Q3 2023 Hyperfine Inc Earnings Call
Good afternoon, and welcome to Hyperfine third quarter 2023 earnings Conference call. Currently all participants are in a listen only mode.
We'll be facilitating a question and answer session towards the end of today's call. As a reminder, this call's being recorded for replay purposes, I would now like to turn the call over to MRSA buys from Gilmartin group for introductory disclosures.
Great. Thank you for joining today's call.
Earlier today Hyperfine, Inc, released financial results for the quarter ended September 32023.
A copy of the press release is available on the company's website as well as SEC Dot Gov.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of $19 95.
Any statements contained in this call that relate to expectations or predictions of future events results or performance are forward looking statements.
All forward looking statements, including without limitation, those relating to our operating trends and future financial performance.
Management expectations for hiring training and adoption growths in our organization market opportunity commercial and international expansion regulatory approval and product development are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our latest periodic filing with the Securities and Exchange Commission.
This conference call contains time sensitive information and is accurate only as of the live broadcast today November nine 2023.
Hyperfine, Inc, disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
With that I will turn the call over to Maria vein, President and Chief Executive Officer.
Good afternoon, and thank you all for joining us on the call with me today is our chief administrative officer, and Chief Financial Officer.
In the third quarter, we saw the benefits of our focus in the U S and the realization of our new pricing model, resulting in an improvement in the financial profile of our business.
We achieved revenue of $2 3 million flat compared to the same period last year and up 55% year to date.
We sold fixed subsystem predominantly U S direct sales driving record average selling price and gross margin.
We have mentioned in the past commercializing ultra low field.
It requires us to develop a new capital equipment imaging market.
Our technology makes brain imaging possible at multiple sites of care from critical care units to neurology offices anytime at patient competitor.
We are still learning the dynamics of the selling cycle and advancing many FERC.
With every CEO would be somewhat unique considering our customers are early adopters of these new imaging paradigm.
This involves the adoption of new technology and new workflows.
We also continue to closely manage our cash use with control spending while investing in our three strategic pillars innovation critical evidence and commercialization.
Exiting the third quarter I'm very proud of the execution of the tea transforming our financial profile and laying a strong foundation for the future of our business.
Innovation continues to be an area of great focus as we pursue development projects across all elements of the food system.
In addition to our many year to date improvement we have a strong cadence of enhancement in hardware and AI powered software plans.
To further advance the image quality clinical utility and application of ultra low tier MRI.
On our last call we mentioned our plan to launch another software upgrade by early 2024 today I am pleased to share that we have already received FDA clearance for these software updates and plan to launch it before the end of the year a couple of months ahead of schedule.
This is our eighth FDA clearance is our initial system launch in 2020.
It includes proprietary AI and deep learning algorithms in the T. W sequence, adding.
Adding significant value to the clinical utility of our platform.
This expands our AIC noisy capabilities by incorporating advanced image processing into the VW is secret.
The systems other sequences.
One T too unfair previously benefited from Dci future.
The only thing enables a crisper image that potentially helps clinicians more accurately diagnose further to treat and monitor patients undergoing brain imaging.
As we move forward, we are continuously investing in improving our AI powered industry quality and usability leveraging each imaging focused software release to further improve system performance.
As a reminder, the process of launching software updates is straightforward for our chemo customers with most U S. Commercial systems' operating up connected site, where the new updates are downloaded remotely without the need for appeal team or technician intervention.
We look forward to updating you on our innovation roadmap for 2024 on our next call.
Now turning to clinical evidence I would like to update you on the work we're doing on different studies across the breadth of current and future applications for our platform technology.
We continue to collaborate with leading U S and international institutions, and multiple scientific research and clinical studies that support our current and future potential clinical use cases.
Relevant towards beachhead use case today imaging patients in critical care I'm excited to share the data from the space MRI Ecmo study was recently presented at the <unk> meeting in Seoul, South Korea.
