Q1 2025 Hyperfine Inc Earnings Call
Operator: Please wait, the conference will begin shortly. Thank you for standing by.
Please wait the conference will begin shortly.
[music].
Kate: Thank you for standing by my name is Kate and I will be your conference operator today.
Kate: My name is Kate, and I will be your conference operator today.
Kate: At this time, I would like to welcome everyone to the Hyperfine Q1-25 earnings call. All lines have been placed on mute to prevent any background noise.
Speaker Change: At this time I would like to welcome everyone to the Hypersound Q1 25 earnings call.
All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. If you would like to ask a question. During this time simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question Press Star. One again. Thank you I would now like to turn the call.
Kate: After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star followed by the number 1 on your telephone keypad. If you would like to withdraw your question, press star 1 again. Thank you.
Webb Campbell: I would now like to turn the call over to Webb Campbell, Investor Relations. Please go ahead.
Speaker Change: Over to web Campbell Investor Relations. Please go ahead.
Webb Campbell: Thank you for joining today's call. Earlier today, Hyperfine Inc. released financial results for the quarter ended March 31st, 2025. A copy of the press release is available on the company's website as well as sec.gov.
Speaker Change: Thank you for joining today's call earlier today Hyperfine, Inc. Released financial results for the quarter ended March 31, 2025, 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 <unk>.
Webb Campbell: 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 the federal securities laws which are made pursuant to the Safe Harbor provision of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or projections 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, expense management, expectations for hiring, training and adoption, growth in our organization, market opportunity, commercial and international expansion, regulatory approvals.
Speaker Change: Looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provision of the private Securities Litigation Reform Act of 995.
Speaker Change: Statements contained in this call that relate to expectations or projections of future events.
Speaker Change: <unk> or performance are forward looking statements all forward looking statements, including without limitation those relating to our operating trends and future financial performance expense management expectations for hiring.
Speaker Change: Training and adoption gross in our organization market opportunity commercial and international expansion regulatory approvals.
Webb Campbell: Product Development are based upon current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events that materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these things.
Speaker Change: And product development are based upon current estimates and various assumptions.
Speaker Change: 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.
Webb Campbell: 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 Security and Exchange Commission.
Speaker Change: Please refer to the risk factors section of our latest periodic filings with the Securities and Exchange Commission.
Webb Campbell: This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 13, 2025. Hyperfine 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.
Speaker Change: This conference call contains time sensitive information and is accurate.
Speaker Change: As of the live broadcast today May 13, 2025, hyperfine 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.
Maria Sainz: With that, I will turn the call over to Maria Sainz, President and Chief Executive Officer. Good afternoon and thank you for joining us. On the call with me today is our Chief Administrative Officer and Chief Financial Officer, Brett Hale. In the first quarter, we delivered revenue of $2.1 million with a sale of six systems with a strong average selling price. We also reinforced our financial profile, taking steps to meaningfully reduce cash burn by completing a reorganization. And we further strengthened our balance sheet by raising $6 million through a registered direct offering to extend our cash run rate to the end of 2026.
Maria: President and Chief Executive Officer.
Speaker Change: Good afternoon, and thank you for joining us on the call with me today is our chief administrative officer, and Chief Financial Officer Brett.
Speaker Change: In the first quarter, we delivered revenue of $2 1 million with the sale of fixed system with a strong average selling price.
Speaker Change: Also reinforced our financial profile taken steps to meaningfully reduce cash burn by completing a reorganization and we further strengthened our balance sheet by raising 6 million through a registered direct offering to extend our cash runway to the end of 2026.
Maria Sainz: In the first quarter, we experienced some headwinds to revenue associated with the new political environment which resulted in the loss of several deals at large academic institutions that were funded by grants. The first half of 2025 marks the end of a time in our company's commercial trajectory where our business relies primarily on U.S. hospital deals. As we have previously indicated, hospitals have proven to have protracted sales cycles and high variability in deal timing. We are committed. and excited about Hyperfine's future with diversified revenue across the three verticals of the hospital, the office setting and international markets and introducing our significantly improved product performance with our next generation image quality.
Speaker Change: In the first quarter, we experienced some headwinds to revenue associated with the new political environment, which resulted in the loss of several deals at large academic institutions that were funded by grants.
Speaker Change: The first half of 2025 marks the end of her time in our company's commercial trajectory, where our business relies primarily on U S Hospital deals.
Speaker Change: As we have previously indicated.
Speaker Change: Both have proven to have protracted sales cycles and high variability in deal timing.
Speaker Change: We are committed.
Speaker Change: I'm excited about <unk> future with diversified revenue across the three verticals of the hospital the office setting and international markets and introducing our significantly improved product performance with our next generation image quality.
Maria Sainz: We still expect this catalyst to change the growth trajectory of Hyperfine starting in the second half of this year.
Speaker Change: We still expect this catalyst to change the growth trajectory of hyperfine, starting in the second half of this year.
Maria Sainz: I will now provide an update on our diversified growth catalyst coming to fruition in 2025. As we progress into the second half of 2025, our business will be a diversified portfolio with hospital, office, and international verticals, providing a platform for higher growth and less variability. We have continued to make solid progress towards launch readiness for the office business. Several of the office accounts in the pilot program are now IAC-accredited, have started to scan, and are going through the reimbursement process with CMS. Neuro-PMR, our office clinical study, has begun enrollment, and the two participating office sites are demonstrating strong enthusiasm for the subsystem.
Speaker Change: I will now provide an update on our diversified growth catalyst coming to fruition in 2025.
As we progress into the second half of 2025, our business will be a diversified portfolio with hospital office and international verticals, providing a platform for higher growth and less variability.
