Spectral AI Q4 2025 Earnings Call - BARDA $31.7M Boost as FDA De Novo Decision Looms, Commercial rollout pushed into 2026

Gary, Conference Operator: I would now like to turn the conference over to Devin Sullivan, Managing Director of The Equity Group. Please go ahead.

Devin Sullivan, Managing Director, The Equity Group: Thank you, Gary. Good afternoon, everyone, and thank you for joining us today for Spectral AI’s 2025 fourth quarter and full year financial results conference call. Our speakers for today will be Vincent Capone, the company’s Chief Executive Officer, and Thomas Spieth, our Corporate Controller. 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 United States Private Securities Litigation Reform Act of 1995, including statements regarding the company’s strategy, plans, objectives, initiatives, and financial outlook. When used in 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, I’d now like to turn the call over to Vincent Capone, Spectral AI’s Chief Executive Officer.

Vince, please go ahead.

Vincent Capone, Chief Executive Officer, Spectral AI: 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. We will also file our 10-K with the SEC later this evening. Today, I will focus my remarks on our year-end review and corporate developments, and our Controller, Tom Spieth, will take us through our key financial metrics. We will then open the conference call up for questions. 2025 was a pivotal year for Spectral AI in which we made great progress along a number of fronts in support of achieving our primary goal of commercializing the DeepView system for the burn indication. The DeepView system is a diagnostic tool that empowers medical personnel to make quick, data-driven decisions regarding whether a burn wound will heal on its own or if it requires significant medical intervention.

This currently unmet clinical need is dramatically magnified in the event of a mass casualty burn incident, where the ability to triage burn patients rapidly and properly would be crucial in allocating valuable resources and managing the surgical burden. Our DeepView System is designed to assist the U.S. government in preparing for any such mass casualty event. As many of you may be aware, the hallmark event for our company was the June 2025 submission of our De Novo application to the FDA. This submission was the culmination of years of work by our talented, hardworking, and dedicated team. Following our submission, and as anticipated, we received an additional information notification letter from the FDA, which we timely and completely responded to just earlier this month. We are maintaining an active dialogue with the FDA, and its feedback has been consistent with our expectations.

We are hopeful for a positive response from the FDA before the end of the second quarter of this year. Now to give a review of the 2025 year. In March 2025, we completed our burn validation study. This 15-month study represented one of the largest burn trials ever conducted in the United States, with data obtained from 164 adult and pediatric patients across 15 burn centers and emergency departments in the United States. In this study, the DeepView system significantly outperformed the clinical judgment of burn physicians. Following our anticipated FDA clearance, we will initiate an outcome study to measure the real-world impact of the DeepView system within the hospital setting. This study will focus on the benefits across patients’ journeys and clinician workflows. The results of the burn validation study were submitted as part of our De Novo application to the FDA.

More broadly, the use of our DeepView System in these burn centers and emergency departments raised awareness of the technology among a larger set of likely users of the device if approval from the FDA is ultimately obtained. By way of scale, in the United States, there are approximately 125 burn centers, 700 trauma centers, and 5,400 federal and community hospitals with emergency rooms where the burn patients are most likely to present upon injury. Let me next turn to a discussion regarding our BARDA contract. We have had a long-term, significant, and strong partnership with the Biomedical Advanced Research and Development Authority since 2013. Its support has been instrumental in our product development to date, and most notably related to the Project BioShield contract that we signed in September of 2023 with a value of up to $150 million.

$55 million, of which were awarded at that time as part of the contract’s base phase. This BARDA funding has supported product development as well as funding extensive U.S.-based studies to validate our DeepView technology and our AI algorithm in emergency departments, trauma, and burn centers. Last week, as we announced, BARDA reaffirmed its commitment to the development of the DeepView system by awarding Spectral AI $31.7 million of advanced funding to accelerate and support additional feature aspects of our innovative AI-driven diagnostic device. In connection with this award, we have also committed to provide an additional $9.7 million to the total overall development costs associated with these advancements.

The acceleration of the second phase of our BARDA contract will enable us to expedite further development of the DeepView System, most notably with our total body surface area measurement tool and our EHR integration. Our contract with BARDA, upon an FDA approval of our device, also includes a provision that will allow BARDA to subsidize an initial sale and distribution of up to 30 DeepView Systems in burn centers in key regions across the United States. This contract also allows a further subsidy by BARDA for an additional 140 DeepView Systems in burn centers and trauma level one emergency departments across the United States. Internationally, the DeepView Systems that we have placed in the United Kingdom have generated positive user feedback. As previously shared, we have obtained UKCA authorization for the burn indication in 2024.

