Nano-X Imaging Q2 2025 Earnings Call Transcript

Quartr
Provided by Quartr
August 12, 2025

Key Takeaways

  • Positive Sentiment: Nanox is on track to install 100 ARC systems by year-end, driven by a growing U.S. pipeline and new CE-marked deployments in Romania and Greece.
  • Positive Sentiment: The company launched robust clinical and educational programs—including partnerships with Duke University, Kaiser University, and the Nanox Academy digital platform—to accelerate customer onboarding and adoption.
  • Positive Sentiment: Nanox AI secured multiple integrations with leading platforms (DeepSea, CTIS) and expanded its MRI screening collaboration with Ezra to 50 sites, broadening its market reach.
  • Negative Sentiment: Second-quarter revenue rose to $3.0 million with 2025 growth guidance maintained, but GAAP net loss widened to $14.7 million due to higher finance costs and ongoing R&D and commercialization investments.
  • Positive Sentiment: Strategic manufacturing partnerships with Varex for glass tubes and a multi-year contract with Fabrinet aim to scale production and lower costs to meet growing ARC demand.
AI Generated. May Contain Errors.
Earnings Conference Call
Nano-X Imaging Q2 2025
00:00 / 00:00

There are 8 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the Nanox Imaging Second Quarter twenty twenty five Earnings Call. At this time, all participants are in a listen only mode. After the speakers' presentation, we will open up for questions. Call.

Operator

I would now like to hand it over to your first speaker, Mike Cavanagh, Investor Relations. Please go ahead.

Speaker 1

Good morning and thank you for joining us today. Earlier today, Nanox Imaging Limited released financial results for the quarter ended 06/30/2025. 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 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 and clinical activities, and other matters.

Speaker 1

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, and non GAAP gross loss per share.

Speaker 1

With that, I'd now like to turn the call over to Erez Meltzer.

Speaker 2

Thank you, Mike. Good morning, and thank you all for joining our second quarter twenty twenty five call. As we enter the 2025, the entire Nanox team remains focused on disciplined execution and expanding our commercial footprint across our entire ecosystem, including AI and teleradiology solutions, as we pursue our vision of making medical imaging more accessible and thereby improving patient outcomes. In line with the commitments outlined during our May 2025 earnings call, we are making steady progress toward our goal of 100 Nanox ARC systems installations. Expanding our commercial footprint remains a top priority and our sales team continues to expand the pipeline of qualified leads and successfully convert those leads into systems being shipped to customers.

Speaker 2

While most leads and new customer activity is now being sourced from The U. S. Market, we also continue to expand our network in different countries outside of The U. S, including various European countries such as Romania and Greece on the heels of attaining the CE Mark designation earlier this year. We are well on our way to meeting our target of 100 systems in installed or being deployed by year's end.

Speaker 2

As previously indicated, revenues are expected to grow in the 2025. We are also advancing our clinical strategy on multiple fronts, as we seek to strengthen our position as a transformative force in medical imaging. To support this movement, we're acting on multiple fronts, clinical data and publication collaboration with global academic institutes, hands on clinical education initiatives and expanded our QoPIM leaders network. In other words, our commercial rollout involves bringing new technology to the market, while also working to change the habits of healthcare providers. With respect to academic partners supporting our transformative vision, we seek to partner with organizations that are leaders in medical imaging innovation.

Speaker 2

A prime example in our collaboration with researchers at Duke University Medical Center, which I'll tell you about later in my prepared remarks. Another example can be found in our recent announcement that Kaiser University has established a flagship training and demonstration site integrating the Nanox ARC into the Radiologic Technology Graduate Program and enabling hands on education for future imaging professionals. This is particularly exciting as a radiologist of the future are immersed in Nanox Arc early in their careers. To raise awareness and drive education on the Nanox Arc systems, we created the clinical education program. The clinical education specialists who run this program play a central role delivering structured customer onboarding and ongoing training through site visits, working with the referral physicians, training the site personnel through webinars and tailor educational plans.

