Why Nano-X Imaging Stock Soared Today

Nano-X Imaging (NASDAQ: NNOX), the Israeli X-ray imaging company that hopes to disrupt the medical devices market with a business model charging per X-ray delivered rather than simply selling X-ray machines, jumped in Thursday trading, rising 14.2% through 12:30 p.m. ET.

Why? This morning, Nano-X announced that it has received clearance from the U.S. Food and Drug Administration (FDA) to use its Nanox.ARC X technology to produce "tomographic images for general use, including musculoskeletal, pulmonary, intra-abdominal and paranasal indications" -- and presumably, to charge per image.

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Nano-X's big news day

Nano-X says its proprietary Nanox.ARC X technology uses artificial intelligence in conjunction with 2D X-ray scans to produce "a more comprehensive, sliced three-dimensional view of the body." (Yes, you read that right. Nano-X is an artificial intelligence company now.)

It's also moving quickly to build out a market for its services. The company noted that the FDA granted 510(k) clearance "less than 30 days from the date of submission" of its request. The company further notes that a Nanox.ARC X system itself is plug-and-play and can be installed in a medical location in just a single day.

Is Nano-X stock a buy?

Unprofitable today, with $53.5 million in trailing-12-month losses and about $39 million in annual cash burn, Nano-X is the kind of growth stock that must move quickly to justify its valuation -- and replenish its cash.

Winning FDA clearance for its proprietary 3D technology is only the first step in achieving that growth, however. Now, the company needs to demonstrate a demand for its services, which can translate into rapid sales growth and eventually profits.

Last year, Nano-X grew sales at a respectable 14%, a good start. Still, looking ahead, Wall Street analysts polled by S&P Global Market Intelligence don't see the company turning profitable before 2028 (although free cash flow may arrive sooner). Right now, whether Nano-X is a buy depends a lot on whether it can start generating cash...before it burns through the $73 million in cash it already has.

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.