Hyperfine, Inc. — Q1 2024 Form 10-Q
Business and period: Hyperfine develops and sells the Swoop portable, ultra-low-field brain MRI system and related services. This unaudited report covers the three months ended March 31, 2024; comparisons are with Q1 2023 unless stated otherwise. Dollar amounts below are in millions unless noted.
Financial performance and liquidity
| Metric | Q1 2024 | Q1 2023 | Change |
|---|---|---|---|
| Revenue | $3.295 | $2.635 | +25.0% |
| Device revenue | $2.704 | $2.132 | +26.8% |
| Service revenue | $0.591 | $0.503 | +17.5% |
| Gross profit | $1.354 | $1.155 | +17.2% |
| Gross margin | 41.1% | 43.8% | Down 2.7 percentage points |
| Operating expenses | $12.004 | $14.190 | -15.4% |
| Operating loss | $(10.650) | $(13.035) | Loss narrowed 18.3% |
| Net loss | $(9.848) | $(12.160) | Loss narrowed 19.0% |
| Operating cash used | $(12.510) | $(13.491) | Use decreased |
- Cash and cash equivalents were $63.2 million at March 31, 2024, versus $75.2 million at December 31, 2023. Total assets were $85.4 million; total liabilities were $9.8 million. The filing reports no debt balance.
- Cash, cash equivalents, and restricted cash decreased $12.6 million during the quarter. Investing activities used $0.145 million; financing provided $0.055 million, primarily from option exercises.
- Accumulated deficit was $263.6 million. Basic and diluted net loss per share was $0.14, compared with $0.17 in Q1 2023.
- Management expects existing cash and cash equivalents, together with product and service proceeds, to fund planned operations for at least the next 12 months. The company expects continued significant cash burn and recurring losses for the foreseeable future.
Material changes and operating developments
- Total Swoop systems sold increased to 13 from 10 in Q1 2023. Management attributed revenue growth primarily to increased device sales and a larger installed base supporting service revenue.
- Cost of sales rose 31.1%, faster than revenue growth, contributing to the decline in gross margin. Device cost of sales increased 40.0%, primarily with higher unit volume.
- Operating expenses fell $2.2 million. General and administrative expense declined 28.3%, mainly due to lower personnel and stock-based compensation, professional services, insurance, legal, and recruiting costs. Sales and marketing expense declined 21.3%; R&D increased 2.0%.
- Three customers each represented more than 10% of Q1 revenue, compared with one in Q1 2023. Three customers accounted for more than 10% each of trade receivables at quarter-end.
- The company completed delivery of the remaining Swoop units and a software milestone under its Bill & Melinda Gates Foundation grant; it released $0.6 million of restricted cash and recorded a grant receivable of approximately $0.5 million, excluding interest.
Outlook, risks, and contingencies
- No specific revenue, earnings, or cash-burn guidance was provided. Management plans to invest in product development and commercial expansion, with U.S. sales focus and expansion into select international markets.
- The company had $5.6 million of remaining performance obligations at March 31, 2024; it expects approximately 30% to be recognized in 2024 and the remainder in 2025 and thereafter.
- Risks include ongoing losses and uncertain future financing, adoption and commercialization challenges, competition, regulatory and development uncertainties, macroeconomic conditions, and reliance on single-source manufacturers and suppliers. The company cautions that funding may not be available on acceptable terms; equity financing could dilute shareholders.
- A $150 million shelf registration includes an at-the-market program. As of March 31, 2024, no shares had been sold under the program; the March 22, 2024 prospectus amendment permitted up to $22.8 million of Class A shares to be offered, subject to applicable offering limits.
- No material legal proceedings or probable loss contingencies were reported. The company had no material changes to the risk factors in its 2023 Form 10-K. Management reported disclosure controls were effective at a reasonable assurance level.
Important facts for investors to verify
- Whether device sales and recurring service revenue continue to grow, and whether gross margin recovers as volume increases.
- Actual cash burn and progress toward the stated minimum 12-month operating runway, including any additional financing or use of the ATM program.
- Customer and supplier concentration, collection timing, and inventory levels as commercialization expands.
- Whether product adoption, regulatory clearances, and international expansion support management’s plans and reduce dependence on grant-funded activity.
- Potential dilution from the outstanding options and other equity-linked awards; the filing lists 18.5 million options outstanding at March 31, 2024.