Nano-X Imaging Ltd. (NNOX) Q2 2024 Earnings Report, Transcript and Summary

Good day, and thank you for standing by. Welcome to the Nano-X Second Quarter 2024 Earnings Conference Call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your speaker today, Mike Cavanaugh, Investor Relations. Please go ahead.

Good morning, and thank you for joining us today. Earlier today Nano-X Imaging Limited released financial results for the quarter ended June 30, 2024. The release is currently available on the investor section of the company's website. With me today are, Erez Meltzer, Chief Executive Officer and Acting Chairman; and Ran Daniel, Chief Financial Officer. Before we get started, I would like to remind everyone that management will be making statements during this call that include forward-looking statements regarding the company's financial results, research and development, manufacturing and commercialization activities, regulatory process operations and other matters. These statements are subject to risks, uncertainties, and assumptions that are based on management's current expectations as of today and may not be updated in the future. Therefore, these statements should not be relied upon as representing the company's views as of any subsequent date. Factors that may cause such a difference include, but are not limited to those described in the company's filings with the Securities and Exchange Commission. We will also refer to certain non-GAAP financial measures to provide additional information to investors. A reconciliation of the non-GAAP to GAAP measures is provided with our press release, with the primary differences being non-GAAP net loss attributable to ordinary shares, non-GAAP cost of revenue, non-GAAP gross profit, non-GAAP gross profit margin, non-GAAP research and development expenses, non-GAAP sales and marketing expenses, non-GAAP general and administrative expenses, non-GAAP other expenses or income, and non-GAAP gross loss per share. With that, I'd now like to turn the call over to Erez Meltzer.

