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Nanox Announces Fourth Quarter of 2023 Financial Results and Provides Business Update

Apr 1, 2024

Nanox Launches Nanox.ARC in United States with Installations Across Five States, Marking a Major Advancement in Medical Imaging

Management to host conference call and webcast Monday, April 1, 2024 at 8:30 AM ET

PETAH TIKVA, Israel, April 01, 2024 (GLOBE NEWSWIRE) -- NANO-X IMAGING LTD (NASDAQ: NNOX) (“Nanox” or the “Company”), an innovative medical imaging technology company, today announced results for the fourth quarter ended December 31, 2023 and provided a business update.

Fourth Quarter 2023 Highlights and Recent Developments:

  • Generated $2.4 million in revenue in the fourth quarter of 2023, compared to $2.1 million in the fourth quarter of 2022.

  • Made significant progress in US deployment, with multiple Nanox.ARC systems now deployed in 5 states.

  • The Nanox.ARC has begun to scan patients in the U.S.

  • passed all required tests in three states conducted by a licensed and certified physicists.

  • Nanox.AI secured FDA clearance for HealthFLD, an advanced AI-based software empowering clinicians in assessment of fatty liver disease, and which may deliver advantages to the biopharmaceutical industry.

  • InterMountain Health has signed on to deploy HealthCCS and was part of a Nuance bundle.

  • Initial data readout from the ADOPT study, being held at Oxford University Hospital and other locations in the UK, demonstrated a sixfold increase in identifying previously undiagnosed patients with vertebral compression fracture using Nanox.AI’s HealthVCF solution.

  • Began multi-site clinical trial to study the Nanox.ARC use for chest indications.

  • Continued to advance the process of securing CE-mark in the EU

“I am incredibly proud to announce another strong quarter and year for Nanox,” said Erez Meltzer, Nanox Chief Executive Officer. “First and foremost, we achieved a pivotal milestone in fiscal year 2023, getting FDA clearance for the Nanox ARC systems and deploying them in the key US market. With significant regulatory successes in hand, Nanox is committed to accelerating the execution of our commercial infrastructure and strategic plans in the US. Our mission is to provide healthcare practices with a transformative advantage through the Nanox.ARC – an accessible, end-to-end, and cost-effective solution that not only provides advanced diagnostic imaging capabilities but also elevates overall patient care. Additionally, we are constantly advancing our AI solutions as we truly believe early detection, precise diagnoses, effective treatments and ongoing medical monitoring can be life-changing.”

Financial results for three months ended December 31, 2023

For the three months ended December 31, 2023 (the “reported period”), the Company reported a net loss of $10.2 million, compared to a net loss of $52.8 million for the three months ended December 31, 2022 (which is referred as the “comparable period”), representing a decrease of $42.6 million. The decrease was largely due to a goodwill impairment of $36.5 million, an accrual of $8 million in connection with the settlement of the class action which were recorded in the comparable period, other income of $3.0 million recorded from the D&O insurance carrier under the settlement agreement in connection with the class action lawsuits and a decrease of $4.4 million in general and administrative expenses offset by a decrease in the change in contingent earnout liability of $9.1 million.

The Company reported revenue of $2.4 million in the reported period, compared to $2.1 million in the comparable period. During the reported period, the Company generated revenue through teleradiology services, the sales and deployment of its imaging systems and AI solutions. 

The Company’s gross loss during the reported period totaled $1.7 million (gross loss margin of (72%)) on a GAAP basis, as compared to a gross loss of $1.7 million (gross loss margin of (82%)) in the comparable period. Non-GAAP gross profit for the reported period was $0.9 million (gross profit margin of approximately 36%), as compared to $0.8 million (gross profit margin of approximately 39%) in the comparable period.

The Company’s revenue from teleradiology services for the reported period was $2.3 million, as compared to revenue of $2.1 million in the comparable period. The increase in the Company’s revenue from teleradiology services was mainly attributable to increase in the facilities in the reported period as compared to comparable period. The Company’s GAAP gross profit from teleradiology services for the reported period was $0.3 million (gross profit margin of approximately 14%), as compared to $0.3 million (gross profit margin of approximately 13%) in the comparable period. Non-GAAP gross profit of the Company’s teleradiology services for the reported period was $0.9 million (gross profit margin of approximately 38%) as compared to $0.8 million (gross profit margin of approximately 40%) in the comparable period. The decreases in the gross profit margins on a non-GAAP basis was attributable mainly to an increase in the cost of the engaged radiologists due to increases in reading rates and incentive payments which the Company paid to radiologists to engage during overnight and weekend shifts.