Speaker Change: We have continued to make solid progress towards launch readiness for the office business.
Speaker Change: Several of the office accounts into pilot program are now.
Speaker Change: Accredited.
Speaker Change: Wanted to scan and ill go away.
Speaker Change: Through the reimbursement process with CMS.
Speaker Change: Newer of EMR, Our office clinical study has begun enrollment and the two participating office sites are demonstrating strong enthusiasm for the soup system.
Maria Sainz: Neuro-PMR is a multicenter perspective observational study comparing AI-powered portable MRI and conventional high-field MRI with respect to pathology findings, clinical utility and patient experience in the neurology office setting to assess different use cases for the subsystem. The study is being run by two private neurology practices, the Dent Neurologic Institute and Texas Neurology. The study has a target enrollment of 100 patients. Enrollment is progressing very well, and I am pleased to report the study is about halfway enrolled, and we now expect the study to conclude ahead of our previous estimate by the end of the third quarter of 2025.
Speaker Change: European EMR is a multicenter prospective observational study comparing AI powered portable MRI.
Speaker Change: Conventional high fee and MRI with respect to pathology findings clinical utility and patient experience in the neurology office setting to assess different use cases for the subsystem.
The study is being run by two private neurology practices.
Speaker Change: Neurologic Institute.
Texas Neurology. The study has a target enrollment of 100 patients enrollment is progressing very well and I am pleased to report the studies about halfway enrolled and we now expect the study to conclude ahead of our previous estimates.
Speaker Change: End of the third quarter of 2025.
Maria Sainz: Additionally, in the last couple of weeks, we have conducted training for our field teams on the office market opportunity. On the technology front, we continue to improve the image quality of our unique AI-powered portable MRI to drive broad clinical utility and mainstream adoption. We expect to obtain clearance for our next generation software in the first half of the year and expect a commercial rollout in the second half of the year. Meanwhile, we continue to work towards clearance and launch of another generation of subsystem technology later this year. These releases will bring a step-function improvement in image quality, approaching the quality obtained from conventional 1.5 Tesla MRI systems, as noted by several key opinion leaders involved in our development process.
Speaker Change: Additionally, in the last couple of weeks, we have conducted training for our field teams on the office market opportunity.
Speaker Change: On the technology front, we continue to improve the image quality of our unique AI powered portable MRI to drive broad clinical utility and mainstream adoption.
Speaker Change: We expect to uptake clearance for our next generation software in the first half of the year unexpected commercial rollout in the second half of the year.
Speaker Change: While we continue to work towards clearance and launch of another generation of soup system technology later this year.
Speaker Change: These leases will bring a step function improvement in image quality approaching the quality obtained from conventional one five Tesla MRI systems as noted by several key opinion leaders involved in our development process.
Maria Sainz: We believe this level of image quality will make the adoption of portable brain MRI quicker for new users, enabling a shorter learning curve and accelerating market update of our technology. Our strategy for growth is based on site of care expansion. Our focus is on building an office business, expanding to multiple sites inside the hospital, and driving adoption in international markets. The neurology office setting is an incredibly compelling opportunity for the subsystem. Neurologists directly impact 100 million patients lives in the United States. They order an average of 500 to 600 MRIs annually and only a very small fraction of the private neurology practices have MR imaging equipment on site.
Speaker Change: This level of image quality, we make the adoption of portable brain MRI quicker for new users in.
Speaker Change: Labeling a shorter learning curve and accelerating market update of our technology.
Speaker Change: Our strategy for growth is based on site of care expansion. Our focus is on building an office business expanding to multiple sites inside the hospital.
Speaker Change: And driving adoption in international markets.
Speaker Change: The neurology office setting is an incredibly compelling opportunity for the soup system.
Speaker Change: <unk> directly impact a 100 million patient lives in the United States.
Speaker Change: They order on average 500 to 600 mris annually.
Speaker Change: Only a very small fraction of the private neurology practices.
Speaker Change: Imaging equipment on site.
Maria Sainz: We plan to launch in the office mid-2025, and as highlighted previously, the team has made a lot of progress towards launch readiness by initiating pilot accounts, initiating the neuro-PMR study, and most recently, training the field. Now moving to the hospital opportunity, we have continued our expansion into the emergency department at an additional call point in the hospital, given the importance of time to scan and patient progress, and supported by the clinical work we have done in stroke. MRI availability for the triage of stroke patients in the ER is very limited, and patients and clinicians often endure long waits.
Speaker Change: We plan to launch in the office mid 2025 and as highlighted previously the team has made a lot of progress towards launch readiness by initiating pilot accounts initiating the <unk> study and most recently <unk>.
Speaker Change: <unk> the Seo teams.
Speaker Change: Now moving to the hospital opportunity we have continued our expansion into the emergency department as an additional call points in the hospital given the importance of time to scan and patient progress and supported by the clinical work, we have done in stroke MRI availability for the triage.
Speaker Change: For patient <unk> is very limited and patient census, admissions often into a long wait.
Maria Sainz: Data from Action PMR shows that AI-powered portable MRI in ischemic stroke triage can help address patients quickly and provide valuable clinical insights in this highly time-sensitive environment. and DMR, evaluating the use of the subsystem for ischemic stroke patients completed enrollment at 100 patients across four leading institutions globally. Data was presented most recently at the 2025 International Stroke Conference. To drive expansion into DER, we plan to support additional projects to generate clinical evidence that will demonstrate the clinical, workflow, and economic value of the use of the FUST system in this new site of care. Besides standing on the clinical benefits of using the soup system in the hospital, we have focused our team on highlighting the potential favorable economic impact of using the soup system.
