NANO-X IMAGING LTD

Good morning and thank you for standing by. Welcome to the NANUC's second quarter 2023 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Mike Cavanaugh, Investor Relations. Please go ahead.

Good afternoon and thank you for joining us today. Earlier today, Nanox Imaging Limited released financial results for the quarter ended June 30, 2023. The release is currently available on the investor section of the company's website. Harris Meltzer, Chief Executive Officer, and Ron Daniel, Chief Financial Officer, will host this morning's call. 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 operations, 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. Management will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of each non-GAAP financial measure to the nearest GAAP financial measure is provided in the company's press release filed today. The non-GAAP financial measures include 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, non-GAAP other expenses, and non-GAAP gross loss per share. With that I'd like to turn the call over to Erez Meltzer.

Thanks Mike and welcome all to the NANUC's second quarter 2023 earnings conference call. Throughout this quarter we achieved significant advancements across multiple business segments. I would like to highlight that today's call will extend a bit beyond our typical duration as I aim to offer more comprehensive insights. I will delve into specifics, including our strategic approach to the U.S. market, the reinforcement of our manufacturing and supply chain, and our regulatory process. During the quarter and the June 30th, 2023, we continue to advance our commercialization efforts outside the U.S. following FDA clearance to market the multi-source Nano-X Arc. With this clearance, we are now preparing to establish our foothold in the U.S. market, complemented by our ongoing commercialization initiatives outside the U.S. Today, I'm excited to delve into our commercial efforts in both the U.S. and the non-U.S. markets. About the U.S. deployment and strategy. Obtaining the 510 clearance from the FDA for the multi-source Nano-X Arc has been a long-standing strategic goal for the company and enabled us to deploy the Nano-X Arc in the U.S. for the indication of use cleared by the FDA. As previously announced, we are in the process of establishing a U.S. demo as part of our strategic approach for our U.S. commercial activities. We have decided to shift this first unit and are now planning to install the unit in a clinical setting rather than a standalone commercial site. The system is planned to be installed in an East Coast facility and will expect to start to generate revenues alongside training and demonstrations. We believe that this first site will serve a dual purpose. First, as a training and demonstration center for the Nanooks Arc, which will provide potential buyers with live demonstration of the technology, which we believe is essential for informed acquisition purposes by healthcare practices, hospitals, and health systems. Secondly, we believe the clinical site can raise awareness of the Nanook Arc among key opinion leaders, radiologists, and hospital system personnel. The first Nanook Arc system was shipped from Israel and arrived in the US for installation in the clinical site, which we expect to open the clinical site during the fourth quarter of this year. Based on market analysis of the U.S. market of clinicians, imaging administrators, and directors, stakeholders recognize the clinical benefits of the NANUX ARC and its more affordable approach to advanced imaging techniques. Furthermore, outpatient facilities such as skilled nursing facilities, freestanding emergency clinics, and pulmonary clinics showed interest in adopting the NANUX ARC. specifically because such facilities typically do not have CT capabilities, and we believe such facilities view the NanoXAR as the more affordable way to keep patients in-house for advanced imaging needs combined with a 2D x-ray. Outpatient facilities also express potential interest in our MSUS business model, which we believe reduces the risk of an upfront purchase because the cost is based on equipment use. We believe that gathering further clinical evidence will strengthen the support of our technology. Our U.S. go-to-market strategy is comprised of three primary components, customer targeting, building a sales team, and using a hybrid business model. In terms of the customer targeting, We believe several factors impact willingness to adapt our system, including the type of facility, its current imaging capabilities and imaging volumes, and geographic locations, namely rural versus urban. Our aim is to strategically engage segments that show early adoption potential, such as orthopedic clinics, skilled nursing facility, freestanding emergency departments, and urgent care facilities. We intend to continue to build clinical evidence, particularly with the US market, to support the adoption of our system, as well as reimbursement mechanisms, specifically with commercial payers. We have strategically realigned our focus to enhance our presence