Generated Scanner Sales Revenue of $1.4M with
56% Gross Margin in the First Quarter of 2024, Since the Company
Became Public on March 4th
Streamlined Business Model via Strategic Sales
and Distribution Partnership in USA
Reported in Academic Radiology the Results of a
Second Blinded Screening Trial That Found That QTI Technology Is
Similarly Effective as Digital Breast Tomosynthesis (DBT) or 3D
Mammography
Company Completed Merger with GigCapital5
QT Imaging Holdings, Inc. (NASDAQ: QTI) (“QT Imaging” or
the “Company”), a medical device company engaged in
research, development, and commercialization of innovative body
imaging systems, today announced financial results for the first
quarter of 2024.
QT Imaging delivers today the QT Imaging Breast Acoustic CT™
Scanner, the only true 3D imaging device, FDA cleared for use as a
transmission and reflection low frequency soundwaves imaging system
for a patient’s breast. There is no ionizing radiation or
compression associated with mammography, or the contrast dyes
injections required for breast MRI.
“The QT Imaging team has been on an incredible journey since its
inception in 2012, starting with a shared mission to create
disruptive innovation to expand access to medical imaging while
ensuring superior patient experience and improving health outcomes.
Moving forward, the team will address commercialization of our
scanner in the U.S. via partnership with our strategic sales and
distribution partner. We are proud to announce the scanner
shipments made in the first quarter, since the merger with
GigCapital5 on March 4th, as well as our on-going feasibility study
to solidify the partnership for large scale manufacturing,” QT
Imaging CEO Dr. Raluca Dinu said.
“We are thankful to our partners in the National Institutes of
Health/National Cancer Institute who continue to support the
research and development of QT Imaging technology today and since
the Company’s inception. We will continue to carry on clinical
studies with partners in academia and medical institutions and
publish comparative data to show the advantages of QT Imaging’s
breast scanning technology that gives women the choice they deserve
to ensure their breast health over time.”
Financial Highlights
- Commercial revenue was $1.4 million for the first quarter of
2024, compared to less than $0.1 million for the first quarter of
2023.
- Gross margin of 56% in the first quarter of 2024, compared to
negative margin in the first quarter of 2023. The increase in
margin was due to the sale and delivery of three QT Breast Scanners
during the first quarter of 2024, compared to no deliveries in the
first quarter of 2023.
- Net loss of $4.3 million for the first quarter of 2024, which
includes $1.9 million of net non-cash income related to the change
in fair value of warrants, derivatives, and contingent
consideration that were recorded as part of the closing of the
business combination with GigCapital5, Inc. on March 4, 2024 and
outstanding as of March 31, 2024, less than $0.1 million of
equity-based compensation expense, and $4.3 million of one-time
business combination transaction expenses, compared to a net loss
of $1.9 million for the first quarter of 2023 which included
equity-based compensation expense of $0.2 million and one-time
transaction expenses of $0.4 million.
- Non-GAAP Adjusted EBITDA* of $(1.2) million for the first
quarter of 2024 compared to $(1.1) million for the first quarter of
2023.
New Developments
- On February 6, 2024, the Company delivered a QT Breast Scanner
under a unique collaboration with the Department of Radiation
Oncology, and Radiation Treatment Program at the Sunnybrook Health
Sciences Centre in Toronto, Canada, one of the largest cancer
centers in Canada, and The University of Illinois,
Urbana-Champaign, Department of Electrical and Computer Engineering
and Grainger College of Engineering. This collaboration is part of
a five-year research grant from the National Institutes of
Health/National Cancer Institute to develop an inexpensive,
portable, safe, and repeatable imaging approach capable of accurate
and early identification of response of breast cancer patients to
neoadjuvant chemotherapy (NAC).
- On March 4, 2024, the Company completed the business
combination of QT Imaging, Inc. and GigCapital5, Inc. in accordance
with the Business Combination Agreement dated December 8, 2022, as
amended.
- On March 7, 2024, the Company announced its first commercial
sale of a QT Breast Scanner to True Health Center for Functional
Medicine through its strategic sales and distribution partner, as
disclosed in the Company's Form 8-K (Link), as the Company continue
to focus our commercialization effort in the U.S.
