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Spectral AI, Inc. (MDAI)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a top-line and EPS beat versus S&P Global consensus, with Research & Development revenue at $6.71M vs. $5.25M estimated and EPS at -$0.04 vs. -$0.13 estimated; gross margin expanded to 47.2% while net income swung to $2.9M, largely driven by a $4.25M favorable warrant liability fair value change .
  • Management reiterated FY 2025 revenue guidance of ~$21.5M (BARDA-driven, excludes burn commercialization), and remains on track to submit the FDA De Novo by end of Q2 2025; BARDA partnership and 10+ FDA pre-sub meetings underpin derisking efforts .
  • Capital structure strengthened in March with $8.5M initial debt draw from Avenue Capital and ~$2.7M equity, lifting cash to $14.1M and extending runway; a second $6.5M debt tranche and ~$7M equity are contingent on FDA clearance .
  • Burn Validation Study confirmed DeepView outperforms clinicians on sensitivity and Dice; positive UK/Australia real-world feedback supports eventual commercialization and value proposition build-out .
  • Near-term stock narrative centers on regulatory submission, BARDA procurement ramp (post-clearance), and disciplined OpEx, with potential estimate revisions following Q1 beats and confirmation of guidance trajectory .

What Went Well and What Went Wrong

What Went Well

  • Delivered revenue and EPS beats: $6.71M R&D revenue and EPS of -$0.04 versus consensus of $5.25M and -$0.13, respectively; gross margin up 60 bps YoY to 47.2% .
  • Net income inflected to $2.9M, driven by $4.25M decrease in warrant liability fair value and lower borrowing/transaction costs, highlighting effective financial management and capital structure optimization .
  • Strategic progress toward FDA De Novo: completion of Burn Validation Study with statistically significant outperformance on sensitivity (image-wise 86.6% vs. 40.8% CJA) and Dice (68.5% vs. 39.2% CJA); management emphasized confidence and extensive FDA/BARDA engagement (“on track” by end of Q2) .

What Went Wrong

  • Sequential revenue decline vs. Q4 2024 ($6.71M vs. $7.60M) as BARDA activity mix moderated; management signaled lighter second-half BARDA revenue while resources pivot to regulatory submission .
  • Operating loss persisted (-$0.90M) despite G&A discipline, underscoring continued need for scale and commercialization to achieve sustainable operating profitability .
  • Commercial revenue remains immaterial in UK/Australia near term; NICE pathway and implementation science work elongate external monetization timelines, limiting contribution in FY 2025 guidance .

Financial Results

MetricQ3 2024Q4 2024Q1 2025
Research & Development Revenue ($USD Millions)$8.2 $7.60 $6.71
Gross Margin (%)44.9% 44.0% 47.2%
General & Administrative Expense ($USD Millions)$4.6 $4.46 $4.06
Operating Income (Loss) ($USD Millions)$(1.11) $(1.11) $(0.90)
Net Income (Loss) ($USD Millions)$(1.5) $(7.74) $2.90
Diluted EPS ($USD)$(0.08) $(0.41) $(0.04)*

Notes:

  • Q1 2025 EPS actual = -$0.0389, Q1 2025 Revenue actual = $6.707M; Values retrieved from S&P Global.*
Estimates vs. Actuals (Q1 2025)ConsensusActual
Revenue ($USD Millions)$5.25*$6.71
Primary EPS ($USD)$(0.13)*$(0.04)*
# of Estimates (Revenue/EPS)3 / 3*—

Notes:

  • Values retrieved from S&P Global.*
  • Beat: Revenue and EPS vs. consensus.

KPIs and Balance Sheet Highlights

KPIQ3 2024Q4 2024Q1 2025
Cash and Equivalents ($USD Millions)$3.7 $5.16 $14.06
Warrant Liabilities ($USD Millions)—$6.45 $5.11
Burn Validation – Image-wise Sensitivity (%)—86.6 86.6
Burn Validation – Pixel-wise Sensitivity (%)—81.9 81.9
Burn Validation – Dice Score (%)—68.5 68.5
Burn Validation – Image-wise Specificity (%)—61.2 61.2

Segment breakdown: Revenue is primarily BARDA PBS contract R&D funding; no separate commercial segments in period .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD Millions)FY 2025~$21.5 ~$21.5 Maintained
Commercial Revenue Contribution (Burn)FY 2025Excluded Excluded Maintained

Notes:

