Executive Summary

Q2 2024 revenue was $1.85M, down 10% year over year and slightly down sequentially; gross margin improved to 20% (+200 bps q/q; -1000 bps y/y). Net loss narrowed to $4.36M; Adjusted EBITDA loss improved modestly to $3.83M .
Management implemented a 24% headcount reduction in June to streamline the peripheral business and focus resources on the coronary program, with the full effect expected in H2 2024 (lower OpEx and improved gross margin) .
Coronary CTO program advanced: Phase III V&V studies continuing, IDE filing anticipated by end of Q3 2024; Pantheris LV full commercial launch “in the coming weeks” .
Balance sheet strengthened: $11M debt converted to preferred equity (debt principal reduced to $2.6M, no principal payments until 2027) and ~ $5.3M net proceeds from June offering (up to ~$24M total financing potential via milestone-linked warrants) .
Near-term stock reaction catalysts: IDE submission timeline, Pantheris LV full launch, and visible H2 cost/margin benefits; possible pressure from softer peripheral revenue near term given reduced sales force .

What Went Well and What Went Wrong

What Went Well

Gross margin expanded to 20% (from 18% in Q1) as production and inventory optimization initiatives took hold; management expects further margin improvement in H2 2024 .
Strategic progress: “We anticipate filing an IDE application with the FDA by the end of the third quarter,” enabling first-in-human study of Avinger’s OCT-guided coronary CTO device; “we believe we can provide physicians with a superior, simplified and more successful solution” .
Capital structure improved: $11M of debt converted, reducing principal to $2.6M and boosting stockholders’ equity; secured financing capacity up to $24M to fund growth .

What Went Wrong

Revenue softened: Q2 sales declined to $1.85M (vs $2.04M y/y, $1.86M q/q), largely reflecting late-quarter sales force reductions and lower production activity .
Year-over-year margin compression: gross margin fell to 20% (from 30% a year ago), driven by lower production volumes and inventory optimization; OpEx rose y/y to $4.51M .
Near-term revenue headwinds: management expects “some softening of revenue on the peripheral side” in H2 given the reduced team, even as it prioritizes coronary milestones and Zylox partnership build-out .

Financial Results

Metric	Q2 2023	Q1 2024	Q2 2024
Revenue ($USD Millions)	$2.041	$1.859	$1.847
Gross Margin %	30%	18%	20%
Total Operating Expenses ($USD Millions)	$4.334	$5.432	$4.505
Net Loss and Comprehensive Loss ($USD Millions)	$(4.176)	$(5.517)	$(4.362)
Net Loss Applicable to Common ($USD Millions)	$(5.394)	$(3.674)	$(4.600)
Diluted EPS ($USD)	$(5.32)	$(2.49)	$(2.82)
Adjusted EBITDA ($USD Millions)	$(3.422)	$(3.910)	$(3.834)

Liquidity (balance sheet highlights):

Metric	Dec 31, 2023	Mar 31, 2024	Jun 30, 2024
Cash and Cash Equivalents ($USD Millions)	$5.275	$7.174	$8.806
Borrowings - Current ($USD Millions)	$14.293	$14.751	$4.044
Total Stockholders’ Equity ($USD Millions)	$(6.202)	$(4.054)	$7.753

Estimates vs Actual (Q2 2024):

Metric	Q2 2024 Actual	Q2 2024 Consensus
Revenue ($USD Millions)	$1.847	Unavailable (S&P Global mapping missing)
Diluted EPS ($USD)	$(2.82)	Unavailable (S&P Global mapping missing)

Segment breakdown: Not applicable; Avinger reports as a single business with device families, but no segment revenue disclosure in Q2 materials .

KPIs and Operating Metrics:

KPI	Q2 2024 Value	Notes
Headcount Reduction (%)	24%	Implemented June to streamline costs and refocus on coronary
Sequential Gross Margin Change (bps)	+200 bps	18% in Q1 to 20% in Q2
Debt Principal Outstanding ($USD Millions)	$2.6	After $11M conversion to preferred equity
Financing Capacity ($USD Millions)	Up to $24 (incl. $6 funded)	Additional ~$18M tied to milestone-linked warrants
Cash and Equivalents ($USD Millions)	$8.8	As of June 30, 2024

Non-GAAP note: Adjusted EBITDA defined as net loss + interest + other income/expense + stock-based comp + certain D&A and inventory charges; reconciliation provided in press release tables .