- On March 18, 2024, the Company delivered two QT Breast Scanners
to its strategic partner, as disclosed in the Company's Form 8-K
(Link), in accordance with the terms of a non-binding letter of
intent pursuant to which four binding purchase orders were received
in earlier for the purchase of two QT Breast Scanners, with 50% of
the payment for the QT Breast Scanners having taken place at the
date of placement of purchase orders and the remaining balance was
received within 30 days of shipment in April 2024.
- On March 28, 2024, the Company entered into a Feasibility Study
Agreement (the “Feasibility Study Agreement”) with its strategic
partner, as disclosed in the Company's Form 8-K (Link). The term of
the Feasibility Study Agreement commenced on March 28, 2024 and
will remain in force until the end of December 2024 or until the
execution of a definitive agreement that supersedes the Feasibility
Study Agreement, whichever comes earlier. In connection with the
Feasibility Study Agreement, a strategic partner will initiate
studies to evaluate the business, technical, and clinical values of
the QT Breast Scanner including product quality validation,
development and manufacturing studies, clinical evaluation,
regulatory investigation, and market validation.
- As announced on April 17, 2024 in our press release, a study in
Academic Radiology, online, in January 2024: "A Multireader
Multicase (MRMC) Receiver Operating Characteristic (ROC) Study
Evaluating Noninferiority of Quantitative Transmission (QT)
Ultrasound to Digital Breast Tomosynthesis (DBT) on Detection and
Recall of Breast Lesions – Academic Radiology" found that QT
Imaging technology is similarly effective as digital breast
tomosynthesis (DBT), also known as 3D mammography, in that the area
under receiver operating characteristic curve (AUC) was
statistically non-inferior for QT Imaging scan compared with DBT
for the AUC difference margin of -0.05.
- Leadership Updates:
- On March 12, 2024, the Board of Directors (the "Board")
appointed Dr. Raluca Dinu, who is also a member of the Board, to be
employed as the Company's Acting Chief Executive Officer. Dr. Dinu
spent approximately 25 years in international executive positions
within the Technology, Media, and Telecommunications industries
working for privately held start-ups, middle-cap companies, and
large enterprises. In these roles, Dr. Dinu has been instrumental
in launching and accelerating entities, building teams, large-scale
fund raising, developing key alliances and technology partnerships,
M&A activities, business development, financial management,
global operations and sales and marketing.
- Anastas (Stas) Budagov has served as the Chief Financial
Officer of QT Imaging, Inc. since December 2023. On March 12, 2024,
the Board ratified the prior appointment of Mr. Budagov as the
Company's Chief Financial Officer of QT Imaging Holdings, Inc.
following the merger with GigCapital5. Mr. Budagov will report to
the Chief Executive Officer. Mr. Budagov brings over 10 years of
finance and accounting leadership experience in medical device,
life science, and biotech industries.
- The Company continued to attract top talent following the
onboarding of Steve Choate as the Company's new Chief Operating
Officer on April 8, 2024. Mr. Choate's extensive experience and
expertise as a production operations leader will be key to fueling
the Company's continued growth. Mr. Choate's will be focused on
overseeing manufacturing activities, product development, and
production releases.
- Following Dr. John Klock's resignation from his previous
position as the Company's Chief Executive Officer, on April 5,
2024, the Company entered into a Services Agreement (the “Services
Agreement”) with QT Imaging Center, which is owned and operated by
Dr. Klock. Effective April 1, 2024, QT Imaging Center agreed to
provide its services to the Company, including but not limited to
providing healthcare services to patients, assisting with clinical
trials and studies and assisting with drafting of institutional
review board approved clinical protocols, assisting with the
performance of research and development activities on behalf of the
Company, providing comprehensive multi-day training on the
operation of breast imaging technology for radiologist customers
and other customer staff such as technicians, performing clinical
validation of imaging software changes which may include recruiting
patients, training, as well as other services as specified in the
Services Agreement.