Speaker Change: Data from <unk> shows that AI powered portable MRI in ischemic stroke triage can help address patients quickly and provides valuable clinical insights in this highly time sensitive environment.
Speaker Change: Okay DMR about evaluating the use of the <unk> system for ischemic stroke patients completed enrollment of 100 patients across four leading institutions globally.
Speaker Change: Data was presented most recently at the 2025 International stroke conference to.
Speaker Change: To drive expansion into the ER.
Speaker Change: Plan to support additional projects to generate clinical evidence that will demonstrate the clinical workflow and economic value of the use of the <unk> system in this new site of care.
Speaker Change: Besides selling on the clinical benefits of using the system in the hospital, we have focus our team on highlighting the potential favorable economic impact of using the soup system.
Maria Sainz: We have compiled data from key subsystem accounts documenting incremental conventional scans enabled by the use of the subsystem in critical care and cost savings in care associated with the use of the subsystem, enabling faster decision-making and discharge as appropriate. This real-world data is another valuable tool our commercial teams are now using in their I am pleased to report we have seen an increase in multiple uni deals in the hospital setting in our pipeline, illustrating the interest across several hospital call points. Finally, turning to our international commercialization activities, we continue to see strong interest and healthy demand in our markets across Europe, the Middle East, and Asia.
Speaker Change: We have compiled data from key subsystem accounts documenting incrementals conventional scans enable by the use of the <unk> system in critical care and cost savings in care associated with the use of the system, enabling faster decision, making and discharge as appropriate.
Speaker Change: This real world data is another valuable tool our commercial teams are now using in their accounts.
Speaker Change: I am pleased to report we have seen an increase in multiples do any deals in the hospital setting in our pipeline illustrating the inks across several hospital call points.
Finally, turning to our international commercialization activities, we continue to see strong interest in healthy demand in our markets across Europe, the middle East and Asia.
Maria Sainz: I'm also pleased to share that we continue to anticipate regulatory approval and market entrance in India in the second half of the year.
Speaker Change: I'm also pleased to share that we continue to anticipate regulatory approval and market entrants in India in the second half of the year.
Maria Sainz: As I said on our last call, 2025 will be a tale of two halves with our first half performance based on our legacy business with a heavy mix of hospital deals. The second half of 2025 will be favorably impacted by the launch of two new AI-powered technology releases with significant improvements in image quality, the launch of our office business, and the adoption from existing and new international markets, including India, driving healthy growth and diversification of our revenue in the second half of 2025 and beyond. and remain confident in the opportunity in front of us and the execution and capabilities of our team.
I said on our last call 2025, we'd be a tale of two halves with our first half performance based on our legacy business with a heavy mix of hospital deals.
Speaker Change: Second half of 2025 will be favorably impacted by the launch of two new AI powered technology leases with significant improvements in image quality the launch of our office business and the adoption from existing and new international markets, including India driving healthy growth in <unk>.
Suffocation of our revenue in the second half of 2025 and beyond.
I remain confident in the opportunity in front of us and the execution and capabilities of our team.
Brett Hale: I will now turn over the call to Brett to review our Q1 performance and provide an update to 2025 guidance. Thank you, Maria. I will recap our financial results for the first quarter of 2025 before providing an update on our financial guidance. Revenue for the first quarter of 2025 was $2.1 million. In the first quarter of 2025, we sold six units with a strong average selling price. During the first quarter we continued to experience longer deal timing and processes for U.S. hospitals and the loss of several deals due to significant reductions and cancellations of grant funding to academic institutions.
Speaker Change: I will now turn over the call to Brian to review, our Q1 performance and provide a net eight to 2025 guidance.
Brian: Thank you Maria I will recap our financial results for the first quarter of 2025 before providing an update on our financial guidance.
Brian: Revenue for the first quarter of 2025 was $2 1 million in the first quarter of 2025, we sold six units with a strong average selling price.
Brian: During the first quarter, we continued to experience longer deal timing and processes for U S hospitals, and the loss of federal deal due to significant reductions in cancellation of grant funding to academic institutions.
Brett Hale: Our average selling price in pipeline remains strong, but U.S. hospital critical care deal sales cycles continue to experience variability and are longer than in past quarters. Also, during the first quarter, a majority of our United States sales personnel were newly hired. These new members of our sales teams are gaining traction with customers while training to be prepared to build awareness and visibility of our next-generation imaging technology once cleared and launched. Gross profit for the first quarter of 2025 was $0.9 million and gross margin for the first quarter of 2025 was 41.3% representing a 20 basis point improvement versus the prior year period.
Brian: Our average selling price and pipeline remains strong.
Brian: The US hospital critical care deal sales cycles continue to experience variability in our longer than in past quarters.
Brian: Also during the first quarter, a majority of our United States sales personnel were newly hired.
Brian: These new members of our sales teams are gaining traction with customers while training to be prepared to build awareness and visibility of our next generation imaging technology once cleared and launch.
Brian: Gross profit for the first quarter of 2025 was 0.9 million and gross margin for the first quarter of 2025 was 41, 3%, representing a 20 basis point improvement versus the prior year period.
Brett Hale: We continue to drive healthy margins at our stage, and we believe we are well positioned for meaningful margin expansion at scale. Our R&D expenses for the first quarter of 2025 were $5.0 million compared to $5.6 million in the first quarter of 2024. Sales, general and administrative expenses for the first quarter of 2025 were $6.7 million compared to $6.4 million in the first quarter of 2024. Net loss for the first quarter of 2025 was $9.4 million equating to a net loss of $0.12 per share as compared to a net loss of $9.8 million or a net loss of $0.14 per share for the same period of the prior year.
Brian: We continue to drive healthy margins at our stage and we believe we are well positioned for meaningful margin expansion at scale.