As mentioned above, during the reported period the Company generated revenue through the sales and deployment of its imaging systems which amounted to $17 thousand for the reported period, with a gross loss of $44 thousand on a GAAP and non-GAAP basis. The revenue stems from the sale and deployment of our 2D systems in Africa.

The Company’s revenue from its AI solutions for the reported period was $84 thousand with a gross loss of $2.0 million on a GAAP basis, as compared to revenue of $63 thousand with a gross loss of $2.0 million in the comparable period. Non-GAAP gross profit of the Company’s AI solutions for the reported period was $21 thousand, as compared to a profit of $4 thousand on a non-GAAP basis in the comparable period. During the fourth quarter of 2023, Nanox AI continued to complete pilot programs with marketplaces, marketplace costumers and health organizations in anticipation of full deployment of its products. During the first quarter of 2024, Nanox AI sold its HealthCCS cardiac solution to a second IDN in the U.S for an annual fee of $ 8.5 thousand during the first year of engagement and annual fee of $75 thousand from the first anniversary of the engagement and after.

Research and development expenses, net for the reported period were $6.8 million, as compared to $7.1 million in the comparable period. The decrease of $0.3 million was mainly due to a decrease in the cost of the Company’s development expenses of the Nanox.ARC system in the amount of $0.4 million. 

Sales and marketing expenses for the reported period were $1.0 million, as compared to $1.5 million in the comparable period. The decrease of $0.5 million was mainly due to a decrease in the Company’s marketing expenses and a decrease in share-based compensation expense.

General and administrative expenses for the reported period were $3.8 million, as compared to $8.2 million in the comparable period. The decrease of $4.4 million was mainly due to a decrease in legal expenses in the amount of $4.2 million, largely as a result of the finalization of the SEC investigation and reaching a settlement of the class action litigation and the receipt of $2 million from the Company’s directors’ and officers’ liability insurance carrier during the reported period under the Company’s policy and the settlement agreement.

There was no Goodwill impairment for the reported period as compared to $36.5 million in the comparable period, which was resulted from the goodwill impairment related to the Nanox.AI reporting unit.

Other income was $2.7 million for the reported period, as compared to other expenses that was $7.8 million for the comparable period. Other expenses in the comparable period included an accrual for settlement in connection with the class action lawsuit against the Company in the amount of $8 million, which was reversed by the amount of $3 million in the reported period since the Company received that amount from its D&O insurance carrier under the settlement agreement in connection with the class action lawsuits against the Company.

Non-GAAP net loss attributable to ordinary shares for the reported period was $10.4 million, as compared to $9.9 million in the comparable period. The increase of $0.5 million was mainly due to a decrease in our tax income of $1.0 million and increase in the non-GAAP other expenses of $0.5 million which was mitigated by an increase of $0.5 million in our interest income, a decrease of $0.3 million in our non-GAAP research and development expenses and a decrease of $0.3 million in our non-GAAP sales and marketing expenses.

Non-GAAP gross profit for the reported period was $0.9 million, as compared to $0.8 million in the comparable period. Non-GAAP research and development expenses for the reported period were $5.9 million, as compared to $6.2 million in the comparable period. Non-GAAP sales and marketing expenses for the reported period were $0.8 million, as compared to $1.1 million in the comparable period. Non-GAAP general and administrative expenses for the reported period and the comparable period were $4.7 million.

The difference between the GAAP and non-GAAP financial measures above is mainly attributable to amortization of intangible assets, goodwill impairment, share-based compensation, change in contingent earnout liability, legal fees in connection with the class-action litigation and the SEC investigation, accrual in connection with the settlement of the SEC investigation and class action. A reconciliation between GAAP and non-GAAP financial measures for the three and twelve-month periods ended December 31, 2023, and 2022 is provided in the financial results that are part of this press release.

