Spectral AI, Inc. (Nasdaq: MDAI) (“Spectral AI” or the
“Company”), an artificial intelligence (AI) company
focused on medical diagnostics for faster and more accurate
treatment decisions in wound care, today announced financial
results for the third quarter ended September 30, 2023 (“Q3 2023”).
“This has been an extraordinary period for
Spectral AI, highlighted by our September listing on Nasdaq,
continued progress towards developing and commercializing our
AI-Driven DeepView® System wound healing assessment platform for
burn and diabetic foot ulcers (“DFU”), and the recent receipt of
the largest contract in our history a $149 million award from the
United States government to advance our DeepView® System for burn
wound assessment,” said Wensheng Fan, CEO of Spectral AI.
“We believe that our DeepView® System is the
only digital predictive medical diagnostic product that provides
clinicians with an objective and immediate assessment of a wound’s
healing potential through the application of AI. Multiple clinical
studies have validated the efficacy of our DeepView® System in
assessing – within seconds – whether a wound will heal on
its own or will require medical intervention to do so. In the case
of burn, where our DeepView® System’s current accuracy is 92% for
adults and 88% for pediatrics, a non-healing assessment may suggest
a surgical referral as well as determining which specific areas
require excision and grafting. For DFU, where our DeepView®
System’s accuracy is 86%, a non-healing assessment may justify the
immediate use of advanced wound care therapy as opposed to the
current ‘wait-and-see’ approach. In each case, our DeepView® System
is designed to support clinicians in placing their patients on an
informed, defined, and immediate path to healing, while improving
outcomes, reducing hospital stays, and eliminating unnecessary
expenses.”
Mr. Fan concluded, “We are preparing across all
fronts for the commercial launch of our DeepView® System as early
as 2024 following the receipt of necessary regulatory approvals. To
that end, we remain on track to submit applications for FDA, UKCA,
and CE mark approval for the DeepView® System DFU indication and 3D
wound measurement in 2024 and for FDA and CE mark approval for the
burn indication in 2025. As previously announced, we also expect
2024 revenue growth of approximately 60% from anticipated 2023
levels.”
Q3 2023 FINANCIAL RESULTS
OVERVIEW
All comparisons are to the third quarter
ended September 30, 2022 (“Q3 2022”) unless otherwise
stated.
- Research & Development
Revenue¹ was $3.4 million compared to $7.0 million, primarily
due to decreased research and development work performed pursuant
to the BARDA Burn II contract as clinical trials under this
contract were nearing completion. New patient enrollments in our
BARDA clinical study declined as the Company is completing
enrollment and transitioning to the closeout phase of the
study.
- Cost of revenue declined by $1.8
million, or 48.4%, primarily due to decreased activity to fulfill
the BARDA Burn II contract consistent with decreased Research &
Development revenue.
- Gross margin declined to 42.8% from
45.9%, primarily due to the commencement of Phase II of the Medical
Technology Enterprise Consortium (“MTEC”) contract, which has a
lower gross margin than the BARDA Burn II contract.
- General & administrative
expenses were $5.6 million compared to $3.5 million, the result of
increased headcount required to support our organizational growth,
and R&D initiatives associated largely with ongoing studies in
support of planned regulatory applications for our DFU
indication.
- Non-recurring transaction costs
associated with the September 2023 consummation of the Company’s
business combination that resulted in our Nasdaq listing were $7.6
million as compared to no such costs.
- Net loss was $(10.6) million, or
$(0.77) per share, compared to a net loss of $(0.4) million, or
$(0.03) per share. Net loss for Q3 2023 included the
above-referenced $7.6 million in non-recurring transaction
costs.
- Adjusted EBITDA loss was $(3.9)
million compared to Adjusted EBITDA of $0.0 million.
- As of September 30, 2023, cash and
cash equivalents totaled $7.3 million and the Company had no
long-term debt.
2023 and 2024 Guidance
The Company is reiterating its revenue guidance
of approximately $17.4 million for full year 2023 and approximately
$28.0 million for full year 2024. Financial guidance for FY2024
does not reflect the material financial contributions the Company
expects would result from the commercialization of our DeepView®
System for DFU and 3D wound measurement following the receipt of
necessary regulatory clearances.
Q3 2023 OPERATIONS OVERVIEW
Burn Indication
- Awarded a new contract from the
U.S. Government valued at up to $149 million to support the
clinical validation and FDA clearance of our DeepView® System for
burn wound assessment. Together with the previous contracts, this
brings total U.S. Government awards to the Company since
2019 to more than $246.0 million.
