Executive Summary / Key Takeaways

• Disruptive Technology at the Core: Nanox Imaging is fundamentally transforming medical imaging with its proprietary cold cathode digital X-ray source, enabling compact, lower-cost, and lower-radiation 3D tomosynthesis systems like the Nanox.ARC and the upcoming Nanox.ARC X. This technology aims to democratize access to advanced diagnostics, particularly in underserved markets.
• Integrated End-to-End Solution: The company's strategic acquisitions of USARad (teleradiology) and Nanox.AI (AI-powered analytics) have created a comprehensive ecosystem, enhancing revenue per customer and offering a holistic diagnostic pathway from imaging acquisition to interpretation and AI-assisted insights.
• Accelerating Commercialization & Regulatory Momentum: With recent FDA general use clearance for Nanox.ARC and Nanox.ARC X, and CE Mark designation for Nanox.ARC and HealthOST, the company is rapidly expanding its commercial footprint in the U.S. and entering European markets, targeting 100 Nanox.ARC system deployments by year-end 2025.
• Path to Profitability with Segmented Growth: While the company currently operates at a net loss, its teleradiology segment (USARad) is already profitable. Management projects the Nanox.AI business to reach breakeven by 2026 and the Nanox.ARC business by 2027, driven by increasing deployments, strategic partnerships, and a growing pipeline.
• Significant Market Opportunity and Risks: Nanox addresses a growing global demand for accessible medical imaging, especially in preventive health and early disease detection. However, challenges include the inherent difficulties of introducing disruptive technology, the time-intensive clinical sales cycle, and delays in reimbursement processes, necessitating sustained capital investment and careful execution.

The Vision: Democratizing Medical Imaging Through Innovation

Nanox Imaging Ltd. (NASDAQ:NNOX), founded in 2011 and headquartered in Petah Tikva, Israel, is on a mission to revolutionize medical imaging by making advanced diagnostics more accessible and affordable worldwide. The company's core strategy revolves around its proprietary digital X-ray source technology, which underpins its Nanox.ARC tomosynthesis system, and an integrated end-to-end solution that includes AI-powered imaging analysis (Nanox.AI) and global teleradiology services (USARad). This comprehensive approach positions Nanox as a challenger in an industry dominated by established giants, aiming to disrupt traditional imaging paradigms and improve patient outcomes.

The global demand for medical imaging is steadily increasing, driven by an aging population and a growing emphasis on preventive healthcare and early disease detection. This trend creates a significant market opportunity for solutions that can expand access to high-quality imaging across diverse care settings. Nanox's strategy directly addresses this need by offering a more accessible and affordable alternative to conventional, often costly and bulky, imaging modalities. The company's historical journey, marked by the strategic acquisitions of USARad and Zebra Medical Vision (now Nanox.AI) in 2021, underscores its commitment to building a holistic ecosystem around its core imaging technology. These acquisitions were pivotal, transforming Nanox into a provider of a connected medical imaging solution with the potential to meaningfully expand healthcare delivery.

Technological Edge: The Cold Cathode Advantage

At the heart of Nanox's disruptive potential lies its proprietary cold cathode digital X-ray source. Unlike traditional hot cathode X-ray tubes, this semiconductor-based technology enables the creation of compact, efficient, and potentially lower-cost imaging systems. The Nanox.ARC system, utilizing this technology, offers 3D digital tomosynthesis (DTS) imaging, providing superior detail and added clinical value over conventional X-ray, as confirmed by an independent review committee. A study conducted in collaboration with Duke University Medical Center's Center for Virtual Imaging Trials demonstrated that the Nanox.ARC configuration is less susceptible to motion-induced artifacts compared to standard linear configuration DTS systems, addressing a common imaging challenge.

Nanox is not resting on its laurels, actively pursuing further technological advancements. The Nanox.ARC X, an updated multi-source digital tomosynthesis system, received 510(k) clearance from the FDA in April 2025 for general use, including musculoskeletal, pulmonary, intra-abdominal, and paranasal sinus indications, adjunctive to conventional radiography. This new system boasts an even smaller footprint than the existing Nanox.ARC, enhancing its key differentiation of portability and ease of deployment. Management anticipates a one-day setup time and plug-and-play functionality for the Nanox.ARC X, which is expected to be deployed in the second half of 2025. Furthermore, Nanox is developing a TAP2D software module for 2D view image output, which, once cleared, aims to alleviate adjunctive use limitations in the future. The company is also exploring a mobile imaging solution, integrating the Nanox.ARC into commercial vehicles to expand access to high-quality diagnostic imaging in remote settings. These technological differentiators contribute significantly to Nanox's competitive moat, offering the potential for lower operational costs, improved patient experience, and expanded market reach.

