Nano-X has the FDA’s backing. Now it just needs to make some money.
Nano-X Imaging (NNOX 15.11%), the Israeli X-ray imaging company that hopes to disrupt the medical devices market with a business model charging per X-ray delivered rather than simply selling X-ray machines, jumped in Thursday trading, rising 14.2% through 12:30 p.m. ET.
Why? This morning, Nano-X announced that it has received clearance from the U.S. Food and Drug Administration (FDA) to use its Nanox.ARC X technology to produce “tomographic images for general use, including musculoskeletal, pulmonary, intra-abdominal and paranasal indications” — and presumably, to charge per image.
Nano-X’s big news day
Nano-X says its proprietary Nanox.ARC X technology uses artificial intelligence in conjunction with 2D X-ray scans to produce “a more comprehensive, sliced three-dimensional view of the body.” (Yes, you read that right. Nano-X is an artificial intelligence company now.)
It’s also moving quickly to build out a market for its services. The company noted that the FDA granted 510(k) clearance “less than 30 days from the date of submission” of its request. The company further notes that a Nanox.ARC X system itself is plug-and-play and can be installed in a medical location in just a single day.
Is Nano-X stock a buy?
Unprofitable today, with $53.5 million in trailing-12-month losses and about $39 million in annual cash burn, Nano-X is the kind of growth stock that must move quickly to justify its valuation — and replenish its cash.
Winning FDA clearance for its proprietary 3D technology is only the first step in achieving that growth, however. Now, the company needs to demonstrate a demand for its services, which can translate into rapid sales growth and eventually profits.
Last year, Nano-X grew sales at a respectable 14%, a good start. Still, looking ahead, Wall Street analysts polled by S&P Global Market Intelligence don’t see the company turning profitable before 2028 (although free cash flow may arrive sooner). Right now, whether Nano-X is a buy depends a lot on whether it can start generating cash…before it burns through the $73 million in cash it already has.
Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.