The study evaluated the benefits of using portable MRI breaking imaging for monitoring patients on Ecmo, which is advanced life support highlighting it.
Post operative ischemic stroke detection capabilities compared to C T scan.
Especially his body kidney injury early.
The study further underscores the role of MRI imaging.
Imaging in acute brain injury detection and the potential for rollout we have improvement in neurological outcomes.
In stroke were pleased with the pace of enrollment and physician excitement in our action TMR study a multi center evaluation to assess the use of <unk> system in detecting acute ischemic stroke, we remain bullish about this opportunity and look forward to sharing updates in the coming quarters.
Looking further ahead I wanted to touch on the large new opportunity for the MRI industry in the treatment of Alzheimers.
We believe the portables took system can offer a highly differentiated and cost effective unacceptable solution for these new use cases.
We have committed to conducting a clinical feasibility study led by a two system key opinion leader, who also has a passion for alzheimers.
System will be placed in the infusion center workflow for the feasibility study rendering the care navigation of the patients more efficient.
We're preparing to begin enrollment in the next couple of months.
We have also appointed a prime or sub advisory committee comprised of thought leaders to help shape our efforts in this area.
Turning to commercialization.
You have commercial teams gain tenure and experience selling for soup system, theyre, driving a broader and more robust deal pipeline quarter after quarter.
U S steel dominated our revenue make up in the quarter, including the completion of our multi system sales to the Barnes Jewish healthcare system, we have previously announced.
As we have mentioned before our first cycle is six to nine months.
We implemented a new pricing strategy in early 2023, the heavy U S mix, we drove in the third quarter, coupled with a reallocation of our higher U S pricing concentrated into a record overall ASP on a record gross margin.
We are in the early days of building this new market ultra low field, bringing Gs.
Our still navigating and understanding the dynamics of the sales cycle and often face multiple reviews and approvals.
Clinical technology amongst safety legal.
And administrative constituents unique to reach accounts, resulting in timeline variability.
As I mentioned in our last call. We recently iterate that the makeup of our U S Field force and have established three dedicated team focused on selling implementation and utilization.
We are pleased with this new structure and hope to drive greater sales volume and strong reference site as our teams mature in their roles.
As I complete my first year as a CEO rollout hyperfine I am very pleased to report on the increasing interest in our technology across many different institutions. The strong positive feedback on our images and clinical utility and the record number of image reviews and demos that we are now running.
These are all encouraging indicators strengthening our commercial foundation.
Before I turn the line over to Greg I'm proud of the progress, we're making and the continued focus we have on spending discipline on gross margin.
Our focus remains on operating <unk>, one investing in innovation clinical evidence and commercialization, we continue to see a cash runway for the business through 2025.
I will now turn the call over to Fred to review, our third quarter performance and discuss our financial outlook in greater detail.
Thank you Maria turning to our financial results for the third quarter of 2023.
Revenue for the quarter ended September 32023 was $2 3 million flat compared to the third quarter of 2022.
Year to date, we've generated $8 3 million in revenue up 55% from the first nine months of 2022.
Gross profit for the third quarter of 2023 was $1 1 million compared to zero point $7 million in the third quarter, 2022, and reflecting a record 48% gross margin.
Year to date, we have a 45% gross margin of 34 percentage points.
From the 11% for the first nine months of 2022.
R&D expenses for the third quarter of 2023 were $5 7 million compared to $7 3 million in the third quarter of 2022.
Sales general and administrative expenses for the third quarter of 2023 were $7 1 million compared to $6 6 million in the third quarter of 2022.
Year to date total opex of $42 million is down 34% from $60 9 million in the first nine months of 2022.
Net loss for the third quarter was $10 8 million equating to a net loss of <unk> 15 per share as compared to a net loss of $13 2 million or a net loss of <unk> 19 per share for the same period of the prior year.
Year to date net loss of $33 6 million is down 44% from $60 1 million in the first nine months of 2022.
