What changed in this filing

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Item 2. Management’s Discussion and Analysis

2025-08-05 compared with 2025-05-09 · 107 added, 47 removed, 146 unchanged (51% of the section changed)

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However, we consider hospitals, where the procedures are performed primarily in an outpatient setting, to be our customers, as they are the purchasing entities of Barostim in the U.S.

We intend to continue making significant investments building our U.S.

We intend to continue making

significant investments building our U.S.

commercial infrastructure by expanding and training our U.S.

We have dedicated significant resources to educate physicians who treat HFrEF about the advantages of Barostim and train them on the implant procedure.

We have dedicated significant resources to educate physicians and advanced practice providers who treat HFrEF about the advantages of Barostim and train them on the implant procedure.

The costs for the device and implantation procedure are reimbursed through various third-party payers, such as government agencies and commercial payers.

In the U.S., we estimate that 67% of our target patient

population is Medicare-eligible based on the age demographic of the HFrEF patient population indicated for Barostim.

In the U.S., we estimate that 67% of our target patient population is Medicare-eligible based on the age demographic of the HFrEF patient population indicated for Barostim.

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

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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 March 31, 2025.

As a result of these investments and 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.

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

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

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

The proposal 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 is expected to be issued in the November and take effect January 1, 2026.

Also in July 2025, CMS, as part of the proposed rule for the 2026 Outpatient Prospective Payment System (“OPPS”), proposed to retain the Barostim implant procedure under New Technology Ambulatory Payment Classification (“APC”) 1580, with an associated outpatient payment rate of approximately $45,000.

CMS continues to solicit comments on the need for a Level 6 Neurostimulator APC, and we will continue to work with CMS in an effort to create this new classification.

The final rule is expected to be issued in November and take effect January 1, 2026.

Factors affecting our performance

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sales have steadily increased since the pre-market approval of Barostim by the FDA in August 2019, and the subsequent reimbursement changes.

We expect to continue to drive increases in revenue through our efforts to increase awareness of Barostim among physicians, patients and payers, and

by the expansion of our U.S.

We expect to continue to drive increases in revenue through our efforts to increase awareness of Barostim among physicians, patients and payers, and by the expansion of our U.S.

sales force, as well as by seeking expanded labeling for Barostim.

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The manufacturing overhead costs of Barostim are directly aligned to our production volume and therefore the cost per product is reduced if production levels increase.

While we expect our gross margin to be positively affected over time to the extent we are successful in selling more product through our direct sales force and by increasing our production volumes, it will likely fluctuate from period to period as we continue to introduce new or modified products and adopt new manufacturing processes and technologies.

period to period as we continue to introduce new or modified products and adopt new manufacturing processes and technologies.

Research and development expenses

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Other income, net consists primarily of interest income on our interest-bearing accounts, partially offset by the effect of exchange rates on our foreign currency-denominated asset and liability balances.

Provision for income taxes

Provision for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business.

Benefit (provision) for income taxes

Benefit (provision) for income taxes consists primarily of income taxes in foreign jurisdictions in which we conduct business.

We maintain a full valuation allowance for deferred tax assets including NOL carryforwards, R&D credits, and other tax credits.

Results of operations

Consolidated results of operations for the three months ended March 31, 2025, compared to the three months ended March 31, 2024

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

Three months ended

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Total Revenue

Revenue was $12.3 million for the three months ended March 31, 2025, an increase of $1.6 million, or 15%, over the three months ended March 31, 2024.

Revenue was $13.6 million for the three months ended June 30, 2025, an increase of $1.8 million, or 15%, over the three months ended June 30, 2024.

Revenue generated in the U.S.

was $11.2 million for the three months ended March 31, 2025, an increase of $1.4 million, or 14%, over the three months ended March 31, 2024.

was $12.2 million for the three months ended June 30, 2025, an increase of $1.6 million, or 15%, over the three months ended June 30, 2024.

HF revenue in the U.S.

totaled $11.1 million and $9.7 million for the three months ended March 31, 2025 and 2024, respectively.

totaled $12.1 million and $10.5 million for the three months ended June 30, 2025 and 2024, respectively.

HF revenue units in the U.S.

totaled 353 and 319 for the three months ended March 31, 2025 and 2024, respectively.

totaled 387 and 339 for the three months ended June 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.

