Spectral AI, Inc. Class A Common Stock 2026 Q2 Earnings Call

Good afternoon, everyone. Thank you for joining us for Spectral AI's 2026 second quarter financial results conference call. Our speakers for today will be Vincent Capone, the company's Chief Executive Officer, and David McGuire, Chief Financial Officer. Before we begin, I'd like to remind everyone that during this call, certain statements made are forward-looking statements within the meaning of the Safe Harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995, including statements regarding the company's strategy, plans, objectives, initiatives and financial outlook. When used during this call, the words estimates, projected, expects, anticipates, forecasts, plans, intends, believes, seeks, may, will, should, future, propose, and variations of these words or similar expressions, or the negative versions of such words or expressions are intended to identify forward-looking statements.

These forward-looking statements are not guarantees of future performance, conditions, or results and involve a number of known and unknown risks, uncertainties, assumptions, and other important factors, many of which are outside the company's control, that could cause actual results or outcomes to differ materially from those discussed in the forward-looking statements. As such, listeners are cautioned not to place undue reliance on any forward-looking statements. Investors should carefully consider the foregoing factors and the other risks and uncertainties described in the Risk Factors section of the company's filings with the SEC, including the registration statement and other documents filed by the company. These filings identify and address other important risks and uncertainties that could cause actual events and results to differ materially from those contained in the forward-looking statements. With that said, I'd now like to turn the call over to Vincent Capone, Spectral AI's Chief Executive Officer.

Vince, please go ahead. Thanks, Devin, and thank you all for joining us today.

We issued our earnings release this afternoon, which contains additional details of our operating results, and we will also file our Form 10-Q with the SEC this afternoon. We have had some significant developments since we last spoke. In May, we achieved a major benchmark with the FDA De Novo clearance for our DeepView System for the burn indication, marking a major milestone in Spectral AI's history. This clearance validates the strength of our science, the groundbreaking research and development efforts, and also sets the stage for our company's transformation to a commercial organization. Over the next several months, our main focus will be on a disciplined commercial launch in the U.S. and abroad.

We will also focus on continued expansion of the clinician awareness of the DeepView System through our triage and treatment outcome study initiative, as well as expanding our commercial viability and infrastructure, further software and hardware advancements in our technology, and the continued work on the expansion of additional indications on tissue diagnostics, which will lay the foundation for sustainable long-term growth and in an expanded position within our marketplace. An important part of that execution strategy is finding the right people. At the beginning of our last earnings call, I welcomed David McGuire as our new CFO. On today's call, I would like to welcome Darcy Bajko as our new Chief Commercial Officer. Darcy brings significant market experience to our organization from her time at Integra and Smith+Nephew in particular, and her recent appointment reflects the continued strengthening of our leadership team.

I will be working closely with Darcy to execute on our commercial strategy, accelerate our product launch schedule, and enhance alignment across our sales, marketing, market access, and our reimbursement strategy. I am pleased to welcome her to Spectral AI. Our DeepView System is a truly first-of-its-kind technology, cleared by the FDA in the absence of any predicate device. It is the culmination of more than $250 million of non-dilutive governmental funding over the last 13 years and a tireless effort from our executive and research teams and collaborating clinicians. I would like to talk for a few moments on our regulatory pathway and successes to date. Since the inception of the FDA's Breakthrough Devices Program over a decade ago, nearly 1,300 medical devices have met the Center for Devices and Radiological Health's rigorous standard to receive breakthrough designation. Spectral AI received this designation in 2018.

Today, our DeepView System is one of only 193 devices, or 15%, that has successfully navigated a novel regulatory approval process to commercial market authorization through the De Novo pathway. While the FDA clears over 3,000 standard 510K applications every year, it grants an average of just over 40 De Novo authorizations, fewer than 2% of all approvals, putting our technology in an incredibly exclusive tier of true medical innovation. This rare milestone is a powerful testament to the clinical rigor, disruptive capability, and significant competitive advantage that our DeepView System brings to the future of wound care. We are excited to introduce this product across the burn marketplace in both the U.S. and abroad.

