Corporate Restructuring - The company announced a strategic realignment and corporate restructuring on November 8, 2023, reallocating capital from its mapping and ablation businesses to focus on its left-heart access distribution relationship with Medtronic[70]. - The restructuring involves winding down the mapping and ablation businesses and reducing the workforce by approximately 65%, with estimated pre-tax restructuring charges of $21-32 million, of which $16.4 million has already been incurred[77]. - The restructuring plan aims to focus exclusively on manufacturing and distributing Medtronic's left-heart access product portfolio, with expected completion in Q1 2024[401]. - The company expects to incur additional restructuring costs until the process is complete, which may include severance, inventory liquidation, and non-cash asset impairments[77]. - The company faces significant risks associated with the restructuring, including potential litigation and the need to manage transition costs effectively[77][82]. Revenue Dependence - The company is entirely dependent on revenue from Medtronic, with all sales coming from the left-heart access portfolio, and earnout payments expected to begin in January 2024 and continue quarterly until 2027[71][75]. - If the Distribution Agreement with Medtronic terminates, the company will have no sources of revenue, and it plans to reduce operations to explore strategic options, including potential liquidation[76][85]. - Revenue is dependent on Medtronic's sales of the Products, which may be affected by competition from other companies in the electrophysiology field[93]. - The company relies on revenue from Medtronic's commercial sales to fund operating needs and achieve profitability, but there are uncertainties regarding liquidity generation[153]. - The company earned $9.4 million in 2023 based on Medtronic's product sales, which will be paid in fiscal 2024[405]. Financial Performance - For the year ended December 31, 2023, the company reported a net loss of $11.9 million, compared to a net income of $28.8 million for the year ended December 31, 2022[149]. - The net loss for 2023 was $(81,663,000), compared to $(39,616,000) in 2022, reflecting a worsening financial position[388]. - The accumulated deficit increased to $(600.0 million) as of December 31, 2023, from $(518.3 million) in 2022[403]. - Total revenue for 2023 was $7,164,000, a 136% increase from $3,031,000 in 2022[388]. - The company reported a loss from discontinued operations of $(69,742,000) in 2023, compared to $(68,449,000) in 2022[388]. Legal and Compliance Risks - The company has ongoing legal disputes with Biotronik, alleging breaches of contractual obligations, with claims seeking $38 million in damages[80][81]. - The company is subject to regulatory inspections, and failure to comply with FDA requirements could result in enforcement actions that significantly impact manufacturing and financial results[125]. - The company faces risks of product recalls due to defects or regulatory non-compliance, which could harm reputation and divert resources[170]. - The company is subject to potential tax liabilities for past sales due to not historically collecting certain taxes, which could adversely affect its financial condition[139]. - The company is currently required to maintain a minimum liquidity amount of $10.0 million under the 2022 Credit Agreement[136]. Market and Competitive Environment - The medical device industry is highly competitive, with significant competition from well-capitalized companies that may have greater resources for product development and marketing[94]. - The commercial success of the Products depends on significant market acceptance among hospitals, physicians, patients, and payors[88]. - Medtronic's ability to market and sell the Products effectively is crucial for revenue generation, with potential adverse effects on business if acceptance is not achieved[89]. - Supply chain vulnerabilities exist due to reliance on third-party suppliers, including single-source suppliers, which could impact production capabilities[102]. - The company faces pricing pressure in the medical device industry, which could lead to decreased revenue and gross margins if forced to lower prices[122]. Management and Operational Challenges - The company has experienced significant executive management changes, including the departure of the CEO and other top executives, which may disrupt operations and impact financial goals[115]. - The company lacks meaningful registered intellectual property, relying solely on manufacturing processes for success, increasing vulnerability to competition[177]. - The company has limited experience in manufacturing products in commercial quantities, which may result in production delays or shortfalls[124]. - The company’s inventory management is critical, as excess inventory could become obsolete, while underestimating demand could lead to supply interruptions[120]. - The company is classified as an emerging growth company, allowing it to take advantage of reduced reporting requirements[203]. Stock and Market Conditions - The company's common stock is at risk of delisting from Nasdaq, which could significantly decrease or eliminate its market value[194]. - The company received a letter from Nasdaq indicating non-compliance with the $1.00 minimum bid price requirement, with a deadline to regain compliance by April 29, 2024[193]. - The market price of the common stock has been volatile, influenced by factors such as operating results and industry announcements[197]. - As of December 31, 2023, directors and principal stockholders own approximately 18.1% of the common stock, potentially influencing corporate decisions[208]. - The company does not intend to declare dividends in the foreseeable future, focusing instead on using earnings for working capital[202].

Financial Performance - As of September 30, 2023, the company reported an accumulated deficit of $566.2 million and working capital of $57.9 million[176]. - Revenue for the three months ended September 30, 2023, was $5.2 million, a 44% increase from $3.6 million in the same period of 2022, driven by higher disposable sales and sales from left-heart access products through Medtronic[217]. - Revenue for the nine months ended September 30, 2023, was $14.7 million, a 29% increase from $11.4 million in the same period of 2022, primarily driven by higher disposable sales and increased sales from left-heart access products through Medtronic[230]. - The net loss for the three months ended September 30, 2023, was $13.2 million, a 35% improvement from a net loss of $20.4 million in the same period of 2022[215]. - Gross profit was negative $8.8 million for the nine months ended September 30, 2023, compared to negative $12.2 million for the same period in 2022, reflecting a gross margin improvement from negative 107% to negative 60%[231]. - Other net expense was $0.4 million for the nine months ended September 30, 2023, significantly reduced from $10.6 million in 2022, primarily due to a prior year loss on debt extinguishment[239]. Operational Changes - Following the restructuring, the company will wind down its mapping and ablation businesses and focus solely on manufacturing and distributing Medtronic's left-heart access product portfolio[175]. - The company reduced its workforce by approximately 65% as part of the restructuring plan aimed at simplifying operations and maximizing free cash flow[191]. - The company expects the restructuring to be substantially complete in the first quarter of 2024[175]. - The company plans to focus on manufacturing and distributing left-heart access products to Medtronic to generate revenue and earn associated payments[241]. Cash Flow and Liquidity - As of September 30, 2023, the company had cash, cash equivalents, restricted cash, and marketable securities totaling $45.5 million, down from $76.2 million at the end of 2022[240]. - For the nine months ended September 30, 2023, net cash used in operating activities was $45.1 million, a decrease of $26.9 million compared to the same period in 2022[252][253]. - Net cash provided by investing activities was $47.3 million, a decrease of $45.2 million from the nine months ended September 30, 2022, primarily due to a $33.0 million decrease in net proceeds from the Medtronic left-heart access portfolio sale[252][254]. - Net cash used in financing activities was $2.2 million, a decrease of $9.9 million from the nine months ended September 30, 2022[252][255]. - Management believes current cash resources are sufficient to fund operations for at least the next 12 months while exploring cost improvement opportunities[243]. Expenses - Cost of products sold for the three months ended September 30, 2023, was $8.6 million, a 24% increase from $7.0 million in the same period of 2022, with a gross margin of negative 64% compared to negative 91% in 2022[218]. - Research and development expenses decreased to $4.8 million for the three months ended September 30, 2023, down 19% from $5.9 million in 2022, due to reduced project-related spending and workforce reduction[219]. - Selling, general and administrative expenses were $7.4 million for the three months ended September 30, 2023, a 23% decrease from $9.7 million in 2022, primarily due to reduced compensation costs[220]. - Research and development expenses decreased by 19% to $17.7 million for the nine months ended September 30, 2023, down from $21.9 million in 2022, due to reduced project-related spending and workforce adjustments[232]. - Selling, general and administrative expenses were $26.3 million for the nine months ended September 30, 2023, a decrease of 31% from $38.2 million in 2022, attributed to lower professional fees and compensation costs[233]. Market and Competition - Future gross margins may fluctuate due to competition, demand from Medtronic, and other market factors[193]. - Approximately 41% of sales for the nine months ended September 30, 2023, were generated outside the United States, compared to 48% in 2022[199]. Corporate Governance and Compliance - The company was granted an additional 180-calendar day period until April 29, 2024, to regain compliance with the Nasdaq Bid Price Requirement[264]. - The company's common stock was transferred to The Nasdaq Capital Market on October 31, 2023, continuing to trade under the symbol "AFIB"[264]. - The company entered into Amendment No. 1 to the 2022 Credit Agreement, reducing the minimum liquidity requirement to $5 million for 18 months, which will increase to $20 million thereafter[249]. - Amendment No. 2 to the 2022 Credit Agreement requires the company to maintain a minimum liquidity of $10 million at all times[250]. - The company issued warrants to purchase up to 3,779,018 shares of common stock at an exercise price of $1.1114 per share for a period of eight years[251]. Acquisitions and Earnouts - The company achieved a $20.0 million OEM Earnout in October 2022 and a $17.0 million Transfer Earnout in December 2022, with respective payments received in November 2022 and January 2023[180]. - The earnout period for the acquisition of Rhythm Xience concluded on June 19, 2023, resulting in no contingent consideration liability recorded as of September 30, 2023[207]. - The final earnout payment of $1.9 million related to the acquisition of Rhythm Xience was made in July 2023[256].

