Nanox offers up to $200M to pool digital X-ray technology in Zebra Medical merger

For once—and for Nanox, at least—the sound of hooves does, indeed, herald the arrival of a zebra.

The digital X-ray machine maker has allotted a total of $200 million to acquire Zebra Medical Vision, which develops artificial intelligence-powered systems to spot breast cancer, brain bleeds and more in standard X-ray images.

Under the terms of the deal, Nanox will pay $100 million up front to merge Zebra Medical’s assets with its own. Once the merger is complete, up to $100 million more will be doled out over time as Zebra Medical hits certain milestones, including $16 million if the new Nanox subsidiary signs three new business contracts within six months of the deal’s close.

All $200 million will be distributed in the form of Nanox shares.

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Combining Nanox and Zebra Medical’s digital imaging technologies will essentially create a comprehensive system for collecting, processing and analyzing X-ray data.

Nanox has developed a Star Trek-inspired “biobed” that runs on a cold cathode system, which the company says will make digital X-rays more accessible and affordable around the globe compared to traditional imaging systems that rely on heated metal filaments.

The single-source Nanox.ARC machine was cleared by the FDA earlier this year. Next on Nanox’s checklist of regulatory approvals are a multisource version of the digital X-ray bed and the Nanox.CLOUD platform, which connects to the X-ray machines to store images, flag them for radiologist review and manage billing and reporting.

Zebra Medical’s software, meanwhile, would slot easily into that workflow: Its AI systems transform digital X-ray readings into 3D models and process those images to detect early signs of disease.

So far, the company has received the FDA’s OK for seven of its software solutions. The most recent of these include a program to help orthopedic surgeons map out procedures and an algorithm that automatically spots suspicious, potentially cancerous lesions in mammography images.

“We understand that in order to truly lead and shape this new AI-enabled diagnostic space, we’ll need both the superb hardware capabilities and coming install base, which Nanox delivers, and the AI and cloud delivery capabilities, combined with proven regulatory and quality framework, which Zebra Medical Vision has built over seven years,” Eyal Gura, co-founder of Zebra Medical Vision, said in a release.

The merger would put Nanox and Zebra in the company of imaging technology giants like GE Healthcare, which has increasingly been merging its own X-ray machine and AI software portfolios to build smarter, all-inclusive imaging systems. Amid the COVID-19 pandemic, for example, GE added a new algorithm to its fixed and mobile scanners to automatically monitor the placement of ventilator tubes in chest X-rays of critical care patients.

RELATED: FDA clears Zebra Medical Vision's X-ray modeling AI for orthopedic surgery planning

Alongside news of the Zebra Medical merger, Nanox also laid out plans to buy longtime partner USARAD, a radiology network. That deal will total $30 million, split between $21 million in Nanox shares and $9 million in cash.

This subsequent buyout will potentially give Nanox an easier pathway to bringing its digital X-ray machines—equipped with Zebra Medical’s AI—into the medical practices and urgent care centers where USARAD’s more than 300 U.S. radiologists are based.

Though Nanox didn’t issue a definitive timeline to close either transaction, the company is likely looking to the acquisitions to boost its bottom line sooner than later. In its second-quarter earnings, Nanox reported a net loss of $13.6 million, more than double the $6.4 million net loss registered during the same period last year.