In 2026, following a positive FDA determination of our De Novo submission, we will be updating our U.K., UKCA authorization to include the improved DeepView system as we have submitted it to the FDA. Thereafter, we anticipate initial sales in the U.K., Australia, or the Gulf Cooperation Council nations to begin in late 2026 following such UKCA expanded authorization. While there will be a transition phase following our anticipated FDA approval, we will begin commercial activities in earnest in 2026 with our existing manufacturing relationships and expanding our sales team to facilitate the first commercial sales in our company’s history. We believe we have a clear strategy to drive rapid market adoption both inside and outside of our BARDA relationship.

I would also like at this time to share some additional information about our handheld device, which we continue to develop as part of our Department of Defense contract through the contracting consortium called MTEC. In late 2025, we signed a no-cost extension of our current phase two contract to just extend it through June 30, 2026. Consistent with our current contract requirement, we anticipate delivering a fully functioning prototype of our handheld device by the end of the second quarter of 2026. After such time, we will also determine if there are any additional scope items that we can complete as part of that contract before the end of the third quarter of 2026.

Phase II of the MTEC contract is scheduled to be reviewed and awarded by the end of the fourth quarter of 2026, and we are hopeful that we will be asked to bid on such work. We also anticipate leveraging any approvals of the FDA for our cart-based DeepView system as a predicate to our handheld device. At such time, we will look to obtain a 510(k) approval of our handheld device after receiving approvals for the cart-based DeepView system currently under review by the FDA. Before turning things over to Tom, I am happy to say that we entered 2026 in the strongest liquidity and financial position in our recent history, and certainly during my tenure with our company.

Our cash position of more than $15 million at year-end tripled from December 31, 2024, and we have aligned our operating expense profile with our strategic priorities. This allows us to pursue our growth objectives both pre-approval and hopefully post-approval from a position of strength and with a sufficient cash runway. While I have participated on numerous calls in the past, I also want to recognize that this is my first call as the company’s Chief Executive Officer. I want to thank the board for their continued confidence in me, as well as the amazing team of people I am fortunate to work with every day. They are driving our success. I am grateful to lead Spectral to bigger and better things. With that said, I’ll now turn over the conference call to Tom for a review of our financial results.

Thomas Spieth, Corporate Controller, Spectral AI: Thanks, Vince. As Vince noted, we had a strong year and believe that we have the financial performance in place to continue our R&D efforts and evolve into commercial business. Beginning with the fourth quarter, research and development revenue for Q4 2025 was $3.8 million compared to $7.6 million, reflecting the anticipated reduction in research direct labor, clinical trial, and other reimbursed study costs relative to 2024 as the company moved closer to completion of the base phase under our contract with BARDA. We call it the BARDA PBS contract. Gross margin for Q4 2025 was 39.8% compared to 44.0%, due primarily to a lower percentage of reimbursed direct labor as a component of overall revenue from the BARDA PBS contract.

General and administrative expenses in Q4 2025 were $4.0 million, down from $4.5 million in Q4 2024 and reflecting lower spend on third-party accounting and legal providers. Net income for Q4 2025 was $0.6 million or $0.02 per diluted share, compared to a net loss of $7.7 million or -$0.41 per diluted share in the fourth quarter of 2024. Net income in Q4 2025 included a $4 million gain in the fair value of the company’s warrant liability as compared to a net loss of $5.4 million. Now we turn to the full year.

Research and development revenue decreased to $19.7 million from $29.6 million, reflecting the anticipated overall reduction in the company’s reimbursed costs associated with the BARDA Project BioShield contract during 2025, following the company’s submission of its De Novo application to the FDA. Gross margin was stable at 45.4% compared to 44.9%, reflecting a consistent mix of direct labor as a percentage of the total work performed on the BARDA Project BioShield contract from the prior year. G&A declined to $17.5 million from $19.9 million, reflecting a continued focus on operating efficiencies at the company.

Our net loss for the year was $7.6 million or $(0.29) per diluted share, compared to a net loss of $15.3 million or $(0.85) per diluted share, primarily due to the change in the fair value of the company’s warrant liability, reduced borrowing-related costs of $1.5 million, net amortization of debt discount, and improved operating efficiencies. As of December 31, 2025, we had approximately 30.7 million shares outstanding. With respect to our financial condition, as of December 31, 2025, cash improved to $15.4 million from $5.2 million at December 31, 2024, reflecting previously announced debt and equity financings completed during the year as well as warrant and stock option exercises. Total debt was $8.5 million. I will now turn the call back to Vince.

