Cardio Diagnostics Holdings, Inc. quarterly report, Q2 FY2025

Cardio Diagnostics Holdings, Inc. (CDIO) - Q2 2025 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended June 30, 2025. Cardio Diagnostics Holdings, Inc. is a medical technology company developing AI-driven DNA biomarker testing for cardiovascular disease. The company operates as a single segment focused on product testing, primarily offering the Epi+Gen CHD and PrecisionCHD tests. The financial statements reflect a 1-for-30 reverse stock split effective May 12, 2025, with all prior period data retroactively adjusted.

Key Financial Metrics

Metric Q2 2025 (3 Months) Q2 2024 (3 Months) YTD 2025 (6 Months) YTD 2024 (6 Months)
Revenue $7,475 $7,870 $8,415 $23,798
Net Loss $(1,683,199) $(1,287,995) $(3,318,263) $(5,451,579)
Loss Per Share (Basic/Diluted) $(0.97) $(1.71) $(1.94) $(7.49)
Cash and Equivalents (End of Period) $7,966,500 (as of June 30, 2025)
Total Assets
Total Liabilities $671,848
Stockholders' Equity $9,724,699
Operating Cash Flow (6 Months) $(2,971,566) Used

Material Changes vs. Prior Period

  • Revenue Decline: YTD revenue decreased by approximately 65% compared to the prior year ($8,415 vs. $23,798). Management attributes the Q1 decline to the conclusion of a specific testing initiative with Family Medicine Specialists, though Q2 revenue indicates continued onboarding of new providers.
  • Net Loss Reduction: While Q2 net loss increased by $395,204 year-over-year due to higher personnel costs, the YTD net loss decreased significantly by $2.13 million. This improvement is primarily driven by a massive reduction in stock-based compensation expenses ($61,390 in 2025 vs. $2.55 million in 2024).
  • Expense Structure: Selling, General, and Administrative (SG&A) expenses increased in Q2 2025 compared to Q2 2024, driven by higher payroll, legal, and R&D costs. However, YTD SG&A expenses were lower than the prior year due to the aforementioned stock compensation variance.
  • Liquidity: Cash balances increased slightly to $7.97 million, supported by net proceeds of $3.42 million from the sale of common stock under an At-the-Market (ATM) issuance agreement.

Outlook, Risks, and Contingencies

  • Capital Needs: The company expects to continue incurring losses and negative operating cash flows. It relies on the ATM offering and potential future equity/debt issuances to fund operations, laboratory setup, and FDA submission activities. Management notes that raising capital at current stock prices presents dilution challenges.
  • Regulatory Update: A federal district court vacated the FDA's final rule regarding Laboratory Developed Tests (LDTs) on March 31, 2025. The court ruled that LDTs do not meet the definition of a medical device, removing the requirement for premarket authorization that was set to phase in May 2025.
  • Legal Contingencies:
    • Boustead Securities: Dispute regarding success fees from a terminated 2021 agreement. The company disputes the claim and believes no material adverse impact will occur.
    • The Benchmark Company: Alleged damages regarding a right of first refusal for a prior transaction. The company is evaluating the claim.
    • Securities Law Firm: A demand letter regarding the S-4 Registration Statement remains unresolved, though no lawsuit has been filed.
  • Internal Controls: Management identified a material weakness in internal controls due to inadequate segregation of duties. Remediation plans, including approval matrices and automation, are in progress but not yet fully implemented.

Investor Verification Checklist

  • Revenue Sustainability: Verify the pipeline of new provider contracts to confirm if Q2 revenue represents a sustainable trend or a temporary fluctuation following the Q1 initiative conclusion.
  • Cash Runway: Assess the sufficiency of the $7.97 million cash balance against the projected burn rate, considering the need to fund the new laboratory facility and ongoing R&D.
  • Dilution Risk: Monitor the terms and volume of future equity issuances under the ATM agreement and the proposed 20% share issuance proposal for the upcoming annual meeting.
  • Legal Exposure: Track the status of the Boustead Securities and Benchmark Company disputes to ensure no unexpected liabilities materialize.
  • Control Remediation: Confirm the timeline for fully implementing the remediation of the material weakness in internal controls over financial reporting.