- Announced that the imaging
component of the DeepView SnapShot® Wound Imaging System
(“SnapShot®”) achieved UK Conformity Assessed (UKCA)-mark for use
in the United Kingdom and Class 1 medical device classification
with the United States Food and Drug Administration (FDA). The
Company is now pursuing the approval of its integrated AI
application to obtain both UKCA and FDA approval for the
commercialization of the complete DeepView® System in the U.S. and
around the world.
- Continued to pursue horizon
indication uses of the DeepView® System by commencing Phase II
design and development activities for DeepView SnapShot® M, a
handheld, portable and wireless device capable of performing
digital burn assessment in military and combat environments. The
Company is advancing this product under a $4 million contract award
in April 2023 from MTEC, a biomedical technology consortium working
in partnership with the U.S. Department of Defense.
- Commenced enrolling an additional
150 adult and pediatric subjects across at least 15 clinical sites
in the U.S. and EU to expand one of the largest, multi-center burn
studies ever conducted, which the Company completed in Q2 2023. The
results of this expanded study will allow the Company to complete
the development of the AI algorithm for burn and support its
applications for FDA and CE Mark approval for the DeepView® System
burn indication, which are planned for 2025.
DFU Indication
- Added seven additional clinical
sites to its third multi-center DFU validation study in the U.S.
Data collected from this third study will be used to further test
the wound healing prediction capability of our DeepView® System’s
DFU healing prediction algorithm and support the Company’s
applications for FDA, UCKA and CE Mark approval for our DeepView®
System’s DFU indication, which is planned for 2024.
Corporate
- Completed the business combination
with Rosecliff Acquisition Corp I, subsequent to which the Company
commenced trading on Nasdaq on September 12, 2023 following its
delisting from the AIM Market of the London Stock Exchange.
- Received ISO 13485 certification
for the manufacture and distribution of the DeepView® System.
- Appointed healthcare services
leader and population health expert Deepak Sadagopan, MHCDS, to its
board of directors.
- Appointed Professor Paul Chadwick,
former CEO of the Royal College of Podiatry UK, as Executive
Vice President of the Company’s UK subsidiary where he will be
responsible for the market expansion of our DeepView® System in
the EMEA.
CONFERENCE CALL
The Company will host a conference call on
Tuesday, November 14, 2023 at 9:00 am Eastern Time to discuss the
results. Investors interested in participating in the live call can
dial:
- 833-630-1956 – U.S.
- 412-317-1837 –
International
A simultaneous webcast of the call may be
accessed online from the Events & Presentations section of the
Investor Relations page of the Company’s website at
https://investors.spectral-ai.com/news-events/events
About Spectral AI
Spectral AI, Inc. is a Dallas-based predictive
AI company focused on medical diagnostics for faster and more
accurate treatment decisions in wound care, with initial
applications involving patients with burns and diabetic foot
ulcers. The Company is working to revolutionize the management of
wound care by “Seeing the Unknown®” with its DeepView® System.
DeepView® is a predictive diagnostic device that offers clinicians
an objective and immediate assessment of a wound’s healing
potential prior to treatment or other medical intervention. With
algorithm-driven results and a goal of substantially exceeding the
current standard of care in the future, DeepView® is expected to
provide faster and more accurate treatment insight towards value
care by improving patient outcomes and reducing healthcare costs.
For more information about DeepView®, visit
www.spectral-ai.com.
Forward-Looking Statements
Certain statements made in this release are
“forward looking statements” within the meaning of the “safe
harbor” provisions of the United States Private Securities
Litigation Reform Act of 1995, including statements regarding the
Company’s strategy, plans, objectives, initiatives and financial
outlook. When used in this press release, the words “estimates,”
“projected,” “expects,” “anticipates,” “forecasts,” “plans,”
“intends,” “believes,” “seeks,” “may,” “will,” “should,” “future,”
“propose” and variations of these words or similar expressions (or
the negative versions of such words or expressions) are intended to
identify forward-looking statements.
These forward-looking statements are not
guarantees of future performance, conditions, or results, and
involve a number of known and unknown risks, uncertainties,
assumptions and other important factors, many of which are outside
Company’s control, that could cause actual results or outcomes to
differ materially from those discussed in the forward-looking
statements. As such, readers are cautioned not to place undue
reliance on any forward-looking statements.
Investors should carefully consider the
foregoing factors and the other risks and uncertainties described
in the “Risk Factors” sections of the Company’s filings with the
SEC, including the Registration Statement and the other documents
filed by the Company. These filings identify and address other
important risks and uncertainties that could cause actual events
and results to differ materially from those contained in the
forward-looking statements.
