What changed in this filing

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Item 2. Management’s Discussion and Analysis

2026-05-12 compared with 2025-11-06 · 71 added, 105 removed, 147 unchanged (54% of the section changed)

1 unchanged sentence

We are a commercial-stage medical device company focused on developing, manufacturing, and commercializing innovative and minimally invasive neuromodulation solutions for patients with cardiovascular disease.

Our proprietary platform technology, Barostim, is designed to leverage the power of the brain and nervous system to address the imbalance of the Autonomic Nervous System, which causes HF with reduced

Ejection Fraction (“ HFrEF”) and other cardiovascular diseases.

Our proprietary platform technology, Barostim, is designed to leverage the power of the brain and nervous system to address the imbalance of the Autonomic Nervous System, which causes HF with reduced Ejection Fraction (“ HFrEF”) and other cardiovascular diseases.

Our second-generation product, Barostim, is the first and only commercially available neuromodulation device indicated to improve symptoms for patients with HFrEF.

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As a result, we have prioritized coverage by the Centers for Medicare and Medicaid Services while simultaneously developing processes to engage commercial payers.

All Medicare Administrative Contractors have retired their official automatic coverage denial policies for our Current Procedural Terminology codes, thereby allowing hospitals to submit payment requests for the Barostim procedure to be adjudicated on a claim-by-claim basis.

Our reimbursement strategy involves continuing to broaden our current coverage and build our in-house market access team to obtain appropriate prior authorization approvals in advance of treatment on a case-by-case basis where positive coverage policies currently do not exist.

All Medicare Administrative Contractors have retired their official automatic coverage denial policies for our Current Procedural Terminology (“CPT”) codes, thereby allowing hospitals to submit payment requests for the Barostim procedure to be adjudicated on a claim-by-claim basis.

Our reimbursement strategy involves continuing to broaden our current coverage and build our in-house market access team to obtain appropriate prior authorization approvals in advance of

treatment on a case-by-case basis where positive coverage policies currently do not exist.

Outside the U.S., reimbursement levels vary by country and within some countries by region.

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On October 31, 2022, we entered into the Loan Agreement allowing borrowing, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

W e had $50.0 million in outstanding Term Loans under the Loan Agreement as of September 30, 2025.

On January 9, 2026, we entered into an Amendment to our existing Loan Agreement.

Pursuant to the Amendment, the terms loans available were increased by $50.0 million, to an aggregate principal amount of up to $100.0 million, subject to our achievement of certain milestones, and the maturity date was extended to 2031.

W e had $60.0 million in outstanding Term Loans under the Loan Agreement as of March 31, 2026.

As a result of the planned investments to fund our commercialization efforts, we expect to continue to incur net losses for the next several years, which may require additional funding and could include future equity and debt financing.

Recent developments

In October 2025, the Centers for Medicare & Medicaid Services (“CMS”) released the final 2026 Medicare Physician Fee Schedule (“MPFS”).

This final rule includes the new Category I CPT codes for the Barostim implant and follow-up services.

The rule establishes national pricing for the code series used to report procedures associated with Barostim, supporting continued access for Medicare beneficiaries.

We expect the transition to Category I will eliminate the automatic denials regularly seen with Category III codes and improve prior authorization predictability to fairly pay physicians for the procedure.

The final rule will take effect January 1, 2026.

As previously disclosed, the Category I CPT codes for Baroreflex Activation Therapy using our Barostim device replaced Category III codes as of January 1, 2026, which eliminates the automatic denials regularly seen with Category III codes and improves prior authorization predictability to fairly pay physicians for the procedure.

Early data in 2026 showed an increase in the 30-day approval rate for Medicare Advantage prior authorizations managed by our in-house market access team.

At the same time that payers were incorporating this coding change, other regulatory changes took effect January 1, 2026 that accelerated the deadline for Medicare Advantage payers to respond to prior authorization requests.

We believe this caused Medicare Advantage payers to respond with a higher rate of initial denials as the quarter progressed, which slowed the 30-day approval rate for March 2026.

As a result, the 30-day approval rate for Medicare Advantage prior authorizations managed by our in-house market access team increased from 31% in 2024 to 44% in 2025 and to 46% for the first quarter of 2026.

We expect the overall approval rate to continue to increase, although the speed of approval may be temporarily delayed.

In November 2025, the FDA granted an investigational device exemption (“IDE”) study designed as a prospective, multi-center, randomized controlled trial to evaluate the Barostim device’s impact on all-cause mortality and HF decompensation events in an expanded population of HF patients.

