10-Q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

_________________

FORM 10-Q

_________________

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2023

or

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES

EXCHANGE ACT OF 1934

For the transition period from ___________to_________

Commission File Number: 001-39949

_________________

Hyperfine, Inc.

(Exact name of registrant as specified in its charter)

_________________

Delaware

 

98-1569027

(State or other jurisdiction of incorporation or organization)

 

(IRS Employer

Identification No.)

 

351 New Whitfield Street

Guilford, Connecticut

 

06437

(Address of principal executive offices)

 

(Zip Code)

 

(866) 796-6767

(Registrant’s telephone number, including area code)

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

 

Trading Symbol(s)

 

Name of each exchange
on which registered

Class A common stock, $0.0001 Par Value Per Share

 

HYPR

 

The Nasdaq Stock Market LLC

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer ☐

Accelerated filer ☐

Non-accelerated filer      ☒

Smaller reporting company

 

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes No

As of November 1, 2023, the registrant had 56,544,314 shares of Class A common stock outstanding and 15,055,288 shares of Class B common stock outstanding.

 


 

TABLE OF CONTENTS

 

 

 

Page

 

Cautionary Statement Regarding Forward-Looking Statements

3

PART I

FINANCIAL INFORMATION

5

Item 1.

Financial Statements

5

 

Condensed Consolidated Balance Sheets (unaudited)

5

 

Condensed Consolidated Statements of Operations and Comprehensive Loss (unaudited)

6

 

Condensed Consolidated Statements of Changes in Stockholders’ Equity (unaudited)

7

 

Condensed Consolidated Statements of Cash Flows (unaudited)

8

 

Notes to Condensed Consolidated Financial Statements (unaudited)

9

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

21

Item 3.

Quantitative and Qualitative Disclosures About Market Risk

31

Item 4.

Controls and Procedures

31

PART II

OTHER INFORMATION

32

Item 1.

Legal Proceedings

32

Item 1A.

Risk Factors

32

Item 2.

Unregistered Sales of Equity Securities, Use of Proceeds, and Issuer Purchases of Equity Securities

32

Item 3.

Defaults Upon Senior Securities

32

Item 4.

Mine Safety Disclosures

32

Item 5.

Other Information

32

Item 6.

Exhibits

33

 

Signatures

35

 

All brand names or trademarks appearing in this report are the property of their respective holders. Use or display by us of other parties’ trademarks, trade dress, or products in this report is not intended to, and does not, imply a relationship with, or endorsements or sponsorship of, us by the trademark or trade dress owners. Unless the context requires otherwise, references in this report to the “Company,” “we,” “us,” and “our” refer to Hyperfine, Inc. and its wholly-owned subsidiaries, including Hyperfine Operations, Inc., or Legacy Hyperfine, and Liminal Sciences, Inc., or Liminal, as the case may be.

2


 

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that relate to future events or our future financial performance regarding, among other things, the plans, strategies and prospects, both business and financial, of the Company. These statements are based on the beliefs and assumptions of our management team. Although we believe that our plans, intentions and expectations reflected in or suggested by these forward-looking statements are reasonable, we cannot assure you that we will achieve or realize these plans, intentions or expectations. Forward-looking statements are inherently subject to risks, uncertainties and assumptions. Generally, statements that are not historical facts, including statements concerning possible or assumed future actions, business strategies, events or results of operations, are forward-looking statements. These statements may be preceded by, followed by or include the words “believes,” “estimates,” “expects,” “projects,” “forecasts,” “may,” “will,” “should,” “seeks,” “plans,” “scheduled,” “anticipates” or “intends” or similar expressions. Forward-looking statements contained in this Quarterly Report on Form 10-Q include, but are not limited to, statements about:

the success, cost and timing of our product development activities;
the commercialization and adoption of our existing products and the success of our future product offerings;
the potential attributes and benefits of our products and services;
our ability to obtain and maintain regulatory approval for our products, and any related restrictions and limitations of any approved product;
our ability to identify, in-license or acquire additional technology;
our ability to maintain our existing licensing, manufacturing and supply agreements;
our ability to compete with other companies currently marketing or engaged in the development of magnetic resonance imaging technologies, many of which have greater financial and marketing resources than us;
the size and growth potential of the markets for our products and services, and the ability of our products and services to serve those markets, either alone or in partnership with others;
the pricing of our products and services and reimbursement for medical procedures conducted using our products and services;
changes in applicable laws or regulations;
our estimates regarding expenses, revenue, capital requirements and needs for additional financing;
our ability to raise financing in the future;
our financial performance;
our success in retaining or recruiting, or changes in, our officers, key employees or directors;
intense competition and competitive pressures from other companies in the industry in which we operate;
anticipated benefits of the Business Combination (as defined below);
market conditions and global and economic factors, such as inflation or the conflicts in Ukraine and Israel;

3


 

our intellectual property rights; and
the effect of legal, tax and regulatory changes.

These and other risks and uncertainties are described in greater detail under the caption “Risk Factors” in Item 1A of Part I of our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, in Item 1A of Part II of this Quarterly Report on Form 10-Q, and in other filings that we make with the Securities and Exchange Commission (the “SEC”). The risks described under the heading “Risk Factors” are not exhaustive. New risk factors emerge from time to time, and it is not possible to predict all such risk factors, nor can we assess the impact of all such risk factors on our business or the extent to which any factor or combination of factors may cause actual results to differ materially from those contained in any forward-looking statements. Forward-looking statements are not guarantees of performance. You should not put undue reliance on these statements, which speak only as of the date hereof. All forward-looking statements attributable to the Company or persons acting on its behalf are expressly qualified in their entirety by the foregoing cautionary statements. We undertake no obligation to update or revise publicly any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

4


 

PART I — FINANCIAL INFORMATION

Item 1. Financial Statements

HYPERFINE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited)

(in thousands, except share and per share amounts)

 

 

September 30,
2023

 

 

December 31,
2022

 

ASSETS

 

 

 

 

 

 

CURRENT ASSETS:

 

 

 

 

 

 

Cash and cash equivalents

 

$

85,424

 

 

$

117,472

 

Restricted cash

 

 

548

 

 

 

771

 

Accounts receivable, less allowance of $241 and $180 as of September 30, 2023 and December 31, 2022, respectively

 

 

2,437

 

 

 

2,103

 

Unbilled receivables

 

 

682

 

 

 

454

 

Inventory

 

 

6,940

 

 

 

4,622

 

Prepaid expenses and other current assets

 

 

2,184

 

 

 

3,194

 

Due from related parties

 

 

 

 

 

48

 

Total current assets

 

 

98,215

 

 

 

128,664

 

Property and equipment, net

 

 

3,158

 

 

 

3,248

 

Other long term assets

 

 

1,691

 

 

 

2,139

 

Total assets

 

$

103,064

 

 

$

134,051

 

LIABILITIES AND STOCKHOLDERS’ EQUITY

 

 

 

 

 

 

CURRENT LIABILITIES:

 

 

 

 

 

 

Accounts payable

 

$

908

 

 

$

678

 

Deferred grant funding

 

 

548

 

 

 

771

 

Deferred revenue

 

 

1,454

 

 

 

1,378

 

Due to related parties

 

 

48

 

 

 

 

Accrued expenses and other current liabilities

 

 

5,253

 

 

 

5,976

 

Total current liabilities

 

 

8,211

 

 

 

8,803

 

Long term deferred revenue

 

 

1,086

 

 

 

1,526

 

Total liabilities

 

 

9,297

 

 

 

10,329

 

COMMITMENTS AND CONTINGENCIES (NOTE 12)

 

 

 

 

 

 

STOCKHOLDERS' EQUITY

 

 

 

 

 

 

Class A Common stock, $.0001 par value; 600,000,000 shares authorized; 56,537,946  and 55,622,488 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

