Why Shares of Nanox Climbed 10.6% in June

What happened

Nano-X Imaging (NNOX -2.36%), an X-ray technology company that has the potential to be a disruptor in the industry, saw its shares rise 10.6% in June, according to data from S&P Global Intelligence. The stock hit its high for the month at $12.30 on June 24. It has a 52-week low of $8.23 and a 52-week high of $32.42.

So what

The company, more commonly referred to as Nanox, saw its stock rally in June, but that was more a response to the lowered price of the stock, with bargain hunters taking a flyer on the company.

Nanox's technology works by using nanoparticles, and the company says it can power its imaging systems without the huge amount of heat that conventional X-ray machines require. That means that Nanox can manufacture its machines far more cheaply, and they can be operated with less expense as well.

The catch is that its devices -- the Nanox.ARC and the Nanox.CLOUD -- haven't been approved yet by the Food and Drug Administration (FDA). The company said it expects approved by the fourth quarter of this year and would begin manufacturing shortly after that.

If the company can stay on target for the FDA approval and delivery of its systems (it plans to produce 15,000 by the end of 2024), then it is in a good position to soon become profitable.

In the first quarter, the company reported that it lost $12.7 million, but that it has $219.3 million in cash, plenty to allow it to ramp up marketing later this year. It also had its first full quarter of revenue, reaping $1.8 million, thanks to its purchases of Zebra Medical Vision (now Nanox.AI); MDW (now Nanox Marketplace), a centralized marketplace that connects imaging facilities with radiologists; and USARAD Holdings, which provides parallel teleradiology services.

Now what

The key will be whether the FDA signs off on Nanox.ARC and Nanox.CLOUD and whether Nanox can keep costs down as it switches to manufacturing.

It's also going to be interesting to see how quickly the medical device company's technology is adopted in an industry where many players have already invested a great deal in conventional systems. The company said it plans to distribute the machines at no cost, profiting instead on usage fees of the devices, which the company calls medical screening as a service.