ClearPoint Neuro(CLPT) - 2023 Q3 - Quarterly Report

Financial Performance - Total revenue for Q3 2023 was $5.762 million, a 12% increase from $5.146 million in Q3 2022[18] - Product revenue decreased to $2.410 million in Q3 2023 from $3.130 million in Q3 2022, representing a 23% decline[18] - Service and other revenue increased significantly to $3.352 million in Q3 2023, up 66% from $2.016 million in Q3 2022[18] - Gross profit for Q3 2023 was $3.273 million, down from $3.679 million in Q3 2022, reflecting a 11% decrease[18] - Operating loss for Q3 2023 was $4.897 million, compared to a loss of $3.795 million in Q3 2022, indicating a 29% increase in losses[18] - Net loss for Q3 2023 was $4.809 million, compared to a net loss of $3.788 million in Q3 2022, representing a 27% increase in losses[18] - For the nine months ended September 30, 2023, the company reported a net loss of $17.47 million, compared to a net loss of $12.05 million for the same period in 2022, representing a 45.5% increase in losses year-over-year[27] Assets and Liabilities - Total assets decreased to $43.837 million as of September 30, 2023, down from $55.490 million as of December 31, 2022[15] - Total liabilities increased to $19.743 million as of September 30, 2023, compared to $18.603 million as of December 31, 2022[15] - Stockholders' equity decreased to $24.094 million as of September 30, 2023, down from $36.887 million as of December 31, 2022[15] - The company has a cumulative deficit of $167.8 million as of September 30, 2023, indicating ongoing financial challenges since inception[36] Cash Flow - Cash flows from operating activities resulted in a net cash outflow of $12.55 million for the nine months ended September 30, 2023, slightly improved from a net cash outflow of $13.10 million in the same period of 2022[27] - The company recorded net cash flows from investing activities of $9.14 million for the nine months ended September 30, 2023, a significant improvement compared to a net cash outflow of $22.48 million in the prior year[27] - The company’s cash and cash equivalents at the end of the period were $24.34 million, an increase from $18.71 million at the end of the same period in 2022[27] - As of September 30, 2023, the company had $24.3 million in cash and cash equivalents, down from $27.6 million at December 31, 2022[70] Revenue Breakdown - For the nine months ended September 30, 2023, total revenue reached $17.145 million, up 11.5% from $15.377 million in the prior year[63] - Biologics and drug delivery revenue for the three months ended September 30, 2023, was $3.487 million, a 55.3% increase from $2.246 million in 2022[61] - Functional neurosurgery navigation and therapy revenue decreased to $1.918 million in Q3 2023 from $2.420 million in Q3 2022, representing a decline of 20.8%[61] - The company recognized approximately $1.0 million of revenue during the nine months ended September 30, 2023, which was previously included in deferred revenue[65] Share-Based Compensation - The company incurred $4.54 million in share-based compensation for the nine months ended September 30, 2023, compared to $2.95 million in the same period of 2022, reflecting a 53.5% increase[27] - The Company recorded share-based compensation expense of $1.584 million for the three months ended September 30, 2023, an increase of 35% compared to $1.175 million for the same period in 2022[88] - For the nine months ended September 30, 2023, share-based compensation expense totaled $4.536 million, up 53% from $2.954 million in the prior year[90] Customer and Market Insights - The company has more than 50 biologics and drug delivery customers currently evaluating or using its products and services in trials, which represents a significant growth opportunity[34] - The company continues to monitor macroeconomic trends that could impact its operations, including inflationary pressures and supply chain disruptions[35] Inventory and Credit Losses - Inventory as of September 30, 2023, totaled $9.392 million, a decrease from $9.753 million at December 31, 2022[72] - The allowance for credit losses increased to $1.0 million as of September 30, 2023, compared to $0.1 million at December 31, 2022[56] - At September 30, 2023, two customers accounted for 29% and 24% of accounts receivable, indicating a concentration risk[54] Lease and Facility Information - The company entered into a lease for a manufacturing facility in Carlsbad, California, with a right-of-use asset recorded at approximately $2.5 million[29] - The new manufacturing facility lease in Carlsbad, California, commenced on June 1, 2023, and is set to end on May 31, 2033[84] - The Company subleased office space in Solana Beach, California, with a term expiring on December 31, 2026, and has the option to renew for an additional five years[83] Debt and Financing - The Outstanding First Closing Note had a principal of $10 million as of September 30, 2023, with an interest rate of 7.25% due to rising interest rates[158] - As of September 30, 2023, the total scheduled principal payment for the remaining note payable is $10 million, net of unamortized financing costs of $65,000[82] Stock Options and Employee Plans - The Company had 1,485,019 stock options outstanding as of September 30, 2023, with a weighted average exercise price of $8.64[91] - The Employee Stock Purchase Plan (ESPP) allowed the purchase of 51,041 shares at an average price of $6.15 during the first offering period of 2023[96]