Acutus Medical, Inc. (AFIB) Corporate Presentation Disclaimer This presentation will include forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical facts contained in this presentation, including statements regarding our future results of operations and financial position, business strategy, prospective products, availability of funding, ability to maintain existing, and establish new, strategic collaborations ...

Financial Performance - Revenue for the six months ended June 30, 2023, was $9.5 million, a 21.8% increase from $7.8 million in the same period of 2022[166] - Net loss for the six months ended June 30, 2023, was $34.7 million, compared to a net loss of $34.3 million for the same period in 2022[166] - Revenue for the three months ended June 30, 2023, was $5.3 million, a 30% increase from $4.1 million in the same period of 2022, driven by higher disposable sales and left-heart access products through Medtronic[218] - Revenue for the six months ended June 30, 2023, was $9.5 million, a 22% increase from $7.8 million in the same period of 2022, attributed to higher disposable sales and increased procedure volumes[232] - Net loss for the three months ended June 30, 2023, was $18.3 million, compared to a net income of $5.7 million in 2022, marking a 421% decline[218] Operational Metrics - Total installed base of AcQMap consoles as of June 30, 2023, was 78, with 27 in the U.S. and 51 outside the U.S., compared to 75 total in 2022[173] - Procedure volumes for the three months ended June 30, 2023, were 584, up from 481 in the same period of 2022, representing a 21.4% increase[175] - For the six months ended June 30, 2023, approximately 43% of sales were generated outside the United States, compared to 48% in the same period of 2022[198] Expenses and Costs - Cost of products sold for the six months ended June 30, 2023, was $14.9 million, an 11% decrease from $16.6 million in 2022, with a gross margin of negative 57%[233] - Cost of products sold decreased by 17% to $8.1 million for the three months ended June 30, 2023, compared to $9.7 million in 2022, reflecting improved manufacturing efficiencies[219] - Research and development expenses were $6.8 million for the three months ended June 30, 2023, down 14% from $7.9 million in 2022, due to reduced project spending and workforce adjustments[220] - Research and development expenses decreased by $3.0 million, or 19%, to $12.9 million for the six months ended June 30, 2023, compared to $15.9 million for the same period in 2022[234] - Selling, general and administrative expenses decreased by $9.7 million, or 34%, to $18.8 million for the six months ended June 30, 2023, compared to $28.5 million for the same period in 2022[235] Cash Flow and Capital - As of June 30, 2023, the company had working capital of $69.1 million, down from $98.0 million as of December 31, 2022[166] - Cash, cash equivalents, restricted cash, and marketable securities totaled $61.5 million as of June 30, 2023, down from $76.2 million as of December 31, 2022[244] - Net cash used in operating activities was $31.1 million for the six months ended June 30, 2023, a decrease of $19.6 million from $50.7 million for the same period in 2022[257] - Investing activities provided $30.4 million of cash during the six months ended June 30, 2023, a decrease of $58.8 million from the same period in 2022[258] Strategic Initiatives - The company plans to focus on maximizing console utilization and procedure volume growth in targeted geographic regions as part of its restructuring efforts[167] - The company aims to leverage strategic partnerships and acquisitions to achieve global distribution and broaden its product portfolio[182] - The company has established a direct selling presence in the U.S. and select Western European markets, where cardiac ablation is a standard of care[164] Legal and Compliance - The company is involved in two putative securities class action lawsuits alleging violations of the Exchange Act, with potential substantial costs if the matters proceed[275] - The company maintains effective disclosure controls and procedures as evaluated by management[271] - The company has not experienced any changes in internal control over financial reporting that materially affect its operations during the quarter ended June 30, 2023[272] Market Conditions - The company is facing significant competition from large, well-capitalized companies, which necessitates continuous innovation to maintain market share[192] - Global supply chain disruptions may negatively impact costs due to fluctuations in raw material prices and unexpected delays[193]

Financial Data and Key Metrics Changes - For Q1 2023, net revenue was $4.2 million, a 13% increase from $3.7 million in Q1 2022, primarily driven by disposable sales and increases in service, rent, and other revenue [16][17] - Non-GAAP gross margin improved to negative 60% in Q1 2023 from negative 119% in Q1 2022, marking the strongest quarter since Q2 2021 [18] - Non-GAAP operating expenses were approximately $13.9 million, down 39% year-over-year, with a non-GAAP net loss of $16.8 million or $0.59 per share compared to a loss of $28.5 million or $1 per share in Q1 2022 [19][20] Business Line Data and Key Metrics Changes - Disposable revenue in Q1 2023 was $3.4 million, a 7% increase compared to the previous year, driven by growth outside the U.S. and through a distribution agreement with Medtronic [17] - The installed base of systems globally increased to 77, up from 76 in the previous quarter, with a focus on driving procedure volumes and revenue per procedure rather than just growing the installed base [16] Market Data and Key Metrics Changes - U.S. procedure volumes showed steady progress in Q1, with March commercial procedure volumes increasing over 60% month-over-month [6][7] - The company anticipates continued growth in procedure volumes and disposable product revenue throughout the year, particularly in the second half [7][20] Company Strategy and Development Direction - The company aims to drive utilization and adoption of AcQMap, focusing on complex treatment segments in the electrophysiology market [6][8] - A significant driver for growth is the product development pipeline, with plans for new product launches and clinical research to support adoption [10][11] - The company is also focused on improving financial performance, with a goal of achieving positive gross margins by Q1 2024 [18][20] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in resolving supply chain challenges that impacted Q1 results, with expectations for improved performance in Q2 and beyond [27][29] - The company is optimistic about the impact of recent clinical studies, such as RECOVER AF, on physician engagement and product adoption [39][40] Other Important Information - The company received FDA clearance for AcQMap 8.5 software, which is expected to enhance the adoption of AcQMap [11] - The partnership with Medtronic for left-heart access products is progressing well, with positive early feedback on commercial distribution [43] Q&A Session Summary Question: Update on AcQBlate timing and launch plans - Management confirmed that AcQBlate approval is expected in the second half of the year, with a focus on high utilization accounts for limited market release [24][25] Question: Comfort level around Q2 revenue expectations - Management indicated that supply chain challenges impacted Q1 results but expressed confidence in resolving these issues and achieving revenue growth in Q2 [26][27] Question: Approach to increasing installed base and procedure volumes - Management clarified that while the installed base is important, the focus is on driving procedure volume growth and increasing revenue per procedure [33][34] Question: Feedback on RECOVER AF study results - Management noted significant engagement from the physician community following the publication of RECOVER AF results, which aligns with the company's strategy to target complex patients [39][40] Question: Early feedback on Medtronic partnership - Management reported positive progress with Medtronic's commercial distribution efforts and emphasized the importance of maintaining high-quality supply to meet demand [43][44] Question: Expectations for gross margin improvements - Management expects progressive improvement in gross margins throughout the year, driven by higher production volumes and manufacturing efficiencies [46][47]