Competitive Landscape: A Challenger's Position

Nanox operates in a highly competitive medical imaging market, facing off against established giants like GE Healthcare , Philips , Siemens Healthineers (SHL), and Canon Medical Systems (CAJ). These larger players benefit from extensive global distribution networks, broad product portfolios, and deep-rooted relationships with healthcare providers. Their financial performance typically reflects consistent revenue growth, higher profitability margins due to economies of scale, and robust cash flow generation.

In contrast, Nanox positions itself as a nimble innovator, focusing on cost-effective, AI-driven imaging solutions, particularly for teleradiology and remote diagnostics. While Nanox's current financial metrics, such as its gross profit margin of -100.88% and net profit margin of -468.29% (TTM), indicate a company in an early commercialization phase with significant investment in growth, its larger competitors generally exhibit strong positive margins. For example, GE Healthcare (GEHC) and Philips (PHG) demonstrate solid revenue growth and healthy gross and operating margins, supported by diversified revenue streams and established efficiency.

Nanox's proprietary semiconductor-based X-ray technology provides a qualitative advantage in terms of compactness and potential for easier integration into decentralized healthcare settings. This allows Nanox to target underserved regions and specific market segments, such as small-to-medium sized clinics, orthopedic practices, and workers' compensation programs, where the capital expenditure and infrastructure requirements of traditional systems might be prohibitive. The company's strategic emphasis on its end-to-end solution, integrating hardware, AI, and teleradiology, aims to create a unique value proposition that larger competitors may not fully replicate with their existing, often siloed, offerings. However, Nanox's smaller scale and higher operational costs in its developmental stage mean it currently lags behind its larger rivals in overall financial health and operational execution. The company's reliance on strategic partnerships for distribution, particularly in Europe, is a direct response to the extensive market presence of its competitors, allowing Nanox to leverage existing networks for faster market penetration.

Operational Progress and Financial Performance

Nanox's operational execution in the first half of 2025 demonstrates a concerted effort to translate its technological vision into commercial reality. As of Q2 2025, the company reported a GAAP net loss of $14.7 million, an increase from $13.6 million in Q2 2024, primarily due to higher gross loss and finance expenses, partially offset by reduced operating expenses. On a non-GAAP basis, the net loss for Q2 2025 was $10.9 million, compared to $8.4 million in the comparable period.

The company's revenue streams are segmented across teleradiology services, AI solutions, and imaging systems/OEM services.

Teleradiology Services (USARad)

USARad continues to be Nanox's most mature and profitable segment. In Q2 2025, teleradiology services generated $2.7 million in revenue, an increase from $2.5 million in Q2 2024. The GAAP gross profit for this segment was $0.5 million, representing an 18% margin, up from 15% in the prior year. On a non-GAAP basis, gross profit reached $1.0 million, with a 38% margin. This growth is primarily attributed to customer retention, increased rates, and higher volumes of reading services across all shifts. USARad has doubled its revenues since its acquisition less than four years ago and is currently profitable. Its "Second Opinion service" is interpreting approximately 20,000 scans per month at around $300 per consultation, contributing to revenue generation.

Nanox.AI Solutions

The AI segment is transitioning from pre-revenue to a growth phase. Q2 2025 revenue for AI solutions was $0.1 million, consistent with Q2 2024, with a GAAP gross loss of $2.0 million. However, management expects the AI business to reach breakeven by 2026, driven by continuous growth and new collaborations. Recent partnerships include integrating liver and bone products with a leading visualization software provider, incorporating cardiac, bone, and liver products onto deepc's platform, and expanding the collaboration with Ezra to 50 imaging centers. Notably, the Nanox.AI bone solution helped Oxford University Hospitals NHS Foundation Trust identify six times as many patients with osteoporosis in routine CT scans, leading to a three-year contract for HealthOST.

Nanox.ARC Imaging Systems and OEM Services

Revenue from imaging systems and OEM services remains relatively small but is showing signs of acceleration. In Q2 2025, this segment generated $221,000 in revenue, up from $68,000 in Q2 2024, though it incurred a GAAP and non-GAAP gross loss of $1.7 million. As of Q2 2025, more than 20 Nanox.ARC systems are operating and scanning patients, with an average target of seven scans per day for operational units. The company is on pace to meet its target of 100 Nanox.ARC systems installed or deployed by year-end 2025, with revenues from this segment expected to grow in the second half of the year. The sales pipeline has substantially grown, with a focus on small-to-medium sized health clinics and medical imaging chains.

