NANO-X IMAGING LTD

Good day, and thank you for standing by. Welcome to NANOC's first quarter 2024 earnings conference call. At this time, all participants are in listen-only mode. After this speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1-1 on your telephone. You will then hear an automatic message advising your hand is raised. As a reminder, this conference is being recorded. I would now like to turn the call over to Mike Cavanaugh of 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 March 31st, 2024. The release is currently available on the investor section of the company's website. Eris Meltzer, Chief Executive Officer, and Ron Daniel, Chief Financial Officer, will host this morning's call. Before we get started, I would like to share some information with participants. First, if you're an institutional investor and would like to schedule a meeting with management or join an upcoming demonstration of the NanoxARC system, please contact me at mike.kavanaugh at westwick.com, and we will work to schedule the requested meeting. Second, 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 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 files 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 for joining us today. And as always, we appreciate your continuing support of NANOX and our mission as we strive for global health equity via innovation, particularly in medical technology and AI, which we believe is key and can directly impact patient outcomes. We aim to offer a comprehensive solution that connects medical imaging solutions from scan to diagnosis. During this call, we will provide updates on our strategic partnerships, product launches, and market expansions. We will also discuss our operational achievements. Our CFO, Rand Daniel, will present the financial highlights and we will conclude with a Q&A session. We look forward to sharing our progress with you and answering questions you may have. Let's get started. We have kicked off 2024 with a positive momentum, achieving milestones in our U.S. commercialization work strategic partnerships, product launches, and market expansion outside the U.S. In the first quarter of 2024, we've continued to make strides in our operational performance. Our key operational metrics reflect our commitment to excellence and our relentless pursuit of our mission to make medical imaging more accessible globally through innovative medical imaging technology. In the U.S., we are continuing with our installation plan. As of today, we have about 20 systems in the U.S., of which some have been installed and several more are in different stages of shipment and deployment. We have manufactured dozens of systems today, and we are confident that we can meet the accelerating demand for NanoX Arc systems that we are seeing in the U.S. market. Last month, we hosted an in-person live demonstration of the NanoX Arc system on a patient as part of our investor event in Dynamic Medical Imaging in New Jersey. Investors witnessed the entire patient scanning workflow with NanoX Arc and observed the speed and precision of the generated images as well as for its clinical utility. Additionally, we presented samples from the undergoing CHESS clinical trial in Bellystone Hospital in Israel and outlined the path to expanded indications in the US outside MSK. As the healthcare landscape continues to evolve, we are staying ahead of the curve by leveraging our cutting edge technology and strategic partnerships. For current installations, I can share that we recently received initial indication for reimbursement for NANUX ART, a scan from a managed care insurance company. On a previous investor call, we discussed the building out of the support and service infrastructure NANUX ART users will need as deployment accelerates, specifically the Georgia site at 626 Imaging Academy, which shares as a technical and training center for technicians seeking to be trained on the use of the system. Anticipating the need for another vendor beyond 626 to provide installation services, as well as routine servicing of deployed NanoXARC systems, we have entered into a third-party agreement with SwissRaid. Located in Bridgewater, New Jersey, Swissray is one of the forefront experts in the area of digital radiography from sales or installation, setup, training and service. The agreement covers system installations, user support, troubleshooting and regular system maintenance. As we continue to expand our footprint on the ground in the US, we will constantly evaluate the need for commercial personnel to drive our growth while also closely monitoring the need for service infrastructure to effectively support our advancements. Moreover, we have expanded the capabilities of our NanoCSR system with the addition of specialized MSK protocols, including protocols for cervical, thoracic, and lumbar spine. In addition to spine imaging, we have also fine-tuned our MSK protocols to include more detailed patient positioning options, and further enhancement, which will aid healthcare providers in obtaining clearer and more accurate diagnostic images, facilitating better patient outcomes. These new protocols are designed to offer more precise and detailed imaging options, catering specifically to the needs of our customers based on feedback we have received from them. Thanks to our advanced cloud-based architecture, these upgrades have been implemented remotely across all systems without the need of physical modification or on-site visits. This approach significantly reduces service work hours and eliminates the need for travel, bringing efficiency and convenience to healthcare facilities. All upgrades have been meticulously performed in alignment with applicable regulatory requirements, ensuring our system continues to operate within their intended use and safety standards. We are confident that these upgrades will empower healthcare professionals further, elevate diagnosis capabilities, and enhance patient care in all facilities equipped with the NanoSARC system. Turning to