Q1 2024 electroCore Inc Earnings Call

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Operator: Greetings and welcome to the electroCore first quarter 2024 earnings conference call. At this time, all participants are on a listen-only basis. A question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone key. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Dan Goldberger. Thank you, sir.

Greetings and welcome to the Electric Corps first quarter 2024 earnings Conference call.

Operator: At this time all participants are in a listen only mode.

Daniel S. Goldberger: A question and answer session will follow the formal presentation.

Operator: If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad. As a reminder, this conference is being recorded I would now like to turn the conference over to your host Dan Goldberger.

Daniel S. Goldberger: Sir you may begin.

Daniel S. Goldberger: Thank you all for participating in today's electroCore earnings call. My name is Dan Goldberger.

Daniel S. Goldberger: Thank you all for participating in today's electric Corp earnings call.

Daniel S. Goldberger: I'm the Chief Executive Officer of electroCore, and I'm also a member of the Board of Directors. Joining me today is Brian Posner, the Chief Financial Officer. Earlier today, electroCore published results for the first quarter ended March 31, 2024. 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.

Daniel S. Goldberger: My name is Dan Goldberger, I'm, the Chief Executive Officer of electric cord and I'm also a member of the board of directors.

Daniel S. Goldberger: Joining me today is Brian Posner, Chief Financial Officer.

Daniel S. Goldberger: Earlier today electric or publish results for the first quarter ended March 31 2024.

Daniel S. Goldberger: A copy of the press release is available on the company's website.

Speaker Change: Before we begin I'd like to remind you that management will make statements. During the 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 <unk>.

Daniel S. Goldberger: Private Securities Litigation Reform Act of 1995.

Daniel S. Goldberger: Any statements contained in this call that are not statements of historical fact 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 performances, 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 the state. 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, May 8, 2024. electroCore was founded in 2005 to commercialize the use of our proprietary non-invasive vagus nerve stimulation for medical and general wellness applications.

Daniel S. Goldberger: Any statements contained in this call that are not statements of historical facts.

Daniel S. Goldberger: Be deemed to be forward looking statements.

Daniel S. Goldberger: All forward looking statements, including without limitation, any guidance outlook or future financial expectations or operational activities and performances.

Daniel S. Goldberger: Our.

Daniel S. Goldberger: Based upon the company's current estimates and various assumptions.

Daniel S. Goldberger: 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 statements.

Daniel S. Goldberger: For a list of risks and uncertainties associated with the company's business. Please.

Daniel S. Goldberger: Please see the company's filings with the Securities and Exchange Commission.

Daniel S. Goldberger: Electric cord disclaims any intention or obligation.

Daniel S. Goldberger: As required by law update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.

Daniel S. Goldberger: This conference call contains time sensitive information.

Daniel S. Goldberger: That is accurate only as of the live broadcast today may eight 2024.

Daniel S. Goldberger: Electric car was founded in 2005 to commercialize the use of our proprietary noninvasive vagus nerve stimulation for medical and general wellness applications.

Daniel S. Goldberger: 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.

Daniel S. Goldberger: The vagus nerve is the longest cranial nerve in the body, bringing information from the distal organs to the brain.

Daniel S. Goldberger: Stimulating the vagus nerve affect 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 in human performance. Our pipeline of potential future indications and products continues to grow as clinicians, researchers, and wellness advocates conduct investigator-initiated trials to become more familiar with the benefits of noninvasive vagus nerve stimulation. We are thrilled to report that there is a sixth.

Daniel S. Goldberger: Surgically implanted vagus nerve stimulators had been available from other companies.

Daniel S. Goldberger: More than 40 years for chronic conditions like epilepsy and depression.

Daniel S. Goldberger: Large and growing database confirms the safety and efficacy of the technique.

Daniel S. Goldberger: Building on that science electric core pioneered noninvasive 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.

Daniel S. Goldberger: Our pipeline of potential future indications and product continues to grow as clinicians researchers and wellness advocates conduct investigator initiated trials to become more familiar with the benefits of noninvasive vagus nerve stimulation.

Daniel S. Goldberger: We are thrilled to report a fish in.

Daniel S. Goldberger: This is a record revenue quarter of $5.4 million for the three months ended March 31, 2024, a 96% increase over the prior year. That's a five-year compound annual growth rate from Q1 2019 of greater than 67%.

