COCH

Envoy Medical, Inc. (COCH) - 10-K Summary for Fiscal Year Ended December 31, 2025

Business Context and Reporting Period

Envoy Medical, Inc. is a hearing health company focused on developing fully implanted medical technologies. The reporting period covers the fiscal year ended December 31, 2025. The Company is an emerging growth company and a smaller reporting company. Its primary focus is the development of the Acclaim CI, an investigational fully implanted cochlear implant designed to treat severe-to-profound sensorineural hearing loss without external components. The Company also maintains the Esteem FI-AMEI, an FDA-approved fully implanted active middle ear implant, though it generates limited revenue due to reimbursement challenges.

Key Financial Metrics

Note: The Company has no debt outstanding as of December 31, 2025, following the extinguishment of related-party term loans in August 2025.

Material Changes vs. Prior Period

• Revenue: Increased slightly by 7.1% ($16 thousand) to $241 thousand, driven by nominal sales of the Esteem FI-AMEI and replacement components.
• Net Loss: Increased by 14.2% to $23.8 million, primarily due to higher Research and Development (R&D) expenses and interest expense.
• R&D Expenses: Increased by 22.7% to $12.5 million. This was driven by a 663.1% increase in clinical trial costs ($2.7 million) as the Company expanded its pivotal study enrollment to 56 patients.
• General and Administrative (G&A): Increased by 16.2% to $7.9 million, largely due to a $315 thousand severance accrual for the former CFO and increased consultant fees.
• Debt Extinguishment: In August 2025, the Company extinguished approximately $29.4 million of related-party term loans and accrued interest for a $100 payment, recording a $27.9 million gain recognized as a capital contribution.
• Warrant Liabilities: Significant volatility in fair value adjustments for various warrant liabilities (Forward Purchase Agreement, Private, and Publicly Traded) impacted "Other Income (Expense)," resulting in a net expense of $1.5 million for 2025.

Guidance, Outlook, and Risks

Clinical Progress: The Company completed enrollment of all 56 patients in its pivotal clinical trial for the Acclaim CI on March 10, 2025 (reported as a subsequent event in the filing). The study requires 12-month follow-up data before a Premarket Approval (PMA) application can be submitted. The Company anticipates FDA approval in late 2027 or early 2028.

Liquidity and Capital Resources:

• The Company reported a "substantial doubt about its ability to continue as a going concern" in its financial statements due to recurring losses and negative cash flows.
• As of December 31, 2025, cash was $3.7 million. Management expects this, combined with net proceeds of approximately $27.7 million from a February 2026 Offering (completed subsequent to year-end), to fund operations into the second quarter of 2027.
• The February 2026 Offering included shares, pre-funded warrants, and Series A warrants, with potential additional proceeds of $48 million if warrants are fully exercised.

Material Weaknesses in Internal Controls: The Company identified material weaknesses in internal control over financial reporting, including insufficient accounting personnel, lack of formal risk assessment, and ineffective IT general controls. Remediation efforts are ongoing.

Key Risks:

• Regulatory Approval: Failure to obtain FDA approval for the Acclaim CI would likely result in the cessation of operations.
• Reimbursement: Commercial success depends on favorable reimbursement policies from Medicare, Medicaid, and private payors.
• Capital Needs: The Company requires substantial additional funding to complete clinical trials and commercialize the product. Future financing may cause significant dilution.
• Legal Proceedings: The Company is defending a lawsuit filed by Atlas Merchant Capital SPAC Fund I LP alleging damages of approximately $9.4 million related to share redemption restrictions.

Investor Verification Checklist

• Cash Runway: Verify the actual cash balance post-February 2026 Offering and confirm the timeline for the next potential capital raise.
• Clinical Trial Status: Monitor the 12-month follow-up data collection for the 56 enrolled patients and the timeline for PMA submission.
• Internal Controls: Review future filings (10-Q) for progress in remediating the identified material weaknesses in financial reporting.
• Legal Exposure: Track the status of the Atlas Merchant Capital litigation and any potential accruals for damages.
• Warrant Dilution: Assess the dilution impact of the various outstanding warrant classes (Public, Shortfall, Term Loan, and Series A) and their exercise prices relative to the current stock price.