Business Context and Reporting Period
The filing is Ra Medical Systems, Inc.’s unaudited Form 10-Q for the quarter and six months ended June 30, 2021; the supplied metadata identifies Catheter Precision, Inc., which does not match the registrant named in the filing. Ra Medical developed excimer laser systems for vascular and dermatological applications, principally the DABRA system and Pharos laser. The company reported 5,902,612 shares outstanding at June 30, 2021 and 7,029,438 shares as of August 9, 2021.
The company had paused commercial DABRA catheter shipments outside its atherectomy clinical trial because of shelf-life and performance concerns. Additional shelf-life data submitted in March 2021 was cleared by the FDA in July 2021, but commercial shipments had not resumed as of the filing.
Key Financial Metrics
| Metric | Three months ended June 30, 2021 | Three months ended June 30, 2020 | Six months ended June 30, 2021 | Six months ended June 30, 2020 |
|---|---|---|---|---|
| Total revenue | $1.005 million | $0.900 million | $2.123 million | $2.274 million |
| Gross loss | $(0.483) million | $(0.267) million | $(0.738) million | $(0.477) million |
| Operating loss | $(7.242) million | $(10.116) million | $(14.427) million | $(17.906) million |
| Net loss | $(5.249) million | $(10.121) million | $(12.485) million | $(17.822) million |
| Adjusted EBITDA | $(6.112) million | $(8.447) million | $(12.174) million | $(14.612) million |
| Net cash used in operating activities | Not separately provided | Not separately provided | $(14.699) million | $(12.843) million |
Revenue increased 12% year over year in the second quarter but declined 7% for the first six months. Gross margin remained negative: approximately negative 48% in the second quarter and negative 35% for the first six months, compared with approximately negative 30% and negative 21%, respectively, in the comparable periods.
Second-quarter SG&A declined to $3.741 million from $7.896 million, while research and development increased to $3.018 million from $1.953 million. For the six-month period, SG&A declined to $7.855 million from $14.181 million, while research and development increased to $5.834 million from $3.248 million.
Cash and cash equivalents were $20.220 million at June 30, 2021, compared with $23.906 million at December 31, 2020. Total assets were $29.159 million and total liabilities were $7.896 million. No promissory note or equipment financing balance remained outstanding at June 30, 2021. Operating lease liabilities totaled $2.445 million.
Material Changes Versus the Prior Comparable Period
- Dermatology revenue increased 21% in the second quarter to $0.996 million, while vascular revenue declined 88% to $9,000 because commercial catheter shipments remained paused.
- Six-month vascular revenue declined to $13,000 from $191,000; dermatology revenue was approximately unchanged at $2.110 million versus $2.083 million.
- Total cost of revenue increased 28% in the second quarter and 4% for the six-month period, producing a wider gross loss.
- Operating and net losses improved primarily because of lower SG&A, including lower legal, personnel, insurance, public-company and sales-related costs.
- Research and development spending increased substantially because of next-generation catheter engineering and the atherectomy clinical study.
- The company recognized a $2.023 million gain from forgiveness of its $2.0 million Paycheck Protection Program loan, approved by the SBA on June 24, 2021.
- Financing activities provided $10.555 million during the first six months, primarily from $11.022 million of net proceeds from at-the-market equity offerings. The company issued 2,617,787 shares through ATM offerings during the period.
Guidance, Outlook, Risks and Unusual Items
Management did not provide quantified revenue or earnings guidance. It expected continuing operating losses and negative operating cash flow and stated that substantial doubt existed about the company’s ability to continue as a going concern for at least 12 months from issuance of the financial statements.
The atherectomy study was approved for up to 10 sites and 100 subjects. As of August 2, 2021, 69 subjects had been enrolled, with four sites cleared to enroll and a fifth site being reactivated. Management could not estimate when enrollment would be completed because of COVID-19-related delays.
Management expected to submit a more kink-resistant catheter for FDA clearance in the first quarter of 2022 and expected to finalize a guidewire-compatible catheter design by year-end 2021 before submitting it for clearance. The company was also evaluating strategic options for the dermatology business, including investment, partnerships, alliances or divestiture.
COVID-19 continued to affect elective procedures, dermatology equipment purchases, clinical-trial enrollment, component deliveries and access to financing. The company operated a single manufacturing facility in Carlsbad, California and relied on certain limited-source suppliers.
The company had paid the $2.5 million initial amount required under its DOJ and state settlement, including $0.1 million paid in April 2021. Potential additional payments depend on revenue exceeding $10 million in 2021–2024 or a change-in-control transaction. A five-year Corporate Integrity Agreement imposed monitoring, reporting, training and independent-review obligations.
A securities class action remained pending, with a hearing on defendants’ motion to dismiss scheduled for October 12, 2021. A shareholder derivative action was stayed. The DOJ Criminal Division had an active investigation, and the company stated that it could not estimate potential losses. In contrast, the SEC notified the company on August 3, 2021 that it had concluded its investigation and did not intend to recommend enforcement action.
Subsequent to June 30, 2021, the company sold 1,139,306 additional shares through ATM offerings and received approximately $4.4 million in net proceeds through August 2, 2021.
Important Facts for Investors to Verify
- Confirm the registrant identity: the filing names Ra Medical Systems, Inc., while the request metadata names Catheter Precision, Inc.
- Assess whether the $20.2 million cash balance and subsequent $4.4 million equity proceeds are sufficient given six-month operating cash burn of $14.7 million.
- Monitor the company’s going-concern disclosure and its ability to raise additional capital without substantial dilution.
- Verify the commercial restart, demand and economics of DABRA catheters following the July 2021 FDA shelf-life clearance.
- Track enrollment, completion timing and regulatory outcomes for the atherectomy clinical trial.
- Evaluate the impact of continuing DOJ criminal-investigation risk, securities litigation and Corporate Integrity Agreement compliance.
- Consider dilution from ATM offerings, 2,345,033 outstanding warrants and other equity awards.