Catheter Precision, Inc. — Form 10-K Summary
Reporting period: Fiscal year ended December 31, 2023. The filing is an annual report, not a standalone fourth-quarter filing. Comparisons with 2022 are significantly affected by the January 9, 2023 merger with Old Catheter Precision, after which the Company discontinued its legacy DABRA business and focused on cardiac electrophysiology products.
Business Context
- The Company’s lead product is VIVO, an FDA-cleared and CE-marked, non-invasive 3D cardiac mapping system for locating idiopathic ventricular arrhythmia origins before electrophysiology procedures.
- LockeT, a sterile Class I suture-retention device, was registered with the FDA in February 2023 and began initial distributor shipments. CE Mark approval was expected in the second half of 2024.
- Amigo, a robotic catheter-control system, remains largely under consideration for future research and development and was not actively marketed.
- A full-scale VIVO commercial launch began in the first quarter of 2023 with expansion of the U.S. direct sales infrastructure. VIVO had been used in more than 1,000 procedures by more than 30 physicians in 10 countries.
- The Company operates as one cardiac electrophysiology segment. Approximately 25% of 2023 sales were generated outside the United States.
Key Financial Metrics
| Metric | 2023 | 2022 | Change or comment |
|---|---|---|---|
| Revenue | $442 thousand | $14 thousand | Increase of $428 thousand, primarily from post-merger VIVO sales |
| Cost of revenues | $30 thousand | $161 thousand | Lower legacy-product costs |
| Gross profit | $412 thousand | $(147) thousand | Reported gross margin approximately 93%; limited scale makes the margin less meaningful |
| SG&A | $17.1 million | $16.3 million | Higher amortization, compensation, stock-based compensation and consulting costs, partly offset by lower merger-related professional fees |
| R&D | $475 thousand | $6.4 million | Decrease of $5.9 million following discontinuation of legacy DABRA development |
| Goodwill impairment | $60.9 million | None | Entire goodwill balance recognized in the merger was impaired |
| Net loss | $70.6 million | $26.9 million | Included the goodwill impairment and other merger-related items |
| Net loss attributable to common stockholders | $71.4 million | $26.9 million | Includes an $0.8 million deemed dividend related to warrant modifications |
| Basic and diluted loss per share | $12.99 | $25.98 | Loss per share improved due to a substantially higher share count |
| Net cash used in operating activities | $20.6 million | $22.6 million | Still materially negative; included approximately $5.0 million of settlement payments and $1.75 million of severance |
| Net cash from financing activities | $8.4 million | $23.4 million | Primarily the $8.0 million private placement and $1.3 million warrant exercises |
| Cash and cash equivalents at year-end | $3.6 million | $15.9 million | Decrease of $12.3 million during 2023 |
| Accumulated deficit | $275.7 million | $205.1 million | Continued substantial historical losses |
Balance Sheet, Debt and Liquidity
- Total assets were $30.7 million at December 31, 2023, including $26.3 million of net intangible assets related to the merger.
- Total liabilities were $9.5 million, including $7.0 million of royalty obligations, $0.2 million of notes payable and $0.2 million of operating lease liabilities.
- The Company had no material traditional long-term debt disclosed, but it had significant future royalty obligations. LockeT royalties include approximately 12% of net sales to Noteholders through December 31, 2035, plus additional inventor royalties subject to stated conditions.
- As of March 7, 2024, cash was approximately $1.86 million. Management stated that available cash and anticipated operating cash were not sufficient to fund operations through May 2024.
- Management and the auditors concluded that substantial doubt exists regarding the Company’s ability to continue as a going concern for one year after issuance of the financial statements.
Material Changes Versus the Prior Comparable Period
- The merger materially changed the Company’s business, product portfolio, management, capital structure and financial reporting base. 2022 results largely reflect the legacy Ra Medical business, while 2023 includes Old Catheter operations from January 9, 2023.
- Revenue increased substantially from a very low base as VIVO sales began to be reflected in the consolidated results.
- Goodwill of $60.9 million recognized in the merger was fully impaired during 2023 following a sustained decline in the Company’s share price and the reporting unit’s estimated value.
- R&D expense declined sharply because legacy DABRA development and related clinical activities were discontinued.
- The Company raised approximately $9.3 million of gross proceeds through warrant exercises and a private placement, but cash declined because operating losses, merger-related payments and commercialization expenses exceeded financing proceeds.
- The Company’s common stock trading symbol changed from RMED to VTAK on August 17, 2023.
- At year-end, 11.0 million warrants, 4,578 Series A preferred shares and 12,656 Series X preferred shares remained outstanding or potentially convertible, creating significant potential dilution.
Outlook, Management Commentary and Unusual Items
- Management intends to invest in VIVO commercialization, U.S. sales and clinical support, additional product development, and clinical studies for LockeT and expanded VIVO indications.
- The Company has no reimbursement specifically established for VIVO. A Category III CPT code was expected to become available July 1, 2024, but Category III codes do not establish a payment rate and reimbursement remains subject to payor discretion.
- The Coventry physician-initiated study is intended to support a potential FDA submission to expand VIVO labeling to patients with structurally abnormal or ischemic hearts.
- LockeT Phase II clinical work was expected to compare the device with manual compression in 100 patients by June 2024. Phase III approval was in process, with completion anticipated in early 2025.
- Stereotaxis receives 45% of VIVO revenue generated at robotic hospitals under a marketing and distribution arrangement running through December 31, 2025, subject to automatic extensions. This materially reduces revenue retained on affected sales.
- The Company may owe the United States and participating states $1.25 million if fiscal 2024 revenue exceeds $10 million under the prior DOJ settlement.
- The Company identified material weaknesses in internal control over financial reporting involving segregation of duties, financial reporting review controls, service-provider oversight, royalty accounting and valuation, and revenue-recognition timing. Disclosure controls were ineffective as of December 31, 2023.
- Three customers represented more than 10% of revenue, and two customers represented approximately 32% and 20% of total 2023 revenue; four customers collectively represented approximately 72%.
- The filing states that no cybersecurity event had materially affected the Company as of the filing date and that no outstanding litigation was considered material at December 31, 2023.
Most Important Facts for Investors to Verify
- Whether the Company can raise sufficient capital before its projected liquidity shortfall and under what terms and dilution.
- Whether VIVO sales can scale materially beyond the $442 thousand reported for 2023 and whether customer concentration decreases.
- Whether VIVO obtains expanded FDA indications and meaningful reimbursement, including the practical payment impact of any CPT code.
- Whether LockeT receives CE Mark approval, completes clinical studies, achieves commercial adoption and generates sales after royalty obligations.
- The potential dilution from approximately 11.0 million outstanding warrants, preferred-stock conversions and equity incentive awards relative to 7.0 million common shares outstanding at December 31, 2023 and 7.6 million shares outstanding as of March 12, 2024.
- Progress in remediating the identified material weaknesses and whether future filings require corrections or restatements.
- The effect of the $60.9 million goodwill impairment, the $7.0 million royalty liability and the assumptions used in their valuation.
- Whether the Company remains compliant with NYSE American listing requirements and avoids further late filings or low-price deficiencies.