Shares of medical imaging company Nano-X Imaging (NASDAQ: NNOX) -- commonly referred to as Nanox -- went up on Thursday after some pretty substantial news broke regarding regulatory clearance. At 10:50 a.m. ET, Nanox stock was only up 6%, but it had been up as much as 24% earlier in the morning.
Another step in the right direction
In a press release this morning, Nanox announced that the U.S. Food and Drug Administration (FDA) had expanded clearance for its flagship medical device, the Nanox.ARC. The FDA had previously cleared it for certain applications, but today that clearance expanded to include pulmonary and intra-abdominal images, among other things.
Nanox has a differentiated business model that seeks to generate recurring, per-scan revenue from its medical imaging software. It plans to get its machines out there for free or at a reduced price. But to do this, it needs to satisfy the FDA. Therefore, today's news is a step toward its long-term vision.
Still a long ways to go
Like many early-stage medical device stocks, Nanox stock can be very volatile. The slightest positive news can send shares soaring, but level-headed investors need to acknowledge that the company still has a long ways to go to become profitable. The company reported financial results for the third quarter of 2024 last month, showing revenue of just $3 million.
I don't think investors should buy Nanox stock in light of today's news unless they're comfortable with many years of volatility and are prepared for the possibility of substantial losses. I'm not necessarily saying that will happen. But there are still plenty more chapters in Nanox's story yet to be written, which makes it hard to know what will happen.
That said, today's news is positive, and Nanox shareholders are justified in their excitement.
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Jon Quast has positions in Nano-X Imaging. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
