Q4 2023 electroCore Inc Earnings Call

Operator: www.electroCore.com Hello, and welcome to the electroCore fourth quarter and full year 2023 earnings conference call-in webcast. If anyone should require operator assistance, please press star zero on your telephone keypad. A question and answer session will follow the formal presentation. You may be placed into the question queue at any time by pressing star one on your telephone keypad. At this time, I'd like to turn the call over to Dan Goldberger, CEO. Please go ahead, sir.

Yeah.

[music].

Hello, and welcome to the electrical Corps fourth quarter and full year 2023 earnings conference call and webcast. If anyone should require operator assistance. Please press star zero on your telephone keypad, a question and answer session will follow the formal presentation. You may be placed in the question queue at any time by pressing star one.

On your telephone keypad at.

At this time I'd like to turn the call over to Dan Goldberger CEO. Please go ahead Sir.

Daniel S. Goldberger: Thank you all for participating in today's electroCore earnings call. My name is Dan Goldberger. I am the Chief Executive Officer of electroCore, and I'm also a member of the Board of Directors. Joining me today is Brian Posner, our Chief Financial Officer. Earlier today, electroCore published results for the fourth quarter and full year ended December 31, 2023. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during the call that are forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Therefore, any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation any guidance, outlook, or future financial expectations or operational activities and performance, are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements.

Thank you all for participating in today's electric core earnings call.

My name is Dan Goldberger, I am the Chief Executive Officer of Electric car and I'm also a member of the board of directors joining.

Joining me today is Brian Posner, our Chief Financial Officer.

Earlier today, he electric core published results in the fourth quarter and full year ended December 31 2023.

A copy of the press release is available on the company's website.

Before we begin.

I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995, Okay.

Statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.

All forward looking statements, including without limitation any guidance outlook or future financial expectations or operational activities and performance are based upon the company's current estimates and various assumptions.

These statements involve material risks and uncertainties.

That could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.

Daniel S. Goldberger: Accordingly, you should not place undue reliance on these states. For a list of the risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission. ElectroCore disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcast today, March 13, 2024. ElectroCore was founded in 2005 to commercialize the use of our proprietary, non-invasive vagus nerve stimulation for medical and general wellness applications. The vagus nerve is the longest cranial nerve in the body, bringing information from the visceral organs to the brain. Stimulating the vagus nerve affects many important autonomic functions in the brain and in the body, including neurotransmitter levels, inflammation levels, and metabolism.

Accordingly, you should not place undue reliance on these statements.

For a list of the risks and uncertainties associated with the company's business. Please see the company's filings with the Securities and Exchange Commission.

Cordless claims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

This conference call contains time sensitive information that is accurately only as of the live broadcast today March 13 2024.

Electrical was founded in 2005 to commercialize the use of our proprietary noninvasive vagus nerve stimulation for medical and general wellness applications. The vagus nerve is the longest cranial nerve in the body, bringing information from the visceral Oregon's to the brain.

Stimulating the vagus nerve effects, many important autonomic functions in the brain and in the body, including neurotransmitter levels inflammation levels and metabolism.

Daniel S. Goldberger: Surgically implanted vagus nerve stimulators have been available from other companies for more than 40 years for chronic conditions like epilepsy and depression, so a large and growing database confirms the safety and efficacy of the technique. Building on that science, electroCore pioneered non-invasive vagus nerve stimulation, and our products are now available by prescription for certain headache conditions and without a prescription for general wellness and human performance. Our pipeline of potential future indications and products continues to grow as clinicians, researchers, and wellness advocates become more familiar with the benefits of non-invasive vagus nerve stimulation. We're thrilled to report revenue of $16 million for the full year ended December 31, 2023, an 87% increase over the prior year. This represents a compound annual growth rate of greater than 60% since Brian and I joined the company five years ago. 2023 was capped off by a fifth consecutive record revenue quarter with sales of $5.2 million for the three months ended December 31, 2023. That's a 103% increase over the fourth quarter of 2022 and approximately $21 million annual run rate as we enter 2024. Gross margins continue to be strong, increasing from 81% to 83% for the full year 2023.

Surgically implanted vagus nerve stimulators had been available from other companies for more than 40 years for chronic conditions like epilepsy and depression, so a large and growing database confirms the safety and efficacy of the technique.

Building on that science electrical pioneered non invasive vagus nerve stimulation and our products are now available by prescription for certain headache conditions and without a prescription for general wellness and human performance.

Pipeline of potential future indications and products continues to grow as clinicians researchers and wellness advocates become more familiar with the benefits of noninvasive vagus nerve stimulation.

We're thrilled to report revenue of $16 million for the full year ended December 31, 2023, and 87% increase over the prior year.

This represents a compound annual growth rate of greater than 60% since Brian and I joined the company five years ago.

2023 was capped off by a fifth consecutive record revenue quarter with sales of $5 $2 million for the three months ended December 31 2023.

That's a 103% increase over the fourth quarter of 2022, and approximately $21 million annual run rate as we enter 2024.

Gross margins continued to continued to be strong increasing from 81% to 83% through the full year 2023, and Brian will discuss the financials in more detail later on.

Daniel S. Goldberger: And Brian will discuss the financials in more detail later on. We launched our prescription headache business in 2017, selling primarily to specialty pharmacies. Since then, our prescription headache business has grown worldwide, including sales that are covered by national health systems, such as the VA hospital system in the U.S. and the National Health Service in the United Kingdom, as well as cash-pay sales in the commercial channel and through certain managed care systems. We launched two new non-prescription general wellness product lines in late 2022. Truvega is a direct-to-consumer brand, and TaxSim for Human Performance is for our active-duty military personnel. Both new brands exceeded our expectations in their first full year of sales and are driving excitement about the future. The VA Hospital Channel continues to be our largest customer. You'll recall that our GammaCore prescription therapy is free to patients covered by Veterans Administration benefits, representing about 9 million covered lives across approximately 1,300 healthcare facilities.

