(HYPR)
Q1 2023 Earnings-Transcript
Operator: At this time all participants are in listen-only mode. After the speakers presentation there will be a question-and-answer session. [Operator Instructions]. Please be advised that today’s conference is being recorded. It is now my pleasure to introduce Marissa Bych from Investor Relations.
Marissa Bych: Great! Thank you for joining today’s call. Earlier today Hyperfine Inc. released financial results for the quarter ended march 31, 2023. A copy of the press release is available on the company’s website as well as sec.gov. Before we begin, I’d like to remind you that management will make statements during this call that includes forward-looking statements within the meaning of the 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, expense management, expectations for hiring, training and adoption, growth in our organization, market opportunity, commercial and international expansion, regulatory approvals, 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, May 11, 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.
And with that, I will turn the call over to Maria Sainz, President and Chief Executive Officer.
Maria Sainz: Good afternoon, and thank you all for joining us. On the call with me is our Chief Administrative Officer and Chief Financial Officer, Brett Hale. We achieved measurable growth in the first quarter of 2023, with an all time record revenue of 2.6 million driven by the sale of 10 commercial Swoop systems. In addition, we have continued to execute with a financial discipline that allows our cash runway to extend through the end of 2025. I am pleased with our progress this quarter, and I am confident that we are poised to execute our plan in 2023. As we mentioned in March, we are focused on three strategic pillars; innovation, clinical evidence and commercial expansion with a strong focus in the US. On innovation, we continue to lead and advance ultra-low MRI with technology iterations and enhancements that further improve image quality as well as the provider and patient experience with Swoop.
In February, we announced the receipt of two FDA 510(k) clearances for Viz.ai powered software updates to the Swoop system. The latest Viz.ai powered software has now been installed in the units in the field. And the feedback from existing users have been very positive especially on the diffusion weighted imaging or DWI sequence. Our commercial team is now using images in cases with our latest software in their discussions and demos with prospective accounts and feedback has been very positive from prospective users as well. Despite our heightened OpEx discipline, we remain committed to investing in innovation and evidence and we have allocated a healthy budget to R&D through the next several years. We have active development programs working on next generation hardware, additional upgrades to software and Viz.ai for our current critical care application and future stroke pediatrics and neurodegenerative disease use cases.
Furthermore, our partnership with the Bill & Melinda Gates Foundation provides access to a network of leading experts in the field of MRI across the globe, who work in a collaborative manner with our development and clinical science team. On tangible evidence, we are pleased to see abstract papers and symposia focusing on ultra-low-field MRI and the use of our Swoop system at measure scientific calm For instance, like the International Stroke Conference ISC and the American Society of Neuroradiology, ASNR. At ISC in February, we were pleased to see new clinical research data from Yale, showing the potential for Swoop to provide critical brain imaging following thrombectomy in stroke patients. At ASNR in Chicago last week, we have an interactive case review session with a panel of six leading neuro radiologists, evaluating patients based on Swoop images with our latest software.
This interactive session brought nearly 300 attendees and there was a strong booth traffic at the conference. We also have strong research partnerships with leading institutions working on other applications of the Swoop system in adult and pediatric brain imaging. Our major clinical initiative in 2023 is the Action PMR project. Action PMR is a global multicenter evaluation that will assess the use of the tube system in the acute ischemic stroke use case and we’re fortunate to be working with prominent, experienced and passionate clinical team in the field of stroke. As a reminder, this is an exciting project for us as it represents the first step in pursuing the use of Swoop in acute stroke imaging. We look forward to beginning Action PMR enrollment midyear, and sharing our progress on upcoming call.
Turning to commercial expense. We’re pleased with the pipeline of deals driven by our commercial team for 2023 and beyond. The commercial team has also begun implementing our higher pricing and we are encouraged by the solid momentum across multiple territories in the U.S. As we shared in the fall of 2022 we received the purchase order from King’s College London for 20 commercial systems in association with the Bill & Melinda Gates Foundation and a signed letter of intent for seven commercial units from BJC Healthcare in St. Louis one of the leading hospital systems in the U.S. to continue to execute the delivery of commercial systems in 2023. We’re very pleased with our new [filled] leadership and commercial structure. Our sales and clinical support teams are in place.
And we feel this combination of an experienced capital sales team and a clinical and expert clinical support team is the right approach to drive adoption. The team remains focused on the core U.S. market opportunity building relationships and executing contracts with U.S. hospital systems with a specific focus on multi-system placement opportunities. Clinically our field team remains focused on selling subsystems within the broad critical care opportunity for new imaging while our innovation and clinical evidence teams are setting the stage for much broader use in the future. Internationally, we maintain our small commercial footprint, but see compelling opportunities for future expansion into new markets. We remain excited about CE marking which we received in February of this year.
We also see the immense long term opportunity in low and middle income countries through the work that hospitals affiliated with the Bill & Melinda Gates Foundation are undertaken with Swoop in Africa and Asia. And lastly, we continue to explore the potential to enter the regulatory process in China. All of that said we remain focus on the U.S. as our number one commercial priority for this year. Finally, as it relates to our commercial process, our commitment to meeting the highest standards for data protection and information security for our customers. We were pleased that in the first quarter of this year, our key platform to achieve the record high trust with space two years certification. We believe this will streamline the information security reviews associated with contracting and hospital implementation.
