NANO-X IMAGING LTD Ordinary Shares 2026 Q2 Earnings Call

Please go ahead. Good morning, and welcome to Nanox Imaging's second quarter 2026 investor call.

Earlier today, Nano-X Imaging Ltd. released financial results for the quarter ending June 30, 2026. 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 Guy Nathanzon, 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, 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, which reconciles the following non-GAAP measures to the closest equivalent figures under GAAP: non-GAAP gross margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP net loss, and adjusted EBITDA loss. With that, I would now like to turn the call over to Erez Meltzer.

Thank you all for joining us today. In the 2 months since our last call, we have advanced commercialization across several areas of the business. Our management team has completed a thorough review of the business and started implementing lessons learned with progress reflected across our commercial, operational, and strategic priorities. Today, I will focus on the steps we are taking to improve execution, extend commercialization, and support the long-term value of the Nanox platform. While our business is trending in the right direction, as we discussed last quarter, our commercialization has taken longer than we expected when we initiated the commercial phase. We have already provided preliminary financial results last month, and our results are substantially consistent with those previously disclosed figures. The main friction points have been, as mentioned, operational.

Commercialization requires close side-by-side coordination with small and medium-sized imaging centers, particularly around permitting, shielding, construction timelines, and integration into clinical workflows. These are practical deployment requirements, but they have been important lessons as we refine how we move systems from commercial agreement to active utilizations. By identifying where the frictions has occurred, we have been able to shape the changes we are now implementing. Most importantly, we are increasingly leveraging commercial partners with established relationship and workflow in the imaging space to meaningfully enhance our presence in the U.S. At the same time, our direct sales effort continue to support additional Nanox.ARC CapEx agreements and deployment activity, including the first Nanox Imaging Network installation in Philadelphia, which has already scanned its first patients.

Beyond the U.S., we continue Nanox.ARC deployment activity across Europe and Latin America, advanced new Nanox.AI commercial and pilot programs in India and the U.S., and moved forward with the restructuring of our South Korea operations to better align resources with our core technologies and commercialization priorities. We continue to broaden our U.S. footprint through strategic collaborations, customers evaluations, and deployment activities, including our recently announced collaboration with RadNet and ongoing work with leading clinical institutions with the goal of expanding our engagement with healthcare chains and increasing activity within those chains. As we disclosed in our last call, the Nanox.ARC system has been operational for several months at RadNet sites. RadNet is the largest outpatient imaging center operator in the United States and has deployed the Nanox.ARC system at one of its facilities, where it is now in commercial use and integrated into routine clinical workflow.

We continue to explore opportunities for clinical research, including early lung nodule detection. We believe this represents an important step in demonstrating Nanox.ARC's clinical value in a major outpatient imaging setting, and we are excited to continue this collaboration. We recently deployed a Nanox.ARC system through a capital equipment sale to an internationally recognized orthopedic center in Florida, which is part of an IDN, integrated delivery network. As this organization integrates the system into its orthopedic imaging workflow, we are launching a strategic collaboration aimed at broadening the clinical use of Nanox.ARC in orthopedics and generating clinical experience in a high-volume specialty care environment. We believe the true measure of innovation in medical imaging lies in clinical relevance and potential to improve patient care.

Our continued engagement with leading healthcare organizations reflects our commitment to generating more real-world evidence and evaluating a growing number of clinical applications for our technology. For example, we recently installed an ARC system in an urgent care unit located in New Jersey. Turning to our commercial distribution partnership, we are seeing channel partners build pipelines activity that supports future CapEx sales. In addition, our U.S.-based subsidiary, Nanox Impact Inc., has entered into a distribution agreement with Associated X-Ray Imaging Corp., a New England-based provider of medical imaging equipment and services, specializing in X-ray, MRI, and CT systems to support deployment of the Nanox.ARC across the region. We now have 10 signed commercial distribution partnerships in the United States. Associated has already supported the customer installation of the Nanox.ARC that is installed and operational, further demonstrating its ability to support deployment and service in the region.

