Filing summary
Registrant mismatch: The supplied filing is HealthCor Catalio Acquisition Corp.’s Form 10-Q for the quarter ended March 31, 2021, not a Hyperfine, Inc. filing. The figures and disclosures below describe HealthCor Catalio, a blank-check company.
Business context and reporting period
HealthCor Catalio was formed to pursue a business combination, with a stated focus on healthcare businesses in the United States and other developed countries. It had not commenced operations by March 31, 2021; the quarter’s activity primarily related to its January 29 IPO and searching for a target. It reported no operating revenue and expects none before a business combination.
Financial results and liquidity
- Quarter results: Operating and formation costs were $153,200; trust-account interest was $4,434; net loss was $148,766. Net loss per non-redeemable ordinary share was $0.03. Revenue and operating margins are not meaningful for this pre-combination SPAC.
- Cash flow: Operating cash use was $645,604; investing cash use was $207.0 million, primarily funds placed in the trust; financing provided $208.5 million. Cash outside the trust increased to $868,003 from zero at year-end.
- March 31 balance sheet: Total assets were $208.45 million, including $207.00 million in the trust account and $868,003 in cash outside the trust. Current liabilities were $123,628; total liabilities were $7.37 million, including a $7.245 million deferred underwriting fee payable upon a completed business combination.
- Equity and redemption: $196.08 million representing 19,607,812 redeemable Class A shares was presented as temporary equity. Shareholders’ equity was $5.00 million. The related-party promissory note outstanding at December 31, 2020 was repaid in February; no long-term debt was reported.
- IPO financing: The company sold 20.7 million public shares for $207.0 million and 614,000 private-placement shares for $6.14 million. It reported $11.93 million in transaction costs, including $4.14 million paid underwriting fees, $7.245 million deferred underwriting fees, and $543,907 of other offering costs.
Changes versus prior period
Compared with December 31, 2020, the company moved from pre-IPO formation to holding $207.0 million in trust after its January IPO. Total assets rose from $304,412 to $208.45 million, while shareholders’ equity rose from $20,000 to $5.00 million. The filing presents no prior-year-quarter operating comparison.
Outlook, risks, and other matters
- The company had until January 29, 2023 to complete a business combination; otherwise, it was required to redeem public shares and wind up, subject to the filing’s terms.
- Management said it expected available funds outside the trust to cover anticipated operating needs, but cautioned that actual target-search and transaction costs could exceed estimates and additional financing might be needed.
- Risks highlighted include increased SPAC competition for suitable targets, potentially higher deal costs, and increased cost or reduced availability of directors’ and officers’ insurance. Management also noted that COVID-19 could adversely affect the company or its target search, but the impact was not determinable.
- The trust held short-term U.S. Treasury-related investments; management reported no material market or interest-rate risk. Disclosure controls were deemed effective, with no material changes to internal control reported during the quarter. No legal proceedings were reported.
Important facts to verify
- Confirm the intended issuer: this filing is for HealthCor Catalio Acquisition Corp., not Hyperfine, Inc.
- Verify the trust balance, redemption-share classification, and the conditions under which trust funds and the deferred underwriting fee become available or payable.
- Review the SPAC’s business-combination deadline, redemption and liquidation provisions, and financing needs if transaction costs exceed available cash.
- Assess the target-search risks disclosed, including SPAC competition and directors’ and officers’ insurance availability and cost.