Hyperfine, Inc. Q4 FY2024 earnings call

• 2024 was a year of significant progress with strategic milestones achieved, setting the stage for 2025 growth.
• Plan to launch two subsystem software releases in 2025 (10th and 11th generation) with step-function image quality improvement, expected to have clinical utility and drive mainstream adoption.
• Expansion vectors include building an office business (launching in neurology offices by mid-2025, with pilot programs and participation in meetings to raise awareness), expanding to multiple sites inside the hospital (including emergency department and stroke triage), and driving adoption in international markets (13 distributors in place, CE and UKCA approvals, anticipation of India approval in H2 2025).
• Partnership with NVIDIA related to future technology, though details limited at this stage.

For the quarter ended December 31, 2024, revenue was $2.3 million compared to $2.7 million in Q4 2023. Sold 9 units in Q4 2024. Full year 2024 revenue was $12.9 million, up 17% from $11.0 million in 2023. Gross profit in Q4 2024 was $0.8 million vs $1.0 million in Q4 2023. Full year 2024 gross profit was $5.9 million, up 24% from 2023, with a full year gross margin of 46%. R&D expenses in Q4 2024 were $5.1 million vs $6.0 million in Q4 2023. Full year 2024 R&D was $22.5 million, flat. SG&A in Q4 2024 was $6.5 million vs $6.7 million in Q4 2023. Full year 2024 SG&A was $26.6 million, down 12%. Net loss in Q4 2024 was $10.4 million vs $10.7 million in Q4 2023. Full year 2024 net loss was $40.7 million vs $44.2 million in 2023. Net cash burn in Q4 2024 was $8.2 million. Full year 2024 net cash burn was $38.4 million, down 9% from 2023.

• First half 2025 revenue expected to be approximately $6 million.
• Full year 2025 revenue growth expected in the range of 20% to 30% over 2024.
• Gross margin range for 2025 is 47% to 52%, with second half gross margins expected to exceed the first half.
• Total cash burn for 2025 expected in the range of $25 million to $27 million, representing a 32% decline at the midpoint.

• Tariffs could materially impact the business, but guidance assumes no material impact currently; will continue to monitor.
• Protracted processes with U.S. hospitals for capital allocation and deal timelines.
• Uncertainty related to funding associated with deals supported by grant funds.

Q: This is Simran on for Larry. Thanks for taking the questions. And I want to say first off, congratulations on the announcement this morning, the partnership with NVIDIA. Any additional details that you can share regarding what that collaboration will entail? From the press release, it did sound like there could be some R&D products in the works. So, if that is the case, what are the timelines there? And then as well as, if there are any financial implications associated with the partnership?

A: Simran, hi. Thanks for the question. It is an initiative related to our future technology, and there's really nothing further that we're going to be commenting at this stage. So, we're going to leave it at what was out this morning.

Q: And maybe just turning to 2025, how are you thinking about capital trends? In the year particularly, given there does seem to be some concerns around potential recessionary headwinds? And are there any offsets that we should be considering in the year? I know office -- the in-office expansion is one.

A: Sure. So, I think -- as we think our business, we really think about the office separate from our hospital business. And I think Brett was right in commenting that we have seen more protracted and complexity in the processes for hospitals to go through capital allocation and finalizing the purchase of something in the neighborhood of our $400,000 to $500,000. So, I would say there is a little bit of tempered enthusiasm about how quickly hospitals are going to be moving through the capital process. I want to say that although I would say that our processes are now longer than I have even commented in the past in the hospital setting. We also have a lot of things in the pipeline that will be moving through throughout the year. I think there is a difference in the office setting. There is a very reduced number of decision makers and there is really more of a business case built up to whether this makes sense or not. So, it was critically important for us to be able to have the accreditation from a CMS accredited body so that we can run sort of a little bit of a pro forma as to what this could look like for them in the office. And I think it is less tied to capital allocation. It is more tied to does this make financial and clinical sense for the practice I'm running. I think we commented in prepared remarks that we're really making a strong push to talk economic benefit coupled with clinical benefit in our selling process for both the hospital environment and the clinic environment because we definitely understand that people want to make sure that there is ultimately sort of an ROI thinking around buying any of these devices. The one area where I would say there is a little bit more maybe pause at this point is any kind of systems that were going to be funded with grant funding. And that is a number of our systems sometimes have been funded through grant funding. That has more uncertainty as of the last 10 weeks or so.

Q: I guess to start, it's March 17th, first half guidance is $6 million. I was wondering if you can provide any high-level color on 1Q versus 2Q split?

A: Brett Hale: Yes. So, I think, when we gave kind of more specific guidance for the first half of the year, given where we are, we definitely see the second half of the year being more catalyst-rich, all the growth drivers and vectors coming into play, ranging from the market expansions, the office international, as well as the timing of clearances and technology releases that we've talked about being kind of at the core to business acceleration. So, that's why we came up with the first half guidance and then we've pointed to what we believe our expectations are for the full year. So, we do have a tail of two half years where we see significant growth in the second half off of the base of the first half. Maria Sainz: But I don't think we're going to get down to the quarter split to your very specific point, Young.

Q: I guess just on the second half ramp, pretty big number even though you have a lot of catalysts and new initiatives coming to play, but I think you did replace like half of your underperforming reps, who are sort of the new reps that you hire? How experienced are they? To your level of confidence that, those guys can get up and running to the second half.

A: Yes, I'll be happy to take that. So earlier in the year, in 2024, we started seeing pretty significant separation in performance across territories, and we started seeing what good looks like, and there were some territories that were definitely falling behind. We took an interim step which was around combining leadership that we had some regional leaders and we thought everyone under one leader probably would make more sense. We still observed that very uneven performance, and we decided to take action at the end of the year. The reason for that was that we wanted to make sure that we had the new group of people ready to go when we're introducing the new upgrades in the image quality, the software, and the technology. So, one of the things we did was hire them with a number of skills that we thought were really important around understanding how to build new markets, also some degree of understanding of the brain space. So, they don't all come from the same place. They came from different successful sales assignments. I have to say that all of them I think were employed before, so we were looking for people that were really just jumping on the first thing that they had. But what I'm proudest of is the fact that we put them through a very rigorous training program at the crack of the year when they joined us, and we've been incredibly impressed with what we have seen. I have seen some of that firsthand as they have evolved through their training. They've shadowed some of the experienced people. We have our implementation leader and our commercial leader also spending a lot of time with them. They have been at other people's accounts. Some more experienced people have been with them at their accounts, and we think that we have a team that will be ready to really do the good things that we're expecting when we have also the new releases here and the image quality that is going to be highly differentiated from anything we've had before.