Canaccord Genuity has upheld its Buy rating and $15.00 price target for CVRx Inc (NASDAQ: CVRX), following the announcement that the American Medical Association CPT Editorial Panel has approved new Category I codes for CVRx Inc's Barostim therapy, which is used to treat heart failure symptoms.
The new codes are expected to facilitate the prior authorization process for Medicare Advantage and commercial pay patients, who represent approximately half of CVRx's indicated patient base.
The company has indicated that the current Category III codes often result in automatic denials of claims by payors, labeling the treatment as experimental. This has led to burdensome prior authorization procedures for patients and physicians. Although CVRx has not provided specific numbers on prior authorization approvals or denials, they have reported winning more cases than losing.
The simplification of prior authorization is anticipated to reduce procedural friction. CVRx will next engage in the RUC process, with expectations for the physician payment component to appear in the Physician Fee Schedule proposal in July 2023.
The final rule for the Outpatient Prospective Payment System (OPPS) is expected to be released in mid-November 2023. This will clarify whether the Centers for Medicare & Medicaid Services (CMS) for 2025 will opt to create a new level 6 neurostimulator code, revert CVRx to the New Tech APC category as in 2024, or place it under the level 5 neurostimulator code. A shift to the level 5 code could potentially reduce Barostim's reimbursement from $45,000 to approximately $31,200, which may influence the company's average selling prices.
CVRx reported a 24% increase in Q2 revenue, reaching $11.8 million, despite a net loss of $14 million. The company projects total revenue between $50 million and $53 million for 2024. The American Medical Association (AMA) has accepted new codes for CVRx's Barostim heart failure therapy, expected to be effective from January 1, 2026. In financial developments, CVRx secured an additional $20 million loan tranche from Innovatus Life Sciences Fund I, LP, bringing its total outstanding term loans to $50 million.
Analyst firms Cantor Fitzgerald, Piper Sandler, and Canaccord Genuity have revised their outlook on CVRx. Cantor Fitzgerald initiated coverage with an Overweight rating and a 12-month price target of $14.00, while Piper Sandler lowered its target to $13, and Canaccord Genuity raised it to $15.
The company has expanded its Board of Directors with the appointment of Kevin Ballinger and Mitch Hill, following the resignation of Ali Behbahani. Also, the Centers for Medicare and Medicaid Services (CMS) have increased the reimbursement for CVRx's Barostim implant procedure from $17,000-$23,000 to approximately $43,000, effective in 2024.
InvestingPro Insights
To complement the analysis of CVRx Inc's recent developments, InvestingPro data provides additional context for investors. The company's market capitalization stands at $206.75 million, reflecting its current position in the medical devices sector. CVRx has demonstrated strong revenue growth, with a 43.94% increase over the last twelve months as of Q2 2024, reaching $44.39 million. This aligns with the positive outlook on the company's Barostim therapy and the potential impact of the new Category I codes.
InvestingPro Tips highlight that CVRx holds more cash than debt on its balance sheet, which could provide financial flexibility as it navigates the reimbursement landscape changes. Additionally, liquid assets exceed short-term obligations, suggesting a solid near-term financial position. These factors may be crucial as the company awaits decisions on reimbursement rates and potential changes to the OPPS.
However, it's important to note that CVRx is currently not profitable, with a negative operating income of $55.39 million over the last twelve months. This underscores the importance of the new CPT codes and potential reimbursement changes in improving the company's financial performance.
For investors seeking a more comprehensive analysis, InvestingPro offers 6 additional tips for CVRx, providing a deeper understanding of the company's financial health and market position.
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