5

 

 

 

5

 

Class B Common stock, $.0001 par value; 27,000,000 shares authorized; 15,055,288 shares issued and outstanding at September 30, 2023 and December 31, 2022, respectively

 

 

2

 

 

 

2

 

Additional paid-in capital

 

 

336,798

 

 

 

333,199

 

Accumulated deficit

 

 

(243,038

)

 

 

(209,484

)

Total stockholders' equity

 

 

93,767

 

 

 

123,722

 

TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY

 

$

103,064

 

 

$

134,051

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

5


 

HYPERFINE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS (Unaudited)

(in thousands, except share and per share amounts)

 

 

Three Months Ended
September 30,

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

 

2023

 

 

2022

 

Sales

 

 

 

 

 

 

 

 

 

 

 

 

Device

 

$

1,728

 

 

$

1,945

 

 

$

6,670

 

 

$

4,305

 

Service

 

 

602

 

 

 

403

 

 

 

1,676

 

 

 

1,085

 

Total sales

 

 

2,330

 

 

 

2,348

 

 

 

8,346

 

 

 

5,390

 

Cost of sales

 

 

 

 

 

 

 

 

 

 

 

 

Device

 

 

835

 

 

 

1,215

 

 

 

3,321

 

 

 

3,511

 

Service

 

 

371

 

 

 

445

 

 

 

1,302

 

 

 

1,272

 

Total cost of sales

 

 

1,206

 

 

 

1,660

 

 

 

4,623

 

 

 

4,783

 

Gross margin

 

 

1,124

 

 

 

688

 

 

 

3,723

 

 

 

607

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

Research and development

 

 

5,739

 

 

 

7,338

 

 

 

16,531

 

 

 

22,937

 

General and administrative

 

 

4,615

 

 

 

3,198

 

 

 

16,103

 

 

 

26,570

 

Sales and marketing

 

 

2,529

 

 

 

3,434

 

 

 

7,575

 

 

 

11,345

 

Total operating expenses

 

 

12,883

 

 

 

13,970

 

 

 

40,209

 

 

 

60,852

 

Loss from operations

 

 

(11,759

)

 

 

(13,282

)

 

 

(36,486

)

 

 

(60,245

)

Interest income

 

 

1,021

 

 

 

170

 

 

 

2,920

 

 

 

203

 

Other income (expense), net

 

 

(19

)

 

 

(59

)

 

 

12

 

 

 

(63

)

Loss before provision for income taxes

 

 

(10,757

)

 

 

(13,171

)

 

 

(33,554

)

 

 

(60,105

)

Provision for income taxes

 

 

 

 

 

 

 

 

 

 

 

 

Net loss and comprehensive loss

 

$

(10,757

)

 

$

(13,171

)

 

$

(33,554

)

 

$

(60,105

)

Net loss per common share attributable to common stockholders, basic and diluted

 

$

(0.15

)

 

$

(0.19

)

 

$

(0.47

)

 

$

(0.85

)

Weighted-average shares used to compute net loss per share attributable to common stockholders, basic and diluted

 

 

71,464,315

 

 

 

70,509,639

 

 

 

71,178,769

 

 

 

70,398,103

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

 

6


 

HYPERFINE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (Unaudited)

(in thousands, except share amounts)

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

Additional

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Equity

 

Balance, December 31, 2022

 

 

55,622,488

 

 

$

5

 

 

 

15,055,288

 

 

$

2

 

 

$

333,199

 

 

$

(209,484

)

 

$

123,722

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(12,160

)

 

 

(12,160

)

Issuance of restricted stock

 

 

324,296

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

54,211

 

 

 

 

 

 

 

 

 

 

 

 

49

 

 

 

 

 

 

49

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,126

 

 

 

 

 

 

1,126

 

Balance, March 31, 2023

 

 

56,000,995

 

 

 

5

 

 

 

15,055,288

 

 

 

2

 

 

 

334,374

 

