QT Imaging Announces Second Quarter 2024 Financial Results
Generated Scanner Sales Revenue of
The Company Continues to Make Progress in the Engineering and Clinical Feasibility Study with its Strategic Partner
Signed a
“QT Imaging's team completed the first full quarter in the life of our young public company. We continued to deliver against our plan for the engineering and clinical feasibility study to solidify the intended partnership for large scale manufacturing. Additionally, we shipped four Breast Acoustic CTTM scanners throughout the quarter, three of them via partnership with our strategic distribution partner, increasing the number of commercial locations offering
“Additionally, we are very proud to report on our partnership with the
Financial Highlights
-
Commercial revenue was
$1.7 million for the second quarter of 2024, compared to$1.4 million in the first quarter of 2024 and less than$0.1 million for the second quarter of 2023. - Gross margin of 51% in the second quarter of 2024, compared to 56% margin in the first quarter of 2024 and an insignificant margin in the second quarter of 2023. The decrease in margin in the second quarter of 2024 compared to the first quarter of 2024 was attributable to variability in the weighted average cost related to the Company's existing inventory. The increase in margin in 2024 was due to the sale and delivery of four QT Breast Acoustic CTTM scanners during the second quarter of 2024, compared to no deliveries in the second quarter of 2023.
-
Net loss of
$1.2 million for the second quarter of 2024, which includes$2.1 million of net non-cash income related to the change in fair value of the warrant, derivative, and earnout liabilities and$0.2 million of warrant modification expense, compared to a net loss of$1.3 million for the second quarter of 2023, which included stock-based compensation expense of$0.2 million and one-time transaction expenses of$0.2 million . -
Non-GAAP Adjusted EBITDA* of
$(2.1) million for the second quarter of 2024 compared to$(0.7) million for the second quarter of 2023. -
Net cash used in operating activities during the second quarter of 2024 was
$1.0 million compared to$0.5 million during the second quarter of 2023.
New Developments
-
On
May 8, 2024 , the Company announced a partnership with theVincere Cancer Center , inScottsdale, Arizona , together with its strategic distribution partner.The Vincere Cancer Center is a top cancer center in theU.S. Founded by Dr. Vershalee Shukla and Dr.Pablo Prichard . The Vincere Center focuses on cancer prevention, early detection, and specializes in radiation therapy, surgery, and chemotherapy. The two doctors employ innovative technology to mitigate against over-diagnoses while ensuring cancer is not missed. They are both long-standing supporters ofQT Imaging and its innovative technology. -
On
May 14, 2024 , the Company delivered a QT Breast Acoustic CT ScannerTM to the Center of New Medicine inIrvine, California , with its strategic distribution partner.The Center for New Medicine is one of the largest integrative medical clinics inNorth America , providing a personalized approach to health care including cancer prevention, its early detection, and internal medicine. With the incorporation of QT Imaging’s innovative technology, theCenter for New Medicine will expand their innovative services in women’s and breast health. -
On
May 19, 2024 , the paper “Breast Glandular and Ductal Volume Changes during the Menstrual Cycle: A Study in 48 Breasts Using Ultralow-Frequency Transmitted Ultrasound Tomography/Volography” was published inTomography Journal . The study showed for the first time that low-frequency 3D-transmitted ultrasound tomography can differentiate breast tissue types using tissue properties, accurately measure glandular and ductal volumes in vivo, and measure variation over time. The highly accurate visualization of the ductal and glandular tissue even in dense breasts usingQT Imaging's technology is important, as such visualization can be challenging using conventional breast imaging technologies, as mammography or handheld ultrasound. -
On
June 18, 2024 , the Company entered into a Distribution Agreement withNXC Imaging, Inc. (NXC), as disclosed in the Company's Form 8-K (Link). Under the Distribution Agreement, NXC is appointed as the exclusive reseller to market, advertise, and resell QT Breast Acoustic CTTM Scanners in theU.S. andU.S. territories. NXC will purchase for the purpose of reselling, leasing or renting the same directly to its customers, but is not obligated to purchase any particular quantity of scanners from the Company. The Company has reserved the right to sell directly to customers as an exception. Furthermore, the Company may, in its sole discretion, sell the QT Breast Acoustic CTTM Scanners to any other person or entity anywhere in the world without notice to NXC or NXC’s prior consent. NXC is also allowed to assign sales agents for the purpose of scanners' sales. NXC’s purchases will be in accordance with an agreed upon product pricing schedule (subject to change upon 60 days’ prior written notice by the Company), provided that neither NXC nor its assigned sales agents may mark-up the cost of the QT Breast Acoustic CTTM Scanner more than twenty percent (20%) unless otherwise mutually agreed to between NXC and the Company. Each order will include information reasonably requested by the Company and is subject to the Company’s acceptance, after which it becomes an approved order (“Approved Order”). Any such Approved Orders are non-cancellable and not subject to rescheduling after acceptance by the Company. The Company will invoice NXC for QT Breast Acoustic CTTM Scanner fifty percent (50%) upon receipt of the applicable Approved Order, and fifty percent (50%) upon shipment of the QT Breast Acoustic CTTM Scanner, which are due within fifteen days after NXC receives each invoice from the Company. -
On
June 20, 2024 , the Company delivered a QT Breast Acoustic CTTM Scanner toUniversity of Oklahoma , which is home to theNational Cancer Institute (NCI) designated theOU Health Stephenson Cancer Center (SCC), and theNational Institutes of Health Center of Biomedical Research Excellence (COBRE),Oklahoma Center of Medical Imaging forTranslational Cancer Research . Innovative imaging modalities like QT Imaging’s Breast Acoustic CT™ technology, with its quantitative imaging predictive markers, will be used to provide an objective measure or index that can reduce subjectivity and improve consistency for medical image diagnosis. QT Imaging’s technology will be incorporated in the clinical research to validate its strengths, such as its ability to image frequently for disease progression as well as to be able to assess volumetric breast density without exposing the patient to radiation. -
On
June 27, 2024 , the Company delivered a QT Breast Acoustic CTTM Scanner to PerfeQTion Imaging Center inHaverford, Pennsylvania , with its strategic distribution partner. PerfeQTion Imaging Center offers screening and diagnostic exams, as well as monitoring. QT Imaging’s Breast Acoustic CT™ System, provides a safe, painless, and accurate alternative for breast imaging. TheQT Imaging technology is expanding the medical imaging market opportunities beyond hospitals and imaging centers by supporting direct‑to‑provider approaches to enable the ability to lower health care costs and increase access via personal medical imaging.
Outlook for the Balance of 2024
2024 is a transitional year as the Company stabilizes the business and focuses on commercialization anchored in strategic business partnerships. The Company plans to deliver its revenue at the same pace in the second half of 2024 as during the first half of the year, with an expected higher gross margin due to the weighted average cost of existing inventory.
Summary of Results for the Three and Six Months Ended |
||||||||||||||||
|
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
|
|
|
|
||||||||||||
|
Three Months Ended |
|
Six Months Ended
|
|||||||||||||
$ thousands (except share and per share amounts) |
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||||||
Revenue |
$ |
1,714 |
|
$ |
3 |
|
$ |
3,076 |
|
$ |
11 |
|
||||
Cost of revenue |
|
839 |
|
|
3 |
|
|
1,442 |
|
|
50 |
|
||||
Gross profit (loss) |
|
875 |
|
|
— |
|
|
1,634 |
|
|
(39 |
) |
||||
Operating expenses: |
|
|
|
|
||||||||||||
Research and development |
|
925 |
|
|
349 |
|
|
1,567 |
|
|
771 |
|
||||
Selling, general and administrative |
|
2,170 |
|
|
849 |
|
|
7,866 |
|
|
2,141 |
|
||||
Loss from operations |
|
(2,220 |
) |
|
(1,198 |
) |
|
(7,799 |
) |
|
(2,951 |
) |
||||
Interest expense, net |
|
(1,095 |
) |
|
(132 |
) |
|
(1,694 |
) |
|
(262 |
) |
||||
Other expense, net |
|
(187 |
) |
|
— |
|
|
(208 |
) |
|
— |
|
||||
Change in fair value of warrant liability |
|
214 |
|
|
— |
|
|
191 |
|
|
— |
|
||||
Change in fair value of derivative liability |
|
1,729 |
|
|
— |
|
|
4,713 |
|
|
— |
|
||||
Change in fair value of earnout liability |
|
310 |
|
|
— |
|
|
(750 |
) |
|
— |
|
||||
Net loss |
$ |
(1,249 |
) |
$ |
(1,330 |
) |
$ |
(5,547 |
) |
$ |
(3,213 |
) |
||||
Less: deemed dividend related to the modification of equity classified warrants |
|
(5,186 |
) |
|
— |
|
|
(5,186 |
) |
|
— |
|
||||
Net loss attributable to common stockholders |
$ |
(6,435 |
) |
$ |
(1,330 |
) |
$ |
(10,733 |
) |
$ |
(3,213 |
) |
||||
|
|
|
|
|
||||||||||||
Basic and diluted net loss per share |
$ |
(0.30 |
) |
$ |
(0.14 |
) |
$ |
(0.62 |
) |
$ |
(0.34 |
) |
||||
|
|
|
|
|
||||||||||||
Weighted average shares outstanding |
|
21,440,447 |
|
|
9,540,533 |
|
|
17,333,000 |
|
|
9,528,880 |
|
EBITDA* and Adjusted EBITDA* for the Three and Six Months Ended |
||||||||||||||||
|
||||||||||||||||
(Unaudited) |
||||||||||||||||
|
Three Months Ended
|
|
Six Months Ended
|
|||||||||||||
$ thousands |
2024 |
|
2023 |
|
2024 |
|
2023 |
|||||||||
Net loss |
$ |
(1,249 |
) |
|
$ |
(1,330 |
) |
|
$ |
(5,547 |
) |
|
$ |
(3,213 |
) |
|
Interest expense, net |
|
1,095 |
|
|
|
132 |
|
|
|
1,694 |
|
|
|
262 |
|
|
Depreciation and amortization |
|
86 |
|
|
|
116 |
|
|
|
185 |
|
|
|
233 |
|
|
EBITDA |
|
(68 |
) |
|
|
(1,082 |
) |
|
|
(3,668 |
) |
|
|
(2,718 |
) |
|
Adjustments: |
|
|
|
|
|
|
|
|||||||||
Stock-based compensation |
|
— |
|
|
|
208 |
|
|
|
39 |
|
|
|
417 |
|
|
Warrant modification expense |
|
201 |
|
|
|
— |
|
|
|
201 |
|
|
|
— |
|
|
Change in fair value of warrants(1) |
|
(214 |
) |
|
|
— |
|
|
|
(191 |
) |
|
|
— |
|
|
Change in fair value of derivatives(2) |
|
(1,729 |
) |
|
|
— |
|
|
|
(4,713 |
) |
|
|
— |
|
|
Change in fair value of earnout liability(3) |
|
(310 |
) |
|
|
— |
|
|
|
750 |
|
|
|
— |
|
|
Transaction expenses(4) |
|
— |
|
|
|
206 |
|
|
|
4,301 |
|
|
|
562 |
|
|
Adjusted EBITDA |
$ |
(2,120 |
) |
|
$ |
(668 |
) |
|
$ |
(3,281 |
) |
|
$ |
(1,739 |
) |
(1) |
The decrease in fair value of warrant liability during the three and six months ended |
|
(2) |
The decrease in fair value of derivative liability during the three and six months ended |
|
(3) |
The earnout liability relates to the contingent consideration for the Merger Earnout Consideration Shares pursuant to the Business Combination Agreement dated |
|
(4) |
The Company incurred transaction expenses related to the Merger with |
*Refer to the “Non-GAAP Financial Measures” section in this press release. |
Condensed Consolidated Balance Sheets as of | ||||||||
|
||||||||
(Unaudited) |
||||||||
$ in thousands |
|
|
|
|||||
Assets |
|
|
|
|||||
Current assets: |
|
|
|
|||||
Cash |
$ |
4,581 |
|
|
$ |
165 |
|
|
Restricted cash and cash equivalents |
|
20 |
|
|
|
20 |
|
|
Accounts receivable, net |
|
669 |
|
|
|
1 |
|
|
Inventory |
|
3,355 |
|
|
|
4,418 |
|
|
Prepaid expenses and other current assets |
|
869 |
|
|
|
215 |
|
|
Total current assets |
|
9,494 |
|
|
|
4,819 |
|
|
Non-current assets: |
|
|
|
|||||
Property and equipment, net |
|
142 |
|
|
|
491 |
|
|
Intangible assets, net |
|
— |
|
|
|
90 |
|
|
Operating lease right-of-use assets |
|
1,105 |
|
|
|
1,267 |
|
|
Other assets |
|
39 |
|
|
|
39 |
|
|
Total assets |
$ |
10,780 |
|
|
$ |
6,706 |
|
|
|
|
|
|
|||||
Liabilities and Stockholders' Deficit |
|
|
|
|||||
Current liabilities: |
|
|
|
|||||
Accounts payable |
$ |
549 |
|
|
$ |
1,356 |
|
|
Accrued expenses and other current liabilities |
|
4,192 |
|
|
|
370 |
|
|
Related party notes payable |
|
5,409 |
|
|
|
705 |
|
|
Current maturities of long-term debt |
|
4,294 |
|
|
|
4,199 |
|
|
Derivative liability |
|
408 |
|
|
|
— |
|
|
Deferred revenue |
|
32 |
|
|
|
347 |
|
|
Operating lease liabilities |
|
383 |
|
|
|
361 |
|
|
Total current liabilities |
|
15,267 |
|
|
|
7,338 |
|
|
Non-current liabilities: |
|
|
|
|||||
Long-term debt |
|
37 |
|
|
|
96 |
|
|
Related party notes payable |
|
— |
|
|
|
3,144 |
|
|
Operating lease liabilities |
|
867 |
|
|
|
1,063 |
|
|
Warrant liability |
|
18 |
|
|
|
— |
|
|
Earnout liability |
|
750 |
|
|
|
— |
|
|
Other liabilities |
|
— |
|
|
|
377 |
|
|
Total liabilities |
|
16,939 |
|
|
|
12,018 |
|
|
|
|
|
|
|||||
Stockholders’ deficit: |
|
|
|
|||||
Common stock |
|
2 |
|
|
|
1 |
|
|
Additional paid-in capital |
|
22,342 |
|
|
|
12,457 |
|
|
Accumulated deficit |
|
(28,503 |
) |
|
|
(17,770 |
) |
|
Total stockholders’ deficit |
|
(6,159 |
) |
|
|
(5,312 |
) |
|
Total liabilities and stockholders’ deficit |
$ |
10,780 |
|
|
$ |
6,706 |
|
Condensed Consolidated Statements of Cash Flows for the Six Months Ended |
||||||||
|
||||||||
(Unaudited) |
||||||||
|
Six Months Ended |
|||||||
$ in thousands |
2024 |
|
2023 |
|||||
Cash flows from operating activities: |
|
|
|
|||||
Net loss |
$ |
(5,547 |
) |
|
$ |
(3,213 |
) |
|
Adjustments to reconcile net loss to net cash used in operating activities: |
|
|
|
|||||
Depreciation and amortization expense |
|
185 |
|
|
|
233 |
|
|
Stock-based compensation |
|
39 |
|
|
|
417 |
|
|
Warrant modification expense |
|
201 |
|
|
|
— |
|
|
Provision for credit losses |
|
1 |
|
|
|
— |
|
|
Fair value of common stock issued in exchange for services and in connection with non-redemption agreements |
|
3,718 |
|
|
|
— |
|
|
Loss on issuance of common stock in connection with a subscription agreement |
|
206 |
|
|
|
— |
|
|
Non-cash interest |
|
1,201 |
|
|
|
22 |
|
|
Non-cash operating lease expense |
|
(12 |
) |
|
|
(4 |
) |
|
Change in fair value of warrant liability |
|
(191 |
) |
|
|
— |
|
|
Change in fair value of derivative liability |
|
(4,713 |
) |
|
|
— |
|
|
Change in fair value of earnout liability |
|
750 |
|
|
|
— |
|
|
Changes in assets and liabilities: |
|
|
|
|||||
Increase in accounts receivable |
|
(669 |
) |
|
|
— |
|
|
Decrease in inventory |
|
1,353 |
|
|
|
54 |
|
|
Increase in prepaid expenses and other current assets |
|
(554 |
) |
|
|
(41 |
) |
|
Decrease in other assets |
|
— |
|
|
|
10 |
|
|
Increase (decrease) in accounts payable |
|
(2,281 |
) |
|
|
786 |
|
|
Increase (decrease) in accrued liabilities and other current liabilities |
|
52 |
|
|
|
(24 |
) |
|
Decrease in deferred revenue |
|
(316 |
) |
|
|
— |
|
|
Increase (decrease) in other liabilities |
|
(378 |
) |
|
|
239 |
|
|
Net cash used in operating activities |
|
(6,955 |
) |
|
|
(1,521 |
) |
|
|
|
|
|
|||||
Cash flows from investing activities: |
|
|
|
|||||
Purchases of property and equipment |
|
(27 |
) |
|
|
(1 |
) |
|
Net cash used in investing activities |
|
(27 |
) |
|
|
(1 |
) |
|
|
|
|
|
|||||
Cash flows from financing activities: |
|
|
|
|||||
Proceeds of sale of common stock and warrants, net of issuance costs |
|
— |
|
|
|
1,017 |
|
|
Proceeds from issuance of common stock pursuant to a subscription agreement |
|
500 |
|
|
|
— |
|
|
Proceeds from long-term debt, net of issuance costs |
|
10,525 |
|
|
|
— |
|
|
Repayment of long-term debt |
|
(65 |
) |
|
|
(64 |
) |
|
Repayment of bridge loans |
|
(800 |
) |
|
|
— |
|
|
Proceeds from related party payable |
|
— |
|
|
|
350 |
|
|
Proceeds from the Merger, net of transaction costs |
|
1,238 |
|
|
|
— |
|
|
Net cash provided by financing activities |
|
11,398 |
|
|
|
1,303 |
|
|
Net increase (decrease) in cash and restricted cash and cash equivalents |
|
4,416 |
|
|
|
(219 |
) |
|
Cash and restricted cash and cash equivalents at the beginning of period |
|
185 |
|
|
|
475 |
|
|
Cash and restricted cash and cash equivalents at the end of the period |
$ |
4,601 |
|
|
$ |
256 |
|
Forward-Looking Statements
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Exchange Act of 1934, as amended. Forward-looking statements generally are accompanied by words such as “believe,” “may,” “will,” “estimate,” “continue,” “anticipate,” “intend,” “expect,” “should,” “would,” “plan,” “predict,” “potential,” “seem,” “seek,” “future,” “outlook,” and similar expressions that predict or indicate future events or trends or that are not statements of historical matters. These forward-looking statements include, but are not limited to, statements regarding the QT Imaging Breast Acoustic CT™ Scanner, including its commercialization, manufacturing (including large scale) and further development, plans for
Non-GAAP Financial Measures
The financial information and data contained in this press release is unaudited. Some of the financial information and data contained in this press release, such as EBITDA and Adjusted EBITDA, have not been prepared in accordance with generally accepted accounting principles in
The presentation of these financial measures is not intended to be considered in isolation or as a substitute for, or superior to, financial information prepared and presented in accordance with GAAP and should not be considered measures of
We believe these non-GAAP financial measures provide investors and analysts with useful supplemental information about the financial performance of our business, enable comparison of financial results between periods where certain items may vary independent of business performance, and allow for greater transparency with respect to key measures used by management to operate and analyze our business over different periods of time.
EBITDA is defined as loss before interest expense, income tax expense, depreciation and amortization. Adjusted EBITDA is defined as EBITDA further adjusted for equity-based compensation, net change in fair value of the derivative, earnout and warrant liabilities, and transaction expenses. Similar excluded expenses may be incurred in future periods when calculating these measures.
Management does not consider these non-GAAP measures in isolation or as an alternative to financial measures determined in accordance with GAAP. The principal limitation of these non-GAAP financial measures is that they exclude significant expenses and income that are required by GAAP to be recorded in the Company’s condensed consolidated financial statements. In addition, they are subject to inherent limitations as they reflect the exercise of judgment by management about which expense and income items are excluded or included in determining these non-GAAP financial measures.
Management uses EBITDA and Adjusted EBITDA as a non-GAAP performance measure which is defined in the accompanying tables and is reconciled to net loss, the most directly comparable GAAP measure, in the tables above. The Company does not reconcile forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measure (or otherwise describe such forward-looking GAAP measure) because it is not able to forecast the most directly comparable measure calculated and presented in accordance with GAAP without unreasonable effort. Certain elements of the composition of the GAAP amounts are not predictable, making it impracticable for the Company to forecast. As a result, no guidance for the Company’s net income (loss) income or reconciliation of the Company’s Adjusted EBITDA guidance is provided. For the same reasons, the Company is unable to assess the probable significance of the unavailable information, which could have a potentially significant impact on its future net income (loss) income.
We present reconciliations of these non-GAAP financial measures to the most directly comparable GAAP measures in the tables above.
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Chief Financial Officer
Stas.Budagov@qtimaging.com
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