Brian: R&D expenses for the first quarter of 2025 were $5 1 million compared to $5 6 million in the first quarter of 2020 quarter.
Brian: Sales general and administrative expenses for the first quarter of 2025 were $6 7 million compared to $6 4 million in the first quarter of 2020 quarter.
Brian: Net loss for the first quarter of 2025 with $9 4 billion equating to a net loss of <unk> 12 per share as compared to a net loss of $9 8 million or a net loss of <unk> 14 per share for the same period of the prior year.
Brett Hale: Our net cash burn, including financing in the first quarter of 2025, was $4.6 million. As of March 31st, 2025, we have $33.1 million in cash and cash equivalents on our balance sheet, inclusive of $6 million registered direct financing in February. For the first quarter of 2025, our net cash burn, excluding financing, was $10.1 million, down 16% from $12.0 million in 2024. The first quarter is typically our highest cash burn quarter during the year due to several annual one-time costs.
Our net cash burn, including financing in the first quarter of 2025 was $4 6 million.
Brian: As of March 31, 2025, we have $33 1 million in cash and cash equivalents on our balance sheet inclusive of $6 million registered direct financing in February.
Brian: For the first quarter of 2025, our net cash burn excluding financing with $10 1 million down 16% from $12 <unk> million dollars in 2024.
Brian: The first quarter is typically our highest cash burn quarter during the year due to several annual one time cost.
Brett Hale: Reducing cash burn remains a significant focus for us and we will continue to prioritize spending discipline and optimize our operating leverage in 2025.
Brian: Reducing cash burn remains a significant focus for ours, and we will continue to prioritize spending discipline and optimize our operating leverage in 2025.
Brett Hale: Now turning to financial guidance, beginning with our revenue outlay. For the first half of 2025, we now expect revenue to be in the range of $5 to $6 million. Our updated expectations for the first half revenue are a result of several U.S. deals recently lost due to cancellations of grant funding to certain academic institutions by the federal government. We believe we'll be able to more precisely forecast our second half revenue over the coming months as our growth catalysts play out.
Brian: Now turning to financial guidance.
Brian: Beginning with our revenue outlook for the first half of 2025, we now expect revenue to be in the range of $5 million to $6 million.
Brian: Our updated expectations for the first half revenue are a result of several U S deals recently lost due to cancellations of grant funding to certain academic institution by the federal government. We believe we'll be able to more precisely forecast our second half revenue over the coming months as a growth catalyst play out and for the full.
Brett Hale: And for the full year, we now expect revenue growth to be in the range of 10% to 20% over 2020. For the full year 2025, we are also updating our gross margin outlook to 47 to 50% for the year, representing a 280 basis point increase in gross margin on a year-over-year basis at the midpoint. We expect the progression of gross margin percentage increase to closely follow our sales growth, and we expect second-half gross margin percentages to exceed the first half. We remain optimistic that we will surpass 50% growth margin comfortably and sustainably as we realize higher volumes driven by our growth catalyst.
Brian: Year, we now expect revenue growth to be in the range of 10% to 20% over 2024.
Brian: For the full year 2025, we are also updating our gross margin outlook to 47% to 50% for the year, representing a 280 basis point increase in gross margin on a year over year basis at the midpoint.
Brian: We expect the progression of gross margin percentage increased to closely follow our sales growth and we expect second half gross margin percentages to exceed the first half.
Brian: We remain optimistic that we will surpass 50% gross margin comfortably and sustainably as we realized higher volume driven by our growth catalyst.
Brett Hale: Lastly, we now expect total cash burn to be in the range of $25 to $28 million for the full year 2025, representing a 31% decline in cash burn on a year-over-year basis at the mid-term. We have taken several steps to enhance our financial profile. We completed a restructuring in the first quarter to reduce operating costs, extend cash runway, and transition our organization from a development stage to a commercial stage company. We also bolstered our balance sheet with a $6 million finance. We will execute upon our plan with strong spending discipline while maintaining appropriate investments in our growth catalyst.
Brian: Lastly, we now expect total cash burn to be in the range of 25% to $28 million for the full year 2025, representing a 31% decline in cash burn on a year over year basis at the midpoint.
Brian: We've taken several steps to enhance our financial profile, we completed a restructuring in the first quarter to reduce operating cost extend cash runway and transition our organization from a development stage to a commercial stage company.
Brian: We also bolstered our balance sheet with a $6 million financing.
Brian: We will execute upon our plan with strong spending discipline, while maintaining appropriate investments in our growth catalyst. We continue to see a cash runway for the business to the end of 2026.
Brett Hale: We continue to see a cash runway for the business to the end of 2026.
Brett Hale: Before turning the line back to Maria, I want to briefly touch upon the topics of tariff. We have been closely monitoring recent government commentary and actions and the potential impact on our business. Our 2025 guidance assumes that our business will not materially be impacted by tariffs. Additionally, at this time, we have sufficient inventory on hand to meet current demands.
Maria: Before turning the line back to Maria I want to briefly touch upon the topic of tariffs.
Maria: We have been closely monitoring recent government commentary and actions and the potential impact on our business. Our 2025 guidance assumes that our business will not materially be impacted by tariffs.
Maria: Additionally, at this time, we have sufficient inventory on hand to meet current demand. We will continue to follow the situation closely and provide updates to the market as needed.
Maria Sainz: We will continue to follow the situation closely and provide updates to market at I would like to now turn the call back to Maria for closing comments. Thank you, Brett. As we get closer to mid 2025, my confidence in driving a new office business, expanding in the hospital and into more international markets and bringing forward the highest performing image quality in the soup system increases significantly. The team is laser focused on our growth drivers and very excited about the future of our company.
