NeurAxis, Inc. (NRXS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed strong revenue growth (39% in Q1 2025) and a significant increase in unit sales (58% YoY), despite a slight decline in gross margin. Operating expenses and losses decreased, showing improved cost management. The Q&A highlighted positive responses from insurance payers and potential for expanded insurance coverage, which could boost future sales. While there are uncertainties in policy writing speed and coverage timelines, the overall sentiment is positive due to revenue growth, cost management, and optimistic insurance coverage outlook.
Key Financial Performance
Revenue (Q2 2025) $894,000, up 46% compared to $612,000 in Q2 2024. The increase is attributed to volume growth from patients with health insurance coverage, the company's financial assistance program, and the soft launch of the RED product line.
Revenue (6 months ended June 30, 2025) $1.8 million, up 42% compared to $1.3 million for the same period in 2024. Growth driven by increased unit sales and financial assistance programs.
Unit Sales (Q2 2025) Increased approximately 58% year-over-year due to volume growth from patients with health insurance coverage and financial assistance programs.
Gross Margin (Q2 2025) 83.6%, down from 88% in Q2 2024. The decline is due to higher discounting in financial assistance programs and expired RED inventory.
Operating Expenses (Q2 2025) $2.5 million, a decrease of 10% compared to $2.7 million in Q2 2024. The reduction is due to the absence of certain one-time costs incurred in 2024 and lower accounting, investor relations, and insurance costs.
Operating Loss (Q2 2025) $1.7 million, a decrease of 22% compared to $2.2 million in Q2 2024. Improvement driven by revenue growth and reduced operating expenses.
Net Loss (Q2 2025) $1.7 million, a decrease of 42% compared to $2.9 million in Q2 2024. Improvement attributed to revenue growth and cost management.
Cash on Hand (June 30, 2025) $6 million, supported by $5 million raised through equity financing and $1 million from the exercise of common stock warrants.
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Operating Highlights
IB-Stim and RED products: Continued execution of commercialization strategies for IB-Stim and RED products. IB-Stim is focused on neuromodulation technology, while RED targets evacuation disorders. FDA indication expansion for IB-Stim now includes functional dyspepsia with nausea symptoms, nearly doubling the market opportunity. Soft launch of RED is ongoing, with plans for a hard launch.
Market expansion: Expanded IB-Stim label to include patients aged 8-21, increasing the addressable market. Achieved 53 million covered lives for IB-Stim, with ongoing efforts to secure broader medical policy coverage. Category I CPT code for IB-Stim becomes effective January 1, 2026, expected to improve insurance coverage and reimbursement.
Revenue growth: Achieved 46% year-over-year revenue growth in Q2 2025, marking the fourth consecutive quarter of double-digit growth. Revenue for the first half of 2025 increased by 42% compared to the same period in 2024.
Operational efficiencies: Gross margin decreased to 83.6% in Q2 2025 due to higher discounting for financial assistance programs. Operating expenses decreased by 10% year-over-year in Q2 2025, reflecting cost control measures.
Strategic shifts: Focus on achieving cash flow breakeven and profitability through revenue growth and operational efficiencies. Emphasis on securing broad medical policy coverage and leveraging the new CPT code for scaling revenues.
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Risk or Challenges
Insurance Barriers: The lack of national insurance coverage and the absence of a Category I CPT code are causing significant revenue losses. Patients face financial barriers, with many unable to afford treatment due to insufficient insurance support. Approximately 70% of patients receive a 'no authorization required' response, leading to no guarantee of payment and limited access to treatment.
Revenue Dependency on Insurance Coverage: Revenue growth is heavily dependent on achieving broader medical policy coverage and the implementation of the Category I CPT code. Without these, the company is leaving significant revenue potential untapped.
Gross Margin Pressure: Gross margins have declined due to higher discounting in the financial assistance program and expired inventory. This is a result of a higher mix of patients without insurance coverage.
Operational Losses: The company continues to operate at a loss, with operating expenses exceeding revenues. Although losses have decreased, they remain a significant challenge to achieving cash flow breakeven.
Regulatory and Payer Review Timelines: The timing of payer reviews and regulatory approvals is uncertain, with some reviews delayed until late 2025 or early 2026. This creates uncertainty in revenue projections and operational planning.
Market Penetration Challenges: Despite achieving milestones, market penetration remains low, with the company treating only a small fraction of the addressable market.
Dependence on Milestones: Future growth is highly dependent on achieving specific milestones, such as the effective date of the Category I CPT code and broader insurance coverage. Delays in these milestones could adversely impact growth.
Financial Assistance Program Costs: The financial assistance program, while necessary for patient access, is contributing to lower average selling prices and reduced gross margins.
Litigation Costs: The company incurred a one-time legal settlement charge, which has impacted operating expenses and financial performance.
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Guidance & Outlook
Revenue Growth: The company expects significant revenue growth in 2026 and beyond, driven by achieving critical milestones such as national insurance coverage and the effective date for the Category I CPT code on January 1, 2026. Revenue growth is expected to accelerate meaningfully as payer medical policy coverage increases and the new CPT code becomes effective.
Insurance Coverage and CPT Code: The Category I CPT code, effective January 1, 2026, is expected to simplify coding, billing, and reimbursement processes, leading to increased treatment access and revenue. The company has reached about 53 million covered lives and anticipates further expansion of medical policy coverage, which is a key driver for exponential revenue growth.
Market Opportunity Expansion: The FDA expansion of the IB-Stim label to include functional dyspepsia with nausea symptoms in children aged 8 to 21 nearly doubles the market opportunity. This expansion will rely on the same infrastructure, including the Category I CPT code, children's hospitals, and the existing sales and marketing force.