Now turning to our first quarter results. I’m pleased to announce that we achieved record revenue of 2.6 million and 10 commercial Swoop system placements in the first quarter of 2023 driven in large part by placement to new U.S. customers. I am incredibly proud of our team and remain optimistic in our commercial pipeline for the future. Alongside our three strategic pillars we remain laser focused on spending discipline. We continue to offer [indiscernible] and implement initiatives in support of cash runway extension while investing in innovation, clinical evidence and commercial expansion. We continue to see a cash runway for the business through 2025. Now turning towards 2023 revenue outlook. We are maintaining our revenue guidance for the full year in the range of $10 million to $14 million.
In line with our discipline approach to spending, we’re also maintaining guidance for cash burn of $40 million to $45 million for the full year 2023. I want to reiterate from the fundamental of Swoop our access and affordability or commercial progress over the last two years, we know that our clinical value proposition with customers is strong. As mentioned in our last earnings call, we have implemented a new pricing for the Swoop system in early 2023. Our guidance, we placed a gradual continued increase in the two fabric selling price in 2023 relative to 2022. I will now turn the call over to Brett Hale, our Chief Administrative Officer and Chief Financial Officer to review our first quarter performance and discuss the financial outlook in greater detail.
Brett Hale: Thank you Maria. Turning to our financial results for the first quarter 2023. Revenue for the quarter ended March 31, 2023 was $2.6 million, compared to $1.5 million in the first quarter of 2022. Gross profit for the first quarter of 2023 was $1.2 million compared to $0.1 million in the first quarter of 2022 and reflecting a 44% gross margin. R&D expenses for the first quarter of 2023 were $5.5 million compared to $8.3 million in the first quarter of 2022. Sales, general and administrative expenses for the first quarter of 2023 were $8.7 million, compared to $15.5 million in the first quarter of 2022. Net loss for the first quarter was $12.2 million, equating to a net loss of $0.17 per share, as compared to a net loss of $23.8 million or a net loss of $0.34 per share for the same period of the prior year.
Our cash burn in the first quarter was $13.4 million, and we ended the first quarter of 2023 with $104 million in cash and cash equivalents. Turning to our 2023 outlook. Based on the progress and current trends of the business, we are maintaining full year expectations for revenue to be in the range of $10 million to $14 million. As Maria mentioned, the Swoop clinical value proposition with customers is strong. The new pricing is now in effect. As we mentioned last quarter, we will not be providing an exact average selling price per unit volume expectation. But our guidance is predicated on the assumption that the Swoop system pricing will continue increasing in 2023 relative to 2022. And based on our position in the market today, we remain confident in that steady price improvement.
To help you with modeling please note we still expect our second half to be stronger than our first half as our new sales team gains experience and continues to drive the pipeline. For the year we now expect gross margins to be approximately 40% to 50% as we began recognizing scale, and average Swoop pricing moves gradually higher. And lastly, we are maintaining expectations for total cash burn of $40 million to $45 million for the full year 2023. This incorporates the expectations for continued investment in R&D and substantially streamline investments in SG&A while maintaining customer facing resources to continue to drive the adoption and growth. In line with this we have allocated a greater relative portion of CapEx spending to R&D in 2023 versus prior year at approximately 40% to 50% of total OpEx dollars.
We will continue to focus on our three strategic pillars and maintain spending discipline as we realize the benefits of our recent right sizing and reorganization. As we shared in March, 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 and afford the business the right runway to execute post reset. At this point, I’d like to turn the call back to Maria for closing comments.
Maria Sainz: Thank you, Brett. I’m proud of the progress that Hyperfine team has made in weeks and months and I am very bullish as to what this thing can deliver. Just a week ago, I attended ASNR seminar in Chicago and was able to witness firsthand the interests that are suited and it’s drawing from clinician as well as the patient’s care conversations that continue to open opportunities to Swoop for conventional MRI if not practical or not available. The opportunity for high profile is increasingly compelling as we develop use cases for automotive, MRI and expand geographically. And I am confident that we would have exciting progress to discuss with you all on call to come. With that I want to thank you for your time and opening up to any questions.
Operator: Thank you. [Operator Instructions] Our first question comes from the line of Larry Biegelsen with Wells Fargo.
Operator: Thank you. And our next question comes from the line of Vijay Kumar with Evercore ISI.
Operator: Thank you. [Operator Instructions] And our next question comes from the line of Neil Chatterji with B. Riley.
Operator: Thank you. I would now like to hand the call back over to Hyperfine CEO, Maria Sainz for any closing remarks.
Maria Sainz : Thank you very much for your interest in Hyperfine. I look forward to updating you again in a quarter. Talk to you soon.
Operator: Thank you. Ladies and gentlemen this concludes today’s conference call. Thank you for participating and you may now disconnect.