HYPERFINE Defining the Future of Diagnostics at the Point of Care Corporate Presentation | November 2022 © 2022 Hyperfine, Inc. Forward Looking Statements This presentation includes forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are forward-lookin ...

[Explanatory Note](index=2&type=section&id=Explanatory%20Note) This note explains the December 2021 business combination forming Hyperfine, Inc. and its Nasdaq listing under 'HYPR' - On December 22, 2021, HealthCor Catalio Acquisition Corp. (now Hyperfine, Inc.) consummated a business combination with Legacy Hyperfine and Liminal Sciences, Inc., which became wholly-owned subsidiaries[8](index=8&type=chunk) - Following the Business Combination, HealthCor changed its name to 'Hyperfine, Inc.', and its Class A common stock is listed on the Nasdaq Global Market under the symbol 'HYPR'[8](index=8&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=Cautionary%20Statement%20Regarding%20Forward-Looking%20Statements) This statement warns that the report contains forward-looking statements subject to inherent risks and uncertainties, detailed in risk factors - This report contains forward-looking statements regarding the company's future events and financial performance, based on management's beliefs and assumptions[10](index=10&type=chunk) - Forward-looking statements are subject to inherent risks, uncertainties, and assumptions, including those detailed under 'Risk Factors' in the Annual Report on Form 10-K and this quarterly report[10](index=10&type=chunk)[13](index=13&type=chunk) - Key areas of forward-looking statements include anticipated benefits of the Business Combination, product development, commercialization, regulatory approvals, market size, financial performance, and the impact of COVID-19[12](index=12&type=chunk)[14](index=14&type=chunk) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20%E2%80%94%20FINANCIAL%20INFORMATION) This part presents the company's unaudited financial statements and management's discussion and analysis of financial condition and results of operations [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) This section presents the unaudited condensed combined and consolidated financial statements, including balance sheets, income statements, equity changes, cash flows, and detailed notes [Condensed Combined and Consolidated Balance Sheets (unaudited)](index=5&type=section&id=Condensed%20Combined%20and%20Consolidated%20Balance%20Sheets%20(unaudited)) This table provides a snapshot of the company's financial position, detailing assets, liabilities, and equity as of September 30, 2022, and December 31, 2021 | Metric | September 30, 2022 (in thousands) | December 31, 2021 (in thousands) | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Cash and cash equivalents | $132,482 | $188,498 | | Total current assets | $143,716 | $197,485 | | Total assets | $148,331 | $202,473 | | Total current liabilities | $12,459 | $15,736 | | Total liabilities | $13,348 | $16,246 | | Accumulated deficit | $(196,425) | $(136,320) | | Total stockholders' equity | $134,983 | $186,227 | [Condensed Combined and Consolidated Statements of Operations and Comprehensive Loss (unaudited)](index=6&type=section&id=Condensed%20Combined%20and%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(unaudited)) This table presents the company's revenues, costs, and net loss for the three and nine months ended September 30, 2022 and 2021 | Metric (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Total sales | $2,348 | $371 | $5,390 | $1,060 | | Total cost of sales | $1,660 | $709 | $4,783 | $1,774 | | Gross margin | $688 | $(338) | $607 | $(714) | | Total operating expenses | $13,970 | $16,052 | $60,852 | $38,067 | | Loss from operations | $(13,282) | $(16,390) | $(60,245) | $(38,781) | | Net loss and comprehensive loss | $(13,171) | $(16,392) | $(60,105) | $(38,766) | | Net loss per common share, basic and diluted | $(0.19) | $(8.66) | $(0.85) | $(22.56) | [Condensed Combined and Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) (unaudited)](index=7&type=section&id=Condensed%20Combined%20and%20Consolidated%20Statements%20of%20Changes%20in%20Convertible%20Preferred%20Stock%20and%20Stockholders'%20Equity%20(Deficit)%20(unaudited)) This table details changes in the company's equity, including net loss and stock-based compensation, from December 31, 2021, to September 30, 2022 | Metric (in thousands) | Balance, Dec 31, 2021 | Net Loss (9 months ended Sep 30, 2022) | Stock-based Compensation Expense (9 months ended Sep 30, 2022) | Balance, Sep 30, 2022 | | :-------------------- | :-------------------- | :------------------------------------- | :------------------------------------------------------------- | :-------------------- | | Additional paid-in capital | $322,540 | N/A | $8,859 | $331,401 | | Accumulated deficit | $(136,320) | $(60,105) | N/A | $(196,425) | | Total stockholders' equity | $186,227 | $(60,105) | $8,859 | $134,983 | [Condensed Combined and Consolidated Statements of Cash Flows (unaudited)](index=8&type=section&id=Condensed%20Combined%20and%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) This table summarizes the company's cash inflows and outflows from operating, investing, and financing activities for the nine months ended September 30, 2022 and 2021 | Metric (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(56,994) | $(29,047) | | Net cash used in investing activities | $(427) | $(1,736) |\n| Net cash provided by financing activities | $2 | $35,439 | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(57,419) | $4,656 | | Cash, cash equivalents and restricted cash, end of period | $133,741 | $68,942 | [Notes to Condensed Combined and Consolidated Financial Statements (unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Combined%20and%20Consolidated%20Financial%20Statements%20(unaudited)) This section provides detailed explanations and disclosures supporting the condensed combined and consolidated financial statements [1. ORGANIZATION AND DESCRIPTION OF BUSINESS](index=9&type=section&id=1.%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) Hyperfine, Inc. was formed through a business combination in December 2021, aiming to provide affordable and accessible MRI with its Swoop® Portable MR Imaging System. The system is FDA-cleared and commercially available in the US, Canada, Australia, New Zealand, and Pakistan. The company is also developing a device for non-invasive brain vital sign measurement - Hyperfine, Inc. was formed on December 22, 2021, through a business combination with Legacy Hyperfine and Liminal Sciences, Inc.[27](index=27&type=chunk) - The company's mission is to provide affordable and accessible MRI, with its Swoop® Portable MR Imaging System™ commercially available in the U.S. (FDA 510(k) clearance in 2020), Canada, New Zealand, Pakistan, and Australia[28](index=28&type=chunk) - Hyperfine is in the early research and development stage of a new device to non-invasively measure key vital signs in the brain[28](index=28&type=chunk) [2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES](index=9&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) This section outlines the basis of financial statement presentation, accounting policies, COVID-19 impact, segment information, use of estimates, and recent accounting pronouncements [COVID-19 Outbreak](index=10&type=section&id=COVID-19%20Outbreak) The COVID-19 pandemic continues to adversely impact operations, affecting personnel, manufacturing, material availability, and hiring, with uncertain future financial impact - The COVID-19 pandemic has adversely impacted operations, including personnel, third-party manufacturing, and material availability, creating uncertainty for future financial results[33](index=33&type=chunk)[34](index=34&type=chunk) - No significant impairment losses on assets have been incurred due to the COVID-19 pandemic[35](index=35&type=chunk) [Segment Information](index=10&type=section&id=Segment%20Information) The company aggregates Legacy Hyperfine and Liminal into a single reporting segment, with all long-lived assets and most revenue generated in the U.S - Legacy Hyperfine and Liminal are aggregated into a single reporting segment, as both focus on developing and commercializing products and services[36](index=36&type=chunk) - All long-lived assets are located in the United States[36](index=36&type=chunk) Non-U.S. Revenue | Metric | Three Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | | :----- | :--------------------------------------------- | :-------------------------------------------- | | Non-U.S. Revenue | $784 | $1,947 | [Use of Estimates](index=10&type=section&id=Use%20of%20Estimates) Financial statement preparation requires significant management estimates for revenue, doubtful accounts, inventory, deferred tax assets, and stock-based compensation, which may differ from actual results - Significant estimates are made for revenue recognition, allowance for doubtful accounts, inventory valuation, deferred tax assets, and stock-based compensation expense[42](index=42&type=chunk) - Estimates are based on historical and anticipated results, but actual results could differ materially[39](index=39&type=chunk) [Recent Accounting Pronouncements](index=11&type=section&id=Recent%20Accounting%20Pronouncements) The company is evaluating the impact of new accounting pronouncements on Leases and Credit Losses, with the Leases pronouncement not expected to be material - ASU 2016-02, Leases (Topic 842), is effective for interim reporting periods within annual periods beginning January 1, 2023; its adoption is not expected to be material[40](index=40&type=chunk) - ASU No. 2016-13, Financial Instruments — Credit Losses (Topic 326), is effective for the annual reporting period beginning January 1, 2023; the company is evaluating its impact[41](index=41&type=chunk) [3. REVENUE RECOGNITION](index=12&type=section&id=3.%20REVENUE%20RECOGNITION) This section details the company's revenue recognition policies, disaggregating revenue by product type, managing contract balances, and clarifying leasing arrangements and contract costs [Disaggregation of Revenue](index=12&type=section&id=Disaggregation%20of%20Revenue) Revenue is disaggregated by device and service, both showing significant growth for the three and nine months ended September 30, 2022, compared to 2021 | Revenue Type | Pattern of Recognition | Three Months Ended Sep 30, 2022 (in thousands) | Three Months Ended Sep 30, 2021 (in thousands) | Nine Months Ended Sep 30, 2022 (in thousands) | Nine Months Ended Sep 30, 2021 (in thousands) | | :----------- | :--------------------- | :--------------------------------------------- | :--------------------------------------------- | :-------------------------------------------- | :-------------------------------------------- | | Device | Point in time | $1,945 | $200 | $4,305 | $521 | | Service | Over time | $403 | $171 | $1,085 | $539 | | Total revenue| | $2,348 | $371 | $5,390 | $1,060 | [Contract Balances](index=12&type=section&id=Contract%20Balances) Contract balances, including accounts receivable and deferred revenue, increased significantly from December 2021 to September 2022, with substantial growth in recognized deferred revenue Contract Balances (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Accounts receivable, net | $2,702 | $553 | | Unbilled receivables | $1,475 | $91 | | Deferred revenue | $1,449 | $730 | | Long term deferred revenue | $889 | $510 | Revenue Recognized from Deferred Revenue (in thousands) | Revenue Recognized from Deferred Revenue (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------------------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | From beginning-of-period balance | $118 | $43 | $501 | $157 | [Costs of Obtaining or Fulfilling Contracts](index=13&type=section&id=Costs%20of%20Obtaining%20or%20Fulfilling%20Contracts) Incremental costs of obtaining contracts, such as commissions, are capitalized and amortized over the period consistent with the transfer of related goods and services Capitalized Costs in Other Long Term Assets (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Capitalized costs in Other long term assets | $251 | $158 | [Transaction price allocated to remaining performance obligations](index=13&type=section&id=Transaction%20price%20allocated%20to%20remaining%20performance%20obligations) Remaining performance obligations increased to $5.1 million as of September 30, 2022, with most expected to be recognized as revenue in fiscal year 2023 and thereafter Remaining Performance Obligations (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Remaining performance obligations | $5,101 | $2,800 | - Approximately **9%** of remaining performance obligations are expected to be recognized in fiscal year 2022, and **91%** in fiscal year 2023 and thereafter[51](index=51&type=chunk) [4. FAIR VALUE OF FINANCIAL INSTRUMENTS](index=13&type=section&id=4.