Speaker 2

We recently launched the Nanox Academy digital platform tailored for our clients, partners and our Nanox network collaborators offering full product sales and clinical online training. Expanding our clinical evidence, the ultimate output of these studies are peer reviewed publications and white papers and academic publications derived from data generated by studies such as those currently being conducted with Shamir and Bellystone Medical Centers. These papers demonstrate the diagnostic potential of our cold cathed tomosynthesis system in imaging, offering a lower radiation cost effective alternative to CT. Moreover, we are constantly expanding the number of images bank of case studies, which serves to help illustrate the capabilities of the Nanox Arc system. This growing bank of scans also serves as a useful tool for our sales team when in discussions with imaging centers about the utility of the Nanox Arc.

Speaker 2

The final leg of our clinical development platform is our key opinion leaders network. This strategy is involving into structure segmented model that includes visionary leaders on our advisory board, clinical collaborators and show sites. This approach enable us to amplify our clinical voice holding seminars and webinars talking about the clinical value in conferences while supporting pre sales activities and beta testing in targeted specialties such as orthopedic and lung cancer screening. Together, these efforts form a cohesive clinical narrative that supports commercialization, enhance credibility and drives adoption positioning Nanox as a category defining innovator in low cost three d digital radiography. With that said, let's now move ahead to our operational highlights and updates.

Speaker 2

Turning now to our installation progress in key U. S. Markets. I'm happy to report that our pipeline has grown substantially since our last call. We continue to install system in various facilities, primarily standalone multi specialty, small and medium sized health clinics.

Speaker 2

These installations appear to be in line with the industry standard sales cycle. This increase in the sales pipeline is due to our investments in sales development representative initiatives, both internal and external, in order to increase the pipeline and conversion. These efforts are clearly resulting in traction with the medical imaging community and our commercial ramp will remain a primary focus. On another promising note, a growing number of customers with NanoQSARC units installed are actively referring and scanning patients. Amongst the notable customers, Nanoxlariq systems will soon be installed at Kaiser University Sarasota campus for training healthcare professionals, including live demonstrations and incorporation into Kaiser University Radiology Technology Graduate Program.

Speaker 2

We have also installed units in several imaging chains in California and New York. Of particular note, one of the largest medical imaging chains in The U. S. With hundreds of locations from which we recently generated revenues, has completed installation of the ARC and began Nanox ARC application training for its technicians in the July. This is the final step before patient scanning begins and we expect this chain to start scanning patients in the third quarter.

Speaker 2

The chain is also preparing to expand Nanox Arc deployment to a second site within its network. As many of you are aware, we are supplementing our direct sales effort via channel partnerships in select S. Distributor partnerships we announced last quarter with ASI and Swiss Re are both fully completed and are off to good starts. Additionally, we are in advanced negotiations with large distributor and equipment reseller with a presence throughout The U.

Speaker 2

S. To support these partnerships, we provide comprehensive training and onboarding covering everything from systems fundamentals and the clinical positioning to sales processes and contracting workflows. Our goal is to equip our partners with the tools and knowledge that they need to confidentially reengage their networks and promote the Nanox Arc. As part of our efforts to expand our go to market strategy, we're working on developing a future project. Nanox is developing a mobile imaging solution that integrates system into a commercial vehicle.

Speaker 2

The mobile Nanox Arc vehicle will serve as a traveling medical imaging center, visiting clinics to provide high quality diagnostic imaging without requiring patients to travel to central hospitals. The goal is to expand access to high quality imaging, improving patient reach and create new opportunities for service delivery and revenue growth. Turning to our rapidly growing Nanox AI business, I'd like to share details of several product collaborations that we are working on. First, I'm pleased to announce that Nanox AI and a leading provider of advanced AI powered medical imaging solutions are collaborating to integrate Nanox AI's liver and bone products with the providers advanced visualization software. This new partnership will allow us to extend the benefits of Nanox AI to a larger customer base, enhancing our collective offering and providing greater value to our users.

