Spectral AI (NASDAQ:MDAI) lowered its 2026 research and development revenue outlook as it reported a decline in third-quarter revenue and continued preparations for the first commercial sales of its DeepView AI burn assessment system.
The company now expects approximately $13 million in research and development revenue for the year, down from its previous forecast of approximately $18.5 million. Chief Financial Officer David McGuire attributed the change primarily to the completion of a government-funded handheld device program and the timing of development work reimbursed under a contract with the Biomedical Advanced Research and Development Authority, or BARDA.
The revised outlook excludes revenue from DeepView AI device sales and any new or extended government awards. Chief Executive Officer Vincent Capone said first commercial sales remain an achievable goal for 2026.
Revenue Falls Under BARDA Cost-Sharing Arrangement
Third-quarter research and development revenue fell 24.7% to $2.9 million from $3.8 million a year earlier. BARDA revenue declined to $2.7 million from $3.4 million, while revenue from other U.S. government programs fell to $0.1 million from $0.4 million as work on the handheld device program was completed.
McGuire said the quarter was the first full period under the follow-on development phase of Spectral AI’s current BARDA contract. Under that phase, the work is narrower in scope and the company shares development costs with BARDA.
Gross margin declined to 27.2% from 42.7%, reflecting Spectral AI’s share of those costs. McGuire said the quarter was indicative of continuing gross margins under the current phase of the contract, while commercial sales would be incremental and could improve margins.
Total operating expenses declined to $4.7 million from $5.0 million. Research and development expense rose to $2.0 million, primarily because of a U.K. label expansion study, while general and administrative expense fell to $2.3 million, largely due to lower legal and related professional fees.
The company reported a net loss of $3.7 million, or $0.11 per share, compared with a loss of $3.6 million, or $0.13 per share, a year earlier. Its adjusted EBITDA loss widened to $3.7 million from $3.1 million.
Commercial Rollout and Reimbursement
Capone said Spectral AI began manufacturing the first 30 DeepView AI systems during the quarter for BARDA-supported deployments at U.S. burn centers. The system received FDA De Novo authorization in May, according to McGuire.
Capone said the company is working through hospital and burn center procurement processes, offering customers the choice of purchasing or leasing devices. McGuire said the commercial model pairs those arrangements with recurring software and service revenue under agreements with a minimum three-year term.
Spectral AI has also applied to the Centers for Medicare & Medicaid Services for a new technology add-on payment that, if approved, would provide hospitals with additional Medicare reimbursement for eligible inpatient use. Capone said the company requested $2,750 per patient and expects a decision in August 2027. The proposed payment would have a two- to three-year term beginning in October 2027, he said.
On physician reimbursement, Capone said a pathway has been advanced for January 2027 with pricing supported by local Medicare Administrative Contractors. The company is working to move from a Category III CPT code to a Category I code, an effort it expects to support with a planned clinical study.
Studies, International Timing and Cash
Spectral AI expects to begin its U.S. Triage and Treatment Outcomes study at four to five burn centers in early December, with plans to expand to 12 centers by the end of the first quarter of 2027. The study will evaluate the system’s potential to improve surgical precision, accelerate treatment decisions and reduce hospital stays, Capone said.
In the U.K., the company has enrolled 10 patients in a self-funded study seeking to expand its label to include burns on the head, hands and feet. Separately, Spectral AI now expects an update to its existing U.K. burn assessment approval in early 2027, rather than by year-end. Capone said the company plans initial sales and placements in either the U.K., Australia or Gulf Cooperation Council countries after that approval.
Spectral AI ended September with $11.2 million in cash, down from $15.4 million at the end of 2025. It used $10.5 million in operating activities during the first nine months of 2026. Its $15 million Avenue Capital facility is fully drawn, with interest-only payments through March 2027 and maturity in March 2028, McGuire said.
About Spectral AI (NASDAQ:MDAI)
Spectral AI, Inc. is a medical diagnostic technology company focused on using artificial intelligence and advanced imaging to support earlier, more objective assessment of wound healing. The company develops predictive diagnostic systems intended to help clinicians evaluate wounds and make treatment decisions. Its principal product is the DeepView System, a noninvasive imaging and artificial intelligence platform designed to assess burn wounds and predict the likelihood that injured tissue will heal without surgical intervention.