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) The company measures fair value using a three-tier hierarchy, with cash equivalents and short-term items approximating fair value, and no Level 2 or 3 assets/liabilities - Fair value is measured using a three-tier hierarchy: Level 1 (quoted prices in active markets), Level 2 (observable inputs), and Level 3 (unobservable inputs)[53](index=53&type=chunk)[54](index=54&type=chunk)[55](index=55&type=chunk) - The company had no assets or liabilities valued with Level 3 inputs, and no transfers between fair value measurement levels occurred[55](index=55&type=chunk)[56](index=56&type=chunk) Money Market Funds (Level 1) (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Money market funds (Level 1) | $38,007 | $48,625 | [5. INVENTORIES](index=14&type=section&id=5.%20INVENTORIES) Total inventories slightly decreased to $4.0 million at September 30, 2022, comprising raw materials and finished goods, with manufacturing overhead including allocated labor costs Inventories (in thousands) | Inventory Type (in thousands) | September 30, 2022 | December 31, 2021 | | :---------------------------- | :----------------- | :---------------- | | Raw materials | $2,366 | $2,355 | | Finished goods | $1,636 | $1,955 | | Total inventories | $4,002 | $4,310 | - Manufacturing overhead costs include management's estimate and allocation of labor costs for warehousing, logistics, material sourcing, and production planning[58](index=58&type=chunk) [6. PROPERTY AND EQUIPMENT, NET](index=14&type=section&id=6.%20PROPERTY%20AND%20EQUIPMENT%2C%20NET) Property and equipment, net, decreased to $3.4 million at September 30, 2022, while depreciation expense increased for both the three and nine months ended September 30, 2022 Property and Equipment, Net (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Property and equipment, net | $3,448 | $3,753 | Depreciation Expense (in thousands) | Depreciation Expense (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Depreciation expense | $238 | $172 | $754 | $389 | [7. ACCRUED EXPENSES AND OTHER CURRENT LIABILITIES](index=14&type=section&id=7.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Accrued expenses and other current liabilities increased to $8.9 million at September 30, 2022, primarily driven by a significant rise in payroll and related benefits Accrued Expenses and Other Current Liabilities (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Total accrued expenses and other current liabilities | $8,949 | $8,115 | | Payroll and related benefits | $2,896 | $441 | | SPAC bonus and other costs | $0 | $1,071 | [8. EQUITY INCENTIVE PLAN](index=15&type=section&id=8.%20EQUITY%20INCENTIVE%20PLAN) This section details activity for stock options and RSUs under the 2021 Equity Incentive Plan, including grants, exercises, forfeitures, and a stock option repricing [Stock option activity](index=15&type=section&id=Stock%20option%20activity) Outstanding stock options decreased to 8.5 million at September 30, 2022, due to forfeitures, including 3.1 million from the former CEO, with a repricing approved in September 2022 Stock Option Activity | Metric | Outstanding at Jan 1, 2022 | Granted | Exercised | Forfeited | Outstanding at Sep 30, 2022 | | :----- | :------------------------- | :------ | :-------- | :-------- | :-------------------------- | | Options | 7,522,136 | 5,053,663 | (16,375) | (3,714,944) | 8,544,480 | - Forfeitures include **3,124,252** options from the former CEO[62](index=62&type=chunk) - A one-time stock option repricing was approved on September 26, 2022, effective October 31, 2022, for options held by employees other than Dr. Rothberg[67](index=67&type=chunk) [Restricted stock unit activity](index=15&type=section&id=Restricted%20stock%20unit%20activity) Outstanding RSUs decreased to 2.0 million at September 30, 2022, due to vesting and forfeitures, including 150,000 from the former CEO, resulting in a $4.5 million compensation recapture Restricted Stock Unit Activity | Metric | Outstanding at Jan 1, 2022 | Granted | Vested | Forfeited | Outstanding at Sep 30, 2022 | | :----- | :------------------------- | :------ | :----- | :-------- | :-------------------------- | | RSUs | 117,516 | 2,464,840 | (222,096) | (322,738) | 2,037,517 | - Forfeitures include **150,000** RSUs from the former CEO[64](index=64&type=chunk) - A **$4,501 thousand** stock-based compensation expense related to the former CEO's forfeited awards was recaptured as a credit to general and administrative expense[66](index=66&type=chunk) [Stock-based compensation expenses by functional line item](index=16&type=section&id=Stock-based%20compensation%20expenses%20by%20functional%20line%20item) Total stock-based compensation expense for the nine months ended September 30, 2022, was $8.9 million, with a $2.8 million credit to G&A for the three months due to forfeited awards Stock-based Compensation Expenses by Functional Line Item (in thousands) | Functional Line Item (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :---------------------------------- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Cost of sales | $34 | $24 | $85 | $24 | | Research and development | $339 | $207 | $1,851 | $829 | | Sales and marketing | $79 | $15 | $291 | $52 | | General and administrative | $(2,806) | $1,129 | $6,632 | $2,226 | | Total | $(2,354) | $1,375 | $8,859 | $3,131 | - The negative General and administrative expense for the three months ended September 30, 2022, is due to the recapture of **$4.5 million** in previously recognized expense related to the former CEO's forfeited awards[66](index=66&type=chunk)[68](index=68&type=chunk) [9. NET LOSS PER SHARE](index=16&type=section&id=9.%20NET%20LOSS%20PER%20SHARE) Basic and diluted net loss per share were identical due to the company's net loss position, with weighted-average shares significantly increasing in 2022 Net Loss Per Share Data | Metric | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :----- | :------------------------------ | :------------------------------ | :----------------------------- | :----------------------------- | | Net Loss | $(13,171) | $(16,392) | $(60,105) | $(38,766) | | Weighted-average common stock | 70,509,639 | 1,892,208 | 70,398,103 | 1,718,489 | | Basic and dilutive net loss per share | $(0.19) | $(8.66) | $(0.85) | $(22.56) | Anti-Dilutive Common Equivalent Shares | Anti-Dilutive Common Equivalent Shares | September 30, 2022 | September 30, 2021 | | :------------------------------------- | :----------------- | :----------------- | | Outstanding options to purchase common stock | 8,544,480 | 7,597,120 | | Outstanding Legacy Hyperfine convertible preferred stock | 0 | 46,084,168 | | Outstanding RSUs | 2,037,517 | 0 | | Earn-Out Shares | 9,450,862 | 0 | | Total anti-dilutive common equivalent shares | 20,032,859 | 53,681,288 | - Earn-Out Shares (up to **10,000,000** Class A common stock) are contingent on the Class A common stock price reaching **$15.00** within three years of the Closing Date[71](index=71&type=chunk) [10. INCOME TAXES](index=17&type=section&id=10.%20INCOME%20TAXES) The company's effective income tax rate was 0.0% for the periods presented, with a full valuation allowance against deferred tax assets due to its earnings history - The estimated annual effective income tax rate was **0.0%** for the three and nine months ended September 30, 2022 and 2021[73](index=73&type=chunk) - A full valuation allowance is recorded against net deferred tax assets, as realization is not considered more likely than not due to the company's earnings history[75](index=75&type=chunk) [11. RELATED PARTY TRANSACTIONS](index=18&type=section&id=11.%20RELATED%20PARTY%20TRANSACTIONS) This section details transactions with related parties, including subleases from 4Catalyzer, expense allocations, a forgiven Promissory Note, and various service agreements - The company subleases office and lab space from 4Catalyzer Corporation (4C), a related party[76](index=76&type=chunk) Related Party Balances (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Due to related parties (4C) | $58 | $1,872 | | Due from related parties | $0 | $14 | - A **$90 thousand** Promissory Note with an employee was forgiven on January 11, 2022[78](index=78&type=chunk) [12. COMMITMENTS AND CONTINGENCIES](index=19&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) This section outlines commitments, including a 401(k) plan and grants from the Bill & Melinda Gates Foundation, and addresses contingencies, noting no material legal proceedings [Commitments](index=19&type=section&id=Commitments) The company has no 401(k) matching contributions and received $4.9 million in BMGF grants to deploy 25 Swoop devices for a multi-site study - No matching contributions were made to the 401(k) plan for the three and nine months ended September 30, 2022 and 2021[83](index=83&type=chunk) - Received grants totaling **$4.9 million** from the Bill & Melinda Gates Foundation (BMGF) for the provision and equipping of **25** sites with Swoop systems for a multi-site study[84](index=84&type=chunk)[144](index=144&type=chunk) Restricted Cash (BMGF Grants) (in thousands) | Metric (in thousands) | September 30, 2022 | December 31, 2021 | | :-------------------- | :----------------- | :---------------- | | Restricted cash (BMGF grants) | $1,259 | $2,662 | [Contingencies](index=19&type=section&id=Contingencies) The company is not involved in material legal proceedings, has no recorded liabilities for indemnification, and a $1.0 million Earn-Out Shares payment is not considered probable - The company is not currently a party to any material legal proceedings[85](index=85&type=chunk) - No liability has been recorded for indemnification obligations due to limited history and no awareness of material claims[87](index=87&type=chunk) - A **$1,000 thousand** payment to a third-party service provider for Earn-Out Shares is not considered probable, so no liability was recognized[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) This section provides management's perspective on the company's financial condition and results, covering business overview, COVID-19 impact, key metrics, and detailed financial performance [Overview](index=21&type=section&id=Overview) Hyperfine is a digital health company providing affordable MRI with its FDA-cleared Swoop® system, integrating AI, and developing a brain sensing platform for international expansion - Hyperfine's mission is to provide affordable and accessible imaging and monitoring through MRI, with its Swoop® Portable MR Imaging System™[90](index=90&type=chunk) - The Swoop system is FDA 510(k) cleared (2020) and commercially available in the US, Canada, Australia, New Zealand, and Pakistan[93](index=93&type=chunk) - The company is optimizing its software ecosystem with Artificial Intelligence (AI) for clinical decision support and plans to develop a brain sensing platform[92](index=92&type=chunk) [COVID-19](index=22&type=section&id=COVID-19) The COVID-19 pandemic continues to adversely impact operations, causing sales restrictions, decreased hospital spending, and supply chain disruptions, leading to increased costs and extended lead times - COVID-19 has created commercial challenges, restricting salesforce visits to healthcare providers and slowing product demonstrations[96](index=96&type=chunk) - The supply chain has been adversely affected, leading to increased product costs and dramatically extended lead times for certain components, particularly semiconductors[98](index=98&type=chunk) - The company mitigated impacts by shifting to domestic suppliers, increasing communication, and providing advanced forecasts, but future waves could still cause greater negative impacts[98](index=98&type=chunk) [Key Performance Metrics](index=23&type=section&id=Key%20Performance%20Metrics) The company evaluates business performance using key metrics, primarily focusing on the 'Installed Base' of its Swoop systems, indicating