NANO-X IMAGING LTD

Good day, and thank you for standing by. Welcome to the NNAC's second quarter 2024 earnings conference call. At this time, all participants are on 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 now like to hand the conference over to your speaker today. 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, 2024. The release is currently available on the investor section of the company's website. With me today are Eris Meltzer, Chief Executive Officer and Acting Chairman, and Ron 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 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. 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, non-GAAP other expenses or income, 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 continued support of Nano-X and our mission. 2024 has been a period of strong commercial progress while also advancing the value of our products through our clinical efforts as we continue to expand our deployment in the U.S. and the rest of the world. We're not only accelerating deployment of the NanoX Arc system, but also expanding the footprint of the other value-added elements of the full NanoX solution, including NanoX AI. As mentioned in previous calls, I'm committed to providing further insights and detailed updates on our ongoing advancements in the coming periods. I will begin with a discussion of our recent achievements which will cover regulatory updates, clinical advancements, commercial deployments, NanoX AI updates, and an introduction to our new NanoX Arc system, which we'll call NanoX ArcX. After my prepared comments, I'll turn the call over to our CFO, Ran, who will review our Q2 financial results. I will then share a few closing thoughts before turning the call over to the Q&A session. We have a lot to discuss, so let's get started. Before I provide an overview of our commercial progress, I will begin with some clinical and regulatory updates, which we believe will have a near-term positive impact on our commercial efforts. I'm happy to share that just last week, NANUC submitted a new 510 submission to the FDA which is intended to expand the indications for our current NanoXARC system in general tomosynthesis imaging. Once cleared, the submission will significantly expand the system's indication for use from the current MSK for general use, including chest. As you know, much of the clinical work we have been performing recently has centered around the suitability of the Nano-X Arc for chest indications and was intended to support the submission. The submission will include some software updates and is accompanied by new clinical data for various body anatomies with and without pathologies. To be clear, it is worth noting that all CARD-installed Nano-X Arc systems are hardware ready and has the required capabilities to scan MSK chest and abdomen, subject to the FDA clearance and the requisite regulatory approvals. This means that post-FDA clearance, a simple software upgrade that can be done remotely is all that will be necessary to bring currently deployed NOMX ARC units up to the new standards. Additionally, after completing the technical stages, including obtaining the ISO 13485 certifications from BSI and successfully passing the MDR audit, we are now in advanced stages with our notified body to secure the CE mark for the EU region. Rest assured, we will provide updates as soon as they are available. Turning now to our global deployment and commercial efforts, which continued in the next second quarter. Our team is diligently working with imaging centers, physicians, and regulators to increase footprint of our NanoXR technology. As of today's call, there are now dozens of units in various stages of shipment and deployment. The deployments in the U.S. are spread across seven states, the newest being Delaware and California, which are awaiting state approvals, and we expect to grow this number as our commercial team executes our deployment and growth plan. To keep more color on our U.S. deployment, I would like to add that during the second quarter, we have installed NANUC's ARC system in three prominent healthcare chains operating imaging facilities across the U.S., including one of the largest in the industry. Additionally, in the U.S., some of the deployed sites have received certification from the corresponding state's regulatory body and have begun to scan patients. Others are in the process of obtaining approval. This commercial scanning activity is accelerating. For example, as of today, one of those sites have shown up to 14 scans per day. We recently received good indications for validation of the U.S. CPT and reimbursement process as we received management care EOB. Since March 2024, we have been ramping up in the U.S. with current targeted backlog of 50 favorable prospects and additional 44 leads in the pipeline, with the main segments being outpatient imaging centers medical imaging chains, and orthopedic centers. We understand that not all of these 94 leads will convert, but I'm very pleased with our commercial team's progress in such a short period, and we are very confident that this will continue to grow over time. We're also waiting the import license to deploy the first Nano-X Arc in Mexico with the systems ready for shipment. Additionally, There are two units fully deployed in Israel, and another deployment is expected in the upcoming months for both clinical and commercial use. We're able to pursue this opportunity as we obtained a MAR approval several months ago. Importantly, the number of daily scans is accelerating, and in last July, we experienced an average of 6.67 scans globally for all deployed non-ARC systems, accomplishing both clinical work and commercial patient scans. I think it is interesting to learn that the global commercial and clinical scans by body part are distributed as follows. 31% chest, 25% hand, 14% leg, and 14% spine, but of course, These indications may vary from over time. For those of you that are interested, we also have some new clinical samples on our website, including chest pathology. To support our accelerating deployment effort, we continue to strengthen our team and infrastructure during the quarter, adding to our US sales and technical teams. Looking ahead, NANUX is dedicated to accelerating the execution of our commercial infrastructure and future strategic collaboration in the country. Our mission is to provide healthcare practices with a transformative imaging advantage with the NANUX Arc, an accessible, cost-effective solution that not only provides advanced diagnostic imaging capabilities, but also elevates overall patient care. We are working to accelerate a steady flow of referrals from healthcare providers for NanoXARC digital tomography imaging as part of their diagnostic workflow. We also continue to advance our other clinical efforts in multiple countries and locations, generating data, demonstrating the utility of the NanoXARCs for a fuller, wider range of indications. is a key initiative