We launched our prescription headache business in 2017, selling primarily to specialty pharmacies. Since then our prescription headache business has grown worldwide, including sales that are covered by national health systems, such as the VA Hospital system in the U S and the National Health service in the United Kingdom.

Cash pay sales in the commercial channel and through certain managed care assistance.

We launched two new Nonprescription general wellness product lines in late 2022 to Vega is a direct to consumer brand and Taxane for human performance is for our active duty military personnel.

Both new brands exceeded our expectations in their first full year of sales and are driving excitement about the future.

The VA Hospital channel continues to be our largest customer you'll recall that our gamma corp. Prescription therapies screening of patients covered by veterans administration benefits, representing about 9 million covered lives across approximately 1300 health care facilities.

Daniel S. Goldberger: Sales in the VA channel grew 89% to $9.6 million in 2023 from $5.1 million in 2022. 147 VA facilities have purchased prescription GammaCore products through December 31, 2023, as compared to 117 through December 31, 2022. The VA Hospital Administration Headache Centers of Excellence, the HCOE, estimates approximately 600,000 patients are being treated for headaches in the VA hospitals.

Sales in the VA channel grew 89% to $9.6 million in 2023 from $5 $1 million in 2022 one.

147, VA facilities have purchased prescription gamba core products through December 31, 2023, as compared to 117 through December 31 2022.

The VA Hospital administration headache centers of excellence the H C. O E estimates approximately 600000 patients are being treated for headache into the a hospital system.

Daniel S. Goldberger: Since we have dispensed approximately 4,400 GammaCore devices to veterans, that represents less than 1% of the total addressable market within the VA system. In order to further penetrate the channel, in August 2023, we signed a non-exclusive distribution agreement with Level Government Services, giving Level the right to list and distribute certain prescription GammaCore products into the federal market. Level is a service-disabled, veteran-owned small business, an SDVOSB, offering medical and pharmaceutical goods and services to federal health care providers. Listing products with Level is intended to streamline the sales process to a variety of government procurement channels, which helps government agencies meet their SDVOSB procurement goals.

Since we have dispensed approximately 4400 gamma core devices to veterans that represents less than 1% of the total addressable market within the VA system.

In order to further penetrate the channel in August 2023, we signed a non exclusive distribution agreement with level government services, giving level the right to list and distribute certain prescription Gaba core products into the federal market.

Level is a service disabled veteran owned small business and S. E V O S b offering medical and pharmaceutical goods and services to federal health care providers lifting.

Lifting products with level is intended to streamline the sales process to a variety of government procurement channels, which helps government agencies meet their S. E V O S b procurement goals cut.

Daniel S. Goldberger: Customers for these contract mechanisms include the Veterans Health Administration, VHA, the Military Health System, MHS, and Indian Health Services, IHS, which we believe serve up to 21 million patients combined. Truvega is currently available exclusively through our e-commerce platform at www.truvega.com. We are positioning Truvega as a direct-to-consumer general wellness product for stress, relaxation, sleep, and mental acuity. We are carefully managing our Truvega advertising spend as we fine-tune our messaging and prepare to launch our next generation, mobile app-enabled general wellness product, Truvega+. Full year 2023 Truvega net sales were approximately $1 million. Truvega Net sales in the fourth quarter of 2023 were approximately 21% up sequentially from the third quarter of 2023. When the full year ended December 31, 2023, our revenue return on advertising spend, what the industry calls a media efficiency ratio or MER, was approximately 2.27. In other words, we're spending $1 to generate $2.27 of revenue.

Customers for these contract mechanisms include the Veterans Health Administration V. H E. The military health system, MHS and Indian Health services, IHS, which we believe serve up to 21 million patients combined.

Vega is currently available exclusively through our e-commerce platform at Triple double you'd actually Vega Dot com.

Our positioning true Vega is a direct to consumer general wellness product stress relaxation sleep and mental acuity.

We are carefully managing our true Vega advertising spend as we fine tune, our messaging and prepare to launch our next generation mobile App enabled general wellness product through Vega plus.

Full year 2023 through Vegas, net sales were approximately $1 million <unk> net sales in the fourth quarter of 2023 were approximately 21% up sequentially from the third quarter of 2023.

Full year ended December 31, 2023, our revenue return on advertising spend what the industry calls a media efficiency ratio or N. E. R was approximately 2.27 in other words, we're spending $1 to generate $2.27 of revenue.

Daniel S. Goldberger: We're carefully monitoring Truvega return rates, which continue to be 11 to 12% of shipments. We believe that the Truvega business could scale nicely if we maintain or improve these metrics, and we're excited about the anticipated launch of Truvega Plus next month. PaxVim for Human Performance is being sold to select Air Force Special Forces and Army Special Forces units for accelerated training, sustained attention, reduced fatigue, and improved mood, as defined by the Air Force Research Laboratory, or AFRL. No prescription is required, and more information is available at www.taxstim.com.

We're carefully monitoring through Vega return rates, which continue to be.

11% to 12% of shipments.

We believe that the true Vega business could scale nicely, if we maintain or improve these metrics and we're excited about the anticipated launch of true Vega plus next month.

Okay.

Tax them for human performance is being sold to select air for special forces and Army Special forces units for accelerated training sustained attention reduce fatigue and improved mood as defined by the Air Force Research laboratory or a F. R. L.

No prescription is required and more information is available at triple W. Dot taxed in dot com.