Speaker 2

Another commercial collaboration I can share is between Nanox AI and a leading company, which provide an AI powered health informatics with the aim of empowering breakthroughs in care through imaging. The collaboration leverages advanced AI for operational efficiency and improved clinical outcomes in lung. In another recent example, we have signed an agreement with Deep Sea to incorporate cardiac, bone and liver products onto the Deep Sea platform. And Deep Sea is a multinational company which markets an infrastructure platform, DeepCOS, designed to unify diverse radiology AI workflow across the enterprise. Having Nanox AI solutions integrated within this platform will make our products available on a much larger potential

Speaker 2

Another collaboration that I'd like to share today is with CTIS, a leading provider of health informatics solutions with decades of experience partnering with clinical trials and research stakeholders, particularly in support of NIH projects. Nanox AI and CTIS have joined the force to pursue two NIH grants aimed at analyzing lung cancer in young VAPS users, which is acknowledged to be a looming health problem in The U. S. Needless to say, it is encouraging that the growing group of AI platform providers recognize the value of our technology and are taking the time to integrate the Nanox AI solutions into their open architecture platform offering. Furthermore, as previously announced, we have finalized the collaboration between Nanox AI and ESRA, a leading provider of full body MRI screening services.

Speaker 2

Initially, the collaboration included Nanos AI population health solution integrated to Ezra Medical screening processes at 28 imaging center locations across The United States, feature AI powered full body MRI and CT scan to screen adults for early detection, such as cancer and other serious conditions at their earliest and often most treatable stages. The solution is now integrated into 50 five-zero sites with both the number of installations and the volume of scans steadily increasing. To continue our updates for Nanox AI, I'm pleased to report that the leading academic institution has launched a major collaboration with Nanox AI, selecting three of our advanced artificial intelligence applications to power a new population health clinical study targeting asymptomatic individuals aged 70 and above. These marks another milestone in our ongoing academic collaboration. We continue to partner with leading academic institutions that are leveraging our AI solution.

Speaker 2

I can also report that we signed an agreement to provide Nanox AI solution to customers of Radiology Diagnostic Group, RDG, a network of specialized senior radiologists offering rapid expert imaging interpretation, valuable second opinions and detailed explanation of imaging findings. In addition, we recently partnered with a reseller in India to market Nanox AI solution, securing two pilot projects and positioned us to expand our footprint in the region. Moreover, we are strengthening our U. S. Presence with the expansion of our service and sales infrastructure to support growing market demand.

Speaker 2

Turning to deployment and other activities outside of The U. S, we continue to advance along multiple fronts such as EU market and where we feel that distributor model is an efficient way to make initial inroads into the various nations of the EU. We accelerated our efforts in The EU after Nanox Arc was granted the CE Mark designation under EU MDR standards earlier this year. Our team recently met with our partner in Romania, Medis Imaging, which is the leading medical equipment supplier in the country. It was a highly productive engagement, which included a training session for medic sales personnel.

Speaker 2

Next step is to launch the Nanox R in the Annual Radiology Congress in Romania with our new partner September. The system is ready for shipment for that purpose. This is an exciting step forward in making Nanox innovation imaging solutions more accessible across Europe and promising start bringing next generation medical imaging technology to Romania. We are currently working with our local partner in Greece to secure the required import permits and are engaged in advanced discussions with additional potential partners in the region. We will continue to focus on the large EU market and expect that our strong business momentum will continue in many other European countries in 2025 and beyond.

Speaker 2

In Latin America, we are also pursuing the import license to ship to demo units to distributor in New Mexico, and I will provide an update when I have something material to share. The company notified the FDA of its intent to submit the TAP2D software module to the FDA through the five ten program. CAP2D submission purpose to receive clearance for two d ReU image output for Nanox ARC system, a practical tool for a geologist to enhance their diagnostic confidence as they become more experienced evaluating DPS images. Step 2D, once cleared, will be part of a wider vision held by Nanox to alleviate adjunctive use limitations in the future. Moving on to the clinical work that helps support all of our efforts by generating data supporting the use of our solutions.

