CVRx, Inc. — Q3 2021 Form 10-Q
Reporting period: Quarter and nine months ended September 30, 2021. CVRx is a commercial-stage medical-device company marketing BAROSTIM NEO, a neuromodulation device for heart failure; it is also CE-marked for resistant hypertension. The unaudited statements are consolidated.
Financial performance
| Metric | Q3 2021 | Q3 2020 | Nine months 2021 | Nine months 2020 |
|---|---|---|---|---|
| Revenue | $3.4m | $1.0m | $9.4m | $4.0m |
| Gross profit / margin | $2.5m / 74% | $0.8m / 79% | $6.7m / 72% | $3.0m / 75% |
| Operating expenses | $9.8m | $3.8m | $23.9m | $12.4m |
| Operating loss | $(7.3)m | $(3.0)m | $(17.2)m | $(9.4)m |
| Net loss | $(6.1)m | $(3.2)m | $(32.5)m | $(10.7)m |
| Operating cash flow | Not stated for quarter | Not stated for quarter | $(20.7)m | $(12.0)m |
Balance sheet at September 30: Cash and cash equivalents were $170.9m, versus $59.1m at December 31, 2020; accounts receivable was $3.4m and inventory $3.4m. Total assets were $181.7m, total liabilities $25.9m, and stockholders’ equity $155.8m. Debt had $20.0m principal outstanding (reported carrying value: $19.5m, including current and long-term portions).
Changes and notable items
- Q3 revenue rose 241% year over year, driven primarily by U.S. heart-failure sales following the 2020 commercial launch. U.S. revenue increased to $2.6m from $0.3m; Europe contributed $0.8m, up 17%.
- U.S. heart-failure revenue units were 84 versus 4 in Q3 2020. CVRx reported 38 active U.S. implanting centers at quarter-end, compared with 4 a year earlier, and 11 U.S. sales territories.
- Nine-month U.S. revenue increased 597% to $6.3m; Europe was essentially flat at $3.1m. Gross margin declined as full-system sales represented a larger share of units, partly offset by higher average selling prices.
- SG&A increased substantially with commercial expansion, including higher compensation, marketing, travel, consulting, stock-based compensation and public-company insurance costs. Nine-month R&D expense decreased 3%, mainly reflecting lower clinical-study costs.
- CVRx completed its July 2021 IPO, issuing 8.05m shares at $18 per share and receiving approximately $133.2m net proceeds. Preferred shares converted to common stock. The large increase in weighted-average shares makes per-share loss comparisons with 2020 less directly comparable.
- Nine-month other expense included a $13.3m fair-value charge related to preferred-stock warrants before their conversion to common-stock warrants at the IPO. Q3 other income included a favorable warrant fair-value adjustment. These noncash valuation effects contributed to the difference between operating loss and net loss.
Liquidity, outlook and risks
Management said cash resources and revenue were expected to fund forecast operating liquidity, capital expenditures and debt service for at least 12 months. It expects operating losses and negative operating cash flows to continue for the foreseeable future, with significant losses anticipated for several years. No specific revenue or earnings guidance was provided. Management planned continued U.S. sales-force expansion and investment in R&D and commercialization.
On November 3, 2021, CVRx repaid the Horizon loan in full for $21.3m, including prepayment and other fees; this occurred after quarter-end and was to be reflected in 2021 year-end financial statements. The loan was secured by substantially all company assets and carried covenants; CVRx reported compliance at September 30.
Key risks include dependence on BAROSTIM NEO, continued losses, adoption and reimbursement uncertainty, competition, COVID-19-related procedure disruption, reliance on limited third-party suppliers, clinical and regulatory outcomes, and the need to scale commercial and manufacturing operations. The company reported no material legal proceedings or contingencies requiring accrual or disclosure. Management concluded disclosure controls were effective.
Investor verification points
- Track U.S. procedure volumes, active implanting centers, sales-force productivity and conversion of revenue growth into sustainable cash generation.
- Monitor gross-margin trends, product mix, average selling prices and supply-chain capacity.
- Verify Medicare and commercial coverage, reimbursement adequacy, and any progress on coding or payment changes.
- Assess cash burn and liquidity after the $21.3m post-quarter debt payoff, alongside management’s stated 12-month liquidity outlook.
- Follow BeAT-HF post-market clinical data and any regulatory decisions on expanded indications, as well as COVID-19 and hospital access effects.