Daniel S. Goldberger: For the full year ended December 31, 2023, we recorded $1.75 million in tax stims sales. The sales funnel for this product continues to grow as word spreads across active-duty military units of the potential human performance benefits provided by tax credits. In parallel, we've developed a second-generation product known internally as TaqStim Black in collaboration with AFRL, and we continue to build prototypes for evaluation by our government research partners. We've stated before that revenue growth for this product line is likely to be lumpy as active duty units are purchased in bulk for pilot deployment, and we expect TACFIM revenues in the first quarter of 2024 to be down sequentially due to the timing of these. Our physician-dispensed cash-paid channel, including GC Direct and GConcierge, grew 42% to $1.7 million during the full year 2023 from $1.2 million in the full year 2022. There were 1,843 cumulative revenue-generating cash pay prescribers as of December 31, 2023, up from 948 on December 31, 2022.

The full year ended December 31, 2023, we recorded $1.75 million of tax and sales.

Ailes funnel for this product continues to grow as word spreads across active duty military units of the potential human performance benefits provided by tax them.

In parallel we've developed a second generation product known internally as taxed in black in collaboration with a S. R. L and we continue to build prototypes for evaluation by our government research partners.

We've stated before that revenue growth for this product line is likely to be lumpy as active duty units purchased in bulk for pilot deployment and we expect Tac stem revenues in.

In the first quarter of 2024 to be down sequentially due to the timing of these orders.

Our physician dispensed cash pay channel, including G C direct and G. Concierge grew 42% to $1 $7 million during the full year 2023 from $1 $2 million in the full year 2022.

There were 1843 cumulative revenue generating cash pay prescribers as of December 31, 2023.

From 948 on December 31, 2022.

Daniel S. Goldberger: We believe that the increase in revenue-generating prescribers could be a leading indicator of future growth, and we'll continue to report this metric in our investor presentation and in subsequent quarters. Last year, we announced a distribution agreement with Germans Healthcare LLC that we believe will add more than 12.5 million colored lives within a select managed care health system. The business model with Jones is similar to how we work with the VA hospital. Gerens handles adjudications, billing, and collections, while electroCore shifts directly to patients and provides in-service care and patient support.

We believe that the increase in revenue generating prescribers could be a leading indicator of future growth and will continue to report this metric in our investor presentation and in subsequent quarters.

Last year, we announced a distribution agreement with journeys healthcare LLC that we believe will add more than $12 5 million covered lives within a select managed care health system.

Business model with journeys is similar to how we work with the VA Hospital system.

Gerrans handles adjudication is billing and collections, while electric or ships directly to patients and provides in servicing and patient support.

Daniel S. Goldberger: Our field sales team is responsible for building awareness among clinicians within those managed care settings. We continue to work with Charins on the implementation and will continue recording small recurring revenue from this relationship during the fourth quarter of 2023. Our field sales function is developing champions within the target managed care systems, and we think Charins could be a significant revenue source in the second half of 2024 and beyond. Revenue from channels outside the United States increased by 13% in U.S. dollars to $1.8 million for the full year 2023, as compared to $1.6 million for the full year 2022. Revenue from channels outside the U.S. increased 18% in local currency for the full year 2023 as compared to 2022.

Our field sales team is responsible for building awareness among clinicians within those managed care systems.

We continue to work with turns on the implementation and continue recording small recurring revenue from this relationship during the fourth quarter of 2023, our field sales function is developing champions within the target managed care system, and we think <unk> could be a significant revenue source in the second half of 2024.

And beyond.

Revenue from channels outside the United States increased by 13% in U S dollars to $1.8 million and the full year 2023, as compared to $1.6 million for the full year 2022.

Revenue from channels outside the U S increased 18% in local currency for the full year 2023 as compared to 2022.

Daniel S. Goldberger: Most of our OUS revenue is generated in the United Kingdom by prescription gamma core sales funded by the National Health Service, or NHS. Now, turning to our clinical progress, on October 24, 2023, we announced top-line data from an abstract presented at the 2023 American College of Gastroenterology annual meeting regarding the potential for NBNS to decrease the use of acute rescue medications for exacerbations of nausea due to gastroparesis or functional This study is entitled Noninvasive Vagal Nerve Stimulation Reduces Nausea Rescue Medication in Patients with Gastroparesis and Related Disorders with Additional Benefits for Multiple Other Associated Symptoms.

Most of our O U S revenue was generated in the United Kingdom by prescription Gamma core sales funded by the National Health service or NHS.

Now turning to our clinical progress on October 24, 2023, we announced topline data from an abstract presented at the 2023 American College of Gastroenterology annual meeting regarding the potential for N BNS to decrease the use of acute rescue medications per exam.

Acervation of nausea, due to gastroparesis or functional dyspepsia.

The study is entitled Noninvasive, vagus nerve stimulation reduces nausea rescue medication in patients with Gastroparesis and related disorders with additional benefits on multiple other associated symptoms. The primary endpoint was reducing the use of anti nausea medications.

Daniel S. Goldberger: The primary endpoint was reducing the use of anti-nausea medication. On October 10, 2023, we announced two abstracts that were presented at the 15th World Stroke Congress on the possible role of NVNS in the treatment of acute neurological injury. The first trial, entitled noninvasive vagus nerve stimulation is safe and efficacious in the treatment of headache associated with subarachnoid hemorrhage, also known as the Vanquish Trial, was conducted at Northwell Health in New York and showed a significant reduction in the overall pain score and a 14% decrease in the average morphine equivalent dosage after two weeks of treatment, as well as a trend towards a three-day decrease in average hospital size.

On October 10, 2023, we announced two abstracts that were presented at the 15th World stroke Congress on the possible role of N VNS and the treatment of acute neurological injury.

The first trial entitled Noninvasive, Vagus nerve stimulation is safe and efficacious in the treatment of headache associated with subarachnoid hemorrhage also known as the vanquish trial was conducted at North well health in New York and showed a significant reduction in the overall pain score and a 14% decrease in the App.

