Hyperfine Inc
NASDAQ:HYPR
US |
Fubotv Inc
NYSE:FUBO
|
Media
|
|
US |
Bank of America Corp
NYSE:BAC
|
Banking
|
|
US |
Palantir Technologies Inc
NYSE:PLTR
|
Technology
|
|
US |
C
|
C3.ai Inc
NYSE:AI
|
Technology
|
US |
Uber Technologies Inc
NYSE:UBER
|
Road & Rail
|
|
CN |
NIO Inc
NYSE:NIO
|
Automobiles
|
|
US |
Fluor Corp
NYSE:FLR
|
Construction
|
|
US |
Jacobs Engineering Group Inc
NYSE:J
|
Professional Services
|
|
US |
TopBuild Corp
NYSE:BLD
|
Consumer products
|
|
US |
Abbott Laboratories
NYSE:ABT
|
Health Care
|
|
US |
Chevron Corp
NYSE:CVX
|
Energy
|
|
US |
Occidental Petroleum Corp
NYSE:OXY
|
Energy
|
|
US |
Matrix Service Co
NASDAQ:MTRX
|
Construction
|
|
US |
Automatic Data Processing Inc
NASDAQ:ADP
|
Technology
|
|
US |
Qualcomm Inc
NASDAQ:QCOM
|
Semiconductors
|
|
US |
Ambarella Inc
NASDAQ:AMBA
|
Semiconductors
|
Utilize notes to systematically review your investment decisions. By reflecting on past outcomes, you can discern effective strategies and identify those that underperformed. This continuous feedback loop enables you to adapt and refine your approach, optimizing for future success.
Each note serves as a learning point, offering insights into your decision-making processes. Over time, you'll accumulate a personalized database of knowledge, enhancing your ability to make informed decisions quickly and effectively.
With a comprehensive record of your investment history at your fingertips, you can compare current opportunities against past experiences. This not only bolsters your confidence but also ensures that each decision is grounded in a well-documented rationale.
Do you really want to delete this note?
This action cannot be undone.
52 Week Range |
0.79
1.36
|
Price Target |
|
We'll email you a reminder when the closing price reaches USD.
Choose the stock you wish to monitor with a price alert.
Fubotv Inc
NYSE:FUBO
|
US | |
Bank of America Corp
NYSE:BAC
|
US | |
Palantir Technologies Inc
NYSE:PLTR
|
US | |
C
|
C3.ai Inc
NYSE:AI
|
US |
Uber Technologies Inc
NYSE:UBER
|
US | |
NIO Inc
NYSE:NIO
|
CN | |
Fluor Corp
NYSE:FLR
|
US | |
Jacobs Engineering Group Inc
NYSE:J
|
US | |
TopBuild Corp
NYSE:BLD
|
US | |
Abbott Laboratories
NYSE:ABT
|
US | |
Chevron Corp
NYSE:CVX
|
US | |
Occidental Petroleum Corp
NYSE:OXY
|
US | |
Matrix Service Co
NASDAQ:MTRX
|
US | |
Automatic Data Processing Inc
NASDAQ:ADP
|
US | |
Qualcomm Inc
NASDAQ:QCOM
|
US | |
Ambarella Inc
NASDAQ:AMBA
|
US |
This alert will be permanently deleted.
Good afternoon, and welcome to Hyperfine's First Quarter 2022 Earnings Conference Call. At this time all participants are in listen-only mode. We will be facilitating a question-and-answer session towards the end of today's call. As a reminder, this call is being recorded for replay purposes.
I would now like to turn the call over to Marissa Bych, from Gilmartin Group Investor Relations for introductory comments.
Thank you all for joining today's call. Joining me are, Dave Scott, President and Chief Executive Officer; and Alok Gupta, Chief Financial Officer of Hyperfine. Earlier today Hyperfine released financial results for the first quarter ended March 31, 2022. A copy of the press release is available on the company's website as well as sec.gov.
Before we begin, I would like to remind you that management will make statements during this call that includes forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements.
