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HELIUS MEDICAL TECHNOLOGIES, INC. (HSDT)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $0.182M, up 35% QoQ on higher U.S. and Canada sales, but down 29% YoY due to the expiration of the Patient Therapy Access Program and temporary cash-pay pricing; net loss was $1.6M with EPS of -$0.64 .
  • Reimbursement milestones advanced: first third‑party reimbursement at $23,900 for PoNS, CMS preliminary Medicare payment determinations in place with final rates expected to be effective Oct 1, 2024, and VA/DoD contract pricing secured (FSS and DAPA) .
  • Stroke U.S. registrational program site participation fully enrolled; management reiterated FDA submission target in 1H 2025, supported by Canadian real‑world evidence initiatives .
  • Liquidity bolstered via $6.4M offering (net ~$5.5M), ending cash of $6.4M and no debt; projected cash runway into 2025, with warrant mechanics potentially adding capital post CMS final rates and stock thresholds .
  • Near-term stock catalysts: final CMS reimbursement rates (Oct 1 effective), VA sales penetration and PoNSTEP readouts; medium-term stroke submission trajectory and potential broader payer coverage .

What Went Well and What Went Wrong

What Went Well

  • First third‑party reimbursement achieved for PoNS at $23,900, validating pricing and supporting payer negotiations; CMS preliminary payment determinations secured with final rates expected to be effective Oct 1, 2024 .
  • Federal channels advancing: VA Federal Supply Schedule pricing ($23,843.72 device; $7,344.97 mouthpiece) and DoD DAPA pricing ($23,724.50 device; $7,308.25 mouthpiece); VA sales reps established across 13 states plus Puerto Rico .
  • Management tone confident on access and clinical pathway: “The third quarter of 2024 will be pivotal… receive final reimbursement determination by CMS” (CEO Dane Andreeff) and stroke program “fully enrolled” with submission on track for 1H 2025 .

What Went Wrong

  • YoY revenue decline (-$0.074M) versus Q2 2023 as PTAP expired and temporary cash‑pay pricing ended, highlighting revenue sensitivity to reimbursement timing .
  • Operating structure still loss‑heavy: Q2 operating loss of $3.3M (EBIT margin ~-1,796%) and net loss margin ~-886% given sub‑scale revenue base .
  • R&D spend increased to $0.9M YoY for clinical programs (stroke and risk of fall), elevating OpEx amid limited revenue scale until reimbursement expands .

Financial Results

Income Statement Bridge (Quarterly)

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$0.134 $0.135 $0.182
Cost of Revenue ($USD Millions)$0.090 $0.123 $0.118
Gross Profit ($USD Millions)$0.044 $0.012 $0.064
Gross Profit Margin %32.8% 8.9% 35.2%
SG&A ($USD Millions)$1.632 $2.633 $2.457
R&D ($USD Millions)$0.650 $0.788 $0.870
Amortization ($USD Millions)$0.008 $0.007 $0.007
Total Operating Expenses ($USD Millions)$2.290 $3.428 $3.334
EBIT / Loss from Operations ($USD Millions)-$2.246 -$3.416 -$3.270
EBIT Margin %-1,676% -2,529% -1,796%
Net Loss ($USD Millions)-$1.045 -$2.516 -$1.612
Net Loss Margin %-780% -1,863% -886%
Basic & Diluted EPS ($)-$1.47 -$3.08 -$0.64
Weighted Avg Shares (Basic)708,603 817,327 2,518,071

YoY Comparison (Q2 2024 vs Q2 2023)

MetricQ2 2023Q2 2024YoY Change
Revenue ($USD Millions)$0.256 $0.182 -$0.074 (-29%)
Cost of Revenue ($USD Millions)$0.184 $0.118 -$0.066
Gross Profit ($USD Millions)$0.072 $0.064 -$0.008
Gross Profit Margin %28.1% 35.2% +710 bps
SG&A ($USD Millions)$2.569 $2.457 -$0.112
R&D ($USD Millions)$0.684 $0.870 +$0.186
Total Operating Expenses ($USD Millions)$3.291 $3.334 +$0.043
EBIT / Loss from Operations ($USD Millions)-$3.219 -$3.270 -$0.051
Net Loss ($USD Millions)-$1.648 -$1.612 +$0.036
EPS ($)-$2.92 -$0.64 +$2.28 (share count impact)

Balance Sheet & Liquidity

MetricQ4 2023Q1 2024Q2 2024
Cash & Cash Equivalents ($USD Millions)$5.182 $3.638 $6.387
Total Assets ($USD Millions)$7.692 $5.757 $8.846
Total Liabilities ($USD Millions)$5.342 $3.771 $2.507
Derivative Liability ($USD Millions)$3.323 $2.080 $0.347
Stockholders’ Equity ($USD Millions)$2.350 $1.986 $6.339
Debt Outstanding$0 $0 $0

KPIs and Operating Milestones

KPIQ2 2024Notes
First third‑party reimbursement (PoNS)$23,900 achieved Pricing validation, supports payer negotiations
CMS reimbursement timelineFinal rates expected; effective Oct 1, 2024 Preliminary determinations received
VA Federal Supply Schedule pricingDevice $23,843.72; Mouthpiece $7,344.97 Via Lovell Government Services
DoD DAPA pricingDevice $23,724.50; Mouthpiece $7,308.25 Via Lovell Government Services
VA sales rep coverage13 states + Puerto Rico Began building coverage in June 2024
Cash used in operating activities (6M)$5.9M (flat YoY) Cash runway into 2025