Average morphine equivalent dosage after two weeks of treatment as well as the trend towards a three day decrease in average hospital stay.

The second study entitled Noninvasive, vagus nerve stimulation in acute ischemic stroke.

Daniel S. Goldberger: A second study entitled Noninvasive Vagus Nerve Stimulation in Acute Ischemic Stroke, also known as Nelvis, is a prospective randomized clinical trial with blinded outcome assessment being conducted at the Leiden University Medical Center. 150 patients with ischemic stroke were randomly allocated one-to-one to NVNS for five days in addition to standard treatment versus standard treatment alone. This study has been fully enrolled, and we hope to see top-line data by the end of 2024. We'll continue to provide updates about our pipeline and other opportunities as they become available. Now, I'll turn the call over to Brian for a review of our financials and other guidance. Brian?

Also known as notice.

Is a prospective randomized clinical trial with blinded outcome assessment being conducted at the Leiden University Medical Center.

150 patients with ischemic stroke, where randomly allocated one to one to N. VNS for five days in addition to standard treatment versus standard treatment alone.

This study has been fully enrolled and we hope to see top line data by the end of 2024.

We'll continue to provide updates about our pipeline and other opportunities as they become available.

Now I'll turn the call over to Brian for a review of our financials and other guidance items Brian.

Brian M. Posner: Thank you, Dan. Net sales for the year ended December 31st, 2023, increased 87% as compared to the year ended December 31st, 2022. The increase of $7.4 million is due to an increase in net sales across major channels, including our prescription GammaCore medical devices sold in the U.S. and abroad, and revenue from the sales of our non-prescription general wellness and human performance Trivega and TaxStim products. Gross profit of $13.2 million increased $6.3 million for the year ended December 31st, 2023, compared to gross profit of $7 million for the year ended December 31st, 2022. Gross margin was 83% and 81% for the years ended December 31st, 2023 and 2022, respectively. Total operating expenses for the full year ended December 31, 2023 were approximately $32.5 million, as compared to $29.9 million for the full year ended December 31, 2022.

Thank you Dan.

Sales for the year ended December 31, 2020 increased 87% compared to the year ended December 31 2022.

The increase of seven $4 million is due to an increase in net sales across major channels, including our prescription gamma core medical devices sold in the U S and abroad.

And revenue from the sales of our Nonprescription general wellness and human performance.

He got from tax skin products.

Gross profit of $13 $2 million increased $6 $3 million for the year ended December 31 2023 compared.

Compared to gross profit of 7 million for the year ended December 31 2022.

Gross margin was 83% and 81% for the years ended December 31, 2023 and 2022.

Yeah.

Total operating expenses in the full year ended December 31, 2023 were approximately $32 $5 million as compared to $29 9 million for the full year ended December 31 2022.

Brian M. Posner: Research and development expense of $5.3 million for the year ended December 31, 2023 decreased by $200,000 from $5.5 million for the full year ended December 31, 2022. This decrease was due to cost-cutting measures offset by our targeted investments to support the next generation of the company's non-invasive nerve stimulants. Selling general and administrative expenses of $27.2 million for the year ended December 31st, 2023, increased by $2.8 million compared to $24.3 million for the previous year. This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales, offset by decreases in insurance and stock-based compensation expenses. Gap's net loss for the full year of 2023 was $18.8 million, as compared to the $22.2 million net loss for the full year of 2022.

Research and development expense of $5 $3 million for the year ended December 31, 2023 decreased by $200000 from $5 5 million during the full year ended December 31 2022.

This decrease was due to cost cutting measures offset by our targeted investments to support the next generation of the company is noninvasive nerve nerve stimulators.

Selling general and administrative expense of $27 $2 million for the year ended December 31, 2023 increased by $2.8 million compared to $24 $3 million for the previous year.

This increase was primarily due to a greater variable selling and marketing costs consistent with our increase in sales offset by decreases in insurance and stock based compensation expenses.

GAAP net loss for the full year of 2023 was $18 $8 million as.

As compared to the $22 $2 million net loss for the full year of 2022.

Brian M. Posner: The adjusted EBITDA net loss for the full year of 2023 was $15.4 million. That's compared to an adjusted EBITDA net worth of $19 million for the full year of 2022. A reconciliation of Gap Net Loss to Non-Gap Adjusted EBITDA Net Loss has been provided in the financial statement tables included in today's press release. Cash, cash equivalents, and restricted cash at December 31st, 2023 totaled approximately $10.6 million, as compared to approximately $18 million as of December 31st, 2022.

Adjusted EBITDA net loss for the full year of 2023 was $15 $4 million as compared to an adjusted EBITDA net loss of $19 million for the full year of 2022.

A reconciliation of GAAP net loss and non-GAAP adjusted EBITDA in that loss has been provided in the financial statement tables included in today's press release.

Cash cash equivalents and restricted cash at December 31, 2023.

Approximately $10 $6 million as compared to approximately $18 million as of December 31, 2022.

Daniel S. Goldberger: In July 2023, the company raised net proceeds of approximately $7.5 million through a registered direct offering and concurrent private placements priced at the market under NASDAQ rules. And now, I'll turn the call back over to Dan. Thank you, Brian. I'm very proud of our full-year 2023 operating results and the continued momentum in our prescription headache and general wellness business. All of our operating metrics continue to beat expectations, and we continue to be enthusiastic about the company's long-term prospects across all brands and products. The launch of our first general wellness product, Truvega 350, was received favorably by the market, as evidenced by greater than $1 million of revenue in its first full year of sales and the efficiency of our media spend to drive those sales.

In July 2023.