The DeepView system provides an immediate assessment of whether a burn wound will heal on its own or require significant medical intervention, eliminating both undertreatment, which can take the form of delayed surgery and extended length of stay, or overtreatment, where patients are subject to an avoidable surgery or graft procedure. Our wound assessment abilities are ground truthed by over 340 billion pixels of clinically validated burn images. I cannot stress enough the competitive moat that both this burn biopsy library and our patent portfolio provides to our company. These attributes underscore just how novel our approach is to burn assessment, while emphasizing the potential of this AI-driven diagnostic imaging platform to redefine the standard of burn care in triage and treatment. With the FDA clearance in hand, where are we going?

Our commercial model is designed around two complementary revenue streams and a staged adoption path that we believe supports both near-term monetization and long-term recurring growth. At the point of device placement, we expect to generate revenue through capital purchase or lease, with each installation creating an opportunity for recurring annual software and services revenue with a minimum three-year term that compounds as placements grow. Importantly, we also understand the factors that drive revenue timing. Placements in previous clinical sites, we believe, can move the fastest and accelerate adoption, while new installations typically follow a longer capital and procurement cycle. The first 30 U.S. installations will benefit from significant support from our partners at BARDA. The burn market opportunity offers near-term sales and a multiyear commercial runway.

To that end, while we see a meaningful long-term opportunity in over 200 high-value facilities, our initial focus will be on deploying up to 30 systems under the BARDA CLIN2 part of our multiyear Project BioShield contract. Under this contract, through June 30, 2027, we will be placing our DeepView systems into routine care use across U.S. burn centers, trauma centers, and emergency departments, with some centers supporting our clinical validation work. In connection with our international sales strategy, we are in the process of updating our UKCA burn assessment approval, which we secured in 2024 to reflect the improved algorithm, hardware, and software included in our FDA-cleared device. We anticipate receiving this expanded UKCA clearance in the fourth quarter of this year, after which time we will commence initial sales and placements of the DeepView system in either the U.K., Australia, or within the Gulf Cooperation Council countries.

In the U.K., we have also initiated our Head, Hands, and Feet study to support a label expansion of the DeepView system across all markets. Domestically, we are also in the final stages of initiating a triage and treatment outcome study to demonstrate that the DeepView system's wound assessments improve surgical precision and accelerate treatment decisions, leading to a better overall patient care journey and a reduced length of stay for these patients. We expect to launch this study in the fourth quarter of 2026 with 12 centers across the United States. We remain steadfast in the improvements in patient care and reducing length of stay for patients through our cutting-edge diagnostic achievements. I want to express that we are also well-capitalized to execute on our strategic priorities.

As of June 30, 2026, our balance sheet included $14 million of cash with a manageable debt maturity and access to over $60 million of additional non-dilutive funding from BARDA. Longer term, I also want to emphasize that we see our DeepView System as a platform technology. As previously noted, we have delivered a prototype of our handheld device to MTEC last quarter as part of our existing Department of Defense contract. We are also working on the expansion of our total body surface area burn calculation, those capabilities that use DeepView System's imaging and AI platform to quickly and objectively quantify how much of a patient's body is burned. This would provide a standardized data-driven input for triage, fluid resuscitation, and treatment decisions, which are especially valuable in complex or mass casualty situations.

Our team remains deeply focused on advancing this technology by building on these developments to pursue potential new indications, including critical ischemia, amputations, diabetic foot ulcers, and others. Our team is energized by our FDA approval and deeply motivated by the opportunities that lie ahead for us. With the FDA De Novo clearance for our DeepView System behind us, a clear commercialization road map in place, and a full bench of experienced leaders to execute on our strategy, I believe we are well-positioned to define Spectral AI as a true commercial stage platform technology company in the quarters and years ahead. With that, I'll now turn things over to David for a review of our financial results for the second quarter of 2026.