Vincent Capone, Chief Executive Officer, Spectral AI: Thanks, Tom. Before turning things over for questions, I would like to address our 2026 outlook. For 2026, we are forecasting revenue of approximately $18.5 million, which includes the effect of the new BARDA funding. This guidance does not include any significant contributions from the sale of the VPU system. With that, I will open up the floor to any questions.

Gary, Conference Operator: We will now begin the question and answer session. To ask a question, you may press star then one on your telephone keypad. If you are using a speakerphone, please pick up your handset before pressing the keys. To withdraw your question, please press star then two. At this time, we will pause momentarily to assemble our roster. Our first question is from Ryan Zimmerman with BTIG. Please go ahead.

Ryan Zimmerman, Analyst, BTIG: Good afternoon. Thanks for taking the questions. Let me just start by saying congrats on the BARDA funding and Vince, the new role. Maybe, you know, as we think about your transition into a commercial organization, you know, this year, Vince, you can talk to us a little bit about kinda how you’re thinking about preparing for commercialization, you know, what you need to do to get the organization ready to be a commercial organization and so forth. I have a few follow-ups.

Vincent Capone, Chief Executive Officer, Spectral AI: Sure. Good to hear from you, Ryan. I mean, there’s a few things that we’re working on in preparation for what we believe will be hopefully FDA approval. Some of that is, you know, we’ve already started our search for a new Chief Commercial Officer. We have also engaged Deloitte Consulting to help us with our strategic plan for commercialization moving forward, both in the U.S. and overseas. That is already underway. We continue to have plans in place to expand our sales team. I’d like to do that in concert with the hiring of a new Chief Commercial Officer. That should get us in a position where we’re ready to see sales inside and outside of BARDA in late 2026.

Ryan Zimmerman, Analyst, BTIG: Just to be clear, you know, let’s assume that the approval comes on time. The thirty systems that are distributed to burn centers around the U.S., how do you think about the commercial activity that is generated from that? Because if you’re not necessarily selling those systems, maybe ’cause again, it’s, you know, BARDA’s distributing them, just how do you think about kinda what that does to the business model, or how should investors think about that over time?

Vincent Capone, Chief Executive Officer, Spectral AI: Ultimately, each health system will make its own determination on really how they wanna treat the device if we can install it into their facilities, right? Whether it’s purchase or lease, it’s different for us, it’s a different revenue recognition from a company perspective. You know, we foresee an opportunity for us to be in place with each center that we can place a device at, you know, hopefully with a 3-year contract for both, you know, improvements in the software, the software licensing, and then the delivery of the device maintenance. You package that whole thing together. Again, it’s gonna depend on the health system on how we as a company treat that revenue stream.

You know, we think that we’re well-positioned to see. I don’t see that adding a lot to our revenue number for 2026, but that’ll be obviously significant in 2027, and clearly much more so in 2028, where you have, you know, the layering on of all the different levels of installations.

Ryan Zimmerman, Analyst, BTIG: Okay. Then, you know, with this new BARDA contract, which was, you know, great to see, you know, we didn’t expect, we certainly did not expect this kind of guidance, which is great, again, very positive to see for 2026. What kind of things are you gonna be working on with this additional money from BARDA to enhance DeepView, that, you know, allows like I imagine you have to be speeding up some things, maybe pulling forward some opportunities, you know, just given the development revenue that you’re getting now as part of this contract. What does that do for DeepView, you know, if we’re sitting here a year from now looking at some of the capabilities and some of the investments you’ve made over 2026?

Vincent Capone, Chief Executive Officer, Spectral AI: Yeah. I love that question. We have so many things that, you know, we see as kind of line of sight. We’re going to be doing a label expansion. I think that’s probably gonna be one of the first things you see where we’re gonna pick up different areas of the body. We’ll look to do a label expansion. We’re gonna do further work on our TBSA, total body surface area, offering to make it, you know, better for the doctors, better for the physician assistants, better for the nurses. That is a process that we’ve worked on significantly to get it to this point, and it’s part of our FDA submission. The next iteration of that is going to be much better. The next iteration after that, if there is one, will be even better.

Add that into improved EHR integration. I mean, at a minimum, we’re also working on things we’ve heard from other users. You know, we’re gonna improve the battery. We’re gonna improve some of the user interfaces. This refinement, I think, is going to make our device even that much more valuable in a burn center.