business growth [Installed Base](index=23&type=section&id=Installed%20Base) The total installed base of Swoop systems reached 100 units as of September 30, 2022, including commercial, grant fulfillment, and research installations, doubling from the prior year Installed Base of Swoop Systems | Installation Type | As of September 30, 2022 | As of September 30, 2021 | | :---------------- | :----------------------- | :----------------------- | | Commercial systems installations | 57 | 20 | | Grant fulfillment installations | 20 | 8 | | Research units | 23 | 22 | | Total Installed Units | 100 | 50 | - Commercial system installations and RTA sales generate revenue, while grant fulfillment and research units expand clinical use cases, often at no cost to institutions[104](index=104&type=chunk)[105](index=105&type=chunk)[106](index=106&type=chunk) [Factors Affecting Results of Operations](index=24&type=section&id=Factors%20Affecting%20Results%20of%20Operations) Key factors influencing future results include strategic partnerships, accelerated international expansion, and technical innovation focusing on AI integration and new imaging applications [Strategic partnerships and accelerated international expansion](index=24&type=section&id=Strategic%20partnerships%20and%20accelerated%20international%20expansion) Market expansion through direct sales and distribution partners in target regions, alongside a BMGF partnership for research, are key growth drivers - The company is building an international sales strategy with direct sales and distribution partners in target regions, including Canada, Australia, New Zealand, Pakistan, and potentially larger EU countries[108](index=108&type=chunk) - A partnership with the Bill & Melinda Gates Foundation (BMGF) involves deploying **20** Swoop systems (out of **25** funded) for a multi-site study to validate use in maternal anemia, malnutrition, infection, and birth-related injury[108](index=108&type=chunk)[144](index=144&type=chunk) [Technical innovation](index=24&type=section&id=Technical%20innovation) The company focuses on enhancing the Swoop system with AI, new imaging applications, and a brain sensing platform, expecting increased R&D expenses but positive future profitability - Focus on integrating the Swoop system into clinical workflows and developing automated image analysis using Artificial Intelligence (AI)[109](index=109&type=chunk) - Plans to develop an enhanced MRI system for neuroimaging and other extremities, and a brain sensing platform for neuromonitoring[109](index=109&type=chunk) - These technical innovation activities are expected to increase research and development expenses but positively impact future results and profitability[109](index=109&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) This section details the company's financial performance for the three and nine months ended September 30, 2022, versus 2021, covering sales, costs, gross margin, and operating expenses [Sales](index=25&type=section&id=Sales) Total sales increased significantly by 532.9% for the three months and 408.5% for the nine months ended September 30, 2022, driven by higher device volume and service sales Sales (in thousands) | Sales (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (%) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (%) | | :------------------- | :------------------------------ | :------------------------------ | :--------- | :----------------------------- | :----------------------------- | :--------- | | Device | $1,945 | $200 | 872.5% | $4,305 | $521 | 726.3% | | Service | $403 | $171 | 135.7% | $1,085 | $539 | 101.3% | | Total sales | $2,348 | $371 | 532.9% | $5,390 | $1,060 | 408.5% | - Device sales increase was driven by higher volume and sales price, following a pricing action in Q1 2022[112](index=112&type=chunk) - Service sales growth was driven by an increase in the volume of installed devices, as service revenue is recurring[113](index=113&type=chunk) [Cost of sales](index=26&type=section&id=Cost%20of%20sales) Total cost of sales increased by 134.1% for the three months and 169.6% for the nine months ended September 30, 2022, due to higher manufacturing, hardware, and labor costs Cost of Sales (in thousands) | Cost of Sales (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (%) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (%) | | :--------------------------- | :------------------------------ | :------------------------------ | :--------- | :----------------------------- | :----------------------------- | :--------- | | Device | $1,215 | $508 | 139.2% | $3,511 | $1,420 | 147.3% | | Service | $445 | $201 | 121.4% | $1,272 | $354 | 259.3% | | Total cost of sales | $1,660 | $709 | 134.1% | $4,783 | $1,774 | 169.6% | - Increase in device cost of sales was driven by third-party manufacturing costs, product hardware costs, and labor costs due to increased sales volume[116](index=116&type=chunk)[118](index=118&type=chunk) - Increase in service cost of sales was primarily due to higher internal overheads and labor costs[117](index=117&type=chunk)[119](index=119&type=chunk) [Research and development](index=26&type=section&id=Research%20and%20development) R&D expenses increased by 14.0% for the three months and 35.3% for the nine months ended September 30, 2022, due to higher personnel, stock-based compensation, and consulting costs Research and Development Expenses (in thousands) | R&D Expenses (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (%) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------ | :--------- | :----------------------------- | :----------------------------- | :--------- | | Research and development | $7,338 | $6,438 | 14.0% | $22,937 | $16,949 | 35.3% | - The increase was driven by higher personnel-related costs (**$5.8 million** for 9 months), stock-based compensation (**$1.0 million** for 9 months), and consulting costs (**$0.9 million** for 9 months)[121](index=121&type=chunk)[122](index=122&type=chunk) - Partially offset by grant fulfillments recorded as credits to R&D expenses (**$1.8 million** for 9 months)[122](index=122&type=chunk) [General and administrative](index=27&type=section&id=General%20and%20administrative) G&A expenses decreased by 53.2% for the three months due to a $4.5 million compensation recapture, but increased 73.1% for nine months due to higher personnel and insurance costs General and Administrative Expenses (in thousands) | G&A Expenses (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (%) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------ | :--------- | :----------------------------- | :----------------------------- | :--------- | | General and administrative | $3,198 | $6,827 | (53.2)% | $26,570 | $15,348 | 73.1% | - The 3-month decrease was primarily due to a **$4.5 million** credit from recaptured stock-based compensation related to the former CEO's forfeited awards[123](index=123&type=chunk) - The 9-month increase was driven by higher stock-based compensation (**$4.4 million** net), personnel costs (**$3.6 million**), insurance (**$2.4 million**), and recruitment expenses[124](index=124&type=chunk) [Sales and marketing](index=27&type=section&id=Sales%20and%20marketing) Sales and marketing expenses increased by 23.2% for the three months and 96.6% for the nine months ended September 30, 2022, driven by higher personnel, stock-based compensation, and travel costs Sales and Marketing Expenses (in thousands) | S&M Expenses (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (%) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (%) | | :-------------------------- | :------------------------------ | :------------------------------ | :--------- | :----------------------------- | :----------------------------- | :--------- | | Sales and marketing | $3,434 | $2,787 | 23.2% | $11,345 | $5,770 | 96.6% | - The increase was primarily due to higher personnel-related expenses (**$4.2 million** for 9 months), stock-based compensation (**$0.2 million** for 9 months), travel (**$0.7 million** for 9 months), and consulting expenses (**$0.4 million** for 9 months)[126](index=126&type=chunk) - Partially offset by a decrease in marketing costs and marketing events for the three months ended September 30, 2022[125](index=125&type=chunk) [Interest income](index=28&type=section&id=Interest%20income) Interest income increased significantly to $170 thousand for the three months and $203 thousand for the nine months ended September 30, 2022, primarily due to higher interest rates Interest Income (in thousands) | Interest Income (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (%) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (%) | | :----------------------------- | :------------------------------ | :------------------------------ | :--------- | :----------------------------- | :----------------------------- | :--------- | | Interest income | $170 | $3 | 5,567% | $203 | $13 | 1,462% | - The increase in interest income was primarily driven by higher interest rates during the periods[128](index=128&type=chunk)[129](index=129&type=chunk) [Other income (expense), net](index=28&type=section&id=Other%20income%20(expense)%2C%20net) Other income (expense), net, showed an unfavorable increase in expense for both periods, primarily due to realized losses on foreign currencies Other Income (Expense), Net (in thousands) | Other Income (Expense), net (in thousands) | Three Months Ended Sep 30, 2022 | Three Months Ended Sep 30, 2021 | Change (unfavorable) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | Change (unfavorable) | | :----------------------------------------- | :------------------------------ | :------------------------------ | :------------------- | :----------------------------- | :----------------------------- | :------------------- | | Other income (expense), net | $(59) | $(5) | $(54) | $(63) | $2 | $(65) | - The unfavorable changes were primarily driven by realized losses on foreign currencies[130](index=130&type=chunk)[131](index=131&type=chunk) [Liquidity and Capital Resources](index=28&type=section&id=Liquidity%20and%20Capital%20Resources) The company funds operations primarily through stock issuance, with $132.5 million cash as of September 30, 2022, expecting to cover operations for at least 12 months despite continued cash burn [Cash](index=29&type=section&id=Cash) Cash and cash equivalents totaled $132.5 million as of September 30, 2022, with future capital requirements uncertain and dependent on development, commercialization, and regulatory costs - Cash and cash equivalents totaled **$132.5 million** as of September 30, 2022[136](index=136&type=chunk) - Future capital requirements are dependent on development costs, commercialization strategy, international expansion, and regulatory costs[136](index=136&type=chunk) - Inability to obtain additional funds on a timely basis could lead to delays in product development or commercialization efforts[135](index=135&type=chunk)[136](index=136&type=chunk) [Cash flows](index=29&type=section&id=Cash%20flows) The company experienced a net decrease in cash of $57.4 million for the nine months ended September 30, 2022, driven by increased operating cash use and reduced financing activities Cash Flow Activity (in thousands) | Cash Flow Activity (in thousands) | Nine Months Ended Sep 30, 2022 | Nine Months Ended Sep 30, 2021 | | :-------------------------------- | :----------------------------- | :----------------------------- | | Net cash used in operating activities | $(56,994) | $(29,047) | | Net cash used in investing activities | $(427) | $(1,736) | | Net cash provided by financing activities | $2 | $35,439 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(57,419) | $4,656 | [Net cash used in operating activities](index=29&type=section&id=Net%20cash%20used%20in%20operating%20activities) Net cash used in operating activities increased to $57.0 million for the nine months ended September 30, 2022, due to a higher net loss and negative changes in operating assets and liabilities - Net cash used in operating activities increased to **$57.0 million** for the nine months ended September 30, 2022, from **$29.0 million** in 2021[138](index=138&type=chunk)[140](index=140&type=chunk) - The increase in cash used was primarily due to a net loss of **$60.1 million** and negative changes in operating assets and liabilities of **$6.5 million**[138](index=138&type=chunk) - Non-cash items, including **$8.9 