F for detailed risk factors Forward-Looking Statements Disclaimer This press release contains forward-looking statements subject to risks and uncertainties regarding R&D, manufacturing, commercialization, regulatory approvals, acquisition benefits, market acceptance, and global operations, with actual results potentially differing materially due to various factors, and readers are advised to consult the 'Risk Factors' section in the company's Form 20-F annual report - This press release may contain forward-looking statements subject to risks and uncertainties, concerning the company's research and development, manufacturing and commercialization activities, the benefits of acquisitions, and the company's business prospects[24] - Factors that could cause actual results to differ from expectations include the ability to complete the development of the Nanox System, the commercial viability of the technology, regulatory approvals, the realization of acquisition benefits, collaborations with third-party manufacturers and suppliers, market acceptance, changes in global operations, and risks related to the COVID-19 pandemic[24] - Readers should not place undue reliance on any forward-looking statements in this press release and should refer to the "Risk Factors" section in the company's Form 20-F annual report for additional risks and uncertainties[25] Non-GAAP Financial Measures Disclosure This section clarifies the company's use of non-GAAP financial measures, explaining their purpose in assessing performance and identifying trends, while noting they are not GAAP-standardized and should not substitute for GAAP metrics Explanation of Non-GAAP Measures This section explains the company's use of non-GAAP financial measures, such as non-GAAP net loss and gross profit, which are not standardized by GAAP but are used by management for performance evaluation, planning, and identifying operational trends, providing a clearer view of performance by adjusting for items like intangible asset amortization, share-based compensation, goodwill impairment, and legal fees, but should not replace GAAP measures or serve as liquidity indicators - This press release includes information regarding certain financial measures not prepared in accordance with U.S. Generally Accepted Accounting Principles (GAAP), including non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, and non-GAAP gross profit[27] - These non-GAAP measures are adjusted to exclude items such as intangible asset amortization, share-based compensation expenses, secondary offering expenses, goodwill impairment, changes in contingent earnout liability, and legal fees related to class action lawsuits and SEC investigations[27] - The company's management and board of directors use these non-GAAP financial measures to evaluate the company's performance and believe they are useful to investors and analysts in identifying potential trends in ongoing operations, but they should not be considered a substitute for GAAP measures or as indicators of liquidity[27] Unaudited Condensed Consolidated Financial Statements This section presents Nanox's unaudited condensed consolidated financial statements, including balance sheets, statements of operations and comprehensive loss, changes in shareholders' equity, and cash flow statements for the reported periods Balance Sheets As of December 31, 2022, Nanox reported total assets of $253.9 million, total liabilities of $29.3 million, and shareholders' equity of $224.7 million, with total assets, liabilities, and shareholders' equity all decreasing compared to 2021 关键资产负债表数据 (单位：千美元) | Item | Dec 31, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Assets | | | | TOTAL CURRENT ASSETS | 82,461 | 94,857 | | TOTAL NON-CURRENT ASSETS | 171,472 | 268,313 | | TOTAL ASSETS | 253,933 | 363,170 | | Liabilities | | | | TOTAL CURRENT LIABILITIES | 17,074 | 52,751 | | TOTAL NON-CURRENT LIABILITIES | 12,179 | 18,271 | | TOTAL LIABILITIES | 29,253 | 71,022 | | Shareholders' Equity | | | | TOTAL SHAREHOLDERS' EQUITY | 224,680 | 292,148 | Statements of Operations and Comprehensive Loss In Q4 2022, Nanox reported $2.1 million in revenue, a gross loss of $1.7 million, an operating loss of $45.8 million, and a net loss of $44.8 million; for the full year, revenue was $8.6 million, with a net loss of $105.2 million and basic and diluted loss per share of $2.01 关键运营和综合亏损数据 (单位：千美元) | Item | 12 Months Ended Dec 31, 2022 | 12 