8-K: Helius Medical Technologies Announces Second Quarter 2024 Financial Results and Business Updates

Helius Medical Technologies reported a 35% increase in revenue compared to the previous quarter, alongside key advancements in reimbursement and clinical programs.

Summary

• Helius Medical Technologies announced its financial results for the second quarter of 2024, showing a revenue of $182 thousand, which is a decrease compared to $256 thousand in the same quarter of 2023 due to the expiration of the Patient Therapy Access Program (PTAP).
• However, revenue increased by $47 thousand or 35% compared to the first quarter of 2024, driven by increased product sales in both the U.S. and Canada.
• The company secured its first third-party reimbursement for the PoNS device at $23,900 and received a preliminary CMS payment determination, with final rates expected on October 1, 2024.
• Helius also completed site enrollment for its U.S. stroke registrational program, targeting an FDA submission in the first half of 2025.
• The company secured Federal Supply Schedule and DAPA contract pricing with the U.S. Department of Veterans Affairs and Department of Defense, respectively.
• A public offering closed, raising net proceeds of approximately $5.5 million.
• The net loss for the quarter was $1.6 million, consistent with the same period last year, with a basic and diluted net loss per share of $0.64.
• As of June 30, 2024, Helius had $6.4 million in cash and no debt, projecting a cash runway into 2025.

Sentiment

Score: 7

Explanation: The sentiment is moderately positive due to the revenue growth, reimbursement progress, and clinical trial advancements, but tempered by the ongoing losses and risks associated with commercialization.

Positives

• The company achieved a 35% increase in revenue compared to the previous quarter, indicating growth in product sales.
• Securing the first third-party reimbursement for the PoNS device is a significant step towards increasing accessibility.
• The preliminary CMS payment determination is a positive development for future reimbursement.
• Completion of site enrollment for the stroke program keeps the company on track for its FDA submission.
• Securing contracts with the VA and DoD provides a stable revenue stream.
• The successful public offering has strengthened the company's cash position.
• The expansion of sales representation at VA sites is a positive step for market penetration.

Negatives

• Second quarter revenue of $182 thousand was lower than the $256 thousand reported in the same quarter of 2023 due to the expiration of the PTAP.
• The company reported an operating loss of $3.3 million for the second quarter of 2024.
• The net loss for the quarter was $1.6 million, consistent with the same period last year.

Risks

• The company's future success depends on obtaining national Medicare insurance coverage and a reimbursement code.
• There are risks associated with manufacturing, labor shortages, and supply chain issues.
• The company faces risks related to the clinical development process and FDA regulatory submission review and approval process.
• The company's ability to secure additional funding is uncertain.
• The company's ability to build internal commercial infrastructure and secure state distribution licenses is a risk.

Future Outlook

The company expects a first read of the primary endpoints results of the PoNSTEP study, further expansion of the VA sales rep organization, and final reimbursement determination by CMS in the third quarter of 2024. The company projects a cash runway into 2025.

Management Comments

• Our team has been working tirelessly to get PoNS into the hands of MS patients who suffer from gait and balance impairment.
• 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 as well as negotiating reimbursement with other third-party payers.
• In June, we completed site participation enrollment for our registrational program in stroke.
• The third quarter of 2024 will be pivotal for Helius and will help frame our future.

Industry Context

This announcement reflects the ongoing efforts of neurotech companies to gain market traction for innovative therapies. The focus on reimbursement and clinical trials is typical for companies in this sector, as they navigate regulatory hurdles and seek to establish commercial viability. The company's focus on the VA and DoD is a common strategy for medical device companies seeking to establish a stable revenue base.

Comparison to Industry Standards

• The company's revenue growth of 35% quarter-over-quarter is a positive sign, but the year-over-year decrease highlights the challenges of transitioning from a patient access program to a reimbursement-based model.
• The securing of a third-party reimbursement at $23,900 is a significant achievement, as many neurotech companies struggle to obtain favorable reimbursement rates.
• The company's progress with the stroke registrational program is comparable to other companies in the neurorehabilitation space, which often face lengthy and costly clinical trial processes.
• The securing of contracts with the VA and DoD is a positive development, as these contracts provide a stable revenue stream and can serve as a validation of the technology.
• Compared to companies like NeuroMetrix and Second Sight Medical Products, Helius is at an earlier stage of commercialization, but its focus on reimbursement and clinical trials is consistent with industry best practices.

Stakeholder Impact

• Shareholders will be impacted by the financial results and the company's progress towards commercialization.
• Employees will be impacted by the company's growth and expansion.
• Customers (patients) will benefit from increased access to the PoNS device.
• Suppliers will be impacted by the company's production and sales volumes.
• Creditors will be impacted by the company's financial performance and cash position.

Next Steps

• The company expects a first read of the primary endpoints results of the PoNSTEP study.
• The company will further expand its VA sales rep organization and penetrate VA sites.
• The company expects to receive final reimbursement determination by CMS on October 1, 2024.

Key Dates

Keywords

PoNS, Neuromodulation, Reimbursement, Stroke, FDA, CMS, Veterans Affairs, Department of Defense, Gait, Balance, Multiple Sclerosis, Neurotech