Executive Summary / Key Takeaways

• Pioneering Epigenetic Diagnostics: Cardio Diagnostics (CDIO) is an early-stage biotechnology company leveraging a proprietary AI-driven Integrated Genetic-Epigenetic Engine to develop novel, actionable tests for cardiovascular disease (CVD) risk assessment and management, aiming to shift care from reactive to proactive.
• Differentiated Technology in a Vast Market: CDIO's core technology offers unique insights into reversible epigenetic changes, providing a distinct competitive advantage in the massive and growing CVD market, with products like EpiGen CHD and PrecisionCHD targeting precision prevention.
• Evolving Commercialization & Operational Progress: Despite a significant revenue decline in the first half of 2025 due to a concluded initiative, the company is actively onboarding new providers, has secured preliminary Medicare gapfill pricing, and is setting up its internal lab, signaling a re-vamped, broader go-to-market strategy.
• High Burn Rate & Persistent Capital Needs: CDIO remains deeply unprofitable, reporting a $1.68 million net loss in Q2 2025, and relies heavily on equity financing, including a recent $14.78 million net from an At-the-Market offering, to fund operations, growth, and upcoming lab expenses.
• Execution and Funding are Paramount: The investment thesis hinges on CDIO's ability to scale commercial adoption, secure full reimbursement, and manage its cash burn effectively, while successfully executing its product pipeline and navigating competitive pressures from larger, more established diagnostic players.

The Epigenetic Revolution in Cardiovascular Health

Cardio Diagnostics Holdings, Inc. (CDIO) stands at the forefront of a paradigm shift in cardiovascular disease (CVD) management, aiming to transform care from a reactive response to a proactive, precision-driven approach. With nearly one in two Americans projected to develop some form of CVD by 2035, the market for early detection and personalized prevention is immense and critically underserved. CDIO's core strength lies in its patent-pending, Artificial Intelligence (AI)-driven DNA biomarker testing technology, specifically its "AI-driven Integrated Genetic-Epigenetic Engine." This innovative platform leverages epigenetics, the study of how environmental and behavioral factors can alter gene expression without changing the underlying DNA sequence. Crucially, these epigenetic changes are reversible, offering actionable insights for clinicians to personalize patient management and potentially improve chronic care outcomes.

The company's product portfolio is built upon this foundational technology. EpiGen CHD, launched in 2021, provides a three-year symptomatic Coronary Heart Disease (CHD) risk assessment. Following this, PrecisionCHD, an integrated epigenetic-genetic clinical blood test for CHD detection, was introduced in March 2023. These tests are complemented by the Actionable Clinical Intelligence (ACI) platform, which translates complex epigenetic and genetic data into practical insights for healthcare providers. Further expanding its reach, CDIO launched CardioInnovate360 in May 2023, a research-use-only solution for biopharmaceutical discovery, and HeartRisk in February 2024, a Software-as-a-Service (SaaS) cardiovascular disease risk intelligence platform. The tangible benefit of this technology is its potential to offer superior predictive accuracy in early detection, enabling more targeted interventions and fostering stronger customer loyalty through repeat testing. This differentiation allows CDIO to pursue improved pricing power in its niche markets.

In the competitive landscape, CDIO operates as an emerging, niche player against formidable, diversified giants like Illumina (ILMN), Quest Diagnostics (DGX), Abbott Laboratories (ABT), and Thermo Fisher Scientific (TMO). While these larger entities possess vast scale, extensive R&D budgets, and established market presence, CDIO's competitive moat is carved out by its specialized focus on cardiovascular-specific epigenetics. For instance, compared to Illumina's broader genomic sequencing platforms, CDIO offers a more targeted, streamlined solution for clinical use, potentially easier to integrate into routine healthcare workflows. Against Quest Diagnostics, known for its volume-driven diagnostic services, CDIO's epigenetic tests promise greater specificity in risk assessment. Similarly, CDIO's non-invasive, software-driven insights contrast with Abbott's hardware-focused cardiovascular devices, and its focused epigenetic analysis offers a distinct advantage over Thermo Fisher's broader life sciences tools. However, CDIO's smaller scale presents vulnerabilities, including potentially higher customer acquisition costs and supply chain dependencies, which could impact margins when competing against the operational efficiencies of its larger rivals.

CDIO's journey began in 2017 as Legacy Cardio, evolving from an Iowa LLC to a Delaware C-Corp, driven by the vision of its University of Iowa founders. The initial commercialization of EpiGen CHD during the COVID-19 pandemic saw minimal volumes through telemedicine and small practices. This led to a strategic re-vamp, broadening the go-to-market approach to include larger provider organizations, employers, payors, and life insurers. A significant milestone was the October 2022 business combination with Mana Capital Acquisition Corp., which brought the company public. This strategic evolution continued with the hiring of more seasoned sales personnel in late 2024 to accelerate partnerships and sales cycles, which management acknowledges can be lengthy, sometimes extending up to 14 months. A notable regulatory tailwind emerged in March 2025 when a federal district court vacated an FDA rule that would have subjected laboratory-developed tests (LDTs), including CDIO's products, to more stringent medical device regulations, removing an immediate compliance burden.

Performance, Liquidity, and Strategic Trajectory

Recent financial performance reflects CDIO's early-stage, high-investment profile. For the three months ended June 30, 2025, the company reported revenue of $7,475, a modest decrease from $7,870 in the prior-year quarter. The six-month period ended June 30, 2025, saw a more significant revenue decline to $8,415 from $23,798 in the first half of 2024. This half-year decrease was primarily attributed to the conclusion of a "Family Medicine Specialists Heart Attack Prevention testing initiative" in Q1 2025. However, management noted that "Additional providers have been and are continuing to be onboarded as noted by Q2 revenue," suggesting a potential stabilization or re-acceleration in commercial traction.