In January 2026, we initiated the trial, supported by CMS Category B IDE coverage.

We expect to begin enrolling the trial across approximately 150 centers in the first half of 2026 and complete enrollment within five years.

The trial provides for a two-year follow-up period, resulting in the expected conclusion of the trial in five to seven years.

On March 31, 2026, the first site was activated in the BENEFIT-HF trial and the first patient was enrolled in the second quarter of 2026.

On January 9, 2026, we entered into an Amendment to our existing Loan Agreement.

Pursuant to the Amendment, the terms loans available were increased by $50.0 million, to an aggregate principal amount of

up to $100.0 million, subject to our achievement of certain milestones, and the maturity date was extended to 2031.

On the closing date, we borrowed an additional $10.0 million under the Loan Agreement.

On January 12, 2026, we entered into the Sale Agreement with Jefferies LLC, as agent.

Pursuant to the terms of the Sale Agreement, we may offer and sell, from time to time at our sole discretion, shares of common stock having an aggregate offering price up to $50.0 million in an ATM offering, to or through the agent.

Factors affecting our performance

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Our gross margin has been and will continue to be affected by a variety of factors, but is primarily driven by the average sale price of our product, the percentage of products sold that include a full system (i.e., an IPG and a stimulation lead), as compared to individual IPG sales, and the allocated manufacturing overhead.

Although we sell the majority of our devices directly to hospitals, the impact of the average selling price on gross margin is driven by the percentage of products we sold to distributors as compared to those sold directly to hospitals, as our average selling price is typically higher on products we sell directly.

Although we sell the majority of our devices directly to hospitals, the impact of the average selling price on gross margin is driven by

the percentage of products we sold to distributors as compared to those sold directly to hospitals, as our average selling price is typically higher on products we sell directly.

The full system sales typically have a lower gross margin as they include the cost of an IPG and a stimulation lead whereas individual IPG sales only include the cost of an IPG.

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Results of operations

Consolidated results of operations for the three months ended September 30, 2025, compared to the three months ended September 30, 2024

Consolidated results of operations for the three months ended March 31, 2026, compared to the three months ended March 31, 2025

Three months ended

September 30,

(unaudited and in thousands)

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Three months ended

September 30,

(unaudited and in thousands)

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Total Revenue

Revenue was $14.7 million for the three months ended September 30, 2025, an increase of $1.3 million, or 10%, over the three months ended September 30, 2024.

Revenue was $14.8 million for the three months ended March 31, 2026, an increase of $2.4 million, or 20%, over the three months ended March 31, 2025.

Revenue generated in the U.S.

was $13.5 million for the three months ended September 30, 2025, an increase of $1.2 million, or 10%, over the three months ended September 30, 2024.

was $13.7 million for the three months ended March 31, 2026, an increase of $2.4 million, or 22%, over the three months ended March 31, 2025.

Revenue units in the U.S.

totaled 420 and 394 for the three months ended September 30, 2025 and 2024, respectively.

totaled 429 and 359 for the three months ended March 31, 2026 and 2025, respectively.

The increases were primarily driven by continued growth in the U.S.

HF business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostim.

As of September 30, 2025, we had a total of 250 active implanting centers in the U.S., as compared to 208 as of September 30, 2024.

As of March 31, 2026, we had a total of 257 active implanting centers in the U.S., as compared to 227 as of March 31, 2025.

Active implanting centers are customers that have completed at least one commercial HF implant in the last 12 months.

As of September 30, 2025, we had a total of 50 sales territories in the U.S.

as compared to 45 sales territories as of September 30, 2024.

Revenue generated in Europe was $1.2 million for the three months ended September 30, 2025, a $0.1 million increase, or 12%, compared to the three months ended September 30, 2024.

Total revenue units in Europe decreased to 50 for the three months ended September 30, 2025, as compared to 56 in the prior year period.

As of September 30, 2025 we had five sales territories in Europe, as compared to six sales territories as of September 30, 2024 .

As of March 31, 2026, we had a total of 56 sales territories in the U.S.

as compared to 45 sales territories as of March 31, 2025.

Revenue generated in Europe was $1.1 million for the three months ended March 31, 2026, a $27,000 decrease, or 2%, compared to the three months ended March 31, 2025.

Total revenue units in Europe decreased to 56 for the three months ended March 31, 2026, as compared to 59 in the prior year period.

W e had five sales territories in Europe as of March 31, 2026 and March 31, 2025 .