million** in stock-based compensation expense, partially offset the cash used[138](index=138&type=chunk) [Net cash used for investing activities](index=30&type=section&id=Net%20cash%20used%20for%20investing%20activities) Net cash used in investing activities decreased to $0.4 million for the nine months ended September 30, 2022, from $1.7 million in 2021, primarily due to reduced purchases of property and equipment - Net cash used in investing activities decreased to **$0.4 million** for the nine months ended September 30, 2022, from **$1.7 million** in 2021[141](index=141&type=chunk) - This was primarily due to lower purchases of property and equipment[141](index=141&type=chunk) [Net cash provided by financing activities](index=30&type=section&id=Net%20cash%20provided%20by%20financing%20activities) Net cash provided by financing activities significantly decreased to $2 thousand for the nine months ended September 30, 2022, compared to $35.4 million in 2021, which included stock issuance proceeds - Net cash provided by financing activities was **$2 thousand** for the nine months ended September 30, 2022, a significant decrease from **$35.4 million** in 2021[142](index=142&type=chunk) - The 2021 financing activities included **$30.5 million** from Series D convertible preferred stock and **$3.5 million** from 4Bionics, LLC[142](index=142&type=chunk) [Contractual obligations](index=30&type=section&id=Contractual%20obligations) The company has no significant contractual obligations beyond its 401(k) plan and $4.9 million in BMGF grants for deploying Swoop devices - No significant contractual obligations as of September 30, 2022[145](index=145&type=chunk) - The company did not make any matching contributions to its 401(k) plan for the three and nine months ended September 30, 2022 and 2021[143](index=143&type=chunk) - BMGF grants totaling **$4.9 million** support the deployment of **25** Swoop devices for a multi-site study, with **20** units and **10** baby cradles provisioned by September 30, 2022[144](index=144&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=31&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Financial statements rely on estimates for revenue, doubtful accounts, inventory, deferred tax assets, and stock-based compensation, with no material changes reported except for recent pronouncements - Financial statements require estimates and assumptions for revenue recognition, allowance for doubtful accounts, inventory, deferred tax assets, and stock-based compensation[146](index=146&type=chunk) - No material changes to critical accounting policies and estimates were reported compared to the 2021 Annual Report on Form 10-K, except for recent accounting pronouncements[147](index=147&type=chunk) [Recently Issued Accounting Pronouncements](index=31&type=section&id=Recently%20Issued%20Accounting%20Pronouncements) This section refers to Note 2 of the financial statements for details on recently issued accounting pronouncements that may impact the company's financial position - Refer to Note 2 of the condensed combined and consolidated financial statements for details on recently issued accounting pronouncements[148](index=148&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=31&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company is exposed to market risks from interest rates, inflation, and foreign exchange, but believes its overall exposure is limited and does not use financial instruments for speculation [Interest Rate Risk](index=31&type=section&id=Interest%20Rate%20Risk) Cash equivalents, including $38.0 million in money market funds, are subject to interest rate risk, but a 10% change is not expected to materially affect cash flows due to short-term nature - Cash equivalents include **$38.0 million** in money market funds as of September 30, 2022[150](index=150&type=chunk) - The company's investment policy prioritizes liquidity and capital preservation[150](index=150&type=chunk) - A hypothetical **10%** change in interest rates is not expected to have a material effect on cash flows or operating results due to the short-term nature of cash equivalents[150](index=150&type=chunk) [Inflation Risk](index=31&type=section&id=Inflation%20Risk) Inflation has not materially affected the company's business, but inability to offset higher costs through price increases or efficiencies could cause harm - Inflation has not had a material effect on the company's business, financial condition, or results of operations, other than its impact on the general economy[151](index=151&type=chunk) - Inability to fully offset higher costs from inflationary pressures through price increases or manufacturing efficiencies could harm the business[151](index=151&type=chunk) [Foreign Exchange Risk](index=32&type=section&id=Foreign%20Exchange%20Risk) The company primarily transacts in U.S. dollars, limiting foreign currency translation risk, and does not use hedging strategies, so material impact is not expected - The company primarily operates and executes transactions in U.S. dollars[153](index=153&type=chunk) - Foreign currency translation risk is limited and not expected to have a material impact on financial statements[153](index=153&type=chunk) - The company has not utilized hedging strategies for foreign exchange exposure[153](index=153&type=chunk) [Item 4. Controls and Procedures](index=32&type=section&id=Item%204.%20Controls%20and%20Procedures) The principal executive and financial officers concluded that disclosure controls and procedures were not effective as of September 30, 2022, due to identified material weaknesses in internal control over financial reporting. These weaknesses relate to limited accounting personnel post-Business Combination and misclassification of Class A ordinary shares subject to redemption. Management is actively implementing a remediation plan, including hiring experienced finance personnel [Evaluation of Disclosure Controls and Procedures](index=32&type=section&id=Evaluation%20of%20Disclosure%20Controls%20and%20Procedures) Disclosure controls and procedures were deemed ineffective as of September 30, 2022, solely due to identified material weaknesses in internal control over financial reporting - Disclosure controls and procedures were not effective as of September 30, 2022[154](index=154&type=chunk) - The ineffectiveness was due to material weaknesses in internal control over financial reporting[154](index=154&type=chunk) [Material Weaknesses in Internal Control Over Financial Reporting](index=32&type=section&id=Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) Two material weaknesses were identified: limited accounting personnel post-Business Combination and misclassification of Class A ordinary shares subject to redemption - Identified material weakness: limited accounting and financial reporting personnel and resources post-Business Combination, leading to insufficient supervision and review of outsourced accounting information[156](index=156&type=chunk) - Identified material weakness: misclassification of Class A ordinary shares subject to possible redemption, which was quantitatively material and required restatement[157](index=157&type=chunk) - Despite these weaknesses, management concluded that the financial statements are fairly stated in all material respects[159](index=159&type=chunk) [Plan for Remediation of the Material Weaknesses in Internal Control Over Financial Reporting](index=33&type=section&id=Plan%20for%20Remediation%20of%20the%20Material%20Weaknesses%20in%20Internal%20Control%20Over%20Financial%20Reporting) Management is actively remediating material weaknesses by hiring experienced accounting and finance personnel, providing training, and increasing communication with third-party professionals - Remediation plan includes hiring experienced accounting and finance resources, such as a Chief Financial Officer and Vice President, Controller[160](index=160&type=chunk) - The plan also involves providing accounting training, literature, research materials, and increased communication with outsourced third-party professionals[160](index=160&type=chunk) - Material weaknesses will not be considered remediated until effective controls are designed, implemented, and tested over a sufficient period[160](index=160&type=chunk) [Changes in Internal Control Over Financial Reporting](index=33&type=section&id=Changes%20in%20Internal%20Control%20Over%20Financial%20Reporting) No material changes in internal control over financial reporting occurred during the three months ended September 30, 2022, other than those made for remediation - No material changes in internal control over financial reporting occurred during the three months ended September 30, 2022, other than changes made to remediate the material weaknesses[161](index=161&type=chunk) [PART II — OTHER INFORMATION](index=34&type=section&id=PART%20II%20%E2%80%94%20OTHER%20INFORMATION) This part covers other information including legal proceedings, risk factors, equity sales, defaults, mine safety, and exhibits [Item 1. Legal Proceedings](index=34&type=section&id=Item%201.%20Legal%20Proceedings) The company is not currently involved in any material legal proceedings - The company is not currently a party to any material legal proceedings[164](index=164&type=chunk) [Item 1A. Risk Factors](index=34&type=section&id=Item%201A.%20Risk%20Factors) This section highlights new risks related to attracting key personnel, reliance on suppliers, pricing pressures, and potential Nasdaq delisting due to low stock price - The company's business is subject to various risks and uncertainties, including those described in its 2021 Annual Report on Form 10-K[165](index=165&type=chunk) - Key risks include the inability to attract and retain key personnel, reliance on a limited number of suppliers, and pricing pressures from contract suppliers[166](index=166&type=chunk)[169](index=169&type=chunk)[172](index=172&type=chunk) - The Class A common stock is trading below **$1.00** per share, posing a risk of delisting from Nasdaq if compliance is not regained[173](index=173&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=35&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) The company did not engage in any unregistered sales of equity securities or repurchase any equity securities during the three months ended September 30, 2022 - No unregistered sales of equity securities occurred during the three months ended September 30, 2022[174](index=174&type=chunk) - The company did not repurchase any of its equity securities during the three months ended September 30, 2022[175](index=175&type=chunk) [Item 3. Defaults Upon Senior Securities](index=35&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the company for the reporting period - Not applicable[176](index=176&type=chunk) [Item 4. Mine Safety Disclosures](index=35&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the company for the reporting period - Not applicable[177](index=177&type=chunk) [Item 5. Other Information](index=35&type=section&id=Item%205.%20Other%20Information) This item is not applicable to the company for the reporting period - Not applicable[178](index=178&type=chunk) [Item 6. Exhibits](index=36&type=section&id=Item%206.%20Exhibits) This section lists exhibits filed with the Quarterly Report on Form 10-Q, including offer letters, severance plans, certifications, and XBRL documents - Exhibits include the Offer Letter for Maria Sainz, Executive Severance Plan, and certifications (Section 302 and 906 of Sarbanes-Oxley Act)[181](index=181&type=chunk)[183](index=183&type=chunk) - Inline XBRL Instance Document and Taxonomy Extension documents are also filed[181](index=181&type=chunk)[182](index=182&type=chunk) [Signatures](index=38&type=section&id=Signatures) The report was signed by Maria Sainz, President and Chief Executive Officer, and Alok Gupta, Chief Financial Officer, on November 10, 2022 - The report was signed by Maria Sainz, President and Chief Executive Officer, and Alok Gupta, Chief Financial Officer[186](index=186&type=chunk) - The signing date for the report was November 10, 2022[186](index=186&type=chunk)

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 _________________ FORM 10-Q _________________ (Mark One) ☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2022 or ☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 001-39949 _________________ Hyperfine, Inc. (Exact name of registrant as specified in its charte ...