The company raised net proceeds of approximately $7.5 million through a registered direct offering and concurrent private placements priced at the market under NASDAQ rules.

And now I'll turn the call back over to Brad.

Thank you Brian.

I'm very proud of our full year 2023 operating results and with the continued momentum in our prescription headache and general wellness businesses.

All of our operating metrics continue to beat expectations and we continue to be enthusiastic about the company's long term prospects across all brands and product lines.

The launch of our first general wellness product Vega 350 was received favorably by the market as evidenced by greater than $1 million of revenue in its first full year sales and the efficiency of our media spend to drive those sales.

The brand continues to show tons of potential as a direct to consumer general wellness offering and we are incredibly excited about the anticipated launch of our next generation true Vega plus product next month.

Daniel S. Goldberger: The brand continues to show tons of potential as a direct-to-consumer general wellness option, and we are incredibly excited about the anticipated launch of our next generation Truvega Plus product next month. Tureka Plus will be the first mobile app-enabled cervical noninvasive vagus nerve stimulator on the market and will leverage many of the patents involving the control of the stimulator using a smartphone device that we've secured over the last few years.

<unk> plus will be the first mobile app enabled cervical noninvasive vagus nerve stimulator on the market and will leverage many of the patents involving the control of the stimulator using a smartphone device and we've secured over the last few years.

We'll continue selling through Vega products through our E Commerce site.

Triple W that too big a dotcom and hope to add additional channels and product offerings to increase the lifetime value of each customer.

We will continue to monitor our kpis and metrics and adjust our investments and all of our consumer channels as the year progresses.

Daniel S. Goldberger: We'll continue selling Trivega products through our e-commerce site, www.truvega.com, and hope to add additional channels and product offerings to increase the lifetime value of each customer. We will continue to monitor our KPIs and metrics and adjust our investment in all of our consumer channels as the year progresses. A pipeline of interest from different branches of our active-duty military continues to develop for our taxed-in and second-generation taxed-in black product. Fails of the text and brand are likely to be lumpy as active-duty units purchase them in bulk for pilot deployment.

Our pipeline of interest from different branches of our active duty military continues to develop for our tax dim and second generation taxed in black products.

Sales in detached and brand are likely to be lumpy as active duty units purchased in bulk for pilot deployment.

Longer term, we also believe that there may be civilian crossover as first responders elite athletes transportation workers traders and E gamers become aware of the human performance benefits established so far.

Demand for our prescription gamma core therapy in the VA channel continues to grow based on clinical performance and our increased presence in the field. We have about 35 straight Commission sales agents, representing about 90, 10 99 reps in the field managed by our small team of territory business managers.

Daniel S. Goldberger: Longer term, we also believe that there may be civilian crossover as first responders, elite athletes, transportation workers, traders, and e-gamers become aware of the human performance benefits established so far. Demand for our prescription gamma-core therapy in the VA channel continues to grow based on clinical performance and our increased presence in the field. We have about 35 straight commission sales agents representing about 90, 1099 reps in the field, managed by our small team of territory business managers and supported by our customer experience. This hybrid structure is very scalable as we deploy prescription GammaCore around the country.

And supported by our customer experience team.

Hybrid structure is very scalable as we deploy prescription gamma core around the country.

During 2023, our sales and marketing expense increased by approximately $3 $3 million over 2022, while sales grew by $7.4 million signaling that there may be real leverage opportunities in the P&L.

Further out we are working towards establishing additional indications for prescription gamma core to treat post traumatic stress disorder opioid use disorder and other clinical opportunities.

Daniel S. Goldberger: During 2023, our sales and marketing expense increased by approximately $3.3 million over 2022, while sales grew by $7.4 million, signaling that there may be real leverage opportunities in the P&L. Further out, we're working towards establishing additional indications for prescription Gamma-Core to treat post-traumatic stress disorder, opioid use disorder, and other clinical opportunities. We have lots of positive momentum leading into 2024, including continued growth in our U.S. prescription headache business in both the VA and commercial channels.

We have lots of positive momentum leading into 2024, including one continued growth in our U S prescription headache business in both the VA and commercial channels.

To anticipated launch of our next generation true vague, a plus product next month for general wellness mental acuity and sleep driven by ongoing consumer marketing efforts.

Three further development of the taxed in brand and launch of taxed in Black later in the year for human performance in the active duty military and civilian crossover.

Poor revenue through our distribution agreement with <unk> health care for the sale of prescription gamma core within a select managed care health system.

Five prescription gamba core label extensions for a variety of indications over time.

Daniel S. Goldberger: Anticipated launch of our next-generation Truvega Plus product next month for general wellness, mental acuity, and sleep, driven by ongoing consumer marketing efforts. Three, further development of the Taxiderm brand and launch of Taxiderm Black later in the year for human performance in the active-duty military and civilian cross-border. Four, revenue through our distribution agreement, which earns healthcare revenue for the sale of prescription GammaCore within a select managed care health system. Five, prescription GammaCore label extensions for a variety of indications over time.

Six more than enough cash to execute our plan through 2024 and close the cash flow gap even further.

At this time I'll turn the call over to the operator operator, please open the line for questions.

Thank you well now be conducting a question and answer session.

The question queue. Please press star one on your telephone keypad, a confirmation tone will indicate your line is in the question queue. You May press star two if you'd like to remove your question from the queue.

Once again Thats star one to be placed in the question queue.

Operator: And six, more than enough cash to execute our plan through 2024 and close the cash flow gap even further. At this time, I'll turn the call over to the operator. Operator, please open the line for questions.

Our first question today is coming from Jeffrey Cohen from Ladenburg Thalmann. Your line is now live.

Oh, Hi, Dan as Brian how are you.

Good. Thank you how are you Jeff.

We're just oh pupil to just a few so.

June turned the.

Sure.