Our cash burn in the third quarter was $8 $5 million and as of September 32023, we had $85 $4 million in cash and cash equivalents on our balance sheet.
Year to date, our cash burn of $32 million down 43% from $56 million in the first nine months of 2022.
Turning to our 2023 outlook, we are narrowing our full year revenue expectations to a range of $11 million to $13 million based on our early Q4 closings and the progress in our pipeline.
Looking at gross margin for the year, we are narrowing our range to <unk>, 44% to 46% as we grow and realize higher average food system pricing. We are very pleased to be driving healthy margins in our business even at a small scale.
And lastly, we are narrowing our total cash burn expectations to <unk> $41 million to $44 million for the full year 2023.
This incorporates our expectations for continued investment in R&D and substantially streamline investments in SG&A versus history, while we maintained customer facing resources to continue to drive adoption and growth.
We will continue to focus on our three strategic pillars, and maintain spending discipline maintaining enough cash to fund the business through 2025.
We are excited about the momentum we are building for the remainder of the year and beyond and we are pleased to have the cash and flexibility to invest in the right areas for continued scoop system adoption.
At this point I'd like to turn the call back to Murray for closing comments.
Thank you Brett I'm proud of the progress the hyper quality team has made so far this year and I remain very optimistic up to what this team can deliver.
With that I want to thank you for your time and open the line up for questions.
Thank you if you like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Neil Chatterji with B Riley Your line is open.
Hey, guys. Thanks for taking the questions good afternoon.
Hi can you hear me okay. Good uptick.
Yes can hear you find great perfect.
Just maybe just starting out on the sales funnel.
I'm curious if you have any more color on how thats progressing as we kind of.
Okay closer to exiting the year and getting into 2024, and then just with the.
The latest software update.
How might that help with.
With the funnel and just future uptake.
Sure. So as we just said we are feeling positive about the early traction with that breadth of the.
The pipeline.
We do have more tenured and more experienced reps several quarter that we go by and that continues to drive sort of the good traction and progress on our pipeline, we have but now the clearance of the new software, but we havent yet launched it were taken a little bit of a different stance at this time in which we're doing.
And early access program with few customers here this week to make sure we get all of the feedback so that we can launch with more testimonials and more meat on the bone. So you should expect the release for all customers sort of very early into the new year.
From an innovation perspective that is going to really drive nice things because we said there is that enhancement in BWI, which is really that the king and queen sequence, especially in the stroke application, but it also has a nice setup.
Features around usability that are that I think are going to be well well appreciated by existing customers to continue to reinforce usage and by new customers that are contemplating acquiring the system.
Great. Thanks for that and then just.
Also Alzheimer's just any update on kind of the progress there I think you were planning for some early feasibility studies.
No return soup users.
Any update there and any updated thoughts on that potential opportunity.
Sure. So we continue to be really bullish about that because we believe axis and ease of getting this gas is going to really drive a lot of the efficiency and how those patients have gone to navigate their way between neurology.
Fusion sites and imaging location and we are even more pleased that what we're doing is really following the very strong interest that has been formulated to us by some of the physicians that know our system and what it can do so we're going to start early visibility.
By the end of this year with one of those.
Aficionados, our Kols that is also someone very involved in Alzheimer's treatment.
And as I said in the prepared remarks, what we're doing is trying to place our soup system in the workflow of the infusion of the drug to make it a lot more convenient for the patient and the idea is going to be how this really helps us set the rates for these patients, but <unk> is something that we expect.
To start in the next couple of months.
Yeah.
Great. That's it for me I'll hop back in queue.
Sure. Thank you.
Thank you there are no further questions at this time I'd like to turn the call over to Maria <unk> for any closing remarks.
Thank you for your interest this afternoon, and we look forward to keeping you informed in future calls.
Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.
[music].
[music].
