CVRx, Inc. — Q1 2023 Form 10-Q
Reporting period: Three months ended March 31, 2023; comparisons are with Q1 2022 unless otherwise noted. CVRx is a commercial-stage medical-device company marketing Barostim, a neuromodulation device for heart failure and resistant hypertension, primarily in the U.S. and Europe.
Financial performance
| Metric | Q1 2023 | Q1 2022 |
|---|---|---|
| Revenue | $8.0 million | $4.1 million |
| Gross profit / margin | $6.7 million / 83% | $3.1 million / 77% |
| Operating expenses | $18.8 million | $13.0 million |
| Operating loss | $12.2 million | $9.9 million |
| Net loss | $11.4 million | $10.0 million |
| Basic and diluted loss per share | $0.55 | $0.49 |
| Cash used in operating activities | $10.2 million | $10.6 million |
Revenue rose 96%; U.S. revenue increased 127% to $6.9 million, while Europe revenue was $1.0 million, up 2%. U.S. heart-failure unit sales increased to 225 from 99. The company cited expanded sales territories, new accounts, and greater physician and patient awareness. Active implanting centers increased to 122 from 56, and U.S. sales territories to 29 from 17.
Gross margin improved six percentage points, which management attributed primarily to lower unit costs as production volume increased. Research and development expense increased 51% to $3.4 million, and selling, general and administrative expense increased 43% to $15.4 million, principally reflecting higher headcount and commercialization spending.
Liquidity, debt, and cash flow
At March 31, 2023, cash and cash equivalents were $103.3 million, down from $106.2 million at year-end. Current assets were $120.6 million and current liabilities $8.0 million. Cash used in investing activities was $0.2 million; financing activities provided $7.6 million, including a $7.5 million loan draw. Net cash declined $2.9 million during the quarter.
Gross term-loan borrowings totaled $15.0 million; the balance-sheet carrying amount was $14.2 million after unamortized costs and discounts. The loan bears a floating rate based on the greater of prime or 5.50%, plus 2.65%, and is secured by substantially all company personal property. Additional tranches of up to $35 million are subject to revenue milestones, timing, and other conditions. The company reported compliance with loan covenants at quarter-end. No shares had been sold under its $50 million at-the-market program as of March 31.
Outlook, developments, and risks
Management expects operating losses and negative operating cash flows to continue for at least the next several years. It believes existing cash, the loan facility, and revenue will meet forecast operating, capital expenditure, and debt-service needs for at least three years; additional financing may be needed if those resources prove insufficient. The filing provides no specific revenue or earnings guidance.
In February 2023, CVRx received BeAT-HF trial morbidity and mortality data. The trial did not achieve statistical significance on its primary endpoint, although management cited clinically meaningful prespecified analyses favoring Barostim and expects to submit to the FDA for expanded labeling. The timing and scope of any expansion are uncertain, and clinical or regulatory outcomes could affect adoption and existing or future indications.
Key risks include continued losses and reliance on Barostim, market acceptance and reimbursement, competition, hospital access, and dependence on third-party suppliers. The company also noted uncertainty around the evolving European Medical Devices Regulation review; it said it met conditions allowing continued distribution under qualifying existing certificates through December 2027. The company reported no material legal proceedings or accrued contingent liabilities. Disclosure controls were assessed as effective.
Other notable item: On April 21, 2023, after quarter-end, CVRx extended its Minneapolis lease from August 2024 through August 2028, with a landlord improvement allowance of up to $50,000.
Important facts for investors to verify
- Whether U.S. procedure growth, implanting-center expansion, and reimbursement access continue to support revenue growth.
- The FDA submission, interpretation, and regulatory outcome for expanded Barostim labeling, given the BeAT-HF primary endpoint result.
- Gross-margin durability and the effect of continued commercial and R&D spending on losses and cash burn.
- Loan interest costs, covenant and revenue-milestone requirements for further borrowing, and the company’s stated three-year liquidity assessment.
- Progress and deadlines for European MDR compliance and continued market access.