 

 

(221,644

)

 

 

112,737

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,637

)

 

 

(10,637

)

Issuance of restricted stock

 

 

219,887

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

63,656

 

 

 

 

 

 

 

 

 

 

 

 

58

 

 

 

 

 

 

58

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,133

 

 

 

 

 

 

1,133

 

Balance, June 30, 2023

 

 

56,284,538

 

 

$

5

 

 

 

15,055,288

 

 

$

2

 

 

$

335,565

 

 

$

(232,281

)

 

$

103,291

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(10,757

)

 

 

(10,757

)

Issuance of restricted stock

 

 

210,488

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

42,920

 

 

 

 

 

 

 

 

 

 

 

 

39

 

 

 

 

 

 

39

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

1,194

 

 

 

 

 

 

1,194

 

Balance, September 30, 2023

 

 

56,537,946

 

 

$

5

 

 

 

15,055,288

 

 

$

2

 

 

$

336,798

 

 

$

(243,038

)

 

$

93,767

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Class A Common Stock

 

 

Class B Common Stock

 

 

Additional

 

 

Accumulated

 

 

Total
Stockholders'

 

 

 

Shares

 

 

Amount

 

 

Shares

 

 

Amount

 

 

Paid-in Capital

 

 

Deficit

 

 

Equity

 

Balance, December 31, 2021

 

 

55,277,061

 

 

$

5

 

 

 

15,055,288

 

 

$

2

 

 

$

322,540

 

 

$

(136,320

)

 

$

186,227

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,775

)

 

 

(23,775

)

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,111

 

 

 

 

 

 

4,111

 

Balance, March 31, 2022

 

 

55,277,061

 

 

 

5

 

 

 

15,055,288

 

 

 

2

 

 

 

326,651

 

 

 

(160,095

)

 

 

166,563

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,159

)

 

 

(23,159

)

Issuance of restricted stock

 

 

19,220

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Exercise of stock options

 

 

16,375

 

 

 

 

 

 

 

 

 

 

 

 

2

 

 

 

 

 

 

2

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

7,102

 

 

 

 

 

 

7,102

 

Balance, June 30, 2022

 

 

55,312,656

 

 

$

5

 

 

 

15,055,288

 

 

$

2

 

 

$

333,755

 

 

$

(183,254

)

 

$

150,508

 

Net loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(13,171

)

 

 

(13,171

)

Issuance of restricted stock

 

 

202,876

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Stock-based compensation expense

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(2,354

)

 

 

 

 

 

(2,354

)

Balance, September 30, 2022

 

 

55,515,532

 

 

$

5

 

 

 

15,055,288

 

 

$

2

 

 

$

331,401

 

 

$

(196,425

)

 

$

134,983

 

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

7


 

HYPERFINE, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited)

(in thousands)

 

 

Nine Months Ended
September 30,

 

 

 

2023

 

 

2022

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(33,554

)

 

$

(60,105

)

Adjustments to reconcile net loss to net cash used in operating activities:

 

 

 

 

 

 

Depreciation

 

 

791

 

 

 

754

 

Stock-based compensation expense

 

 

3,453

 

 

 

8,859

 

Loss on disposal of property and equipment, net

 

 

48

 

 

 

 

Payments received on net investment in lease

 

 

25

 

 

 

6

 

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable, net

 

 

(334

)

 

 

(2,149

)

Unbilled receivables

 

 

(228

)

 

 

(1,384

)

Inventory

 

 

(2,494

)

 

 

308

 

Prepaid expenses and other current assets

 

 

1,010

 

 

 

(439

)

Due from related parties

 

 

48

 

 

 

14

 

Prepaid inventory

 

 

281

 

 

 

 

Other long term assets

 

 

142

 

 

 

62

 

Accounts payable

 

 

229

 

 

 

(1,522

)

Deferred grant funding

 

 

(196

)

 

 

(1,403

)

Deferred revenue

 

 

(364

)

 

 