Maria: I would like to now turn the call back to Maria for closing comments.
Maria: Thank you Brett as we get closer to mid 2025, my confidence in driving our new office business expanding into the hospital and into more international markets and bringing forward the highest performing image quality in the soup system increases significantly the team.
Maria: <unk> is laser focused on our growth drivers and very excited about the future of our company.
Maria Sainz: With that, I want to thank you for your time and open up the line for questions. At this time, I would like to remind everyone, in order to ask a question, please press star then the number 1 on your telephone keypad. We will pause for just a moment to compile the Q&A watch.
Maria: With that I want to thank you for your time and open up the line for questions.
Maria: At this time I would like to remind everyone in order to ask a question. Please press Star then the number one on your telephone keypad.
Maria: We will pause for just a moment to compile the Q&A roster.
Frank Takinen: Your first question comes from the line of Frank Takinen with Lake Street, your line is open. Great. Thank you for taking the questions.
Speaker Change: Your first question comes from the line of Frank <unk> with Lake Street. Your line is open.
Speaker Change: Alright. Thank you for taking the questions I am very hybrid I was hoping we could start with one on some of the pilot activity ongoing in the office setting. Most curious I know you touched on a little bit in your prepared remarks, but just more curious about kind of initial feedback and whether or not this has.
Frank Takinen: Hi, Maria. Hi, Brett.
Frank Takinen: I was hoping we could start with one on some of the pilot activity ongoing in the office setting. Most curious, I know you touched on a little bit in your prepared remarks, but just most curious about kind of initial feedback and whether or not this has resulted in you kind of changing strategy, changing any timelines to go into these markets, and then I have one follow-up after that.
Speaker Change: Resulted in your kind of changing strategy changing any timelines to go into these markets and then I have one follow up after that thanks.
Maria Sainz: Maria, would you want to take that? Sorry, I was talking to myself. I was on mute. Sorry, Frank. Thank you for the question. And I was saying that we have really taken a very methodical approach to working through the pilot phase and make sure that we follow very closely the accounts from how we have pitched to them their interest in the technology to then really understanding the deal cycle, making sure that we are ready to support them and chaperone any activities associated with accreditation, and then even down to implementation. So we have now passed the pilot accounts, gone through all of them are now accredited by IAC.
Mario: Mario do you want to take that.
Frank: Sorry, I was talking to myself I was on mute sorry, Frank.
Mario: Yeah.
Mario: Thank you for the question.
Mario: We're saying that.
Mario: We have really taken a very methodical approach to working through the pilot phase and make sure that we follow very closely the accounts from how we have pitched to ban their interest in the technology to them really understanding the deal cycle, making sure that we are ready to support them and chaperone.
Mario: Any activities associated with accreditation and then even down to implementation. So we have now perhaps the pilot accounts gone through all of them are now accredited by IAC Theyre, all scanning and they are going now through the CMS registration on the motion and that.
Maria Sainz: They're all scanning, and they're all going now through the CMS registration and the motion. And I would say in the training meeting that we had for our sales team, we had one of those pilot neurologists come speak to them. It is really encouraging to hear how they are thinking about this opportunity in terms of transforming their practice, being able to offer more, being able to be actually a more full-service supplier, and how easy they report feeling the technology is to operate and to bring on board. So I would say, if anything, we are feeling more bullish.
Mario: I'd say in the training meeting that we have for our sales team. We had one of those pilot neurologists come to speak to them. It is really encouraging to hear how they are thinking about this opportunity in terms of transforming their practice being able to offer more being able to be actually a more full service supplier.
Mario: And how easy they report seeing that technology is to operate and to bring onboard. So I would say if anything we are feeling more bullish.
Maria Sainz: I am also incredibly encouraged by the two very large neurology practices that are participating in NeuroPMR. The rate at which they are enrolling patients is exceeding our expectations, which is a great testament for their enthusiasm. And also we are seeing a variety of cases that they are willing to use in triaging patients with the soup system. So I am feeling that it is really the right thing for us to diversify, and there's an opportunity there that is very substantial.
Mario: I'm also incredibly encouraged by the.
Mario: Two very large neurology practices that are participating in Europe.
Mario: The rate at which they are enrolling patients.
Mario: <unk>, our expectations, which is a great Testament for their enthusiasm and also we are seeing.
Mario: A variety of cases that they are willing to use in <unk> patients with the soup system. So.
Mario: I am seeing that it is really the right thing for us to diversify and there is some opportunity there that is very substantial and we're going to be moving into into that launch phase here in the next several weeks as we hit the midpoint of the ear with the CMT now trained.
Frank Takinen: And we're going to be moving into that launch phase here in the next several weeks as we hit the midpoint of the year with the field team now trained. Got it. That sounds great. Thanks for that.
Speaker Change: Got it sounds great. Thanks for that and then just for my follow up maybe a two parter.
Frank Takinen: And then just for my follow-up, maybe a two-parter. First, on the grant-funded headwind in Q1, is this an instance where if some of those grants start to come back online that that business could be recovered? Or are you guys kind of thinking of that as lost business at this point?
Speaker Change: First on the grant funded headwind in Q1, as an instance, where if some of those grants start to come back online that that business could be recovered or are you just kind of thinking that is lost business. At this point and then as a second part just any update on kind of initial receptivity with the international distributors would be great. Thanks.
Frank Takinen: And then as a second part, just any update on kind of initial receptivity with the international distributors would be great.
Maria Sainz: Sure. So, I think given how, I think across academic institutions, the tone of clinicians around grant funding confidence is clearly very, very sobering. So, we are not expecting that they come back, even though some of the institutions that were actually that we were were in the front page of main news streams, and they have received some of it back.
