Revenue Rose to $8.2 Million
Company Reaffirms Timeline for Regulatory Submission to U.S. FDA
Q3 2024 Overview
- Research & Development Revenue Rose 138% to $8.2 Million
- Last Patient Out at Burn Centers for U.S. Burn Pivotal Study; Top Line Study Results Expected in Q4 2024
- U.S. FDA Submission on Track for Q2 2025
- Completed Proof-of-Concept Module for Wound Measurement Technology
Dr. J. Michael DiMaio, the Company's Founder and recently appointed Chairman of the Board of Directors, said, "My confidence in the potential of DeepView AI®-Burn to change the standard of care in burn wound assessment and improve patient outcomes has never been greater. We achieved a critical clinical milestone with the announcement of last patient out at our U.S. Burn Pivotal Study and remain on schedule for our De Novo submission to the U.S. Food and Drug Administration ("FDA”) in the second quarter of 2025 for the use of DeepView AI®-Burn in burn centers. We are prioritizing our regulatory pathways for burn, fortifying our long-standing relationships with U.S. Government agencies, developing strategic partnerships that can expand our global reach, and capitalizing on the platform nature of our proprietary technology to pursue additional pipeline applications. We are fortunate to have the support of a team of dedicated professionals, an engaged and committed management team and Board, and $150 million of non-dilutive U.S. Government funding to advance our technology towards commercialization. We look forward to our future with great confidence.”
DeepView AI®-Burn Highlights
- Final group of burn center patients in U.S. Burn Pivotal Study completed clinical visits, with top line study results expected in December 2024.
- Received a new award of over $850,000 from the Medical Technology Enterprise Consortium ("MTEC”) to support the ongoing development of DeepView SnapShot® M, the Company's handheld predictive burn wound healing device targeted for use in battlefield assessment. Total non-dilutive U.S. Government funding for DeepView SnapShot® M now exceeds $7.0 million.
- Completion of a proof-of-concept module for the Company's wound measurement technology that calculates the total body surface area ("TBSA”) of a burn. This technology provides an accurate, and standardized measurement that the Company believes is a significant improvement over current wound size measurement technology and can improve patient treatment decisions.
- Top line results from U.S. Burn Pivotal Study Expected Q4 2024
- U.S. FDA submission for the use of DeepView AI®-Burn in burn centers in Q2 2025
On November 6, 2024, the Company announced its intent to spin-off its Spectral IP, Inc. subsidiary ("Spectral IP”) to continue to seek ways to maximize shareholder value. The Company anticipates that the transaction will be in the form of a stock distribution to its shareholders of Spectral IP, which will become a new, independent publicly-traded company.
Q3 2024 FINANCIAL RESULTS OVERVIEW
All comparisons are to the third quarter ended September 30, 2023 ("Q3 2023”) unless otherwise stated.
Research and Development Revenue1
Research & Development Revenue for Q3 2024 rose 138% to $8.2 million from $3.4 million, primarily reflecting an increased level of work on the Company's Project BioShield (PBS) contract with BARDA, and awards and work performed on other U.S. Government contracts.
Gross Margin
Gross margin for Q3 2024 improved to 44.9% from 42.8%, reflecting increased development activity and higher Research and Development revenue.
General & Administrative Expense
General & administrative expenses in Q3 2024 declined to $4.6 million, or 55.7% of revenue, from $5.6 million, or 163.9% of revenue. This was driven primarily by an approximately $1.0 million reduction in non-revenue generating research and development activities associated with the Company's strategic shift to a larger focus on advancing the BARDA PBS contract.
Operating Loss
Operating loss narrowed to $(0.9) million from $(4.2) million, reflecting higher Research and Development revenue, improved gross margin, and reduced operating costs.
Net Loss
Net loss for Q3 2024 was $(1.5) million, or $(0.08) per share, compared to a net loss of $(10.6) million, or $(0.77) per share. Net loss in Q3 2024 included $1.1 million in borrowing related costs as compared to no such costs in the prior year period. Net loss in Q3 2023 included, among other items, $7.6 million in non-recurring transaction costs associated with the September 2023 consummation of the Company's business combination and Nasdaq listing.
Adjusted EBITDA
Adjusted EBITDA loss for Q3 2024 was $(0.7) million compared to a loss of $(3.9) million.
Financial Condition
As of September 30, 2024, the Company had $3.7 million in cash, short-term notes payable of $5.0 million, and $1.0 million of long-term debt relating to Spectral IP. Cash at September 30, 2024 included $0.9 million in Spectral IP.
2024 Guidance
The Company reiterates its revenue guidance of approximately $28.0 million for FY 2024.
CONFERENCE CALL
The Company will host a conference call today at 5:00 pm Eastern Time to discuss these results.
Investors interested in participating in the live call can dial:
- 833-630-1956 - U.S.
- 412-317-1837 - International
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 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 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.