Liquidity and Capital Deployment

As of June 30, 2025, Nanox held approximately $62.6 million in cash, cash equivalents, restricted deposits, and marketable securities.

The company's operating expenses have been maintained at similar levels in recent quarters, reflecting management's focus on efficiency and cost control. In Q4 2024, Nanox raised $38.8 million in gross proceeds ($37.8 million net) through its ATM program, with the capital earmarked for accelerating the commercialization of its imaging and AI products. This capital infusion is crucial to support the company's ambitious deployment targets and ongoing R&D efforts.

Outlook and Strategic Initiatives

Nanox's outlook is characterized by a phased approach to achieving profitability across its business segments. Management projects the Nanox.AI business to reach breakeven by 2026 and the Nanox.ARC business by 2027. To achieve breakeven for the ARC business, the company has indicated a need for 1,500 to 2,000 units to be deployed. The second half of 2025 is anticipated to be an "inflection point" for seeing significant results, with revenues expected to grow.

Strategic initiatives are focused on expanding market presence and enhancing the end-to-end solution:

• Commercial Expansion: The company is targeting 100 Nanox.ARC system installations or deployments by year-end 2025, with the majority in the U.S. and 15-20% in Europe. U.S. deployment is progressing, with systems in 8 approved states. In Europe, the CE Mark designation in February 2025 has paved the way for market entry, with the first system ready for shipment to Romania and advanced discussions in Greece. European sales are expected to be primarily CapEx-based initially.
• Partnerships: New channel partnerships in the U.S. with ASI and Swissray are fully operational. Nanox is also finalizing a project in the workers' compensation segment, a large potential market covering over 100 million workers, with contractual rates of $120-$180 per patient. A multi-segment collaboration with Monarch Medical Management was recently announced to expand access across workers' compensation, nursing homes, and outpatient clinics.
• Clinical Validation and Education: Nanox is actively generating clinical data through collaborations with academic institutions like Duke University and Keiser University, and ongoing trials at Shamir and Beilinson Medical Centers. The Nanox Academy digital platform provides comprehensive training for clients and partners.
• Manufacturing and Supply Chain: A multi-year Volume Supply Agreement with Fabrinet (FN) for Nanox.ARC X production is expected to drive down manufacturing costs and strengthen the global supply chain. Varex (VREX) is also supplying glass tubes for the next-generation ARC units, which are more economical than ceramic.

Risks and Challenges

Despite the promising outlook, Nanox faces several inherent risks and challenges. Introducing disruptive new medical equipment that aims to change the standard of care is inherently difficult, requiring extensive education and clinical support. The sales process is clinical and time-intensive, demanding dedicated resources to educate prospective customers on the benefits and usage of the Nanox.ARC. There is also a delay between machine deployment and revenue generation due to regulatory processes, permits, setup, and crucially, obtaining approved Explanation of Benefits (EOB) for procedures. The ramp-up of scans and subsequent revenue can take time, even with existing CPT codes.

Furthermore, the company's financial performance is currently characterized by significant gross losses in its imaging and AI segments, necessitating continued capital investment. While management is focused on cost efficiencies, sustained losses could pressure liquidity if revenue growth does not accelerate as anticipated. The ability to predict the mix of CapEx sales versus MSaaS (Medical Screening as a Service) models remains challenging, which impacts revenue recognition and financial projections. Finally, geopolitical and economic uncertainties in various international markets could affect regulatory approvals and commercialization efforts, particularly in regions like the Far East and Africa, where Nanox is currently deprioritizing efforts due to economic clarity concerns.

Conclusion

Nanox Imaging stands at a pivotal juncture, armed with a truly differentiated technology and a strategically integrated business model designed to address a critical unmet need in global healthcare. The company's cold cathode digital X-ray source, embodied in the Nanox.ARC and the forthcoming Nanox.ARC X, offers a compelling vision of accessible, affordable, and high-quality 3D medical imaging. Coupled with its profitable teleradiology services and rapidly evolving AI solutions, Nanox is building an ecosystem that promises to streamline diagnostics and enhance patient outcomes.

While the path to widespread adoption and overall profitability for the Nanox.ARC business by 2027 requires diligent execution and overcoming significant market entry barriers, the recent regulatory clearances, accelerating commercial deployments, and strategic partnerships underscore a disciplined approach to growth. Investors should closely monitor the ramp-up in Nanox.ARC installations, the continued expansion and profitability of the AI segment, and the company's ability to navigate reimbursement complexities. Nanox's commitment to technological leadership and its multifaceted growth strategy position it as a compelling, albeit higher-risk, investment in the transformative future of medical imaging.