The company's net loss for Q2 2025 increased to $1.68 million, compared to $1.29 million in Q2 2024. This was primarily driven by higher Selling, General and Administrative (SG&A) expenses, including increased payroll-related costs due to more personnel, higher research and development expenses, and increased sales and marketing efforts. For the six months ended June 30, 2025, the net loss was $3.32 million, an improvement from $5.45 million in the prior-year period. This reduction in loss was largely due to significantly lower stock-based compensation expenses in 2025 compared to 2024, partially offset by the aforementioned increases in payroll and other operational costs. The company's TTM gross profit margin of -356.98% and net profit margin of -32040.48% underscore its current unprofitability and substantial investment phase.

Liquidity remains a critical focus for CDIO. As of June 30, 2025, cash and cash equivalents stood at $7.97 million, a slight increase from $7.83 million at December 31, 2024. Operating activities consumed $2.97 million in cash during the first half of 2025, an increase from $2.44 million in the same period last year, reflecting the ongoing operational burn.

The company continues to rely on equity financing to fund its operations and growth. As of August 14, 2025, CDIO had raised $14.78 million net of offering costs through its At-the-Market (ATM) Sales Agreement, selling 1.05 million shares. A private placement in February 2024 also generated $1.00 million in gross proceeds. Management explicitly states an "ongoing need to raise additional cash from outside sources to fund our operations and grow our business," acknowledging the challenge of balancing capital raised with potential dilution, particularly given recent stock price volatility. The company anticipates its current liquidity will be sufficient for the next 12 months, but additional equity or debt financing will be required beyond that period to sustain operations and growth.

Operationally, CDIO is making strides. In Q1 and Q2 2025, the company focused on driving adoption among providers, channel partners, and employers. Key achievements include receiving preliminary gapfill pricing from the Centers for Medicare and Medicaid for its EpiGen CHD and PrecisionCHD tests, onboarding a new employer client, and advancing the setup of its internal laboratory facility. Management expects an increase in payroll and facility costs in the second half of 2025 as the internal lab becomes operational. The company's ongoing strategy includes developing additional products for stroke, congestive heart failure, and diabetes, expanding its clinical and health economics evidence portfolio, leveraging newly awarded CPT PLA codes for reimbursement, and exploring international market opportunities.

Risks and Outlook

While CDIO's technological differentiation and market opportunity are compelling, significant risks and challenges persist. The company faces inherently long sales and partnership cycles, which can extend up to 14 months, delaying revenue recognition and exacerbating cash burn. The ability to raise additional capital is paramount, and failure to do so could severely harm the business, especially given the acknowledged dilution risk and the unlikelihood of warrant exercises at current stock price levels. Achieving and sustaining profitability remains a distant goal, with no assurance of success.

Legal and contractual disputes also present potential distractions and liabilities. While a claim from Northland Securities has reportedly been dropped, disputes with Boustead Securities and The Benchmark Company, LLC regarding placement agent fees and rights of first refusal, respectively, are ongoing. Additionally, a securities law firm is pursuing a mootness fee related to alleged deficiencies in a past S-4 Registration Statement, which the company vigorously denies. These claims, though currently not deemed to have a material adverse impact, could consume significant management time and resources. Furthermore, the exclusive license agreement with the University of Iowa Research Foundation, foundational to CDIO's technology, could terminate upon material breach, such as failure to pay license fees. The company also holds a substantial portion of its cash, approximately $7.60 million as of June 30, 2025, in excess of FDIC insurance limits, exposing it to credit risk.

Looking ahead, CDIO's outlook is defined by its strategic initiatives to expand its product portfolio, build clinical evidence, and broaden market adoption. The successful operationalization of its internal laboratory in the second half of 2025 is a key milestone, though it will entail increased costs. The company's reliance on the ATM offering for the remainder of 2025, coupled with a forthcoming shareholder vote on future equity issuance, highlights the continued need for external funding. The long-term investment thesis hinges on CDIO's ability to translate its innovative epigenetic technology into widespread clinical adoption and sustainable revenue streams, ultimately achieving the scale and reimbursement necessary to transition to profitability.

Conclusion

Cardio Diagnostics (CDIO) presents a high-potential, high-risk investment opportunity rooted in its pioneering AI-driven epigenetic and genetic testing technology for cardiovascular disease. The company's unique approach to identifying reversible biomarkers offers a compelling value proposition in a vast and growing market, positioning it as an innovator against larger, more traditional diagnostic players. While recent financial performance reflects the challenges of an early-stage biotechnology company, including significant losses and a revenue dip tied to specific initiatives, operational progress in Medicare reimbursement, new partnerships, and internal lab development signal a determined push towards commercialization.

The path to success for CDIO is critically dependent on its ability to execute its ambitious growth strategy, secure consistent and substantial funding without excessive dilution, and navigate the inherent complexities of the healthcare and regulatory landscapes. Investors must weigh the transformative potential of its technology and the immense market opportunity against the realities of a high cash burn, long sales cycles, and the ongoing need for capital. CDIO's future hinges on its capacity to convert its technological leadership into a robust, revenue-generating enterprise, making it a compelling, albeit speculative, play for those believing in the power of precision medicine to redefine cardiovascular care.