Speaker 2

As I mentioned in my introductory remarks, we have several successes to share today, including our collaboration with Kaiser University and our ongoing partnership with Duke University Center for Virtual Trials. We have mentioned the Duke partnership on previous calls and I'm now able to share that this collaboration has resulted in a publication of a new paper that has just been published. In collaboration with Doctor. Eschen Sami's team at the Center for Virtual Imaging Trial at Duke, we have seen promising results of the potential values of Nanosar Digital Tomosynthesis configuration in handling patient motion as opposed to standard linear configuration DPS system. Patient movement during image acquisition can adversely affect the quality of medical image and the study shows the benefit that Nanox R configuration has the potential to effectively manage this issue.

Speaker 2

The study addressed various types of patient motions and showed that the Nanox R configuration is less susceptible to motion induced artifacts. The data and conclusions of the study have now been published in Biomedical Physics and Engineering Express, making key opinion leaders aware of the value of the Nanox Arc for cell mounting a common imaging challenge. Earlier, I acknowledged the value of bringing medical imaging experts and key opinion leaders onto the Nanox team. And with that goal in mind, we have recently strengthened our Medical Advisory Board with two new additions. Doctor.

Speaker 2

Lawrence Stannenbaum is an active consultant in the medical imaging space. He is a long term collaborator with the medical imaging industry and continues to chair advisory board for imaging OEMs, pharma, and AI concerns. He has interest in developing applications for AI and machine learning, concert agents, MRCP, and advanced rendering. Doctor. Tennerbaum serves as Vice President and Chief Technology Officer and Director of Advanced Imaging at RadNet from 2015 to 2024.

Speaker 2

Second, George Espada is a medical imaging executive with over twenty five years of global leadership experience. He has held senior roles at Agfa and Philips specializing in imaging technology and digital health transformation. He is an expert in bringing innovation to market and scaling customer centric tech driven healthcare solutions. We are excited to have these talented individuals join the NANOX team as we seek to innovate and change the medical imaging landscape. Our key opinion leaders strategy is evolving into a structured segmented model that includes visionary leaders, clinical collaborators, and show sites.

Speaker 2

This approach enables us to amplify our clinical voice while supporting pre sales activities and beta testing in targeted specialties such as orthopedic and lung cancer screening. Together, these efforts form a cohesive clinical narrative that supports commercialization, enhanced credibility, and driven adoption position Ignatius as a category defining innovator in digital retailing. We continue close collaboration with our OEM partners through the supply of components needed as our ARC deployment continues. Furthermore, we are seeking partnership with additional providers of unique imaging equipment to develop new and innovative uses of our three d Tomosynthesis technology. Additionally, in Q2 we met with multiple companies across a handful of application areas.

Speaker 2

We believe our technology provides unique and even disruptive technical benefits. These companies were approached based on exhaustive review of their applications, market position, our perceived product fit and of course the commercial opportunity potential. Having received several requests for additional data and or testing results, we are now reviewing, prioritizing, and formulating responses outlined proposed next steps. New applications and business development efforts take time, but this activity level demonstrates our continuous probing for new use cases and applications for our differentiated imaging technology. I'd also like to follow-up on my comments regarding Varex from our last call.

Speaker 2

We are sourcing glass tubes from Varex for our units as they are more economical than ceramic and advantageous for our application. At this time, I shared that Varex had delivered tubes for use in the newly developed Nanox ARC and that Nanox has technical staff at Varex facility for validation and training on multiple source demo units. The Arc team in Israel began system integration of Varex tubes into the Arc X earlier this month and we approached the time to start manufacturing the new Arc X at scale to meet anticipated customer demand. Also, delivery of the first multi source demonstrator from Varex is anticipated later this month. With regard to mass production, we have recently entered into a multi year volume supply agreement with Fabrinet, a leading global electronics manufacturing services provider, to support the scalable production of Advanced Medical Imaging.

Speaker 2

Under this agreement, Fabrinet will provide contract manufacturing services, including assembly, testing, procurement, and quality control, ensuring reliable and cost effective product delivery aligned with Nanoxil specification. The long term agreement will help to ensure stable and high quality manufacturing, as well as flexible production and forecasting to support our anticipated growth. In addition to manufacturing services, CoverageNet will support regulatory compliance, quality assurance and continuous improvement processes to help optimize the efficiency of the manufacturing process. We believe this collaboration will drive down our manufacturing cost over time and strengthen our global supply chain, which will in turn support our mission to expand access to innovative, affordable imaging technology worldwide.

Speaker 3

Thank you, Erez. We reported a GAAP net loss for the 2025 of $14,700,000 which is the reported period, compared with a net loss of $13,600,000 in the 2024, which is the comparable period. The increase in net loss was mainly due to the increase of $400,000 in our gross loss and $1,000,000 in our finance expense, net, which was mitigated by a decrease of $400,000 in our operating expenses. Revenue for the reported period was $3,000,000 and gross loss was $3,200,000 on a GAAP basis. Revenue for the comparable period was $2,700,000 and gross loss was $2,900,000 on a GAAP basis.

Speaker 3

Non GAAP gross loss for the reported period was $600,000 as compared to a gross loss of $200,000 in the comparable period, which represents a gross loss margin of approximately 21% on a non GAAP basis for the reported period, as compared to a gross loss margin of 9% on a non GAAP basis in the comparable period. Revenue from the teleradiology services for the reported period was $2,700,000 with a gross profit of $500,000 on a GAAP basis, as compared to revenue of $2,500,000 with a gross profit of $400,000 on a GAAP basis in the comparable period, which represents a gross profit margin of approximately 18% on a GAAP basis for the reported period, as compared to 15% on a GAAP basis in the comparable period. Non GAAP gross profit of the company's cellular radiology services for the reported period was $1,000,000 as compared to $900,000 in the comparable period, which represents a gross profit margin of approximately 38% on a non GAAP basis for the reported period, as compared to 37% on a non GAAP basis in the comparable period. The increase in the company's revenue and gross profit margins from the televariologist services was mainly attributable to customer retention, increased rates, and increased volume of the company's breathing services during the weekdays, weekends, and night shifts.

Speaker 3

During the reported period, the company generated revenue through the sale and deployment of its imaging systems and OEM services, which amounted to $221,000 for the reported period, with a gross loss of $1,700,000 on a GAAP basis and non GAAP basis compared to revenue of $68,000 with a gross loss of $1,300,000 on a GAAP basis and non GAAP basis in the comparable period. The company's revenue from its AI solutions for the reported period was $100,000 with a gross loss of $2,000,000 on a GAAP basis, compared to revenue of $100,000 with a gross loss of $2,000,000 in the comparable period. Non GAAP gross loss of the company's AI solutions for the reported period was $19,000 compared to a gross profit of $57,000 in the comparable period. Research and development expenses net for the reported and comparable period were $4,800,000 reflecting no change between the periods. Nevertheless, there was a decrease of $400,000 in share based compensation and $300,000 in expense related to our development activities, which were mitigated by an increase of $300,000 in salaries and wages and a decrease of $400,000 in grants received.

Speaker 3

Sales and marketing expenses for the reported period were $1,200,000 compared to $800,000 in the comparable period, which represents an increase of $400,000 mainly due to increase of $300,000 in salaries and wages, and $100,000 in marketing activities with connection to the commercialization in The U. S. Market. General and administrative expenses for the reported period were $5,100,000 compared to $5,900,000 in the comparable period. The decrease of $800,000 was mainly due to a decrease of $500,000 in share based compensation, a decrease of $500,000 in the company's legal expenses, and a decrease of $200,000 in D and O insurance expenses, was mitigated by an increase of $200,000 in salaries and wages.

Speaker 3

Non GAAP net loss attributable to ordinary shares for the reported period was $10,900,000 compared to $8,400,000 in the comparable period. The increase of $2,500,000 was mainly due to an increase of $400,000 in non GAAP gross loss, increase of $1,000,000 in the non GAAP operating expenses, and increase of $1,000,000 in non GAAP financial expenses. Turning to our balance sheet. As of 06/30/2025, we had cash, cash equivalents, restricted deposits and marketable securities of approximately $62,600,000 and adds $3,300,000 in short term loans from a bank. We ended the quarter with a property and equipment net of $46,100,000 as of 06/30/2025, and 12/31/2024, with approximately 63,900,000.0 and 63,800,000.0 shares outstanding, respectively.

Speaker 3

With that, I will hand the call back over to Erez.

Speaker 2

Thank you all for joining us today quarterly call. We appreciate the ongoing support from our investors, which is vital in helping us achieve our vision of making medical imaging more accessible worldwide and improving patient outcomes. Nanox has made progress advancing our Nanox AI business on multiple fronts and the deployment of the Nanox ARC system in the second quarter and we are on pace to meet our target of 100 units in the deployment by year's end with revenues expected in the 2025. We are seeing a growing and increasingly robust manufacturing pipeline and we are proud to mark a breakthrough in the European market with the first system ready for shipment and working on enlarging our network. By expanding our systems output with a two d view image, we reaffirm our commitment to continuous progress enhancement in line with the evolving market needs.

Speaker 2

Alongside our commercial efforts, we are executing a robust clinical program designed to product dating supporting the use case of Nanox AI technology. We continue to partner with leading academic institutions that are leveraging our AI solution and engaging key opinion leaders who can partner with Nanox to drive behavior change in the medical imaging sector. I'm proud of our team's diligent execution of our multi faceted growth strategy. If you would like an update call with the team, please contact our Investor Relations partners at ICR Healthcare. Thanks again for your time and attention today and we look forward to our next update.

Operator

Thank you. Our first question will come from the line of Ross Osborne from Cantor Fitzgerald. Your line is open.

Speaker 4

Hi, good morning, and thanks for taking our questions. So starting off, how many systems were operating during the quarter that resulted in $221,000 in imaging related revenue?

Speaker 2

Can you repeat the question?

Speaker 4

Yes. How many systems were operating during the quarter meeting scans were being performed that resulted in your reported $221,000 in imaging related revenue?

Speaker 2

Out of the 100 that we are currently targeting for the end of the year and the more than 60 that we published last time?

Speaker 4

Yes. So I guess out of those 60 or however many are in the field, how many systems were operating, meaning that patients were being scanned?

Speaker 2

Okay. So right now, more than 20 are operating and scanning patients. And all the numbers that we gave last time have increased. So, the number of operating system, the number of systems which are being in the process to install, The number of leads have grown exponentially that we are currently dealing with, namely the deal flow. Right now, as previously indicated, we are we can say that the 100 that we are talking about are identified.

Speaker 2

So, we know each one of them, almost each one of them, when it's going to be installed, and when it's going to be shipped and start to operate.

Speaker 4

Okay. That's great to hear. And then looking at those 100 leads, are you expecting any of those to be capital sales, or should we assume they will all be placed via the MSAS model?

Speaker 2

I would say that a part of them will be CapEx.

Speaker 4

Great. And then lastly, how many states in The United States are you now approved in for users to operate a system?

Speaker 2

Right now, eight.

Speaker 4

Thank you.

Operator

Thank you. One moment for our next question. Our next question will come from the line of Scott Henry from AGP. Your line is open.