Two very good plus eventually replace <unk>.

Operator: Thank you. We will now be conducting a question and answer session. If you would like to be placed in the question queue, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue.

Or do you feel as if all the functionality may offer different advantages for different users.

It's a great question, Jeff we're going to launch next month or are too big a plus.

Operator: You may press star 2 if you would like to remove your question from the queue. Once again, that's star one to be placed in the question here. Our first question today is coming from Jeffrey Cohen from Langenberg-Fallman. Your line is now live. Hi Dan and Brian, how are you?

We're going to continue to offer the true Vegas 350.

At a lower price point, they've got a different feature sets and that'll allow us to do some.

Some price discovery.

It'll allow us to learn more about what feature sets are more important to us to different customer segments.

Daniel S. Goldberger: Good. Thank you. How are you?

Daniel S. Goldberger: I'll keep it to just a few. So June 10, that... Shruvega Plus eventually replace Shruvega, or do you feel as if the functionality may offer different advantages for different users? It's a great question, Jeff.

So for the foreseeable future I think we're gonna be offering at least two different product configurations in the in the directed consumer true Vega Dot Com channel.

Okay, and then can I segue that over to talk soon discharged two nice quarter by the way I'm attached and detached and plus what is the difference between now and then.

Daniel S. Goldberger: We're going to launch our Trudega Plus next month, and we're going to continue to offer the Truvega 350 at a lower price point. They've got different feature sets.

As soon as it related to.

Power or amplification or cellular.

Daniel S. Goldberger: And that'll allow us to do some price discovery. It'll allow us to learn more about what feature sets are more important to different customer settings. So for the foreseeable future, I think we're going to be offering at least two different product configurations on the direct-to-consumer Truvega.com. Okay, and then could I segue that over to ToxStim? This ToxStim, nice quarter, by the way, on the ToxStim. The ToxStim Plus, what is the difference between that and the ToxStim? Is it related to power or amplification or cellular conductivity?

Germany.

So it's we call attach them black, but I think I know what you meant there are images of the taxed in black on our web site at a triple W. Dot tax M Dot com and.

Just by coincidence I spent the last two days in India.

In Ohio with the team at at Air Force Special forces.

Taxed in black is a much more rugged implementation and more powerful implementation.

And we're on track to launch that as a as a cartridge device commercial off the shelf later this year.

Interesting, Okay and then.

Lastly for us.

Any commentary on.

Daniel S. Goldberger: So we call it Tax Stim Black, but I think I know what you meant. There are images of Tax Stim Black on our website at www.taxstim.com. Just by coincidence, I spent the last two days in Dayton, Ohio with the team at Air Force Special Forces. Taxed in Black is a much more rugged implementation and more powerful implementation, and we're on track to launch that as a COTS device commercial off the shelf later this year. Okay, and then lastly for us, any commentary on OUS business outside of the NHS in the UK? Yeah, another very good question.

O U S business outside of <unk>.

For us and the UK yeah. Another very good question.

N H S. A has been very supportive in that business are in the U K.

King continues to grow sort of middle single digits, right, 46% year on year, we'd not been <unk>.

Successful gaining reimbursement in other national health systems and for the short term for the time being I would rather make those investments in the U S rather than Europe.

Daniel S. Goldberger: You know, the NHS has been very supportive of that business in the UK continues to grow sort of middle single digits, right, 4 to 6% year on year. We've not been successful gaining reimbursement from other national health systems, and, For the short term, for the time being, I would rather make those investments in the U.S. rather than Europe. As our directed consumer business matures, we'll be looking at taking Truvega to Canada and Australia first. Excuse me, and then I will go to the UK and Western Europe after that.

As our direct to consumer business matures.

We'll be looking at take.

Taking true Vega.

To Canada, and Australia first.

Excuse me and then the U K and and West Western Europe after that.

Okay, and then lastly, nothing on 24, no no garden sure anything off of a year for now we're not going to give guidance we're comfortable with.

With with analysts' consensus right now.

Uh huh.

Daniel S. Goldberger: Okay, and then lastly, nothing on 24. No guidance or anything on the year or the first quarter. No, we're not going to give guidance. We're comfortable with analyst consensus right now, and we need to see how the launch, the new product launch goes before we really say something with confidence about Perfect. Okay, nice readout and full year. Thanks for taking our questions. Thanks. Thank you. As a reminder, that's Star 1 to be placed in the question queue. Our next question is coming from R.K. from H.C. Wainwright. Your line is now on.

Okay, and we need to see how the launch had a new product launch goes before weekend.

Really say some things with.

With confidence about the back half of the year.

Perfect. Okay, nice readout in whole year, thanks for taking our questions. Thank you Jay.

Thank you as a reminder, that star one to be placed in the question queue. Our next question is coming from RK from H C. Wainwright. Your line is now off.

Thank you good.

Good afternoon, Dan and Brian computer.

So okay.

So when you close the quarter and you also said you.

Daniel S. Goldberger: Thank you. Good afternoon, Dan and Brian. Thank you. Thank you. So when you close the quarter, and you also said, you know, based on the fourth quarter, it's an annualized rate of 21 million. Thank you. Thank you.

Based on the fourth quarter, it's an annualized run rate of $21 million.

So.

What what could be the drivers.

For it to push beyond the annualized number of $21 million.

And you're thinking.

Oh, Yeah look.

Daniel S. Goldberger: What could be the drivers for it to push beyond the annualized number of 21 million in your thinking? We've been growing at 100% year-on-year for the last two quarters. I'm And, you know, our full-year growth is, I think we said 75 or 78 percent. I've got every reason to believe that we'll be able to continue that momentum. Our biggest customer is the VA Hospital Channel, and we've got more feet on the street every month, and I don't see any slowdown in that channel. The Jones Distribution Agreement has tremendous upside.

