NeurAxis, Inc. (NRXS) Q3 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
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.
Key Financial Performance
Revenue Revenues in the third quarter of 2025 were $811,000, up 22% compared to $677,000 in the third quarter of 2024. The increase was driven by a 38% rise in unit deliveries, primarily due to volume growth from patients in the company's financial assistance program, which provides discounts to those without insurance coverage.
Gross Margin Gross margin in the third quarter of 2025 was 83.3%, compared to 85.4% in the third quarter of 2024. The decline was due to higher discounting on devices sold through the Financial Assistance Program, stronger unit growth in the lower-margin Financial Assistance Program, and expired RED inventory charges.
Operating Expenses Total operating expenses in the third quarter of 2025 were $2.8 million, an increase of 25% compared to $2.2 million in the third quarter of 2024. The increase was driven by higher sales commissions, targeted advertising and marketing costs, and the introduction of a long-term incentive plan.
Net Loss Net loss in the third quarter of 2025 was $2.1 million, 21% higher compared to $1.8 million in the third quarter of 2024. The higher loss was due to increased operating expenses, despite higher gross profit from increased sales.
Cash on Hand Cash on hand as of September 30, 2025, was $4.4 million. The company improved its liquidity position in October 2025 by raising an additional $2.8 million through an at-the-market equity offering and the exercise of warrants.
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Operating Highlights
IB-Stim: Neuromodulation technology for pediatric and adult patients. Achieved FDA indication expansion to Functional Abdominal Pain and Functional Dyspepsia with associated nausea symptoms in adults. Category 1 CPT code effective January 1, 2026, expected to streamline coding and reimbursement.
RED (Rectal Expulsion Device): Device for chronic constipation. Existing Category 1 CPT code with strong reimbursement. New CPT code expected January 1, 2026, with potential impact on reimbursement.
Pediatric Market Expansion: Focus on securing medical policy coverage for IB-Stim, emphasizing pediatric coverage. Engaged with major insurers and academic societies to advocate for coverage.
Adult Market Expansion: FDA clearance for IB-Stim in adults. Approaching market through randomized controlled trials, Federal Supply Schedule contract for VA access, and limited market release to gauge insurance acceptance.
Revenue Growth: Achieved 22% year-over-year revenue growth in Q3 2025, marking the fifth consecutive quarter of double-digit growth.
Gross Margin: 83.3% in Q3 2025, slightly down due to higher discounting and expired inventory charges. Expected recovery in 2026 with new CPT code.
Operating Expenses: Increased by 25% year-over-year in Q3 2025, driven by higher sales and marketing expenses and research and development activities.
Category 1 CPT Code Implementation: Effective January 1, 2026, expected to improve reimbursement and physician adoption for IB-Stim.
Commercial Readiness: Focused on education and outreach to children's hospitals and stakeholders to ensure adoption of IB-Stim with the new CPT code.
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Risk or Challenges
Insurance Coverage and Reimbursement: The company faces challenges in securing national policy coverage and permanent CPT codes, which are critical for broader adoption of IB-Stim. Current revenue growth is limited as providers are treating only a fraction of the addressable market due to these issues. Policy changes and prior authorization improvements are expected to unfold gradually, delaying broader adoption.
Adult Market for IB-Stim: Although FDA clearance for adults has been obtained, it is based on extrapolated data from adolescents, leading to potential coverage and reimbursement issues in 2026. This could limit market penetration in the adult segment.
RED Device Commercialization: The RED device faces challenges in adoption due to required practice flow changes and physician habit adjustments. Additionally, uncertainty around a new CPT code effective January 1, 2026, could impact reimbursement and market acceptance.
Financial Assistance Program: Higher discounting on devices sold through the Financial Assistance Program has led to lower gross margins. The program's growth in volume has not yet translated to full reimbursement revenue, impacting profitability.
Operating Loss and Cash Burn: The company reported a 27% increase in operating loss year-over-year, with a net loss of $2.1 million in Q3 2025. Free cash flow burn remains at $1.5 million per quarter, raising concerns about liquidity and financial sustainability.
Market Readiness for 2026: Hospitals may face workflow challenges and early payer hurdles as they transition to the new Category 1 CPT code. Initial revenue conversion may lag, impacting short-term financial performance.