The agreement follows other recent engagements, including Digital X-ray Imaging, Integrity Medical Service Inc., and Elite Surgical Technologies. The goal is to supplement our direct sales force and increase our presence economically as we pursue broader coverage of major U.S. markets. We are also expanding joint commercialization activity with our partners, including participation in Howard Medical's Annual Sales Summit, our webinar partnership with Radiology Oncology Systems, and ongoing sales and marketing initiatives. As more customers, channel partners, and physical gain first-hand experience with Nanox.ARC, we are seeing encouraging utilization, including sites performing hundreds of scans per month, and one customer transitions from MSaaS to CapEx purchase. Nanox Imaging Network proof of concept is beginning to contribute to our commercialization strategy by targeting segments that may offer potentially higher reimbursement rates, such as worker compensation groups and concierge medical providers.

Through this initiative, Nanox completed the first Nanox Imaging Network installation in Philadelphia, and the site has begun scanning its first patients. It is encouraging that we are already seeing reimbursement from insurers and payers, with paid claims in the range of $200 to $700 per claim. This provides early validation of the commercial opportunity for the Nanox Imaging Network and support our focus on targeted care segments where reimbursement dynamics can be favorable. Based on the preliminary business model, we believe each site may have the potential to generate annual revenue in the range of half a million dollars to $1 million, depending on utilization, reimbursement, payer mix, and site level execution. In our rest of the world markets, we advanced commercialization activities across Europe and Latin America.

During the quarter, we completed an end-user deployment in the Czech Republic and advanced system deliveries in Romania and Greece through local distribution partners, which we have discussed on previous calls. We also appointed SOLME RC, S.A. as our new distribution partner in Costa Rica, further expanding our presence in Latin America. We also continue to develop commercial opportunities with distributors in Slovenia and Ecuador, and are preparing to ship a system to Argentina. Since the acquisition, our teleradiology services division, USARAD, continued to deliver strong and consistent revenues during the first half of 2026, which grew on a year-over-year basis, averaging 14% growth, driven by continued expansion of our teleradiology client base. USARAD Holdings, Inc. has once again earned The Joint Commission's Gold Seal of Approval for ambulatory healthcare accreditation by demonstrating continuous compliance with its performance standards.

The Gold Seal of Approval is a symbol of quality that reflects a healthcare organization's commitment to providing safe and quality patient care. We also extended USARAD engagement with a leading multinational aerospace organization. This renewal reflects the value of USARAD services offering and our ability to support large organizations with reliable, high-quality teleradiology services. We continue to view the teleradiology business as both a source of recurring revenues and an important channel for advancing the commercialization of our broader imaging and AI solutions. Nanox.AI advanced on both the commercial and the clinical fronts during the quarter. We recently announced that Nanox entered into an exclusive sales reseller agreement with Virtek Vision International for the Nanox.AI bone solution in the U.K. Virtek Vision International is also the exclusive supplier of Hologic DXA scanners in the U.K. with an extensive network of opinion leaders, clinics, and hospitals.

Moreover, we launched five new AI installations pilots across the U.S. and India. These engagements expand our clinical and commercial footprint and provide opportunities to demonstrate the value of our AI solution in real-world healthcare settings. We are actively supporting these organizations through the evaluation process and look forward to advancing discussion around broader deployment. We also completed a pilot study with Cedars-Sinai comparing Nanox.AI Health AVC with standard of care tools for assessing aortic valve calcification. The study demonstrated greater than 92% agreement between the two approaches, reinforcing the accuracy of our technology and supporting its potential integration into existing imaging workflows. In addition, IRB approval has been received from a leading university-affiliated medical center for an upcoming clinical study, and we are now moving forward with data collection. To end my update on the AI business, I would like to share some reimbursement news.