Liquidity and Capital Resources

As of December 31, 2023, the Company had total cash, cash equivalents, restricted deposits and marketable securities of $82.8 million, compared to $102.9 million as of December 31, 2022.

The decrease in the Company’s cash, cash equivalents, restricted deposits and marketable securities of $20.1 million during the twelve-month period ended December 31, 2023, was primarily due to negative cash flow from operations of $44.8 million and the purchase of property and equipment of $3.3 million, which was offset by cash flow from financing of $27.3 million largely from the capital raise that the Company consummated during the third quarter of 2023.

Other Assets

As of December 31, 2023, the Company had property and equipment of $42.3 million as compared to $43.5 million as of December 31, 2022. The decrease was mainly attributed to period depreciation.

As of December 31, 2023, the Company had intangible assets and goodwill of $80.6 million as compared to $98.6 million as of December 31, 2022. The decrease was attributable to the periodic amortization of intangible assets in the amount of $10.6 million and goodwill impairment of $7.4 million.

Shareholders’ Equity

As of December 31, 2023, the Company had approximately 57.8 million shares outstanding as compared to 55.1 million shares outstanding as of December 31, 2022. The increase was mainly due to the issuance of 2,142,858 of the Company’s ordinary shares in consideration of net proceeds of $27.1 million, the issuance of 286,141 shares upon the exercise of options and RSUs, which generated, in the aggregate, approximately $0.9 million in gross proceeds to the Company and the issuance of 255,392 ordinary shares to the former stockholders of USARAD, in consideration for the achievement of certain milestones in connection with the first earn-out period, as defined in the USARAD Stock Purchase Agreement and a global settlement of both parties’ performance obligations under the USARAD Stock Purchase Agreement.

Conference Call and Webcast Details

Monday, April 1, 2024 @ 8:30am ET

Individuals interested in listening to the conference call may do so by joining the live webcast on the Investors section of the Nanox website under Events and Presentations. Alternatively, individuals can register online to receive a dial-in number and personalized PIN to participate in the call. An archived webcast of the event will be available for replay following the event.

About Nanox:

Nanox (NASDAQ: NNOX) is focused on applying its proprietary medical imaging technology and solutions to make diagnostic medicine more accessible and affordable across the globe. Nanox’s vision is to increase access, reduce costs and enhance the efficiency of routine medical imaging technology and processes, in order to improve early detection and treatment, which Nanox believes is key to helping people achieve better health outcomes, and, ultimately, to save lives. The Nanox ecosystem includes Nanox.ARC— a multi-source Digital Tomosynthesis system that is cost-effective and user-friendly; an AI-based suite of algorithms that augment the readings of routine CT imaging to highlight early signs often related to chronic disease (Nanox.AI); a cloud-based infrastructure (Nanox.CLOUD); and a proprietary decentralized marketplace, through Nanox’s subsidiary, USARAD Holdings Inc., that provides remote access to radiology and cardiology experts; and a comprehensive teleradiology services platform (Nanox.MARKETPLACE). Together, Nanox’s products and services create a worldwide, innovative, and comprehensive solution that connects medical imaging solutions, from scan to diagnosis. For more information, please visit www.nanox.vision.

Forward-Looking Statements:

This press release may contain forward-looking statements that are subject to risks and uncertainties. All statements that are not historical facts contained in this press release are forward-looking statements. Such statements include, but are not limited to, those relating to the initiation, timing, progress and results of the Company’s research and development, manufacturing, and commercialization activities with respect to its X-ray source technology and the Nanox.ARC, the ability to realize the expected benefits of its recent acquisitions and the projected business prospects of the Company and the acquired companies. In some cases, you can identify forward-looking statements by terminology such as “can,” “might,” “believe,” “may,” “estimate,” “continue,” “anticipate,” “intend,” “should,” “plan,” “should,” “could,” “expect,” “predict,” “potential,” or the negative of these terms or other similar expressions. Forward-looking statements are based on information the Company has when those statements are made or management’s good faith belief as of that time with respect to future events and are subject to risks and uncertainties that could cause actual performance or results to differ materially from those expressed in or suggested by the forward-looking statements. Factors that could cause actual results to differ materially from those currently anticipated include: risks related to (i) Nanox’s ability to continue to develop of the Nanox imaging system; (ii) Nanox’s ability to successfully demonstrate the feasibility of its technology for commercial applications; (iii) Nanox’s expectations regarding the necessity of, timing of filing for, and receipt and maintenance of, regulatory clearances or approvals regarding its technology, the Nanox.ARC and Nanox.CLOUD from regulatory agencies worldwide and its ongoing compliance with applicable quality standards and regulatory requirements; (iv) Nanox’s ability to realize the anticipated benefits of acquisitions, which may be affected by, among other things, competition, brand recognition, the ability of the acquired companies to grow and manage growth profitably and retain their key employees; (v) Nanox’s ability to enter into and maintain commercially reasonable arrangements with third-party manufacturers and suppliers to manufacture the Nanox.ARC; (vi) the market acceptance of the Nanox imaging system and the proposed pay-per-scan business model; (vii) Nanox’s expectations regarding collaborations with third-parties and their potential benefits; and (viii) Nanox’s ability to conduct business globally; (ix) changes in global, political, economic, business, competitive, market and regulatory forces, including the continuation and escalation of the military conflicts in Israel; (x) the costs incurred with respect to and the outcome of the securities class action litigation and the civil litigation Nanox is currently subject to and any similar or other claims and litigation it may be subject to in the future; and (xi) risks related to business interruptions resulting from the COVID-19 pandemic or similar public health crises, among other things.

For a discussion of other risks and uncertainties, and other important factors, any of which could cause Nanox’s actual results to differ from those contained in the Forward-Looking Statements, see the section titled “Risk Factors” in Nanox’s Annual Report on Form 20-F for the year ended December 31, 2022, and subsequent filings with the U.S. Securities and Exchange Commission. The reader should not place undue reliance on any forward-looking statements included in this press release.

Except as required by law, Nanox undertakes no obligation to update publicly any forward-looking statements after the date of this press release to conform these statements to actual results or to changes in the Company’s expectations.

Non-GAAP Financial Measures

This press release includes information about certain financial measures that are not prepared in accordance with generally accepted accounting principles in the United States (“GAAP”), including 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 and non-GAAP basic and diluted loss per share. These non-GAAP measures are not based on any standardized methodology prescribed by GAAP and are not necessarily comparable to similar measures presented by other companies. These non-GAAP measures are adjusted for (as applicable) amortization of intangible assets, goodwill impairment, share-based compensation expenses, change in contingent earnout liability, legal fees in connection with class-action litigation and the SEC investigation, accrual in connection with the settlement of the SEC investigation and class-action. The Company’s management and board of directors utilize these non-GAAP financial measures to evaluate the Company’s performance. The Company provides these non-GAAP measures of the Company’s performance to investors because management believes that these non-GAAP financial measures, when viewed with the Company’s results under GAAP and the accompanying reconciliations, are useful in identifying underlying trends in ongoing operations. However, these non-GAAP measures are not measures of financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP measures as indicators of operating performance. Further, these non-GAAP measures should not be considered measures of the Company’s liquidity. A reconciliation of certain GAAP to non-GAAP financial measures has been provided in the tables included in this press release.


  
NANO-X IMAGING LTD.
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(U.S. dollars in thousands except share and per share data)
 
  
  December 31,
2023
  December 31,
2022
 
  U.S. Dollars in thousands 
Assets      
CURRENT ASSETS:      
Cash and cash equivalents  56,377   38,463 
Restricted deposit  46   - 
Marketable securities  26,006   39,161 
Accounts receivables net of allowance for credit losses of $55 and $34 as of December 31, 2023 and December 31,2022, respectively.  1,484   977 
Inventories  2,356   - 
Prepaid expenses  1,274   2,414 
Other current assets  1,092   1,446 
TOTAL CURRENT ASSETS  88,635   82,461 
         
NON-CURRENT ASSETS:        
Restricted deposit  327   66 
Property and equipment, net  42,343   43,545 
Operating lease right-of-use asset  4,573   1,157 
Marketable securities  -   25,198 
Intangible assets  80,607   91,219 
Goodwill  -   7,420 
Other non-current assets  2,163   2,867 
TOTAL NON-CURRENT ASSETS  130,013   171,472 
TOTAL ASSETS  218,648   253,933 
         