Daniel S. Goldberger: Second a record revenue quarter of $5 $4 million for the three months ended March 31, 2024, 96% increase over the prior year.

Daniel S. Goldberger: A five year compound annual growth rate from Q1, 'twenty 19 through Q1 of 'twenty 'twenty four a greater than 67 per se.

Daniel S. Goldberger: Moreover, this growth has been accomplished with 84% gross margin. Brian will discuss the financials in more detail later on. We launched our U.S. prescription headache business in 2017, selling primarily to specialty pharmacists. 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 United States and the National Health Service in the United Kingdom, cash-pay sales, and through certain managed care systems in the United States.

Daniel S. Goldberger: Moreover, this growth has been accomplished with 84% gross margins.

Daniel S. Goldberger: Ian will discuss the financials in more detail later on.

Daniel S. Goldberger: We launched our U S prescription headache business in 2017, selling primarily to specialty pharmacies.

Daniel S. Goldberger: 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 United States and the National Health service in the United Kingdom.

Daniel S. Goldberger: Cash pay sales and through certain managed care assistance in the United States.

Daniel S. Goldberger: We launched two new non-prescription general wellness product lines last year. Truvega is a direct-to-consumer health and wellness brand, and TaxStem is our brand for human performance for active-duty military. Both new brands exceeded our expectations in their first full year of sales and continue driving excitement about the future.

Daniel S. Goldberger: We launched two new Nonprescription general wellness product lines last year.

Daniel S. Goldberger: Two Vega is a direct to consumer health and wellness brand and tax them is our brand for human performance for active duty military personnel, both new brands exceeded our expectations in their first full year of sales and continued driving excitement about the future.

Daniel S. Goldberger: The VA hospital system continues to be our largest revenue channel. 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. Sales in the VA channel grew 127% to $3.9 million in the first quarter of 2024, from $1.7 million in the first quarter of 2023. 151 VA facilities have purchased prescription GammaCore products through March 31, 2024, as compared to 124 through March 31, 2023. The VA Hospital Administration Headache Centers of Excellence, or HCOE, estimates that approximately 600,000 patients are being treated for headaches in the VA hospital system.

Daniel S. Goldberger: The VA hospital system continues to be our largest revenue channel.

Daniel S. Goldberger: You'll recall that our gamma court prescription therapy has freed of patients covered by the veterans administration benefits, representing about 9 million covered lives across approximately 1300 health care facilities.

Daniel S. Goldberger: Sales in the VA channel grew 127% to $3 $9 million in the first quarter of 'twenty 'twenty four from $1 $7 million during the first quarter of 2023.

Daniel S. Goldberger: 151, VA facilities had purchased prescription gamma core products through March 31, 2024, as compared to 124 through March 31 2023.

Daniel S. Goldberger: The VA Hospital administration headache centers of excellence or H C O E S.

Daniel S. Goldberger: Estimates approximately 600000 patients are being treated for a headache in the VA Hospital system.

Daniel S. Goldberger: Since we've dispensed approximately 5,300 GammaCore devices to veterans since 2022, we believe that represents less than 1% of the total addressable market within the VA system. We use several contracting mechanisms to support sales to individual VA facilities, including open market access, our FSS or Federal Supply Services contract, and our non-exclusive distribution agreement with Level Government Services. Lovell is a service-disabled, veteran-owned small business, or SDVOSB, offering medical and pharmaceutical goods and services to federal health care providers.

Daniel S. Goldberger: Since we've dispensed approximately 5300 gamma core devices to veterans.

Daniel S. Goldberger: 2022.

Daniel S. Goldberger: We believe that represents less than 1% of the total addressable market within the VA system we.

Daniel S. Goldberger: We use several contracting mechanisms to support sales to individual VA facilities, including open market access our FSS or federal supply services contract and are non exclusive distribution agreement with level government services level is a service disabled veteran owned small business or.

Daniel S. Goldberger: S E V O S b offering medical and pharmaceutical goods and services to federal health care providers.

Daniel S. Goldberger: During the first quarter of 2024, sales through Level accounted for approximately 13 percent of our VA sales. Truvega is currently positioned as a direct-to-consumer general wellness product for stress, relaxation, sleep, and mental acuity. For the first quarter of 2024, Trivega net sales were approximately $385,000 as compared to $147,000 during the first quarter of 2023. Our revenue return on advertising spend, what the industry calls a media efficiency ratio or MER, was approximately 2.49 in the first quarter.