Cost of goods sold and gross margin

Cost of goods sold decreased $0.3 million, or 14%, to $1.9 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Cost of goods sold decreased $0.1 million, or 7%, to $1.9 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

This decrease was driven by a lower cost per unit, primarily due to an increase in manufacturing efficiencies.

Gross profit was $12.8 million for the three months ended September 30, 2025, an increase of $1.6 million, or 15%, over the three months ended September 30, 2024.

Gross margin increased to 87% for the three months ended September 30, 2025, compared to 83% for the three months ended September 30, 2024.

Gross margin for the three months ended September 30, 2025 was higher due to an increase in the average selling price and a decrease in the cost per unit, primarily due to an increase in manufacturing efficiencies.

Gross profit was $12.9 million for the three months ended March 31, 2026, an increase of $2.6 million, or 25%, over the three months ended March 31, 2025.

Gross margin increased to 87% for the three months ended March 31, 2026, compared to 84% for the three months ended March 31, 2025.

Gross margin for the three months ended March 31, 2026 was higher due to an increase in the average selling price and a decrease in the cost per unit, primarily due to an increase in manufacturing efficiencies.

Research and development expenses

R&D expenses increased $0.6 million, or 26%, to $3.1 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This change was driven by a $0.5 million increase in compensation expenses and a $0.2 million increase in consulting expenses, partially offset by a $0.2 million decrease in clinical trial expenses.

R&D expenses increased $0.6 million, or 23%, to $3.1 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

This change was driven by a $0.4 million increase in consulting expenses, a $0.3 million increase in compensation expenses, and a $0.1 million increase in non-cash stock-based compensation expenses, partially offset by a $0.2 million decrease in clinical trial expenses.

Selling, general and administrative expenses

SG&A expenses increased $0.2 million, or 1%, to $21.9 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

This change was primarily driven by a $0.2 million increase in consulting expenses, a $0.2 million increase in travel expenses, and a $0.2 million increase in non-cash stock-based compensation expense, partially offset by a $0.2 million decrease in advertising expenses and a $0.2 million decrease in compensation expenses.

SG&A expenses increased $0.7 million, or 3%, to $22.0 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

This change was primarily driven by a $1.0 million increase in compensation expenses and a $0.3 million increase in non-cash stock-based compensation expenses, partially offset by a $0.3 million decrease in consulting expenses and a $0.3 million decrease in advertising expenses.

Interest expense

Interest expense increased $0.5 million for the three months ended September 30, 2025, compared to the three months ended September 30, 2024.

Interest expense increased $0.1 million for the three months ended March 31, 2026, compared to the three months ended March 31, 2025.

This increase was driven by the interest expense on higher levels of borrowings under the Loan Agreement.

Other income, net

Other income, net was $0.9 million for each of the three months ended September 30, 2025 and 2024.

Other income, net was $0.6 and $1.1 million for the three months ended March 31, 2026 and 2025, respectively.

These balances consisted of interest income on our interest-bearing accounts.

Benefit (provision) for income taxes

Benefit (provision) for income taxes was nominal for each of the three months ended September 30, 2025 and 2024.

Consolidated results of operations for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024

Nine months ended

September 30,

(unaudited and in thousands)

Cost of goods sold

Operating expenses:

Research and development

Selling, general and administrative

Total operating expenses

Loss from operations

Interest expense

Other income, net

Loss before income taxes

Benefit (provision) for income taxes

The following table provides revenue by geography:

Nine months ended

September 30,

(unaudited and in thousands)

United States

Total Revenue

Revenue was $40.6 million for the nine months ended September 30, 2025, an increase of $4.7 million, or 13%, over the nine months ended September 30, 2024.

Revenue generated in the U.S.

was $36.9 million for the nine months ended September 30, 2025, an increase of $4.1 million, or 13%, over the nine months ended September 30, 2024.

Revenue units in the U.S.

totaled 1,170 and 1,062 for the nine months ended September 30, 2025 and 2024, respectively.

The increases were primarily driven by continued growth in the U.S.

HF business as a result of the expansion into new sales territories, new accounts, and increased physician and patient awareness of Barostim.

Revenue generated in Europe was $3.7 million for the nine months ended September 30, 2025, a $0.5 million increase, or 17%, compared to the nine months ended September 30, 2024.

Total revenue units in Europe increased to 170 for the nine months ended September 30, 2025, as compared to 163 in the prior year period.

Cost of goods sold and gross margin

Cost of goods sold increased $0.3 million, or 6%, to $6.1 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This increase was driven by higher sales of Barostim, partially offset by a lower cost per unit, primarily due to an increase in manufacturing efficiencies.