Ryan Zimmerman, Analyst, BTIG: Very helpful and congrats again, guys. Nice to see.

Vincent Capone, Chief Executive Officer, Spectral AI: Thanks, Ryan. I appreciate it.

Gary, Conference Operator: The next question is from Carl Byrnes with Northland Capital Markets. Please go ahead.

Carl Byrnes, Analyst, Northland Capital Markets: Thanks for the question, and congratulations again on the BARDA advance, particularly prior to DeepView’s approval here. Also Vince, your promotion and your new role, congrats there. With respect to the $31.7 BARDA advance, you know, I’m wondering if you can kinda tell us a bit how you expect that to hit in 2026 and 2027, and the same with respect to the $63 million remaining on the contract or thereabout in terms of filling CLIN 2, CLIN 3, and Clin f-

For I would call them obligations, but the buckets, they’re over fiscal 2026, 2027 and 2028. I know that’s a lot, but any sort of visibility you can give would be awesome. Thanks.

Vincent Capone, Chief Executive Officer, Spectral AI: No, thank you, Carl. Well, I think we’re clearly pleased that, you know, BARDA was able to accelerate the second phase of the contract for us in advance of FDA approval. They’ve been a valued and frankly a very supportive partner for us. This does a number of things for us. It’s gonna open up the opportunity for us. If we can gain FDA approval to really begin to start manufacturing devices with the new De Novo system in place, really start in earnest with hospital systems for the placement of these devices. That’s, you know, part of the contract acceleration. I can’t get into too many weeds on the terms of the contract as to what it’ll do in 2028.

We have, you know, we have economic outcome studies that we plan on doing. You know, we have an expanded label work that we’re gonna do internally for, you know, for expanding our label on what the indication is for. There’s outcome studies that we’re going to start in earnest sooner rather than later. All of this is great for us as an acceleration and providing us with, you know, getting to the part where we can provide better patient outcomes to burn patients and providing a better alternative so that we can help the healthcare system be in a position to really treat these patients in a more timely and more efficient manner.

Carl Byrnes, Analyst, Northland Capital Markets: That was great. Thank you. Congrats again.

Vincent Capone, Chief Executive Officer, Spectral AI: Thanks, Carl.

Gary, Conference Operator: The next question is from Ram Selvaraju with H.C. Wainwright. Please go ahead.

Ram Selvaraju, Analyst, H.C. Wainwright: Thanks very much for taking my questions. Just three quick ones. Firstly, can you just remind us of the timeframe within which you anticipate the entirety of the BARDA funds to ultimately be disbursed? Secondly, was wondering how you’re looking to approach the fine-tuning or revising of revenue guidance as and when the DeepView system achieves FDA licensure. Lastly, with respect to the potential optimization of DeepView’s value outside of the United States, I was wondering if you could perhaps say a few words on that. Thank you.

Vincent Capone, Chief Executive Officer, Spectral AI: Sure. Happy to do so. Three pretty broad questions, but let’s kinda walk through that. The BARDA contract in and of itself, I believe extends until 2030. If you take a look at the acceleration, that really runs mostly through 2028. That contract is going to help us with revenue earlier rather than later. You know, it. That’s the timeline for the entire BARDA contract. Ultimately, as things progress, that timeline may be moved up, but you know, that’s the terms of the BARDA contract in and of itself. You’re gonna see an acceleration through 2028. Refining and revising our forecast on revenue.

As I said to Ryan, you know, some of this is dependent upon health systems and how they wanna treat the actual deployment of the device. However they treat it is gonna really impact our revenue recognition. For us, the installation to burn centers is obviously a pivotal event, even if the revenue is recognized, say, over a 36-month period. You layer that on with the software licensing piece that is gonna benefit them as we make improvements, you’re gonna see that kinda stacking of installations in 2027 and 2028 as we move along the continuum of installations both in burn centers and EDs and level 1 trauma centers. That’s within and without BARDA. I like to make that point pretty clear.

I mean, we look to commercialize this in the United States with BARDA’s assistance, but not solely exclusively through BARDA’s assistance. That’s the same thing with respect to our U.K., our GCC, and our Australian international sale opportunities. We’re gonna modify our UKCA authorization to expand it to what is in the current DeepView system that’s under De Novo review with the FDA. At that point, we will pivot and look to deploy those devices overseas. That revenue model may be different as those health systems and some of them are nationalized, how they wish to treat the sale of the DeepView systems abroad. Again, I put little stock in those numbers for 2026.

