Spectral AI, Inc. (MDAI)·Q3 2023 Earnings Summary

Executive Summary

• Q3 2023 research & development revenue was $3.44M, down 51% year-over-year; gross margin was 42.8% vs 45.9% in Q3 2022; net loss was $(10.6)M or $(0.77) per share, driven by $7.6M non-recurring transaction costs tied to the Nasdaq listing .
• The company reiterated full-year revenue guidance: ~$17.4M for FY 2023 and ~$28.0M for FY 2024, implying ~60% growth; FY 2024 guidance excludes potential commercialization contributions from DeepView for DFU and 3D wound measurement .
• Strategic progress included a new BARDA Project BioShield contract valued up to $149M (largest in company history), UKCA-mark for the DeepView SnapShot imaging component, ISO 13485 certification, and expanded burn and DFU trial activity .
• The company hosted its Q3’23 conference call on Nov 14, 2023; webcast available via the Events page .

What Went Well and What Went Wrong

What Went Well

• Secured a new U.S. Government BARDA contract valued up to $149M to advance clinical validation and FDA clearance of DeepView for burn wound assessment; total U.S. Government awards since 2019 now exceed $246M .
• Achieved UKCA-mark for the imaging component of DeepView SnapShot, and obtained ISO 13485 certification for manufacturing and distribution, strengthening regulatory and quality footing for commercialization .
• Management reiterated confidence in commercialization timing and revenue trajectory: “We are preparing across all fronts for the commercial launch of our DeepView System as early as 2024… we also expect 2024 revenue growth of approximately 60% from anticipated 2023 levels.” — CEO Wensheng Fan .

What Went Wrong

• Revenue decline: R&D revenue fell to $3.4M from $7.0M YoY as BARDA Burn II clinical trials neared completion; gross margin compressed to 42.8% from 45.9% due to commencement of lower-margin MTEC Phase II work .
• Operating expense and transaction items: G&A rose to $5.6M from $3.5M on headcount/R&D initiatives; non-recurring transaction costs were $7.6M associated with the SPAC business combination and Nasdaq listing .
• Profitability: net loss widened to $(10.6)M vs $(0.4)M YoY; Adjusted EBITDA was $(3.9)M vs ~$0.0M in Q3 2022; cash was $7.3M at quarter-end with no long-term debt .

Financial Results

Key metrics vs prior year and estimates

Notes: S&P Global consensus estimates were not retrievable for Q3 2023 within current tool limits; therefore no estimate comparison is shown for this quarter.

Revenue composition (no segments; contract-funded R&D)

KPIs (technology performance and regulatory progress)

Guidance Changes

Earnings Call Themes & Trends

Note: No prior-quarter (Q1/Q2 2023) earnings press releases or transcripts were available in our document corpus; “Previous Mentions” reflect references within the Q3 materials (e.g., Q2 2023 burn study completion) .

Management Commentary

• “This has been an extraordinary period for Spectral AI… and the recent receipt of the largest contract in our history a $149 million award from the United States government to advance our DeepView System for burn wound assessment.” — CEO Wensheng Fan .
• “We believe that our DeepView System is the only digital predictive medical diagnostic product that provides clinicians with an objective and immediate assessment of a wound’s healing potential… Multiple clinical studies have validated the efficacy… within seconds…” — CEO Wensheng Fan .
• “We are preparing across all fronts for the commercial launch of our DeepView System as early as 2024… we remain on track to submit applications for FDA, UKCA, and CE mark… and… expect 2024 revenue growth of approximately 60% from anticipated 2023 levels.” — CEO Wensheng Fan .

Q&A Highlights

• The company scheduled and held its Q3’23 call/webcast on Nov 14, 2023; webcast link available via Events page .
• A full Q&A transcript was not accessible in our document corpus; based on prepared remarks and press materials, investor focus areas likely included regulatory timelines, BARDA PBS contract execution, commercialization milestones, and FY 2023/2024 revenue guidance .

Estimates Context

• Wall Street consensus (S&P Global) for Q3 2023 revenue and EPS was unavailable within current tool limits; therefore, no estimate comparison or beat/miss determination can be provided at this time. If coverage is sparse for micro-cap diagnostics, sell-side estimates may be limited or non-existent for certain quarters [Tool error on S&P Global retrieval].

Key Takeaways for Investors

• Non-dilutive funding tailwind: the BARDA PBS contract (up to $149M) and cumulative government support substantially de-risk burn program execution and bridge to regulatory milestones .
• Commercialization is near: UKCA-mark on the imaging component and ISO 13485 certification, plus U.S./EU clinical expansion, align with 2024 DFU/3D filings and 2025 burn filings; monitor regulatory submissions and timing .
• Revenue trajectory reiterated: FY 2023 ~$17.4M and FY 2024 ~$28.0M guidance maintained; 2024 growth (~60%) excludes commercialization contributions from DFU/3D, offering upside optionality .
• Margin dynamics: the shift from BARDA Burn II to lower-margin MTEC work drove gross margin compression; near-term mix will matter until higher-margin commercialization emerges .
• Expense and one-time items: elevated G&A supporting trials and regulatory prep, plus $7.6M transaction costs tied to listing, expanded net loss; watch expense normalization post-business combination .
• Liquidity: $7.3M cash at quarter-end and no long-term debt; continued access to non-dilutive contracts and prudent balance sheet management are critical near commercialization .
• Trading catalysts: regulatory filings/approvals, initial commercial placements and revenues, and BARDA PBS contract milestones are likely to drive sentiment and re-rating potential .

Additional Q3 2023 Materials

• Q3 2023 earnings press release (Exhibit 99.1): Spectral AI Announces 2023 Third Quarter Financial Results .
• BARDA PBS contract announcement (Sep 28, 2023) .
• Q3 2023 call scheduling notice (Nov 1, 2023) .