[PART I. FINANCIAL INFORMATION](index=1&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) This section presents the company's unaudited condensed consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) This section presents Acutus Medical, Inc.'s unaudited condensed consolidated financial statements for the quarter ended March 31, 2023, including balance sheets, statements of operations and comprehensive loss, stockholders' equity, and cash flows, along with detailed notes explaining accounting policies, business operations, and financial instrument valuations Condensed Consolidated Balance Sheet Highlights (March 31, 2023 vs. December 31, 2022) | Metric | March 31, 2023 (in thousands) | December 31, 2022 (in thousands) | Change (in thousands) | % Change | | :-------------------------------- | :----------------------------- | :----------------------------- | :-------------------- | :------- | | Total Current Assets | $101,788 | $117,867 | $(16,079) | -13.6% | | Total Assets | $115,996 | $133,440 | $(17,444) | -13.1% | | Total Current Liabilities | $17,110 | $19,872 | $(2,762) | -13.9% | | Total Liabilities | $55,530 | $58,421 | $(2,891) | -4.9% | | Total Stockholders' Equity | $60,466 | $75,019 | $(14,553) | -19.4% | Condensed Consolidated Statements of Operations and Comprehensive Loss Highlights (Three Months Ended March 31, 2023 vs. 2022) | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (in thousands) | % Change | | :--------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | :------- | | Revenue | $4,170 | $3,681 | $489 | 13.3% | | Cost of products sold | $6,790 | $6,941 | $(151) | -2.2% | | Gross profit | $(2,620) | $(3,260) | $640 | -19.6% | | Research and development | $6,117 | $8,003 | $(1,886) | -23.6% | | Selling, general and administrative | $9,565 | $14,385 | $(4,820) | -33.5% | | Goodwill impairment | $— | $12,026 | $(12,026) | -100.0% | | Gain on sale of business | $(1,207) | $— | $(1,207) | 100.0% | | Loss from operations | $(17,307) | $(38,630) | $21,323 | -55.2% | | Net loss | $(16,315) | $(40,017) | $23,702 | -59.2% | | Net loss per common share, basic and diluted | $(0.57) | $(1.42) | $0.85 | -59.9% | Condensed Consolidated Statements of Cash Flows Highlights (Three Months Ended March 31, 2023 vs. 2022) | Metric | Three Months Ended March 31, 2023 (in thousands) | Three Months Ended March 31, 2022 (in thousands) | Change (in thousands) | | :-------------------------------------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------- | | Net cash used in operating activities | $(16,515) | $(27,609) | $11,094 | | Net cash provided by investing activities | $15,249 | $15,999 | $(750) | | Net cash used in financing activities | $(213) | $(42) | $(171) | | Net change in cash, cash equivalents and restricted cash | $(1,471) | $(11,752) | $10,281 | [Condensed Consolidated Balance Sheets](index=4&type=section&id=Condensed%20Consolidated%20Balance%20Sheets) [Condensed Consolidated Statements of Operations and Comprehensive Loss](index=5&type=section&id=Condensed%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) [Condensed Consolidated Statements of Stockholders' Equity](index=6&type=section&id=Condensed%20Consolidated%20Statements%20of%20Stockholders%27%20Equity) [Condensed Consolidated Statements of Cash Flows](index=7&type=section&id=Condensed%20Consolidated%20Statements%20of%20Cash%20Flows) [Notes to Condensed Consolidated Financial Statements](index=10&type=section&id=Notes%20to%20Condensed%20Consolidated%20Financial%20Statements) [Note 1—Organization and Description of Business](index=10&type=section&id=Note%201%E2%80%94Organization%20and%20Description%20of%20Business) [Note 2—Summary of Significant Accounting Policies](index=11&type=section&id=Note%202%E2%80%94Summary%20of%20Significant%20Accounting%20Policies) [Note 3—Sale of Business](index=22&type=section&id=Note%203%E2%80%94Sale%20of%20Business) [Note 4—Marketable Securities](index=23&type=section&id=Note%204%E2%80%94Marketable%20Securities) [Note 5—Inventory](index=24&type=section&id=Note%205%E2%80%94Inventory) [Note 6—Lessor Sales-Type Leases](index=24&type=section&id=Note%206%E2%80%94Lessor%20Sales-Type%20Leases) [Note 7—Property and Equipment, Net](index=24&type=section&id=Note%207%E2%80%94Property%20and%20Equipment%2C%20Net) [Note 8—Intangible Assets](index=25&type=section&id=Note%208%E2%80%94Intangible%20Assets) [Note 9—Accrued Liabilities](index=26&type=section&id=Note%209%E2%80%94Accrued%20Liabilities) [Note 10—Debt](index=26&type=section&id=Note%2010%E2%80%94Debt) [Note 11—Operating Leases](index=28&type=section&id=Note%2011%E2%80%94Operating%20Leases) [Note 12—Commitments and Contingencies](index=29&type=section&id=Note%2012%E2%80%94Commitments%20and%20Contingencies) [Note 13—Warrants](index=30&type=section&id=Note%2013%E2%80%94Warrants) [Note 14—Stockholders' Equity](index=30&type=section&id=Note%2014%E2%80%94Stockholders%27%20Equity) [Note 15—Stock-Based Compensation](index=32&type=section&id=Note%2015%E2%80%94Stock-Based%20Compensation) [Note 16—Net Loss Per Common Share](index=35&type=section&id=Note%2016%E2%80%94Net%20Loss%20Per%20Common%20Share) [Note 17—401(k) Retirement Plan](index=36&type=section&id=Note%2017%E2%80%94401%28k%29%20Retirement%20Plan) [Note 18—Related Party Transactions](index=36&type=section&id=Note%2018%E2%80%94Related%20Party%20Transactions) [Note 19—Subsequent Events](index=36&type=section&id=Note%2019%E2%80%94Subsequent%20Events) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=39&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides an overview of Acutus Medical, Inc.'s business, financial condition, and results of operations for the three months ended March 31, 2023, compared to the same period in 2022. It highlights the company's focus on arrhythmia management, recent restructuring efforts, contingent consideration from the Medtronic sale, key business metrics, and factors affecting performance, alongside a detailed analysis of revenue, costs, and liquidity - Acutus Medical, Inc. is an arrhythmia management company focused on improving cardiac arrhythmia diagnosis and treatment through its product portfolio, including the AcQMap imaging and mapping system[164](index=164&type=chunk)[165](index=165&type=chunk) - The company completed an organizational workforce reduction and implemented cost reduction measures in 2022 to optimize cash resources and prioritize console utilization and procedure volume growth in targeted regions[171](index=171&type=chunk) Key Business Metrics (As of March 31, 2023 vs. 2022) | Metric | As of March 31, 2023 | As of March 31, 2022 | | :-------------------------- | :------------------- | :------------------- | | Total Acutus net system placements | 77 | 77 | | Procedure volumes | 451 | 465 | [Overview](index=39&type=section&id=Overview) [Restructuring](index=40&type=section&id=Restructuring) [Contingent Consideration Relating to Sale of Left-heart Access Portfolio](index=40&type=section&id=Contingent%20Consideration%20Relating%20to%20Sale%20of%20Left-heart%20Access%20Portfolio) [Key Business Metrics](index=41&type=section&id=Key%20Business%20Metrics) [Factors Affecting