Executive Summary / Key Takeaways

• Reimbursement Catalyst: HSDT is on the cusp of a significant revenue inflection point, transitioning from a cash-pay model to broad reimbursement for its Portable Neuromodulation Stimulator (PoNS) therapy, with Medicare rates effective October 1, 2024, and recent commercial payer approvals signaling market acceptance.
• Stroke Market Expansion: The company's stroke registrational program has achieved positive outcomes, paving the way for FDA submission in Q3 2025 and potential authorization by late 2025 or early 2026, opening access to a substantially larger patient population.
• Differentiated Technology & Value: PoNS offers a unique, non-invasive neuromodulation approach for gait and balance deficits, demonstrating superior clinical outcomes, such as a 28% reduction in fall risk for stroke patients compared to 1-3% for physical therapy alone, and significant health economic benefits.
• Liquidity & Operational Leverage: Recent financing activities have extended the cash runway into Q2 2026, while a highly leverageable commercial model (OEM, telehealth, online PT training) is designed to scale efficiently with anticipated revenue growth.
• Overcoming Challenges: HSDT has successfully addressed Nasdaq listing compliance issues through strategic financing and reverse stock splits, but faces ongoing capital needs for clinical trials and the inherent risks of commercialization in a competitive medical device landscape.

The Dawn of a New Era for Helius Medical Technologies

Helius Medical Technologies, Inc. (HSDT) stands at a pivotal juncture, poised to transform its commercial trajectory through a strategic pivot from a niche cash-pay model to a reimbursement-driven growth engine. As a neurotechnology company, HSDT is dedicated to neurological wellness, focusing on non-implantable technologies to alleviate symptoms of neurological disease or trauma. Its flagship product, the Portable Neuromodulation Stimulator (PoNS), represents a differentiated approach in a competitive landscape dominated by larger medical device players.

The PoNS device, comprising a controller and a mouthpiece, delivers mild electrical stimulation to the surface of the tongue. This non-invasive neuromodulation, coupled with supervised therapeutic exercise (PoNS Therapy), aims to improve gait and chronic balance deficits. This approach contrasts sharply with the often-invasive solutions offered by industry giants like Medtronic (MDT), Abbott Laboratories (ABT), and Boston Scientific (BSX), which typically involve implanted devices for chronic pain or movement disorders. PoNS's non-invasive nature and portability offer a unique value proposition, potentially enhancing patient comfort and accessibility, thereby carving out a distinct niche in neurological care.

HSDT's technology has demonstrated tangible, quantifiable benefits. For instance, in stroke patients, PoNS Therapy has been shown to reduce the risk of falling by a remarkable 28%, significantly outperforming the 1% to 3% reduction typically achieved with physical therapy alone, which is the current standard of care. This clinical superiority translates into substantial health economic benefits; with the average treatment cost per fall estimated at $64,500, the PoNS system's list price of $25,700 presents a compelling cost-saving argument for healthcare systems. The company's existing intellectual property and data warehouse also form a solid foundation for future innovation, as evidenced by the establishment of Revelation Neuro, Inc. in March 2025, a wholly-owned subsidiary focused on developing non-implantable, AI-powered brain-computer interface (BCI) technology for personalized neurorehabilitation. This initiative highlights HSDT's commitment to leveraging advanced technology to maintain a competitive edge.

From Development to Commercialization: A Strategic Evolution

HSDT's journey began with PoNS's commercial availability in Canada in March 2019, authorized for multiple indications including chronic balance deficit due to mild-to-moderate traumatic brain injury (mmTBI), gait deficit due to multiple sclerosis (MS), and gait deficit due to stroke. This early market entry provided crucial real-world evidence. In the U.S., PoNS gained marketing clearance for gait deficit due to mild-to-moderate MS symptoms, with commercial sales commencing in April 2022. To build a patient registry and gather health economic data, HSDT launched its Patient Therapy Access Program (PTAP) in June 2022, which subsidized the device cost. However, the program's expiration in June 2023 led to a sharp decline in U.S. sales as prices reverted to a cash-pay basis, underscoring the critical need for widespread reimbursement.

The company's strategic response has been a relentless pursuit of reimbursement. In September 2023, PoNS received UPC numbers, followed by the assignment of unique HCPCS Level II codes for the controller and mouthpiece by CMS, effective April 1, 2024. These codes were a "game changer," enabling HSDT to negotiate with third-party payers and submit claims. Despite initial preliminary Medicare payment determinations in May 2024 that mapped PoNS to lower-priced neuromuscular peripheral stimulation devices (controller at $1,206.53, mouthpiece at $3,075.53), HSDT actively advocated for higher, gap-filled rates based on market pricing. Final Medicare rates, effective January 1, 2025, were set at $532.27 for the controller and $2,963.30 for the mouthpiece.

Beyond Medicare, HSDT has secured initial commercial payer reimbursement, with Anthem Blue Cross Blue Shield approving its first claim in March 2025, followed by United Healthcare (UNH) (May 2025), Aetna Healthcare (CVS) (June 2025), and additional claims from Anthem Multiplan and CignaHealth (CI) (June 2025). These out-of-network negotiated prices, typically ranging from $18,350 to $19,161, represent a crucial step towards broader market access. Concurrently, HSDT partnered with Lovell Government Services in Q1 2024 to access federal healthcare systems. PoNS was included on VA and DoD contracts by July 2024, with pricing ranging from $23,724.50 to $26,228.09 for the device and mouthpiece. The first VA system sale occurred in December 2024, with a second in July 2025, and HSDT is building a sales representative organization to penetrate VA facilities across 13 states and Puerto Rico. This multi-pronged reimbursement strategy is designed to unlock significant demand, as management notes a "very strong list of built-up demand regarding Medicare" patients awaiting coverage.