our deployment efforts outside of the U.S. market, As previously mentioned, we continue to advance our commercial footprint in Africa, Latin America, and Asia. We have had a unity stall at the University of Ghana Medical Center, UGMC, and which has received local regulatory clearance. We have had a footprint in Africa for some time and will continue to press our commercialization there. Furthermore, we are in the process of initiating a clinical trial at UGMC as part of our multi-site clinical trial. In Latin America, we continue to invest our commercial activities with respect to the Nano-XR and Nano-X Connect in Mexico, Peru, and Chile. At the high level, we will extend our geographic footprint as we achieve local regulatory authorizations. We also have NanoX Connect operating systems deployed in various countries, including Ghana, Morocco, Cameroon, and Israel. Some of these systems have been paid for upfront, which were referred to as CAPEX model. Others are operating under the MSAS model, where we charge per scan, and some are currently being used for demonstration purposes. In our request to promote healthcare globally, we recently announced our entry in the South Korea market through our collaboration with A Health V, a healthcare distribution company, and STL Science, A Health V affiliated company, and subsidiary of Global Healthcare Group, STL, the all-clinic laboratories. A Health V plans to assist NADOCs in efforts to secure local authorization and licenses to enable the importation, marketing, and sales of the Nano-X Arc in South Korea, and will also include SEL science-integrating Nano-X AI solution. Additionally, Nano-X Marketplace, a tera-radiology services platform that provides remote access to radiology and cardiology experts, will potentially be integrated with SEL Sciences, teleradiology centers in South Korea, and other overseas markets. This expansion is a testament to our ongoing efforts and our partners' commitment to bringing comprehensive medical imaging solutions to South Korea. We hope the South Korea collaboration to be a stepping stone into the broader Southeast Asia market for the entire non-ex-products fleet. Turning to our important AI business segment, Nanox AI recently signed two agreements. Covera Health, a leading healthcare technology company, has signed a multi-year contract with Nanox AI to provide its three advanced AI solutions, cardiac, bone, and liver. Covera Health delivers clinically validated solutions for population health that improve patient outcomes, reduce healthcare costs, and enhance value-based care by supporting radiologists with technology capabilities that emphasizes improvement of quality and performance. Under these new agreements, Nano-X will deploy the full suite of population health AI algorithms to support the needs of Covaira's customers. And we will deploy the population health Nano-X AI algorithms, and for the first time, commercially installed Health FLDA clinicians in detecting fatty liver associated with metabolic dysfunction-associated steatotic liver diseases following FDA clearance last February. The second agreement is a collaboration with New York-based Dandelion Health, a healthcare data platform that focuses on AI analytics offering healthcare providers accessibility to data with AI insights and aims to bring products to market factor, providing a wealth of multi-modal clinical data for healthcare pioneers. Clinical AI precision medicine offer the potential for earlier diagnosis, personalized screening, and prevention strategies in more effective therapy. Dandelion health partners with leading health systems to provide safe ethical access to build identified clinical data of unparalleled depth, quality, and diversity. Moving to developments in existing partnerships. As part of our cooperation with Caldwell, it was reported by Dr. Langhold, a cardiology specialist who participated in a Society of Cardiacs TV webinar, that by using Nanos AI Cardiac Solution, Corwell Health significantly increased their ability to detect coronary calcifications, identified nearly 4,000 new patients in 2023, compared to just 268 patients having CAC reported in the previous two years. This data demonstrates the effectiveness of the technology, but the great impact is the seamless integration into hospital electronic medical record systems, streamlining the process of incorporating these findings into patient records for improved care and management. On the regulatory front, Danux AI recently submitted to the FDA a new version of the cardiac AI solution, Health CCNG, which introduces algorithm improvement aimed at enhancing accuracy and yield. It will also include new features that will improve coronary artery category detection accuracy. We have also been busy integrating our acquisitions of the previous three years, deploying these assets to leverage our core platforms and technologies. One example is Second Opinion. which we acquired through our USA RAG subsidiary. Second Opinion is an online medical platform providing second opinions in a wide variety of medical fields. This service is provided through the USA RAG platform and has been available to patients since 2012. Nano-X AI functionality is being embedded in Second Opinions to allow private patients to use artificial intelligence to their Second Opinion CT reports, aiming to enhance the early detection of chronic conditions on chest and abdominal CT scans with a short process of registration to the Second Opinion website. The Second Opinion service will provide access to the nanopopulation health AI solutions that have already received FDA 510 clearance. We expect the enhanced second opinions platform to be launched in a matter of weeks. Earlier this month, we announced that USAID has once again earned the Joint Commission's gold seal of approval for ambulatory healthcare accreditation. The Joint Commission is a leading accrediting organization in the United States that certifies more than 22,000 healthcare organization and programs based on the highest