Our Performance](index=41&type=section&id=Factors%20Affecting%20Our%20Performance) [Components of Results of Operations](index=44&type=section&id=Components%20of%20Results%20of%20Operations) [Results of Operations for the Three Months Ended March 31, 2023 and 2022](index=46&type=section&id=Results%20of%20Operations%20for%20the%20Three%20Months%20Ended%20March%2031%2C%202023%20and%202022) [Liquidity, Capital Resources, and Going Concern](index=49&type=section&id=Liquidity%2C%20Capital%20Resources%2C%20and%20Going%20Concern) [Debt Obligations](index=51&type=section&id=Debt%20Obligations) [Cash Flows](index=51&type=section&id=Cash%20Flows) [Contractual Obligations and Commitments](index=52&type=section&id=Contractual%20Obligations%20and%20Commitments) [Off-Balance Sheet Arrangements](index=52&type=section&id=Off-Balance%20Sheet%20Arrangements) [Critical Accounting Policies and Estimates](index=52&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) [Recent Accounting Pronouncements](index=52&type=section&id=Recent%20Accounting%20Pronouncements) [Item 3. Quantitative and Qualitative Disclosures about Market Risk](index=52&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20about%20Market%20Risk) As a smaller reporting company, Acutus Medical, Inc. is not required to provide quantitative and qualitative disclosures about market risk in this quarterly report - Acutus Medical, Inc. is exempt from providing quantitative and qualitative disclosures about market risk as it qualifies as a **'smaller reporting company'**[253](index=253&type=chunk) [Item 4. Controls and Procedures](index=53&type=section&id=Item%204.%20Controls%20and%20Procedures) This section confirms that Acutus Medical, Inc.'s disclosure controls and procedures were evaluated and deemed effective as of March 31, 2023. No material changes in internal control over financial reporting occurred during the quarter - The company's disclosure controls and procedures were evaluated and concluded to be **effective as of March 31, 2023**[254](index=254&type=chunk)[256](index=256&type=chunk) - No material changes in internal control over financial reporting occurred during the quarter ended March 31, 2023[257](index=257&type=chunk) [Disclosure Controls and Procedures](index=53&type=section&id=Disclosure%20Controls%20and%20Procedures) [Changes in Internal Control over Financial Reporting](index=53&type=section&id=Changes%20in%20Internal%20Control%20over%20Financial%20Reporting) [PART II. OTHER INFORMATION](index=54&type=section&id=PART%20II.%20OTHER%20INFORMATION) This section covers legal proceedings, risk factors, recent securities sales, exhibits, and official signatures [Item 1. Legal Proceedings](index=54&type=section&id=Item%201.%20Legal%20Proceedings) Acutus Medical, Inc. is involved in two putative securities class action lawsuits filed in February and March 2022, consolidated in July 2022. The lawsuits allege violations of Section 10(b) and 20(a) of the Exchange Act due to alleged false and misleading statements. The outcome is currently undeterminable, and the company may incur substantial defense costs or damages - Acutus Medical, Inc. and certain officers are defendants in two consolidated securities class action lawsuits filed in February and March 2022, alleging violations of Section 10(b) and 20(a) of the Exchange Act[260](index=260&type=chunk) - The lawsuits claim false and misleading statements were made between May 13, 2021, and November 11, 2021, seeking compensatory damages, attorney's fees, and other costs[260](index=260&type=chunk) - The outcome of these legal matters is not presently determinable, and the company could face substantial defense costs or damages[261](index=261&type=chunk) [Item 1A. Risk Factors](index=54&type=section&id=Item%201A.%20Risk%20Factors) There have been no material changes to the risk factors previously disclosed in the company's annual report on Form 10-K for the year ended December 31, 2022. These factors could significantly impact the company's operations or financial condition - No material changes to risk factors have occurred since the annual report on Form 10-K for the year ended December 31, 2022[262](index=262&type=chunk) - Existing risk factors, or new unforeseen ones, could materially and adversely affect the company's results of operations or financial condition[262](index=262&type=chunk) [Item 2. Recent Sales of Unregistered Securities](index=54&type=section&id=Item%202.%20Recent%20Sales%20of%20Unregistered%20Securities) On June 30, 2022, Acutus Medical, Inc. issued warrants to purchase up to 3,779,018 shares of common stock to lenders under the 2022 Credit Agreement. These warrants, issued in a private placement under Section 4(a)(2) of the Securities Act, have an exercise price of $1.1114 per share and an eight-year term, subject to certain beneficial ownership limitations and anti-dilution adjustments - On June 30, 2022, Acutus Medical, Inc. issued warrants to purchase up to **3,779,018 shares of common stock** to lenders under the 2022 Credit Agreement[263](index=263&type=chunk) - The warrants have an exercise price of **$1.1114 per share**, an **eight-year term**, and were issued in a private placement pursuant to Section 4(a)(2) of the Securities Act[263](index=263&type=chunk)[265](index=265&type=chunk) - Key terms include a **4.9% beneficial ownership limitation**, anti-dilution adjustments, and holder options for redemption or assumption in a 'Major Transaction'[264](index=264&type=chunk) [Item 6. Exhibits](index=56&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed with the Form 10-Q, including organizational documents, employment agreements, certifications from executive officers, and financial information formatted in XBRL - The exhibits include the Amended and Restated Certificate of Incorporation and Bylaws, Certificate of Designation for Series A Preferred Stock, and employment agreements[267](index=267&type=chunk) - Certifications from the Principal Executive Officer and Principal Financial Officer are provided pursuant to the Securities Exchange Act of 1934 and the Sarbanes-Oxley Act of 2002[267](index=267&type=chunk) - Financial information from the Quarterly Report is provided in Inline Extensible Business Reporting Language (XBRL) format[267](index=267&type=chunk) [Signatures](index=57&type=section&id=Signatures) The report is duly signed on behalf of Acutus Medical, Inc. by David H. Roman, President, Chief Executive Officer and Director, and Takeo Mukai, Senior Vice President and Chief Financial Officer, on May 11, 2023 - The report was signed by David H. Roman, President, Chief Executive Officer and Director, and Takeo Mukai, Senior Vice President and Chief Financial Officer[273](index=273&type=chunk) - The signing date for the report was **May 11, 2023**[273](index=273&type=chunk)

Market Overview - The electrophysiology market is projected to grow at a compound annual growth rate (CAGR) of approximately 11% from 2018 to 2025 [7] - Despite nearly 1 million procedures performed in 2020, the market remains under 5% penetrated [7] - Complex ablations represent 35-40% of procedures and over $3 billion in market opportunity [8] Clinical Studies & Results - The UNCOVER AF study reported 73% freedom from atrial fibrillation (AF) at 12 months in patients treated with PVI + AcQMap-enabled ablation [30] - Patients were approximately 9 times more likely to be in sinus rhythm at 12 months with PVI plus 3+ AcQMap targets ablated [31] - Over 6,000 patients have been treated with AcQMap since its launch [34] Financial Performance & Outlook - Full year 2022 revenue was $164 million, a decrease of 5% compared to the prior year [42] - Full year 2022 non-GAAP operating expenses were $715 million, an increase of 18% compared to the prior year [44] - Full year 2022 disposables revenue was $129 million, an increase of 8% compared to the prior year (11% excluding FX) [45] - The company anticipates modest year-over-year revenue growth for Q1 2023 and projects full-year 2023 revenue between $18 million and $21 million [47]