Liabilities and Shareholders’ Equity        
CURRENT LIABILITIES:        
Current maturities of long term loan  3,490   - 
Accounts payable  3,303   3,619 
Accrued expenses  3,920   12,240 
Deferred revenue  543   182 
Contingent short term earnout liability  -   4,250 
Current maturities of operating lease liabilities  861   740 
Other current liabilities  3,407   4,043 
TOTAL CURRENT LIABILITIES  15,524   25,074 
         
NON-CURRENT LIABILITIES:        
Non-current operating lease liabilities  4,045   398 
Long term loan  -   3,481 
Non-current deferred revenue  -   398 
Contingent long-term earnout liability  -   4,089 
Deferred tax liability  2,953   3,330 
Other long-term liabilities  612   483 
TOTAL NON-CURRENT LIABILITIES  7,610   12,179 
TOTAL LIABILITIES  23,134   37,253 
         
COMMITMENTS AND CONTINGENCIES        
         
SHAREHOLDERS’ EQUITY:        
Ordinary Shares, par value NIS 0.01 per share 100,000,000 authorized at December 31, 2023 and December 31 2022, 57,778,628 and 55,094,237 issued and outstanding at December 31, 2023 and December 31, 2022, respectively  165   158 
Additional paid-in capital  515,887   477,953 
Accumulated other comprehensive loss  (305)  (1,974)
Accumulated deficit  (320,233)  (259,457)
TOTAL SHAREHOLDERS’ EQUITY  195,514   216,680 
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY  218,648   253,933 


  
NANO-X IMAGING LTD.
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND
COMPREHENSIVE LOSS
(U.S. dollars in thousands except share and per share data)
 
  
  Twelve Months Ended
December 31,
  Three Months Ended
December 31,
 
  2023  2022  2023  2022 
REVENUE  9,905   8,578   2,397   2,132 
                 
COST OF REVENUE  16,497   15,458   4,113   3,879 
                 
GROSS LOSS  (6,592)  (6,880)  (1,716)  (1,747)
                 
OPERATING EXPENSES:                
Research and development, net  26,049   26,507   6,812   7,095 
Sales and marketing  4,168   4,376   1,034   1,494 
General and administrative  24,272   41,254   3,791   8,185 
Goodwill impairment  7,420   50,878   -   36,540 
Change in contingent earnout liability  (4,488)  (20,376)  18   (9,074)
Other expenses (income), net  (1,424)  8,191   (2,684)  7,769 
TOTAL OPERATING EXPENSES  55,997   110,830   8,971   52,009 
OPERATING LOSS  (62,589)  (117,710)  (10,687)  (53,756)
REALIZED LOSS FROM SALE OF MARKETABLE SECURITIES  (178)  -   -   - 
FINANCIAL INCOME (EXPENSES), net  1,652   789   360   (113)
OPERATING LOSS BEFORE INCOME TAXES  (61,115)  (116,921)  (10,327)  (53,869)
                 
INCOME TAX BENEFIT  339   3,678   79   1,032 
NET LOSS  (60,776)  (113,243)  (10,248)  (52,837)
                 
BASIC AND DILUTED LOSS PER SHARE  (1.08)  (2.17)  (0.18)  (1.01)
Weighted average number of basic and diluted ordinary shares outstanding (in thousands)  56,368   52,235   57,758   52,414 
Comprehensive Loss:                
Net Loss  (60,776)  (113,243)  (10,248)  (52,837)
Other comprehensive gain (loss):                
Reclassification of net losses realized in income statement  (178   -   -   - 
                 
Unrealized gain (loss) from marketable securities  1,847   (1,367)  341   485 
Total comprehensive loss  (59,107)  (114,610)  (9,907)  (52,352)


  
NANO-X IMAGING LTD.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands, except share and per share data)
 
  
  Ordinary shares  Additional  Accumulated
other
       
  Number of
shares
  Amount  paid-in
capital
  comprehensive
loss
  Accumulated
deficit
  Total 
BALANCE AT JANUARY 1, 2022  51,791,441   149   438,820   (607)  (146,214)  292,148 
                         
