- - Spectral AI (MDAI) Q3 2025 Earnings Transcript

Motley Fool Transcribing, The Motley FoolNovember 11, 2025 at 11:35 PM

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Date

Tuesday, November 11, 2025 at 5 p.m. ET

Call participants -

Chief Executive Officer — Vincent Stanley Capone

Chief Medical Officer — Dr. Michael DiMaio

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Risks -

Net loss increase — The company reported a net loss of $3.6 million, representing a $2.1 million increase from the prior year’s third quarter, driven by reduced research and development revenue and higher general and administrative expenses.

Revenue guidance reduction — CEO Capone announced, "we are reducing our revenue guidance from $21.5 million to $18.5 million," citing decreased BARDA Project BioShield activity and timing effects from the US government shutdown.

Expectations for potential revenue decline — CEO Capone stated, "I would anticipate 2026 to look from a revenue standpoint, probably somewhat lower than it is in 2025," although the reduction may not be material.

Takeaways -

Net loss -- $3.6 million, compared to $1.5 million in the prior year’s third quarter, reflecting higher general and administrative expenses and reduced research and development revenue.

Year-to-date net loss -- $8.6 million for the first nine months, versus $7.4 million in the same period last year, indicating ongoing cost management focus.

Cash and cash equivalents -- $10.5 million as of September 30, 2025, up from $5.2 million at 2024 year-end, with stability since June 30, 2025, attributed to option and warrant exercises and expense management.

Additional funding -- Gross proceeds of $7.6 million were raised in October from a registered direct offering, not included in the September cash balance.

Share count -- 27,251,034 shares outstanding as of September 2025.

2025 revenue guidance -- to $18.5 million, down from $21.5 million, due to slower BARDA contract activity and timing delays related to the government shutdown.

FDA submission status -- CEO Capone confirmed, "We do not see any holdups in our FDA submission into 2026," with anticipated first-half 2026 approval and delayed but ongoing BARDA conversations.

2026 revenue outlook -- CEO Capone signaled expectations for a flat to slightly lower revenue year as the commercial transition begins, noting, "2026 will be, in general, a down year on revenue" compared to 2024 and 2025.

International product feedback -- CEO Capone reported, "the feedback we've gotten from the units outside the US has been overwhelmingly positive." User comments cited ease of use and impactful clinical value, leading to planned device adjustments for the next Phoenix iteration.

FDA communications -- Dr. DiMaio stated, "we've had very, very frequent and good communications with the FDA," with positive feedback on the statistical analysis plan and ongoing reliability and human factors studies as requested by the agency.

Handheld device development -- Dr. DiMaio confirmed that the military-funded handheld module for Stamp Shot is progressing through environmental testing, with plans for parallel civilian and military applications.

Commercialization staffing -- CEO Capone outlined budget plans for four additional hires in 2026 dedicated to sales and professional education, building on an existing commercialization lead and BARDA-funded headcount.

European market expansion -- Presentations at recent burn meetings in the UK and Germany were well received; the company seeks UKCA and CE Mark clearances to accelerate broader European entry beyond existing UK placements.

Spectral IP transaction status -- CEO Capone reported the SIM IP deal is currently working through the SEC, with expected closing and related financial impact anticipated in 2026.

Summary

Spectral AI (NASDAQ:MDAI) lowered its 2025 revenue guidance by $3 million, specifically citing reduced BARDA contract activity following FDA submission and delays stemming from the US government shutdown. Cash reserves reached $10.5 million, before factoring in $7.6 million in new October funding not yet reflected in reported balances. Management emphasized continued progress toward 2026 FDA clearance with no identified regulatory obstacles and highlighted positive user reception for DeepView devices internationally. Company leadership identified ongoing military-sponsored development of a handheld module and confirmed incremental hiring and infrastructure investments to support US commercialization. European expansion will leverage recent clinical presentations and plans for regulatory clearances.

Capone stated, "we have always projected that 2026 will be, in general, a down year on revenue from where we were in '24 and in 2025," indicating expectations for a flat or modestly reduced topline as the company enters commercial transition.

Dr. DiMaio confirmed a "very, very frequent and good" FDA dialogue, especially regarding the statistical analysis plan underpinning the artificial intelligence algorithm, while additional testing is ongoing per agency feedback.