No reportable segments; revenue is product sales plus other revenue .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
CMS reimbursement effective dateFY 2024Expected Oct 1, 2024 Final rates expected; effective Oct 1, 2024 Maintained
Stroke FDA submission2025Early 2025 target First half of 2025 target Clarified timing (slightly later in 1H)
Revenue outlook2H 2024Muted until reimbursement; growth post CMS Positioned to significantly boost revenues beginning later this year Maintained (post‑CMS ramp)
Cash runway2025Extended into 2025 via financing Runway into 2025; warrants could add capital post CMS pricing Maintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q4’23 & Q1’24)Current Period (Q2’24)Trend
Reimbursement (CMS & payers)HCPCS codes effective Apr 1; aiming for Oct 1 CMS rates; one‑off claims; pathway to positive cash flow First commercial payer reimbursement achieved; CMS preliminary determinations; final rates expected Oct 1; active patient claim assistance Improving access momentum
Federal channels (VA/DoD)LOI and targeting VA; supplier partnership progress FSS and DAPA pricing secured; VA reps in 13 states + PR Execution ramping
Stroke program (U.S.)RCT at MUSC + open‑label; streamlined plan; early 2025 submission target Site participation fully enrolled; 1H 2025 submission reiterated; Canadian study initiated On track; expanded sites
PT network & trainingNationwide PT training; APTA engagement; modularized training Continued build‑out to support VA and broader access Expanding footprint
Liquidity & financingATM proceeds extended runway; costs trending by quarter $6.4M offering (net ~$5.5M) extends runway into 2025; warrants contingent on CMS/stock price Strengthened
Product pricing & economicsList price and health economics vs fall cost discussed Market pricing validated via FSS/DAPA and third‑party payer amount Validation increasing

Management Commentary

  • “We were pleased to announce the first third‑party reimbursement for PoNS from a major insurance carrier at $23,900 and are now just a few weeks away from CMS publishing its final reimbursement rates to be effective on October 1, which we believe will be a significant catalyst for growing revenue…” — CEO Dane Andreeff .
  • “CMS is expected to publish final reimbursement rates in the coming weeks. Once finalized, the payment rates will be effective October 1, 2024.” — CFO Jeff Mathiesen .
  • “The registrational program… is designed to establish the effects of cranial nerve noninvasive neuromodulation delivered using PoNS Therapy on gait and balance in chronic stroke survivors… results will significantly bolster our FDA submission when we submit for regulatory approval in 2025.” — CEO Dane Andreeff .
  • “Beginning in June, we began building out a sales rep organization to service the VA sites… established sales representatives covering 13 states… plus Puerto Rico.” — CFO Jeff Mathiesen .

Q&A Highlights

  • Pipeline and demand: Management maintains a “long list” of Medicare patients awaiting CMS final rates, indicating pent‑up demand likely to convert post Oct 1 .
  • Stroke timeline: Enrollment on track and submission planned in 1H 2025; leveraging breakthrough designation and 150‑day pathway .
  • TBI expansion: Investigating expansion; cited Canadian Pacific Blue Cross real‑world outcomes (balance/gait improvements, RTW, cost savings) as supportive evidence .
  • Revenue inflection: Revenue muted pre‑reimbursement; expect significant boosts starting later in 2024 with VA access and CMS coverage enabling third‑party payer expansion .

Estimates Context

  • Wall Street consensus estimates from S&P Global for Q2 2024 (revenue and EPS) were not available due to data access limits at time of request. Anchor comparisons to estimates were therefore unavailable; future updates should align with S&P Global consensus once accessible.
  • Implication: Given a 35% QoQ revenue increase and reimbursement milestones, estimates may need upward revision for late‑2024/2025 once CMS rates are effective and VA/third‑party payer uptake accelerates .

Key Takeaways for Investors

  • Reimbursement is the key near‑term catalyst: CMS final rates effective Oct 1, plus first commercial payer reimbursement, should unlock demand and catalyze revenue growth in late 2024 .
  • Federal channel execution: VA/DoD pricing secured and VA sales coverage established in 13 states + PR — a scalable path to MS patient access within integrated systems .
  • Clinical momentum: Stroke registrational program fully enrolled in U.S., Canadian study underway; FDA submission targeted 1H 2025 supports medium‑term expansion beyond MS .
  • Liquidity runway: Cash of $6.4M, no debt, and 2025 runway with potential warrant proceeds post CMS pricing/stock triggers reduce financing overhang through key milestones .
  • Operating leverage potential: Revenue scale post‑reimbursement should begin to normalize extreme negative margins; watch SG&A discipline vs sales ramp .
  • Sales infrastructure: Rapid PT training, tele‑prescribing, and manufacturer readiness position Helius to convert pent‑up Medicare and VA demand efficiently .
  • Trading setup: Near‑term binary around CMS final rates and initial VA uptake; medium‑term thesis hinges on payer coverage breadth and stroke indication authorization .