CHANGES DURING 2022:                        
Issuance of ordinary shares upon exercise of warrants  192,927   1   369   -   -   370 
Issuance of ordinary shares upon exercise of options  372,159   1   578   -   -   579 
Issuance of ordinary shares in connection with earnout liability  89,286   *   953   -   -   953 
Issuance of ordinary shares under settlement agreement with former shareholders of Nanox AI Ltd.  2,648,424   7   18,610   -   -   18,617 
Share-based compensation  -   -   18,623   -   -   18,623 
Unrealized loss from marketable securities  -   -   -   (1,367)  -   (1,367)
Net loss for the year  -   -   -   -   (113,243)  (113,243)
BALANCE AT DECEMBER 31, 2022  55,094,237   158   477,953   (1,974)  (259,457)  216,680 
                         
CHANGES DURING 2023:                        
Issuance of ordinary shares and warrants, net of issuance expenses **  2,142,858   6   27,133   -   -   27,139 
Issuance of ordinary shares upon exercise of RSUs  34,750   *   -   -   -   * 
Issuance of ordinary shares upon exercise of options  251,391   *   903   -   -   903 
Issuance of ordinary shares under settlement agreement with former stockholders of USARAD Holding Inc.  255,392   1   1,560   -   -   1,561 
Reclassification of earn-out liability to equity  -   -   1,500   -   -   1,500 
Share-based compensation  -   -   6,838   -   -   6,838 
Unrealized gain from marketable securities, net  -   -   -   1,669   -   1,669 
Net loss for the year  -   -   -   -   (60,776)  (60,776)
BALANCE AT DECEMBER 31, 2023  57,778,628   165   515,887   (305)  (320,233)  195,514 


*Less than $1.
**Issuance expenses totaled to $2,861

 

  
NANO-X IMAGING LTD.
UNAUDITED CONDENSED STATEMENTS OF CHANGES IN SHAREHOLDERS’ EQUITY
(U.S. dollars in thousands, except share and per share data)
 
  
        Accumulated       
  Ordinary shares  Additional  other       
  Number of     paid-in  comprehensive  Accumulated    
  shares  Amount  capital  deficit  deficit  Total 
  U.S. Dollars in thousands 
BALANCE AT OCTOBER 1, 2023  57,717,425   165   512,497   (646)  (309,985)  202,031 
Changes during the period:                        
Issuance of ordinary shares upon exercise of options  26,453   *   33   -   -   33 
Issuance of ordinary shares upon exercise of RSUs  34,750   *   -   -   -   * 
Reclassification of earn-out liability to equity  -   -   1,500   -   -   1,500 
Unrealized gain from marketable securities  -   -   -   341   -   341 
Share-based compensation  -   -   1,857   -   -   1,857 
Net loss for the period  -   -   -   -   (10,248)  (10,248)
BALANCE AT DECEMBER 31, 2023  57,778,628   165   515,887   (305)  (320,233)  195,514 


*Less than $1.


  Ordinary shares  Additional  Accumulated
other
       
  Number of
shares
  Amount  paid-in
capital
  comprehensive
loss
  Accumulated
deficit
  Total 
     U.S. Dollars in thousands 
BALANCE AT OCTOBER 1, 2022  52,266,474   150   456,761   (2,459)  (206,620)  247,832 
CHANGES DURING THE PERIOD:                        
Issuance of ordinary shares to employees and non-employees upon exercise of options  179,339   1   298   -   -   299 
Issuance of ordinary shares under settlement agreement with former shareholders of Nanox AI Ltd.  2,648,424   7   18,610   -   -   18,617 
Share-based compensation  -   -   2,284   -   -   2,284 
Unrealized gain from marketable securities  -   -   -   485   -   485 
Net loss for the period  -   -   -   -   (52,837)  (52,837)
BALANCE AT DECEMBER 31, 2022  55,094,237   158   477,953   (1,974)  (259,457)  216,680 


  
NANO-X IMAGING LTD. 
UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(U.S. dollars in thousands)
 
