Hyperfine(HYPR) - 2025 Q1 - Quarterly Report

PART I FINANCIAL INFORMATION The company's first quarter financial results for 2025 show decreased sales and a net loss, with liquidity supported by recent financing activities Item 1. Financial Statements The unaudited condensed consolidated financial statements for Q1 2025 show decreased sales to $2.1 million, a net loss of $9.4 million, and reduced cash to $33.1 million Condensed Consolidated Balance Sheets As of March 31, 2025, total assets decreased to $53.4 million, primarily due to reduced cash, while liabilities slightly increased and equity declined Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | March 31, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $33,093 | $37,645 | | Total current assets | $48,403 | $53,710 | | Total assets | $53,377 | $58,901 | | Liabilities & Equity | | | | Total current liabilities | $7,979 | $8,729 | | Total liabilities | $10,263 | $9,861 | | Total stockholders' equity | $43,114 | $49,040 | | Total Liabilities & Equity | $53,377 | $58,901 | Condensed Consolidated Statements of Operations and Comprehensive Loss Total sales for Q1 2025 decreased by 35.1% to $2.1 million, resulting in a net loss of $9.4 million, a slight improvement from Q1 2024 Q1 2025 vs Q1 2024 Statement of Operations (in thousands, except per share data) | Metric | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Total sales | $2,137 | $3,295 | | Gross margin | $883 | $1,354 | | Total operating expenses | $11,785 | $12,004 | | Loss from operations | ($10,902) | ($10,650) | | Net loss | ($9,418) | ($9,848) | | Net loss per share | ($0.12) | ($0.14) | Condensed Consolidated Statements of Cash Flows Net cash used in operating activities improved to $9.2 million in Q1 2025, while financing activities provided $5.6 million, leading to a $4.1 million decrease in total cash Q1 2025 vs Q1 2024 Cash Flow Summary (in thousands) | Cash Flow Activity | Q1 2025 | Q1 2024 | | :--- | :--- | :--- | | Net cash used in operating activities | ($9,249) | ($12,510) | | Net cash used in investing activities | ($472) | ($145) | | Net cash provided by financing activities | $5,582 | $55 | | Net decrease in cash | ($4,139) | ($12,600) | Notes to Condensed Consolidated Financial Statements The notes detail accounting policies, a going concern assessment, a $6.0 million stock offering, and a $400 thousand restructuring charge from workforce reduction - The company's existing capital resources are expected to be sufficient to fund operations for at least twelve months from the financial statement issuance date, though failure to generate sufficient revenue or obtain additional financing in the longer term could raise substantial doubt about its ability to continue as a going concern[28][29] - In February 2025, the company raised aggregate gross proceeds of $6.0 million through a registered direct offering of 4,511,278 shares of Class A common stock and accompanying warrants at a combined price of $1.33 per share and warrant[69] - In January 2025, the company implemented a restructuring plan, terminating approximately 14% of its global workforce and incurring approximately $400,000 in costs, primarily for severance[92] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes the 35.1% revenue decline to fewer device sales, notes a slight decrease in operating expenses, and confirms sufficient liquidity for the next 12 months after a $6.0 million offering Results of Operations Total sales for Q1 2025 decreased by 35.1% to $2.1 million due to fewer device units sold, while gross margin fell and operating expenses saw mixed changes Comparison of Results for the Three Months Ended March 31 (in thousands) | Line Item | 2025 | 2024 | Change % | | :--- | :--- | :--- | :--- | | Total sales | $2,137 | $3,295 | (35.1)% | | Device Sales | $1,522 | $2,704 | (43.7)% | | Service Sales | $615 | $591 | 4.1% | | Gross margin | $883 | $1,354 | (34.8)% | | Total operating expenses | $11,785 | $12,004 | (1.8)% | | Research and development | $5,037 | $5,570 | (9.6)% | | General and administrative | $4,208 | $4,430 | (5.0)% | | Sales and marketing | $2,540 | $2,004 | 26.7% | | Loss from operations | ($10,902) | ($10,650) | 2.4% | - The decrease in device sales was mainly driven by a decrease in units sold, which was 6 units for Q1 2025 compared to 13 units for Q1 2024[102][110] Liquidity and Capital Resources The company ended Q1 2025 with $33.1 million in cash, supported by a $6.0 million offering and an ATM program, with management expecting sufficient funds for the next 12 months - As of March 31, 2025, the company had cash and cash equivalents of $33.1 million and an accumulated deficit of $303.9 million[120] - The company raised $6.0 million in gross proceeds from a registered direct offering in February 2025 and has an active ATM program which has raised net proceeds of $947 thousand as of March 31, 2025[121][123] - Management expects that existing cash and cash equivalents, along with proceeds from sales, will be sufficient to fund planned operations for at least the next 12 months[124] Item 3. Quantitative and Qualitative Disclosures About Market Risk The company identifies interest rate, inflation, and foreign exchange as primary market risks but considers their material effect on its business to be minimal - The company's market risk exposure is primarily from interest rates, inflation, and foreign exchange risk, but it does not consider any of these to be significant[144] - A hypothetical 0.5 percentage point decrease in interest rates would decrease annualized earnings before income taxes by approximately $0.2 million[145] Item 4. Controls and Procedures As of March 31, 2025, the company's disclosure controls and procedures were deemed effective, with no material changes in internal control over financial reporting during the quarter - Management concluded that as of March 31, 2025, the company's disclosure controls and procedures were effective[148] - No changes in internal control over financial reporting occurred during Q1 2025 that have materially affected, or are reasonably likely to materially affect, internal controls[149] PART II OTHER INFORMATION This section covers legal proceedings, significant risk factors related to Nasdaq listing compliance, and other standard disclosures Item 1. Legal Proceedings The company reports that it is not currently a party to any material legal proceedings - As of the filing date, the company is not involved in any material legal proceedings[152] Item 1A. Risk Factors The company faces a significant risk of delisting from Nasdaq due to its stock price falling below the $1.00 minimum bid requirement - On April 30, 2025, Hyperfine received a notice from Nasdaq for failing to meet the minimum bid price requirement of $1.00 per share[154] - The company has a 180-calendar day period, until October 27, 2025, to regain compliance by maintaining a closing bid price of at least $1.00 for a minimum of 10 consecutive business days[154] - Failure to regain compliance could lead to the delisting of the company's Class A common stock from Nasdaq, which would adversely affect share liquidity and capital-raising abilities[154] Other Items (Items 2, 3, 4, 5, 6) This section confirms no unregistered equity sales, no defaults, no mine safety disclosures, and no Rule 10b5-1 trading arrangement changes by officers or directors - Items 2, 3, and 4, concerning Unregistered Sales of Equity Securities, Defaults Upon Senior Securities, and Mine Safety Disclosures, are all marked as 'Not applicable'[155][156] - During the three months ended March 31, 2025, none of the company's officers or directors entered into, modified, or terminated any Rule 10b5-1 trading arrangements[157]