RED Product Launch: The company is progressing from a soft launch to a hard commercial launch of the RED product for chronic constipation. This product already has a Category I CPT code and strong national reimbursement, which is expected to drive adoption and revenue growth.
Operational and Financial Goals: The company aims to achieve cash flow breakeven and profitability, supported by revenue growth, increased insurance coverage, and operational expense leverage. Gross margins are expected to recover as discounted devices transition to full revenue with insurance coverage.
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Shareholder Return Plan
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Key Q&A
Q:What are the perceptions of larger insurance plans regarding the guidelines?
A:Brian Carrico stated that the company has received responses from all 12 primary payers, which account for 175-185 million covered lives. The responses have been faster than normal and generally positive. Some payers have expressed favorable responses and a likelihood for coverage in the fall. However, the speed of policy writing by payers remains uncertain.
Q:What are the expectations for coverage and prior authorization post-guidelines?
A:Brian Carrico explained that most plans require prior authorization and step therapy, but the guidelines suggest removing medication requirements due to lack of evidence. While some plans may remove these requirements, it is expected to be a gradual process. The goal is to have IB-Stim used earlier in the treatment cycle, potentially as a first-line treatment.
Q:What is the trigger for sales force expansion?
A:Brian Carrico mentioned that sales force expansion is tied to larger insurance policy coverages. The company is also focusing on marketing efforts, including key opinion leaders, academic meetings, and creating IB-Stim clinic days to ensure utilization and capacity management in children's hospitals.
Q:What is the current status of device payment and insurance coverage?
A:Brian Carrico explained that 70% of patients are denied treatment due to 'no auth required,' leaving 30% for prior authorization. Of these, 50% get full price approval, and the other 50% go through a patient assistance program with a 65% discount. The average selling price is around $850. The prior authorization approval rate is about 9%, but this is expected to improve with the new Category I code and positive policy coverage.
Q:Is there any recourse for patients if the device is not covered by insurance?
A:Patients can appeal a denial after prior authorization. If denied again, they can either not be treated or opt for cash pay at $2,900. If approved, the hospital bills the insurance company, and the patient is treated.
Q:What is the progress on getting approval for adults to use the IB-Stim device?
A:Brian Carrico stated that the company has submitted the application to the FDA and expects a response by Q4.
Q:Are you satisfied with the RVUs and reimbursements?
A:Brian Carrico expressed satisfaction with the RVU of 1.46 and the Medicare/Medicaid reimbursement rate, which is higher than the device cost. This is seen as positive news for children's hospitals.
Q:What are the general expenses and leverage going forward?
A:Timothy Henrichs explained that the company has reduced costs by hiring dedicated employees and negotiating with vendors. While spending will increase in areas like sales, advertising, and R&D to support growth, the company aims to achieve operating expense leverage and profitability.
Q:How will the company leverage investments for the new indication, functional dyspepsia?
A:Brian Carrico stated that the same sales force, call points, and CPT code will be used for functional dyspepsia, which nearly doubles the market opportunity. Most policies already include functional dyspepsia as a covered benefit.
Q:What is the current cash balance and liquidity outlook?
A:Timothy Henrichs reported a cash balance of $6 million as of June 30, which is expected to provide liquidity into the first half of 2026. Better insurance coverage and operating expense leverage could extend this further.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on the timeline for policy coverage by payers, stating that it is beyond their control. Additionally, while they expressed optimism about removing medication requirements, they acknowledged that it would be a gradual process without committing to a clear timeline.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
CAT
FDA treatment
RED inventory
Research
Unidentified
absence onetime
accounting investor
assignment Category
authorization response
consulting accounting
decrease absence
digit milestone
discounting assistance
dyspepsia nausea
expansion dyspepsia
expenditure month
expense leverage
guideline policy
health insurance
hire service
increase month
indication expansion
insurance hire
investor relation
loss month
month increase
month settlement
nausea symptom
onetime severance
party control
patient health
payer policy
practice guideline
relation insurance
settlement charge
severance consulting
society guideline
NRXS Transcript
NeurAxis, Inc. (NRXS) Q3 2025 Earnings Call Transcript
Unknown11-11
The earnings call reveals mixed sentiments. Basic financial performance shows revenue growth but also increased losses and expenses. Product updates, like the RED launch, face adoption challenges, and there's uncertainty in market strategy due to reliance on the new CPT code. The Q&A highlights cautious optimism but lacks concrete details, leading to investor uncertainty. Despite positive long-term prospects, short-term hurdles and management's vague responses temper enthusiasm. Overall, the sentiment remains neutral, expecting minimal stock price movement in the short term.
NeurAxis, Inc. (NRXS) Q2 2025 Earnings Call Transcript
Positive8-12
The earnings call revealed strong revenue growth (39% in Q1 2025) and a significant increase in unit sales (58% YoY), despite a slight decline in gross margin. Operating expenses and losses decreased, showing improved cost management. The Q&A highlighted positive responses from insurance payers and potential for expanded insurance coverage, which could boost future sales. While there are uncertainties in policy writing speed and coverage timelines, the overall sentiment is positive due to revenue growth, cost management, and optimistic insurance coverage outlook.
NeurAxis, Inc. (NRXS) Q1 2025 Earnings Call Transcript
Neutral5-12
NeurAxis, Inc. (NASDAQ:NRXS) Q4 2024 Earnings Call Transcript
Positive3-22
The earnings call reflects strong financial performance, with a 25% revenue increase and improved margins, alongside positive product development updates. The Q&A highlights significant market expansion opportunities and favorable insurance coverage impacts. Concerns exist regarding regulatory risks and competitive pressures, but the company has a solid plan for growth and breakeven achievement. Overall, the sentiment is positive, indicating a likely stock price increase in the short term, despite some risks.
NRXS Report
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