Hyperfine, Inc. (NASDAQ:HYPR) Q2 2022 Earnings Conference Call August 10, 2022 4:30 PM ET Company Participants Marissa Bych - Gilmartin Group LLC Scott Huennekens - Interim President and Chief Executive Officer Alok Gupta - Chief Financial Officer Conference Call Participants Lawrence Biegelsen - Wells Fargo Vijay Kumar - Evercore ISI Operator Ladies and gentlemen, thank you for standing by and welcome to the Hyperfine Q2 2022 Earnings Conference Call. At this time all participants are in a listen-only mode ...

HYPERFINE Defining the Future of Life-Saving Diagnostics at the Point of Care Corporate Presentation | May 11, 2022 © 2022 Hyperfine, Inc. Forward Looking Statements This presentation includes forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are for ...

[FORM 10-Q Filing Information](index=1&type=section&id=FORM%2010-Q) Summarizes the company's quarterly report filing details, classification, and outstanding common stock [Filing Details](index=1&type=section&id=Filing%20Details) Details Hyperfine, Inc.'s Quarterly Report on Form 10-Q filing for Q1 2022 and its regulatory classifications - Hyperfine, Inc. filed a **Quarterly Report on Form 10-Q** for the period ended **March 31, 2022**[2](index=2&type=chunk) - The company is classified as a **non-accelerated filer**, a **smaller reporting company**, and an **emerging growth company**[4](index=4&type=chunk) Outstanding Common Stock as of May 10, 2022 | Class | Shares Outstanding | | :------------------------------- | :----------------- | | Class A common stock | 55,277,061 | | Class B common stock | 15,055,288 | [Explanatory Note](index=2&type=section&id=EXPLANATORY%20NOTE) Provides context on the business combination that led to Hyperfine, Inc.'s formation and Nasdaq listing [Business Combination Overview](index=2&type=section&id=Business%20Combination%20Overview) Outlines the December 2021 business combination forming Hyperfine, Inc. and its subsequent Nasdaq listing under 'HYPR' - HealthCor Catalio Acquisition Corp. (now Hyperfine, Inc.) completed a business combination with Legacy Hyperfine and Liminal Sciences, Inc. on **December 22, 2021**[8](index=8&type=chunk) - Following the business combination, HealthCor changed its name to **Hyperfine, Inc.**, and its Class A common stock is listed on the Nasdaq Global Market under the symbol **'HYPR'**[8](index=8&type=chunk) [Cautionary Statement Regarding Forward-Looking Statements](index=3&type=section&id=CAUTIONARY%20STATEMENT%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) Highlights the inherent risks and uncertainties associated with the company's forward-looking statements regarding future performance [Forward-Looking Statements and Risks](index=3&type=section&id=Forward-Looking%20Statements%20and%20Risks) Discusses the company's forward-looking statements on future events and financial performance, subject to inherent risks and uncertainties - The report includes **forward-looking statements** concerning future events and financial performance, based on management's beliefs and assumptions[10](index=10&type=chunk) - Key areas of forward-looking statements include **product development, commercialization, regulatory approval, market size, pricing, financing, competition, and the impact of COVID-19**[11](index=11&type=chunk)[13](index=13&type=chunk) - These statements are subject to **risks and uncertainties**, detailed in the 'Risk Factors' sections of the Annual Report on Form 10-K and this quarterly report[10](index=10&type=chunk)[12](index=12&type=chunk) [PART I — FINANCIAL INFORMATION](index=5&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) Presents the company's unaudited condensed combined and consolidated financial statements and management's discussion and analysis [Item 1. Financial Statements](index=5&type=section&id=Item%201.%20Financial%20Statements) Presents Hyperfine, Inc.'s unaudited condensed combined and consolidated financial statements, including balance sheets and cash flows [Condensed Combined and Consolidated Balance Sheets (Unaudited)](index=5&type=section&id=Condensed%20Combined%20and%20Consolidated%20Balance%20Sheets%20(unaudited)) Provides a snapshot of the company's financial position, detailing assets, liabilities, and equity at specific reporting dates Condensed Combined and Consolidated Balance Sheets (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :---------------------------------- | :------------- | :---------------- | | Total current assets | $173,729 | $197,485 | | Total assets | $178,828 | $202,473 | | Total current liabilities | $11,414 | $15,736 | | Total liabilities | $12,265 | $16,246 | | Total stockholders' equity | $166,563 | $186,227 | - Total assets decreased from **$202.5 million** at December 31, 2021, to **$178.8 million** at March 31, 2022[16](index=16&type=chunk) - Total stockholders' equity decreased from **$186.2 million** at December 31, 2021, to **$166.6 million** at March 31, 2022[16](index=16&type=chunk) [Condensed Combined and Consolidated Statements of Operations and Comprehensive Loss (Unaudited)](index=6&type=section&id=Condensed%20Combined%20and%20Consolidated%20Statements%20of%20Operations%20and%20Comprehensive%20Loss%20(unaudited)) Details the company's financial performance over the period, including sales, expenses, and net loss Condensed Combined and Consolidated Statements of Operations and Comprehensive Loss (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------------------------------ | :-------------------------------- | :-------------------------------- | | Total sales | $1,509 | $331 | | Total cost of sales | $1,425 | $608 | | Gross margin | $84 | $(277) | | Total operating expenses | $23,855 | $7,528 | | Loss from operations | $(23,771) | $(7,805) | | Net loss and comprehensive loss | $(23,775) | $(7,794) | | Net loss per common share (basic and diluted) | $(0.34) | $(4.86) | - Total sales increased significantly by **355.9%** from **$331 thousand** in Q1 2021 to **$1.509 million** in Q1 2022[18](index=18&type=chunk) - The company achieved a **positive gross margin of $84 thousand** in Q1 2022, compared to a **negative gross margin of $(277) thousand** in Q1 2021[18](index=18&type=chunk) - Net loss increased from **$(7.794) million** in Q1 2021 to **$(23.775) million** in Q1 2022, primarily due to increased operating expenses[18](index=18&type=chunk) [Condensed Combined and Consolidated Statements of Changes in Convertible Preferred Stock and Stockholders' Equity (Deficit) (Unaudited)](index=7&type=section&id=Condensed%20Combined%20and%20Consolidated%20Statements%20of%20Changes%20in%20Convertible%20Preferred%20Stock%20and%20Stockholders%27%20Equity%20(Deficit)%20(unaudited)) Outlines changes in the company's equity, reflecting net loss and stock-based compensation impacts Changes in Stockholders' Equity (in thousands) | Metric | Balance, Dec 31, 2021 | Net Loss | Stock-based Compensation Expense | Balance, Mar 31, 2022 | | :-------------------------- | :-------------------- | :------- | :------------------------------- | :-------------------- | | Additional Paid-in Capital | $322,540 | — | $4,111 | $326,651 | | Accumulated Deficit | $(136,320) | $(23,775) | — | $(160,095) | | Total Stockholders' Equity | $186,227 | $(23,775) | $4,111 | $166,563 | - Accumulated deficit increased by **$23.8 million** due to the net loss for the quarter[20](index=20&type=chunk) - Stock-based compensation expense contributed **$4.1 million** to additional paid-in capital during the quarter[20](index=20&type=chunk) [Condensed Combined and Consolidated Statements of Cash Flows (Unaudited)](index=8&type=section&id=Condensed%20Combined%20and%20Consolidated%20Statements%20of%20Cash%20Flows%20(unaudited)) Summarizes the inflows and outflows of cash from operating, investing, and financing activities Condensed Combined and Consolidated Statements of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(27,289) | $(7,486) | | Net cash used in investing activities | $(308) | $(170) | | Net cash provided by financing activities | — | $31,210 | | Net (decrease) increase in cash and cash equivalents and restricted cash | $(27,597) | $23,554 | | Cash, cash equivalents and restricted cash, end of period | $163,563 | $87,840 | - Net cash used in operating activities significantly increased from **$(7.5) million** in Q1 2021 to **$(27.3) million** in Q1 2022[24](index=24&type=chunk) - Cash, cash equivalents, and restricted cash decreased by **$27.6 million** in Q1 2022, ending the period at **$163.6 million**[24](index=24&type=chunk) [Notes to Condensed Combined and Consolidated Financial Statements (Unaudited)](index=9&type=section&id=Notes%20to%20Condensed%20Combined%20and%20Consolidated%20Financial%20Statements%20(unaudited)) Provides detailed explanations and disclosures supporting the condensed financial statements, including accounting policies and business context [1. Organization and Description of Business](index=9&type=section&id=1.%20ORGANIZATION%20AND%20DESCRIPTION%20OF%20BUSINESS) Describes Hyperfine, Inc.'s formation through a business combination, its mission, and the commercial status of its Swoop® Portable MR Imaging SystemTM - Hyperfine, Inc. aims to provide **affordable and accessible MRI imaging and monitoring** globally[27](index=27&type=chunk) - The **Swoop® Portable MR Imaging SystemTM** received FDA 510(k) clearance in 2020 and is commercially available in the U.S., Canada, New Zealand, and Pakistan[27](index=27&type=chunk) Swoop System Installations as of March 31, 2022 | Category | Number of Units | | :---------------- | :-------------- | | Total Installed | 85 | | Research Units | 27 | [2. Summary of Significant Accounting Policies](index=9&type=section&id=2.%20SUMMARY%20OF%20SIGNIFICANT%20ACCOUNTING%20POLICIES) Outlines the company's accounting policies, including basis of presentation, COVID-19 impact, segment information, and new accounting pronouncements - The financial statements are prepared in accordance with **U.S. GAAP** and reflect all normal recurring adjustments for interim periods[28](index=28&type=chunk)[30](index=30&type=chunk) - The **COVID-19 pandemic** has adversely impacted operations, particularly salesforce access, hospital spending, and supply chain, leading to increased product costs and extended lead times for components[32](index=32&type=chunk) - The company aggregates Legacy Hyperfine and Liminal into a **single operating segment** due to similar qualitative and economic characteristics[38](index=38&type=chunk) - The company is evaluating the impact of **ASU 2016-02 (Leases)** and **ASU No. 2016-13 (Credit Losses)**, effective for annual periods beginning January 1, 2022, and January 1, 2023, respectively, but does not expect a material impact from the lease standard[42](index=42&type=chunk)[43](index=43&type=chunk) [3. Revenue Recognition](index=12&type=section&id=3.