Speaker Change: Sure. So I think given given how I think our cost of academic institutions, the tone of clinicians around grant funding confidence.
Speaker Change: This is clearly very very sobering.
Speaker Change: So we we are not expecting that they come back even though some of these institutions that were at.
Speaker Change: Actually that we were affected by where in the front page of Maine, New streams and they have received some of it back there is no appetite to do anything eagerly.
Maria Sainz: There is no appetite to do anything eagerly with any grant funding because there's no confidence whether that is going to stick, stay, get retracted. It's just a very unsettling time in that respect.
Speaker Change: Any grant funding because theres no confidence whether that is going to stick stay get retracted just a very unsettling times in that respect definitely we are moving away from betting on grant funding for deals that may have had that and we are putting all of our efforts on other deals.
Maria Sainz: Definitely, we are moving away from betting on grant funding for deals that may have had that, we are putting all of our efforts on other deals that don't have grant funding. It is not every deal in the hospital that has grant funding as the source of funding for the acquisition of the equipment. So, I don't think we expect them to come back.
Speaker Change: Feels that don't have grant funding is not every deal in the hospital grant funding as the source of funding for the acquisition of the equipment. So I don't think we expect them to come back. The question is are we are we April.
Maria Sainz: The question is, are we able here in the second quarter to deliver the quarter and then make anything up or is it going to be more to find deals? As we say, most of it is hospital deals and they have a long sales cycle. And then as it relates to international, we continue to see a lot of interest and we are now seeing a lot of the business internationally is very hospital-based. So, we are seeing our distributors work through the pipeline. We're seeing the implementations from last year start to generate clinical activity that is encouraging.
Second quarter, two to deliver the quarter and then make anything up or is it going to be more challenging to find deals as we say most of it is hospital deals that they have long.
Speaker Change: Sales cycle.
Speaker Change: And then as it relates to international we continue to see a lot of interest and we are now seeing a lot of the hospital a lot of the business internationally is very hospital based so we are seeing our distributors work through the pipeline. We're seeing implementations from last year start to generate sort of clinical activity that is <unk>.
Maria Sainz: So, we're starting to go deeper in some countries with our distributors.
Speaker Change: <unk>. So we are starting to go deeper in some in some countries with our distributors to really so we're looking at establishing centers of excellence, we're looking at establishing.
Frank Takinen: So, we're looking at establishing centers of excellence. We're looking at establishing networks of users that can actually in the article said. Great. Thanks for taking the questions. Thank you, Frank.
Speaker Change: Networks of users that can actually.
Speaker Change: Communicate or maybe not collaborate but communicate.
Speaker Change: As the pioneers on the use of soup in in in different markets.
Speaker Change: In our prepared remarks, we stated that we still feel like we will get India clearance from an approval from the Cvs CEO and we will do market entrance in the second half.
Speaker Change: Great. Thanks for taking the questions.
Frank: Thank you Frank.
Larry Biggleton: Your next question comes from the line of Larry Biggleton with Wills Fargo. Your line is open.
Frank: Your next question comes from the line of Larry.
Speaker Change: Three big Olsen with real Fargo. Your line is open.
Simran Anferleri: Hi team, this is Simran Anferleri. Thanks for taking the questions here. Maybe just on guidance, you know, if I do the math, you took the full year 25 outlook down by about a million at the midpoint. It does imply slightly lower second half sales than before at the midpoint. So I guess, you know, you did lay out a number of growth catalysts that you expect to come online in the second half. So maybe what's changed, you know, in your second half guidance since you set your initial guidance in mid-March? And can you talk more broadly about your expectations for, you know, the selling cycle, the hospital selling cycle and capital environment for the remainder of the year?
Speaker Change: Hi team. This is someone on for Larry Thanks for taking the questions here.
Speaker Change: Maybe just on guidance.
Speaker Change: If I do the math you kept the full.
Speaker Change: For your 25 outlook down by about $1 million.
Speaker Change: Midpoint.
Speaker Change: It does imply slightly lower second half sales than before at the midpoint.
Speaker Change: So I guess you did lay out a number of growth catalysts that you expect to come online in the second half.
Speaker Change: So maybe what's changed.
And your second half guidance that your initial guidance in mid March.
Speaker Change: Can you talk more broadly about your expectation for.
Speaker Change: The selling cycle the hospital selling cycle on top of the environment for the remainder of the year.
Brett Hale: Brett, do you want to start? Hi, Simran. Yeah, so I'll take that. So I think two things on revenue guidance. On the first half, we adjusted it to $5 to $6 million. As Maria highlighted, predominantly that's coming from the grant funding-related activities that we do not anticipate necessarily coming back. So the first half we adjusted, and then we also adjusted the full-year guidance, which also incorporates some of that grant funding-related revenue that we do not anticipate that we'd be capturing here for fiscal year 25. So no major changes in terms of our anticipation for second half guidance, how we think about the prospects of the business, the growth drivers will all be in place.
Tim Ryan: Brett do you want to start Hi, Tim Ryan.
Brett: Yes, so I'll take that so I think two things on revenue guidance.
Brett: First half, we adjusted at two 5% to $6 million.
Brett: Maria highlighted predominantly that's coming from the grant funding related activities that we do not anticipate necessarily coming back. So the first half we adjusted and we also adjusted the full year guidance, which is also incorporate some of that grant funding related revenue that we do not anticipate.
Brett: That would be capturing here for fiscal year 'twenty five so no major changes in terms of our anticipation for second half guidance, how do we think about the prospects of the business. The growth drivers will all be in place, but given what we saw in Q1 in terms of grant funding, we've made adjustments to both the first half as well as the full year guidance.
Brett Hale: But given what we saw in Q1 in terms of grant funding, we made adjustments to both the first half as well as the full-year guidance.
