SPECTRAL AI INC (NASDAQ:MDAI) Q3 2025 Earnings Miss Estimates and Revenue Declines 54%

SPECTRAL AI INC (NASDAQ:MDAI) reported its third-quarter 2025 financial results, revealing a performance that fell short of analyst expectations on both the top and bottom lines. The market reaction has been negative, with shares declining in after-hours trading, reflecting investor concerns over the company's declining revenue and widened losses during the period.

Earnings and Revenue Versus Estimates

The company's Q3 2025 results missed key analyst consensus estimates, a primary driver behind the negative market sentiment.

• Revenue: The company reported research and development revenue of $3.8 million. This fell significantly short of the analyst estimate of $5.16 million and represents a 54% decline from the $8.2 million reported in the same quarter last year.
• Earnings Per Share (EPS): Spectral AI reported a non-GAAP EPS loss of $0.13 for the quarter. This was worse than the analyst estimate for a loss of $0.0842 per share.

The substantial revenue drop was attributed by the company to an anticipated reduction in work under its contract with the Biomedical Advanced Research and Development Authority (BARDA), following the submission of its De Novo application to the U.S. Food and Drug Administration (FDA) in June 2025.

Financial Performance and Business Highlights

Beyond the earnings and revenue miss, the press release detailed a mixed financial picture. The company's net loss for the quarter widened to $3.6 million, compared to a net loss of $1.5 million in Q3 2024. This was primarily driven by the sharp decline in revenue, though partially offset by a reduction in borrowing-related costs.

However, the company highlighted a strengthened balance sheet. Spectral AI ended the quarter with a cash position of $10.5 million, a significant improvement from $3.7 million a year prior. This was bolstered by approximately $2.5 million received from stock option and warrant exercises during the quarter. Furthermore, after the quarter's end, the company completed a securities offering and private placement, raising aggregate gross proceeds of approximately $7.6 million, providing additional financial runway.

A key operational focus remains the regulatory pathway for its DeepView™ System. The company reported ongoing progress toward its FDA De Novo submission, a critical milestone for the commercial launch of its AI-based wound assessment technology in the United States.

Updated Financial Guidance

Management provided updated financial guidance for the full 2025 fiscal year, lowering its revenue expectations. The company now anticipates revenue of $18.5 million, down from its previous guidance of $21.5 million. This revision is attributed to timing of work on the BARDA contract and some impact from the current U.S. government shutdown, with the company noting that much of this impact is expected to be recaptured in fiscal year 2026.

This revised outlook of $18.5 million sits below the current analyst sales estimate for the full year, which stands at $21.94 million. For the upcoming fourth quarter, analysts are estimating revenue of $4.76 million and an EPS loss of $0.0969.

Market Reaction and Investor Takeaway

The negative after-market price movement is a direct response to the quarterly earnings and revenue miss, coupled with the lowered revenue guidance for the year. Investors are likely weighing the company's progress on its FDA submission and its solid cash position against the near-term financial headwinds and delayed commercialization timeline. The company’s future remains heavily tied to the successful regulatory approval and subsequent market adoption of its DeepView™ System.

For a more detailed look at historical and estimated future performance, you can review additional earnings and estimate data for Spectral AI (NASDAQ:MDAI).

Disclaimer: This article is for informational purposes only and is not intended as investment advice. The information presented should not be construed as a recommendation to buy or sell any security. Readers should conduct their own research and consult with a qualified financial advisor before making any investment decisions.