Good afternoon, and welcome to Hyperfine third quarter 2023 earnings Conference call. Currently all participants are in a listen only mode. We will be facilitating a question and answer session towards the end of today's call. As a reminder, this call's being recorded for replay purposes.
Now I'd like to turn the call over to MRSA buys from Gilmartin group for introductory disclosures.
Great. Thank you for joining today's call.
Earlier today Hyperfine, Inc, released financial results for the quarter ended September 32023 copies.
A copy of the press release is available on the company's website as well as SEC Dot Gov.
Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of 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 looking statements.
All forward looking statements, including without limitation, those relating to our operating trends and future financial performance <unk>.
<unk> management expectations for hiring training and adoption growth no organization market opportunity commercial and international expansion regulatory approval and product development are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our latest periodic filing with the Securities and Exchange Commission.
This conference call contains time sensitive information and is accurate only as of the live broadcast today November nine 2023.
Hyperfine, Inc, disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
With that I will turn the call over to Maria vein, President and Chief Executive Officer.
Good afternoon, and thank you all for joining us on the call with me today is our chief administrative officer, and Chief Financial Officer Brett.
In the third quarter, we saw the benefits of our focus in the U S and the realization of our new pricing model, resulting in an improvement in the financial profile of our business.
We achieved revenue of $2 3 million flat compared to the same period last year and up 55% year to date.
We saw fixed subsystem predominantly U S direct sales.
The record average selling price and gross margin.
And we have mentioned in the past commercializing ultra low field MRI imaging.
Required us to develop a new capital equipment imaging market our.
Our technology makes brain imaging possible at multiple sites of care from critical care unit, two neurology offices anytime at patient competitor.
We are still learning the dynamics of the selling cycle and advantage through many firms.
With every CEO would be somewhat unique considering our customers are early adopters of these new imaging paradigm.
This involves the adoption of new technology and new workflows.
We also continue to closely manage our cash use with control spending while investing in our three strategic pillars innovation clinical evidence and commercialization.
Exiting the third quarter I'm very proud of the execution of the <unk> transforming our financial profile and laying a strong foundation for the future of our business.
Innovation continues to be an area of great focus as we pursue development projects across all elements of the <unk> system.
In addition to our many year to date improvements we have a strong cadence of enhancement in hardware and AI powered software plans to.
To further advance the image quality clinical utility and application of ultra low til MRI.
On our last call we mentioned our plan to launch another software upgrade by early 2024 today I am pleased to share that we have already received FDA clearance for these software updates and plan to launch it before the end of the year a couple of months ahead of schedule.
This is our eighth FDA clearances are initial system launching 2020.
It includes proprietary AI and deep learning algorithms into DWI sequence, adding.
Adding significant value to the clinical utility of our platform.
This expands our AIP noisy capabilities by incorporating advanced image processing into the BWI secret.
The systems other sequences.
One two and flare previously benefited from Dci future.
The noise being enabled a crisper image that potentially helps clinicians more accurately diagnose further to treat and monitor patients undergoing breast imaging.
As we move forward, we are continuously investing in improving our AI powered imaging quality and usability leveraging each imaging focused software release to further improve system performance.
As a reminder, the process of launching software updates is straightforward for our Piedmont customers with most U S. Commercial systems' operating connected site, where the new updates are downloaded remotely without the need for appeal team or technician intervention.
Look forward to updating you on our innovation roadmap for 2024 on our next call.
Now turning to clinical evidence I would like to update you on the work we're doing on different studies across the breadth of current and future applications for our platform technology.
We continue to collaborate with leading U S and internationally intuitions on multiple scientific research and clinical studies that support our current and future potential clinical use cases.
Relevant toward beachhead use case to date imaging patients in critical care I'm excited to share the data from the space MRI Ecmo study was recently presented at the upheld soap meeting in Seoul, South Korea.
The study evaluated the benefits of using portable MRI breaking emoji for monitoring patients on Ecmo, which is advanced life support highlighting.
