Leading medical diagnostics artificial intelligence company Spectral AI Inc. (NASDAQ: MDAI) announced on Monday that it had secured a new contract with the Defense Health Agency and the U.S. Army Medical Material Development Activity.
The Dallas-based company endeavors to provide medical diagnostics that allow for faster and accurate treatment decisions in wound care with applications involving patients with burns and diabetic foot ulcers. Spectral AI’s products include DeepView, which is a predictive diagnostic device that offers clinicians an objective and immediate assessment of a wound’s healing potential prior to treatment or other medical intervention.
The Army contract is valued at over $500,000 and supports the development of the DeepView handheld wound imaging system, which is designed to enhance medical care in military and home health care and other settings. This latest contract increases the total non-dilutive funding for the handheld device to over $6 million.
Spectral AI CEO Pete Carlson commented, “We firmly believe that this collaboration will make a profound impact, as the miniaturization of medical devices is essential for introducing innovative medical care to a wider range of clinical settings and patients.”
The U.S. government has provided Spectral AI with significant financial support. Total non-dilutive funding has exceeded $250 million, including $150 million awarded in the past six months. These funds have been pivotal in advancing the company’s AI-driven health care innovations, particularly in the field of wound care diagnostics.
A Profound Impact on Spectral AI Stock?
Where does the stock go from here?
Recently, Spectral AI also announced the formation of a wholly-owned subsidiary dedicated to advancing intellectual property (IP) relevant to the broader AI ecosystem, with a specific emphasis on health care.
Last month, the board of directors selected Chief Financial Officer Peter Carlson to replace outgoing Chief Executive Officer Wensheng Fan, who transitioned to chief innovation strategist and senior advisor to the CEO. The company also reaffirmed its forecast revenue growth for 2024.
The stock went public in April of 2021, and shares are down about 80% since then, as well as more than 21% year to date. They jumped about 20% after the news of the new contract but were last seen trading for less than $2 apiece.
Only one analyst covers the stock, initiating coverage in January with a Buy rating. That analyst sees the stock more than doubling in the coming 12 months to $4 per share, noting that the advanced wound care market is large and underpenetrated. Moreover, the analyst expects Spectral AI’s licensing model to drive recurring revenue at high margins. That could make it a stable growth company.
Whether more analysts will jump on this bandwagon and how much that may change expectations for the stock remains to be seen.
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