Spectral AI, Inc. Q3 FY2025 earnings call

• Finance: Cash balance stayed flat at $10.5 million from Q2 2025, with stock option and warrant exercises contributing to cash reserves. Completed a registered direct offering adding $7.6 million in cash.
• Focus: FDA submission in June 2025 was a milestone; ongoing interactions with FDA on de novo application, though slowed by U.S. government shutdown.
• Finish: Working with BARDA partners to bring DeepView system to market, preparing to launch commercialization strategy, with broad applications beyond burns and positive feedback from burn community.

In the third quarter of 2025, research and development revenue was $3.8 million, down from $8.2 million in the third quarter of the prior year. Gross margin decreased to 42.7% from 44.8% in the same quarter last year. As of September 30, 2025, cash and cash equivalents totaled $10.5 million, up from $5.2 million on December 31, 2024. The cash balance has remained consistent since June 30, 2025, due to stock option and warrant exercises and managed operating expenses.

• Reduced 2025 revenue guidance from $21.5 million to $18.5 million due to reduced work on BARDA Project BioShield contract post-FDA submission and timing effects from U.S. government shutdown, with expectation of making up in first half of 2026.
• Guidance does not include sales of DeepView system in UK or Australia.

• Known and unknown risks, uncertainties, and factors outside the company's control that could cause actual results to differ from forward-looking statements.
• Impact of U.S. government shutdown on interactions with FDA and BARDA work timing.

Q: Could you provide more color on the impact of the government shutdown and its effect on timing, and confirm if everything is still on track for first half '26 approval?

A: We continue to see our FDA submission on track into 2026. Some work with BARDA partners delayed, but nothing changes the expectation of FDA clearance in first half of 2026.

Q: Qualitative commentary on the cadence or pacing of revenue in 2026?

A: 2026 is expected to be a down year on revenue from 2024 and 2025, relatively flat with possible small reduction, with 2027 and 2028 seen as significant growth years.

Q: Feedback from international units and how it informs U.S. launch?

A: Feedback from international units is overwhelmingly positive, with comments on ease of use. Used feedback to make minor adjustments for next iteration of Phoenix device.

Q: How have communications with the FDA been progressing and any additional requests?

A: Frequent and good communications with FDA. Some adjustments and questions, with statistical analysis plan favorably received. Discussions scheduled with FDA for further clarification.

Q: Status of handheld device development and funding?

A: Handheld device development ongoing, funded by MTech and DHA. Seen as complementary to cart-based device, with plan for 510(k) application for handheld based on cart-based technology.

Q: Commercialization preparation activities and plans for hiring?

A: Have a commercialization person on board, budget for 4 more FTEs in 2026. Good foundation with people and funding in place for commercialization rollout.

Q: Reception of European burn association presentations and expansion plans?

A: Outstanding reception from presentations, with plans to expand into European market, including UK and beyond, with upgrades to current device in UK.

Q: Status of Spectral IP transaction?

A: Transaction working through SEC, expected to close in first quarter of 2026, with financials likely reflecting it in first quarter of 2026.