We've been growing at a at 100% year on year for the last two quarters.

And Ah you.

Our full year growth is a I think we said $75 78 per cent I've got every reason to believe that that will be able to continue that momentum.

Our biggest customer is the VA hospital channel and we've got more feet on the street every month.

And I don't see any slowdown in that channel.

The journeys distribution agreement.

<unk> has tremendous upside that's a total addressable market of more than 12 million covered lives that we're just now building some prescriber awareness in and then of course, there's are our two new product lines to Vega and taxed in that are both you know starting from.

Daniel S. Goldberger: That's a total addressable market of more than 12 million covered lives that we're just now building some prescriber awareness about. And then, of course, there are our two new product lines, Truvega and Taxdim, that are both starting from, they represent 20% of our business last year, but still very small numbers and a lot of room to grow. I'm very, very optimistic about things accelerating. Thanks for that.

You know they they represent 20% of our business last year, but still very small numbers and a lot of room to grow so.

I'm, a I'm very very optimistic about things accelerating as we go through this year.

Yeah. Thanks for that in terms of the Jones health care can you give us a little bit more sense as how this.

Daniel S. Goldberger: In terms of Jones Healthcare, can you give us a little bit more sense as to how this could mushroom not only in 24 but also in 25? Because I think for the last couple of quarters, we have been hearing you saying you've been achieving small revenues. So do you think by this time, when I say by this time, by now, you have kind of solved all the kinks in the system, whatever they are in, such that and also have set up enough relationships for us to see a steady growth in revenues and also become meaningful by the end of 24? Yeah, so getting the infrastructure set up, getting on formulary, educating the prescribers and the clinicians is taking longer than I had hoped.

This could mushroom not only in 'twenty four but also in 'twenty fly because I think for the last couple of quarters. We have been hearing you, saying you've been you've been achieving small revenues. So do you think by this time when I say by this time by now you.

How kind of solved all the king's sort of it stays in the system such that and also have set up enough relationships for us to see a steady growth in.

Revenues and also a big ring meaningful by end of 'twenty four.

Yeah. So.

The getting the infrastructure set up getting on formulary.

Educating the prescribers and the clinicians is taking longer than I had hoped so youre not going to see it as a significant number this quarter.

Daniel S. Goldberger: So you're not gonna see it as a significant number this quarter. I think it's really the second half of this year, and it's definitely 2025. Okay, and then on the tax term, yes, you got a good start of 1.75 million for the year, and then you also said the funnel is progressively growing. So when you say that, but on the other hand, Congress hasn't decided whether it wants to run the government or not run the government. So where, how do you see this flow of growth coming through? And also, you know, you were saying something about the first quarter, kind of. sequentially, it's not going to be higher than what we saw in the fourth quarter. Can you kind of expand on those comments?

I think it's really a second half of this year and it's definitely a 2025 story.

Okay, and then on the tax time, Yes, you got a good start of a one 5 million for the year.

And then you also said the funnel is is progressively.

Progressively growing.

So when you say that but.

But the other hand, you know Congress hasn't decided whether they want to run the government are not around the government.

So where how do you see this.

Hello growth come through and also.

You were saying something about first quarter kind of.

Sequentially, it's not going to be higher than what we saw in the fourth quarter can you kind of expand on those comments. Please.

Yeah.

Daniel S. Goldberger: Yeah, that's exactly right. The continuing resolutions have affected some of the contracts that are in process, and our first quarter 2024 tax stim sales are going to be sequentially down from the fourth quarter. That said, these are solid purchase commitments; they're just sliding with the continuing resolution. There are many companies that are in this situation that deal with DOD.

That's exactly right.

The continuing resolutions have affected some of the contracts that are in process and our first quarter 2024 taxed them sales are going to be sequentially down from the fourth quarter.

That said.

These are solid purchase commitments, there just sliding with with the continuing resolutions and.

There are many companies that are in this situation that deal with with D. O D. A for US it's still a very small part of our business, but hope springs eternal that our that our government will figure itself out but.

Daniel S. Goldberger: For us, it's still a very small part of our business, but hope springs eternal that our government will figure itself out. But there's growing demand for our human performance product. It's very exciting. And then the last question from me is on the prescriber front. It's really great to hear that cash-based prescribers are continuing to increase. I mean, I can sit down and look at this, but because you said this could be a leading indicator, I want to ask you, you know, what sort of a correlation are you seeing in terms of the growth of prescribers and revenue? I'm just trying to understand how to think through that growth, because it can certainly... Just grow like crazy this year, but I just want to understand how that growth could come. Yeah, we don't, we don't have. I think the best way to look at it is that it's an 80-20 rule.

But there's growing demand for.

For our human performance products very exciting.

Okay. Good and then the last question from me is on the Prescriber front, it's really great to hear that the cash base prescribers are continuing to increase.

I mean, I I can sit down and look at this but because you said this could be a leading indicator I wanted to ask you you know what sort of a correlation or are you seeing in terms of the growth of the prescribers and their revenue.

I'm just trying to understand how to think through that Claude.

Because it can certainly.

Just just grow like crazy over this year, but I just want to understand how that growth could come through.

Yeah, we don't.

We don't have I think the best way to look at it is it's just it's an 80 20 rule.

Daniel S. Goldberger: Roughly 20% of those prescribers are generating 80% of the revenue. And so there are two ways to think about it. The first is that it's just a numbers game, right? We have to sign up 100 to get 20 superstars.

<unk>, 20% of those prescribers are generating 80% of the revenue.

And so there are two ways to think about it. The first is that it's just a numbers game right.

We have to sign up 100 to get 20.

And superstars.

But.