Investors:
The Equity Group
Devin Sullivan
Managing Director
Conor Rodriguez
Analyst
| Spectral AI, Inc. Unaudited Condensed Consolidated Balance Sheets (in thousands, except share and per share data) | |||||||
| September 30, | December 31, | ||||||
| 2024 | 2023 | ||||||
| Assets | |||||||
| Current assets: | |||||||
| Cash | $ | 3,702 | $ | 4,790 | |||
| Accounts receivable, net | 2,834 | 2,346 | |||||
| Inventory | 443 | 230 | |||||
| Deferred offering costs | - | 283 | |||||
| Prepaid expenses | 1,506 | 1,452 | |||||
| Other current assets | 1,011 | 801 | |||||
| Total current assets | 9,496 | 9,902 | |||||
| Non-current assets: | |||||||
| Property and equipment, net | 5 | 12 | |||||
| Right-of-use assets | 2,101 | 778 | |||||
| Total Assets | $ | 11,602 | $ | 10,692 | |||
| Commitments and contingencies (Note 8) | |||||||
| Liabilities and Stockholders' Deficit | |||||||
| Current liabilities: | |||||||
| Accounts payable | $ | 2,797 | $ | 2,683 | |||
| Accrued expenses | 3,253 | 4,300 | |||||
| Deferred revenue | 731 | 2,311 | |||||
| Lease liabilities, short-term | 212 | 853 | |||||
| Notes payable | 597 | 436 | |||||
| Notes payable - at fair value | 4,377 | - | |||||
| Warrant liabilities | 1,101 | 1,818 | |||||
| Total current liabilities | 13,068 | 12,401 | |||||
| Notes payable - related party | 1,000 | - | |||||
| Lease liabilities, long-term | 1,870 | - | |||||
| Total Liabilities | 15,938 | 12,401 | |||||
| Stockholders' Deficit | |||||||
| Preferred stock ($0.0001 par value); 1,000,000 shares authorized; no shares issued and outstanding as of September 30, 2024 and December 31, 2023 | - | - | |||||
| Common stock ($0.0001 par value); 80,000,000 shares authorized; 18,513,073 and 16,294,935 shares issued and outstanding as of September 30, 2024 and December 31, 2023, respectively | 2 | 2 | |||||
| Additional paid-in capital | 35,998 | 31,065 | |||||
| Accumulated other comprehensive income | 25 | 12 | |||||
| Accumulated deficit | (40,361 | ) | (32,788 | ) | |||
| Total Stockholders' Deficit | (4,336 | ) | (1,709 | ) | |||
| Total Liabilities and Stockholders' Deficit | $ | 11,602 | $ | 10,692 | |||
| Spectral AI, Inc. Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss (in thousands, except share and per share data) | |||||||||||||||
| Three Months Ended September 30, | Nine months ended September 30, | ||||||||||||||
| 2024 | 2023 | 2024 | 2023 | ||||||||||||
| Research and development revenue | $ | 8,173 | $ | 3,440 | $ | 21,977 | $ | 12,769 | |||||||
| Cost of revenue | (4,506 | ) | (1,968 | ) | (12,051 | ) | (7,325 | ) | |||||||
| Gross profit | 3,667 | 1,472 | 9,926 | 5,444 | |||||||||||
| Operating costs and expenses: | |||||||||||||||
| General and administrative | 4,553 | 5,638 | 15,397 | 15,499 | |||||||||||
| Total operating costs and expenses | 4,553 | 5,638 | 15,397 | 15,499 | |||||||||||
| Operating loss | (886 | ) | (4,166 | ) | (5,471 | ) | (10,055 | ) | |||||||
| Other income (expense): | |||||||||||||||
| Net interest (expense) income | (8 | ) | 42 | - | 128 | ||||||||||
| Borrowing related costs | (1,059 | ) | - | (2,034 | ) | - | |||||||||
| Change in fair value of warrant liability | 350 | 1,069 | 718 | 1,004 | |||||||||||
| Change in fair value of notes payable | 94 | - | (7 | ) | -- | ||||||||||
| Foreign exchange transaction loss, net | (9 | ) | (24 | ) | (34 | ) | (11 | ) | |||||||
| Other income (expenses), including transactions costs | 51 | (7,604 | ) | (617 | ) | (8,342 | ) | ||||||||
| Total other expense, net | (581 | ) | (6,517 | ) | (1,974 | ) | (7,221 | ) | |||||||
| Loss before income taxes | (1,467 | ) | (10,683 | ) | (7,445 | ) | (17,276 | ) | |||||||
| Income tax benefit (provision) | (37 | ) | 54 | (128 | ) | (32 | ) | ||||||||
| Net loss | $ | (1,504 | ) | $ | (10,629 | ) | $ | (7,573 | ) | $ | (17,308 | ) | |||
| Net loss per share of common stock | |||||||||||||||
| Basic and Diluted | $ | (0.08 | ) | $ | (0.77 | ) | $ | (0.44 | ) | $ | (1.29 | ) | |||
| Weighted average common shares outstanding | |||||||||||||||
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