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DALLAS - Spectral AI, Inc. (NASDAQ: MDAI), a developer of artificial intelligence-driven medical diagnostics with a current market capitalization of $33.16 million, has recently completed a debt financing agreement, securing up to $15 million from Avenue Venture Opportunities Fund II, L.P., part of Avenue Capital Group. The initial drawdown of $8.5 million will bolster the company’s cash reserves to over $14 million, enabling an acceleration of the commercialization of its DeepView® System, which is designed to predict burn healing potential. According to InvestingPro data, this financing comes at a crucial time, as the company’s short-term obligations currently exceed its liquid assets.
The financing package also includes an equity financing component, with $2.7 million raised from both institutional and existing investors. As part of the deal, Spectral AI has access to an additional $6.5 million in debt, subject to the U.S. Food and Drug Administration’s clearance of the DeepView System. Upon FDA approval, the company also plans a $7.0 million equity raise. The company has demonstrated strong revenue growth of 44.52% over the last twelve months, though InvestingPro analysis indicates analysts don’t expect profitability this year.
The three-year financing agreement has a minimum 15-month interest-only payment period, extendable to 24 months upon meeting certain milestones. Furthermore, Avenue Capital Group will receive warrant coverage totaling 8.5% of the total funding commitment, with an exercise price set at $1.80 per share.
In the interest of market stability, Spectral AI has agreed to a minimum six-month standstill on additional stock sales. SP Angel Corporate Finance LLP and Dominari Securities LLC served as placement agents for UK and U.S. investors, respectively.
Dr. J. Michael DiMaio, Chairman of the Board of Directors of Spectral AI, expressed confidence that the financing would enable the company to finalize the commercialization of the DeepView System and improve patient outcomes in the burn treatment sector. Chad Norman, Senior Portfolio Manager at Avenue Capital Group, also conveyed optimism about the system’s potential benefits for burn victims.
Spectral AI’s DeepView System aims to revolutionize wound care management by providing clinicians with an objective and immediate assessment of a burn wound’s healing potential. The company’s approach could surpass current standards of care by offering rapid and precise treatment insights, potentially improving patient outcomes and reducing healthcare costs.
This report is based on a press release statement and contains forward-looking statements that involve risks and uncertainties. Readers are cautioned that actual future results may vary significantly from those projected or contemplated in the forward-looking statements. While trading at $1.70 per share, InvestingPro analysis suggests the stock is currently undervalued, with analyst targets ranging from $3.00 to $8.10 per share. Subscribers can access additional financial health metrics, detailed valuation analysis, and more than 4 additional ProTips for MDAI on the InvestingPro platform.
In other recent news, Spectral AI has been making significant strides with its DeepView System, particularly in the field of burn care. The company announced the completion of its Burn Validation Study, which demonstrated that the DeepView System outperformed traditional physician assessments in identifying non-healing burn wounds. The study involved 164 patients and revealed that the system achieved an 86.6% accuracy rate, a notable improvement over the 40.8% accuracy of physician clinical judgment. Spectral AI plans to submit these results to the FDA by mid-2025, aiming for De Novo Clearance and potential commercialization in early 2026.
Additionally, Spectral AI has expanded its presence internationally by installing the DeepView System at three hospitals in Australia, marking a pivotal step in its global expansion strategy. In analyst coverage, Northland maintained an Outperform rating with a $6 price target, while H.C. Wainwright reaffirmed a Buy rating with a $3.50 price target, reflecting confidence in the system’s commercial potential. The company also completed pediatric enrollment for its U.S. Burn Pivotal Study, which is one of the largest domestic burn studies to date. This study aims to validate the AI-driven algorithm of the DeepView System, supporting future regulatory submissions. Spectral AI’s ongoing efforts underscore its commitment to advancing medical diagnostics and improving patient care in the healthcare industry.
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