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Spectral AI Announces 2024 First Quarter Financial Results

Q1 Overview

DALLAS, May 07, 2024 (GLOBE NEWSWIRE) — 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 first quarter ended March 31, 2024 (“Q1 2024”) and provided an update on its ongoing business activities.

“During the first quarter we continued to execute against our strategic priorities resulting in significant accomplishments across the enterprise,” said Peter M. Carlson, CEO of Spectral AI. “We made important strides towards generating our first commercial product revenue later this year with the deployment of our DeepView™ System for burn in the U.K.   These initial installments enhance patient care and promote clinician familiarity with the device, while also providing real-world data. In the U.S., we advanced clinical studies designed to further demonstrate the efficacy of our DeepView™ System in providing a “Day One” healing assessment of burn wounds and diabetic foot ulcers (DFU). Additionally, we strengthened our management team and fortified the Company’s financial position to support our growth initiatives.”     

Mr. Carlson concluded, “We remain driven by our steadfast belief that our proprietary, AI-Driven, DeepView™ System can help change the standard of care in wound assessment by providing predictive clinical insights that result in more effective and more efficient care across the healthcare ecosystem. We are on track to file additional US and UK regulatory submissions in 2024 and 2025 for the approval of our DeepView™ System, and expect to expand our commercial revenue platforms over the next two years.”

SELECT BUSINESS HIGHLIGHTS

Product Deployment in Support of UKCA Authorization

Clinical Trials

Corporate

Q1 2024 FINANCIAL RESULTS OVERVIEW
All comparisons are to the first quarter ended March 31, 2023 (“Q1 2023”) unless otherwise stated.

Research & Development Revenue 1
Research & Development Revenue for Q1 2024 rose 24.6% to $6.3 million from $5.1 million, reflecting an increased level of activity under the Company’s contracts with BARDA.

Gross Margin
Gross margin for Q1 2024 improved to 46.6% from 42.9%, due to a higher reimbursement rate under the BARDA PBS Contract as compared to the rate associated with the BARDA Burn II contract.

General & Administrative Expense
General & administrative expenses in Q1 2024 were flat at $5.1 million.

Other Income (Expense)
Other expenses for Q1 2024 included borrowing related costs of $0.3 million and transaction costs of $0.7 million, each related to the Company’s previously announced financing agreements (see “Financial Condition” section below).

Net Loss
Net loss for Q1 2024 was $(3.2) million, or $(0.19) per share, compared to a net loss of $(3.6) million, or $(0.27) per share.

Financial Condition
As of March 31, 2024, cash improved to $10.2 million from $4.8 million at December 31, 2023.

As previously announced, the Company enhanced its access to capital by completing a common stock purchase agreement (“ELOC”) with an investment bank, under which the Company sold 1,187,398 shares, netting $2.7 million through March 31, 2024. The Company has the ability to drawdown an additional $3.0 million under the ELOC.

Additionally, Spectral AI entered into a fixed price standby equity purchase agreement (“SEPA”) with a long-only investor that includes a $12.5 million prepaid advance (“Advances”). As of March 31, 2024, the Company received $4.6 million, net, from the SEPA. The Company anticipates receiving $5.0 million shortly following the May 14, 2024 annual meeting, and the remaining $2.5 million of Advances 60 days thereafter. Any further draws above the Advances are at the sole discretion of the Company.

________________________
1Research 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.


2024 Guidance
The Company reiterates its revenue guidance of approximately $28.0 million for FY 2024. Financial guidance for FY 2024 does not reflect contributions from the sale of the DeepView™ System for burn in the UK expected to begin in the second half of 2024 or any additional material financial contributions that may result from the commercialization of our DeepView™ System.

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:

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 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. There can be no assurance that the contemplated transactions, spin out or dividend of shares will occur, or that any transaction, spin out or dividend will be successful; in addition, the Company has not yet determined what percentage of Spectral IP it will retain following completion of the proposed activities.

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.

 
Spectral AI, Inc.
Condensed Consolidated Balance Sheets
(in thousands, except share and per share data)
 
    March 31,     December 31,  
    2024     2023  
Assets            
Current assets:            
Cash   $ 10,157     $ 4,790  
Accounts receivable, net     1,828       2,346  
Inventory     228       230  
Deferred offering costs           283  
Prepaid expenses     1,581       1,452  
Other current assets     1,090       801  
Total current assets     14,884       9,902  
                 
Non-current assets:                
Property and equipment, net     9       12  
Right-of-use assets     590       778  
Total Assets   $ 15,483     $ 10,692  
                 
Commitments and contingencies (Note 8)                
                 
Liabilities and Stockholders’ Equity (Deficit)                
Current liabilities:                
Accounts payable   $ 3,306     $ 2,683  
Accrued expenses     3,818       4,300  
Deferred revenue     2,177       2,311  
Lease liabilities, short-term     660       853  
Notes payable     218       436  
Notes payable – at fair value     4,534        
Notes payable – related party     1,000        
Warrant liabilities     1,798       1,818  
Total current liabilities     17,511       12,401  
Total Liabilities     17,511       12,401  
                 
Stockholders’ Equity (Deficit)                
Preferred stock ($0.0001 par value); 1,000,000 shares authorized; no shares issued and outstanding as of March 31, 2024 and December 31, 2023            
Common stock ($0.0001 par value); 80,000,000 shares authorized; 17,482,333 and 16,294,935 shares issued and outstanding as of March 31, 2024 and December 31, 2023, respectively     2       2  
Additional paid-in capital     33,953       31,065  
Accumulated other comprehensive income     10       12  
Accumulated deficit     (35,993 )     (32,788 )
Total Stockholders’ Equity (Deficit)     (2,028 )     (1,709 )
Total Liabilities and Stockholders’ Equity (Deficit)   $ 15,483     $ 10,692  
 
Spectral AI, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except share and per share data)
 
    Three Months Ended
March 31,
 
    2024     2023  
             
Research and development revenue   $ 6,326     $ 5,078  
Cost of revenue     (3,381 )     (2,897 )
Gross profit     2,945       2,181  
                 
Operating costs and expenses:                
General and administrative     5,088       5,079  
Total operating costs and expenses     5,088       5,079  
Operating loss     (2,143 )     (2,898 )
                 
Other income (expense):                
Net interest income     14       44  
Borrowing related costs     (276 )      
Change in fair value of warrant liability     20       16  
Change in fair value of notes payable     66        
Foreign exchange transaction gain (loss), net     (16 )     13  
Transaction costs     (701 )     (738 )
                 
Change in fair value of derivatives     (147 )      
                 
Other expenses            
Total other expense, net     (1,040 )     (665 )
                 
Loss before income taxes     (3,183 )     (3,563 )
Income tax provision     (22 )     (46 )
Net loss   $ (3,205 )   $ (3,609 )
Net loss per share of common stock                
Basic and Diluted   $ (0.19 )   $ (0.27 )
Weighted-average common shares outstanding                
Basic and Diluted     16,560,298       13,190,600  
                 
Other comprehensive income:                
Foreign currency translation adjustments   $ (2 )   $ 1  
Total comprehensive loss   $ (3,207 )   $ (3,608 )


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