%20REVENUE%20RECOGNITION) Details revenue recognition policies, disaggregated by device and service, and outlines contract balances and remaining performance obligations Disaggregated Revenue (in thousands) | Product Type | Pattern of Recognition | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :----------- | :--------------------- | :-------------------------------- | :-------------------------------- | | Device | Point in time | $1,192 | $169 | | Service | Over time | $317 | $162 | | Total revenue| | $1,509 | $331 | Contract Balances (in thousands) | Metric | March 31, 2022 | December 31, 2021 | | :-------------------- | :------------- | :---------------- | | Accounts receivable, net | $1,944 | $553 | | Unbilled receivables | $478 | $91 | | Deferred revenue | $973 | $730 | | Long term deferred revenue | $851 | $510 | - Remaining performance obligations totaled **$3.975 million** as of March 31, 2022, with **39%** expected in FY2022 and **61%** in FY2023 and beyond[52](index=52&type=chunk) [4. Fair Value of Financial Instruments](index=13&type=section&id=4.%20FAIR%20VALUE%20OF%20FINANCIAL%20INSTRUMENTS) Explains the company's fair value measurement hierarchy and the valuation of financial instruments, including money market funds - The company uses a **three-tier hierarchy** for fair value measurement, with no Level 3 inputs[54](index=54&type=chunk)[57](index=57&type=chunk) - Money market funds, valued using quoted market prices (**Level 1**), totaled **$41.417 million** as of March 31, 2022[58](index=58&type=chunk) [5. Inventories](index=14&type=section&id=5.%20INVENTORIES) Details inventory composition and changes, noting no significant adjustments for net realizable value or obsolescence in Q1 2022 Inventory Summary (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :--------------- | :------------- | :---------------- | | Raw materials | $2,356 | $2,355 | | Finished goods | $2,182 | $1,955 | | Total inventories| $4,538 | $4,310 | - No inventory adjustments for net realizable value or excess/obsolete inventory were recorded in **Q1 2022**, compared to **$75 thousand** in Q1 2021[60](index=60&type=chunk) [6. Property and Equipment, Net](index=15&type=section&id=6.%20PROPERTY%20AND%20EQUIPMENT,%20NET) Reports on the company's property and equipment, net, and the significant increase in depreciation and amortization expense for Q1 2022 Property and Equipment, Net (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :-------------------------- | :------------- | :---------------- | | Total historical cost | $5,521 | $5,163 | | Less: Accumulated depreciation | $(1,644) | $(1,410) | | Property and equipment, net | $3,877 | $3,753 | - Depreciation and amortization expense increased by **163.5%** from **$96 thousand** in Q1 2021 to **$253 thousand** in Q1 2022[61](index=61&type=chunk) [7. Accrued Expenses and Other Current Liabilities](index=15&type=section&id=7.%20ACCRUED%20EXPENSES%20AND%20OTHER%20CURRENT%20LIABILITIES) Details the decrease in accrued expenses and other current liabilities, driven by reductions in bonus and contracted services accruals Accrued Expenses and Other Current Liabilities (in thousands) | Category | March 31, 2022 | December 31, 2021 | | :-------------------------------- | :------------- | :---------------- | | Bonus | $2,724 | $3,421 | | Contracted services | $1,842 | $2,711 | | SPAC bonus and other costs | $250 | $1,071 | | Payroll and related benefits | $1,321 | $441 | | Total accrued expenses and other current liabilities | $6,616 | $8,115 | - Accrued expenses and other current liabilities decreased by **$1.499 million (18.5%)** from December 31, 2021, to March 31, 2022[62](index=62&type=chunk) [8. Equity Incentive Plan](index=15&type=section&id=8.%20EQUITY%20INCENTIVE%20PLAN) Describes the equity incentive plan, outstanding stock options and RSUs, and the significant increase in stock-based compensation expense in Q1 2022 Equity Incentive Plan Activity (Q1 2022) | Metric | Stock Options | Restricted Stock Units | | :------------------------ | :------------ | :--------------------- | | Outstanding at Jan 1, 2022 | 7,522,136 | 117,516 | | Granted | 4,231,693 | 1,660,535 | | Forfeited | (271,368) | — | | Outstanding at Mar 31, 2022| 11,482,461 | 1,778,051 | Stock-Based Compensation Expense by Functional Line Item (in thousands) | Functional Line Item | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :------------------- | :-------------------------------- | :-------------------------------- | | Cost of sales - Device | $16 | — | | Research and development | $781 | $209 | | Sales and marketing | $96 | $6 | | General and administrative | $3,218 | $52 | | Total | $4,111 | $267 | - Total stock-based compensation expense increased by **$3.844 million (1439.7%)** year-over-year[68](index=68&type=chunk) [9. Net Loss Per Share](index=16&type=section&id=9.%20NET%20LOSS%20PER%20SHARE) Reports basic and diluted net loss per share, noting the exclusion of anti-dilutive common equivalent shares due to the net loss position Net Loss Per Share Calculation | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :---------------------------------------------------------------- | :-------------------------------- | :-------------------------------- | | Net Loss (in thousands) | $(23,775) | $(7,794) | | Weighted-average shares used to compute net loss per share | 70,332,349 | 1,602,732 | | Basic and dilutive loss per share | $(0.34) | $(4.86) | Anti-Dilutive Common Equivalent Shares | Category | March 31, 2022 | March 31, 2021 | | :------------------------------------------ | :------------- | :------------- | | Outstanding options to purchase common stock | 11,482,461 | 1,851,656 | | Outstanding RSUs | 1,778,051 | — | | Earn-Out Shares | 10,000,000 | — | | Total anti-dilutive common equivalent shares | 23,260,512 | 37,608,824 | - Earn-Out Shares of up to **10,000,000 Class A common stock** are contingent on the stock price reaching **$15.00** for 20 trading days within a 30-day period or a transaction with a value greater than or equal to **$15.00 per share** within three years of the Closing Date[71](index=71&type=chunk) [10. Income Taxes](index=17&type=section&id=10.%20INCOME%20TAXES) States the company's 0.0% effective income tax rate and the full valuation allowance against deferred tax assets due to historical losses - The estimated annual effective income tax rate was **0.0%** for Q1 2022 and Q1 2021[74](index=74&type=chunk) - A **full valuation allowance** is recorded against net deferred tax assets, indicating that the company does not expect to realize these benefits in the near future[75](index=75&type=chunk) [11. Related Party Transactions](index=18&type=section&id=11.%20RELATED%20PARTY%20TRANSACTIONS) Details related party transactions, including subleasing from 4Catalyzer Corporation and a significant decrease in service expenses from 4C - The company subleases office and lab space from **4Catalyzer Corporation (4C)**, a related party[76](index=76&type=chunk) - Expenses from 4C for services decreased from **$870 thousand** in Q1 2021 to **$154 thousand** in Q1 2022[79](index=79&type=chunk) - Legacy Hyperfine and Liminal terminated the ARTSA and entered into **Master Services Agreements** with 4C for general administration, facilities, IT, financing, legal, and HR services[79](index=79&type=chunk) [12. Commitments and Contingencies](index=19&type=section&id=12.%20COMMITMENTS%20AND%20CONTINGENCIES) Outlines commitments for 401(k) and Bill & Melinda Gates Foundation grants, with no material legal proceedings or earn-out liabilities - No matching contributions were made to the **401(k) plan** for the three months ended March 31, 2022 and 2021[83](index=83&type=chunk) - The company received grants totaling **$4.91 million** from the Bill & Melinda Gates Foundation for deploying **25 Swoop systems** for research, with **$1.983 million** in restricted cash as of March 31, 2022[84](index=84&type=chunk) - No liability has been recognized for a potential **$1.000 million** payment to a third-party service provider related to Earn-Out Shares, as the criteria have not been met[88](index=88&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=21&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses Hyperfine's financial condition, operational results, and future outlook, focusing on the Swoop system, COVID-19 impact, and liquidity needs [Overview](index=21&type=section&id=Overview) Introduces Hyperfine's mission to democratize MRI with its Swoop system, emphasizing bedside use, AI integration, and future brain sensing platform - Hyperfine's mission is to provide **affordable and accessible MRI imaging and monitoring** globally[90](index=90&type=chunk) - The **Swoop system** is designed for bedside use, offering high-quality images at lower magnetic field strength, and is commercially available in the U.S., Canada, New Zealand, and Pakistan[90](index=90&type=chunk)[93](index=93&type=chunk) - The company is optimizing its software ecosystem with **AI** to improve image quality, aid analysis, and reduce diagnosis time, with future plans for an enhanced MRI system and a brain sensing platform[92](index=92&type=chunk)[110](index=110&type=chunk) [COVID-19 Impact](index=22&type=section&id=COVID-19) Discusses the ongoing adverse impact of COVID-19 on sales, hospital spending, and supply chain, leading to potential cost increases and lead time extensions - **COVID-19** continues to create commercial challenges, restricting salesforce visits, decreasing hospital spending, and limiting physical access to facilities, slowing Swoop device demonstrations and sales[97](index=97&type=chunk) - The company anticipates potential negative impacts on its **supply chain**, including increased product costs and extended lead times for components, particularly semiconductors, due to raw material demand surges and labor/transportation constraints[99](index=99&type=chunk) - Mitigation efforts include shifting to **domestic suppliers**, increasing communication with suppliers, and providing advanced forecasts[99](index=99&type=chunk) [Key Performance Metrics](index=23&type=section&id=Key%20Performance%20Metrics) Highlights the total installed base of Swoop systems as a key growth metric, showing a significant increase to 85 units by March 31, 2022 - The **total installed base of Swoop devices** is a key metric for business growth[104](index=104&type=chunk) Swoop Total