All forward-looking statements, including without limitation, those relating to our operating trends and future financial performance, the impact of COVID-19 or geopolitical conflicts such as the war in Ukraine, our business and prospects for recovery, expense management, expectations for hiring, physician training and adoption, growth in our organization, market opportunity, commercial and international expansion, regulatory approvals, and product development are based upon our current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business. Please refer to the risk factors section of our form 10-K filed with the Securities and Exchange Commission on March 25, 2022.
This conference call contains time-sensitive information and is accurate only as of the live broadcast today. May 11, 2022. Hyperfine disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise.
And with that, I will turn the call over to Dave Scott, President and Chief Executive Officer.
Thank you, Marissa. Good afternoon and thank you all for joining us for our first quarter 2022 earnings call. I am honored to be here as Hyperfine as President and Chief Executive Officer, and on the call with me as our Chief Financial Officer, Alok Gupta.
Following our fourth quarter and 2021 results call in March, we are excited to be back to continue the conversation on Hyperfine story with you and to share the meaningful progress we drove in the first quarter of the year, including the placement of 11 commercial Swoop systems, driving $1.5 million in total revenue. We will dive into our first quarter details shortly.
But first, I would like to introduce our newer listeners to Hyperfine and highlight some of our notable recent achievements. Hyperfine vision is to transform healthcare by creating access to life saving diagnostics and actionable data at the patient bedside. Today, brain diagnostics are a single point in time and delay the time from door to discharge. Our mission remains to transform that experience first and foremost with our portable bedside MRI system.
Our initial product, our Portable MRI system called Swoop was FDA cleared in 2020. Today, we continue to launch that system into the hospital setting to solve significant unmet patient and provider needs. In addition, we're developing a brain sensing technology designed to use ultrasound to measure non-invasive blood flow, pressure and flow in the brain. With these technologies, we aim to create an ecosystem of solutions over time, all based on a backbone of machine learning and artificial intelligence to drive diagnostic decision making.
We have an immense market opportunity that we are continuing to capitalize on in 2022. The Imaging segment alone offers a $23 billion market opportunity with potential for installations across numerous hospitals, clinics, and outpatient centers over time. The medical imaging market opportunity is our primary focus today. In addition, non-invasive brain sensing offers a $22 billion market across similar locations, including ICUs, emergency departments, ambulances, and outpatient settings.
In total, we see over a $40 billion addressable market opportunity. Today, just 10% of the world's population has access to MRI. And we are committed to improving that. As we have noted in the past, our near term opportunities for improving patient care lie in the following areas: first in the neuro ICU, next in pediatric hospitals to address hydrocephalus, and third in stroke.
When patients are in the ICU for neurological conditions, patients are typically too unstable to transport to the MRI suite for imaging. The time it takes to get the imaging completed can be prohibitively long, and the process can consume valuable resources. As a result, there is simply not an effective way to perform MRI imaging for ICU patients today. We have been working with our clinical partners to build strong clinical validation to support the ICU use case.
In 2021, a paper published by researchers at Yale in nature addressed detection of brain hemorrhage in ICU patients, and showed 90% accuracy in Swoop imaging results compared to conventional MRI. This is great validation of our technology and exactly the market we're most focused on right now. And we continue to see a very positive response in this setting today.
Secondly, hydrocephalus is an excellent use case for Portable MRI. The problem of hydrocephalus is there a buildup of fluid in the brain in the ventricles, and this is addressed by introducing a shunt and tubing to drain that fluid from the brain. MRI is the preferred approach for imaging these children instead of CT. However, MRI is infrequently available, and as a result, the next best option is to take these pediatric patients for CT scans.
Our mission is to scan these children with bedside MRI as the better solution. It doesn't deliver any radiation. And our technology enables a quick simple diagnosis by showing whether these shunts have failed or operating normally. These are just two examples of use cases where we have received overwhelming early positive responses to the Swoop system. Additionally, we have systems located at leading institutions across the country with ongoing studies to add even greater validation to the utility and the clinical efficacy of our technology.
We also continue to focus on building our base of clinical data in stroke. As many of you know 15 million people worldwide suffer from strokes annually. It's the second leading cause of death globally. 87% of these strokes are ischemic strokes. Data demonstrates that MRI scans can better detect ischemic stroke damage compared to CT scans.
In fact, we were pleased to see a recent independent publication by our partners at Yale and Harvard Mass General in science advances, reviewing the value of Swoop in the detection and evaluation of stroke one of the core use cases we're building. The paper concluded that Hyperfine Swoop enabled highly accessible and dynamic bedside evaluation of ischemic stroke, obtaining actual bedside neuro imaging for 50 confirmed patients.
The study included patients and the neuro ICU, and the emergency department and uses of the Swoop system included serial imaging to monitor the progression of stroke and assess the efficacy of treatment, as well as post operative imaging in one patient, who had already received mechanical thrombectomy. Overall Swoop detected infarcts in 45 out of 50 patients, or 90%, and captured lesions as small as four millimeters.
The authors highlighted the safety and convenience of portable low-field MRI as a tool to expedite the treatment pathway and concluded that results - that these results validated the use of low-field Portable MRI to obtain clinically useful images of stroke, setting the stage for broader use. We're continuing to engage multiple U.S. hospitals to collect data demonstrating the clinical value of Swoop and stroke patients.
As we gather greater clinical data, we will increase our focus on driving awareness and educating the field about Swoop utilization for the stroke use case through our direct sales team. We look forward to sharing our progress on advancing our stroke use case as the year progresses. In addition to improving patient workflow and saving critical time for the aforementioned use cases, we are also hard at work to continue our progress on our next generation suite platform to expand use cases beyond neuro ICU, beyond hydrocephalus and stroke in into C-spine, and extremities over time.
We are also developing our non-invasive brain monitoring system, which uses ultrasound technology to measure intracranial pressure and blood flow in the brain. Like the vital sign monitor for the heart, such as an EKG, or pulse oximeter. This is intended to operate as a vital sign monitor for the brain. We intend to generate an ultrasound image through leads that are put on either side of the head, and from that image extract intracranial pressure and flow non-invasively. This will be a groundbreaking technology in the measurement of vital signs in the brain.
Now that I've reacquainted you with our vision, our market opportunity and the transformational potential of Swoop, I'd like to highlight the progress we made in the first quarter of the year. We installed 11 commercial Swoop systems in the first quarter of 2022, driving revenue of $1.5 million. These included, among others, our first commercial contract with Tennant, through Mission Trail Baptist Hospital in San Antonio, Texas, and a valuable new partnership with Memorial Hermann Hospital in Houston, Texas.
We also broadened our global presence with important new customers in Toronto, Canada, and Karachi, Pakistan. We continue to develop and enhance our customer relationships through comprehensive programs to deliver value to the patient, clinician and hospital side of care. We are seeing that Swoop it's truly a cross functional solution with value spanning multiple stakeholders and more than one clinical discipline.
We are working closely with neurosurgeons, interventional neuroradiologist and critical care clinicians, alongside radiology and hospital executives, all influential stakeholders to roll out successful new programs and placements. We also continue to listen and integrate feedback from our ongoing partnerships into our commercial approach, and future use case development while reaching out to new hospitals and networks, including our ongoing demo at your door program.
For example, we recently completed our first demo at your door plus, which we work directly with hospital leadership and patient consent for real time ICU scans demonstrating Swoops value in real patients. We continue to invest in our sales team and commercial toolbox through in depth training modules and related activities. And as a reminder, we are currently focused most on training and development our core sales team rather than sales team expansion.
However, our broader organization continues to grow, as we add valuable team members across the teams such as clinical science, research, manufacturing and service. Today, our team remains hard at works, stimulating awareness of our technology and placing Swoop systems across U.S. hospitals, and various global sites. And we are pleased to share that we are continuing to successfully engage with new hospitals into the second quarter.
In addition, we are observing that overall access to hospitals is continuing to improve as we emerge from the COVID 19 pandemic with lifting restrictions on visitor and industry representative attendance. We are optimistic that the outlook for the healthcare industry will continue to improve gradually over the remainder of 2022 and that, against that backdrop, we can meet our growth objectives and continue to ramp our commercial business given our strong value proposition.
We are immensely proud of our progress and we continue to see a robust opportunity for growth and expansion into further hospitals and care settings going forward. Based on current trends in our business and our outlook for the remainder of the year, we are reaffirming our revenue guidance of $10 million to $12 million for fiscal year 2022. We are also reaffirming expectations to install 50 to 60 commercial units for the year, roughly tripling our existing commercial installed base from 27 systems at year end 21 to 77 to 87 systems at the end of this fiscal year.
I will now turn the call over to Alok Gupta, our Chief Financial Officer to review our first quarter performance and financial outlook in greater detail.
Thank you, Dave.
Turning to our financial results for the first quarter of 2022 revenue for the first quarter ended March 31, 2022 was $1.5 million, compared $0.3 million in the first quarter of 2021. Gross profits for the first quarter of 2022 was point $0.1 million, compared to negative point $0.3 million in the first quarter of 2021.
R&D expenses for the first quarter of 2022 were $8.3 million, compared to $4.5 million in the first quarter of 2021. Sales, general and administrative expenses for the first quarter of 2022 were $15.5 million, compared to $3.1 million in the first quarter of 2021.
Net loss for the first quarter was $23.8 million, equating to net loss of $0.34 per share, as compared to net loss of $7.8 million, or a net loss of $4.86 per share for the same period of the prior year. We ended the first quarter of 2022 with $161.6 million in cash and cash equivalents.
Turning to our 2022 outlook based on our first quarter progress and current trends in our business, we are pleased to reaffirm our 2022 guidance of $10 to $12 million in total revenue, revenues composed of commercial system installation and subscription revenues. We also continue to anticipate installing 50 to 60 commercial systems in 2022.
This compares to four commercial system installations in 2020 [ph] and three commercial system installation in 2021 and implies that at year end 2022, we expect to have total commercial installed base of 77 to 87 Swoop systems. To help you bridge our commercial system installation and revenue guidance, I would like to remind our listeners of a decent shift in our pricing model. Over the first one and a half years of our commercial Swoop launch.
We have worked hard to accommodate varying hospital payment preferences and budgeting capacity with many of our pre 2022 commercial contracts, including both upfront device installation and ongoing cloud and service agreements for a consistent recurring payments over three years.
As we have expanded our base of hospital customers over this timeframe, we have conducted extensive ongoing market diligence around customer expectations and experience with Swoop to achieve a greater understanding of the immense value that our system delivers.
As a result of these insights, we introduced a new pricing model based on upfront device purchase price of $250,000 per unit, and an annual subscription payment which includes our cloud and service agreements of roughly $50,000 per year. Our contracts will continue to spend on average three years.
Importantly, our book orders and contracts and negotiation year-to-date are based on a mix of our legacy and new pricing models. And as we have done in the past, we will continue to offer a degree of flexibility for customers to finance a Swoop installation through their capital budget or through an annual subscription plan.
However, as we disclosed in our fourth quarter earnings call in March, we anticipate that as the year progresses, we will fully transition our commercial installations to our new pricing model with a greater upfront payment component. As a result, we expect our average revenue price per device to increase over the course of the year.
Shifting to our additional expectations for the year, we continue to anticipate revenue to increase quarterly throughout the year as awareness of our value proposition and commercial traction build and as our new pricing model takes hold.
We anticipate spending over $80 million in total operating expenses for the year with a slightly greater focus on SG&A relative to R&D considering our sales team clinical success team and broader headcount growth intentions. We anticipate total cash burn of approximately $80 million to $90 million in 2022.
At this point, I would like to turn the call back to Dave for closing comments.
Great, thank you Alok.
I'd like to close by highlighting a recent independent publication in the American Journal of Neuroradiology, highlighting the successful implementation of Swoop at the Queen Elizabeth Central Hospital in Malawi in sub-Saharan Africa. This hospital used Swoop to acquire 260 brain scans in critically ill patients over one year with the publication highlighting the transformative potential of Portable MRI and establishing patient diagnosis, and optimizing patient management.
The authors concluded that the use of Portable MRI may lead to faster diagnosis and expedited treatment, including in comatose patients undergoing evaluation and emergency departments, or bed bound patients who have developed sudden onset neurologic deficits, and wrote that our technology may be lifesaving. Our mission is to democratize access to imaging and sensing globally.
And as we make strides in our commercial rollout, primarily in the United States, this publication offers a powerful lens into the broader impact that Swoop is having in the treatment and diagnosis pathway for patients without access to conventional imaging solutions around the world.
With that, I want to thank you for your time, and open it up to any questions.
And thank you. [Operator Instructions] And our first question comes from Larry Biegelsen from Wells Fargo. Your line is now open.
Hey, good afternoon, guys. Thanks for taking the question. And congrats on the nice start to the year here. Can Dave, can you hear me okay?
Yes, I can Larry good to hear from you.
Thanks so a few for me. Just starting on capital, some companies talked about COVID negatively impacting their ability to place systems in hospitals in the first quarter. I'm curious if you saw that. And Dave, if you could talk us about the pipeline for new systems and the cadence of placement you expect in 2022 to reach that guidance. I know Alok talked about revenues increasing I think sequentially through the year. Do you also expect placements increase sequentially through the year?
Yes great questions, Larry. Regarding capital and the impact of COVID I mean, we definitely were seeing and still see the impact of COVID on hospitals engagement in the selling process not so much on the front end, I would say in the clinical evaluation of the system and the clinical sales process and understanding the clinical value proposition.
That's, you know, that's going very well again, it's in many ways, the value proposition is really clear to these physicians, but the buying process is definitely hampered by the, you know, the overall impact of COVID I think a lot of hospitals are, kind of clawing their way out of the impact of COVID. And certainly, we're all seeing a bit of a surge in COVID recently again. That said, we're doing everything to counteract that.
We're working closely with our hospital partners, and try and get in front of those problems to make sure that we're - a very easy partner to work with, in the contracting process to get deals closed. The second part of your question regarding the pipeline in 2022, we aren't giving any more color of course on Q2, but as we discussed in the earnings call.
We are reaffirming our guidance from earlier from our last call of 50, 60 units on the year and $10 million to $12 million. And that would suggest kind of increasing unit placement and increasing revenues quarter-over-quarter.
That's super helpful.
No, sorry. So as revenue increases towards the second half of the year, and as the legacy pricing transition into new pricing, we get the benefit, obviously, on the revenue line, but we do expect the placements to grow sequentially as well.
That's very helpful. Dave, I'd love to hear a little bit more about how the system is being used, you know, which settings and use cases are seeing the most traction. And can you talk about utilization?
Yes, so we're seeing a great adoption in the in the ICU. And again, I think the use case there is really, really strong. So I'll just kind of add color to that use case. You have a patient that that's in the ICU there's been maybe already a diagnosis, these patients are unstable. And for various reasons, you would like to be able to get an MRI scan on those patients, whether you're just doing sequential follow up, you're tracking some condition, or there's been a mental status change in that patient, you don't know what's gone on, and you need to get a scan.
Or if you're trying to, you know, the patient is ready to step down out of the ICU, and you need to release them, and you need to be able to do an MRI scan to release them. So there's, a number of reasons like why you would like to get an MRI scan. And again, for all the reasons we've discussed, traditional MRI is not readily accessible to these patients, the patients are unstable, they may be on a ventilator connected to lots of life support equipment.
They're very difficult to transport, it's unsafe to transport them, as we've shared with you before, there's as much of nearly 50% rate of complications when you transport these patients, it consumes valuable hospital resources and staff to transport them. And then again, the data suggests that there's many, many hours from the time you place the order to get the scan to the time you get the scan back could be as much as 26 hours, we're even seeing in some hospitals multiple days to get the scan done.
And so - the value proposition in the ICU is really, really strong. We can wheel our system into the bed, the bay, the bay of the patient and right up to their bedside and an image them right there on the spot and get the answer right away. So we see that this is going to gain more and more traction as physicians and hospitals realize the benefit of this and realize that Hyperfine is out there and that this is even an option for them you know, typical new disruptive technology adoption curve.
And so that's a really strong use case for us. The others space that we're seeing a lot of traction is in pediatrics for hydrocephalus. So these are patients that kids have shunts. And we need to image those kids with MRI again, for many reasons, MRIs not available, and they're getting a CT scan, and the data suggesting that these kids by the time they turn 18 a huge percentage of them end up with brain tumors.
And so there's a strong desire in the pediatrics community as well, as you could imagine the patients and the families to eliminate x-ray radiation from these children and use MRI. And that's exactly again, our value proposition is being able to image them bedside.
Any color and utilization or how you, how you measure or track that?
Well, just as I spoken in the earnings call, we have this data from Malawi, that was just published a image 265 scans over the last year. We do track the scans done by our systems, some of our systems are connected in the hospital setting, some of them are not. So we don't have perfect data collection on that. But we are seeing strong utilization the platform's in the locations where they're using it commercially and clinically.
That's helpful. I wanted to switch gears maybe for Alok, the supply chain, you know, this is a high tech device, how are you feeling about, supply inventory and related, obviously on inflation. I think on the last call, you said negative gross margin being negative in the first half positive in the second half, it was slightly positive in Q1. So Alok maybe if you could tackle those, that would be great?
So, the supply chain Larry, we do not anticipate any challenges for the remainder of the year, just because the way we had set up our supply chain and procurement strategy. We are obviously very vigilant about what's going on in the electronics world and looking at - already starting to plan for 2023 and beyond. In terms of the key components required to build up a device. So in the near term, we do not see any pressures from the supply chain.
The inflation numbers obviously, the inflation continues to spread across for all the different goods. We have seen some inflationary pressure but not material enough at this point for the 2022 in the near term, but we are closely watching it for the 2023 supply procurements for us from the inflationary perspective.
And gross margin cadence through the year?
So gross margin. I mean, you saw we had a positive gross margin print for this quarter. This is fluctuating for now as we transition from the legacy pricing to the new pricing. And as we have mentioned in our last earnings call, we do expect a positive gross margin in the second half of this year and continue to improve from there onwards.
Okay. And just lastly from me on OpEx, it was - it may have been our kind of modeling or the cadence for the year, but OpEx is a little higher than we modeled in Q1. I think you're getting to at least $80 million. I mean, it looks like you're almost out about $100 million run rate and an $80 million to $90 million burn rate in 2022. Does that assume that like how do we think about OpEx going forward and that burn rate, the cadence of that through the year? Thanks, guys.
The first quarter for us, Larry is always a little bit heavy on the, spend and especially closing the transaction coming out of that. In the first quarter, we had some one-time expenses for the Q1 that will all be not the case in the future quarters. They're all one-time expenses, which are creating a little bit higher number for both OpEx and the cash flow. But we still believe that $80 million to $90 million of net cash burn for the year is what we expect.
All right thanks so much, guys. Thanks for taking all the questions. I'll drop thanks.
Thanks Larry.
And our next question comes from Vijay Kumar, from Evercore ISI. Your line is now open.
Hey, guys thanks for taking my question. I guess maybe a big picture question to start off with. I know in the past customer access, you know, educating customers that's been a process, obviously been impacted by the pandemic. How do you feel about your sales force access to about your ability to communicate with customers, radiologists, hospitals, how are those conversations progress? Do you see a material change as the Q progressed and what it means for the back half?
Hey, Vijay how are you, good to hear from you. Yes, on getting access to our customers, again, the clinicians establishing that connection, then establishing those meetings, having those clinical value proposition conversations, and then ultimately leading to demos. We have been able to do that we do see some hospital systems are still a little more locked down, a little more difficult to access.
But again, because we're so early and the market is so huge, there's, still plenty of opportunities for us. And so, we are getting in front of these customers and we're able to have those conversations and have productive and fruitful discussions and being able to really share with them the value proposition as well as conferences. There's, been a number of conferences that have been held already early this year, in the first part of the year. And so our attendance at those conferences and our opportunity to get in front of those clinicians has been excellent.
And Dave maybe another, a slightly different take on, this CapEx trends within your customer base, I guess if the environment work of profitability were to be pressured. But you know, for hospitals, just given all the economic benefits of your system, in terms of preventing revenue, leakage, improving efficiencies, in addition to clinical benefits. Could this end up being a Calvin [ph] for you guys? Where customers look at their capital budget priorities? And this might be your solution might perhaps, be a way out for them to become more efficient in a tightening environment?