Financial Performance: Awaiting the Reimbursement Inflection

HSDT's recent financial performance reflects the challenges of its transition period, with revenues currently "muted" due to the high cash-pay price and the ongoing efforts to secure broad reimbursement. For the three months ended June 30, 2025, total revenue was $43,000, a significant decrease from $182,000 in the prior-year period. Similarly, for the six months ended June 30, 2025, total revenue was $92,000, down from $317,000 in the same period of 2024. This decline was primarily attributed to the termination of temporary cash pay pricing in the U.S. and a material breach of a distribution agreement in Canada.

The revenue contraction led to a gross loss of $53,000 for Q2 2025 and $125,000 for H1 2025, contrasting with gross profits in the prior year. Operating losses remained substantial, at $3.32 million for Q2 2025 and $7.33 million for H1 2025, contributing to a net loss of $9.83 million and $13.67 million, respectively, for these periods. As of June 30, 2025, the company reported cash and cash equivalents of $6.10 million and an accumulated deficit of $185.40 million. These figures underscore the "substantial doubt about the Company's ability to continue as a going concern within one year" without additional funding.

Despite these challenges, HSDT has actively managed its liquidity. The company raised aggregate gross proceeds of $9.10 million from a public offering in June 2025, and in July 2025, increased its at-the-market (ATM) program capacity to $25.00 million, subsequently generating $5.00 million in net proceeds. These efforts, combined with warrant exercises and a private placement, have extended the company's cash runway into the second quarter of 2026. HSDT also successfully regained compliance with Nasdaq's minimum bid price and stockholders' equity requirements by July 2025, following reverse stock splits in May and July 2025, though it remains under a "Mandatory Panel Monitor until July 7, 2026."

Strategic Outlook and Growth Catalysts

Management's outlook is firmly anchored on the anticipated revenue inflection from reimbursement and new indications. They expect Medicare reimbursement, effective October 1, 2024, to "significantly boost" revenues starting later in 2024, providing a "pathway to positive cash flow." Broader coverage from government and private payers is expected to take "at least 24 months" from the HCPCS codes' effective date (April 2024).

The most significant growth catalyst remains the potential FDA authorization for PoNS in stroke. Leveraging its Breakthrough Device Designation, HSDT completed enrollment of 159 subjects in its stroke registrational program by January 2025, with all studies finished by July 2025. Preliminary analysis showed the pivotal trial met its primary endpoint, demonstrating "statistically significant greater improvements in gait and/or balance deficit due to stroke with active PoNS therapy." The company is on track to submit for FDA authorization in Q3 2025, targeting approval by late 2025 or early 2026. If authorized, PoNS would be eligible for the proposed Transitional Coverage of Emerging Technologies (TCET) pathway, potentially expediting Medicare coverage within six months, a critical factor given that 90% of stroke patients are covered by Medicare. This would allow HSDT to "immediately address the much larger stroke market and grow revenues at an even greater rate."

HSDT is also building a highly leverageable commercial model to support this anticipated growth. This includes an OEM manufacturer capable of rapid production, a telehealth/e-commerce hub (partnered with UpScript for online neurologist appointments and e-prescribing), and a free, online modular training program for physical therapists, which can be completed in three hours or less. This strategy aims to quickly expand the network of PoNS-trained therapists and ensure broad geographic coverage, facilitating patient access without the need for extensive, costly sales force expansion.

Competitive Landscape and Strategic Positioning

HSDT operates in a neurotechnology market where its non-invasive PoNS device offers a distinct advantage over the more invasive neuromodulation solutions from large, diversified medical device companies like Medtronic, Abbott, and Boston Scientific. While these competitors boast superior scale, broader product portfolios, and established global distribution networks, PoNS's unique mechanism of action and non-invasive nature position it as a "game changer" for patients seeking less intrusive treatment options. Its ability to significantly reduce fall risk and offer a cost-effective solution for conditions like stroke and TBI provides a strong value proposition that differentiates it from standard physical therapy and other peripheral stimulation devices.

Against specialized competitors like NeuroPace (NPCE), which focuses on implantable devices for specific neurological conditions, HSDT's portability and ease of use offer a broader appeal for certain patient populations. The company's strategic focus on securing reimbursement and expanding indications for prevalent conditions like MS and stroke allows it to target large, underserved markets. However, HSDT's smaller scale and dependence on successful reimbursement and regulatory approvals make it vulnerable to the financial strength and market penetration capabilities of its larger rivals. The company's future success hinges on its ability to convert its technological differentiation and regulatory wins into sustained market adoption and robust financial performance.

Conclusion

Helius Medical Technologies stands at a critical inflection point, with its PoNS therapy poised to transition from a development-stage product to a commercially viable solution for millions suffering from gait and balance deficits. The successful securing of HCPCS codes, initial commercial payer reimbursements, and the VA partnership, coupled with the anticipated Medicare reimbursement effective October 1, 2024, are foundational to unlocking significant revenue growth. The positive outcomes from the stroke registrational program and the clear path to FDA submission and potential authorization by late 2025 or early 2026 further amplify HSDT's long-term growth prospects by addressing a substantially larger market.

While the company has demonstrated resilience in addressing liquidity and Nasdaq compliance challenges, and has built a leverageable commercial model, the path ahead requires continued execution. The "so what" for investors lies in HSDT's ability to capitalize on its unique, clinically validated, non-invasive technology to capture market share in large, underserved neurological markets. The coming quarters will be pivotal in demonstrating the financial impact of these strategic initiatives, potentially establishing HSDT as a significant player in neurorehabilitation.