for NANOPS. The reason is simple. If we can show large volumes of data demonstrating the value added utility of the NANOPS ARC, it will significantly boost our all important commercial efforts. For example, the hospital in Israel has been scanning patients for exactly this reason, and this trial has begun to generate data. There have been a few dozens of patients recruited at our clinical sites as part of this and the multi-site studies. The previously announced multi-site trial is now operational, and we are accelerating patient scanning activity. The UGMC is in the final preparation to join the multi-site trial as the second participating site. while already gaining clinical experience with the NANOX ARC installed in scanning patients. The MSKL trial held at Shamir Hospital has been completed, and a company white paper published recently. The study concluded that the NANOX ARC was a value-added tool in the hospital's clinical workflow, enabling quicker diagnosis when used as a supplemental tool to the standard x-ray system, achieving faster diagnosis time as compared to the standard CT-based workflow. Furthermore, all NanoXARC images were determined to be of high diagnostic quality, enabling optimal depiction of findings. Our technology can increase depiction of occult chest lesions, localize, characterize, and resolve questionable lesions even without prior radiologist experience. called cathode PTS may have an improved diagnostic accuracy compared to CXR. Its capability to eliminate the need for CT at a fraction of the radiation dose, cost, and images per study should be further investigated. For more information, see more our white paper section on our website. Turning to our AI business. Just last month, we announced that our Nanox AI cardiac solution called Health CCNG was highlighted in multiple scientific presentations at the 2024 Society of Cardiovascular Computed Tomography, SCCT, annual meeting. We are encouraged by the implementation of our AI cardiac solution at esteemed healthcare systems along with a continued validation through real-world studies of its potential to promote early detection and preventive care of cardiovascular diseases. Corwell Health has previously reported that in the first full year of implementing Health CCNG in its electronic medical record system, there was a 13-fold increase over the patients reported in the previous two years. At Bellinson Hospital in Israel, incidental coronary artery calcification on the CT scans of immune-mediated inflammatory disease patients identified and quantified by our AI cardio solution was found in over 50% of scanned patients and associated with all-cause mortality and adverse cardiovascular outcome. Traditional cardiovascular risk scoring is difficult in these patients, and Nanox AI can be a valuable new tool in quantifying these risks. After being installed and implemented at the Jefferson-Einstein Hospital, Health CCNG helped identify 757 patients aged 30 or above with CAC levels higher than 100 Agstone units. In a study conducted by MassGen Hospital and Brigham and Women Hospital, Health CCNG was used to analyze non-contrast chest CT scans of 260 patients who had measurements of lipoprotein A as part of a clinical care. A statistically significant correlation was found between level of CAC and this lipoprotein A, a risk factor for coronary atherosclerosis, suggesting that this approach may be used to identify at-risk patients. As a side note, the lead author of this study, Brittany Weber, was declared as Young Investigator Award winner. at the annual meeting as well. Nano-X is proud to be associated with dynamic clinical talent that is doing valuable work to support the use of the Nano-X AI solutions to identify potential health risks earlier in the care continuum and helping to drive better overall patient outcomes. Additionally, the previous agreements we signed for Nano-X AI with Covair Health and Dandelion Health are off to a great start and the feedback has been very positive thus far. We are continually working to expand our AI footprint and make it accessible to a broader range of customers. Our ongoing innovation and development efforts are focused on enhancing our AI solutions and ensuring they reach and benefit a wider audience. I think I can speak of all of us at Nano-X when I say there is a lot to be excited about. Looking ahead to the near future of Nano-X, we're always looking to improve and meet market needs. In fact, every dynamic company that plans to expand rapidly over the long term with a new technology needs to constantly refine their offering based on customer feedback. changes in technology, and evolving use case. NanoCS is no different, and we are constantly working on product and technology future developments. I'm very pleased to share for the first time that we are developing another NanoCS Arc system called NanoCS ArcX, which we intend to submit, among others, for FDA clearance. Once cleared, it will be marketed along the current system which will expand our current product offering. At the high level, the NanoX ArcX is designed to meet market needs of our customers, including hospitals and imaging centers, as well as our clinical partners who are using the NanoX Arc to generate data for additional use cases. Listening to the clinical needs is an important step in the ongoing expansion of NanoX solution. Among the features I am able to share this time the NanoX ArcX will have an even smaller footprint than existing NanoX Arc systems, enhancing one of our key differentiators. The new system will also be easy to deploy and use with an anticipated one-day setup time and plug and play functionality. There will also be image enhancement options in the new units, which are currently not available on existing NanoX Arc systems, and future synthetic 2D. Please note that we are planning to share more detail about the future Nano-XR system publicly during our next event, which will also be made available via our website. Stay tuned for further details. To touch on our OEM efforts, I can report that we are well underway with the first phase of our development program with the U.S. government entity towards completion of a novel tube design utilizing our emitter and focused on the MDT space. We are optimistic we will move towards prototyping tubes the second half of this year. Regarding our teleradiology services, we are leveraging our USA RAD client based on a network of radiologists as a significant part of our U.S. deployment plan. On the mass production front, we finalized the second phase of our development with CSIM, resulting in a high yield wafer with functional emitters. We are transitioning to production readiness and confident we have secured a second source of supply for our novel emitters. Varex has completed their initial tubes prototype utilizing our emitter for testing to be integrated into our new Nano-XR. I've covered a lot of ground today, so with that, I'll hand the call over to Ran Daniel to review our financials. Ran?