8-K: Helius Medical Technologies Reports Q4 and Full Year 2023 Financial Results, Secures Key Reimbursement Codes

Helius Medical Technologies announced its fourth quarter and full year 2023 financial results, highlighted by securing key reimbursement codes for its PoNS device and progress in stroke development.

Summary

• Helius Medical Technologies reported a decrease in revenue for both the fourth quarter and full year 2023, primarily due to the expiration of the PTAP program in the US and lower sales in Canada.
• Q4 2023 revenue was $134 thousand, down from $282 thousand in Q4 2022, while full year revenue was $644 thousand, compared to $787 thousand in 2022.
• The company's operating expenses decreased in both Q4 and the full year, with Q4 operating expenses at $2.3 million, a decrease of $0.5 million compared to Q4 2022.
• Net loss for Q4 2023 was $1.0 million, a significant improvement from the $4.9 million loss in Q4 2022.
• The full year net loss was $8.9 million, compared to $14.1 million in 2022.
• Helius secured Healthcare Common Procedure Coding System (HCPCS) Level II codes for the PoNS device, effective April 1, 2024, a crucial step towards reimbursement.
• The company is targeting an early 2025 regulatory submission for stroke treatment with potential commercialization by the end of next year.
• Helius raised $1.3 million through its At-The-Market (ATM) program in Q1 2024, extending its cash runway into Q3 2024.
• The company had $5.2 million in cash as of December 31, 2023, compared to $14.5 million at the end of 2022.

Sentiment

Score: 5

Explanation: The document presents mixed signals. While there are positive developments such as securing HCPCS codes and progress in stroke development, the significant revenue decline and cash burn are concerning. The company is making progress but faces significant financial challenges.

Positives

• The securing of HCPCS codes is a major step towards Medicare and third-party reimbursement for the PoNS device.
• The company has made progress in its stroke development program, including adding a second study site and aligning with the FDA on its development plan.
• The reduction in operating expenses and net losses indicates improved financial management.
• The $1.3 million raised through the ATM program provides additional cash runway.
• The letter of intent with the Qubec Ministry of Health and Social Services represents a potential revenue opportunity.
• The study results showing improved return-to-work outcomes for TBI patients using PoNS Therapy are encouraging.

Negatives

• Revenue decreased significantly in both Q4 and the full year 2023, primarily due to the expiration of the PTAP program and lower sales in Canada.
• The company's cash reserves have decreased significantly from $14.5 million at the end of 2022 to $5.2 million at the end of 2023.
• Gross profit decreased significantly for both Q4 and the full year 2023.
• The company is still operating at a loss, although the losses have decreased compared to the previous year.

Risks

• The company's ability to secure Medicare reimbursement for the PoNS device is not guaranteed.
• The company's future cash position is dependent on its ability to raise additional capital.
• There are risks associated with the development and commercialization of the PoNS device, including regulatory approvals and market acceptance.
• The company faces competition from other medical device companies.
• Manufacturing, labor shortage and supply chain risks could impact the company's ability to produce and distribute the PoNS device.

Future Outlook

The company is focused on securing Medicare reimbursement for the PoNS device, progressing its stroke registrational program, and targeting an early 2025 regulatory submission with possible commercialization by the end of next year. The company believes the $1.3 million raised in Q1 2024 will extend the cash runway into Q3 2024.

Management Comments

• We are pleased to have reached a key milestone toward Medicare and broad third-party reimbursement last month when CMS assigned HCPCS codes for the PoNS mouthpiece and controller, effective April 1, 2024.
• We plan to engage with CMS in the coming months with the objective of securing Medicare reimbursement for the PoNS controller and mouthpiece to be effective as soon as October 1, 2024.
• Delivering PoNS Therapy to stroke patients suffering from gait and balance deficit is one of our chief goals and I'm proud to report that weve made several meaningful strides toward potential U.S. authorization.
• With $1.3 million raised under our ATM program since year end, we now have the cash runway to take us into the third quarter of 2024 as we continue progressing our stroke registrational program and pursuing widespread reimbursement.

Industry Context

The announcement comes as the neurotech industry is seeing increased interest in non-invasive neuromodulation therapies. The securing of HCPCS codes is a significant step for Helius, as reimbursement is a major hurdle for medical device companies. The focus on stroke treatment aligns with the growing need for effective therapies for neurological conditions.

Comparison to Industry Standards

• The revenue decline is concerning, especially when compared to other medical device companies that have seen growth in recent years. For example, companies like InMode and Shockwave Medical have reported significant revenue growth.
• The cash burn rate is also a concern, as the company's cash reserves have decreased significantly. This is in contrast to companies like Nevro, which have been able to manage their cash flow more effectively.
• The securing of HCPCS codes is a positive development, but the company still needs to secure Medicare reimbursement, which is a complex and lengthy process. Other companies, such as Axonics, have successfully navigated this process, but it requires significant resources and expertise.
• The progress in stroke development is encouraging, but the company is still in the early stages of clinical trials. Other companies, such as Penumbra, have more advanced stroke treatment technologies and are closer to commercialization.

Stakeholder Impact

• Shareholders may be concerned about the decrease in revenue and cash reserves, but encouraged by the progress in reimbursement and stroke development.
• Employees may be impacted by the company's financial situation, but also motivated by the progress in product development.
• Customers may benefit from the potential for wider availability of the PoNS device through reimbursement.
• Suppliers may be impacted by the company's financial situation, but also benefit from the potential for increased sales.
• Creditors may be concerned about the company's financial situation, but also encouraged by the progress in product development.

Next Steps

• Engage with CMS to secure Medicare reimbursement for the PoNS device.
• Continue progressing the stroke registrational program.
• Pursue widespread reimbursement for the PoNS device.
• Target an early 2025 regulatory submission for stroke treatment.
• Continue to manage cash burn and seek additional funding.

Key Dates

Keywords

PoNS, neuromodulation, stroke, reimbursement, HCPCS, gait, balance, neurotech, medical device, FDA, Medicare, TBI