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 will target to provide guidance
for the rest of the year as part of the release of Q2'24
earnings.
Summary of Results for the Three Months
Ended March 31, 2024 and 2023 (Unaudited)
Three Months Ended March
31,
$ thousands (expect per share amounts)
2024
2023
Revenues
$
1,362
$
8
Cost of revenues
602
47
Gross margin
760
(39
)
Operating expenses:
Selling, general and administrative
5,696
1,292
Research and development
643
422
Operating loss
(5,579
)
(1,753
)
Interest expense
(599
)
(130
)
Other expense
(21
)
—
Net increase in fair value of warrant
liability
(23
)
—
Net decrease in fair value of
derivatives
2,983
—
Net increase in earnout liability
(1,060
)
—
Net loss
(4,299
)
(1,883
)
Basic and diluted net loss per
share
$
(0.33
)
$
(0.20
)
Weighted average shares
outstanding
13,226
9,517
EBITDA* and Adjusted EBITDA* for the Three
Months Ended March 31, 2024 and 2023
(Unaudited)
Three Months Ended March
31,
$ thousands
2024
2023
Net loss
$
(4,299
)
$
(1,883
)
Interest expense
599
130
Depreciation and amortization
99
117
EBITDA
(3,601
)
(1,636
)
Adjustments:
Equity-based compensation
39
209
Net increase (decrease) in fair value of
warrants(1)
23
—
Net increase (decrease) in fair value of
derivatives(2)
(2,983
)
—
Net increase (decrease) in fair value of
earnout liability(3)
1,060
—
Transaction expenses(4)
4,301
356
Adjusted EBITDA
$
(1,161
)
$
(1,071
)
- The increase in fair value of warrants during the three months
ended March 31, 2024 relates to the liability classified private
placement warrants to reflect the increase of publicly traded price
per warrant from $0.01 as of March 4, 2024 to $0.036 as of March
31, 2024. The additional expense related to increase in the price
per share of warrants was recorded as other expense in the
condensed consolidated statement of operations during the three
months ended March 31, 2024.
- The decrease in fair value of derivatives during the three
months ended March 31, 2024 related to the Yorkville Pre-paid
Advance, which contained features that were bifurcated as a
freestanding financial instruments and initially valued on March 4,
2024 upon consummation of the Merger. The derivative liability was
subsequently revalued as of March 31, 2024 for financial reporting
purposes. The favorable change in derivative liability was recorded
as other income in the condensed consolidated statement of
operations during the three months ended March 31, 2024.
- Earnout liability relates to the contingent consideration for
the Merger Earnout Consideration Shares pursuant to the Business
Combination Agreement dated December 8, 2022, as amended in
September of 2023. The earnout liability was initially valued using
the Monte Carlo Simulation method on March 4, 2024 and subsequently
revalued using the same method as of March 31, 2024. The net
increase in fair value of the earnout liability was recognized as
other expense in the condensed consolidated statement of operations
during the three months ended March 31, 2024.
- The Company incurred transaction expenses related to the Merger
with GigCapital5, Inc,, which closed on March 4, 2024. These
transaction expenses included a $3.7 million of transaction costs
that were settled with issuance of common stock, $0.4 million of
transaction costs settled or payable in cash and a $0.2 million
loss on issuance of common stock in connection with a subscription
agreement, which were recorded as selling, general and
administrative expenses in the condensed consolidated statement of
operations during the three months ended March 31, 2024.