Contacts: |
|
Investors: |
|
Spectral
AI |
The Equity
Group |
Vince Capone |
Devin Sullivan, Managing
Director |
General Counsel |
dsullivan@equityny.com |
ir@spectral-ai.com |
|
|
Conor Rodriguez, Analyst |
|
crodriguez@equityny.com |
Media: |
|
Russo
Partners |
|
David Schull |
Guillermo Ruiz, M.D.,
Ph.D. |
Russo Partners |
Russo Partners |
(858) 717-2310 |
(646) 218-4604 |
david.schull@russopartnersllc.com |
guillermo.ruiz@russopartnersllc.com |
Spectral AI,
Inc.Unaudited Condensed Consolidated Balance
Sheets(in thousands, except share and per share
data)
|
|
September 30, |
|
|
December 31, |
|
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
Current
assets: |
|
|
|
|
|
|
Cash |
|
$ |
7,348 |
|
|
$ |
14,174 |
|
Accounts receivable, net |
|
|
1,312 |
|
|
|
2,294 |
|
Inventory |
|
|
220 |
|
|
|
- |
|
Unbilled revenue |
|
|
127 |
|
|
|
618 |
|
Prepaid expenses |
|
|
1,755 |
|
|
|
331 |
|
Other current assets |
|
|
594 |
|
|
|
270 |
|
Total current
assets |
|
|
11,356 |
|
|
|
17,687 |
|
|
|
|
|
|
|
|
|
|
Non-current
assets: |
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
14 |
|
|
|
21 |
|
Right-of-use assets |
|
|
961 |
|
|
|
1,008 |
|
Total
Assets |
|
$ |
12,331 |
|
|
$ |
18,716 |
|
|
|
|
|
|
|
|
|
|
Commitments and
contingencies (Note 8) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
|
|
Current
liabilities: |
|
|
|
|
|
|
|
|
Accounts payable |
|
$ |
3,275 |
|
|
$ |
2,759 |
|
Accrued expenses |
|
|
3,983 |
|
|
|
2,631 |
|
Deferred revenue |
|
|
795 |
|
|
|
- |
|
Lease liabilities,
short-term |
|
|
813 |
|
|
|
680 |
|
Notes payable |
|
|
632 |
|
|
|
175 |
|
Warrant liabilities |
|
|
1,149 |
|
|
|
129 |
|
Total current
liabilities |
|
|
10,647 |
|
|
|
6,374 |
|
Lease liabilities,
long-term |
|
|
228 |
|
|
|
346 |
|
Total
Liabilities |
|
|
10,875 |
|
|
|
6,720 |
|
|
|
|
|
|
|
|
|
|
Stockholders’
Equity |
|
|
|
|
|
|
|
|
Preferred stock ($0.0001 par
value); 1,000,000 shares authorized; no shares issued and
outstanding as of September 30, 2023 and December 31, 2022 |
|
|
- |
|
|
|
- |
|
Common stock ($0.0001 par
value); 80,000,000 shares authorized; 15,688,268 and 13,127,472
shares issued and outstanding as of September 30, 2023 and December
31, 2022, respectively |
|
|
2 |
|
|
|
1 |
|
Additional paid-in
capital |
|
|
30,696 |
|
|
|
23,929 |
|
Accumulated deficit |
|
|
(29,242 |
) |
|
|
(11,934 |
) |
Total stockholders’
equity |
|
|
1,456 |
|
|
|
11,996 |
|
Total Liabilities and
Stockholders’ Equity |
|
$ |
12,331 |
|
|
$ |
18,716 |
|
Spectral AI,
Inc.Unaudited Condensed Consolidated Statements of
Operations(in thousands, except share and per
share data)
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Research and development revenue |
|
$ |
3,440 |
|
|
$ |
7,038 |
|
|
$ |
12,769 |
|
|
$ |
19,272 |
|
Cost of
revenue |
|
|
(1,968 |
) |
|
|
(3,811 |
) |
|
|
(7,325 |
) |
|
|
(10,943 |
) |
Gross
profit |
|
|
1,472 |
|
|
|
3,227 |
|
|
|
5,444 |
|
|
|
8,329 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating costs and
expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
General and
administrative |
|
|
5,638 |
|
|
|
3,478 |
|
|
|
15,499 |
|
|
|
9,207 |
|
Total operating costs
and expenses |
|
|
5,638 |
|
|
|
3,478 |
|
|
|
15,499 |
|
|
|
9,207 |
|
Operating
loss |
|
|
(4,166 |
) |
|
|
(251 |
) |
|
|
(10,055 |
) |
|
|
(878 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other income
(expense): |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net interest income |
|
|
42 |
|
|
|
2 |
|
|
|
128 |
|
|
|
1 |
|
Change in fair value of
warrant liability |
|
|
1,069 |
|
|
|
22 |
|
|
|
1,004 |
|
|
|
50 |
|
Foreign exchange transaction
loss, net |
|
|
(24 |
) |
|
|
(51 |
) |
|
|
(11 |
) |
|
|
(255 |
) |
Transaction costs |
|
|
(7,604 |
) |
|
|
- |
|
|
|
(8,342 |
) |
|
|
- |
|
Other expense |
|
|
- |
|
|