The progress and adoption of the DeepView system outside the US have resulted in both published studies and operational device improvements, with these learnings incorporated into the forthcoming Phoenix iteration.

The ongoing Spectral IP transaction is anticipated to conclude in 2026, pending SEC review and subsequent financial statement inclusion.

Industry glossary -

BARDA Project BioShield: A US government initiative to fund advanced development and procurement of medical countermeasures, often supporting diagnostics and treatments for public health threats.

DeepView: Spectral AI’s predictive diagnostic device platform designed to assess wound healing potential using artificial intelligence algorithms.

Statistical analysis plan (SAP): A detailed methodology for the statistical evaluation of clinical trial data, used as a critical review element by regulatory authorities for medical devices involving algorithms.

SIM IP: Refers to the Spectral IP intellectual property transaction discussed in company filings and in the earnings call.

UKCA/CE Mark: United Kingdom and European Union regulatory certifications required for commercial sale of medical devices in these geographies.

Full Conference Call Transcript

Vincent Stanley Capone: The company reported a net loss in 2025 of $3,600,000 as compared to a net loss of $1,500,000 in the prior year's third quarter, again reflecting the reduced research and development revenue and the higher general and administrative expenses from the prior year, third quarter. Even with a $2,100,000 increase in the net loss for 2025 as compared to 2024, the company is reporting a net loss of $8,600,000 for the first nine months of 2025 as compared to a net loss of $7,400,000 for the first nine months of 2024, reflecting our focus on managing our overall cost structure. At September 2025, we had 27,251,034 shares outstanding. Moving to our balance sheet, as Dr.

Michael DiMaio has previously noted, as of 09/30/2025, cash and cash equivalents totaled $10,500,000, up from $5,200,000 on 12/31/2024. Our cash balance has remained consistent since 06/30/2025. This is due to the exercise of stock options and warrants in 2025 and our continued management of our operating expenses through 2025. Please note that this cash balance does not include the gross proceeds of $7,600,000 of additional funding the company received in connection with our registered direct offering in October 2025. With our large cash reserves and our focused approach on managing our operational costs and expenses, we believe this level of funding is sufficient to provide the company with the necessary capital for the foreseeable future.

For 2025, we are reducing our revenue guidance from $21,500,000 to $18,500,000. The reduced revenue guidance reflects the anticipated reduced work on our BARDA Project BioShield contract since the submission to the FDA and some timing effect from the US government shutdown, which we believe will be largely made up within 2026. Also note that our guidance does not include the contribution of any sales of the Deep View system for the burn indication in the United Kingdom or in Australia. Thank you for your time and attention today. And with that, operator, let's open up the call for questions from our analysts.

Operator: Thank you. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. At any time your question has been addressed, and you would like to withdraw your question, please press star and 2. At this time, we will pause momentarily to assemble our roster. And your first question today will come from Ryan Zimmerman with BTIG. Please go ahead.

Izzy on behalf of Ryan Zimmerman: Hi, everyone. This is Izzy on for Ryan. Thank you for taking the questions. So, Vince, I heard your commentary about the impact of the government shutdown and how that played into timing, but I was hoping you could provide a little bit more color around exactly what has been impacted and just confirm that everything is still on track for that expected first half 2026 approval.

Vincent Stanley Capone: Sure. Izzy, thanks for participating on the call. Yes, Izzy. We continue to see our FDA submission. We do not see any holdups in our FDA submission into 2026. Actually excited this week if we can get the government to lift the shutdown. But some of our conversations with BARDA, some of the conversations we have with their teams, and the team involved with the continued development of our Deep View system, some of that has been delayed. Ultimately, we just see it as a timing issue for the most part.

Understanding that nothing has changed with the delivery of when we hope and anticipate that we will get FDA clearance of our device in 2026 and also the continued work on the BARDA contract, which I am sure you are aware runs through the end of 2026, at least the base phase. So no, other than that, it is just really a general slowdown in work with our BARDA partners. I hope that answered your question.

Izzy on behalf of Ryan Zimmerman: Yeah. It does. Thank you. It's helpful. And I know it's early to think about guidance for 2026, but you did mention the expectation that some of this revenue will be made up next year. So I was curious if you could provide even some qualitative commentary about the cadence or pacing of that for next year.