Post operative ischemic stroke detection capabilities compared to C T scan.
Especially in body kidney injury early.
The study further underscores the role of <unk> based on your imaging in acute brain injury detection and the potential for allowing improvement in neurological outcomes.
In stroke were pleased with the pace of enrollment and physician excitement in our action <unk> study a multi center evaluation to assess the use of <unk> system in detecting acute ischemic stroke, we remain bullish about this opportunity and look forward to sharing updates in the coming quarters.
Looking further ahead I wanted to touch on the large new opportunity for the MRI industry in the treatment of Alzheimers.
We believe the portable soup system can offer a highly differentiated and cost effective and accessible solution for these new use cases.
We have committed to conducting a clinical feasibility study led by a two system key opinion leader, who also has a passion for alzheimers.
The <unk> system will be placing the infusion center workflow for the feasibility study rendering the care navigation of the patients more efficient.
We're preparing to begin enrollment in the next couple of months.
We have also appointed amongst <unk> Advisory committee comprised of thought leaders to help shape our efforts in this area.
Turning to commercialization I'll start.
You have commercial teams gain tenure and experience selling the soup system theyre, driving a broader and more robust deal pipeline quarter after quarter.
USDA dominated our revenue make up in the quarter, including the completion of our multi system sales to the Barnes Jewish healthcare system, we have previously announced.
As we have mentioned before our first cycle is six to nine months.
We implemented a new pricing strategy in early 2023, the heavy U S mix, we drove in the third quarter, coupled with the realization of our higher U S pricing translated into a record overall asp's and a record gross margin.
We are in the early days of building these new market ultra low field, bringing qi.
Our still navigating and understanding the dynamics of the sales cycle and often face multiple reviews and approvals.
From clinical new technology and safety <unk>.
Legal.
And administrative constituents unique to reach accounts, resulting in timeline variability.
As I mentioned in our last call. We recently iterate that the makeup of our U S Field force and have established three dedicated team focused on selling implementation and utilization.
We are pleased with this new structure and hope to drive greater sales volume and strong reference site as our teams mature in their roles.
As I complete my first year as a CEO role at Hyperfine I am very pleased to report on the increasing interest in our technology across many different institution. The strong positive feedback on our imagers and clinical utility and the record number of image reviews and demos that we are now running.
These are all encouraging indicators strengthening our commercial foundation.
Before I turn the line over to grid I'm proud of the progress, we're making and the continued focus we have on spending discipline on gross margin.
Our focus remains on operating lean one investing in innovation clinical evidence and commercialization, we continue to see a cash runway for the business through 2025.
I will now turn the call over to Fred to review, our third quarter performance and discuss the financial outlook in greater detail.
Thank you Maria turning to our financial results for the third quarter of 2023.
Revenue for the quarter ended September 32023 was $2 3 million flat compared to the third quarter of 2022.
Year to date, we've generated $8 3 million in revenue up 55% from the first nine months of 2022.
Gross profit for the third quarter of 2023 was $1 1 billion compared to zero point $7 million in the third quarter, 2022, and reflecting a record 48% gross margin.
Year to date, we have a 45% gross margin of 34 percentage points from the 11% for the first nine months of 2022.
R&D expenses for the third quarter of 2023 were $5 7 million compared to $7 3 million in the third quarter of 2022.
Sales general and administrative expenses for the third quarter of 2023 were $7 1 million compared to $6 6 million in the third quarter of 2022.
Year to date total opex of $42 million is down 34% from $60 9 million in the first nine months of 2022.
Net loss for the third quarter was $10 8 million equating to a net loss of <unk> 15 per share as compared to a net loss of $13 2 million or a net loss of <unk> 19 per share for the same period of the prior year.
Year to date net loss of $33 6 million is down 44% from $60 1 million in the first nine months of 2022.
Our cash burn in the third quarter was $8 5 million and as of September 32023, we had $85 $4 million in cash and cash equivalents on our balance sheet.