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Operating Expenses	H2 2024	Not quantified previously	Expect reduced OpEx from June cost actions	Lowered
Gross Margin	H2 2024	Not quantified previously	Expect improved gross margin	Raised
Coronary CTO IDE Filing	Q3 2024	Anticipated in prior Q4/Q1 updates	Anticipated by end of Q3 2024	Maintained/Refined timing
Pantheris LV Launch	Near-term 2024	“Later this year” (limited launch ongoing)	Full commercial launch “in the coming weeks”	Pulled forward/clarified
Peripheral Revenue Trajectory	H2 2024	Not previously guided	Expect “some softening” given reduced sales team	Lowered near-term expectations

Earnings Call Themes & Trends

Topic	Q4 2023 (Q-2)	Q1 2024 (Q-1)	Q2 2024	Trend
Coronary CTO program	Phase 2 design selected; multiple animal/cadaver studies; IDE anticipated Q3 2024	Phase III V&V initiated; IDE anticipated Q3 2024	Phase III V&V continuing; IDE filing by end of Q3; clinic start expected early 2025; 510(k) target 2026	Continued progress; timeline reaffirmed
Cost structure and OpEx	Building sales team; higher OpEx q/q	OpEx up (sales, Zylox, corporate)	24% headcount reduction; expect lower OpEx and better margins H2	Pivot to efficiency
Peripheral portfolio (Pantheris LV)	Limited launch; planning full launch later in 2024	Limited launch continued	Full commercial launch “in coming weeks”; LV at higher RPM streamlined workflow	Commercial readiness
Greater China strategy (Zylox)	Partnership terms disclosed	$7.5M first tranche; pathway for China 2025	Regulatory/type testing underway; target 2H25 launch; potential COGS benefits via sourcing	Execution phase
Near-term revenue outlook	Not guided	Flat revenue q/q	Expect peripheral softness due to reduced team	Cautious near term

Management Commentary

“The Phase III verification and validation studies for our innovative coronary CTO solution remain on track for filing an IDE application by the end of the third quarter.” — CEO Jeff Soinski .
“We have… reduced our head count by approximately 24%… which we expect to reduce operating expenses in the second half of the year.” — CEO Jeff Soinski .
“We expect… immediate access [to] reimbursement codes for both coronary CTO-crossing and OCT-diagnostic imaging following clearance of these new devices.” — CEO Jeff Soinski .
“We’ve completed the limited launch phase of our new Pantheris LV peripheral atherectomy catheter and are building product inventory for full commercial launch in the coming weeks.” — CEO Jeff Soinski .
“The debt conversion resulted in an $11 million increase in stockholders’ equity.” — CFO/Principal Financial Officer Nabeel Subainati .

Q&A Highlights

Cost reductions and Zylox: Headcount reduction not related to Zylox; near-term peripheral revenue may soften due to smaller team, but Zylox offers mid-2025 revenue upside and potential manufacturing cost benefits .
Zylox regulatory timing: Type testing and filings progressing; management expects China launch in 2H25 (timing ultimately NMPA-dependent) .
Pantheris LV: Minor improvements completed post-limited launch; inventory build underway; full commercial launch expected in the very near term .
Coronary IDE clinical timeline: IDE expected to clear in 4–6 months; pilot 5–10 patients then expand; aim to file 510(k) in 2026; strong physician enthusiasm cited .

Estimates Context

S&P Global/Capital IQ consensus for Q2 2024 revenue and EPS was unavailable due to a missing SPGI company mapping for AVGR, so beat/miss analysis to consensus cannot be determined (use-case limitation encountered when querying S&P Global).
Given management’s expectation of H2 peripheral revenue softness (smaller field team) and margin/OpEx improvements, estimates may shift toward lower near-term revenue with improved profitability metrics as cost actions absorb; coronary milestones could drive upward revisions to medium-term adoption assumptions post-IDE .

Key Takeaways for Investors

Cost-down pivot is real: a 24% headcount reduction should lower OpEx and support margin expansion in H2; watch Q3/Q4 for operating leverage signs as production and inventory normalization continue .
Near-term sales may be soft: management flagged peripheral revenue “softening” from reduced sales coverage; monitor Pantheris LV full launch ramp as an offset .
Coronary CTO is the needle-mover: IDE filing by end-Q3 can catalyze sentiment; clinical start likely early 2025 and 510(k) target 2026 positions AVGR for a differentiated, reimbursable therapy .
Strengthened balance sheet reduces risk: debt principal down to $2.6M with no payments until 2027, equity up via conversion, and fresh capital (~$5.3M net) plus up to ~$18M milestone-linked warrants provide runway to execute .
Zylox partnership provides optionality: China commercialization pipeline for 2025 and potential COGS benefits via sourcing could support margins and global scale .
Trading lens: Catalysts in the next 1–2 quarters include IDE submission and Pantheris LV commercial launch; set expectations for mixed prints as cost actions pressure revenue but bolster margins .
Medium-term thesis: If coronary CTO solution demonstrates clinical and economic advantages (image-guided crossing, reimbursement, procedural efficiency), AVGR’s platform could re-rate on commercialization visibility while peripheral provides steady base .

Sources: Q2 2024 8-K press release and exhibits , earnings call transcript , Q1 2024 8-K press release , Q4 2023 8-K press release , financing-related 8-Ks (debt conversion and offering) .

Avinger Inc (AVGR)·Q2 2024 Earnings Summary