Daniel S. Goldberger: The first quarter of 'twenty 'twenty four sales through level accounted for approximately 13% of our VA sales.

Daniel S. Goldberger: Sure Vega is currently positioned as a direct to consumer general wellness product for stress relaxation sleep and mental acuity for the.

Daniel S. Goldberger: First quarter 'twenty 'twenty four true vegan net sales were approximately $385000 as compared to $147000 during the first quarter 2023.

Daniel S. Goldberger: Our revenue return on advertising spend what the industry calls a media efficiency ratio or N. E. R was approximately 2.49 in the first quarter in other words, we're spending one dollar to generate $2 49 sensor revenue to.

Daniel S. Goldberger: In other words, Spending $1 to generate $2.49 of revenue. Truevega return rates, which we continue to monitor closely, dropped slightly to approximately 8% of shipments. However, we model return rates at a more conservative 10% to 15%.

Daniel S. Goldberger: Two bagger return rates, which we continue to monitor closely dropped slightly to approximately 8% of shipments. However, we modeled return rates at a more conservative 10% to 15%.

Daniel S. Goldberger: Last month, we launched Truvega Plus, our second Truvega product offering. Truvega Plus is a mobile app-enabled general wellness product. The first few weeks of sales of Truvega Plus have again exceeded expectations, and we are enthusiastic about the potential our new app-enabled product provides for future iterations of our technology and engagement with consumers. Since launching Truvega Plus, we've sold approximately 300 units. And customers have conducted approximately 2,400 sessions using the product. Our media efficiency ratio has expanded to 3.21 since launch, driven by higher pricing and early adoption of Truevega+. Both Truvega products are available exclusively through our e-commerce platform, www.truvega.com.

Daniel S. Goldberger: Last month, we launched two Vega, plus our second too big a product offering to Vega plus is a mobile app enabled general wellness product. The first few weeks of sales. It Tobago plus have again exceeded expectations and we are enthusiastic about the potential our new app enabled product.

Daniel S. Goldberger: Provides for future iterations of our technology and engagement with consumers.

Daniel S. Goldberger: Since launching too big a plus we sold approximately 300 units and customers that are conducted approximately 2400 sessions using the product.

Daniel S. Goldberger: Our immediate efficiency ratio has expanded to 3.21 since launch driven by higher pricing and early adoption or too big a plus.

Daniel S. Goldberger: Both to Vega products are available exclusively through our E Commerce platform Triple W. Dr. Chew bag of Dotcom and we are carefully managing our two big advertising spend return rates and sessions as we offered two unique to Vega propositions for health and wellness.

Daniel S. Goldberger: And we are carefully managing our Truvega advertising spend, return rates, and sessions as we offer two unique Truvega propositions for health and wellness. We believe that the Truvega business can scale nicely if we maintain or improve these metrics. TACSTIM 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.taxdim.gov.

Daniel S. Goldberger: We believe that the true Vega business can scale nicely, if we maintain or improve these metrics.

Daniel S. Goldberger: Tax dim for human performance is being sold to select Air Force 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 are a F. R. L.

Daniel S. Goldberger: No prescription is required and more information is available the triple W. Dot tax day and dotcom.

Daniel S. Goldberger: For the first quarter ended March 31, 2024, we recorded $301,000 of taxes in sales as compared to $88,000 during the same period last year. 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 TacStim. In parallel, we have developed a second-generation product known internally as TacStim Black in collaboration with AFRL, and we continue to build prototypes for evaluation by our government research partners.

Daniel S. Goldberger: For the first quarter ended March 31, 2024, we recorded $301000 of tax time sales as compared to $88000. During the same period last year.

Daniel S. Goldberger: The sales funnel for this product continues to grow as word spreads across the active duty military units at the potential human performance benefits provided by tax stemming parallel.

Daniel S. Goldberger: We have developed a second generation product known internally as tax Jim Black in collaboration with a F. R. L and we continue to build prototypes for evaluation by our government research partners.

