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Spectral AI, Inc. (MDAI)·Q2 2025 Earnings Summary

Executive Summary

  • Q2 2025 revenue was $5.1M, down 32% year over year, with gross margin of 45.2%; GAAP EPS was $(0.31), and the net loss expanded to $(7.9)M primarily due to a $5.4M increase in the fair value of warrant liabilities .
  • Versus S&P Global consensus, Q2 revenue modestly missed ($5.07M actual vs. $5.44M est.) and EPS missed (Primary EPS -$0.094 vs. -$0.08 est.) while Q1 had beaten both revenue and EPS; FY 2025 revenue guidance of ~$21.5M remains above FY consensus ($18.47M), implying potential estimate revisions upward if execution continues *.
  • Strategic milestone: De Novo application to the FDA was completed in June, with management reiterating expectations for potential U.S. clearance in 1H 2026 and an active commercialization planning process in partnership with BARDA (rolled devices contemplated within contract language) .
  • Liquidity strengthened: cash rose to $10.5M at quarter-end; a second debt tranche of $6.5M and an attendant $7M equity raise are contingent on FDA approval, extending runway to commercialization .
  • Near-term stock narrative catalysts: FDA review milestones, BARDA deployment path clarity, and confirmation of the handheld SnapShot M pathway leveraging predicate device strategy and military-funded development .

What Went Well and What Went Wrong

What Went Well

  • Completed De Novo submission to the FDA earlier than projected; management highlighted this as a “major milestone” for bringing DeepView to market and improving patient outcomes (“Seeing the Unknown”) .
  • Improved operating efficiency: G&A down to $4.4M in Q2 (from $5.8M YoY), reflecting focused spend and effort on the submission and BARDA contract activities .
  • Liquidity and financing plan in place: cash increased to $10.5M; facility provides potential additional $6.5M debt upon approval plus an attendant equity raise, supporting commercialization preparations (finance, focus, finish) .

What Went Wrong

  • Top-line decline and margin pressure: Q2 R&D revenue fell 32% YoY to $5.1M as BARDA-related reimbursed trial activity wound down; gross margin dipped to 45.2% from 46.6% due to higher non-reimbursed BARDA expenses .
  • Non-operating headwinds: net loss widened to $(7.9)M mainly from a $(5.4)M increase in warrant liability fair value, overshadowing otherwise reduced operating expenses .
  • Q2 missed consensus on both revenue and EPS while reiterating guidance that excludes potential sales contribution from burn indication in the UK/Australia in 2025, leaving upside from commercialization as 2026+ events *.

Financial Results

Consolidated Results (GAAP)

MetricQ4 2024Q1 2025Q2 2025
Revenue ($USD Millions)$7.60 $6.71 $5.07
Gross Margin %44.0% 47.2% 45.2%
G&A Expense ($USD Millions)$4.46 $4.06 $4.41
Operating Income (Loss) ($USD Millions)$(1.11) $(0.90) $(2.12)
Net Income (Loss) ($USD Millions)$(7.74) $2.90 $(7.97)
GAAP EPS (Basic & Diluted, $)$(0.41) —$(0.31)
Cash & Equivalents ($USD Millions, period-end)$5.16 $14.06 $10.52

Notes: “—” indicates not disclosed in the cited document for the period.

Actual vs. S&P Global Consensus (Quarterly)

MetricQ1 2025Q2 2025
Revenue Actual ($USD)$6,707,000$5,065,000
Revenue Consensus Mean ($USD)$5,250,000$5,438,500
Surprise ($USD)+$1,457,000-$373,500
Primary EPS Actual ($)-0.0389-0.0942
Primary EPS Consensus Mean ($)-0.13-0.08
Surprise ($)+0.0911-0.0142

Values retrieved from S&P Global.*

Financial Condition Highlights

  • Warrant liabilities rose to $10.6M (from $6.5M at 12/31/2024), driving the non-operating expense swing; long-term notes payable increased to $7.6M post Avenue Capital financing .
  • Deferred revenue decreased to $0.42M; accounts receivable declined to $1.47M as reimbursed clinical activities tapered .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue ($USD)FY 2025~$21.5M (Q1 reiteration) ~$21.5M (Q2 reiteration) Maintained
DeepView burn commercialization contribution (UK/Australia)FY 2025Excluded Excluded Maintained

Management clarified FY 2025 guidance excludes U.S. burn sales and any additional material contributions from commercialization in 2025 .