in the US market. Our initial efforts in commercialization and deployment within the US will be concentrated on select states. This approach allows us to optimize customer service delivery and support in the near term. To execute our strategy, we have allocated internal sales resources, and we are planning to leverage the USA-Rad network in order to accelerate our initial penetration in the market. Furthermore, we are in the process of enhancing a US-based sales and service team that will seek to generate leads close sales, manage relationships, and provide services for the Nano-RX installed base. We are also in the process of engaging an independent service provider to provide service needs in remote geographies and to decrease equipment downtime. We expect that the other operating areas, such as medical affairs, regulatory, billing, finance, and contracting, will be supported by the existing international Nano-X organization. For our business model in the US, we intend to use a hybrid approach, combining a usage-based MSAS model with a CAPEX model to help promote adoption based on different segments. We have designed a training program to promote the Nano-X Arc. We intend to use a combination of pilot-size training sales and marketing efforts to help meet customer needs. These aspects of our business strategy will require us to hire additional experienced healthcare business development professionals who will be charged with raising awareness of the NANUX Arc among physicians, hospitals, urgent care operators, and large health systems throughout the USA. To support these important efforts, I intend to increase my personal presence in the U.S. and make myself available for meetings with potential customers as well as investors who would like to have an in-depth conversation about our technology, commercial strategy, and future strategic plans. We look forward to providing further details in the upcoming months. With respect to the rest of the world deployment, Turning to our commercialization efforts outside of the U.S., we continue to make significant progress in multiple countries, principally in Africa. As we have previously announced, we have an agreement with a distributor in Morocco and are working to accelerate deployments. We have deployed a NanoxARC system in a prominent hospital in Morocco that is a major healthcare provider in the southern region of the country. the distributor in Morocco received appropriate clearance to conduct certain scans with the Nano-X Arc. Subject to the clearance, the Nano-X Arc system has generated human images on incoming patients at the hospital, including chest. In Nigeria, we have installed the Nano-X Arc system, which we expect will become operational upon receipt of the necessary regulatory approvals and certification that has been formally submitted to the local authorities, the NNRA, to facilitate clinical activities. We hope to begin generating human images in the very near future. As previously reported, we have already placed the system in Ghana at the UGMC Hospital, mainly for training purposes. Meantime, our distributor has submitted the specific Nano-XR device for approval to the Ghana Food and Drug Authority for commercial use. We anticipate receiving an initial response in the fourth quarter of 2023. And in addition, we have engaged a clinical research organization to potentially hold clinical trials in both Morocco and Ghana, subject to local regulatory approvals. In alignment with our global initiatives, and as announced in the past, We established a partnership with BioVentures for Global Health, BVGH, a nonprofit organization dedicated to solving global health issues by forming connections between people, resources, and ideas. We completed the first phase of this program and are excited to begin the second series in just a few weeks, which involves a series of expert-led seminars to train Nigerian and other African healthcare professionals on imaging topics. We also regularly host radiologists, distributors, representatives from hospital systems, investors, and analysts at Nano-X headquarter in Israel to discuss the Nano-X Arc system in detail and conduct live demonstration of the systems onsite, providing firsthand insight into the capabilities of the Nano-X Arc. I'm happy to report that these meetings resulted in very positive feedback in writing. All of those efforts constitute just the beginning of our goal to help people achieve better health outcomes. Lastly, on this front, as part of our global commercialization, we have started to generate initial revenues from the medical imaging equipment and MSUS. With respect to the OEM, before I provide an update on the manufacturing and production fund, I'd like to share the news that we have entered an original equipment manufacturing OEM relationship with a U.S. government agency that we have signed and are working to develop. The government agency I refer to has procured none of SMEM systems for assessment. Their interest in our technology is for the purposes of developing next-generation security scanning and non-destructive testing applications. The