Daniel S. Goldberger: Even though we have an impressive sales funnel for TACSIM, we have stated before that revenue growth for this product line is likely to be lumpy as active duty units purchase in bulk for pilot deployment, and we expect revenues for TACSIM in the second quarter of 2024 to be flat to down sequentially due to the timing of such orders. Our Prescription, Physician Dispense, Caspay Channel, including GC Direct and GConcierge recorded revenue of $424,000 during the first quarter of 2024, down slightly from $436,000 in the first quarter of 2023.

Daniel S. Goldberger: Even though we have an impressive sales funnel for tax and we have 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 revenues for taxes in the second quarter of 2024 could be flat to down sequentially due to the timing of such orders.

Daniel S. Goldberger: Our prescription physician dispensed cash pay channel, including G C direct and <unk> recorded revenue of $424000. During the first quarter of 2024 down slightly from $436000 in the first quarter of 2023.

Daniel S. Goldberger: We expect at least some of these customers to migrate to the Truvega brand as awareness grows, so we are modeling flat revenue from this category for the time being. There were 2023 cumulative revenue-generating cash pay prescribers as of March 31st, 2024, up from 1,218 on March 31st, 2023.

Daniel S. Goldberger: We expect at least some of these customers to migrate to the true Vega brand as awareness grows. So we are modeling flat revenue from this category for the time being they.

Daniel S. Goldberger: There were 2023 cumulative revenue generating cash pay prescribers as of March 31, 2024 up from 1218 on March 31 2023.

Daniel S. Goldberger: Yeah.

Daniel S. Goldberger: Last year, we announced a distribution Agreement that earns health care... that we believe will add more than 12.5 million covered lives within a select managed care health system. The business model with JURNS is similar to how we work with the VA hospital. It handles adjudications, billing, and collections, while electroCore ships directly to patients and provides in-services and patient support.

Daniel S. Goldberger: Last year, we announced a distribution agreement with <unk> health care L. L C.

Daniel S. Goldberger: We believe we will add more than 12, and a half million covered lives within a select managed care health system. The business model with <unk> is similar to how we work with the VA Hospital system insurance handles adjudication billing and collections, while the electric course ships directly to patients and providers in servicing and patients.

Daniel S. Goldberger: Support.

Daniel S. Goldberger: Our field sales team is responsible for building awareness among clinicians within those managed care systems. We continue to work with Jurance on the implementation, including the expansion into new geographic territories, and we recorded small recurring revenue from this relationship during the first quarter of 2024. Our field sales function is developing champions within the target managed care system, and we think Jurance could be a source of revenue growth in the second half of 2024 and beyond.

Daniel S. Goldberger: Our field sales team is responsible for building awareness among clinicians within those managed care assistance.

Daniel S. Goldberger: We continue to work with <unk> on the implementation, including the expansion into new geographic territories, and we recorded small recurring revenue from this relationship during the first quarter of 2024.

Daniel S. Goldberger: Sales function is developing champions within the target managed care system, and we think <unk> could be a source of revenue growth.

Daniel S. Goldberger: In the second half of 2024 and beyond.

Daniel S. Goldberger: Revenue from channels outside the United States increased by 10% in U.S. dollars to $449,000 in the first quarter of 2024, as compared to $410,000 in the first quarter of 2023. Additionally, revenue from channels outside the United States increased approximately 14% in local currency for the first quarter of 2024, as compared to the first quarter of 2023.

Daniel S. Goldberger: Revenue from channels outside the United States increased by 10% in U S dollars to $449000 in the first quarter of 2024 as compared to $410000 for the first quarter of 2023.

Daniel S. Goldberger: Revenue from channels outside the U S increased approximately 14% in local currency for the first quarter of 2024 as compared to the first quarter 2023.

Daniel S. Goldberger: Most of our O U S revenue continues to be generated in the United Kingdom by prescription Gamba core sales funded by the National Health service or NHS.

Daniel S. Goldberger: Most of our OUS revenue continues to be generated in the United Kingdom by prescription GammaCore sales funded by the National Health Service, or NHS. Now, I'd like to turn to our clinical progress. On April 30, 2024, we announced the results of our most recent Trivega Plus consumer study conducted earlier this year. The 39-subject, 30-day in-home use test conducted by an independent third-party research firm demonstrated that TruvegaPlus helped its users improve sleep, focus, stress, energy, and mood.

Daniel S. Goldberger: Now I'd like to turn to our clinical progress.

Daniel S. Goldberger: Self-assessment evaluations were reported after 7 and 30 days. Most notably, 82% of participants felt calmer and mentally healthier, 74% of participants felt they slept better, of which 72% reported they received between 30 minutes to two hours more sleep. After the study concluded, 87% of users said they would continue to use Truvega Plus for ongoing overall wellness benefits. Two of our investigator-initiated trials, the acute stroke trial, NOVUS, in Leiden, Netherlands, and gait and mobility and Parkinson's disease in Newcastle, UK, have been fully enrolled, and we expect to report top-line data later this year. We'll continue to provide updates about our pipeline and other opportunities as they become available. Now, I'd like to turn the call over to Brian for a review of our financials and other guidance.

Daniel S. Goldberger: On April 30th 2024, we announced the results of our most recent true Vega plus consumer study conducted earlier this year.

Brian: The 39 subject 30 day in home use test conducted by an independent third party research firm demonstrated that too big a plus helped its users improve sleep focused stress energy and mood.

Brian: Health assessment evaluations were reported after seven and 30 days, most notably 82% of participants felt calmer and mentally healthy or 74% of participants felt they slept better of which 72% reported they received between 30 minutes to two hours more sleep each night.

Brian: After the study completed 87% of users said they will continue to use to beg a plus for ongoing overall wellness benefits.

Brian: Two of our investigator initiated trials, the acute stroke trial, nobis, and Leiden, Netherlands, and gate and mobility in Parkinson's disease, and Newcastle U K had been fully enrolled and we expect to report topline data later this year.

Daniel S. Goldberger: We'll continue to provide updates about our pipeline and other opportunities as they become available now I'd like to turn the call over to Brian for a review of our financials and other guidance items.

Brian: Brian Thank you Dan.

Brian M. Posner: Net sales for the three months ended March 31st, 2024, increased 96% as compared to the three months ended March 31st, 2023. The increase of $2.7 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 TaxPin brands. Gross profit increased by $2.2 million for the three months ended March 31st, 2024, compared to the three months ended March 31st, 2023. Gross margin was 84% for both periods.

Brian: Net sales for three months ended March 31, 2024 increased 96%.

Brian M. Posner: <unk> to the three months ended March 31 2023 the.

Brian M. Posner: The increase of $2 $7 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.

Brian M. Posner: And revenue from the sales of our Nonprescription general wellness and human performance Tobago and taxed in brands.

Brian M. Posner: Gross profit increased by $2.2 million for the three months ended March 31st 2024 compared to the three months ended March 31 2023.

Brian M. Posner: Gross margin was 84% for both periods.

Brian M. Posner: Total operating expenses for the first quarter ended March 31st, 2024 were approximately $8.4 million as compared to $8.5 million for the quarter ended March 31st, 2023. Research and development expense for the first quarter of 2024 was $399,000 as compared to $1.8 million in the first quarter of 2023. This decrease is primarily due to a significant reduction in investments associated with Trivega Plus.

Brian M. Posner: Total operating expenses in the first quarter ended March 31, 2024 were approximately $8 $4 million as compared to $8 5 million for the quarter ended March 31 2023.

Brian M. Posner: Research and development expense in the first quarter of 2024 was $399000 as compared to $1.8 million in the first quarter of 2023.

Brian M. Posner: This decrease was primarily due to a significant reduction in investments associated with <unk> plus.

Brian M. Posner: Selling, general, and administrative expense of $8 million for the three months ended March 31st, 2024 increased by $1.3 million, or 19%, as compared to $6.7 million for the comparable period in 2023. This increase was primarily due to our greater variable selling and marketing costs consistent with our increase in sales. Gap's net loss for the first quarter of 2024 was $3.5 million, or 53 cents per share, as compared to the $5.9 million net loss or $1.24 per share for the first quarter of 2023.

Brian M. Posner: Selling general and administrative expense of $8 million for the three months ended March 31, 2024 increased by $1.3 million or 19% as compared to $6 $7 million for the comparable period in 2023.

Brian M. Posner: This increase was primarily due to a greater variable selling and marketing cost consistent with our increase in sales.

Brian M. Posner: GAAP net loss for the first quarter of 2024 was $3 5 million or 53 cents per share as compared to the $5 $9 million net loss or $1 24 per share for the first quarter of 2023.