[Part I](index=6&type=section&id=PART%20I) [Business](index=6&type=section&id=Item%201.%20Business) Acutus Medical is an arrhythmia management company leveraging its AcQMap system and electrophysiology products for cardiac arrhythmia diagnosis and treatment - The company's foundational product is the **AcQMap imaging and mapping system**, utilizing a unique non-contact method with 48 ultrasound transducers and 48 biopotential electrodes to map any type of arrhythmia in under three minutes[22](index=22&type=chunk)[24](index=24&type=chunk) - Acutus maintains a strategic partnership with Biotronik for global distribution, with reciprocal product distribution in various international markets[28](index=28&type=chunk)[123](index=123&type=chunk) - In 2022, the company implemented a corporate restructuring, including workforce reduction, to reduce operating expenses and prioritize console utilization and procedure growth in targeted regions[48](index=48&type=chunk) Intellectual Property Portfolio (as of Dec 31, 2022) | Region | Issued Patents | Pending Applications | | :--- | :--- | :--- | | U.S. | 38 | 23 | | Outside U.S. | 76 | 51 | [Overview](index=6&type=section&id=Item%201.%20Business.Overview) Acutus Medical is an arrhythmia management company focused on improving diagnosis and treatment of cardiac arrhythmias through its electrophysiology product portfolio - Acutus Medical is an arrhythmia management company aiming to improve the diagnosis and treatment of cardiac arrhythmias through a portfolio of electrophysiology products[21](index=21&type=chunk) - The company's product portfolio includes access sheaths, diagnostic and mapping catheters, ablation catheters, and the highly differentiated **AcQMap imaging and mapping system** designed to rapidly identify ablation targets[22](index=22&type=chunk) - The company is seeking U.S. regulatory approval for its **AcQBlate® FORCE gold-tip, irrigated, radiofrequency force sensing ablation catheters**, with an anticipated FDA PMA and U.S. commercial launch in the second half of 2023[27](index=27&type=chunk) [Our Market and Industry](index=7&type=section&id=Item%201.%20Business.Our%20Market%20and%20Industry) The cardiac ablation market, particularly for complex arrhythmias, presents an unmet need for more effective diagnostic and treatment solutions Estimated Global Cardiac Ablation Procedures (2021) | Arrhythmia Type | Estimated Procedures | | :--- | :--- | | Atrial Fibrillation (AF) | 624,000 | | Supraventricular Tachycardias (SVTs) | 494,000 | | Ventricular Arrhythmias (VTs/PVCs) | 116,000 | - Current contact-based mapping systems are time-consuming and struggle to map unstable or complex arrhythmias, creating an unmet market need for more effective diagnostic and treatment alternatives[34](index=34&type=chunk)[35](index=35&type=chunk) [Our Solution and Growth Strategies](index=8&type=section&id=Item%201.%20Business.Our%20Solution%20and%20Growth%20Strategies) The AcQMap System offers rapid, accurate, whole-chamber mapping for various arrhythmias, supported by strategies to expand market presence and product offerings - The **AcQMap System** uses a non-contact approach with 48 ultrasound transducers and 48 biopotential electrodes to create comprehensive anatomical and electrical maps in under three minutes[38](index=38&type=chunk) - Key benefits of the AcQMap System include rapid, iterative whole-chamber mapping, increased accuracy via ultrasound and charge density mapping, and the unique capability to map both stable and unstable arrhythmias[40](index=40&type=chunk)[41](index=41&type=chunk)[42](index=42&type=chunk) - The company's growth strategies include establishing presence in targeted accounts, increasing physician awareness, maximizing console utilization, expanding the product portfolio, leveraging strategic partnerships, and building clinical evidence[49](index=49&type=chunk) [Competition and Intellectual Property](index=9&type=section&id=Item%201.%20Business.Competition%20and%20Intellectual%20Property) The company faces intense competition from larger medical device manufacturers and relies on a patent portfolio for intellectual property protection - The company faces intense competition from large, well-capitalized medical device manufacturers including **Abbott Laboratories, Biosense Webster (Johnson & Johnson), Boston Scientific, and Medtronic**, which possess greater resources and market share[49](index=49&type=chunk)[50](index=50&type=chunk) - As of December 31, 2022, the company's patent portfolio includes **38 U.S. patents** and **76 foreign patents**, with U.S. patents covering the AcQMap system expiring between 2027 and 2041[53](index=53&type=chunk) [Manufacturing and Supply](index=11&type=section&id=Item%201.%20Business.Manufacturing%20and%20Supply) The company manufactures products in Carlsbad, California, relying on single-source suppliers and third-party manufacturers, including a distribution agreement with Medtronic - The company manufactures products at its **50,800 square foot facility in Carlsbad, California**, adhering to FDA's Quality System Regulation (QSR) and ISO 13485 standards[54](index=54&type=chunk)[57](index=57&type=chunk) - Acutus relies on single or limited-source suppliers for certain raw materials and components, often without long-term agreements, and utilizes third parties like Biotronik for manufacturing certain products[55](index=55&type=chunk) - Following an asset sale, Acutus entered a distribution agreement with Medtronic to manufacture and supply certain products as an exclusive distributor for up to four years[56](index=56&type=chunk) [Government Regulation](index=11&type=section&id=Item%201.%20Business.Government%20Regulation) The company's medical devices are subject to extensive U.S. and EU regulatory approvals, including FDA clearances and CE Marks, and various fraud and abuse laws - In the U.S., medical devices require either **510(k) clearance** for substantially equivalent devices or a more demanding **Premarket Approval (PMA)** for high-risk (Class III) devices[59](index=59&type=chunk)[61](index=61&type=chunk)[66](index=66&type=chunk) - In the European Union, products must receive a **CE Mark** for sale, requiring conformity assessment by a Notified Body to ensure compliance with MDD or MDR[75](index=75&type=chunk) - The company is subject to numerous U.S. federal and state fraud and abuse laws, including the **Anti-Kickback Statute** and the **False Claims Act**[83](index=83&type=chunk)[84](index=84&type=chunk)[86](index=86&type=chunk) [Coverage, Reimbursement, and Human Capital](index=18&type=section&id=Item%201.%20Business.Coverage%2C%20Reimbursement%2C%20and%20Human%20Capital) Commercial success depends on adequate third-party reimbursement, and the company, with 225 employees, operates as an emerging growth and smaller reporting company - Commercial success depends on adequate reimbursement from third-party payors, including Medicare, Medicaid, and private insurers, who increasingly scrutinize product cost-effectiveness[96](index=96&type=chunk)[97](index=97&type=chunk) - As of December 31, 2022, the company had **225 full-time employees**, none of whom are represented by a labor union or collective bargaining agreement[98](index=98&type=chunk) - The company is classified as an **"emerging growth company"** and a **"smaller reporting company,"** benefiting from reduced reporting requirements and an extended transition period for new accounting standards[105](index=105&type=chunk)[108](index=108&type=chunk) [Risk Factors](index=21&type=section&id=Item%201A.