Ceribell, an AI-driven healthcare technology company, started trading today under the ticker "CBLL" The company's IPO priced at $17, the high end of its range. It opened for trading at $23.26.
CBLL recently announced an upsized initial public offering (IPO), offering 10.6 million shares at a price range of $16 to $17 per share, up from its previous range of $14 to $16. This adjustment significantly increased the deal size, with potential proceeds of about $180.3 million, compared to its earlier target. The company also granted underwriters a 30-day option to purchase an additional 1.59 million shares, and some existing investors have indicated interest in purchasing up to $40 million worth of shares in the offering. Ceribell's IPO is backed by TPG’s The Rise Fund, with underwriters including BofA Securities, J.P. Morgan, William Blair, TD Cowen, and Canaccord Genuity, highlighting strong financial support from key players in the investment community.
Ceribell focuses on making electroencephalography (EEG) technology more accessible and efficient for acute care settings. The company's flagship product, the Ceribell System, is a portable EEG platform that can be set up by any healthcare provider within six minutes, allowing for rapid diagnosis and continuous brain monitoring. Utilizing AI-powered algorithms, the system converts brainwave data into sound, making it possible for clinicians to detect seizures in real-time without needing specialized EEG knowledge. Ceribell aims to transform patient care for those at risk of seizures by providing a solution that is faster and more cost-effective than traditional EEG methods.
Investors are expecting Ceribell to use the proceeds from the IPO to expand its sales and marketing efforts and to fund additional research and development activities. The company plans to focus on increasing its market presence in the U.S. and eventually seeking regulatory clearances in Europe within the next two to four years. With over 450 accounts already utilizing its system, Ceribell's goal is to establish its platform as the standard of care for neurological monitoring in acute settings, with potential for expansion into other conditions like delirium. The anticipated proceeds from the IPO will also support the scaling of its manufacturing and commercial operations to meet growing demand.
Ceribell's backers, including major investors like TPG, Ally Bridge Group, Longitude Capital, and Red Tree, highlight strong confidence in the company's growth potential. Given the recent momentum in healthcare IPOs, with companies like BioAge Labs and Bicara Therapeutics making strong market debuts, Ceribell's entry comes at an opportune time, reflecting investor optimism for innovative healthcare solutions. The company's partnership with these well-regarded investors and the backing of prominent underwriters is expected to bolster its efforts in scaling its operations and enhancing its technology.
Despite its promising technology, Ceribell is not yet profitable, recording a net loss of $29.5 million in 2023 on revenue of $45.2 million. However, its revenue growth and narrowing losses suggest a positive trajectory as it continues to invest in expanding its product line and improving its AI capabilities. The company believes that its current investments in technology and infrastructure will position it to capture a significant portion of the neurological monitoring market, which it estimates to be a multi-billion-dollar opportunity.
The market debut is seen as a significant step for the company as it aims to leverage its proprietary AI and EEG technology to revolutionize the acute care landscape. Investors will be closely watching how Ceribell utilizes the IPO proceeds to accelerate its growth and address the unmet needs of patients with neurological conditions.
Ceribell generates revenue through two main sources: the sale of disposable headbands for single-patient use and a monthly subscription fee for its hospital customers, which covers the use of Clarity, recorders, and its portal. Since launching the Ceribell System in 2018, the company has seen rapid growth, doubling its workforce from over 100 employees in 2021 to more than 200 in 2023, with consistent quarterly revenue increases driven by an expanding customer base and greater usage per account. In 2023, Ceribell's revenue rose by 74% year-over-year to $45.2 million, up from $25.9 million in 2022, while its revenue for the first half of 2024 grew by 45% compared to the same period in 2023. Despite achieving gross margins of 84.4% in 2023 and 86% in the first half of 2024, the company reported a net loss of $29.5 million for 2023 and $17.5 million for the first half of 2024, with an accumulated deficit of $144.0 million as of June 30, 2024.
Ceribell has consistently incurred net losses since its inception, with losses of $37.2 million in 2022, $29.5 million in 2023, and $17.5 million in the first half of 2024, resulting in an accumulated deficit of $144.0 million as of June 30, 2024. The company anticipates that its operating expenses will continue to rise, and it may struggle to achieve or maintain profitability if revenue growth does not sufficiently outpace these costs. Significant investments have been made in the development of the Ceribell System, clinical studies, manufacturing capabilities, commercial operations, and talent acquisition. Ceribell acknowledges that its financial condition and future prospects could be at risk if these challenges persist.
Ceribell believes that its EEG system is underutilized in detecting and managing seizures in acute care, with the potential to expand its use to around three million patients in the U.S. annually, representing a market opportunity of over $2 billion. The company plans to leverage its EEG database and AI capabilities to broaden its system's applications. Ceribell has already started validating its technology for additional uses, including delirium detection, for which it received FDA Breakthrough Device Designation in 2022. Expanding the system's indications could open up a further multi-billion-dollar market opportunity based on the prevalence of these conditions.
Ceribell faces several risks typical of growing companies, including rising operating expenses as it continues to expand its business, infrastructure, and development of the Ceribell System. The company expects significant costs related to legal, accounting, and expert expenses as it scales, and there's uncertainty about whether these investments will lead to increased revenue or business growth. If the expected benefits from these investments are delayed or do not materialize, it could negatively impact the company's financial performance. Additionally, Ceribell has a history of losses and may continue to struggle to achieve or sustain profitability, which could adversely affect its financial condition and shareholder value.