Gross profit was $34.5 million for the nine months ended September 30, 2025, an increase of $4.3 million, or 14%, over the nine months ended September 30, 2024.

Gross margin increased to 85% for the nine months ended September 30, 2025, compared to 84% for the nine months ended September 30, 2024.

for the nine months ended September 30, 2025 was higher due to an increase in the average selling price and a decrease in the cost per unit, primarily due to an increase in manufacturing efficiencies.

Research and development expenses

R&D expenses decreased $0.2 million, or 2%, to $8.1 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This change was driven by a $0.4 million decrease in clinical trial expenses, partially offset by a $0.1 million increase in compensation expenses and a $0.1 million increase in consulting expenses.

Selling, general and administrative expenses

SG&A expenses decreased $4.6 million, or 6%, to $66.5 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This change was primarily driven by an $8.0 million decrease in non-cash stock-based compensation expense and a $0.7 million decrease in advertising expenses, partially offset by a $2.7 million increase in cash compensation expenses and a $1.3 million increase in travel expenses.

The modification of stock options held by our former Chief Executive Officer in connection with his retirement in the first quarter of 2024 described in Note 7 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q contributed approximately $8.4 million to the decrease in non-cash stock-based compensation expense.

Interest expense

Interest expense increased $1.5 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This increase was driven by the interest expense on higher levels of borrowings under the Loan Agreement.

Other income, net

Other income, net increased $0.2 million for the nine months ended September 30, 2025, compared to the nine months ended September 30, 2024.

This increase was primarily driven by increased interest income on our interest-bearing accounts.

The decrease was primarily driven by the lower cash balance.

Benefit (provision) for income taxes

Benefit (provision) for income taxes was nominal for each of the nine months ended September 30, 2025 and 2024.

Benefit (provision) for income taxes was nominal for each of the three months ended March 31, 2026 and 2025.

Liquidity, capital resources and plan of operations

We have incurred significant operating losses and negative cash flows from operations since our inception, and we anticipate that we will incur significant losses for at least the next several years.

As of September 30, 2025 and December 31, 2024, we had cash and cash equivalents of $85.1 million and $105.9 million, respectively.

F or the three months ended September 30, 2025 and 2024, our net losses were $12.9 million and $13.1 million, respectively.

For the nine months ended September 30, 2025 and 2024, our net losses were $41.4 million and $49.3 million, respectively.

Our net cash used in operating activities for the nine months ended September 30, 2025 and 2024 was $30.4 million and $31.1 million, respectively.

On October 31, 2022, we entered into the Loan Agreement under which we were allowed to borrow, subject to our achievement of certain milestones, up to a total of $50.0 million in a series of Term Loans described in Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

We had $50.0 million in outstanding Term Loans under the Loan Agreement as of September 30, 2025.

On November 4, 2022, we entered into an Equity Distribution Agreement with Piper Sandler & Co., as agent, under which we may offer and sell, from time to time at our sole discretion, shares of our common stock having an aggregate offering price of up to $50.0 million in an “at-the-market” (“ATM”) offering, to or through the agent.

In January 2024, we commenced this ATM offering and, during the nine months ended September 30, 2025, we issued 543,462 shares of common stock under the program for gross proceeds of $9.5 million.

As of March 31, 2026 and December 31, 2025, we had cash and cash equivalents of $72.3 million and $75.7 million, respectively.

F or the three months ended March 31, 2026 and 2025, our net losses were $13.1 million and $13.8 million, respectively.

Our net cash used in operating activities for the three months ended March 31, 2026 and 2025 was $12.2 million and $12.8 million, respectively.

Note 4 to our condensed consolidated financial statements included elsewhere in this Quarterly Report on Form 10-Q.

On January 9, 2026, we entered into an Amendment to our existing Loan Agreement.

Pursuant to the Amendment, the terms loans available were increased by $50.0 million, to an aggregate principal amount of up to $100.0 million, subject to our achievement of certain milestones.

On the closing date, we borrowed an additional $10.0 million under the Loan Agreement.

We had $60.0 million in outstanding Term Loans under the Loan Agreement as of March 31, 2026.

We issued 543,462 shares of common stock for gross proceeds of $9.5 million during the year ended December 31, 2025.

On November 4, 2025, we and the agent mutually agreed to terminate the Equity Distribution Agreement for the ATM, effective on November 6, 2025.

In connection with the filing of this Quarterly Report on Form 10-Q, we expect to file a new registration statement on Form S-3 to replace our existing registration statement on Form S-3 that is scheduled to expire on November 15, 2025 and subsequently enter into a new sales agreement to permit continued ATM offering activity in the future.