As of March 31, 2025, we had a total of 227 active implanting centers in the U.S., as compared to 190 as of March 31, 2024.

As of June 30, 2025, we had a total of 240 active implanting centers in the U.S., as compared to 189 as of June 30, 2024.

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

As of March 31, 2025, we had a total of 45 sales territories in the U.S.

as compared to 39 sales territories as of March 31, 2024.

Revenue generated in Europe was $1.1 million for the three months ended March 31, 2025, a $0.2 million increase compared to the three months ended March 31, 2024.

Total revenue units in Europe increased to 59 for the three months ended March 31, 2025, as compared to 44 in the prior year period.

As of March 31, 2025 we had five sales territories in Europe as compared to six sales territories as of March 31, 2024 .

As of June 30, 2025, we had a total of 47 sales territories in the U.S.

as compared to 42 sales territories as of June 30, 2024.

Revenue generated in Europe was $1.3 million for the three months ended June 30, 2025, a $0.2 million increase, or 19%, compared to the three months ended June 30, 2024.

Total revenue units in Europe decreased to 61 for the three months ended June 30, 2025, as compared to 63 in the prior year period.

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

Cost of goods sold and gross margin

Cost of goods sold increased $0.4 million, or 26%, to $2.0 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Cost of goods sold increased $0.2 million, or 13%, to $2.1 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This increase was driven by higher sales of Barostim.

Gross profit was $10.3 million for the three months ended March 31, 2025, an increase of $1.2 million, or 13%, over the three months ended March 31, 2024.

Gross margin was 84% and 85% for the three months ended March 31, 2025 and March 31, 2024, respectively.

Gross profit was $11.5 million for the three months ended June 30, 2025, an increase of $1.5 million, or 16%, over the three months ended June 30, 2024.

Gross margin was 84% for each of the three months ended June 30, 2025 and 2024.

Research and development expenses

R&D expenses decreased $0.5 million, or 18%, to $2.5 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This change was driven by a $0.4 million decrease in consulting expenses and a $0.1 million decrease in non-cash stock-based compensation expense.

R&D expenses decreased $0.3 million, or 11%, to $2.5 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This change was driven by a $0.3 million decrease in compensation expenses.

Selling, general and administrative expenses

SG&A expenses decreased $7.1 million, or 25%, to $21.2 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

This change was primarily driven by an $8.6 million decrease in non-cash stock-based compensation expense, partially offset by a $1.6 million increase in compensation expenses, mainly as a result of increased headcount.

Approximately $8.4 million of the decrease in non-cash stock-based compensation expense is related to 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.

SG&A expenses increased $2.2 million, or 11%, to $23.4 million for the three months ended June 30, 2025, compared to the three months ended June 30, 2024.

This change was primarily driven by a $1.4 million increase in compensation expenses, a $0.8 million increase in travel expenses, and a $0.4 million increase in non-cash stock-based compensation expense, partially offset by a $0.5 million decrease in advertising expenses.

Interest expense

Interest expense increased $0.5 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

Interest expense increased $0.5 million for the three months ended June 30, 2025, compared to the three months ended June 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 $0.1 million for the three months ended March 31, 2025, compared to the three months ended March 31, 2024.

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

This increase was primarily driven by more 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 March 31, 2025 and March 31, 2024.

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

Consolidated results of operations for the six months ended June 30, 2025, compared to the six months ended June 30, 2024

Six months ended

(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:

Six months ended

(unaudited and in thousands)

United States

Total Revenue

Revenue was $25.9 million for the six months ended June 30, 2025, an increase of $3.4 million, or 15%, over the six months ended June 30, 2024.

Revenue generated in the U.S.

was $23.4 million for the six months ended June 30, 2025, an increase of $2.9 million, or 14%, over the six months ended June 30, 2024.

HF revenue in the U.S.

totaled $23.2 million and $20.3 million for the six months ended June 30, 2025 and 2024, respectively.

HF revenue units in the U.S.

totaled 740 and 658 for the six months ended June 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 $2.5 million for the six months ended June 30, 2025, a $0.4 million increase, or 20%, compared to the six months ended June 30, 2024.

Total revenue units in Europe increased to 120 for the six months ended June 30, 2025, as compared to 107 in the prior year period.

Cost of goods sold and gross margin

Cost of goods sold increased $0.7 million, or 19%, to $4.2 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This increase was driven by higher sales of Barostim.