Vincent Stanley Capone: Sure. As well, Izzy, ultimately, we have always projected that 2026 will be, in general, a down year on revenue from where we were in '24 and in 2025. Our current forecast shows relatively flat between 2025 and 2026. There might be a small reduction in overall revenue. Still working through that. And obviously, there are a number of assumptions built in there. But I would anticipate 2026 to look from a revenue standpoint, probably somewhat lower than it is in 2025, but I do not know that materially it will be much different. But that's a turn year for us as we look to commercialize the device.

And then we see 2027 and obviously 2028 to be significant years for the company's growth.

Izzy on behalf of Ryan Zimmerman: That's helpful. And then last one for me. I know there are several units that are placed in international markets. I was curious what some of the feedback has been from those sites and how you're using that to inform your preparations for the US launch. Thanks for taking the questions.

Vincent Stanley Capone: Yeah. If you mind, I'll take that question. Thanks for that question, which of course for me as a clinician is terribly important. The answer is the feedback we've gotten from the units outside the US has been overwhelmingly positive. The comments include that it's easy to use, very helpful, and even a number of papers and abstracts have been in publication or published to document this in addition to the verbal feedback that we've gotten as well. So the answer is you've also used some of that feedback in terms of certain changes or minor adjustments in the device that we plan to incorporate with the next iteration, our Phoenix device.

So in summary, the device has been very positively received. It's been easy to use with both physicians and non-physician health care providers and has really facilitated the care of burn patients outside the United States.

Izzy on behalf of Ryan Zimmerman: Thank you for the question.

Operator: And the next question today will come from Carl Byrnes with Northland Capital Markets. Please go ahead.

Carl Byrnes: Congratulations, and thanks for the question. I'm just wondering how your communications with the FDA have been progressing, and has there been any additional requests or outstanding items with respect to the filing, or has it been a relatively clean and clear exchange? And then I have one quick follow-on. Thanks.

Dr. Michael DiMaio: Yeah. Thank you. This is Dr. DiMaio. Thanks for that question because you say, this is the second part that I mentioned, the focus is FDA. The answer is we've had very, very frequent and good communications with the FDA. There are obviously certain adjustments and questions that they have for us and additional matters I would probably couldn't or shouldn't discuss those publicly because that would probably violate some of the FDA's requirements. But suffice it to say, we've had very good communications. One of the most important aspects is the statistical analysis plan or the SAP. Of course, is the guts of the artificial intelligence algorithm, and that's been very favorably received.

And so that was what I was personally most concerned about. And that seems to have gone very, very well. Our data science teams have done an outstanding job. There's some other testing we'll be looking at, whether it's additional human factors, studies or additional reliability testing that were with the FDA right now, and we're getting clearance and clarity on that. Once we complete that, we anticipate we'll move ahead forward. But in summary, we've got good interaction. We provided additional information, and we literally have calls scheduled the next couple of weeks with the FDA for further clarification. Thank you.

Carl Byrnes: Great. Perfect. Excellent. That's and just one quick follow-up. With respect to Stamp Shot, is there any update on the development of the handheld module? Thanks.

Dr. Michael DiMaio: Good question. So thank you for that question as well. The handheld and the answer is a big yes. Additional development is going on that. As you know, that's primarily a military project sponsored by the military, and we have got good feedback that they have liked the preliminary design of the handheld device. It is currently going through testing and environments that the military requires us to perform, including high temperatures and low temperatures as well. And so we have gotten and we are seeking additional support, which is we plan to be forthcoming from the US military to continue to develop that device for military use.

In a parallel fashion, having discussions to have the same form factor or similar form factor for the military for civilian use, and that's active as well. So the answer is that we're moving forward with the military as the background or the basis to be able to develop a civilian application with a very similar device. But I want to emphasize to you as well as anybody else we do anticipate at least in the short or midterm to have the cart-based device because, of course, that's what BARDA has paid us to do. It's very easily used in the burn units. It's larger and is the Operating Room, in the burnish room, and so forth.

And we see the handheld unit as complementary or additive and not necessarily replacing the cart-based device. As well, please know that we plan for the cart-based device to be the basis for a 510(k) application for the handheld device. So there's similar technology, similar camera, etcetera. So it will simplify the progression of our technology from cart-based to hand-based. Thank you.