%20Risk%20Factors) The company faces significant risks including a history of net losses, limited commercial history, intense competition, extensive government regulation, and challenges in protecting intellectual property - The company has a history of net losses, anticipates continued losses for several years, and may not achieve or sustain profitability[216](index=216&type=chunk) - Commercial success depends on significant market acceptance from hospitals, physicians, and payors, which is uncertain given the company's limited commercial history and slow physician adoption practices[114](index=114&type=chunk) - The company faces intense competition from major players like **Abbott, Biosense Webster (J&J), Boston Scientific, and Medtronic**, possessing significantly greater resources and market presence[127](index=127&type=chunk) - The company is subject to extensive and costly government regulation in the U.S. (FDA) and abroad (CE Mark), with non-compliance potentially leading to significant penalties, recalls, or production shutdowns[224](index=224&type=chunk)[232](index=232&type=chunk) - The company's ability to protect its intellectual property is uncertain, potentially leading to costly litigation from infringement accusations or enforcement efforts[277](index=277&type=chunk)[292](index=292&type=chunk) [Unresolved Staff Comments](index=72&type=section&id=Item%201B.%20Unresolved%20Staff%20Comments) The company reports no unresolved staff comments from the SEC - None[359](index=359&type=chunk) [Properties](index=72&type=section&id=Item%202.%20Properties) The company leases its corporate headquarters and manufacturing facility in Carlsbad, California, and an office in Brussels, Belgium, which are deemed sufficient for current needs - The main facility is a leased **50,800 sq. ft. space in Carlsbad, CA**, serving as headquarters and manufacturing, with its lease expiring on December 31, 2027[360](index=360&type=chunk) - An international office of approximately **3,900 sq. ft.** is leased in Brussels, Belgium, with its lease expiring on December 31, 2024[360](index=360&type=chunk) [Legal Proceedings](index=72&type=section&id=Item%203.%20Legal%20Proceedings) The company and certain officers are defending against consolidated securities class action lawsuits alleging false and misleading statements, with an uncertain outcome - The company and certain officers are defendants in two putative securities class action lawsuits filed in early 2022, alleging Exchange Act violations through false and misleading statements made between May 13, 2021, and November 11, 2021[362](index=362&type=chunk) - The lawsuits were consolidated, a lead plaintiff appointed, and the company filed a motion to dismiss; the outcome is currently not determinable but could incur substantial costs[363](index=363&type=chunk)[364](index=364&type=chunk) [Mine Safety Disclosures](index=73&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company - Not applicable[365](index=365&type=chunk) [Part II](index=74&type=section&id=PART%20II) [Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities](index=74&type=section&id=Item%205.%20Market%20for%20Registrant%27s%20Common%20Equity%2C%20Related%20Stockholder%20Matters%20and%20Issuer%20Purchases%20of%20Equity%20Securities) The company's common stock trades on Nasdaq under "AFIB," with 72 record holders, and the company has never paid cash dividends, retaining earnings for operations and growth - The company's common stock is listed on the Nasdaq under the symbol **"AFIB"**[368](index=368&type=chunk) - The company has never declared or paid cash dividends and does not plan to in the foreseeable future[373](index=373&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=74&type=section&id=Item%207.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) In 2022, revenue decreased to $16.4 million, but net loss significantly narrowed to $39.6 million due to a $79.5 million gain from an asset sale and reduced operating expenses, with current cash deemed sufficient for 12 months Financial Performance Summary (2021 vs. 2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $16.4 million | $17.3 million | | Net Loss | $39.6 million | $117.7 million | | Accumulated Deficit | $518.3 million | $478.7 million | - In June 2022, the company sold its left-heart access portfolio to Medtronic for **$50.0 million upfront** plus potential contingent considerations, resulting in a **$79.5 million gain** in 2022[377](index=377&type=chunk)[425](index=425&type=chunk) Key Business Metrics (2021 vs. 2022) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Total Acutus net system placements | 76 | 77 | | Procedure volumes | 1,861 | 1,570 | [Results of Operations](index=82&type=section&id=Item%207.%20MD%26A.Results%20of%20Operations) Revenue decreased by 5% to $16.4 million in 2022, while net loss significantly narrowed due to a large gain on asset sale and reduced operating expenses Consolidated Results of Operations (in thousands) | | 2022 | 2021 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Revenue** | **$16,363** | **$17,263** | **($900)** | **(5)%** | | Costs of products sold | $31,910 | $32,925 | ($1,015) | (3)% | | Research and development | $28,153 | $36,683 | ($8,530) | (23)% | | Selling, general and administrative | $47,654 | $63,523 | ($15,869) | (25)% | | Goodwill impairment | $12,026 | $— | $12,026 | 100% | | Gain on sale of business | ($79,465) | $— | ($79,465) | 100% | | **Loss from operations** | **($27,339)** | **($112,122)** | **$84,783** | **(76)%** | | **Net loss** | **($39,616)** | **($117,683)** | **$78,067** | **(66)%** | - Revenue decreased by **5% to $16.4 million** in 2022, driven by a **$2.3 million (57%) decline in system sales**, partially offset by an **8% increase in disposables revenue** from higher procedure volumes[435](index=435&type=chunk)[436](index=436&type=chunk) - Operating expenses decreased by **66%**, primarily due to a **$79.5 million gain** on asset sale to Medtronic, supplemented by R&D (down **23%**) and SG&A (down **25%**) reductions, partially offset by a **$12.0 million goodwill impairment charge**[439](index=439&type=chunk)[443](index=443&type=chunk)[444](index=444&type=chunk)[445](index=445&type=chunk) [Liquidity and Capital Resources](index=85&type=section&id=Item%207.%20MD%26A.Liquidity%20and%20Capital%20Resources) The company's $70.4 million cash position, bolstered by an asset sale and new credit facility, is expected to fund operations for at least the next 12 months Liquidity Position (as of Dec 31) | Metric | 2022 | 2021 | | :--- | :--- | :--- | | Cash, cash equivalents and marketable securities | $70.4 million | $107.9 million | | Working Capital | $98.0 million | $107.8 million | | Net cash used in operating activities | ($85.0 million) | ($99.7 million) | - Management believes current cash, receivables, and marketable securities are sufficient to fund operations for at least the next 12 months, supported by cost reduction measures and proceeds from the Medtronic asset sale[460](index=460&type=chunk) - On June 30, 2022, the company entered into a new five-year, **$35.0 million term loan facility**, utilizing proceeds to extinguish its previous 2019 Credit Agreement[467](index=467&type=chunk) [Critical Accounting Policies and Estimates](index=89&type=section&id=Item%207.