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01/10 16:35
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents mixed signals. The VA revenue growth and Truvaga's year-over-year sales increase are positives. However, the sequential decline in Truvaga sales, increased operating expenses, and net loss raise concerns. The Q&A highlights uncertainties around patent litigation and unclear marketing spend impacts. While new product lines and integrations offer potential, the lack of specific guidance and profitability delays temper optimism. Given these factors, the stock price reaction is likely to remain neutral.
Revenue $7.4 million in Q2 2025, up 20% year-over-year and 10% sequentially. The increase is attributed to higher net sales across prescription and general wellness products.
Gross Margin 87% in Q2 2025, up slightly from 86% in Q2 2024. The improvement is due to efficient cost management.
VA Revenue $5.3 million in Q2 2025, up 12% sequentially from $4.7 million in Q1 2025. Growth is driven by increased purchases of gammaCore products by VA facilities.
Truvaga Sales $1 million in Q2 2025, representing 74% year-over-year growth but a sequential decline. The growth is attributed to increased adoption, while the decline is expected to reverse under new leadership and initiatives.
U.S. Prescription Channel Revenue $394,000 in Q2 2025, down 17% year-over-year. The decline is due to customers transitioning to the Truvaga brand.
Outside U.S. Revenue $465,000 in Q2 2025, down 9% year-over-year. Most revenue is generated in the UK through NHS-funded gammaCore sales.
Operating Expenses $9.9 million in Q2 2025, up from $7.9 million in Q2 2024. The increase is due to higher selling and marketing costs, bad debt expense, professional fees, and rent expenses.
Net Loss (GAAP) $3.7 million in Q2 2025, compared to $2.7 million in Q2 2024. The increase is due to higher operating expenses, partially offset by increased gross profit.
Adjusted EBITDA Net Loss $2.4 million in Q2 2025, compared to $1.9 million in Q2 2024. The increase is due to higher operating expenses.
Cash Balance $7.4 million as of June 30, 2025, down from $12.2 million as of December 31, 2024. The decrease is due to operating activities and investments.
gammaCore devices: Dispensed to approximately 10,700 veterans, addressing 2% of the VA headache market. The VA channel remains a significant growth area.
Truvaga: Direct-to-consumer wellness brand posted $1 million in Q2 sales, showing 74% year-over-year growth but a sequential decline. Over 16,000 handsets sold, powering 1.1 million user sessions.
Quell Fibromyalgia stimulators: Dispensed less than 500 units since launch in 2024, with significant growth potential in the VA system.
VA hospital system: Largest customer, with revenue growing 12% sequentially to $5.3 million in Q2 2025. Expanded to 188 VA facilities.
International markets: Revenue outside the U.S. was $465,000, down 9% year-over-year, primarily driven by UK sales funded by NHS.
Revenue growth: Achieved record revenue of $7.4 million in Q2 2025, up 20% year-over-year and 10% sequentially. Gross margins strong at 87%.
NeuroMetrix acquisition: Integration completed ahead of schedule, adding talent and expanding product offerings.
Cash management: Secured $7.2 million in additional liquidity through a term debt facility, with a pro forma cash balance of $10.5 million expected by year-end.
Investment in growth: Prioritizing growth over profitability, with increased spending on Truvaga and new prescription indications. Targeting $11.5-$12 million in quarterly revenue for cash positivity by 2026.
Product expansion: Plans to launch additional health and wellness offerings, including Quell Relief for lower extremity pain, and expand Truvaga's use cases and demographics.
Revenue growth dependency on VA hospital system: The VA hospital system remains the largest customer, and while revenue has grown, the company is heavily reliant on this channel. Any disruption or changes in VA purchasing behavior could significantly impact revenue.
Delayed profitability due to increased investments: The company has decided to prioritize growth and long-term value creation, delaying profitability. This strategy increases financial risk, especially if projected revenue growth does not materialize.
Decline in U.S. prescription channel revenue: Revenue from the U.S. prescription channel decreased by 17% year-over-year, indicating challenges in this segment as customers transition to other products like Truvaga.