  
  Year ended December 31, 
  2023  2022 
  U.S. Dollars in thousands 
CASH FLOWS FROM OPERATING ACTIVITIES:        
Net loss for the year  (60,776)  (113,243)
Adjustments required to reconcile net loss to net cash used in operating activities:        
Share-based compensation  6,838   18,623 
Amortization of intangible assets  10,612   10,607 
Impairment of goodwill  7,420   50,878 
Change in contingent earnout liability  (4,488)  (20,376)
Depreciation  1,198   905 
Deferred tax liability, net  (377)  (3,733)
Realized loss from sale of marketable securities  178   - 
Exchange rate differentials  69   (47)
Amortization of premium, discount and accrued interest on marketable securities  735   1,398 
Impairment of property and equipment  -   172 
Loss from disposal of property and equipment  1,297   - 
Changes in operating assets and liabilities:        
Accounts receivable, net  (507)  74 
Prepaid expenses and other current assets  1,940   1,235 
Other non-current assets  (251)  (800)
Accounts payable  (153)  469 
Accrued expenses and other liabilities  (8,956)  10,410 
Operating lease assets and liabilities  352   (125)
Deferred revenue  (37)  (82)
Other long-term liabilities  129   250 
Net cash used in operating activities  (44,777)  (43,385)
         
CASH FLOWS FROM INVESTING ACTIVITIES:        
Investment in restricted deposits  (373)  - 
Proceeds from maturity of marketable securities  38,287   31,241 
Purchase of marketable securities  -   (8,454)
Proceeds from sale of marketable securities  822   - 
Purchase of property and equipment  (3,303)  (7,171)
Investment in equity securities  -   (1,010)
Net cash provided by investing activities  35,433   14,606 
         
CASH FLOWS FROM FINANCING ACTIVITIES:        
         
Proceeds from issuance of ordinary shares and warrants, net of issuance costs  27,139   - 
Repayment of financial liability  -   (145)
Payment due to settlement of contingent earnout liabilities  (790)  - 
Proceeds from issuance of ordinary shares upon exercise of warrants  -   370 
Proceeds from issuance of ordinary shares upon exercise of options and RSUs  903   579 
Net cash provided by financing activities  27,252   804 
         
EFFECT OF CHANGES IN EXCHANGE RATES ON CASH AND CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS  (60)  (268)
NET CHANGE IN CASH AND CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS  17,848   (28,243)
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS AT BEGINNING OF THE YEAR  38,529   66,772 
CASH AND CASH EQUIVALENTS AND RESTRICTED CASH EQUIVALENTS AT END OF THE YEAR  56,377   38,529 
         
SUPPLEMENTARY INFORMATION ON ACTIVITIES INVOLVING CASH FLOWS:        
Cash paid for income taxes  3   147 
Cash paid for interest  149   90 
         
SUPPLEMENTARY INFORMATION ON ACTIVITIES NOT INVOLVING CASH FLOWS:        
Issuance of ordinary shares in connection with earnout liability.  1,561   953 
Issuance of ordinary shares under settlement agreement with former shareholders of Nanox AI Ltd.  -   18,617 
Reclassification of earn-out liability to equity  1,500   - 
Operating lease liabilities arising from obtaining operating right-of use assets  4,411   320 


(*)Less than 1 thousand US dollars.


UNAUDITED RECONCILIATION OF GAAP AND NON-GAAP RESULTS
(U.S. dollars in thousands (except per share data))

Use of non-GAAP Financial Measures

The unaudited condensed consolidated financial information is prepared in conformity with GAAP. The Company uses information about certain financial measures that are not prepared in accordance with GAAP, including 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 (income) and non-GAAP basic and diluted loss per share. These non-GAAP measures are adjusted for (as applicable) amortization of intangible assets, goodwill impairment, share-based compensation expenses, change in contingent earnout liability, legal fees in connection with the class-action litigation and the SEC investigation and accruals in connection with the settlement of the SEC investigation and class action. The Company believes that separate analysis and exclusion of the one-off or non-cash impact of the above reconciling items (as applicable) adds clarity to the constituent parts of its performance. The Company reviews these non-GAAP financial measures together with GAAP financial measures to obtain a better understanding of its operating performance. It uses the non-GAAP financial measures for planning, forecasting, and measuring results against the forecast. The Company believes that the non-GAAP financial measures are useful supplemental information for investors and analysts to assess its operating performance. However, these non-GAAP measures are not measures of financial performance under GAAP and, accordingly, should not be considered as alternatives to GAAP measures as indicators of operating performance.