Consolidated Balance Sheets as of
March 31, 2024 and December 31, 2023 (Unaudited)
$ in thousands
March 31, 2024
December 31, 2023
Assets
Current assets:
Cash and cash equivalents
$
5,620
$
165
Restricted cash
20
20
Accounts receivable, net
482
1
Inventory
4,116
4,418
Prepaid expenses and other current
assets
1,195
215
Total current assets
11,433
4,819
Non-current assets:
Property and equipment, net
154
491
Intangible assets, net
44
90
Right-of-use assets
1,187
1,267
Other non-current assets
39
39
Total assets
$
12,857
$
6,706
Liabilities and stockholders
deficit
Current liabilities:
Accounts payable
$
712
$
1,356
Accrued expenses and other current
liabilities
2,813
370
Related party notes payable
—
705
Current maturities of long-term debt
130
4,199
Deferred revenue
344
347
Operating lease liabilities, current
372
361
Total current liabilities
4,371
7,338
Non-current liabilities:
Long-term debt, net
3,331
96
Related party notes payable, long term
5,409
3,144
Operating lease liabilities
966
1,063
Warrant liability
32
—
Derivative liability
2,138
—
Earnout liability
1,060
—
Other non-current liabilities
465
377
Total liabilities
17,772
12,018
Stockholders’ deficit:
Common stock
2
1
Additional paid-in capital
17,152
12,457
Accumulated deficit
(22,069
)
(17,770
)
Total stockholders’ deficit
(4,915
)
(5,312
)
Total liabilities and stockholders’
deficit
$
12,857
$
6,706
Consolidated Statements of Cash Flows for
the Three Months Ended March 31, 2024 and 2023
(Unaudited)
Three Months Ended March
31,
$ in thousands
2024
2023
Cash flows from operating
activities:
Net loss
$
(4,299
)
$
(1,883
)
Adjustments to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization expense
99
117
Stock-based compensation to employees
39
209
Provision for credit losses
1
—
Fair value of common stock issued in
exchange for services and in connection with non-redemption
agreements
3,715
—
Loss on issuance of common stock in
connection with a subscription agreement
206
—
Non-cash interest
299
11
Non-cash lease expense
(5
)
(2
)
Increase in fair value of warrant
liability
23
—
Decrease in fair value of derivative
liability
(2,983
)
—
Increase in fair value of earnout
liability
1,060
—
Changes in assets and liabilities:
Increase in accounts receivable
(482
)
(6
)
Decrease in inventory
586
49
Increase in prepaid expenses and other
current assets
(880
)
(35
)
Decrease in other assets
—
5
(Decrease) increase in accounts
payable
(2,118
)
392
(Decrease) increase in accrued
liabilities
(1,320
)
31
Decrease in deferred revenue
(4
)
—
Increase in other liabilities
87
119
Net cash used in operating
activities
(5,976
)
(993
)
Cash flows from financing
activities:
Proceeds of sale of common stock and
warrants, net of issuance costs
—
948
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
(32
)
(32
)
Repayment of bridge loans
(800
)
—
Proceeds from the Merger, net of
transaction costs
1,238
—
Net cash provided by financing
activities
11,431
916
Net increase (decrease) in cash and
restricted cash and cash equivalents
5,455
(77
)
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
$
5,640
$
398
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 and further
development, plans for QT Imaging, new product development and
introduction, product sales growth and projected revenues, QT
Imaging’s industry, future events, and other statements that are
not historical facts. Forward-looking statements involve certain
risks and uncertainties, and actual results may differ materially
from those discussed in any such statement. These statements are
based on various assumptions, whether or not identified herein, and
on the current expectations of QT Imaging's management and are not
predictions of actual performance. These forward-looking statements
are provided for illustrative purposes only and are not intended to
serve as, and must not be relied on by you or any other investor
as, a guarantee, an assurance, a prediction or a definitive
statement of fact or probability. Actual events and circumstances
are difficult or impossible to predict and will differ from
assumptions. Many actual events and circumstances are beyond our
control. These forward-looking statements are subject to a number
of risks and uncertainties, including those relating to: the
ability of the Company to sell and deploy the QT Imaging Breast
Acoustic CT™ Scanner; the ability to extend product offerings into
new areas or products; the ability to commercialize technology;
unexpected occurrences that deter the full documentation and “bring
to market” plan for products; trends and fluctuations in the
industry; changes in demand and purchasing volume of customers;
unpredictability of suppliers; the ability to attract and retain
qualified personnel and the ability to move product sales to
production levels; changes in domestic and foreign business,
market, financial, political, and legal conditions; the uncertainty
of projected financial information; delays caused by factors
outside of our control; changes in our ability to successfully
receive purchase orders and generate revenue under our existing
contracts with partners and distributors; our ability to realize
the benefits of the strategic partnerships; the identified material
weakness in our internal controls over financial reporting
(including the timeline to remediate the material weakness); the
rollout of the business and the timing of expected business
milestones; the effects of competition on our future business; our
ability to obtain and access financing in the future; and those
factors discussed in the Company’s reports and other documents
filed with the SEC, including under the heading “Risk Factors.” If
any of these risks materialize or our assumptions prove incorrect,
actual results could differ materially from the results implied by
these forward-looking statements. There may be additional risks
that QT Imaging presently does not know or that QT Imaging
currently believes are immaterial which could also cause actual
results to differ from those contained in the forward-looking
statements. In addition, forward-looking statements reflect QT
Imaging's expectations, plans or forecasts of future events and
views as of the date of this release. QT Imaging anticipates that
subsequent events and developments will cause QT Imaging's
assessments to change. However, while QT Imaging may elect to
update these forward-looking statements at some point in the
future, QT Imaging specifically disclaims any obligation to do so.