International revenue decline: Revenue from outside the United States decreased by 9% year-over-year, with flat revenue expected from international markets like the UK, limiting growth opportunities in these regions.
Patent infringement issues: The company is dealing with a patent infringement dispute involving a Truvaga copycat from Eastern Europe, which could impact market share and legal costs.
High operating expenses: Operating expenses increased significantly, driven by investments in sales, marketing, and personnel. This raises the revenue threshold needed to achieve cash positivity, increasing financial pressure.
Debt facility risks: The company entered into a term debt facility with Avenue Capital, which includes a high-interest rate of 12.5% and convertible shares. This increases financial obligations and potential dilution of equity.
Dependence on new product adoption: The company’s growth strategy relies on the successful adoption of new products like Truvaga and Quell Fibromyalgia. Failure to achieve market penetration could hinder revenue growth.
Uncertain TAC-STIM revenue: Revenue from TAC-STIM products is unpredictable due to bulk purchasing patterns by active duty military units, making it difficult to forecast and plan.
Revenue Growth: The company expects total revenue for the full year of 2025 to be approximately $30 million. Revenue growth is anticipated to accelerate in 2026 and 2027, driven by investments in marketing, product development, and sales.
Profitability Timeline: Profitability is expected to be delayed due to increased investments in growth initiatives. The company now requires $11.5 million to $12 million in quarterly revenue to achieve positive cash flow, which is anticipated later in 2026.
Gross Margins: Gross margins are modeled to remain in the mid-80% range going forward.
Truvaga Platform: The company plans to accelerate marketing and promotional investments in the Truvaga platform to drive growth in 2026 and beyond. New use cases, target demographics, and additional health and wellness offerings are expected to be launched.
VA Channel Growth: The VA hospital system remains a key growth driver, with sequential revenue growth expected to continue. The company plans to expand its presence in this channel and introduce new products such as Quell Fibromyalgia.
International Revenue: Revenue from outside the United States is modeled to remain flat for the time being, with most revenue generated in the United Kingdom.
Cash and Liquidity: The company expects to consume approximately $4 million in cash in the second half of 2025, resulting in a pro forma cash balance of approximately $10.5 million by December 31, 2025, including proceeds from a new term debt facility.
Research and Development: R&D expenses are expected to increase in the second half of 2025 compared to the same period in 2024, supporting new product development and clinical opportunities.
TAC-STIM Products: Revenue from TAC-STIM products is expected to remain unpredictable, but the company is working on validating requests for proposals and has a funnel of approximately $500,000 in open quotes.
The selected topic was not discussed during the call.
The earnings call reflects mixed signals. Basic financial performance shows slight improvement in adjusted EBITDA net loss, but there's a delay in profitability. Product development is active, but with uncertainties in TAC-STIM and international revenue. Market strategy is cautious, with some success in VA channels. Expenses are increasing, impacting financial health. Shareholder returns are not addressed. Q&A reveals cautious expansion and litigation issues. Overall, the stock price reaction is likely neutral due to balanced positive and negative elements.
The earnings call presents mixed signals. The VA revenue growth and Truvaga's year-over-year sales increase are positives. However, the sequential decline in Truvaga sales, increased operating expenses, and net loss raise concerns. The Q&A highlights uncertainties around patent litigation and unclear marketing spend impacts. While new product lines and integrations offer potential, the lack of specific guidance and profitability delays temper optimism. Given these factors, the stock price reaction is likely to remain neutral.
The earnings call reveals mixed signals: strong revenue growth and gross margins, yet a significant cash burn and lack of 2025 guidance. The acquisition of NeuroMetrix adds complexity, while market access risks and operational challenges persist. The Q&A session highlighted management's lack of clarity on margin estimates and revenue growth projections, which could concern investors. Despite positive developments like the Truvaga expansion and distribution agreement, the absence of a shareholder return plan and cash flow risks temper optimism, leading to a neutral stock price prediction.
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