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2022 | 3 Months Ended Dec 31, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | REVENUE | 8,578 | 1,304 | 2,132 | 1,304 | | GROSS LOSS | (6,880) | (1,512) | (1,747) | (1,512) | | TOTAL OPERATING EXPENSES | 102,830 | 60,046 | 44,009 | 20,403 | | OPERATING LOSS | (109,710) | (61,558) | (45,756) | (21,915) | | NET LOSS | (105,243) | (61,798) | (44,837) | (22,035) | | BASIC AND DILUTED LOSS PER SHARE | (2.01) | (1.28) | (0.86) | (0.44) | Statements of Changes in Shareholders' Equity As of December 31, 2022, the number of ordinary shares increased to 55,094,237, with total shareholders' equity at $224.7 million, primarily due to common stock issued for warrant and option exercises, contingent earnout liabilities, and settlement agreements with former Nanox AI Ltd. shareholders 股东权益变动概览 (单位：千美元) | Item | Dec 31, 2022 | Dec 31, 2021 | | :-------------------------------- | :----------- | :----------- | | Ordinary shares (Number of shares) | 55,094,237 | 51,791,441 | | Ordinary shares (Amount) | 158 | 149 | | Additional paid-in capital | 477,953 | 438,820 | | Accumulated deficit | (251,457) | (146,214) | | Total Shareholders' Equity | 224,680 | 292,148 | - Major changes in 2022 included the issuance of 192,927 ordinary shares for warrant exercises, 372,159 ordinary shares for option exercises, 89,286 ordinary shares for contingent earnout liabilities, and 2,648,424 ordinary shares under a settlement agreement with former Nanox AI Ltd. shareholders[34] Statements of Cash Flows In 2022, Nanox reported net cash outflow from operating activities of $43.4 million, net cash inflow from investing activities of $14.6 million, and net cash inflow from financing activities of $0.8 million, with total cash, cash equivalents, and restricted cash at year-end amounting to $38.5 million 现金流量概览 (单位：千美元) | Cash Flow Activity | 2022 | 2021 | 2020 | | :-------------------------------- | :----- | :------ | :------ | | Net cash used in operating activities | (43,385) | (38,061) | (21,609) | | Net cash provided by (used in) investing activities | 14,606 | (116,320) | (13,937) | | Net cash provided by financing activities | 804 | 7,379 | 240,991 | | NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH | (28,243) | (147,012) | 205,567 | | CASH AND CASH EQUIVALENTS AND RESTRICTED CASH AT END OF THE YEAR | 38,529 | 66,772 | 213,784 | - Non-cash activities in 2022 included the issuance of $0.953 million in ordinary shares for contingent earnout liabilities and $18.617 million in ordinary shares under a settlement agreement with former Nanox AI Ltd. shareholders[42] Unaudited Reconciliation of GAAP and Non-GAAP Results This section provides a detailed unaudited reconciliation of GAAP to non-GAAP financial results, adjusting for items like goodwill impairment, amortization, share-based compensation, and legal fees to present a clearer operational performance view GAAP to Non-GAAP Reconciliation This section provides detailed reconciliation tables between GAAP and non-GAAP financial measures, covering net loss, cost of revenue, gross profit, and operating expenses, with adjustments primarily for goodwill impairment, intangible asset amortization, share-based compensation, and legal fees, aiming to offer investors a clearer view of operational performance 非GAAP净亏损调节 (单位：千美元) | Item | 12 Months Ended Dec 31, 2022 | 12 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2022 | 3 Months Ended Dec 31, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | GAAP net loss | 105,243 | 61,798 | 44,837 | 22,035 | | Non-GAAP net loss | 37,781 | 39,123 | 9,932 | 14,969 | 非GAAP毛利润调节 (单位：千美元) | Item | 12 Months Ended Dec 31, 2022 | 12 Months Ended Dec 31, 2021 | 3 Months Ended Dec 31, 2022 | 3 Months Ended Dec 31, 2021 | | :-------------------------------- | :--------------------------- | :--------------------------- | :-------------------------- | :-------------------------- | | GAAP gross loss | 6,880 | 1,512 | 1,747 | 1,512 | | Non-GAAP gross profit | 3,442 | 242 | 826 | 242 | 非GAAP运营费用调节 (2022年第四季度 vs. 2021年第四季度，单位：千美元) | Item | GAAP 2022 | Non-GAAP 2022 | GAAP 2021 | Non-GAAP 2021 | | :-------------------------------- | :-------- | :------------ | :-------- | :------------ | | Research and development expenses | 7,095 | 6,168 | 6,362 | 5,371 | | Sales and marketing expenses | 1,494 | 1,066 | 1,940 | 1,367 | | General and administrative expenses | 8,185 | 4,675 | 10,919 | 7,172 |