standard of patient safety and quality of care. Moving on to the production and OEM initiatives, as you know, we have entered into multiple supply agreements with prominent original equipment manufacturers around the world to ensure an adequate supply of high-quality components as we scale our manufacturing of the Nano-XR, and I will share an update on some of these. Our agreement with USA based to produce tubes in proceeding according to plan. Tubes design and development continues with the first prototype and art system integration testing scheduled for this summer. In addition to tube development and manufacturing, we continue to explore additional opportunities together. Additionally, we continue to progress with other tube suppliers. We have produced and performed positive functional testing on our first wafers and chips developed in conjunction with Switzerland based system. We will build use with system chips in them for testing and validation in the coming weeks. We are transitioning our efforts to our process refinement, end of the line testing and planning for initial production wafer fabrication second half of this year. Following up on our collaboration with the US government agency, after their acquisition of our chips and tubes for evaluation, we have received a purchase order to collaborate on a novel tube development programs, potentially for non-invasive screening applications. The initial phase of the design and simulation is underway with component testing set to commence later this year. Our previously announced collaboration with a leading global medical technology company is also continuous plan. We are still in the relatively early stages here, but I can share that they are now in the process of performing design and simulation for the purposes of finalizing a proposal which would enable them to produce tubes for us. As part of their design and production simulation, they did purchase and test our chips, which allowed the Nanox team to meet them and their design team and their production facility in Europe. We will share updates as this collaboration moves toward the formal production agreement. We have identified our first few clients to take delivery of our demonstration kits. As described, the NanoX demonstration kit inclusive of NanoX chip, cold cathode tube, power supply, and the necessary software to operate the system has been developed to expose potential partners to our technology and capabilities in a simplified manner. Now, I'd like to provide an update on the clinical aspect. Recognizing the fundamental clinic value of NanoRx system to our future success, we devote substantial effort to conducting clinical trials and create clinical evidence for broader intended use. Today, we have three clinical trial sites, Shamir Hospital in Israel, Bellinson Hospital, and the Ghana Hospital, UGMC, and we're currently working to extend to a fourth facility, a prominent medical institution in Israel. In Ghana, the multi-center trial site is currently well positioned to start soon. The trial has received local IRB approval and currently under the review of the Ghana FDA, the Nano-XR system that will be used in the trial is now actively scanning patients. I would like also to share some real-world feedback on the value of Nano-X technology. In a recent review with our clinical collaboration at Shamir Hospital and Belize Hospital in Israel, we have observed the significant impact our Nano-XR system can have on the daily routines of radiologists and referring clinicians. An ANOX art system added valuable information to regular x-rays in almost all reviewed studies, showing excellent results for lung module detection, visualization of fractures that are hard to see on a standard radiographer, and accurate localization of fractures. We look forward to sharing these results with the clinical and scientific community at upcoming medical conferences. Speaking of Bellingstown Hospital, the CHESS trial being run there is well underway. We have already scanned more than a dozen CHESS patients and initial results are promising. As I just mentioned, we hope to be able to share data from this study in some upcoming medical industry conferences. In addition, Beilin Sun has been formally integrated into the multi-center trial as the first site, and the trial is now actively recruiting with additional referring departments are being added to the trial, mainly orthopedics and internal words. I would like to take a moment to share that we have fortified our group of advisors and key opinion leaders with the addition of Dr. Greg Kischke. Dr. Kishke is a cardiothoracic radiologist with a PhD in biochemistry. Dr. Kishke embarked on a career at the University of Washington in the cardiothoracic imaging division. During his 12 years tenure at UW, he was awarded a grant from GE to study the clinical application of chest tomosynthesis. Dr. Kishke's clinical expertise included imaging diseases of the chest, heart, and blood vessels with specialized training in cardiac MRI and cardiac CT. His research on digital test tonal synthesis explore the unique advantages of these hybrid imaging methods. We are excited to welcome Dr. Kishke to the NanoX family and look forward to a productive collaboration. Turning to our regulatory efforts, we recently received an ISO 13485 certificate for the quality management system of the division from BSI. We completed this important step during the quarter as we continue to work with our notified body to secure CMR designation. I believe the diverse area of development across multiple geographies and business segments I was able to share today underscore our commitment to making our innovative medical imaging technology accessible to healthcare providers and patients worldwide. In summary, the first quarter of 2024 has been a period of significant growth and progress for NANOPs. We are excited about the opportunities ahead and look forward to sharing more updates in the coming months. I will now turn the call over to Rand Delo, Chief Financial Officer.