%20MD%26A.Critical%20Accounting%20Policies%20and%20Estimates) The company's critical accounting policies include revenue recognition for disposable product sales and sales-type leases, stock-based compensation, and contingent consideration, with goodwill fully impaired in 2022 - Revenue is recognized under **ASC 606** and **ASC 842**, with recurring revenue from disposable product sales and deferred equipment agreements treated as sales-type leases[487](index=487&type=chunk)[489](index=489&type=chunk)[491](index=491&type=chunk) - Stock-based compensation is valued using the **Black-Scholes model** for options and grant-date fair value for RSAs/RSUs, with expenses recognized over the service period[494](index=494&type=chunk) - Contingent consideration from acquisitions is a **Level 3 liability** re-measured to fair value each period, with changes recorded in operating loss; in 2022, the company fully impaired its goodwill balance[499](index=499&type=chunk)[503](index=503&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=92&type=section&id=Item%207A.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) As a smaller reporting company, Acutus Medical is not required to provide information for this item - The company is not required to provide this information as it qualifies as a smaller reporting company[509](index=509&type=chunk) [Financial Statements and Supplementary Data](index=93&type=section&id=Item%208.%20Financial%20Statements%20and%20Supplementary%20Data) This section presents the company's audited consolidated financial statements for 2021 and 2022, including the independent auditor's report, balance sheets, statements of operations, equity, cash flows, and accompanying notes [Report of Independent Registered Public Accounting Firm](index=94&type=section&id=Item%208.%20Financial%20Statements.Report%20of%20Independent%20Registered%20Public%20Accounting%20Firm) KPMG LLP issued an unqualified opinion on the consolidated financial statements for 2021 and 2022, affirming their fair presentation in conformity with U.S. GAAP - **KPMG LLP** issued an opinion stating that the consolidated financial statements for the years ended December 31, 2022 and 2021, present fairly the financial position and results of operations in conformity with U.S. GAAP[515](index=515&type=chunk) [Consolidated Financial Statements](index=95&type=section&id=Item%208.%20Financial%20Statements.Consolidated%20Financial%20Statements) This section provides key consolidated financial data, including balance sheet, statement of operations, and cash flow summaries for 2021 and 2022 Consolidated Balance Sheet Data (as of Dec 31, in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | **Total Assets** | **$133,440** | **$169,792** | | Cash, cash equivalents, & marketable securities | $70,447 | $107,893 | | Total current assets | $117,867 | $126,290 | | **Total Liabilities** | **$58,421** | **$64,066** | | Total current liabilities | $19,872 | $18,510 | | Long-term debt | $34,434 | $40,415 | | **Total Stockholders' Equity** | **$75,019** | **$105,726** | Consolidated Statement of Operations Data (Year ended Dec 31, in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Revenue | $16,363 | $17,263 | | Loss from operations | ($27,339) | ($112,122) | | **Net loss** | **($39,616)** | **($117,683)** | | **Net loss per share (basic & diluted)** | **($1.40)** | **($4.11)** | Consolidated Statement of Cash Flows Data (Year ended Dec 31, in thousands) | | 2022 | 2021 | | :--- | :--- | :--- | | Net cash used in operating activities | ($85,032) | ($99,682) | | Net cash provided by investing activities | $104,750 | $19,066 | | Net cash (used in) provided by financing activities | ($12,116) | $79,569 | | **Net change in cash, cash equivalents and restricted cash** | **$7,127** | **($1,163)** | [Notes to Consolidated Financial Statements](index=100&type=section&id=Item%208.%20Financial%20Statements.Notes%20to%20Consolidated%20Financial%20Statements) The notes provide detailed explanations of the company's financial position, including liquidity, asset sale gains, goodwill impairment, and debt restructuring - Management believes the company's cash, cash equivalents, and marketable securities of **$70.4 million** as of December 31, 2022, are sufficient to fund operations for at least the next 12 months (Note 1)[533](index=533&type=chunk)[536](index=536&type=chunk) - The company sold its left-heart access portfolio to Medtronic for **$50.0 million upfront**, plus **$20.0 million** and **$17.0 million** in contingent earnouts achieved in 2022, resulting in a total gain on sale of **$79.5 million** (Note 4)[610](index=610&type=chunk)[612](index=612&type=chunk)[616](index=616&type=chunk) - In Q1 2022, a significant stock price decline triggered a quantitative assessment, leading to the full impairment of the company's **$12.0 million goodwill balance** (Note 9)[627](index=627&type=chunk) - On June 30, 2022, the company entered a new **$35.0 million credit agreement** with Deerfield Management affiliates, using proceeds to extinguish its prior 2019 credit agreement, resulting in a **$7.9 million loss on extinguishment** (Note 11)[635](index=635&type=chunk)[636](index=636&type=chunk) [Changes in and Disagreements With Accountants on Accounting and Financial Disclosure](index=128&type=section&id=Item%209.%20Changes%20in%20and%20Disagreements%20With%20Accountants%20on%20Accounting%20and%20Financial%20Disclosure) The company reports no changes in or disagreements with its accountants regarding accounting and financial disclosure - None[694](index=694&type=chunk) [Controls and Procedures](index=128&type=section&id=Item%209A.%20Controls%20and%20Procedures) Management concluded that disclosure controls and internal control over financial reporting were effective as of December 31, 2022, with no material changes during Q4 2022 - Management concluded that as of December 31, 2022, the company's disclosure controls and procedures were effective[695](index=695&type=chunk) - There were no material changes in internal control over financial reporting during the fourth quarter of 2022[696](index=696&type=chunk) - The company's management concluded that internal control over financial reporting was effective as of December 31, 2022, based on the COSO framework[698](index=698&type=chunk) [Other Information](index=128&type=section&id=Item%209B.%20Other%20Information) The company reports no other information for this item - None[700](index=700&type=chunk) [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](index=129&type=section&id=Item%209C.%20Disclosure%20Regarding%20Foreign%20Jurisdictions%20that%20Prevent%20Inspections) This item is not applicable to the company - Not applicable[701](index=701&type=chunk) [Part III](index=130&type=section&id=PART%20III) [Directors, Executive Officers, Corporate Governance, Executive Compensation, Security Ownership, and Principal Accountant Fees](index=130&type=section&id=Items%2010-14) Information for Items 10-14, covering directors, executive officers, corporate governance, executive compensation, security ownership, and accountant fees, will be incorporated by reference from the 2023 Proxy Statement - Information for **Items 10, 11, 12, 13, and 14** is incorporated by reference from the company's upcoming Proxy Statement for the 2023 Annual Meeting of Stockholders[703](index=703&type=chunk)[704](index=704&type=chunk)[705](index=705&type=chunk)[706](index=706&type=chunk)[707](index=707&type=chunk) [Part IV](index=131&type=section&id=PART%20IV) [Exhibits, Financial Statement Schedules](index=131&type=section&id=Item%2015.%20Exhibits%2C%20Financial%20Statement%20Schedules) This section lists consolidated financial statements and an index of exhibits, noting the omission of financial statement schedules as information is included elsewhere - This item includes the consolidated financial statements of Acutus Medical, Inc. and notes that all financial statement schedules have been omitted[712](index=712&type=chunk) - An index of exhibits, including agreements, corporate governance documents, and certifications, is provided, with many items incorporated by reference from previous filings[714](index=714&type=chunk) [Form 10-K Summary](index=131&type=section&id=Item%2016.%20Form%2010-K%20Summary) The company reports no summary for this item - None[711](index=711&type=chunk)