On January 12, 2026, we entered into a Sale Agreement with Jefferies LLC, as agent.

Our future liquidity and capital funding requirements will depend on numerous factors, including:

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● the emergence of competing technologies or other adverse market developments.

We believe that our existing cash resources together with cash from operations will be sufficient to meet our forecasted requirements for operating liquidity, capital expenditures and debt services for at least the next two years when principal payments start coming due in November 2027 under our existing Innovatus Loan Agreement.

If these sources are insufficient to satisfy our liquidity requirements, or provide funding to execute or accelerate our growth strategies, however, we may seek to sell additional equity or enter into an additional loan agreement.

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The following table sets forth the primary sources and uses of cash for each of the periods presented below:

Nine months ended

September 30,

Three months ended

(in thousands)

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Cash used in operating activities

Net cash used in operating activities for the nine months ended September 30, 2025 was $30.4 million and consisted primarily of a net loss of $41.4 million, partially offset by a non-cash charge of $8.3 million related to stock-based compensation expense, and a change in net operating assets of $2.0 million.

Net operating assets consisted primarily of accounts receivable, accounts payable, inventory, prepaid expenses and other current assets, and accrued expenses to support the growth of our operations.

Net cash used in operating activities for the nine months ended September 30, 2024 was $31.1 million and consisted primarily of a net loss of $49.3 million, partially offset by a non-cash charge of $16.4 million related to stock-based compensation expense and a change in net operating assets of $1.2 million.

Net operating assets consisted primarily of accounts receivable, inventory, prepaid expenses and other current assets, accounts payable, and accrued expenses to support the growth of our operations.

Net cash used in operating activities for the three months ended March 31, 2026 was $12.2 million and consisted primarily of a net loss of $13.1 million, partially offset by a non-cash charge of $2.9 million related to stock-based compensation expense, and a change in net operating assets of $2.2 million.

Net operating assets consisted primarily of accrued expenses, accounts receivable, accounts payable, inventory, and prepaid expenses and other current assets to support the growth of our operations.

Net cash used in operating activities for the three months ended March 31, 2025 was $12.8 million and consisted primarily of a net loss of $13.8 million and a change in net operating assets of $1.7 million, partially offset by a non-cash charge of $2.5 million related to stock-based compensation expense.

Cash used in investing activities:

Cash used in investing activities was $0.5 million and $1.3 million for the nine months ended September 30, 2025 and 2024, respectively, and consisted of purchases of property and equipment.

Cash used in investing activities was $0.1 million for each of the three months ended March 31, 2026 and 2025, respectively, and consisted of purchases of property and equipment.

Cash provided by financing activities:

Net cash provided by financing activities for the nine months ended September 30, 2025 was $10.1 million and consisted of $9.2 million related to net proceeds from the issuance of common stock through the ATM offering, $0.6 million related to proceeds from the exercise of common stock options and $0.4 million related to proceeds from the ESPP.

Net cash provided by financing activities for the nine months ended September 30, 2024 was $42.0 million and consisted of $20.2 million related to proceeds from the issuance of common stock through the ATM offering, $20.0 million related to proceeds under the Loan Agreement, $1.6 million related to proceeds from the exercise of common stock options, and $0.4 million related to proceeds from the ESPP, partially offset by $0.2 million related to debt financing costs.

Net cash provided by financing activities for the three months ended March 31, 2026 was $8.9 million and consisted primarily of $10.0 million related to net proceeds from debt financing partially offset by $1.1 million related to the debt financing costs.

Net cash provided by financing activities for the three months ended March 31, 2025 was $9.6 million and consisted of $9.2 million related to net proceeds from the issuance of common stock through the ATM offering and $0.4 million related to proceeds from the exercise of common stock options.

Contractual obligations and commitments

There have been no material changes to our contractual obligations as of September 30, 2025, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2024.

There have been no material changes to our contractual obligations as of March 31, 2026, as compared to those disclosed in our Annual Report on Form 10-K for the year ended December 31, 2025.

Critical accounting policies and estimates

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“Management's Discussion and Analysis of Financial Condition and Results of Operations—Critical accounting policies and estimates" in our Annual Report on Form 10-K for the fiscal year ended December 31, 2025.

We have reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the nine months ended September 30, 2025.

We have reviewed and determined that those critical accounting policies and estimates remain our critical accounting policies and estimates as of and for the three months ended March 31, 2026.

JOBS Act accounting election

5 unchanged sentences

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis