Hyperfine, Inc.

The following is a discussion of our results of operations for the three months ended March 31, 2025 and 2024. Our accounting policies are described under"Summary of Significant Accounting Policies"in Note 2 to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q.

Comparison of the Three Months Ended March 31, 2025 and 2024 ($ Amounts shown in tables in thousands)

Sales

Device sales decreased by $1.2 million, or 43.7%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease is mainly driven by a decrease in units sold offset by an increase in average selling price.

Service sales increased for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The increase is driven by an increase in device install base.

Cost of sales

Cost of device sales decreased by $0.5 million, or 34.3%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was driven primarily by a decrease in units sold.

Cost of service sales decreased by $0.2 million, or 39.1%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease is driven primarily by a decrease in infrastructure costs.

Research and development

Research and development expenses decreased by $0.5 million, or 9.6%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was driven primarily by a decrease in salary and benefits of $0.9 million, and a decrease in consulting expenses of $0.3 million, partially offset by a decrease in grant fulfillment credits of $0.7 million.

General and administrative

General and administrative expenses decreased by $0.2 million, or 5.0%, for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This decrease was driven primarily by a decrease in auditing and accounting fees of $0.2 million, a decrease in insurance, legal, and intellectual property expenses of $0.1 million, and a decrease in stock-based compensation of $0.1 million, partially offset by an increase in allowance for credit losses of $0.2 million.

Sales and marketing

Sales and marketing expenses increased by $0.5 million, or 26.7% for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase was driven primarily by an increase in salary and benefits of $0.3 million and an increase in marketing expenses of $0.2 million.

Interest income

Interest income decreased by $0.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. The decrease was driven primarily by lower cash balances in money market funds and demand deposit accounts.

Change in fair value of warrant liabilities

Change in fair value of warrant liabilities for the three months ended March 31, 2025 represented a gain of $1.6 million caused by a decrease in the fair value of the warrant liabilities from the initial fair value evaluation on February 12, 2025, the closing date of the Offering (as defined below) to the subsequent fair value evaluation on March 31, 2025, primarily related to changes in the price per share of our Class A common stock. There was no similar change in fair value during the three months ended March 31, 2024 as the warrants were not outstanding during that period.

Other (expense) income, net

Other (expense) income, net increased by $0.5 million for the three months ended March 31, 2025 compared to the three months ended March 31, 2024. This increase is mainly driven by financing cost allocated to warrant liabilities.

Liquidity and Capital Resources

We have funded our operations primarily with proceeds from the issuance of common stock, preferred stock and warrants. We have incurred significant cash burn and recurring net losses, which includes a net loss of $9.4 million for the three months ended March 31, 2025, and an accumulated deficit of $303.9 million as of March 31, 2025. As of March 31, 2025, we had cash and cash equivalents of $33.1 million. As we continue to invest in research and development of our products and sales and marketing, we expect to continue to incur a significant cash burn and recurring net losses for the foreseeable future until such time that our product and services sales generate enough gross profit to cover our operating expenses. However, we can provide no assurance that our product and service sales will generate a net profit in the future or that our cash resources will be sufficient to continue our commercialization and development activities.

In November 2023, we filed a shelf registration statement on Form S-3 (the “Shelf Registration Statement”) with the SEC pursuant to which we registered for sale up to $150 million of any combination of our Class A common stock, preferred stock, debt securities, warrants, rights and/or units from time to time and at prices and on terms that we may determine. The Shelf Registration Statement also includes a prospectus covering up to an aggregate of $50.0 million in shares of Class A common stock that we may issue and sell from time to time, through B. Riley Securities, Inc. (“B. Riley”) acting as our sales agent, pursuant to the sales agreement that we entered into with B. Riley (the “Sales Agreement”) for our “at-the-market” equity program (“ATM”). We are not obligated to make any sales of Class A common stock under the Sales Agreement. As of March 31, 2025, an aggregate total of 898,119 shares of our Class A common stock, for total gross proceeds of $1,013 thousand and net proceeds of $947 thousand, after deducting commissions and other offering expenses related to the ATM, have been issued and sold under the Sales Agreement.

On February 12, 2025, we closed the transactions pursuant to a securities purchase agreement with certain institutional investors (the “Investors”), in which we issued and sold, in a registered direct offering directly to the Investors (the “Offering”): (i) 4,511,278 shares (the “Shares”) of our Class A common stock and (ii) warrants to purchase up to 4,511,278 shares of our Class A common stock (the “Warrants”). Each Share and accompanying Warrant were sold together at a combined offering price of $1.33. The aggregate gross proceeds to from the Offering were $6.0 million before deducting the placement agent’s fees and offering expenses.

Our ability to access capital when needed is not assured and, if capital is not available when, and in the amounts needed, we could be required to delay, scale back or abandon some or all of our development programs, commercialization of our products, and other operations which could materially harm our operations, financial condition and operating results. We expect that our existing cash and cash equivalents, together with proceeds from the sales of our products and services, will enable us to conduct our planned operations for at least the next 12 months. Factors that could accelerate cash needs include: (i) delays in achieving scientific and technical milestones; (ii) unforeseen capital expenditures and fabrication costs related to manufacturing; (iii) changes we may make in our business or commercialization and hiring strategy; (iv) costs of running a public company; (v) higher inflation and increases in product transportation and labor costs; (vi) the effects of the tariffs; and (vii) other items affecting our forecasted level of expenditures and use of cash resources including potential acquisitions.

We expect to use our cash to further invest in the development of our products and services, commercial expansion, and for working capital and general corporate purposes.

Our future cash requirements will depend on many factors, including market adoption of our products; the cost and timing of establishing additional sales, marketing and distribution capabilities; the cost of our research and development activities; our ability to enter into and maintain collaborations; the cost and timing of potential future regulatory clearances or approvals for our products; and the effect of competing technological and market developments. We cannot assure you that we will be able to obtain additional funds on acceptable terms, or at all. If we raise additional funds by issuing equity or equity-linked securities, our stockholders may experience dilution. Future debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. Any debt or equity financing that we raise may contain terms that are not favorable to us or our stockholders. If we raise additional funds through collaboration and licensing arrangements with third parties, it may be necessary to relinquish some rights to our technologies or our products, or grant licenses on terms that are not favorable to us. If we do not have or are not able to obtain sufficient funds, we may have to delay development or commercialization of our products. We also may have to reduce marketing, customer support or other resources devoted to our products and services or cease operations.

Cash

As of March 31, 2025, we had cash and cash equivalents of $33.1 million. Our future capital requirements may vary from those currently planned and will depend on various factors including further development costs, commercialization strategy, international expansion, and regulatory costs. If we need additional funds and are unable to obtain funding on a timely basis, we may need to curtail significantly our product development and commercialization efforts to provide sufficient funds to continue our operations, which could adversely affect our business prospects.

Cash flows

The following table summarizes our cash flows for the periods indicated:

Net cash used in operating activities

For the three months ended March 31, 2025, net cash used in operating activities of $9.2 million was due primarily to a net loss of $9.4 million and non-cash items of $0.4 million, partially offset changes in operating assets and liabilities of $0.6 million. Non-cash items were primarily gain on change in fair value of warrant liabilities of $1.6 million, partially offset by stock-based compensation expense of $0.9 million and depreciation expense of $0.2 million. Changes in operating assets and liabilities were driven primarily by a decrease in inventory of $1.2 million, a decrease in accounts receivable and unbilled receivables of $1.0 million, an increase in accounts payable of $0.6 million, and an increase in deferred funding of $0.4 million, partially offset a decrease in accrued expense and other current liabilities of $1.4 million primarily due to annual bonus payout and an increase in prepaid expenses and other current assets of $1.2 million, primarily due to the timing of payment of the directors and officers liability insurance.

For the three months ended March 31, 2024, net cash used in operating activities of $12.5 million was due primarily to a net loss of $9.8 million and changes in operating assets and liabilities of $4.0 million, partially offset by non-cash items of $1.3 million. Non-cash items were primarily stock-based compensation expense of $1.0 million and depreciation expense of $0.3 million. Changes in operating assets and liabilities were driven primarily by an increase in accounts receivable of $2.1 million due to timing of billing and collection, a decrease in accrued expenses and other current liabilities of $1.4 million primarily due to annual bonus payout, an increase in prepaid expenses and other current assets of $1.3 million primarily due to the timing of payment of the directors and officers liability insurance and the recording of a grant receivable, an increase in inventory of $0.8 million, a decrease in deferred grant funding of $0.6 million due to fulfillment and delivery of a BMGF grant milestone related to a delivery of an enhanced version of our software, partially offset by an increase in accounts payable of $1.2 million, a decrease in prepaid inventory of $0.7 million, a decrease in other long term assets of $0.2 million, and an increase in deferred revenue of $0.1 million.

Net cash used in investing activities

For the three months ended March 31, 2025, net cash used in investing activities of $472 thousand was from fixed assets purchased.

For the three months ended March 31, 2024, net cash used in investing activities of $142 thousand was from fixed assets purchased.

Net cash provided by financing activities

For the three months ended March 31, 2025, net cash provided by financing activities of $5.6 million which consisted primarily of proceeds from issuance and sale of the Shares and Warrants in the Offering, net of offering discounts and other costs of $5.4 million, proceeds from issuance of the Shares under the Sales Agreement of $0.1 million and proceeds from stock option exercises of $33 thousand.

For the three months ended March 31, 2024, net cash provided by financing activities of $55 thousand was proceeds from option exercises.

Contractual obligations

We sponsor a 401(k) defined contribution plan covering all eligible U.S. employees. Contributions to the 401(k) plan are discretionary. We did not make any matching contributions to the 401(k) plan for the three months ended March 31, 2025 and 2024.

Through our engagement with the BMGF, we have deployed and continue to deploy the Swoop® system in low-middle income settings without readily-accessible MRI technology. The multiple grants provided by our research partnership with the BMGF, which commenced funding in the spring of 2020, support the deployment of 25 Swoop® system and accessories to investigators. The ongoing investigation is designed to provide data to validate the potential use of the Swoop® system in measuring the impact of maternal anemia, malnutrition, infection, and birth-related injury. In May 2023, we were awarded an additional three-year grant from the BMGF to continue to develop a scalable approach to measuring neurodevelopment via ULF brain imaging in neonates, infants, and young children in low-to-middle income countries.

Our purchase commitments and obligations include all open purchase orders and contractual obligations in the ordinary course of business, including commitments with contract manufacturers and suppliers, for which we have not received the goods or services. A majority of these purchase obligations are due within a year. Although open purchase orders are considered enforceable and legally binding, the terms generally allow us the option to cancel, reschedule, and adjust our requirements based on our business needs prior to the delivery of goods or performance of services.

We had no other significant contractual obligations as of March 31, 2025.

For information on contingencies, refer to Note 13 in the notes to our unaudited condensed consolidated financial statements for the three months ended March 31, 2025 and 2024 included elsewhere in this Quarterly Report on Form 10-Q.

Critical Accounting Policies and Significant Judgments and Estimates

Our management's discussion and analysis of our financial condition and results of operations is based on our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the condensed consolidated financial statements, as well as the reported revenue generated and expenses incurred during the reporting periods. Our estimates are based on our historical experience and various other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about items that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Except as described in Note 2 “Summary of Significant Accounting Policies – Recently Issued Accounting Pronouncements Not Yet Adopted”, to our unaudited condensed consolidated financial statements included in this Quarterly Report on Form 10-Q, there have been no material changes to our critical accounting policies and estimates as compared to the critical accounting policies and estimates disclosed in our 2024 Annual Report on Form 10-K.

Recently Issued Accounting Pronouncements

A description of recently issued accounting pronouncements that may potentially impact our financial position and results of operations is disclosed in Note 2 to our unaudited condensed consolidated financial statements and notes thereto for the three months ended March 31, 2025 and 2024 included elsewhere in this Quarterly Report on Form 10-Q.