Nano-X Imaging: System Deployments Finally Begin

seekingalpha04-02

Nano-X Imaging is executing its long-awaited roll-out strategy with multiple Nanox.ARC system deployments in the U.S.The company has also made progress in Africa and Latin America with installations ...

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href=https://seekingalpha.com/article/4681579-nano-x-imaging-system-deployments-finally-begin><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>Nano-X Imaging is executing its long-awaited roll-out strategy with multiple Nanox.ARC system deployments in the U.S.The company has also made progress in Africa and Latin America with installations ...</p>\n\n<a href=\"https://seekingalpha.com/article/4681579-nano-x-imaging-system-deployments-finally-begin\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"BK4581","symbol_name":"高盛持仓","start_time":0,"source_url":"https://seekingalpha.com/article/4681579-nano-x-imaging-system-deployments-finally-begin","article_id":"2424277136","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=2424277136","pubTimestamp":1712004600,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking 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with installations and distribution agreements.However, financial performance is still lagging with scant details on how Nano-X will scale up to commercial scale.The story is improving, but there are still too many concerns for me to invest in NNOX stock.   Gerardo Huitrón/E+ via Getty Images In December, when I last updated on Nano-X Imaging Ltd. (NASDAQ:NNOX), the company had just released its Q3/2023 earnings report and disclosed that the company was ramping up commercial deployments in the U.S. with a 2-pronged approach of selling OEM systems as well as deploying a \"Scan-As-A-Service\" (\"Saas\") business model (Figure 1).   Figure 1 - NNOX 2-pronged business model (NNOX investor presentation) At the time of my article, I remarked that the upcoming quarters will be critical for Nano-X, as the company can no longer blame regulatory delays for its lack of execution. To management's credit, the company appears to be finally executing on its long-awaited roll-out strategy, as the company recently released Q4 2023 earnings and updated the markets on its business progress. Nano-X Imaging's Q4 Earnings Included Crucial Business Update On the surface, the fourth quarter earnings was another non-event, as the company only generated $2.4 million in revenues (+12.7% YoY), missing consensus estimates by $0.4 million (Figure 2). Earnings was a loss of $0.18 / share, bringing 2023 losses to $1.08 / share. Figure 2 - NNOX Q4/23 financial summary (NNOX Q4/23 press release) However, looking at the business progress details, I believe there is much to be optimistic about. First, the company disclosed that it had deployed multiple Nanox.ARC systems across 5 states in the U.S. More importantly, the company had begun to scan patients in the U.S. While details were scant in the press release, management was more forthcoming on the earnings call, noting that Nanox.ARC systems had been deployed in New Jersey, New York, Florida, Kansas, and Georgia (partner 626 Opco's Imaging Academy in Georgia serves as a technical and training center for technicians). Operations at additional sites are pending certification from the corresponding state regulatory bodies, but management claims the company has been able to validate its SaaS business model by pricing scans at ~$30 / scan and operating seven scans per day. Nano-X is also in advanced negotiations with another installation, maintenance, and service provider in addition to 626 OpCo. Outside of the U.S., Nano-X has also made progress, with three installations in Africa as of the end of March. Furthermore, Nano-X has signed a multi-site agreement in the Ghanaian market and plans to conduct a multi-site trial in the country. In Latin America, Nano-X has recently signed a distribution agreement with a Peru-based medical equipment distributor and its Mexican distributor is seeking an import license for its first Mexican installation. I believe this earnings announcement is a significant milestone for Nano-X. Recall, one of the biggest pushback against the Nano-X story had been its lack of progress in actual system deployments, despite the company trumpeting thousands of global orders. In fact, early in its corporate history, Nano-X was the target of short-sellers like Citron and Muddy Waters who claimed the company was built on vaporware. So the fact that the company was able to deliver systems to multiple U.S. states and begin scanning patients appears to finally put these short allegations to rest. NNOX's Financial Performance Still Lagging However, putting to rest technological concerns does not mean Nano-X is out of the woods just yet. Looking at the financials, Nano-X has deployed less than 10 systems globally (5 in the U.S., 3 in Africa, 1 in Israel), nowhere near commercial scale. Frustratingly, Nano-X still has not announced concrete plans on how the company will mass produce the scanners at scale in order to ramp up revenues and earnings. How much will each system retail for and how much does it cost to manufacture and operate? How often will systems have to be taken offline for servicing? These are all important questions without answers at the moment. Furthermore, since a significant part of Nano-X's deployment strategy is to charge a fee per scan (\"SaaS\"), the initial capital required to build these systems will have to be fronted by Nano-X. With only $72 million in cash and marketable securities, it is unclear how many systems Nano-X can deploy before the company uses up its current capital resources, given the company continues to lose money on a quarterly basis (Figure 3). Figure 3 - NNOX has limited financial resources (NNOX Q4/23 earnings press release) If the company is serious about deploying a SaaS solution, I recommend the company engage with an investment bank to raise a large chunk of capital and put to rest capital concerns. NVIDIA Disclosure Caused Mini-Frenzy One interesting tidbit of the Nano-X story a recent 13F disclosure by Nvidia (NVDA) that it owned a small stake in the company. This news sent shares of Nano-X soaring by more than 100%. However, looking at the details, it appears Nvidia's NNOX stake came via an investment in Zebra Medical, which was acquired by Nano-X. So Nvidia's stake was obtained indirectly, and not bought directly from the market. Conclusion My takeaway after reviewing Nano-X's Q4/23 earnings is that the company is on the right track, with deployments starting to ramp up in the U.S. and the world. This helps dispel the 'vaporware' accusations from short-sellers. However, important questions still remain on the Nano-X story, namely, when will the company achieve commercial scale and what are the economics at scale? For me personally, I am hesitant to invest without more details on these subjects.  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