Speaker 5

Thank you and good morning or afternoon depending on your location. I guess first to follow-up on the placements of units. Could you talk about the current revenue model? Is it mostly subscriptions versus CapEx in licensing? Just trying to get an idea of how that model has evolved as the launch has continued.

Speaker 5

Thank you.

Speaker 2

You want to go ahead. Yes, Ron.

Speaker 6

So, and so that's the we have discussed in the past, our leading model is the MTSS model. But as we said also in the past, we are we do want to do some CapEx sales. Just to remind you, we said in the process all the sales in the European countries will be in a CapEx sales model to our distributors. And in The US, we expect to be a mixture of CapEx sales and MSOS model. Some other territories will be probably MSOS or CapEx sales, depends on the traits of the of the geographic.

Speaker 5

Okay, great. Thank you for that color. On just looking at the quarterly revenues, the AI Solutions line, it moves around a lot and the numbers are pretty small. But I'm just that would be the 96,000 reported in 2Q. Could you give us a sense of where that number should go going forward?

Speaker 5

I mean, should we start to see more trends evolve as opposed to kind of a lot of volatility in it currently?

Speaker 2

The answer is yes. From the AI point of view, we have indicated already that 2026 will be breakeven in terms of revenues and expenses of the AI. We see a continuous growth in almost each one of the places that they are located, the system. Bear in mind that with respect to the AI, impact coming from the revenue recognition policy. So though, for example, we do install the systems, we get annual payments right now.

Speaker 2

So from a cash flow point of view, we are by far more than the number that you see in the quarter. And the other thing that should be noticed is the fact that, for example, Esra Medical, the one that was mentioned last time and this time as well, is growing exponentially in terms of the numbers. And this is going to be part of the really growing activities that we see, the B2B2C. And we have a similar agreement that we announced today that was signed that is going to be, from our point of view, even double than the, revenues which will be generated from Ezra Medical. With respect to the OEM, it's basically, it's when it comes, we register only when we ship numbers.

Speaker 2

So, I think that the 2026 will probably be more of an indication of the numbers that will show the growth that we're talking about in the agreements that we signed.

Speaker 5

Okay, great. Thank you. And then just quickly on operating expenses, any trends we should expect? I mean, it's been pretty consistent around that kind of 11,000,000 to $12,000,000 a quarter range. Should we expect that to continue going forward?

Speaker 5

And I guess it's probably the 2026 timeframe as well. When would you expect to start seeing the quarterly losses start to decline? I know it's an expensive business model, but at some point you reach that inflection where the revenue start to outweigh the cost. Just trying to get an idea of when that is. Sorry.

Speaker 5

There's two questions in there.

Speaker 6

Yes. So, with regards to the to the OpEx itself, you see the the the it's correct that maintaining the same level in the past few quarters, and that comes for more efficiencies and more measurements that we do to maintain the level of the expenses and to keep our burn to the minimum. On the other end, you see an increase of our sales and marketing expenses as a result the deployment in The US market and increasing our sales and marketing activities. All in all, we it's a trade off for once we increase in one place, do a decrease in one place, and we're trying to maintain the same level of expenses. And as we have said before, and in the past, once you see, especially in the second half of this year and going forward, when you're going to see the revenue alleviating, then you should see a decrease in the operating loss and the burn, etcetera.

Speaker 5

Okay, great. Thank you for taking the questions.

Speaker 2

Thank you.

Operator

Thank you. One question for one moment for our next question. Our next question will come from the line of Jeffrey Cohen from Ladenburg. Your line is open.

Speaker 7

Hello, Erez and Rand. Thanks for taking our questions. Firstly, could you talk about studies and submittals and publications and presentations in the back half of the year, specifically around RSNA and your activities headed into RSNA.