Brian M. Posner: This significant improvement was primarily due to the increase in net sales to $5.4 million for the first quarter of 2024 compared to $2.8 million during the same period of 2023. Adjusted EBITDA net loss in the first quarter of 2024 was $3.1 million as compared to an adjusted EBITDA net loss of $5.1 million in the first quarter of 2023. These improved results are primarily due to the 96% increase in first quarter 2024 net sales over the first quarter of 2023.

Brian M. Posner: This significant improvement was primarily due to the increase in net sales to $5.4 million for the first quarter of 2024 compared to $2.8 million during the same period of 2020.

Brian M. Posner: Adjusted EBITDA net loss in the first quarter of 2024 was $3 $1 million as compared to adjusted EBITDA net loss of $5 $1 million in the first quarter of 2023.

Brian M. Posner: These improved results are primarily due to the 96% increase in first quarter 2024, net sales over the first quarter of 2023.

Brian M. Posner: 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 March 31st, 2024 sold for approximately $8.1 million as compared to approximately $10.6 million as of December 31st, 2023. Now, I'll turn the call back over to...

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

Brian M. Posner: Cash cash equivalents and restricted cash at March 31, 2024 volt, approximately $8 $1 million as compared to approximately $10 $6 million as of December 31, 2023.

Brian M. Posner: Now I'll turn the call back over to Dan.

Speaker Change: Thank you Brian.

Daniel S. Goldberger: I'm very pleased with the continued momentum in our prescription headache and general wellness business. Our operating metrics, especially revenue and gross margin, continue to beat internal expectations, and I'm very enthusiastic about the company's long-term prospects across all brands and products. The launch of Trivega Plus was received favorably by the market.

Brian M. Posner: I'm very pleased with the continued momentum in our prescription headache, and general wellness businesses, our operating metrics, especially revenue and gross margin continue to beat your internal expectations and I'm very enthusiastic about the company's long term prospects across all brands and product lines.

Daniel S. Goldberger: The launch of <unk> plus was received favorably by the market.

Daniel S. Goldberger: The brand continues to show tons of potential as a direct-to-consumer general wellness offering, and we will continue selling Truvega products through our e-commerce site, www.truvega.com. We'll explore additional channels and product offerings to increase the lifetime value of each customer as we go forward. The pipeline of interest from different branches of our active duty military continues to develop for our TACSTEM products. However, sales of the TACSTEM brand continue to be irregular as active duty units purchase in bulk for pilot deployment longer term.

Daniel S. Goldberger: The brand continues to show tons of potential as a direct to consumer general wellness offering and we will continue selling true Vega products through our E. Commerce site Triple double you got to dig a dot com.

Daniel S. Goldberger: We will explore additional channels and product offerings to increase the lifetime value of each customer as we go forward.

Daniel S. Goldberger: The pipeline of interest from different branches of our active duty military continues to develop for our taxed in products sales of the tax dim brand continue to be irregular as active duty units purchasing bulk for pilot deployment longer term.

Daniel S. Goldberger: 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 published 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 approximately 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.

Daniel S. Goldberger: We also believe that there may be civilian crossover as first responders elite athletes transportation workers traders and D gamers become aware of the human performance benefits published so far.

Daniel S. Goldberger: 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.

Daniel S. Goldberger: We have approximately 35 straight commission sales agents, representing about 90, 10 99 reps in the field managed by our small team territory business managers and supported by our customer experience team. This hybrid structure is very scalable as we deploy prescription gamma core around the country.

Daniel S. Goldberger: This hybrid structure is very scalable as we deploy Prescription GammaCore around the country. During the first quarter of 2024, our sales and marketing expense increased by approximately $1.4 million over the first quarter of 2023, while sales grew by $2.7 million, signaling real leverage opportunities in the P&L.

Daniel S. Goldberger: The first quarter of 2024 hour sales and marketing expense increased by approximately $1.4 million over the first quarter of 2023, while sales grew by $2 $7 million signaling real leverage opportunities in the P&L.

Daniel S. Goldberger: Further out.

