Pulmonx(US:LUNG)2024-08-02 20:27Part I. FINANCIAL INFORMATION This section provides the company's unaudited condensed consolidated financial statements, management's discussion and analysis, market risk disclosures, and controls and procedures Item 1. Financial Statements This section presents Pulmonx Corporation's unaudited condensed consolidated financial statements, detailing financial position, operations, and cash flows, with an accumulated deficit Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $63,464 | $83,547 | | Total current assets | $146,159 | $150,422 | | Total assets | $172,627 | $177,781 | | Liabilities & Stockholders' Equity | | | | Total current liabilities | $16,301 | $23,157 | | Total liabilities | $71,443 | $59,466 | | Total stockholders' equity | $101,184 | $118,315 | | Accumulated deficit | $(440,236) | $(411,161) | Condensed Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | Revenue | $20,783 | $17,194 | $39,637 | $31,729 | | Gross Profit | $15,307 | $12,734 | $29,385 | $23,323 | | Loss from Operations | $(15,622) | $(16,439) | $(30,158) | $(32,839) | | Net Loss | $(15,326) | $(16,195) | $(29,075) | $(32,055) | | Net Loss Per Share | $(0.39) | $(0.43) | $(0.75) | $(0.85) | Condensed Consolidated Statements of Cash Flows Highlights (in thousands) | Cash Flow Activity | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | | Net cash used in operating activities | $(17,565) | $(20,535) | | Net cash used in investing activities | $(3,342) | $(239) | | Net cash provided by financing activities | $842 | $20,812 | | Net (decrease) increase in cash | $(20,063) | $80 | - The company has incurred operating losses and negative cash flows from operations to date, with an accumulated deficit of $440.2 million as of June 30, 2024. Management believes that its existing cash, cash equivalents, and marketable securities of $114.5 million will be sufficient to fund planned operations for at least the next 12 months2324 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses the company's financial performance, highlighting revenue growth driven by Zephyr Valve volumes, a narrowed net loss, and sufficient liquidity for the next 12 months Comparison of Results of Operations (in thousands) | Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | % Change | | :--- | :--- | :--- | :--- | | Revenue | $20,783 | $17,194 | 20.9% | | Gross Profit | $15,307 | $12,734 | 20.2% | | Loss from Operations | $(15,622) | $(16,439) | (5.0)% | | Net Loss | $(15,326) | $(16,195) | (5.4)% | - Revenue growth for Q2 2024 was primarily driven by a $2.9 million increase in U.S. sales and a $0.7 million increase in international sales, attributed to the continued growth of Zephyr Valve procedure volumes141 - Research and development expenses for Q2 2024 included a non-cash impairment charge of $1.7 million related to previously capitalized software development costs, offset by decreases in other R&D spending144 - As of June 30, 2024, the company had $114.5 million in cash, cash equivalents, and marketable securities, and $37.2 million in outstanding debt. In May 2024, the interest-only period on its CIBC loan was extended, with principal repayment now set to begin in November 2025115156160 Item 3. Quantitative and Qualitative Disclosures about Market Risk The company is exposed to market risks from interest rates, foreign currency exchange rates, and inflation, but does not currently use hedging instruments - The company is exposed to interest rate risk on its $63.5 million of cash and cash equivalents and $36.9 million of debt, which had an effective annual interest rate of 10.1% as of June 30, 2024180 - Foreign currency exchange risk is present as 32.5% of revenue for the first six months of 2024 came from outside the U.S. A hypothetical 10% change in exchange rates would have impacted the net loss for this period by approximately $0.3 million181 - Inflationary pressures have increased costs for transportation and wages, but the company does not believe inflation has had a material impact on its financial position or results of operations to date182 Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024, with no material changes to internal control over financial reporting - Based on an evaluation with the participation of the CEO and CFO, management concluded that the company's disclosure controls and procedures were effective as of June 30, 2024185 - There were no changes in the company's internal control over financial reporting during the quarter ended June 30, 2024, that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting186 Part II. OTHER INFORMATION This section covers legal proceedings, risk factors, unregistered sales of securities, defaults, and other miscellaneous information Item 1. Legal Proceedings The company is not a party to any material legal proceedings, but notes an ongoing U.S. Department of Justice investigation into sales and marketing practices - The company is not currently a party to any material legal proceedings190 - The company references the ongoing investigation by the U.S. Department of Justice, Civil Division, related to the Anti-Kickback Statute and False Claims Act, for which it received a civil investigative demand in December 2022. The outcome and potential loss cannot be estimated at this time86347 Item 1A. Risk Factors This section details significant business risks, including a history of losses, reliance on a single product, reimbursement uncertainty, manufacturing risks, and extensive government regulation - The company has a history of significant net losses, with an accumulated deficit of $440.2 million as of June 30, 2024, and expects to incur future losses and require substantial additional capital196275 - The business is highly dependent on the commercial success of a single product, the Zephyr Valve, and its adoption by hospitals, physicians, and patients199204 - Use of the Zephyr Valve carries risks of serious complications, including pneumothorax and death, which have occurred in clinical trials and commercial use. Limited long-term safety data is available214218232 - The company faces significant reimbursement risk, as adequate coverage from third-party payors like Medicare and commercial insurers is not guaranteed and is often decided on a case-by-case basis220221 - The company is subject to extensive government regulation and is currently cooperating with a civil investigative demand from the U.S. Department of Justice regarding its sales and marketing practices under the Anti-Kickback Statute and False Claims Act327347 Item 2. Unregistered Sales of Securities and Use of Proceeds The company reports no unregistered sales of securities during the period - None reported457 Item 3. Defaults Upon Senior Securities The company reports no defaults upon senior securities - None reported457 Item 4. Mine Safety Disclosures This item is not applicable to the company - Not applicable457 Item 5. Other Information This section discloses a Rule 10b5-1 trading plan adopted by a director for the sale of common stock - On June 10, 2024, Glendon French, a director and former CEO, adopted a Rule 10b5-1 trading arrangement for the sale of up to 300,000 shares of common stock. The plan expires on August 23, 2025, or earlier if all transactions are completed459 Item 6. Exhibits This section lists the exhibits filed with the Form 10-Q, including employment agreements, lease amendments, and required CEO/CFO certifications - The exhibits filed with this report include employment agreements, lease amendments, and required CEO/CFO certifications under Sarbanes-Oxley Sections 302 and 906458460