Generated Scanner Sales Revenue of $1.7 Million
with 51% Gross Margin in the Second Quarter of 2024
The Company Continues to Make Progress in the
Engineering and Clinical Feasibility Study with its Strategic
Partner
Signed a U.S. Exclusive Distribution
Agreement
Announced Partnership with the University of
Oklahoma and OU Health Stephenson Cancer Center to Improve
Precision in Cancer Detection and Treatment
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 second
quarter of 2024.
“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 QT Imaging technology in the U.S. to five. This
reflects our commitment to 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, “ said
QT Imaging CEO, Dr. Raluca Dinu.
“Additionally, we are very proud to report on our partnership
with the University of Oklahoma (OU) and the OU Health Stephenson
Cancer Center to advance and scale innovative research in medical
imaging and to improve precision in cancer detection and treatment.
We look forward to collaborating with OU and OU Health Stephenson
Cancer Center investigators and clinicians to develop AI/ML-based
algorithms tailored for our inherent 3D images to ease clinical
workflows. QT Imaging technology’s ability to safely image
frequently for disease progression as well as its ability to assess
volumetric breast density without exposing the patient to radiation
are at the forefront of this partnership.”
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 the
Vincere Cancer Center, in Scottsdale, Arizona, together with its
strategic distribution partner. The Vincere Cancer Center is a top
cancer center in the U.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 of QT Imaging and
its innovative technology.
- On May 14, 2024, the Company delivered a QT Breast Acoustic CT
ScannerTM to the Center of New Medicine in Irvine, California, with
its strategic distribution partner. The Center for New Medicine is
one of the largest integrative medical clinics in North 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, the Center 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 in Tomography 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 using QT
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 with NXC 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 the U.S. and U.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 to University of Oklahoma, which is home to the
National Cancer Institute (NCI) designated the OU Health Stephenson
Cancer Center (SCC), and the National Institutes of Health Center
of Biomedical Research Excellence (COBRE), Oklahoma Center of
Medical Imaging for Translational 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 in Haverford,
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. The QT
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
June 30, 2024 and 2023
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
$ 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
June 30, 2024 and 2023
(Unaudited)
Three Months Ended June
30,
Six Months Ended June
30,
$ 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 June 30, 2024
relates to the liability classified private placement warrants to
reflect the decrease of the publicly traded price per warrant.
Additional expense related to the modification of these warrants
was recorded as other expense in the condensed consolidated
statements of operations during the three and six months ended June
30, 2024.
(2)
The decrease in fair value of derivative
liability during the three and six months ended June 30, 2024
related to the Yorkville Pre-paid Advance, which contained features
that were bifurcated as 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 and June 30, 2024 for financial reporting purposes. The change
in derivative liability was recorded as other income in the
condensed consolidated statements of operations during the three
and six months ended June 30, 2024.
(3)
The 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 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 and June 30, 2024. The net change in
fair value of the earnout liability was recognized as other expense
in the condensed consolidated statements of operations during the
three and six months ended June 30, 2024, respectively.
(4)
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 the 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
statements of operations during the six months ended June 30, 2024.
The Company recorded $0.2 million and $0.6 million of transaction
costs during the three and six months ended June 30, 2023.
*Refer to the “Non-GAAP Financial
Measures” section in this press release.
Condensed Consolidated Balance Sheets as of
June 30, 2024 and December 31,
2023
(Unaudited)
$ in thousands
June 30, 2024
December 31, 2023
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
June 30, 2024 and 2023
(Unaudited)
Six Months Ended June
30,
$ 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 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; our ability to pay our debt
obligations as they come due; 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
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.
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
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.
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/20240808190805/en/
For media inquiries, please contact:
Stas Budagov Chief Financial Officer
Stas.Budagov@qtimaging.com
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