project is scheduled to commence next month. As part of our OEM efforts, we have sent several demo units to industry partners, out of which a leading partner independently examined Nano-X cold cathode chips and reported a real technological breakthrough. With respect to the mass production, as we begin to deploy the Nano-X Arc and prepare for mass production, I would like to provide updates regarding research and development and manufacturing. We are currently using chips produced by our Korean fabrication facility in our Nano-X Arc system. However, to secure additional chip supply, in anticipation of commercialization, scale-up, and acceleration of manufacturing activity, we recently entered into an agreement with SISEM, a chip maker located in Switzerland. We have proceeded to phase two, lab-to-fab development, which is expected to manufacture sample chips by the end of this year, and provide production of chips in Q1 2024. For the commercial production of our digital x-ray tubes for use in Nano-XR, we plan to engage third-party manufacturers and suppliers based on, among other things, cost effectiveness. We are currently developing both ceramic and glass-based digital x-ray tubes for use in Nano-XR. Our Korean facility is currently our primary manufacturer and supplier for our ceramic digital X-ray tubes. And we are working with a third party for the production of glass-based digital X-ray tubes. For example, we recently started testing glass-based digital X-ray tubes manufactured by CEI. The testing includes performance, integration, and radiation testing. Furthermore, we are negotiating with additional third parties to produce digital X-ray tubes. Along with our existing manufacturing facilities in Israel and Korea, we believe these developments further strengthen our future supplies of both shifts and tubes. The two key components of the Nano-X Arc to support the scaled deployment of the Nano-X Arc units. In an additional step towards optimizing our mess manufacturing capabilities, we have initiated collaboration with Scanray for NanoRx systems assembly at scale. Scanray, a medical equipment manufacturer, meets essential standard requirements and serves as a supplier for prominent global medical entities. It is also the parent company of CEI, our Italian provider of glass-based digital x-ray tubes. With robust technological manufacturing capabilities in India, we plan to leverage in the coming years of the Nano-X Arc deployment. Regarding regulatory, I'd like to now turn our attention to regulatory and clinical trials update. On April 28, 2023, we obtained a 510 clearance from the FDA to market the Nano-X Arc including the Nanooks Cloud. It's a company cloud-based infrastructure. The Nanooks Arc is a stationary x-ray system intends to produce tomographic images of the human MSK system adjunctive to conventional radiology on adult patients. The approved device is intended to be used in professional healthcare facilities or radiological environments, such as hospital, clinics, imaging center, and other medical practices by trained radiographers, radiologists, and physicians. This version of the NANUX-R has the required capabilities to scan MSK chest and abdomen and to provide 2D X-ray images, conventional radiography, subject to local regulatory approvals. We are also continuing to pursue the CE mark in the European Union with our notified body aiming to submit during Q3 of 2023. In Israel, we are pursuing the Amar clearance, the Israeli medical device listing. The required technical file was completed and submitted in early July 2023, and we expect a decision in the few months. Clinical. As previously discussed, under Helsinki permit, we started to collect clinical sample images of multiple human body anatomies with the NanoxARC system that was deployed in the Shamir Hospital in Israel. We have completed the first phase of clinical sampling and have begun the second phase. We are in the final stages of approval of additional clinical sites in Israel, and this additional trial aims to utilize the NanoxARC subject to receiving the final approval from the institutional IRB. This trial will aim to assess the diagnostic capabilities of Nano-X ARC in detecting chest and lung diseases. Installation of the Nano-X ARC is expected to be completed within a month from its commencement, and the trial itself is scheduled to commence in the third quarter. With respect to Nano-X AI, I'm excited to share the progress we have made in the ADAPT trial with the National Health Service in the UK. To date, all five of the testing sites in the UK have signed the collaboration agreement. And in addition, three sites, Cambridge, Southampton, and Redford, have begun sending images to the NanoX Cloud platform. And we expect two more sites in Nottingham and Cardiff to begin sending images very soon. Nanox AI is currently engaged in showcasing the product across a range of platforms to 10 integrated delivery networks in both the United States and in other regions. With that, I'd like to turn the call over to Rand Daniel, Chief Financial Officer, to review our financial results.