Brett Hale: And I think you had a question regarding the capital cycle. I think that I don't know that we are seeing anything different than what we have been messaging for the last several quarters, which is they are definitely getting longer. I think about a year and a half ago or so I was estimating our hospital deals were going to take us about nine months or so. I would say often now they are a year or a year and a half in some instances. So we have a really robust pipeline of hospital deals, but they are going to take their time to happen.
Brett: And I think you had a question regarding the capital cycle I think that's right.
Brett: I don't know that we are seeing anything different that what we have been messaging for the last couple of quarters, which is they are definitely getting longer.
Brett: Think about a year and a half ago or so I was estimating a hospital deals were going to take us about nine months or so I would say often now they are a year over year on a haas in some instances. So we have a really robust pipeline of hospital deals, but they are going to take their time to.
Brett: To hop in and I would say, it's probably in that year to year and a half timeframe now as we think about.
Simran Anferleri: And I would say it's probably in that year to a year and a half timeframe now as we think about where that stands. Got it. That's very helpful.
Brett: Where where that stands.
Brett: Got it.
Very helpful and maybe just a follow up.
Simran Anferleri: And maybe just to follow up on the in-office expansion, have you talked about how many office sites of care are in the launch readiness phase? And can you elaborate on the economics of selling in the office versus the hospital setting in light of today's macro environment? I know on the previous call, you've talked about flexible payment models here. Yes.
Brett: On the and office expansion.
Brett: Have you talked about how many office sites of care are in the launch readiness phase and can you elaborate on the economics of selling in the office versus.
Hospital setting in light of today's macro environment.
Brett: I know on the previous call you talked about flexible payment models here.
Brett: Yes, so we haven't mentioned how many accounts are in the pilot phase I would say, it's fair to say.
Maria Sainz: So, we haven't mentioned how many accounts are in the pilot phase. I would say it's fair to say it's like a handful. And those are the ones that have gone now through the motions, definitely in the last several weeks, the accreditation, the starting to scan, and then the beginning of the process around reimbursement and CMS registration. Again, we have now gone through the drill of implementation. I would say as simple as implementation, which is shipping the device and training on the device, is a very, very different experience in the hospital than in the office. In the hospital, the moment we get a PO, usually we ship the device, and the hospital has no problem storing a device and implementing it when their teams are all ready and all the connectivity has happened and lots of those things.
Brett: Handful.
Brett: And those are the ones that have gone now through the motions in definitely in the last several weeks the accreditation to starting to scan and then the.
At the beginning of the process around reimbursement from CMS registration.
Brett: Again, we have now gone through the drill of implementation I would say a simple implementation, which is shipping a device and training on the device is a very very different experience in the hospital down in the office in the hospital at the moment, we get a Po usually we shipped the device and the hospital has no problems storing and device.
Brett: And implementing it when their teams are already in all the connectivity has happened and lots of those things with the office. They will pick a date and at that date everything it needs to happen you need to open to create do you need to put the device into motion you need to train the team and it's sort of one and done and sometimes we need to do it after hours.
Maria Sainz: With the office, they really pick a date, and at that date, everything needs to happen. You need to open the crate, you need to put the device into motion, you need to train the team, and it's sort of one and done. And sometimes we need to do it after hours or over the weekend, because that is the time that they have available. So, again, it's been a handful of accounts with whom we've actually learned the whole drill from pitching a deal all the way to implementing and the different steps. In terms of pricing, I think we are continuing to talk about flexibility to accommodate.
Brett: So over the weekend because that is the time that they have available.
Brett: So again its been a handful of accounts with whom we've actually learned the hole drilled from pitching a deal all the way to implementing and the different steps in terms of pricing I think we are continuing to talk about.
Brett: Flexibility to accommodate they definitely have an appetite to pay over time, rather than all at once it depends on the size of the account I think we are doing.
Brett Hale: They definitely have an appetite to pay over time rather than all at once. Depends on the size of the account. I think we're doing an economic model to understand whether they are really ready for our device. A lot of it depends on the number of cases that they refer. We talked about the fact that they do 500, on average, a neurology office refers about 500 to 600 patients a year for MRI. So, that definitely is false writing when this makes sense at our price point. But we are seeing variability in the way we're potentially going to transact with the offices based on their size and their appetite to pay more upfront or pay more over time.
Brett: And economic model to understand whether they are really ready for our device a lot of it depends on the number of cases that they refer we talked about the fact that they do 500 on average enrollment. Your office refers about 500 to 600 patients a year for MRI. So that definitely is it false writing.
Brett: This makes sense at our price point, but we are seeing variability in the way we are.
Brett: Essentially going to transact with the offices based on their size.
Brett: Their appetite to pay more upfront or pay more over time, but feel free to add any other commentary here.
Brett Hale: Brett, feel free to add any other commentary here. No, I think that's fair. I mean, there's over 2000, you know, office, neurology offices, and there obviously is segmentation within that size. So there are some that are more sole proprietary that have a look and feel of what their business looks like versus, you know, those that are, you know, more than, you know, five to 10, you know, practitioners within a setting. So each one of those has a little bit different dynamics, I would say health economics has been something that's been front and center, both in the office setting, as well as what we're bringing to the hospital setting.
Brett: No I think Thats fair I mean, theres over 2000 office neurology offices in there obviously is segmentation with them that size. So there are some that are more sole proprietary that have a look and feel of what their business looks like versus those that are.
Brett: More than.
Brett: Five to 10 practitioners within the setting so each one of US has a little bit different dynamics I would say health economics, it's been something that's been front and center both in the office setting as well as what we're bringing to the hospital setting. So each one of those has a very compelling use case and then but does.