Installed Units | Category | As of March 31, 2022 | As of March 31, 2021 | | :-------------------------- | :------------------- | :------------------- | | Commercial systems installations | 38 | 9 | | Grant fulfillment installations | 20 | 2 | | Research units | 27 | 17 | | Total Installed Units | 85 | 28 | - Total installed units increased by **203.6%** year-over-year[105](index=105&type=chunk) [Factors Affecting Results of Operations](index=23&type=section&id=Factors%20Affecting%20Results%20of%20Operations) Discusses strategic partnerships, international expansion, and technical innovation as key drivers, expecting increased R&D expenses to lead to future profitability - Market expansion is a key growth driver, with plans for direct sales and distribution partners in target regions like the **UK and Australia**[108](index=108&type=chunk) - Partnerships, such as with the **Bill & Melinda Gates Foundation**, support deploying Swoop systems in low-middle resource settings for research and clinical use, with **20 units** provisioned to BMGF as of March 31, 2022[109](index=109&type=chunk) - Technical innovation focuses on enhancing the Swoop system's user interface, integrating **AI for automated image analysis**, and developing new imaging applications and a brain sensing platform, which is expected to increase R&D expenses but positively impact future profitability[110](index=110&type=chunk) [Results of Operations](index=25&type=section&id=Results%20of%20Operations) Analyzes Hyperfine's Q1 2022 financial performance, noting significant sales growth, increased costs, and a substantial rise in net loss Key Financial Highlights (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Change % | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------- | | Total sales | $1,509 | $331 | 355.9% | | Total cost of sales | $1,425 | $608 | 134.4% | | Gross margin | $84 | $(277) | NM | | Total operating expenses | $23,855 | $7,528 | 216.9% | | Loss from operations | $(23,771) | $(7,805) | 204.6% | | Net loss | $(23,775) | $(7,794) | 205.0% | [Sales](index=25&type=section&id=Sales) Reports a **355.9% increase in total sales** to **$1.5 million** in Q1 2022, driven by device sales growth and increased service revenue Sales Performance (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | Device | $1,192 | $169 | $1,023 | 605.3% | | Service | $317 | $162 | $155 | 95.7% | | Total | $1,509 | $331 | $1,178 | 355.9% | - Device sales increased due to **higher volume** and a pricing strategy that increased device price and lowered subscription price[115](index=115&type=chunk) - Service sales growth is attributed to an increase in the **installed base of commercial systems**, generating recurring revenue[116](index=116&type=chunk) [Cost of Sales](index=26&type=section&id=Cost%20of%20sales) Details a **134.4% increase in total cost of sales** to **$1.4 million** in Q1 2022, driven by higher device manufacturing and service labor costs Cost of Sales Performance (in thousands) | Category | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | Device | $1,037 | $548 | $489 | 89.2% | | Service | $388 | $60 | $328 | 546.7% | | Total | $1,425 | $608 | $817 | 134.4% | - Cost of device sales increased due to **higher third-party manufacturing costs** and increased product hardware and labor costs from higher sales volume[119](index=119&type=chunk) - Cost of service sales increased primarily due to **higher internal overheads and labor costs**[120](index=120&type=chunk) [Research and Development Expenses](index=26&type=section&id=Research%20and%20development) Reports an **86.3% increase in R&D expenses** to **$8.3 million** in Q1 2022, driven by higher personnel, stock-based compensation, and professional service costs Research and Development Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | Research and development | $8,334 | $4,474 | $3,860 | 86.3% | - The increase was driven by a **$3.5 million** rise in personnel costs, a **$0.6 million** increase in stock-based compensation, and higher professional services and depreciation[121](index=121&type=chunk) [General and Administrative Expenses](index=26&type=section&id=General%20and%20administrative) Highlights a **511.4% surge in G&A expenses** to **$11.4 million** in Q1 2022, primarily due to increased personnel, stock-based compensation, and professional service costs General and Administrative Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | General and administrative | $11,360 | $1,858 | $9,502 | 511.4% | - The increase was primarily due to a **$3.2 million** rise in personnel costs, a **$3.2 million** increase in stock-based compensation, and higher professional services (**$1.2 million**), insurance (**$0.8 million**), and technology costs (**$0.5 million**)[122](index=122&type=chunk) [Sales and Marketing Expenses](index=26&type=section&id=Sales%20and%20marketing) Reports a **247.9% increase in sales and marketing expenses** to **$4.2 million** in Q1 2022, driven by higher personnel, stock-based compensation, and advertising costs Sales and Marketing Expenses (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | Sales and marketing | $4,161 | $1,196 | $2,965 | 247.9% | - The increase was primarily due to a **$1.9 million** rise in personnel expenses, a **$0.1 million** increase in stock-based compensation, and higher product advertising/marketing (**$0.6 million**) and travel expenses (**$0.2 million**)[124](index=124&type=chunk) [Interest Income](index=27&type=section&id=Interest%20income) Notes a decrease in interest income to **$1 thousand** in Q1 2022, primarily due to lower money market balances and reduced interest rates Interest Income (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :------------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | Interest income| $1 | $5 | $(4) | (80.0)% | [Other Income (Expense), Net](index=27&type=section&id=Other%20income%20(expense),%20net) Reports an unfavorable decrease in other income (expense), net, to **$(5) thousand** in Q1 2022, mainly due to prior period foreign currency gains Other Income (Expense), Net (in thousands) | Metric | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | Amount Change | % Change | | :-------------------------- | :-------------------------------- | :-------------------------------- | :------------ | :------- | | Other income (expense), net | $(5) | $6 | $(11) | (183.3)% | [Liquidity and Capital Resources](index=27&type=section&id=Liquidity%20and%20Capital%20Resources) Discusses Hyperfine's funding history, significant cash burn, and net losses, highlighting current cash position and future capital requirements - The company has funded operations primarily through **equity issuances** and has incurred significant cash burn and recurring net losses[127](index=127&type=chunk) Liquidity Overview (in thousands) | Metric | March 31, 2022 | | :-------------------------- | :------------- | | Net loss (Q1 2022) | $(23,775) | | Accumulated deficit | $(160,095) | | Net proceeds from Business Combination | $141,500 | | Cash and cash equivalents | $161,580 | - Future cash requirements are expected to be substantial for sales and marketing, product development, and inventory, with potential need for **additional financing**[129](index=129&type=chunk)[131](index=131&type=chunk) [Cash Flows](index=28&type=section&id=Cash%20flows) Analyzes cash flows, noting a significant increase in cash used in operating activities and no cash provided by financing activities in Q1 2022 Summary of Cash Flows (in thousands) | Cash Flow Activity | Three Months Ended March 31, 2022 | Three Months Ended March 31, 2021 | | :-------------------------------- | :-------------------------------- | :-------------------------------- | | Net cash used in operating activities | $(27,289) | $(7,486) | | Net cash used in investing activities | $(308) | $(170) | | Net cash provided by financing activities | — | $31,210 | | Net (decrease) increase in cash, cash equivalents, and restricted cash | $(27,597) | $23,554 | - Net cash used in operating activities in Q1 2022 was driven by a **net loss of $23.8 million** and a **$7.9 million** impact from changes in operating assets and liabilities[134](index=134&type=chunk) - Financing activities provided **no cash** in Q1 2022, a significant change from **$31.2 million** provided in Q1 2021, which included proceeds from Series D convertible preferred stock and an investment from 4Bionics, LLC[139](index=139&type=chunk) [Contractual Obligations](index=29&type=section&id=Contractual%20obligations) Outlines contractual obligations, including 401(k) plan and Bill & Melinda Gates Foundation grants for Swoop device deployments - No matching contributions were made to the **401(k) plan** for the three months ended March 31, 2022 and 2021[140](index=140&type=chunk) - **BMGF grants totaling $4.91 million** are designed to support the deployment of **25 Swoop devices** and other services for research over approximately two years[141](index=141&type=chunk) - As of March 31, 2022, **20 Swoop system units** and **10 baby cradles** were provisioned and delivered to BMGF[141](index=141&type=chunk) [Critical Accounting Policies and Significant Judgments and Estimates](index=29&type=section&id=Critical%20Accounting%20Policies%20and%20Significant%20Judgments%20and%20Estimates) Discusses the reliance on estimates and assumptions in financial statements, noting no material changes to critical accounting policies since the 2021 Annual Report - The preparation of financial statements requires management to make **estimates and assumptions** that affect reported amounts[143](index=143&type=chunk)[144](index=144&type=chunk) - No material changes to critical accounting policies and estimates have occurred since the **2021 Annual Report on Form 10-K**, except for those related to recently issued accounting pronouncements[145](index=145&type=chunk)[146](index=146&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=30&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Identifies interest rate fluctuations as the primary market risk, with no material impact expected from a 10% change due to short-term cash equivalents - The company's primary market risk is from **interest rate fluctuations**[147](index=147&type=chunk) - Cash equivalents included **$41.4 million** in money market funds as of March 31, 2022[148](index=148&type=chunk) - Due to the short-term nature of cash equivalents, a hypothetical **10% change in interest rates** is not expected to materially affect cash flows or operating results[148](index=148&type=chunk) [Item 4. Controls and Procedures](index=30&type=section&id=Item%204.