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Guidance & Outlook
Revenue Growth: Stronger growth is expected in 2026 and beyond, driven by the commercialization of IB-Stim and RED products, as well as the implementation of the new Category 1 CPT code effective January 1, 2026.
Insurance Coverage Expansion: Efforts are focused on securing broader medical policy coverage, particularly for pediatric patients, with progress expected through the first half of 2026. The new CPT code is expected to streamline reimbursement and improve access.
Category 1 CPT Code Implementation: The new CPT code, effective January 1, 2026, is anticipated to significantly enhance reimbursement processes, introduce work RVUs for providers, and reduce barriers to access.
Adult Market Expansion: Plans include conducting a randomized controlled trial for IB-Stim in adults, pursuing a Federal Supply Schedule contract for access to the Veterans Administration, and exploring private and commercial market opportunities.
RED Product Outlook: The RED device's market potential is being evaluated, with a new CPT code expected to impact reimbursement starting January 1, 2026. Efforts are underway to explore its adoption in the VA market.
Commercial Readiness for 2026: The company is prioritizing education and outreach to children's hospitals, ensuring readiness for the new CPT code implementation, and aligning commercial efforts to drive adoption.
Financial Projections: Revenue growth is expected to continue in Q4 2025 and accelerate in 2026 with the new CPT code. Gross margins are projected to recover as discounted device sales transition to full reimbursement.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:How is the company tracking success and incentivizing the commercial team ahead of the expected volume inflection next year?
A:The company has a strong and experienced commercial sales force, with many members having been with the company for 5-10 years. They are highly incentivized through a commission structure and prioritize areas and states with good insurance policy coverage and a Category 1 CPT code. The team forecasts revenue on a macro and micro level, and they expect to better predict revenue trends as the Category 1 CPT code is implemented. By mid-2026, they anticipate having a solid understanding of revenue drivers.
Q:Can you provide insights into the volume inflection expected from the Category 1 CPT code alone, even before national payer coverage?
A:The company has started forecasting and expects better adoption rates in areas with insurance policy coverage. However, they are cautious about making predictions for areas without policy coverage and prefer to wait and observe the response. Their focus remains on areas with insurance policy coverage and a Category 1 CPT code.
Q:What updates can you provide on engagement with payers and progress towards national payer coverage?
A:Payers are generally responsive but do not heavily engage with the industry. The company believes payers are aware of the Category 1 CPT code and its credibility. However, they are not disclosing specific details publicly. They feel confident in their comprehensive approach and note that policy coverage announcements often come without prior notice.
Q:Can you quantify the additional commercial investment ahead of the Category 1 CPT code and its impact on SG&A growth?
A:Marketing efforts have shifted to specifically target payers, leading to a more than doubling of marketing expenses quarter-over-quarter. This trend is expected to continue into 2026. R&D costs are also expected to increase due to additional studies and market expansion efforts for the IB-Stim device. Sales-related G&A expenses will grow in line with sales, while other G&A costs are being managed efficiently.
Q:What are the plans for the RED product, and how do you see its revenue ramping up?
A:The RED product faces competition from ARM, which is well-established and reimburses well. RED changes physician practice habits and flow, making adoption slower than expected. The company is awaiting CPT code reimbursement details and plans to focus on IB-Stim in children's hospitals while keeping RED as a secondary product.
Q:What is the current cash balance, and how long is it expected to last?
A:The company ended the quarter with $4.4 million in cash and raised an additional $2.8 million in October. With a $1.5 million quarterly burn rate, the cash is expected to last into the second half of 2026. This timeline could extend if revenue ramps faster than expected or if a major insurance payer is secured.
Q:Review of Unclear Management Responses
A:Management avoided providing specific details on payer engagement and national coverage progress, citing confidentiality. They also refrained from making concrete predictions about revenue impacts in areas without insurance policy coverage, preferring to wait and observe the response.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Abdominal Pain
Category III
Category date
Dyspepsia nausea
FSS contract
Financial Assistance
Functional Abdominal
Functional Dyspepsia
General Administrative
III CPT
Pain Functional
Program
RVUs provider
Research Development
Stim adult
VA
adoption progress
adult IB
child adult
code effect
digit
element
engagement
expansion Functional
focus
increase device
liquidity
marketing research
nausea symptom
presentation
readiness
surprise
work RVUs
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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