Speaker 2

Towards the RSNA, we have, we're going to submit, not we have submitted already. Actually, we will present the the full NanoXantoin solution and the high profile industry event in the first time that we're going to be there. We are going to present the ARC X, including the we are going to show the first the first installation or the first AI interpretation on the, as part of the ARCHX system. And we are planning to, we have submitted one clinical paper that is going to be on the MSK. I mentioned it earlier in the, and when we are talking with, I was talking about a few minutes ago in the earnings prepared remarks.

Speaker 2

And we are going to present at the AI Theater. We're going to have a presentation made by our chief medical officer, and we are going to include our key opinion leaders that will talk in various stages during the show, especially Doctor. Tenenbaum and Jeff?

Speaker 7

Yep. Okay. Sorry. Was just lost here for a second. Thank you for that.

Speaker 7

So, and as a follow-up, Erez, could you talk about geography specifically as far as both ARC placements as well as DIS solutions into the balance of this year and throughout perhaps '26 and '27 as far as countries and regions of geographical presence and where you expect some nice uptake.

Speaker 2

Okay. So first of all, we have indicated today in my remarks that the focus will be in The US, both for the AI and for the ARC as well. And this will be a major part of our efforts, including the the number of people that are going to be dedicated to the sales and marketing efforts. In addition, we are planning to focus on the EU countries. Right now, we have in our list approximately eight countries.

Speaker 2

A few of them already signed, and a few of them are in the process of being signed there shortly. We are very proud about the fact that the less than half a year from the CE Marks, the first system is going to be sent to, Europe and installed, in Romania at our distributor. Next probably in the line will be Greece. We are talking about a few, like three or four countries in Europe, and this will be the second part. In addition, we are going to spend or dedicate efforts, including salespeople and the channel managers, people that will focus on Mexico.

Speaker 2

Mexico is the country that we have already in agreement for quite some time, but the permit, import license and the local certification takes time. The system is we are talking about a few systems that will be sent to to Mexico. They are ready to be shipped. We are waiting for the for the PEM permit in the very near future. We are negotiating right now for another few countries in Latin America that will be part of it.

Speaker 2

The one thing that I'm I'm I'm saying is that right now, the Far East is going, is not going to be the first priority. Although we have already a distributor that is working on the license in Korea, but the rest will wait. We are we are not going to focus or spend a lot of time on Africa right now until we get more clarity on the the economy situation of countries that we are working with. But but in terms of the AI that that that you asked, right now, US is the is the primary market. Europe is second, and Latin America is third.

Speaker 2

Although we have also, we already mentioned that we have already two pilots in India. We have one system already installed in Thailand, and and this is in addition to what we say. In terms of the OEM, basically, we are working on an international basis. We have a one customer in Europe, one big customer and one big customer is in The US, also in Israel that we have. One other market that, you know, I didn't mention, but it's part of the efforts is Israel.

Speaker 2

Have all the systems in Israel are installed in hospitals. And right now we are planning to install few of the AI systems similar to the one that we have at Bezra Medical in Israel as well. Sorry for the long answer, but the detailed one.

Speaker 7

No, very much appreciated. Thanks for taking our questions.

Operator

Thank you.

Speaker 2

One thing that, I would say, Jeff, is basically, from from the, for the, from the call, what you can see is that we are really playing across the whole court, with the with the business development in the, in the workers' comp, in the mobile, units that, we're talking about the future. And from our point of view, there are no shortcuts. We go step by step, one after the other, we are really changing the standard of care, and therefore it's very organized. It's widespread in terms of the areas that we're focused on. And we see the results of the way that we operate this step by step and no shortcuts that we see the results that are coming time after the other quarter after quarter, we see the results, especially the efforts that we're making on the clinical side that I was talking about.

Speaker 2

I elaborated today quite a bit, because when you want to change the standard of care, you have to dedicate a lot of time to brand awareness, to clinical education, to referring physicians, to explain the, everything which relates to what's the value, what's the clinical value that you bring the market and to the customers, and we see the results of it.

Operator

Thank you. And with that, this concludes the question and answer session. Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.

Operator

Everyone, have a great day.

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