Daniel S. Goldberger: We're working towards establishing additional indications for prescription Gamma-Core to treat post-traumatic stress disorder, opioid use disorder, and other clinical operations. We had $8.1 million in cash at March 31st, 2024. We have dramatically reduced our R&D expenses, and we intend to maintain discipline around fixed operating expenses. We expect that commissions and media spend will scale with revenues and will remain at approximately 30% of related sales on a blended basis. Therefore, we expect that our cash used in operations will continue to decline sequentially as revenue increases.

Daniel S. Goldberger: We are working towards establishing additional indications for prescription gamma corridor to treat post traumatic stress disorder opioid use disorder and the other clinical opportunities.

Daniel S. Goldberger: We had $8 $1 million of cash at March 31.

Daniel S. Goldberger: <unk> thousand 24.

Daniel S. Goldberger: We have dramatically reduced our R&D expense and we intend to maintain discipline around fixed operating expenses.

Daniel S. Goldberger: We expect that commissions and media spend will scale with revenues and will remain at approximately 30% of related sales on a blended basis.

Daniel S. Goldberger: Therefore, we expect that our cash used in operations will continue to decline sequentially as revenue increases in summary, I believe the business is demonstrating operating leverage and that we will have a variety of strategic levers to pull to continue growing and are operating the business until we can <unk>.

Daniel S. Goldberger: In summary, I believe the business is demonstrating operating leverage and that we will have a variety of strategic levers to pull to continue growing and or operating the business until we can generate positive cash flow from operations. As we continue through 2024 and beyond, we will focus on strategic initiatives, including, number one, continued growth in our U.S. prescription headache business in both the VA and commercial channels. Number two, growth of our direct-to-consumer wellness business through sales of both our Truvega 350 and Truvega Plus products for general wellness, stress, mental acuity, and sleep, driven by ongoing consumer marketing investments.

Daniel S. Goldberger: <unk> positive cash flow from operations.

Daniel S. Goldberger: As we continue through 2024 and beyond we will focus on strategic initiatives, including number one continued growth in our U S prescription headache business in both the VA and commercial channels.

Daniel S. Goldberger: Number two growth of our direct to consumer wellness business through sales of both our two Vegas 315 true Vega plus products for general wellness stress mental acuity and sleep driven by ongoing consumer marketing investments.

Daniel S. Goldberger: Three further development of the tax dim brand and launch attacks them. Black later this year for human performance in the active duty military and potential civilian crossover.

Daniel S. Goldberger: Number four our revenues through our distribution agreement with <unk> health care for the sale of prescription Gamba core within the select managed care health system and number five prescription gamba core label extensions for a variety of indications over time.

Daniel S. Goldberger: Three, further development of the TACSTIM brand and launch of TACSTIM Black later this year for human performance in the active duty military and potential civilian cross-border. Number four, revenue to our distribution agreement which earns healthcare reimbursement for the sale of prescription GammaCore within a select managed care health system. And number five, prescription GammaCore label extensions for a variety of indications. At this time, I'll turn the call over to the operator. Operator, please open the line for questions.

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

Operator: Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is busy. You may press start, too, if you'd like to remove your question from the queue. For assistance using speaker equipment, it may be necessary to pick up your handset before pressing start. One moment, please, while we poll for questions. Our first question comes from Jeffrey Cohen with Lattenberg Thalmann. Please proceed with your question.

Daniel S. Goldberger: Thank you at this time well be conducting a question and answer session.

Jeffrey Scott Cohen: To ask a question. Please press star one on your telephone keypad.

Operator: A confirmation tone will indicate your line is in the question queue. You May press star two if he like to remove your question from the queue.

Operator: Since using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Operator: Our first question comes from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.

Jeffrey Scott Cohen: Hi Dan and Brian, how are you?

Jeffrey Scott Cohen: Hi, Dan and Brian how are you.

Daniel S. Goldberger: Good. Bye, Jeff.

Jeffrey Scott Cohen: Okay got it yeah.

Daniel S. Goldberger: So I.

Jeffrey Scott Cohen: I guess, firstly, could you talk about the channels in the mix that you anticipate on True Vagra. I know that you've placed a couple hundred units thus far. How do you expect that to fold out as far as one versus the other?

Jeffrey Scott Cohen: I guess, firstly could you talk about.

Jeffrey Scott Cohen: You talked about the channels and the mix of your answers to that.

Jeffrey Scott Cohen: Are you close to couple of hundred units plus four how do you expect a fold out as far as one versus the other.