They may be larger, but you’ll see more of that as a larger component of revenue clearly in 2027 and in 2028.

Ram Selvaraju, Analyst, H.C. Wainwright: Thank you.

Vincent Capone, Chief Executive Officer, Spectral AI: Thank you.

Gary, Conference Operator: The next question is from John Vandermosten with Zacks. Please go ahead.

John Vandermosten, Analyst, Zacks: Thank you. Hey, Vince. What does the training force look like and how will you go about training the trainers for this? ’Cause I assume you’re gonna have a group go out and get everybody up to speed on how to use them when you do the implementations.

Vincent Capone, Chief Executive Officer, Spectral AI: John, good to hear from you. You know, we have a group, a fairly decent staff of BMEs currently in place here, and we’re gonna expand. You know, we have that in the budget for 2026 on expanding both our sales reps and our biomedical engineers here at Spectral. It’s gonna be in concert with both the BMEs and our sales force to make sure we get out there and train many of these centers when they take the device how to use it. The device, and I know you’ve seen it, but I’m just gonna say it for others that haven’t, it’s intuitive.

You know, we have a queue to make sure that the image capture is the right distance. You know, we’re working on a number of different additional features to it to make it even more user-friendly. Yes, we’re gonna need to expand our training force. We plan on that. We plan on expanding our sales force. I’m just excited about where the company ended in 2025. Our cash number is significant. I think we’re in the best financial position we’ve ever been in, especially during my tenure here, which is now, you know, into my fifth year. You know, I’m excited with what we have and where we’re going and we’ll marry our training force to meet the expansion of where we’re going.

John Vandermosten, Analyst, Zacks: Do you have a number in mind in terms of how many individuals that might be to train?

Vincent Capone, Chief Executive Officer, Spectral AI: I don’t. I mean, I have an estimate in my head. You know, we’re talking. We’re not talking hundreds. You know, we’re talking much smaller number than that. But I’m pleased that we’re working in concert with Deloitte Consulting to make sure that we have the right path forward.

John Vandermosten, Analyst, Zacks: Okay. How much time after clearance do you think you’ll need to place the first units?

Vincent Capone, Chief Executive Officer, Spectral AI: John, I wish I had a crystal ball, right? All I know is it’s gonna take us a little while to manufacture the devices. But you know, my hope and as we’ve said this before, my hope is that we place devices in late 2026 and you’ll see a significant pivot in 2027.

John Vandermosten, Analyst, Zacks: Last question is just on looking forward in terms of the allocation of R&D spend. I know you’ve got Snapshot. There’s some indications outside of burn. Then also, you know, you’ve talked about future evolution of the DeepView cart, and then, you know, perhaps, I guess, development of AI technology or just the AI, ML side of things. How do you see that breaking down going, you know, over the next year, 2027 perhaps, and beyond in terms of that R&D spend?

Vincent Capone, Chief Executive Officer, Spectral AI: Well, I will tell you that we’re definitely gonna do a label expansion with head, hands, and feet. I mean, that’s definitely gonna be there. We look at a number of different opportunities for us. A number are being presented to us from third parties. I think the lowest hanging fruit will be the label expansion, the work on that. There may be another indication whether it is critical limb ischemia and things related to that, whether it’s amputations or whether we partner with you know, maybe a wound bed, you know, a wound company to check biofilm markers or wound bed preparedness. You know, we continue to see that as you know, as a near-term additional indication. But you know, look, we’re excited on where we ended up 2025.

We’re excited about BARDA’s commitment to us with an additional almost $32 million. We’re excited to bring this to the burn community and then expanding thereafter.

John Vandermosten, Analyst, Zacks: Okay. Thank you. Thank you, Vince.

Vincent Capone, Chief Executive Officer, Spectral AI: Thanks, John.

Gary, Conference Operator: This concludes our question and answer session. I would like to turn the conference back over to Vince Capone for any closing remarks.

Vincent Capone, Chief Executive Officer, Spectral AI: Gary, thanks. In closing, I would like to again thank our investors for their continued support of our company. I’m excited to deliver on our commitment to develop and commercialize our DeepView system, which we believe will significantly improve patient outcomes. With our strong cash position and continued advances in our product development, I am pleased with where we are to date and where we are going in the near future. Thank you all for your attendance and interest in our company. Have a good evening.

Gary, Conference Operator: The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.