CVRx, Inc. — Q2 2021 Form 10-Q Summary
Reporting period: Quarter and six months ended June 30, 2021. Financial statements are unaudited; dollar amounts below are in millions unless noted. CVRx develops and commercializes BAROSTIM NEO, a medical device for heart failure and resistant hypertension.
Financial performance and position
| Metric | Q2 2021 | Q2 2020 | Six months 2021 | Six months 2020 |
|---|---|---|---|---|
| Revenue | $3.12 | $1.25 | $5.98 | $2.97 |
| Gross profit | $2.21 | $0.91 | $4.20 | $2.19 |
| Gross margin | 71% | 72% | 70% | 74% |
| Operating expenses | $7.88 | $3.97 | $14.09 | $8.53 |
| Operating loss | $(5.67) | $(3.06) | $(9.89) | $(6.34) |
| Net loss | $(17.75) | $(3.67) | $(26.38) | $(7.48) |
- U.S. revenue rose to $2.11 million in Q2 from $0.20 million a year earlier; Europe revenue was $1.02 million, down 3%. For the first half, U.S. revenue increased 513% to $3.72 million, while Europe declined 4% to $2.27 million.
- Q2 selling, general and administrative expense increased 207% to $5.63 million, largely reflecting headcount and compensation, commercial-launch marketing, consulting, stock compensation and travel. First-half research and development expense declined 9% to $4.01 million, principally due to lower clinical study costs.
- Net loss includes a substantial non-cash fair-value expense on preferred-stock warrants: $11.4 million in Q2 and $15.1 million for the first half. The warrant liability was $19.1 million at June 30, versus $3.9 million at year-end. This expense materially increased reported net loss.
- Cash and cash equivalents were $47.1 million at June 30, down from $59.1 million at December 31, 2020. First-half operating cash use was $11.5 million, investing cash use was $0.5 million, and cash declined by $12.0 million.
- Debt was $20.0 million principal, reported net of financing costs at $19.4 million. The Horizon loan is secured by substantially all assets, carries a floating rate of 10% plus the amount by which 30-day LIBOR exceeds 2.2%, and had an interest-only period through April 2022. Principal and interest payments were scheduled to begin in May 2022; a $0.7 million final payment is due in October 2024. The company reported covenant compliance at quarter-end.
Material changes and subsequent events
- Revenue growth primarily reflected the U.S. commercial launch and expansion: 31 active U.S. implanting centers at June 30, 2021, versus two a year earlier, and eight U.S. sales territories. Europe remained affected by COVID-19-related procedure disruption.
- Gross margin declined year over year, partly because a larger share of sales were full systems, which include both an implantable pulse generator and stimulation lead.
- On July 2, 2021, after quarter-end, CVRx completed its IPO at $18 per share, issuing 8.05 million shares and receiving approximately $133.3 million in net proceeds. All preferred shares converted into common stock. The filing presents pro forma June 30 cash of $180.4 million after the IPO and related adjustments.
Outlook, risks and contingencies
- No specific quarterly or annual revenue or earnings guidance is provided. Management expects operating losses and negative operating cash flows to continue for the foreseeable future, with significant investment in U.S. commercialization, sales-force expansion and research and development.
- Management stated that cash resources and revenue were expected to meet forecast operating, capital expenditure and debt-service needs for at least 12 months. This assessment predates the IPO proceeds; the filing also cautions that further financing may be needed and may not be available on acceptable terms.
- COVID-19 had reduced or delayed procedures and continued to pose uncertain risks, although management cited recovery trends, new account expansion and hospitals performing elective procedures closer to pre-pandemic levels.
- Key risks include reliance on BAROSTIM NEO as the principal product; uncertain market adoption and reimbursement; competition; limited commercial operating history; dependence on third-party suppliers; manufacturing and single-facility concentration; clinical, regulatory and product-liability risks; and losses and cash consumption.
- The Horizon loan includes revenue and other covenants, restrictions on certain transactions and a lien on substantially all company assets. The company reported no material legal proceedings and no contingent liabilities requiring accrual or disclosure at June 30. Disclosure controls were assessed as effective.
Most important facts for investors to verify
- Whether U.S. BAROSTIM NEO adoption and procedure volumes continue to expand, and whether reimbursement supports sustained growth.
- Whether gross margin stabilizes as sales mix and manufacturing volumes change, and how commercial investment affects operating losses and cash use.
- The cash runway after incorporating IPO proceeds, ongoing operating burn and scheduled Horizon debt payments.
- The effects of COVID-19, supplier availability, clinical data and regulatory developments on sales and commercialization plans.
- The warrant-related non-cash fair-value charge and preferred-stock conversion effects when comparing reported earnings and per-share results across periods.