Carl Byrnes: Thanks. That's very helpful. And again, the handheld is funded through MTech and DHA. Correct?

Dr. Michael DiMaio: That's correct. Yes, sir. I've been deemphasizing that, not to deemphasize it because of military per se, but also emphasize that we're looking at the civilian market as well. But, yes, the current version is funded by divisions, the Department of Defense called MTech and DHA. That is correct.

Carl Byrnes: Excellent. Thanks so much.

Operator: Thank you. The next question will come from John Vandermosten with Zacks SCR. Please go ahead.

John Vandermosten: Great. Thank you, and good evening. I'd like to start out with just getting a sense of your commercialization preparation activities. And ask if you're planning to hire perhaps a chief commercial officer or chief operations officer. And then also along that same line, what efforts are being made, I guess, in terms of market access, distribution, marketing, and long execution, over the next few months? Coming up on the target action date.

Vincent Stanley Capone: John, that's a great question and appreciate it. And of course, that's third F, is finish. So in no particular order, we already have a person who is a commercialization person right now on board. And he's working to process all this as well. We have in the budget for 2026, four more people, four more FTEs that we're talking about bringing on board shortly. To be able to have Salesforce, and other parts of what we call professional education as well. Please note as well that the BARDA budget includes some of those costs, which helps us defray some of the costs in the initial stages of commercialization.

The next part of that, of course, is that we're talking about the burn community, which, as you know, from our research studies, there's a 137 burn units in the United States. You know, there's a large number that have participated in our research trials. So I would think or argue that we have got a very good leg up on the community for which we intend to do the first sales are quite well aware of the technology and are quite excited about getting it in their hands as soon as it's federally cleared from the FDA.

And lastly is, maybe as importantly, is that the BARDA contract, once we get FDA clearance, includes clauses to help begin the placement of these devices in the burn centers and beyond. In answer, I think we have a very good foundation with people. Funding in place. To start the commercialization rollout, and we will be ramping up as well to make that happen.

John Vandermosten: Okay. That's good. And you had several presentations at the European Burn Association. And I was wondering how they were received by the audience and who the audience was. I know it was in Europe. I think it was in Germany. Is this allowing you to push further east, I guess, from the UK to get more health groups interested in using the device?

Vincent Stanley Capone: Yes, sir, John. I get another great question. Thanks for that. And so the answer is there were burn meetings both in the UK and in Germany, of which members of the burn communities there as well as members from the US burn community participated. We had presentations at all those meetings. And, again, not because I'm prejudiced, we had outstanding reception from those presentations. And a big, big request, how soon will they be in those areas. Again, we already have units placed in the UK, and literally today, we had discussions about expanding into the European both Western and Eastern, and those discussions are forthcoming.

We plan to progress further with getting clearance from UKCA and CE Mark as well. The current device in the UK is going to be upgraded, and based upon what we've learned in the US market and from the FDA. So in summary, yes, we do plan to expand into the UK and parts of Europe and maybe even beyond that. But our primary focus for right now, of course, is the US. But, yes, the secondary and tertiary focus will be outside the US.

John Vandermosten: Okay. Got it. And last question for me is on the Spectral IP transaction. I know that has been announced, I hadn't seen anything and wanted to know if that was or what the status of that was. Vince?

Vincent Stanley Capone: Thank you, Dr. DiMaio. Yeah. I'll take this one. John, good to hear from you. Thanks for participation today. Yes, the Spectral IP and the SIM IP transaction, that it's currently working through the SEC and I would anticipate that those filings will be reviewed with an eye towards my understanding as of today is that I would expect that transaction to close probably in 2026. And I would expect that you'll see something in our financials probably in 2026 reflecting that transaction.

John Vandermosten: Great. Alright. Thank you, Vince. Thank you, Dr. DiMaio.

Vincent Stanley Capone: Thank you, John, so much.

Operator: Thanks, John. That concludes our question and answer session. Would like to turn the conference back over to Dr. DiMaio for any closing remarks.

Dr. Michael DiMaio: Thank you again for your participation and continued interest in Spectral AI. We are very pleased with the progress as I described with the three F's. We continue to make and remain optimistic about our prospects for growth. We continue to work hard on the three principles that I outlined and we look to have further announcements on our progress with these goals in the very near term. I thank everyone on the call and wish you a very good evening.

Operator: The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.

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