Brett Hale: So each one of those has a very compelling use case and then but does we do allow for some degree of making sure that we can meet the practice where where it makes sense for their business model.
Brett: We do allow for some degree of making sure that we can meet the practice, where where it makes sense for their business model.
Simran Anferleri: Great, thank you so much.
Brett: Great. Thank you so much.
Yuan Zhi: Your next question comes from... Your next question comes from the line of Yuan Zhi with B. Reilly Securities. Your line is open. Good afternoon. Thank you for taking our questions.
Speaker Change: Your next question comes.
Speaker Change: Your next question comes from the line of <unk> <unk> with B Riley Securities. Your line is open.
Speaker Change: Good afternoon, Thank you for taking our questions.
Maria Sainz: Maria, maybe on the tariff, because of tariff, can you clarify if some of your international orders are delayed to a later time or they were just cancelled? Today, we haven't had any impact of any tariff-related delays of any of our transactions with our third-party distributors to date, so that hasn't come to fruition. We're in the early stages, as you know, of international market development, but to date, no direct tariff impact.
Speaker Change: That may be.
Speaker Change: Sure.
Speaker Change: Cairo.
Speaker Change: Clarify if some of your internet and the auger delayed to a later time or they were just cancelled.
Speaker Change: So I can take that.
Speaker Change: Yeah go ahead.
Speaker Change: Yes.
Speaker Change: Today, we havent had any impact of any tariff related delays of any of our transactions with our third party distributors to date, so that hasnt come to fruition.
Speaker Change: We're in the early stages as you know international market development, but to date.
Speaker Change: No no direct tariff impact.
Yuan Zhi: Got it. Maybe a follow up question there.
Speaker Change: Got it maybe a follow up question on their call.
Yuan Zhi: So based on for the 1Q 2025 product revenue, most of the products from the US market were with a very minor contribution from international and any reason why? So there's been a, you know, any individual quarter, there's been variability, as you know, in terms of our mix. So for, I guess, for the first quarter of 2025, I guess I would highlight that we sold six units, the effective ASP was 254,000, which actually was a very strong ASP. But any individual quarter, we can have variability in terms of what the demand and what the sales are.
Speaker Change: For the <unk> 101 required product revenue most of the product from the U S market raise my reminder, contribution from the international and any reason why.
Speaker Change: So theres been a any individual quarter, there's been variability as you know in terms of our mix.
Speaker Change: So for I guess for the first quarter of 2025, I guess I would highlight that we sold 60 units. The effective ASP was 254000, which is with a very strong ASB, but any individual quarter. We can have variability in terms of what the demand and what the sales are so.
Brett Hale: So nothing specific to comment about the mix, per se, in Q1.
Speaker Change: Nothing specific to comment about the mix per se in Q1.
Yuan Zhi: Yep, got it.
Speaker Change: Yeah got it and maybe one last question from US. So now we are in May what is your current visibility for the first half on December five and down for the full year just under five the other way to think about it as is.
Yuan Zhi: And maybe one last question from us. So now we are in May, what is your current visibility for the first half of 2025? And then for the full year 2025?
Maria Sainz: The other way to think about this is, which bucket of orders you think are at risk? And which bucket of orders you think, you know, you have higher confidence? I think as we think about, I mean... As we think about the second half of this year, that's when we get into this more balanced portfolio of opportunities. And we have the hospital, we have international, we add to international India, and we have the office. So, we are managing sort of the pipeline across all of those buckets to have higher confidence as to how things are going to play out based on different sales cycles and timeframes.
Others think on risk and which are the buckets all.
Speaker Change: Other than you think.
Speaker Change: Higher accompanying.
Speaker Change: I think as we as we think about.
Speaker Change: <unk>.
Speaker Change: So we think about the second half of this year, that's when we get into this more balanced portfolio of opportunities and we have the hospital, we have international we absolutely International India and we have the office. So we are managing sort of the pipeline across all of those buckets to have higher confidence as to how things are going.
To play out based on different sales cycles on Timeframes.
Maria Sainz: So, as I said, the pipeline is very robust. We have also now had a little more runtime with the new team, which, as we said, was close to 50% of an upgrade at the beginning of the year. And we are very impressed by the pipelines that they are driving as well as new individuals as well as the legacy team. So, I would say the pipeline looks very robust. And we're starting to build a pipeline for the office for the second half. Most of what is going to be driving still the business in this second quarter to round up the first half is going to be hospital.
Speaker Change: As I said the pipeline is very robust we have also now had.
Speaker Change: It'll more run time with the new team.
Speaker Change: As we said was.
Close to 50% of an upgrade at the beginning of the year and we are very impressed by the pipeline that they are driving as well as new individuals as well as the legacy team. So I would say the pipeline looks very robust and we're starting to build the pipeline for the office for the second half most of what it is.
Speaker Change: Going to be driving still the business in this second quarter to round up the first half is going to be hospital. That's why there is definitely a significant ramp in total business between the two has the first center second.
Yuan Zhi: That's why there is definitely a significant ramp in total business between the two halves, the first and the second. Yep, got it.
Speaker Change: Yes got it thanks for us around the corner.
Yuan Zhi: Thanks for answering our questions.
Operator: Thank you.
Speaker Change: Thank you.
Operator: Again, if you would like to ask a question, press star 1 on your telephone keypad.
Speaker Change: Again, if you would like to ask a question press star one on your telephone keypad.
Maria Sainz: I will turn the call back over to Maria for closing remarks. Well, thank you very much for attending today's call and your questions and we look
Speaker Change: I will turn the call back over to Maria for closing remarks.
Speaker Change: Well. Thank you very much for attending today's call on your questions in Windows.