Gross profit was $21.8 million for the six months ended June 30, 2025, an increase of $2.7 million, or 14%, over the six months ended June 30, 2024.

Gross margin was 84% for each of the six months ended June 30, 2025 and 2024.

Research and development expenses

R&D expenses decreased $0.8 million, or 14%, to $5.0 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This change was driven by a $0.4 million decrease in compensation expenses and a $0.3 million decrease in clinical trial expenses.

Selling, general and administrative expenses

SG&A expenses decreased $4.9 million, or 10%, to $44.6 million for the six months ended June 30, 2025, compared to the six months ended June 30, 2024.

This change was primarily driven by an $8.2 million decrease in non-cash stock-based compensation expense and a $0.5 million decrease in advertising expenses, partially offset by a $2.9 million increase in compensation expenses and a $1.1 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 $1.0 million for the six months ended June 30, 2025, compared to the six months ended June 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 six months ended June 30, 2025, compared to the six months ended June 30, 2024.

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

Benefit (provision) for income taxes

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

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 March 31, 2025 and December 31, 2024, we had cash and cash equivalents of $102.7 million and $105.9 million, respectively.

For the three months ended March 31, 2025 and 2024, our net losses were $13.8 million and $22.2 million, respectively.

Our net cash used in operating activities for the three months ended March 31, 2025 and 2024 was $12.8 million and $10.9 million, respectively.

As of June 30, 2025 and December 31, 2024, we had cash and cash equivalents of $95.0 million and $105.9 million, respectively.

F or the three months ended June 30, 2025 and 2024, our net losses were $14.7 million and $14.0 million, respectively.

For the six months ended June 30, 2025 and 2024, our net losses were $28.5 million and $36.2 million, respectively.

Our net cash used in operating activities was $20.7 million for each of the six months ended June 30, 2025 and 2024.

On October 31, 2022, we entered into the Loan Agreement under which we may 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 March 31, 2025.

We had $50.0 million in outstanding Term Loans under the Loan Agreement as of June 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 issued 543,462 shares of common stock for gross proceeds of $9.5 million under the ATM offering during the three months ended March 31, 2025.

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

We have remaining capacity to issue and sell up to $6.7 million of additional shares of common stock under this ATM offering.

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

Three months ended

Six months ended

(in thousands)

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Cash used in operating activities

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.

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

Net cash used in operating activities for the three months ended March 31, 2024 was $10.9 million and consisted primarily of a net loss of $22.2 million, partially offset by a non-cash charge of $11.1 million related to stock-based compensation expense.

Net cash used in operating activities for the six months ended June 30, 2025 was $20.7 million and consisted primarily of a net loss of $28.5 million, partially offset by a non-cash charge of $5.4 million related to stock-based compensation expense, and a change in net operating assets of $1.9 million.

Net operating assets

consisted primarily of accounts receivable, accrued expenses, 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 six months ended June 30, 2024 was $20.7 million and consisted primarily of a net loss of $36.2 million, partially offset by a non-cash charge of $13.7 million related to stock-based compensation expense and an increase in net operating assets of $1.4 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.

Cash used in investing activities:

Cash used in investing activities was $0.1 million and $0.9 million for the three months ended March 31, 2025 and 2024, respectively, and consisted of purchases of property and equipment.

Cash used in investing activities was $0.2 million and $1.3 million for the six months ended June 30, 2025 and 2024, respectively, and consisted of purchases of property and equipment.

Cash provided by financing activities:

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.

Net cash provided by financing activities for the three months ended March 31, 2024 was $1.4 million and consisted of $0.8 million related to proceeds from the exercise of common stock options and $0.5 million related to net proceeds from the issuance of common stock through the ATM offering.

Net cash provided by financing activities for the six months ended June 30, 2025 was $10.0 million and consisted of $9.2 million related to net proceeds from the issuance of common stock through the ATM offering, $0.4 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 six months ended June 30, 2024 was $1.8 million and consisted of $0.9 million related to net proceeds from the exercise of common stock options, $0.5 million related to proceeds from the issuance of common stock through the ATM offering, and $0.4 million related to proceeds from the ESPP.

Contractual obligations and commitments

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

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, 2024.

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, 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 six months ended June 30, 2025.

JOBS Act accounting election

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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