Thank you for joining us today and as always, we appreciate your continued support of Nano-X and our mission. 2024 has been a period of strong commercial progress, while also advancing the value of our products through our clinical efforts. As we continue to expand our deployment in the U.S. and the rest of the world. We're not only accelerating deployment of the Nanox.ARC system, but also expanding the footprint of the other value added elements of the full Nanox solution, including Nanox.AI. As mentioned in previous calls, I'm committed to providing further insights and detailed updates on our ongoing advancements in the coming periods. I will begin with a discussion of our recent achievements, which will cover regulatory updates, clinical advancements, commercial deployments, Nanox.AI updates and an introduction to our new Nanox.ARC system, which we'll call Nanox.ARC X. After my prepared comments, I'll turn the call over to our CFO, Ran, who will review our Q2 financial results. I will then share a few closing thoughts before turning the call over to the Q&A session. We have a lot to discuss, so let's get started. Before I provide an overview of our commercial progress, I will begin with some clinical and regulatory updates, which we believe will have a near term positive impact on our commercial efforts. I'm happy to share that just last week Nanox submitted a new 510k submission to the FDA, which is intended to expand the indications for our current Nanox.ARC System in general tomosynthesis imaging. Once cleared, the submission will significantly expand the systems indication for use from the current MSK for general use including chest. As you know, much of the clinical work we have been performing recently has centered around the suitability of the Nanox.ARC for CHEST indications and was intended to support the submission. The submission will include some software updates and is accompanied by a new clinical data for various study anatomies with and without pathologies. To be clear, it is worth noting that all card (ph) installed Nanox.ARC systems are hardware ready and has the required capabilities to scan MSK, chest and abdomen subject to the FDA clearance and the requisite regulatory approvals. This means that post FDA clearance is simple software upgrade that can be done remotely is all that will be necessary to bring currently deployed Nanox.ARC units up to the new standards. Additionally, after completing the technical stages, including obtaining the ISO 13485 certifications from BSI and successfully passing the MDR audit. We are now in advanced stages with our notified body to secure the CE Mark for the EU region. Rest assured, we will provide updates as soon as they are available. Turning now to our global deployment and commercial efforts, which continued in the next second quarter. Our team is diligently working with imaging centers, physicians and regulators to increase footprint of our Nanox.ARC technology. As of today's call, there are now dozens of units in various stages of shipment and deployments. The deployments in the U.S. are spread across seven states, the newest being Delaware and California, which are awaiting state approvals and we expect to grow this number as our commercial team executes our deployment and growth plan. To keep more color on our U.S. deployment, I would like to add that during the second quarter, we have installed Nanox.ARC system in three prominent healthcare chains operating imaging facilities across the U.S, including one of the largest in the industry. Additionally, in the U.S., some of the deployed sites have received certification from the corresponding states regulatory body and has begun to scale patient. Others are in the process of obtaining approval. This commercial scanning activity is accelerating. For example, as of today, one of those sites have shown up to 14 scans per day. We recently received good indications for validation of the U.S. CPT and reimbursement process as we received management care EOB. Since March 2024, we have been ramping up in the U.S. with current targeted backlog of 50 favorable prospects and additional 44 leads in the pipeline, with the main segments being outpatient imaging centers, medical imaging chains, and orthopedic centers. We understand that not all of these 94 leads will convert, but I'm very pleased with our commercial team's progress in such a short period, and we are very confident that this will continue to grow over time. We are also awaiting the import license to deploy the first Nanox.ARC in Mexico with the systems ready for shipment. Additionally, there are 2 units fully deployed in Israel, and another deployment is expected in the upcoming months for both clinical and commercial use. We're able to pursue this opportunity as we obtained AMAR approval several months ago. Importantly, the number of daily scans is accelerating. And in last July, we experienced an average of 6.67 scans globally for all deployed Nanox.ARC system, accomplishing both clinical work and commercial patient scans. I think it is interesting to learn that the global commercial and clinical scans by body part are distributed as follows: 31% Chest, 25% hand, 14% leg and 14% spine. But of course, these indications may vary from over time. For those of you that are interested, we also have some new clinical samples on our website, including Chest pathology. To support our accelerating deployments effort, we continued to strengthen our team and infrastructure during the quarter, adding to our U.S. sales and technical teams. Looking ahead, Nanox is dedicated to accelerating the execution of our commercial infrastructure and future strategic collaboration in the country. Our mission is to provide health care practices with a transformative imaging advantage with a Nanox.ARC, an accessible cost-effective solution that not only provides advanced diagnostic imaging capabilities, but also elevates overall patient care. We are working to accelerate a steady flow of referrals from health care providers for Nanox.ARC digital tomography imaging as part of their diagnostic workflow. We also continue to advance our other clinical efforts in multiple countries and locations, generating data, demonstrating the utility of the Nanox.ARC for a fuller wider range of indications is a key initiative for Nanox. The reason is simple, if we can show large volumes of data demonstrating the value-added utility of the Nanox.ARC, it will significantly boost our all-important commercial efforts. For example, the Beilinson Hospital in Israel has been scanning patients for exactly this reason and this trial has begun to generate data. There has been a few dozens of patients recruited at our clinical sites as part of this and the multi-site studies. The previously announced multisite trial is now operational, and we are accelerating patient scanning activity. The UGMC is in the final preparation to join the multisite trial as the second participating site, while already gaining clinical experience with the Nanox.ARC installed in scanning patients. The MS Scale (ph) trial held at Shamir Hospital has been completed and a company white paper published recently. The study concluded that the Nanox.ARC was a value-added tool in the hospital's clinical workflow, enabling quicker diagnosis when used as a supplemental tool to the standard x-ray system, achieving faster diagnosis time as compared to the standard CT-based workflow. Furthermore, all Nanox.ARC images were determined to be of high diagnostic quality enabling optimal depiction of findings. Our technology can increase depiction of a cold chest lesions, localized characterized and resolve questionable lesions even without prior ideologist experience. Cold cathode PTs (ph) may have an improved diagnostic accuracy compared to CXR, its capability to eliminate the need for CT at a fraction of the radiation dose, cost and images per study should be further investigated. For more information, see more our white paper section on our website. Turning to our AI business. Just last month, we announced that our Nanox.AI cardiac solution called HealthCCSng was highlighted in multiple scientific presentation at the 2024 Society of Cardiovascular Computed Tomography, SSCCT Annual Meeting. We are encouraged by the implementation of our AI cardiac solution and esteemed health care systems, along with a continued validation through real-world studies of its potential to promote early detection, and preventive care of cardiovascular diseases. Corewell Health, as previously reported that in the first full year of implemented HealthCCSng, in its electronic medical record system, there was a 13-fold increase over the patients reported in the previous two years. At Beilinson Hospital in Israel, incidental coronary artery classification on the CT scans of immune-mediated inflammatory disease patients identify and quantify by our AI cardiac solution was found in over 50% -- 50% of scan patients and associated with all-cause mortality and adverse cardiovascular outcome. Traditional cardio vascular risk scoring is difficult in these patients and Nanox.AI can be a valuable new tool in quantifying these risks. After being installed and implemented the Jefferson Einstein Hospital, HealthCCSng help identify 757 patients, aged 30 or above, with CAC levels higher than 100 Agatston units. In a study conducted by MacGen (ph) Hospital and Brigham & Women's Hospital, HealthCCSng was used to analyze non-contrast chest CT scans of 260 patients who had measurements of lipoprotein A as part of the clinical care. A statistically significant correlation was founded between level of CAC and this lipoprotein A, the risk factor for coronary atherosclerosis suggesting that this approach may be used to identify at risk patients. As a signed out, the lead author of this study, Brittany Weber was declared as young investigator award winner at the Annual Meeting as well. Nanox is proud to be associated with dynamic clinical talent that is doing valuable work to support the use of the Nanox.AI solutions to identify potential health risks earlier in the care continuum and helping to drive better overall patient outcome. Additionally, the previous agreements we signed for Nanox.AI with Covera Health and Dandelion Health are off to a great start, and the feedback has been very positive thus far. We are continually working to expand our AI footprint and make it accessible to a broader range of customers. Our ongoing innovation and development efforts are focused on enhancing our AI solutions and ensuring they reach and benefit a wider audience. I think I can speak of all of us at Nanox, when I say, there is a lot to be excited about. Looking ahead to the near future of Nanox, we are always looking to improve and meet market needs. In fact, every dynamic company that plans to expand rapidly over the long term with the new technology needs to constantly refine their offering based on customer feedback, changes in technology and evolving use case. Nanox is no different, and we are constantly working on product and technology future developments. I'm very pleased to share for the first time that we are developing another Nanox.ARC system called Nanox.ARC X, which we intend to submit, among others for FDA clearance. Once cleared, it will be marketed along the current system, which will expand our current product offering. At the high level, the Nanox.ARC X is designed to meet market needs of our customers, including hospitals and imaging centers, as well as our clinical partners who are using the Nanox.ARC to generate data for additional use cases. Listening to the clinical needs is an important step in the ongoing expansion of Nanox solution. Amongst the future, I'm able to share at this time that Nanox.ARC X will have an even smaller footprint than existing Nanox.ARC systems, enhancing one of our key differentiators. The new system will also be easy to deploy in use with an anticipated one day setup time and plug-and-play functionality. There will also be image enhancement options in the new units, which are currently not available on existing Nanox.ARC system and future synthetic 2D. Please note that we are planning to share more detail about the future Nanox.ARC system publicly during our next event, which will also be made available via our website. Stay tuned for further detail. To touch on our OEM efforts, I can report that we are well underway with the first phase of our development program with the U.S. government entity towards completion of a novel tube design, utilizing our emitter and focused on the entity space. We are optimistic we will move towards prototyping tubes in the second half of this year. Regarding our Teleradiology services, we are leveraging our USARAD client based on a network of radiologists as a significant part of our U.S. deployment plan. On the mass production front, we have finalized the second phase of our development with CSEM, resulting in a high-yield wafers with functional emitters. We are transitioning to the production readiness and confident we have secured a second source of supply for our novel emitters. Varex has completed their initial tubes prototype utilizing our emitter for testing to be integrated into our new Nanox.ARC. I've covered a lot of ground today. So with that, I'll hand the call over to Ran Daniel to review our financials. Ran?

Thank you, Erez. We reported a GAAP net loss for the second quarter of 2024 of $13.6 million, which I will refer to as the reported period compared with a net loss of $17.4 million in the second quarter of 2023, which I'll refer to as the comparable period. The decrease was largely due to a decrease of $2.1 million in the research and development expenses, and a decrease of $1.7 million in the general and administrative expenses, an increase of $0.5 million in the company's financial income, which was mitigated by an increase of $1.2 million in the company's gross loss. Revenue for the reported period was $2.7 million and gross loss was $2.9 million on a GAAP basis, compared to a revenue of $2.6 million and a gross loss of $1.17 million on a GAAP basis for the comparable period. Non-GAAP gross loss for the reported period was $0.9 million, as compared to a non-GAAP gross profit of $0.9 million in the comparable period, which represents a gross loss margin of approximately 9% on a non-GAAP basis for the reported period, as compared to a gross profit margin of 34% on a non-GAAP basis in the comparable period. Revenue from the Teleradiology services for both the reported period and comparable period was $2.5 million with a gross profit of $0.4 million on a GAAP basis in the reported and comparable period, which represents a gross profit margin of approximately 15% on a GAAP basis for the reported and comparable periods. Non-GAAP gross profit of the company's Teleradiology services for the reported and comparable periods was $0.9 million, which represents a gross profit margin of approximately 36% on a non-GAAP basis. During the reported period, the company we generated revenues through the sales of its AI solutions in the amount of 113,000, as compared to revenue of 53,000 in the comparable period. During the reported period, the company generated revenues through the sales and deployment of its imaging systems, which amounted to $68,000 with a gross loss of $1.3 million on a GAAP and non-GAAP basis. Those revenues stems from the sale and deployment of the Nanox.ARC system in the U.S. and the sales of our 2D systems in Africa. Research and development expenses for the reported period were $4.8 million as compared to $6.9 million in the comparable period. The decrease of $2.1 million was largely due to a decrease of $1.2 million in the salaries and wages, a decrease of $0.2 million in share-based compensation and a decrease of $0.7 million in expenses that are related to our research and development and regulatory activities. Sales and marketing expenses for the reported and comparable periods were $0.8 million. General and administrative expenses for the reported period were $5.9 million as compared to $7.6 million in the comparable period. The decrease of $1.7 million was mainly due to a decrease in our legal expenses in the amount of $1.6 million, largely as a result of the finalization of the SEC investigation, and the settlement of the class action and a decrease in the cost of directors and officers liability insurance premium in the amount of $0.4 million. Our non-GAAP net loss attributable to ordinary shares for the reported period was $8.4 million as compared to a non-GAAP net loss of $9.9 million in the comparable period. The decrease of $1.5 million was mainly due to a decrease in non-GAAP operating expenses of $2.2 million and an increase of $0.5 million in our non-GAAP interest income, which was offset by a decrease of $1.1 million in our non-GAAP gross profit. Turning to our balance sheet. As of June 30, 2024, we had cash, cash equivalents, restricted deposits and marketable securities of approximately $64.2 million and we had a $3.2 million loan from a bank. We ended the second quarter of 2024 with a property and equipment net of $44.5 million. As of June 30, 2024, we had approximately 58.5 million shares outstanding. With that, I will hand the call back over to Erez.

Thank you, Ran. As we enter the second half of 2024, our team remains focused on executing our growth strategy by continuing to commercialize the Nanox.ARC system, as well as integrating Nanox.AI solution into medical workflow. Our vision is to extend Nanox technology within and beyond hospitals targeting underserved segments like urgent care units and orthopedic clinics. We deliver a seamless scan to diagnosis solution, leveraging AI for smarter, more efficient health care with a focus on aligning innovation with clinical needs to enhance patient outcome globally. Nanox is dedicated to accelerating the execution of our commercial infrastructure and future strategic collaborations in the U.S. Our mission is to provide health care practices with a transformative imaging advantage with the Nanox.ARC, an accessible cost-effective solution that not only provides advanced diagnostic imaging capabilities, but also elevates overall patient care. Before we conclude our remarks today, I'd like to thank my fellow colleagues, customers and shareholders for their support of Nanox and our mission. As always, I'm available to meet with you and look forward to sharing the insights of Nanox.ARC X and the upcoming events. With that, operator, let's now open the call for questions. Operator, can you pause for a second, I'd like to make one more comment. Okay?

Okay.

So in addition to everything we said, I'm happy to announce that as just today, we received another FDA clearance for the HealthCCSng version 2.0, which is an upgraded version of advanced AI cardiac solution, empowering physicians in assessment of coronary artery calcium. The HealthCCSng version 2.0, an upgraded version of the cardiac solution introduces additional zero calcium categorization of coronary calcium, CAC and generates an exact calcium score with corresponding CAC detection category in output. For us, it is very pleasing to receive further regulatory validation from the FDA for our AI cardiac solution. So thank you. And with that, now we will turn the -- open the call for questions.

Thank you. [Operator Instructions] Our first question comes from the line of Jeffrey Cohen with Ladenburg. Your line is now open.

Hey, good morning, Erez and Ran. How are you?

Good.

Good morning.

Good morning.

So I wondered, firstly, could you expand upon a little bit regarding your backlog as far as imaging when you spoke about 50 on sales and 34 on leads. Could you give us a sense of where these units are? I imagine they are mostly domestic U.S. and how that funnel looks for actually placements and training over the coming quarters?

Okay. So I think that we mentioned last time, the number of 20 right now, the number was growing to more than triple, as you can imagine, in various stages of deployment. We have a few dozens, which are already deployed -- a few that are waiting for approval, regulatory, the state approvals because they are spread over seven states and the last two states are waiting for approvals. And we believe that the indication that we gave, which 50 of them are probably favorable to be installed and 44 in the leads -- in the beginning of the process, we are getting to the targeted that we wanted to be by the end of the year, and that's where we are.

Okay. Got it. And then, congratulations on the news today for a calcium score. Could you talk a little bit about these other 510k indications? And for general tomo as well in addition to general testing. Could you talk about the codes associated with them as far as reimbursement at facilities?

Okay. So with -- maybe I'll start with the end. With the reimbursement right now, what we speak about the reimbursement is based on the Tomo CPT code, which is 76.100 (ph). And this is the basis for the reimbursement of those that submitted their scans to -- for the reimbursement. We have received only already indications from more than -- from two, I think, that insurance insurers, so and this continues to grow. The numbers that were received are in line of the model that we put together. So basically, right now, it seems that the, for the clinics that -- and the sites that the system is installed, it's -- the model is profitable. With respect to the 510k, so in addition to the new one of the CCS or the calcium scoring that we received today, we have submitted the similar. It's a line of what we have indicated in the past that we are going to submit -- to submit this year the additional clinical indications, especially the chest, we decided that we're going to submit it for whole body, so including the chest, not only, by the time that we get this clearance, then even in the U.S., not only in the rest of the world, we are able to scan the whole body and basically everything. Bear in mind that in the rest of the world and especially part of the others and including the submission of the CE, we are using the fact that the hardware is how they're ready for whole body, and we are using it to all the clinical indications. Based on this indication I gave in this call today, I gave indication of the spread between the various body anatomies or body parts that were received and I gave the percentage that we have on the role on a global basis and you can see the chest is a major part of them.

Got it. And then one more, if I may. Could you talk a little bit more about the ARC X platform and perhaps its form factor and differences versus the current platform and the intended commercial presence that you anticipate as compared to the current platform?

So first of all, we are going to give more details within the next, I would say, end of this quarter and beginning of the next quarter. We are, of course, going to submit it to the FDA. And after the FDA clearance, it will be marketed as long -- along the current system, which will expand our current product offering. And we mentioned a few times in the past that the ARC or the first version 2.2 (ph) is not the first product and definitely not the last and we have in line a real product road map for the future. ARC X is one of them. We will give more indications, but I think that, the idea is to make the ARC X available to more specific locations or sites that are more suitable for the spec of the system. We are talking about footprint. We are talking about – first of all, even for us, it’s the cost of manufacturing, the return on investment the features and the beauty of it that whenever we are going to install it, we’re going to enable the, all the features that are coming with the software and the features to be installed remotely. So we don’t have to send technicians to do it. It's download from the network.

Got it. Okay. Super, Erez. Thanks for taking our questions.

Thank you, Jeff.

Thank you. Our next question comes from the line of Scott Henry with AGP. Your line is now open.

Thank you and good morning, or afternoon, depending where you are. Just a couple of questions. Congratulations on getting the 510k application in for the general use in test indication. Could you give any thoughts on what you would expect the review time line to be for that indication? What is it typically in this case, just to get a sense of when we may get final approval.

First of all, I hope that I understand the question, so I'll give the answer and if not, you'll tell me. Bear in mind that up until now, all revenues and the scans that were conducted in the U.S. in the few dozens of systems which are installed are mainly MSK. MSK, spine, hand lag, etc., and not chest. We all know that the chest is the most common use of x-ray and especially when we talk about the tomosynthesis. So we expect that once we get the clearance, it will definitely increase the likelihood of sites and customers to take the ARC and more than that, that the -- in the sites that the system is going to be – ARC is going to be installed, it will increase the number of skins per day because it will be used for other indications as stated. Is this what you asked or…

Well, that's very helpful. Thank you. And I guess the question I additionally was hoping to get some sense on, how long do you expect the review period to be for that 510k?

I wish I could tell you. I do hope that it will be faster than the previous processes that other companies as well as us experience since COVID. But I think that the fact that the system itself is already cleared and it will enhance the process. But I cannot even guesstimate the time.

Well, that's helpful. I appreciate it.

I would say the following. I'm not happy to guesstimate because the last thing I want is that I will give an estimate and then it will, for some reason, to be longer. So I will be happy to announce that it's cleared once it's cleared, and everyone can imagine that the period that it will take.

Okay. I appreciate that feedback. Second question, you mentioned the installed Nanox.ARC systems in the three chain medical imaging service providers in the U.S. Have you gotten any feedback on -- from those three chains and how that's working out, and perhaps what kind of expansion opportunities there would be? It may be too early, but I just wanted to get a sense of how that was going so far.

So especially for those of the people who are actually on the call that here, in the beginning -- or I would say, at the end of 2023 and at the beginning, when we started the test or the pilot or the -- what we call the soft launch of the ARC in the U.S. We said that we're going in the first quarter or two, we are going to gain feedback from each one of the customers, not only from the chains. The -- but we are getting a lot of feedback from the customers, feedback on a clinical basis, clinical in the maintenance on the usage, on the pattern of the body parts, which -- and the anatomies that it's being used, the clinical use. So far, and this is something that encouraged us to accelerate the installation and the deployment, we received a very good feedback. And I think that what we see is a lot of examples of places that this system is replacing CT, places where they didn't have in mind to install or to deploy a system and they decided to do it. So overall, the feedback is very good. I would say that probably in the next few months, we will get even better visibility on the usage, on the process, on the installation, on the regulatory processes, and we will always, as indicated, even in today's call, we will always implement them and improve our service and our products accordingly.

Okay. Great. Thank you for that feedback. Final question, when we're thinking about Q3 relative to Q2, should we expect any seasonality in the U.S.? Is the summer months? Do they tend to be a little slower with a pickup in the fourth quarter? Just trying to get a sense of what kind of cadence we should expect through the year?

Frankly speaking, right now, we don't expect any seasonality, especially due to the fact that we are ramping up our installed base. So we will probably see anyhow a better results. But right now, we are not planning or expecting to have any seasonality effect.

Okay. Great. Thank you for taking the questions.

Thank you.

Thank you. [Operator Instructions] Our next question comes from the line of Ross Osborn with Cantor Fitzgerald. Your line is now open.

Hey, guys. Thanks for taking our questions. So starting off, it seems like you are at the point of inflection in terms of deployments. With that in mind, can you walk through your current manufacturing capabilities and where your various contract initiatives stand?

So you're right about what you said. In terms of manufacturing, I would say the following. The chips, we have no problem. We have available chips right now. We were able, due to the results of the high yield wafers that we get from CSEM. We have two suppliers, and I think that this is not an issue. In terms of the tubes, we have already the tubes that are coming from Korea. We have the tubes that are coming from the plant in Europe. And last but not least, Varex has completed their initial tube prototype utilizing our emitter and this is for testing. So I hope that, it will be integrated into our new Nanox.ARC system shortly, and it will be part of the available production. In terms of the production of the assembly of the system, we have made the preparations in the site in Israel, that's we're moving forward, and we've increased the capacity of the manufacturing to enable what is needed in the next few quarters and the low cost manufacturing arrangement that we have will enable us to ramp up next year even higher than what we are currently doing. So right now, I would say that it seems to be in line with what is needed for the next few quarters.

Thank you.

[Multiple Speakers] are working on the next ramp up for 2025 to be announced.

Got it. Perfect. Thank you. And then following up on my previous question. Would you remind us how large your U.S. sales force is today? And then any plans for adding to the team?

So right now, we actually work with, I would say, it's about 10 people altogether. And if I had the -- if I add the independent agents, then I think that we are right now at around 15%. We are expecting to grow them to the number of 30 in the foreseeable future.

Great. And then last one for us....

What I said is that, that's what we anticipate for 2025 to be around 30% to 40%.

Got it. Thank you. And then lastly, just in anticipation of CE mark approval, would you walk us through your commercialization plan in Europe and other related geographies in terms of what type of medical centers you will be targeting, if you'll build out your own sales force or leverage a distributor there? And lastly, what the reimbursement environment looks like?

Okay. So with respect to the rest of the world, first of all, there are a few countries that you should remember, we have agreements that were signed in the past, and we are going to deploy them once the clearance in these countries are expected to be received. So I mentioned today one of them, Mexico is really coming very shortly. I will be there next month to visit the places that they are planning to install the ARC -- so this is one. We were talking about another one or two countries in Latin America. In terms of Europe, we are waiting for the CE approval, as indicated previously. And we are in the -- really in the final process of the CE approval. Once we get the CE, so all the countries that were part of the agreements that we signed like, Australia, like New Zealand, like Spain, we're going to use them, each one of them, it's going to be the distributors that are going to do the work. If you remember, I mentioned about a year ago that right now only in the U.S., Israel and the U.K., we are planning to have our own people. And in the rest of the world, we are planning to have distributors. We are right now already in the last quarter and this quarter in touch with these distributors in order to ensure that we have a plan. Our people visited already few locations in each one, not in each, but in most of these countries. Right now, we are talking in Europe and in Mexico. We are talking about medium to large medical centers.

Got it. Thanks for taking our questions and congrats again on the quarter.

Great.

Thank you. And I'm currently showing no further questions at this time. This does conclude today's conference call. Thank you all for participating, and you may now disconnect.