Reconciliation of GAAP net loss attributable to ordinary shares to non-GAAP net loss attributable to ordinary shares and non-GAAP basic and diluted loss per share (U.S. dollars in thousands)

  Twelve Months Ended  Three Months Ended 
  December 31,  December 31, 
  2023  2022  2023  2022 
             
GAAP net loss attributable to ordinary shares  60,776   113,243   10,248   52,837 
Non-GAAP adjustments:                
Less: Class-action litigation and SEC investigation  2,504   7,730   (1,699)  2,505 
Less: Amortization of intangible assets  10,612   10,607   2,653   2,649 
Less: Impairment of goodwill  7,420   50,878   -   36,540 
Less (Add): Change in the fair value of earn out liabilities’ obligation  (4,488)  (20,376)  18   (9,073)
Less: Change in accrual in connection with the estimated settlement of the SEC investigation and the class-action  (2,350)  8,000   (3,000)  8,000 
Less: Share-based compensation  6,838   18,623   1,857   2,284 
Non-GAAP net loss attributable to ordinary shares  40,240   37,781   10,419   9,932 
BASIC AND DILUTED LOSS PER SHARE  0.71   0.72   0.18   0.19 
WEIGHTED AVERAGE NUMBER OF ORDINARY SHARES (in thousands)  56,368   52,235   57,758   52,414 


Reconciliation of GAAP cost of revenue to non-GAAP cost of revenue (U.S. dollars in thousands)

GAAP cost of revenue  16,497   15,458   4,113   3,879 
Non-GAAP adjustments:                
Amortization of intangible assets  10,224   10,223   2,556   2,555 
Share-based compensation  56   99   15   18 
Non-GAAP cost of revenue  6,217   5,136   1,542   1,306 


Reconciliation of GAAP gross loss to non-GAAP gross profit (U.S. dollars in thousands)

GAAP gross loss  (6,592)  (6,880)  (1,716)  (1,747)
Non-GAAP adjustments:                
Amortization of intangible assets  10, 224   10,223   2,556   2,555 
Share-based compensation  56   99   15   18 
Non-GAAP gross profit  3,688   3,442   855   826 

  
Reconciliation of GAAP gross loss margin to non-GAAP gross profit margin (in percentage of revenue)

GAAP gross loss margin  (67)%  (80)%  (72)%  (82)%
Non-GAAP adjustments:                
Amortization of intangible assets  103%  119%  107%  120%
Share-based compensation  1%  1%  1%  1%
Non-GAAP gross profit margin  37%  40%  36%  39%

  
Reconciliation of GAAP research and development expenses to non-GAAP research and development expenses (U.S. dollars in thousands)

GAAP research and development expenses, net  26,049   26,507   6,812   7,095 
Non-GAAP adjustments:                
Share-based compensation  3,818   4,806   925   927 
Non-GAAP research and development expenses, net  22,231   21,701   5,887   6,168 

  
Reconciliation of GAAP sales and marketing expenses to non-GAAP sales and marketing expenses (U.S. dollars in thousands)

GAAP sales and marketing expenses  4,168   4,376   1,034   1,494 
Non-GAAP adjustments:                
Amortization of intangible assets  388   384   97   94 
Share-based compensation  484   997   150   334 
Non-GAAP sales and marketing expenses  3,296   2,995   787   1,066 

  
Reconciliation of GAAP general and administrative expenses to non-GAAP general and administrative expenses (U.S. dollars in thousands)

GAAP general and administrative expenses  24,272   41,254   3,791   8,185 
Non-GAAP adjustments:                
Class-action litigation and SEC investigation  2,504   7,730   (1,699)  2,505 
Share-based compensation  2,480   12,721   767   1,005 
Non-GAAP general and administrative expenses  19,288   20,803   4,723   4,675 

  
Reconciliation of GAAP other expenses to non-GAAP other expenses (income) (U.S. dollars in thousands)

GAAP other expenses (income)  (1,424)  8,191   (2,684)  7,769 
Non-GAAP adjustments:                
Change in accrual in connection with the estimated settlement of the SEC investigation and class-action  (2,350)  8,000   (3,000)  8,000 
Non-GAAP other expenses (income)  926   191   316   (231)