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4 2024)Previous Mentions (Q1 2025)Current Period (Q2 2025)Trend
FDA De Novo submission (burn)Planned submission by end of Q2 2025; targeted early 2026 clearance On-track; Burn Validation Study completed; reiterated submission timing Submission completed in June; management still views 1H 2026 clearance as plausible Progressing to review milestones
BARDA PBS contractMulti-year up to $150M with initial $54.9M, procurement contemplated Continued BARDA activity; revenue support BARDA referenced in commercialization rollout support; specifics not disclosed From development to deployment planning
International (UK/Australia)——UK and Australia usage valued for learnings; NICE process considered; 2025 sales immaterial Early market learnings, limited near-term P&L
Handheld SnapShot MMilitary/MTEC funding through Dec 2025; dev underway —510(k) pathway leveraging cart-based predicate; dual military and commercial paths Regulatory pathway clarified
Financing runwayEnhanced with debt + equity in Q1 Cash improved to $14.1M Cash at $10.5M; second tranche contingent on FDA approval Runway tied to regulatory milestones
Corporate IP spinout (Spectral IP)Planned spin-off to public listing by end Q2 2025 —Continues toward IPO; limited resource/capital draw from core Co. Ongoing, non-core dilution

Management Commentary

  • “We are pleased with the results of our second quarter… to complete our submission of our De Novo application earlier than projected to the US Food and Drug Administration… a crucial step toward bringing this innovative diagnostic device to market” — J. Michael DiMaio, MD (Chairman) .
  • “With total cash on hand… over $10,000,000, potential access to an additional $6,500,000 of debt and a reduced spending rate, Spectral AI has significant financing on hand for the foreseeable future…” — J. Michael DiMaio .
  • “For 2025, we are reiterating revenue guidance of approximately $21,500,000… does not include any contributions from sales of the DeepView system for the burn indication…” — Vince Capone (CFO) .
  • “We will use the cart-based device as a predicate for the handheld device… funding via military pathway… and create a similar pathway for a commercial handheld device” — J. Michael DiMaio .

Q&A Highlights

  • Commercialization timing and path: Management expects 1H 2026 U.S. clearance; building a “thorough commercialization plan,” with BARDA contract language indicating potential assistance in initial rollout; no forward-looking specifics given due to governmental uncertainty .
  • International strategy: UK and Australia deployments emphasize clinician experience and learnings; pursuing NICE in UK for broader applicability; near-term sales impact minimal .
  • Handheld Snapshot M: Strategy to pursue 510(k) using cart-based device as predicate; dual-track military and commercial development to broaden adoption .

Estimates Context

  • Q2 2025: Revenue actual $5.07M vs. consensus $5.44M (miss); Primary EPS actual -$0.094 vs. consensus -$0.08 (miss) — while GAAP EPS reported by the company was $(0.31), reflecting share-count and GAAP differences relative to S&P’s “Primary EPS” framework *.
  • Q1 2025: Revenue actual $6.71M vs. consensus $5.25M (beat); Primary EPS actual -$0.039 vs. consensus -$0.13 (beat)*.
  • FY 2025: Company revenue guidance ~$21.5M continues to run above S&P Global consensus $18.47M, indicating potential upward estimate revisions contingent on execution and regulatory trajectory *.

Values retrieved from S&P Global.*

Key Takeaways for Investors

  • Execution milestone achieved: De Novo submission completed; next catalysts are FDA interactions and clarity on review milestones into 1H 2026 .
  • Commercialization planning underway: Management highlighted BARDA’s potential role in initial device rollout; watch for specifics as regulatory milestones firm up .
  • Liquidity is adequate for nearer-term goals; second tranche financing tied to FDA approval offers incremental runway to commercialization .
  • Consensus vs. guidance gap persists: FY revenue guidance above Street could prompt estimate revisions, especially if quarterly run-rate stabilizes post trial taper *.
  • Non-operating volatility remains a swing factor: Warrant liability fair value changes materially impacted Q2 net loss; investors should separate operating performance from fair-value marks .
  • Handheld expansion is a medium-term growth leg: 510(k) predicate strategy and military/commercial pathways suggest a broader TAM beyond burns, pending regulatory progress .
  • Near-term focus: confirm trajectory of BARDA-funded activities, operating efficiency sustainability, and cadence of FDA review updates to gauge commercialization timeline .

Appendix: Prior Quarter Highlights (for trend context)

  • Q1 2025: Revenue $6.7M (+6% YoY), GM 47.2%, GAAP net income $2.9M largely from favorable warrant liability fair-value change; cash $14.1M after Avenue Capital debt and equity raises; FY 2025 revenue guidance reiterated at ~$21.5M .
  • Q4/FY 2024: Revenue $7.6M in Q4; FY revenue $29.6M (+63.5% YoY); GM 44.0% in Q4; FY net loss $(15.3)M including warrant and borrowing-related costs; contract with BARDA PBS up to $150M with procurement contemplated .

Other press releases in Q2 window were third-party promotional news commentary recapping MDAI’s Q2 results rather than company issuances; they reiterated the company’s Q2 metrics and submission milestone but were promotional in nature .