Business Overview and History
Hyperfine, Inc. (NASDAQ: HYPR) is a groundbreaking health technology company that has redefined the landscape of brain imaging with its innovative Swoop® Portable MR Imaging® system. As the first FDA-cleared portable magnetic resonance (MR) brain imaging system, Hyperfine's Swoop is poised to transform the way healthcare professionals access and utilize this critical diagnostic tool.
Hyperfine, Inc. was founded in 2020 with the mission to revolutionize patient care globally through accessible, affordable, clinically relevant, portable ultra-low-field magnetic resonance (MR) brain imaging. The company developed the Swoop Portable MR Imaging System, which produces high-quality, diagnostic images at a lower magnetic field strength than conventional MRI scanners.
The Swoop system received its initial 510(k) clearance from the FDA for brain imaging in 2020, making it the first FDA-cleared, portable, ultra-low-field MR brain imaging system. This allowed healthcare professionals to use the Swoop system to make effective clinical diagnoses and decisions in various care settings where conventional MRI devices are inaccessible, such as emergency rooms, intensive care units, hospitals, outpatient clinics, and physician offices.
In 2021, Hyperfine completed a business combination with HealthCor Catalio Acquisition Corp., which became the legal name Hyperfine, Inc. This provided the company with additional capital to support its product development and commercialization efforts.
Over the past few years, Hyperfine has continued to innovate and improve its Swoop system. In 2023, the company received additional 510(k) clearances from the FDA for its Swoop system AI-powered software, which significantly improved image quality and reduced scan times. The Swoop system has also received marketing authorization for brain imaging in several countries outside the United States, including the European Union, United Kingdom, Canada, Australia, and New Zealand.
Despite the challenges of launching a new medical technology, Hyperfine has made steady progress in commercializing its Swoop system and demonstrating its clinical utility. The company has focused on executing contracts with U.S. hospitals and hospital systems, building a direct sales and field support organization, and expanding its international distribution network.
Financial Snapshot
Hyperfine's financial performance has been marked by steady growth and strategic investments. In the fiscal year ended December 31, 2023, the company reported total revenue of $11.03 million, a significant increase from the $6.81 million generated in the prior year. However, Hyperfine continues to operate at a net loss, with a reported net loss of $44.24 million in 2023, compared to a net loss of $73.16 million in 2022.
For the third quarter of 2024, Hyperfine reported revenue of $3.64 million, representing a 56.4% increase year-over-year. The net loss for this quarter was $10.33 million, an improvement from the $10.8 million net loss in the same period of the previous year. Operating cash flow for Q3 2024 was negative $8.52 million, while free cash flow was negative $8.68 million.
Liquidity
The company's cash position remains strong, with $45.77 million in cash and cash equivalents as of the end of Q3 2024. This provides Hyperfine with the financial flexibility to continue investing in research and development, as well as expanding its commercial footprint both domestically and internationally. The company's debt-to-equity ratio stands at 0, indicating a conservative capital structure. Hyperfine maintains a healthy liquidity position with a current ratio of 6.44 and a quick ratio of 5.73.
Operational Highlights and Growth Drivers
Hyperfine's focus on technological innovation has been a key driver of its success. In 2023, the company received FDA clearance for its ninth-generation AI-powered software, which significantly improved image quality and reduced scan times for the Swoop system. This advancement has been well-received by healthcare professionals, who have praised the system's ability to deliver high-quality brain images in a more efficient and accessible manner.
The company's growth strategy is centered around expanding the Swoop system's reach across various healthcare settings. Hyperfine has made progress in penetrating the U.S. hospital market, and is now turning its attention to international markets, having recently obtained CE approval for the Swoop system in Europe. Additionally, the company is eyeing the neurology office setting as a new frontier, as it works to enable reimbursement for Swoop-based MRI exams in these outpatient facilities.
Product Segments
Hyperfine operates in two main product segments: Device and Service.
The Device segment includes revenue from the sale of the Swoop Portable MR Imaging System. This segment has shown significant growth, with device revenue increasing by 75.5% to $3.03 million in Q3 2024, compared to $1.73 million in the same period of 2023. For the first nine months of 2024, device revenue reached $8.71 million, a 30.5% increase from the $6.67 million reported in the same period of 2023.
The Service segment encompasses revenue from services related to the Swoop system, such as maintenance, training, and leasing arrangements. Service revenue has remained relatively stable, with a slight increase of 1.3% to $610,000 in Q3 2024, compared to $602,000 in Q3 2023. For the first nine months of 2024, service revenue grew by 11.1% to $1.86 million, up from $1.68 million in the same period of 2023.
Geographic Markets
While the majority of Hyperfine's revenue is generated in the United States, the company has begun to expand its international presence. In Q3 2024, 32% of the company's revenue, amounting to $1.16 million, came from non-U.S. markets. This international expansion aligns with Hyperfine's strategy to broaden its global footprint and increase adoption of the Swoop system worldwide.
Partnerships and Collaborations
Hyperfine has leveraged strategic partnerships to further its mission. In 2020 and 2021, the company was awarded multiple grants totaling $5 million from the Bill & Melinda Gates Foundation (BMGF) to deploy the Swoop system in low- and middle-income countries, with the goal of optimizing diagnostic image quality and enabling the measurement of maternal and infant health indicators.
More recently, in May 2023, Hyperfine received an additional $3.4 million grant from the BMGF to continue developing a scalable approach to measuring neurodevelopment via low-field MRI in neonates, infants, and young children in resource-constrained settings. These collaborations not only provide financial support, but also validate the Swoop system's potential to address global health challenges.
Addressing Unmet Clinical Needs
Hyperfine's Swoop system is positioned to make a significant impact in addressing several critical unmet needs in the healthcare landscape. In the field of stroke care, the Swoop system has demonstrated its ability to rapidly characterize acute stroke, potentially enabling more timely and informed treatment decisions.
In the realm of Alzheimer's disease, the Swoop system has shown promise in detecting and monitoring amyloid-related imaging abnormalities (ARIA), a key biomarker for patients undergoing amyloid-targeting therapies. This application can help streamline the management of Alzheimer's patients and improve access to critical MRI monitoring.
Financial Guidance and Outlook
Hyperfine has demonstrated strong financial performance and has provided updated guidance for the full year 2024. The company has narrowed its revenue outlook to a range of $14 million to $14.5 million, representing approximately 30% year-over-year growth. Gross margin guidance for 2024 has been updated to 47% to 50%, which represents the high end of the previous range.
The company anticipates total cash burn to be between $37 million and $40 million for the full year 2024, a reduction from previous guidance. This improved cash burn outlook reflects Hyperfine's focus on operational efficiency and strategic resource allocation.
Looking Ahead
As Hyperfine continues to push the boundaries of portable MRI technology, the company is well-positioned for future growth. The recent CE approval of its latest software generation in Europe, coupled with the expansion of its international distribution network, sets the stage for Hyperfine to accelerate its global commercial footprint.
Furthermore, the company's focus on enhancing the Swoop system's image quality and clinical utility, as evidenced by the upcoming launch of its tenth-generation software, is expected to drive faster adoption and integration of the technology into various healthcare settings, including emergency departments, neurology clinics, and beyond.
With a strong financial foundation, a pipeline of innovative products, and a steadfast commitment to revolutionizing brain imaging, Hyperfine is poised to continue its transformative journey in the years to come. The company's ability to maintain strong revenue growth, improve gross margins, and reduce cash burn demonstrates its progress towards sustainable profitability and long-term success in the medical imaging market.