Year to date, our cash burn of $32 million and down 43% from $56 million in the first nine months of 2022.
Turning to our 2023 outlook, we are narrowing our full year revenue expectations to a range of $11 million to $13 million based on our early Q4 closings and the progress in our pipeline.
Looking at gross margin for the year, we are narrowing our range to <unk>, 44% to 46% as we grow and realize higher average sweep system pricing. We are very pleased to be driving healthy margins in our business even at a small scale.
And lastly, we are narrowing our total cash burn expectations to <unk> $41 million to $44 million for the full year 2023.
This incorporates our expectations for continued investment in R&D and substantially streamline investments in SG&A versus history, while we maintained customer facing resources to continue to drive adoption and growth.
We will continue to focus on our three strategic pillars, and maintain spending discipline maintaining enough cash to fund the business through 2025.
We are excited about the momentum we are building for the remainder of the year and beyond and we are pleased to have the cash and flexibility to invest in the right areas for continued scoop system adoption.
At this point I'd like to turn the call back to Murray for closing comments.
Thank you Brett I'm proud of the progress the hyperfine team has made so far this year and I remain very optimistic as to what this team can deliver.
With that I want to thank you for your time and open the line up for questions.
Thank you if you like to ask a question. Please press star one one if your question has been answered and you'd like to remove yourself from the queue press the pound key.
Our first question comes from Neil Chatted <unk> with B Riley Your line is open.
Hey, guys. Thanks for taking the questions good afternoon.
Can you hear me okay. Good uptick.
Yes can hear you fine great.
Perfect.
Just maybe just starting out on the sales funnel.
I'm curious if you have any more color on how that's progressing as we kind of.
Yes closer to exiting the year and getting into 2024 and then just.
The latest software update.
How might that help with.
With the funnel and as future uptake.
Sure so as well.
We just said we are feeling positive about the early traction with that breadth of the.
The pipeline.
We do have more tenured and more experienced reps several quarter that we go by and that continues to drive sort of the good traction and progress on our pipeline, we have and now the clearance of the new software, but we havent yet launched it were taken a little bit of a different stance. This time in which we're doing.
And early access program with few customers here this week to make sure we get all of the feedback so that we can launch with more testimonials and more meat on the bone. So you should expect the release for all customers sort of very early into the new year.
From an innovation perspective that is going to really drive nice things as we said there is that enhancement in BWI, which is really that the king and queen sequence, especially in the stroke application, but it also has a nice setup.
Features around usability that are that I think are going to be well well appreciated by existing customers to continue to reinforce usage and by new customers that are contemplating acquiring the system.
Great. Thanks for that and then just on.
All timers, just any update on kind of the progress there.
You were planning for some early feasibility studies.
It turns with users.
Any update there and any updated thoughts on that potential opportunity.
Sure. So we continue to be really bullish about that because we believe axis and ease of getting this gas is going to really drive a lot of the efficiency and how those patients have gone to navigate their way between neurology infuse.
Infusion sites and imaging location and we are even more pleased that what we're doing is really following the very strong interest that has been formulated to us by some of the physicians that know our system and what it can do so we're going to start early visibility.
By the end of this year with one of those.
Aficionados, our Kols that is also someone very involved in Alzheimer's treatment.
And as I said in the prepared remarks, what we're doing is trying to place our soup system in the workflow of the infusion of the drug to make it a lot more convenient for the patient and the idea is going to be how would this really helps us as the rates for these patients, but <unk> see some thing that we.
To start in the next couple of months.
Great. That's it for me I'll hop back in queue.
Sure. Thank you.
Thank you there are no further questions at this time I'd like to turn the call over to Maria <unk> for any closing remarks.
Thank you for your interest this afternoon, and we look forward to keeping you informed in future calls.
Thank you for your participation. This does conclude the program and you may now disconnect everyone have a great day.