Hyperfine, Inc. — Q2 2023 Form 10-Q
Reporting period: Quarter and six months ended June 30, 2023. Financial amounts below are in USD millions, except per-share data, percentages, and unit counts. The company sells the Swoop portable MR imaging system and related services; all reported revenue to date came from these products and services.
Key financial results
| Metric | Q2 2023 | Q2 2022 | Six months 2023 | Six months 2022 |
|---|---|---|---|---|
| Revenue | $3.381 | $1.533 | $6.016 | $3.042 |
| Gross profit (loss) | $1.444 | $(0.165) | $2.599 | $(0.081) |
| Gross margin | 42.7% | (10.8%) | 43.2% | (2.7%) |
| Operating expenses | $13.136 | $23.027 | $27.326 | $46.882 |
| Operating loss | $(11.692) | $(23.192) | $(24.727) | $(46.963) |
| Net loss | $(10.637) | $(23.159) | $(22.797) | $(46.934) |
| Net loss per share, basic and diluted | $(0.15) | $(0.33) | $(0.32) | $(0.67) |
- Q2 revenue rose 120.5%; device revenue increased 140.6% and service revenue 56.4%. Management attributed device growth to higher sales volume, strong international sales, and higher device pricing; service growth reflected a larger installed base.
- For the first six months, operating cash used was $23.150, investing cash used was $0.283, and financing cash provided was $0.107. Cash, cash equivalents, and restricted cash declined $23.326 to $94.917. Cash and cash equivalents alone were $93.948 at June 30.
- At June 30, total assets were $112.606, total liabilities $9.315, and stockholders’ equity $103.291. Current assets were $107.823 versus current liabilities of $8.035. The balance sheet reports no debt balance.
- Accounts receivable was $3.948 and inventory $5.983. Accumulated deficit was $232.281. Interest income was $1.030 in Q2 and $1.899 for the six-month period.
Material changes versus the prior comparable period
- Loss narrowed substantially: Q2 net loss improved by $12.522 and six-month net loss by $24.137 versus 2022. Operating expenses fell 43.0% in Q2 and 42% for the six months, reflecting lower personnel and other costs following the 2022 restructuring; lower stock-based compensation was a major contributor to the G&A decline.
- Gross margin turned positive, as revenue growth outpaced cost-of-sales growth. Device costs rose with sales volume, while service costs declined, primarily due to lower personnel-related costs.
- Operating cash use fell to $23.150 from $44.200 for the six months, mainly alongside the lower net loss and lower noncash stock-based compensation. Cash and cash equivalents declined from $117.472 at year-end 2022.
- The installed base reached 131 systems, compared with 92 a year earlier: 86 commercial installations, 20 grant-fulfillment units, and 25 research units.
Outlook, commentary, and risks
- Management expects existing cash and cash equivalents, together with product and service proceeds, to fund planned operations for at least the next 12 months. It also expects significant cash burn and recurring losses for the foreseeable future and provides no assurance of future profitability or adequate funding beyond that period. No specific revenue or earnings guidance is provided.
- The company continues to prioritize U.S. commercialization while pursuing international deployments. The Swoop software update received FDA 510(k) clearance in February 2023, including improvements to diffusion-weighted imaging. The company suspended its Liminal brain-sensing program in December 2022 and substantially completed a restructuring in Q1 2023.
- A May 2023 Bill & Melinda Gates Foundation award added $3.354 of grant funding for work on low-field MRI neurodevelopment measurement through February 2026; $0.499 had been received by June 30. Grant funds are restricted to project purposes, and unused or uncommitted amounts may have to be returned. The filing reports no grant funds currently required to be returned.
- Risks include reliance on single-source manufacturers and suppliers, uncertain customer adoption and sales growth, potential need for additional financing and resulting dilution or restrictive financing terms, inflation and manufacturing costs, and dependence on regulatory clearances. One customer exceeded 10% of revenue in the quarter and six-month period; two customers each exceeded 10% of receivables at June 30.
- The company reported no material ongoing litigation and no material changes to the risk factors in its 2022 Form 10-K. Management stated that previously identified material weaknesses in internal control over financial reporting were remediated as of June 30, 2023; disclosure controls were assessed as effective at a reasonable-assurance level.
Important facts for investors to verify
- Whether device-sales growth and the 131-unit installed base translate into sustained recurring service revenue and improving gross margins.
- Whether the stated minimum 12-month liquidity outlook remains supported by actual cash burn; operating cash use was $23.150 in the first half.
- Customer concentration, collection of receivables, inventory levels, and exposure to the single-source supply chain.
- Progress against Gates Foundation grant milestones, permitted use of restricted cash, and any obligations to return unspent funds.
- Potential dilution: 14.244 million options and 0.911 million RSUs were outstanding at June 30; these and earn-out shares were excluded from diluted loss per share as anti-dilutive.