Daniel S. Goldberger: But what we're also gonna be doing in the back half of this year is trying to learn what are the characteristics of a high-revenue cash-pay practice, and how do we identify those characteristics and be more focused on the one hand in recruiting new customers? Or are there programs, marketing programs, for example, that we can use for the 80% of prescribers who aren't generating a lot of revenue? So there's still a lot of business model discovery ahead. Thank you very much. Thanks for taking all my questions and good luck. Absolutely.

What we're also going to be doing in the back half of this year is trying to learn what what are the characteristics of a high revenue are cash pay practice at.

And and how do we identify those characteristics.

And I'd be more focused on the one hand in recruiting new customers.

Or are there programs marketing programs for example that we can use for the 80% of our prescribers, who arent generating a lot of revenue. So theres still a lot of of our business model discovery ahead of us.

Okay. Thank you very much thanks for taking all my questions. Good luck absolutely.

Thank you. Your next question today is coming from Anthony Vendetti from Maxim Group. Your line is now law.

Daniel S. Goldberger: Thank you. The next question today is coming from Anthony Venditti from Axiom Group. Your line is now live.

Yeah. Thanks.

Anthony Venditti: Yeah, thanks. I just wanted an update. How are you doing, Dan?

I was just wondering an update hey, doing Dan just an update on the ongoing.

Daniel S. Goldberger: Just an update on the ongoing clinical trials. Any expectation for readouts in 2024? Yeah, so the NOVUS trial in acute stroke is fully enrolled. I think the last patient, last consult happened last month. Um, so I'm optimistic that we'll see top-line data in July or August, kind of a time frame.

Clinical trials.

Any expectation for Readouts in 2024.

Yeah, so the novus trial in acute stroke.

Is fully enrolled I think the last patient last console happened last month.

So.

I'm optimistic that we'll see top line data.

In July August kind of a timeframe.

And and similarly.

Daniel S. Goldberger: And similarly, the Parkinson's gait trial in Newcastle was fully enrolled at the end of last year, and so I'm hoping we see top-line data in April or May. Actually turning those into publications is going to take much longer, but that top-line data in both indications will obviously impact our strategic thoughts about how we leverage that data into an expanded indication. Okay, great. And then, just in terms of the VA, obviously, it's one of your primary channels. How would you characterize current penetration and, you know, I know there's still an opportunity there, but what is the overall opportunity that remains with the VA? Sure. So we are measuring penetration two ways.

The Parkinson's gate trial in New Castle.

Was fully enrolled at the end of last year, and so I'm, hoping we see top line data in a in April or May.

Actually turning those into publications is going to take much longer but.

That topline data in both indications.

We'll will obviously impact.

Our our strategic thoughts about how do we leverage that data into an expanded indication of an expanded label.

Okay, Great and then just in terms of the V. A obviously, it's one of your primary channels.

How would you characterize current penetration.

And and you know I know theres still an opportunity there, but what is.

The overall opportunity that remains with the VA sure. So we are I measure penetration two ways.

Daniel S. Goldberger: In terms of facilities, we are about 12% of the 1,300 facilities out there now, so there is still a lot of room to grow. But the better number to look at is the number of headache patients. I think there are roughly 600,000 headache patients per year in the VA hospital system, and by that metric, we're just barely 1% penetrated. Now as we make progress with PTSD, that dramatically increases the denominator, and of course, unfortunately, PTSD has a high prevalence in the VA hospital population, same with substance abuse, with Parkinson's, and other neurological conditions. As we add indications, you know, our denominator gets bigger, and our penetration gets smaller in opportunity.

In terms of facilities are we are about 12% of the.

<unk> thousand 500 facilities out there now so still a lot of room to grow.

But the better number to look at is.

The number of headache patients I think there's roughly 600000.

Headache patients per year in the VA hospital system and by that metric.

We're just barely 1% penetrated now as we make progress with P. T S D that.

Dramatically increases the denominator and of course Unfortunately.

PTSD has a high prevalence in the VA hospital population same with substance abuse.

Same with Parkinson's and other neurological conditions so.

As we add indications.

Our our denominator it gets bigger and our penetration gets smaller and opportunity gets bigger.

Daniel S. Goldberger: Okay, great. Thanks for the update. I appreciate all the comments. Thank you. Thank you. We have reached the end of our question and answer session. I'd like to turn the floor back over to management for any further or closing comments.

Okay great.

Thanks for the update I appreciate all the color.

Thanks.

Thank you we reached end of our question and answer session I'd like to turn the floor back over to management for any further or closing comments.

Daniel S. Goldberger: Thank you, operator. We appreciate everybody joining today's call. I want to specifically say thank you to all of our employees who have been working tirelessly to deliver our amazing therapy to patients. Our team has done a great job of staying nimble, scaling the business, and responding to the needs of our customers and healthcare providers alike, leading to more than 60% compound annual growth over the last five years.

Thank you operator.

We appreciate everybody joining today's call.

I wanted to specifically say, thank you to all of our employees who've been working tirelessly to deliver our amazing therapy to patients.

Our team's done a great job of staying nimble scaling the business and responding to the needs of our customers and healthcare providers alike.

Leading to the more than 60% compound annual growth over the last five years.

Operator: I also want to thank the healthcare professionals and their patients for their loyal support of gamma core therapy. Thank you, and our champions at the Air Force and Army Specialists. You all have a good evening. Thank you. That does conclude today's teleconference. You may disconnect your line at this time and have a wonderful day. We thank you for your participation today.

I also want to thank the healthcare professionals and their patients for their loyal support of Gamma Court therapy.

<unk> to their adoption of our true Vega products as a tool to improve general wellness and our champions at the Air Force and Army Special forces.

You all have a good evening.

Thank you that does conclude today's teleconference. You may disconnect. Your line at this time and have a wonderful day, we thank you for your participation today.

Yeah.