  • Guidance excludes UK/Australia burn commercialization and any additional material contributions from DeepView commercialization .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2: Q3 2024)Previous Mentions (Q-1: Q4 2024)Current Period (Q1 2025)Trend
FDA De Novo submissionAlgorithm truthing, pre-sub interactions; first-half 2025 target Confirmed first-half 2025 submission plan “On track” to submit by end of Q2; 10+ pre-subs; BARDA support Strengthening, derisking
BARDA PBS contract executionRevenue/margin lift from PBS; focus on BARDA deliverables Q4 revenue up; FY24 $29.6M; procurement path post-clearance Q1 revenue growth YoY; lighter 2H as resources shift to submission Near-term pause; post-clearance ramp
Burn Validation StudyTop-line data slated; metrics (sensitivity, Dice, specificity) Successful results disclosed with detailed metrics Metrics reiterated; cornerstone for De Novo submission Completed; supports submission
UK/Australia deploymentsUK devices; Australia special access in planning 3 systems deployed in Australia; UK RWE building Positive feedback; implementation science and coding efforts Constructive RWE; limited near-term revenue
Snapshot M (handheld)MTEC contracts funding; iterative military feedback Awards >$7M; 2027 deployment target Two prototypes; ruggedization and AI integration next; remain on track Advancing development
Capital structure/liquidityShelf registration; plan for opportunistic funding New debt/equity financing in March; cash >$14M Avenue Capital $8.5M draw; $2.7M equity; second tranche contingent on FDA Runway extended

Management Commentary

  • “We are primarily focused as an organization on this goal, and we are on track to meet this timeline” — on the FDA De Novo submission by end of Q2 2025 .
  • “The DeepView System continues to outperform the clinical judgment of burn physicians by a large margin” — on Burn Validation Study outcomes supporting the submission .
  • “With total cash on hand now of over $14 million, and potential access to an additional $6.5 million of debt… our company has significant financing in hand” — on runway and financing .
  • “The Company reiterates its revenue guidance of approximately $21.5 million for FY 2025” — guidance maintained; excludes burn commercialization impact .

Q&A Highlights

  • Guidance cadence: Management maintained ~$21.5M FY 2025, noting strong Q1 and potentially lighter 2H BARDA revenue as DeepView development and submission take precedence; restatement possible if outperformance persists .
  • Submission derisking: >10 FDA pre-sub meetings, BARDA collaboration, and alignment on key metrics (sensitivity, specificity, Dice) to minimize submission risk; confidence expressed with caveat of FDA control .
  • OpEx discipline: G&A expected to remain consistent with Q1 levels as the company targets < ~$1M quarterly burn, supporting extended runway .
  • Commercial strategy: BARDA is primary focus initially; commercialization team preparing for post-clearance expansion beyond BARDA channels .
  • DoD/Snapshot M: Relationship building across MTEC/DHA; milestones include ruggedization testing and AI integration; 2027 remains the handheld deployment goal .

Estimates Context

  • Q1 2025 results beat S&P Global consensus: Revenue $6.71M vs. $5.25M estimated (beat); EPS -$0.04 vs. -$0.13 estimated (beat). # of estimates: 3 (Revenue/EPS). Values retrieved from S&P Global.*
  • Implication: Near-term sell-side models may lift FY 2025 revenue cadence despite management’s caution on a lighter 2H; EPS trajectories should incorporate warrant liability volatility and constraining G&A .

Key Takeaways for Investors

  • Significant beat on both revenue and EPS with gross margin expansion; the net income inflection was driven by non-cash warrant liability fair value change—model EPS with caution around liability mark-to-market .
  • Regulatory path is the primary catalyst: FDA De Novo submission by end of Q2; extensive pre-sub engagement and robust validation data increase probability of a timely review .
  • BARDA procurement post-clearance and UK/Australia RWE efforts support medium-term commercialization; FY 2025 guidance excludes burn commercialization, reducing near-term revenue risk .
  • Liquidity improved meaningfully with March financing; a second debt tranche and equity are gated to FDA clearance—sufficient runway through foreseeable future given OpEx discipline .
  • Near-term trading: Watch for submission timing updates, any guidance restatement, and volatility from warrant liability marks; estimate revisions likely tilt positive after Q1 beat .
  • Medium-term thesis: DeepView’s superior clinical performance and BARDA backing position MDAI for adoption in U.S. burn centers, with Snapshot M extending TAM into military/emergency care .

Notes on estimates: Values retrieved from S&P Global.*