%20Controls%20and%20Procedures) Reports ineffective disclosure controls and procedures due to material weaknesses in internal control over financial reporting, with ongoing remediation efforts - Disclosure controls and procedures were **not effective** as of March 31, 2022, due to material weaknesses in internal control over financial reporting[149](index=149&type=chunk) - Material weaknesses include **limited accounting personnel** and inadequate supervision of outsourced financial reporting prior to the Business Combination[151](index=151&type=chunk) - Another material weakness involved the **misclassification of Class A ordinary shares** subject to possible redemption, leading to a restatement[152](index=152&type=chunk) - Management is implementing a remediation plan, including hiring experienced accounting and finance resources and enhancing internal controls[154](index=154&type=chunk) [PART II — OTHER INFORMATION](index=32&type=section&id=PART%20II%20OTHER%20INFORMATION) Presents additional information not covered in the financial statements, including legal proceedings, risk factors, and exhibits [Item 1. Legal Proceedings](index=32&type=section&id=Item%201.%20Legal%20Proceedings) States that Hyperfine, Inc. is not currently involved in any material legal proceedings - The company is **not involved in any material legal proceedings**[157](index=157&type=chunk) [Item 1A. Risk Factors](index=32&type=section&id=Item%201A.%20Risk%20Factors) Confirms no material changes to the risk factors previously disclosed in the company's Annual Report on Form 10-K - No material changes to risk factors have occurred since the **2021 Annual Report on Form 10-K**[158](index=158&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=32&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no unregistered sales of equity securities or share repurchases during Q1 2022 - **No unregistered sales of equity securities** occurred[159](index=159&type=chunk) - The company did **not repurchase any equity securities** during Q1 2022[160](index=160&type=chunk) [Item 3. Defaults Upon Senior Securities](index=32&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) States that this item is not applicable to the company for the reporting period - This item is **not applicable**[161](index=161&type=chunk) [Item 4. Mine Safety Disclosures](index=32&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) States that this item is not applicable to the company for the reporting period - This item is **not applicable**[162](index=162&type=chunk) [Item 5. Other Information](index=32&type=section&id=Item%205.%20Other%20Information) States that this item is not applicable to the company for the reporting period - This item is **not applicable**[163](index=163&type=chunk) [Item 6. Exhibits](index=33&type=section&id=Item%206.%20Exhibits) Lists the exhibits filed with the Form 10-Q, including agreements, officer certifications, and Inline XBRL documents - Exhibits include the **Amended and Restated Registration Rights Agreement** and **Form of Restricted Stock Unit Agreement**[165](index=165&type=chunk) - Certifications from the **Principal Executive Officer** and **Principal Financial Officer** (Sections 302 and 906 of Sarbanes-Oxley Act) are filed as exhibits[165](index=165&type=chunk) - Inline XBRL documents (Instance, Schema, Calculation, Definition, Label, Presentation Linkbase) are also included[165](index=165&type=chunk)[166](index=166&type=chunk)[168](index=168&type=chunk) [Signatures](index=36&type=section&id=SIGNATURES) Contains the official signatures for the Quarterly Report on Form 10-Q [Report Signatures](index=36&type=section&id=Report%20Signatures) Confirms the signing of the Quarterly Report on Form 10-Q by the President, CEO, and CFO on May 12, 2022 - The report was signed by **Dave Scott, President and CEO**, and **Alok Gupta, CFO**, on **May 12, 2022**[171](index=171&type=chunk)

Hyperfine, Inc. (NASDAQ:HYPR) Q1 2022 Earnings Conference Call May 11, 2022 4:30 PM ET Company Participants Marissa Bych - Gilmartin Group IR Dave Scott - President and CEO Alok Gupta - CFO Conference Call Participants Lawrence Biegelsen - Wells Fargo Vijay Kumar - Evercore ISI Operator Good afternoon, and welcome to Hyperfine's First Quarter 2022 Earnings Conference Call. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's ...

HYPERFINE Defining the Future of Life-Saving Diagnostics at the Point of Care Corporate Presentation | March 23, 2022 © 2022 Hyperfine, Inc. Forward Looking Statements This presentation includes forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor Provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results, or performance are f ...

Market Opportunity - The Swoop scanner targets a $15.9 billion global imaging market, expected to grow at a 5.2% CAGR from 2021 to 2028[22] - The global imaging market is projected to grow from $15.9 billion to over $20 billion, with significant opportunities for the Swoop scanner in underpenetrated markets[43] - The market for global non-invasive brain trauma monitoring devices is expected to grow from approximately $10.1 billion in 2019 to $18.3 billion by 2027, at a CAGR of 7.7%[48] Product Features and Benefits - The Swoop scanner reduces the conventional MRI workflow time from an average of 25.8 hours to 90 minutes, achieving a 94% reduction[32] - The Swoop scanner has the potential to increase the utilization of existing MRI suites by 20% through bedside imaging, allowing for more outpatient procedures[33] - The Swoop scanner is designed to provide immediate point-of-care brain imaging, particularly beneficial for critically ill patients who cannot be transported[31] - The Swoop scanner's lower price point makes it accessible for hospitals that cannot afford conventional MRI or CT scanners[31] - The Swoop scanner is designed to improve patient care by reducing the risk of injury during transport and minimizing anxiety related to imaging procedures[32] - The Swoop scanner is designed to facilitate early diagnosis and intervention, potentially leading to cost savings for patients, providers, and payors[37] - The Swoop portable MRI system delivers diagnostic quality images with a resolution of 1.5 mm x 1.5 mm x 5 mm, compared to conventional MRI's typical resolution of 1.0 mm x 1.0 mm x 5 mm, despite operating at a lower magnetic field strength of 0.064-Tesla[62] - The Swoop scanner can be powered by a standard wall outlet and uses less than 900W of electricity, eliminating the need for liquid helium and other complex infrastructure required by conventional MRI systems[71] Research and Development - The company is developing non-invasive brain sensing technology to monitor key brain vital signs, aiming to enhance patient care and expand its product offerings[41] - Approximately 30% of conventional MRI scans suffer from moderate to severe image quality issues due to patient motion, which the company aims to address with its newly developed motion compensation technology that has received FDA clearance for clinical use[57] - The company is investing $50 million in R&D for new technologies aimed at improving imaging capabilities[2] - Research and development investments increased by 10% to $150 million, focusing on innovative technologies in the utility sector[3] - Research and development investments increased by 30%, focusing on innovative medical imaging solutions[112] Financial Performance - The company reported a revenue increase of 15% year-over-year, reaching $1.5 billion for the quarter[2] - The company reported a significant increase in revenue, achieving $1.5 billion in Q3 2023, representing a 25% year-over-year growth[2] - The company provided guidance for Q4 2023, projecting revenue between $1.6 billion and $1.8 billion, which reflects a growth rate of 20% to 30% compared to Q4 2022[4] - The company incurred net losses of $64.9 million and $23.4 million for the years ended December 31, 2021 and 2020, respectively, with an accumulated deficit of $136.3 million as of December 31, 2021[189] - The company may need to raise additional capital to fund commercialization plans for its products, including manufacturing, sales, and marketing activities[193] Regulatory and Compliance - The FDA requires pre-market review for medical devices, with significant user fees over $12,000 for 510(k) and $374,000 for PMA in FY 2022[130] - The company is subject to FDA inspections and must comply with Good Manufacturing Practice requirements, which include extensive quality management protocols[152] - The company must ensure compliance with evolving EU laws on data export, particularly following the invalidation of the EU-U.S. Privacy Shield[171] - The company faces potential fines of up to $100,000 per violation under the federal Anti-Kickback Statute, with imprisonment for up to ten years for serious violations[157] Strategic Initiatives - The company aims to expand its market presence in the UK, Australia, New Zealand, and Pakistan through strategic partnerships and grant funding[34] - The company plans to continue building its direct commercial infrastructure in the U.S. while exploring distributor partnerships for international sales[95] - The company is exploring partnerships with healthcare providers to expand its reach in the medical sector[112] Competitive Landscape - The competitive landscape includes established players like General Electric and Siemens, with significant barriers to entry for new entrants in the medical imaging market[103] - The company faces significant competition from established players in the medical imaging market, including General Electric, Siemens, and Philips[205] Corporate Governance and Sustainability - The company emphasizes environmental sustainability initiatives, including efforts to reduce its environmental footprint and increase energy efficiency[81] - The company is focused on enhancing its corporate governance practices and sustainability measures over time[88] - The company is committed to diversity, equity, and inclusion, focusing on building a diverse workforce to enhance innovation and performance[85]

Hyperfine, Inc. (NASDAQ:HYPR) Q4 2021 Earnings Conference Call March 23, 2022 4:30 PM ET Company Participants Dave Scott - President and Chief Executive Officer Alok Gupta - Chief Financial Officer Conference Call Participants Vijay Kumar - Evercore ISI Anthony Petrone - Mizuho Group Operator Thank you, and thank you all for joining today’s call. Joining me are Dave Scott, President and Chief Executive Officer; and Alok Gupta, Chief Financial Officer of Hyperfine. Earlier today, Hyperfine released financial ...