1,098

 

Due to related parties

 

 

48

 

 

 

(1,920

)

Accrued expenses and other current liabilities

 

 

(776

)

 

 

827

 

Net cash used in operating activities

 

 

(31,871

)

 

 

(56,994

)

Cash flows from investing activities:

 

 

 

 

 

 

Purchases of property and equipment

 

 

(546

)

 

 

(427

)

Net cash used in investing activities

 

 

(546

)

 

 

(427

)

Cash flows from financing activities:

 

 

 

 

 

 

Proceeds from exercise of stock options

 

 

146

 

 

 

2

 

Net cash provided by financing activities

 

 

146

 

 

 

2

 

Net decrease in cash and cash equivalents and restricted cash

 

 

(32,271

)

 

 

(57,419

)

Cash, cash equivalents and restricted cash, beginning of period

 

 

118,243

 

 

 

191,160

 

Cash, cash equivalents and restricted cash, end of period

 

 

85,972

 

 

 

133,741

 

Reconciliation of cash, cash equivalents, and restricted cash reported in the balance sheets

 

 

 

 

 

 

Cash and cash equivalents

 

 

85,424

 

 

 

132,482

 

Restricted cash

 

 

548

 

 

 

1,259

 

Total cash, cash equivalents and restricted cash

 

$

85,972

 

 

$

133,741

 

Supplemental disclosure of noncash information:

 

 

 

 

 

 

Noncash acquisition of fixed assets

 

$

54

 

 

$

 

Write-off of notes receivable

 

$

 

 

$

90

 

The accompanying notes are an integral part of these condensed consolidated financial statements.

 

8


HYPERFINE, INC. AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited)

(all amounts are in thousands, except share and per share amounts)

 

1. ORGANIZATION AND DESCRIPTION OF BUSINESS

Hyperfine, Inc. (together with its subsidiaries, as applicable, “Hyperfine” or the “Company”), formerly known as HealthCor Catalio Acquisition Corp. (“HealthCor”), was incorporated as a Cayman Islands exempted company on November 18, 2020. The Company’s legal name became Hyperfine, Inc. in connection with the closing (the “Closing”) of the business combination with HealthCor (the “Business Combination”) on December 22, 2021 (the “Closing Date”). In connection with the Closing, Hyperfine, Inc., a Delaware corporation (“Legacy Hyperfine”), and Liminal Sciences, Inc., a Delaware corporation (“Liminal”), merged with and into separate wholly owned subsidiaries of HealthCor and became wholly-owned subsidiaries of the Company (the “Mergers”), and changed their names to Hyperfine Operations, Inc. and Liminal Operations, Inc., respectively. Liminal subsequently changed its name to Liminal Sciences, Inc.

 

The Company is an innovative health technology business with a mission to revolutionize patient care globally through transformational, accessible, clinically relevant ultra-low-field (“ULF”) magnetic resonance (“MR”) diagnostic brain imaging and data solutions. The Company's Swoop® Portable MR Imaging® System (“Swoop® system”) produces high-quality images at a lower magnetic field strength than conventional magnetic resonance imaging (“MRI”) scanners. The Swoop® system is a portable, ULF magnetic resonance imaging device for producing images that display the internal structures of the head where full diagnostic examination is not clinically practical. When interpreted by a trained physician, these images provide information that can be useful in determining a diagnosis. Healthcare professionals can use the Swoop® system to make effective clinical diagnoses and decisions in various care settings where MRI devices have previously been inaccessible. The easy-to-use interface and portable design of the Company's Swoop® system make it accessible anywhere in a hospital, clinic, or patient care site and it does not require any special facilities accommodations to operate safely for patients or the clinical team. Unlike X-ray computed tomography (“CT”) or positron emission tomography (“PET”), ULF MR does not expose patients to harmful ionizing radiation. The Company's Swoop® system received initial 510(k) clearance for brain imaging from the U.S. Food and Drug Administration (“FDA”) in 2020. In F