No, I mean that's a great question Vijay. You know, we really look at, a product like this we believe we're creating value across all of the stakeholders, not many medical devices can do that. Of course, we start with the value proposition to the patient. And but next is the physician we're delivering value proposition to the physician because it's going to move. They're going to get their answer quicker, it's going to move their patients through their workflow faster and give them a quicker diagnosis.
It delivers value to the staff, the hospital staff, the nursing staff, they love our system, they would rather use our system than pack up a patient and have to transport them to the MRI suite. And then to the hospital itself, and this is what you're getting at is the ROI to the hospital. The hospital cares about its ROI and cares about efficiencies and utilization. And, as we've said, being able to image a patient in the ICU or in the emergency department, rather than transporting that patient is a huge value proposition to the hospital system.
It requires less hospital resources to manage that patient. And we're seeing as we've talked about a 20% increase in the utilization of their existing MRI suite. So they're, by using our platform, they're actually freeing up the existing MRI suite and driving additional utilization there. And so, to your point, all of that translates to a cost savings and increased ROI to the hospital system.
And then on the systems, I thought Q1, commercial systems at 11 came in slightly ahead of expectations. They were up sequentially I guess when you think about that we've reached guidance, 50 to 60 systems, with access improving, and perhaps your ability to have those conversations with customers in a tightening environment. Perhaps those conversations become easier given the value proposition. If we see a sequential step up like is that 50 to 60 seeming a little conservative Dave or is that too early in your mind to? How should we think of that 50 to 60, just given the sequential ramp we've seen here for the last few years?
Yes, I think it's I think it's too early to make that call right now. I mean, again, there's just been another recent outbreak of COVID, which we don't know yet how that's going to be impacting hospital systems and how they're going to react to that. And none of us understand the adoption curve yet, right? We really don't understand what how steep that is, and how fast you know, we all believe it's there we all know, it's there as I've said, bedside Portable MRI is inevitable, this is going to happen.
And we are writing this curve its, just none of us know the shape. And so I think it's too early to say yet a few more quarters. And we'll also understand better kind of what the shape of that adoption curve is. We don't understand yet what the impacts of recent interest rate hikes are going to be in inflation so we'll have to, we'll have to see how all those things shake out.
And then maybe one last on a financial question, [indiscernible] if you will, the gross margins, how should we think about gross margins? As the revenue model changes here for us is there an exit rate that we should be looking at as the revenue mix changes here and on your OpEx comment of $80 million?
What should be the cadence here are we looking at a big step down in 2Q and then sort of sequential step up into 3Q, 4Q. Any comments on what the OpEx spend level should be growing at? Is $80 million going to be a constant number for you guys, when you look at the medium term or is that going to step up I think will be helpful?
Well let me take the gross margin question first Vijay. the gross margin, we continue to anticipate significant improvement in our gross margin as the year progresses. We do expect some fluctuation in the near term, but as we have pointed out on our last call that we do expect our gross margin to be positive for the second half of 2022. So we feel pretty confident on the gross margin question.
As far as the OpEx cadence for the oncoming quarter. So as Q2, Q3, Q4, like I pointed out, I think our first quarter is little bit heavy on the one-time expenses, several of them and going forward yes - we anticipate a step down in Q2, but then once the step down in Q2 happens, then incrementally quarter-over-quarter a little bit of step up. So a little bit more smoothing out in Q2, Q3, Q4, before we hit Q1 again.
The way the business is set up, we have some one-time expensive. This year was a little bit on the higher side because the transaction closed, so closed to the Q1, but going forward, we will anticipate Q1 to be much higher on the OpEx side of it – the other three quarters.
Understood, thanks, guys I'll step back in the line.
And thank you. And I am showing no further questions. I would now like to turn the call back over to Dave Scott, President and CEO for closing remarks.
Thank you. Well, thank you everyone for joining us today and listening in on our earnings call. Really appreciate your time. I just want to close with the kind of final sediments that we believe very strongly again in our value proposition in Q1 that has been further validated with publications that emphasize the strength of our system now, especially in stroke, an excellent paper coming out of Yale.
Again, and so we're, we're excited by the value proposition and the validation of that and the inevitability of Portable MRI. And so, we look forward to discussing this with you further in future earnings call and thank you very much.
This concludes today's conference call. Thank you for participating. You may now disconnect.