Accordingly, undue reliance should not be placed upon the
forward-looking statements.
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 United States
(“GAAP”). To supplement our unaudited condensed consolidated
financial statements, which are prepared and presented in
accordance with GAAP in our press release, we also report certain
non-GAAP financial measures. A “non-GAAP financial measure” refers
to a numerical measure of a company’s historical or future
financial performance, financial position, or cash flows that
excludes (or includes) amounts that are included in (or excluded
from) the most directly comparable measure calculated and presented
in accordance with GAAP in such company’s financial statements.
Non-GAAP financial measures should not be considered in isolation
or as a substitute for the relevant GAAP measures and should be
read in conjunction with information presented on a GAAP basis.
Because not all companies use identical calculations, our
presentation of non-GAAP measures may not be comparable to other
similarly titled measures of other companies.
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 QT Imaging's
liquidity. Investors are cautioned that there are material
limitations associated with the use of non-GAAP financial measures
as an analytical tool. In particular, many of the adjustments to
our GAAP financial measures reflect the exclusion of certain items,
as defined in our non-GAAP definitions below, which are recurring
and will be reflected in our financial results for the foreseeable
future. In addition, these measures may be different from non-GAAP
financial measures used by other companies, even where similarly
titled, limiting their usefulness for comparison purposes and
therefore should not be used to compare QT Imaging’s performance to
that of other companies. We endeavor to compensate for the
limitation of the non-GAAP financial measures presented by also
providing the most directly comparable GAAP measures and
descriptions of the reconciling items and adjustments to derive the
non-GAAP financial measures.
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
increase (decrease) in fair value of derivative, earnout and
warrant liabilities, capital market advisory fees, and transaction
expenses. Similar excluded expenses may be incurred in future
periods when calculating these measures. QT Imaging believes these
non-GAAP measures of financial results provide useful information
to management and investors regarding certain financial and
business trends relating to the Company’s financial condition and
results of operations. QT Imaging believes that the use of these
non-GAAP financial measures provides an additional tool for
investors to use in evaluating projected operating results and
trends and in comparing QT Imaging’s financial measures with other
similar companies, many of which present similar non-GAAP financial
measures to investors.
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
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 (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 (loss) income.
We present reconciliations of these non-GAAP financial measures
to the most directly comparable GAAP measures in the tables
above.
About QT Imaging
QT Imaging Holdings, Inc. is a public (NASDAQ: QTI) medical
device company engaged in research, development, and
commercialization of innovative body imaging systems using low
frequency sound waves. QT Imaging Holdings, Inc. strives to improve
global health outcomes. Its strategy is predicated upon the fact
that medical imaging is critical to the detection, diagnosis, and
treatment of disease and that it should be safe, affordable,
accessible, and centered on the patient’s experience. For more
information on QT Imaging Holdings, Inc., please visit the
company’s website at www.qtimaging.com.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20240510482388/en/
For media inquiries, please contact:
Stas Budagov Chief Financial Officer
Stas.Budagov@qtimaging.com
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