|
(17 |
) |
|
|
- |
|
|
|
- |
|
Total other expense,
net |
|
|
(6,517 |
) |
|
|
(44 |
) |
|
|
(7,221 |
) |
|
|
(204 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss before income
taxes |
|
|
(10,683 |
) |
|
|
(295 |
) |
|
|
(17,276 |
) |
|
|
(1,082 |
) |
Income tax benefit
(provision) |
|
|
54 |
|
|
|
(85 |
) |
|
|
(32 |
) |
|
|
(91 |
) |
Net loss |
|
$ |
(10,629 |
) |
|
$ |
(380 |
) |
|
$ |
(17,308 |
) |
|
$ |
(1,173 |
) |
Net loss per share of common
stock |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
$ |
(0.77 |
) |
|
$ |
(0.03 |
) |
|
$ |
(1.29 |
) |
|
$ |
(0.09 |
) |
Weighted average common shares
outstanding |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic and Diluted |
|
|
13,822,990 |
|
|
|
13,145,834 |
|
|
|
13,410,287 |
|
|
|
13,127,825 |
|
Non-GAAP Financial Measures
We use Adjusted EBITDA as a non-GAAP metric when
measuring performance, including when measuring current period
results against prior periods’ Adjusted EBITDA. This non-GAAP
financial measure should be considered in addition to results
prepared in accordance with GAAP and should not be considered as a
substitute for, or superior to, GAAP results. In addition, Adjusted
EBITDA should not be construed as an indicator of our operating
performance, liquidity or cash flows generated by operating,
investing and financing activities, as there may be significant
factors or trends that it fails to address.
Because of their non-standardized definitions,
non-GAAP measures (unlike GAAP measures) may not be comparable to
the calculation of similar measures of other companies. We caution
investors that non-GAAP financial information, by its nature,
departs from traditional accounting conventions. Supplemental
non-GAAP measures are presented solely to permit investors to more
fully understand how Spectral AI’s management assesses underlying
performance.
Adjusted EBITDA
We define Adjusted EBITDA as net loss excluding
income taxes, depreciation of property and equipment, interest
income, stock compensation, transaction costs and any non-operating
financial income and expense.
The following table presents our Adjusted EBITDA
for the three and nine months ended September 30, 2023 and
2022:
|
|
Three Months EndedSeptember
30, |
|
|
Nine Months EndedSeptember
30, |
|
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(In thousands) |
|
Net loss |
|
$ |
(10,629 |
) |
|
$ |
(380 |
) |
|
$ |
(17,308 |
) |
|
$ |
(1,173 |
) |
Adjust: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Depreciation expense |
|
|
2 |
|
|
|
- |
|
|
|
7 |
|
|
|
6 |
|
Provision for income taxes |
|
|
(54 |
) |
|
|
85 |
|
|
|
32 |
|
|
|
91 |
|
Net interest income |
|
|
(42 |
) |
|
|
(2 |
) |
|
|
(128 |
) |
|
|
(1 |
) |
EBITDA |
|
|
(10,723 |
) |
|
|
(297 |
) |
|
|
(17,397 |
) |
|
|
(1,077 |
) |
Additional adjustments: |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Stock-based compensation |
|
|
279 |
|
|
|
247 |
|
|
|
975 |
|
|
|
874 |
|
Change in fair value of warrant liability |
|
|
(1,069 |
) |
|
|
(22 |
) |
|
|
(1,004 |
) |
|
|
(50 |
) |
Foreign exchange transaction gain |
|
|
24 |
|
|
|
51 |
|
|
|
11 |
|
|
|
255 |
|
Transaction costs |
|
|
7,604 |
|
|
|
- |
|
|
|
8,342 |
|
|
|
- |
|
Other income |
|
|
- |
|
|
|
17 |
|
|
|
- |
|
|
|
- |
|
Adjusted
EBITDA |
|
$ |
(3,885 |
) |
|
$ |
(4 |
) |
|
$ |
(9,073 |
) |
|
$ |
2 |
|
______________________________________¹ Research
and Development Revenue consisted primarily of funding from the
Biomedical Advanced Research and Development Authority (BARDA),
part of the Administration for Strategic Preparedness and Response
(ASPR) within the U.S. Department of Health and Human Services.
Spectral AI (NASDAQ:MDAI)
Historical Stock Chart
Von Jun 2024 bis Jul 2024
Spectral AI (NASDAQ:MDAI)
Historical Stock Chart
Von Jul 2023 bis Jul 2024