Financial Data and Key Metrics Changes - For Q4 2022, net revenue was $5 million, a 14% increase from $4.4 million in Q4 2021, marking the highest quarterly sales on record [17] - Full year 2022 net revenue was $16.4 million, down from $17.3 million in 2021, primarily due to a $2.3 million decrease in capital equipment sales and $0.4 million in foreign exchange headwinds [18] - Non-GAAP net loss for Q4 2022 was $17.9 million or $0.63 per share, compared to a loss of $28 million or $1.00 per share in Q4 2021 [23] Business Line Data and Key Metrics Changes - Commercial AcQMap procedure volumes increased by 19% in 2022, with console utilization up 13% and revenue per procedure growing 11% in constant currency [8] - Disposables revenue in Q4 2022 was $3.5 million, an 8% increase year-over-year, driven by a 15% growth in global commercial AcQMap procedures [19] - Capital revenue for the full year 2022 was $1.8 million, a 57% decline from $4.1 million in 2021, consistent with strategic prioritization of procedure volume growth [19] Market Data and Key Metrics Changes - The core addressable market for AcQMap is estimated to be between $750 million and $1 billion, with a potential opportunity of $2 billion to $2.5 billion expected to be approached incrementally in 2023 [9] - The total addressable market for AcQMap is approximately 475,000 procedures and $3 billion in disposable revenue, with expectations to exceed $4 billion by 2026 assuming sustained market growth of 10% [9] Company Strategy and Development Direction - The company is focusing on driving utilization and operational excellence, with a strategic shift towards software and catheter development to enhance product offerings [10] - AcQMap 9 software platform is expected to improve catheter localization and procedural efficiency, with significant launches planned for 2023 and 2024 [10][12] - The transition of the left-heart access portfolio to Medtronic is progressing well, with the company eligible for four years of uncapped revenue base earn-out starting February 2023 [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in returning to growth in 2023, with expectations for revenue in the range of $18 million to $21 million [24] - The company anticipates continued execution of its strategy to drive procedure volume and utilization growth, despite navigating supply chain disruptions [25] - Management highlighted that 2022 was a transition year, setting the stage for progressive improvements in 2023 and stronger performance in 2024 [15] Other Important Information - Operating expenses in Q4 2022 were approximately $13.9 million, down 35% year-over-year, marking the lowest level since the IPO [22] - Non-GAAP gross margins improved to negative 64% in Q4 2022 from negative 110% in Q3 2022, driven by higher volumes and restructuring actions [21] Q&A Session Summary Question: What is assumed from the Medtronic left-heart access portfolio sales in the 2023 guidance? - Management indicated that while the transfer pricing is lower under the distribution agreement with Medtronic, higher volume offsets this, and expected sales are not significantly different from previous estimates [29] Question: Will the AcQGuide MAX shortage impact Q2? - Management expects to resolve the AcQGuide MAX shortages by Q1, with no significant impact anticipated in Q2 or beyond [32] Question: How will the AcQBlate FORCE Sensing Catheter launch be structured? - The launch will likely involve a limited market release initially, with a focus on improving ease of use and integration with existing systems [36] Question: What is the outlook for operating expenses in 2023? - Operating expenses are expected to be relatively flat after Q4 2022, with selective headcount increases to support software improvements [50] Question: How does the company plan to manage funding moving forward? - The company aims to make existing cash last while exploring various capital vehicles as needed, with a focus on maximizing revenue from partnerships with Medtronic and BIOTRONIK [56]

Financial Data and Key Metrics Changes - For Q3 2022, net revenue was $3.6 million, down from $4.6 million in Q3 2021, primarily due to a $1.1 million decline in capital equipment sales [17][24] - Year-to-date procedure volumes increased by 21% year-over-year, with console utilization up 17% and revenue per procedure up 16% on a constant currency basis [8][12] - Non-GAAP operating expenses were approximately $15.2 million, down 30% year-over-year, marking the lowest level since the IPO [23] Business Line Data and Key Metrics Changes - U.S. sales were $1.9 million, a 12% decline year-over-year, driven by lower capital equipment sales, while disposable revenue remained flat [18] - Outside the U.S., sales were $1.7 million, down from $2.4 million in the prior year, primarily due to decreased capital sales [20] - Disposable product revenue increased about 1% year-over-year to $2.9 million, with procedure volumes of 441 reflecting a 17% increase [20] Market Data and Key Metrics Changes - The installed base globally was 74 systems, down from 75 in the previous quarter but up from 71 in the year-ago quarter [21] - Supply chain disruptions impacted U.S. sales by approximately $100,000 in Q3 and are expected to continue affecting Q4 [18][31] - The company expects full-year 2022 revenue to be in the range of $15.5 million to $16 million, including a $2.5 million decline in capital equipment revenue [26] Company Strategy and Development Direction - The company is focusing on driving utilization and operational excellence, with a goal to exit 2023 with a higher installed base and increased revenue per procedure [6][9] - New product launches, including AcQMap 8.5 and AcQBlate, are expected to enhance procedural efficiency and support growth objectives [10][11] - The transition of the left-heart access portfolio to Medtronic is progressing, with a $20 million earn-out payment expected by year-end [14] Management's Comments on Operating Environment and Future Outlook - Management acknowledged external challenges such as foreign exchange headwinds and supply chain disruptions but emphasized strong business fundamentals [16] - The company anticipates progressive improvements in 2023 and stronger performance in 2024, supported by operational improvement initiatives [16][27] - Management expressed confidence in the team's ability to execute the strategy and improve financial performance despite current challenges [15] Other Important Information - Non-GAAP gross margin was negative 109%, compared to negative 77% in Q3 2021, with efforts underway to improve operational performance and gross margins [22] - Cash and cash equivalents at the end of Q3 2022 were $70.5 million, with cash burn down 23% year-over-year [24] Q&A Session Summary Question: Can you elaborate on the supply chain constraints? - The AcQGuide MAX introducer sheath is impacted, with a shift from 2:1 to 1:1 usage ratio due to supply issues, expected resolution by early 2023 [30][31] Question: What is the status of the installed base and utilization increases? - The console relocation effort is mostly complete, with a focus on increasing utilization through physician champions [34][35] Question: How will the rollout of AcQBlate look next year? - The rollout will focus on existing users first, with expected significant uptake and revenue increases [39] Question: What are the expectations for gross margins going into 2023? - Improvements in overhead and manufacturing processes are expected to positively impact gross margins, with a target of $2 million in steady revenue to achieve positive gross margins [69]