Daniel S. Goldberger: You know, that's a great question. The Truvega 350 is offered at a significantly lower price than the Truvega Plus. And the mix, it's early, right? We've only been offering the new product, Truvega Plus, for three full weeks now. And it's been surprisingly successful; it's roughly a 50-50 product mix for the first three weeks. But I wouldn't, you know, we're not, I wouldn't try to draw any conclusions from the first three weeks.

Speaker Change: Yeah. That's a great question are the two Vegas 350 is offered at a significantly lower price than the true Vega plus.

Jeffrey Scott Cohen: Got it. Okay.

Daniel S. Goldberger: And that mix. It's early right. It's we've only been offering the the new products are they the plus for Sweden for weeks now.

Jeffrey Scott Cohen: And and and it's been a surprisingly successful it's roughly a 50 50 product mix through that three weeks.

Jeffrey Scott Cohen: I wouldn't we're not I wouldn't try to draw any conclusions from the first three weeks.

Jeffrey Scott Cohen: And then, can you talk about the OPEX and the components? I know that R&D was down tremendously, which you identified as truly the plus development ending. But what kind of follow-up on R&D, and where should we see that for the second quarter and beyond, full year, and then SGA as well? Is that flattish from that increase from last year, or will it continue to increase sequentially from that? $8 million in the first

Jeffrey Scott Cohen: Got it Okay, and then can you talk about the the opex on the components I know that orange juice down tremendously.

Speaker Change: Sure Jennifer just shrewdly as opposed to development.

Jeffrey Scott Cohen: Including but what kind of a follow up on R&D, and where should we see that.

Jeffrey Scott Cohen: For our second quarter and beyond full year then.

Jeffrey Scott Cohen: Sure as well is that a flattish from that increase from where I'm sure they'll continue to increase sequentially from that.

Jeffrey Scott Cohen: $8 million.

Jeffrey Scott Cohen: In the first quarter.

Daniel S. Goldberger: So for R&D internally, we're going to keep a lid on it for this year. We've got lots and lots of great product ideas and label extensions, but we want to drive towards getting to cash positive and profitability. So we're modeling R&D at sort of $8.5 million for, I'm sorry, no, I misspoke, $2.5 million for the full year, right, less than half of last year. G&A, we expect to be somewhat down from last year.

Speaker Change: So for for R&D internally, we're going to we're going to keep a lid on it for this year, we've got lots and lots of great product ideas and label extensions, but but we want to drive to a to getting to cash positive and profitability, So where my.

Daniel S. Goldberger: Hotaling.

Daniel S. Goldberger: R&D, it's sort of eight and a half million for I'm, sorry, no I misspoke.

Daniel S. Goldberger: Two and a half million dollars for the full year, right less and less than half of <unk> of last year.

Daniel S. Goldberger:

Daniel S. Goldberger: G&A.

Daniel S. Goldberger: We expect it to be somewhat down from last year, we're continuing to look for opportunities to reduce expenses.

Daniel S. Goldberger: We're continuing to look for opportunities to reduce expenses. But our marketing spend, either commissions in our prescription business or advertising spend in our consumer business, is going to be increasing. And in our prepared remarks, we internally remodel our variable sales and marketing expense at about 30 percent on a blended basis.

Daniel S. Goldberger: But our marketing spend.

Daniel S. Goldberger: Either commissions in our prescription business or our advertising spend in our consumer business are going to be scaling and are in our in our prepared remarks, we internally we model our variable sales and marketing expense at about 30% on a blended basis.

Brian M. Posner: To add to what Dan said, the G&A part is seasonally high in the first quarter because of audit-related costs, the auditors, the lawyers, Sarbanes-Oxley, all the requirements of a public company, so the G&A part should be down in the remaining quarters.

Daniel S. Goldberger: Add to what Dan said is the G&A part.

Brian M. Posner: Seasonally high in the first quarter because of audit related costs. The auditors the lawyers Sarbanes Oxley all the all the requirements of a public company. So the G&A part where it should be down.

Brian M. Posner: And in the remaining quarters.

Daniel S. Goldberger: So to be clear, I misspoke. I want to be clear that we're modeling R&D at roughly $2.5 million this year, not that higher number. I don't know why that popped into my head.

Brian M. Posner: So to be clear.

Speaker Change: I misspoke I wanted to be clear that we're modeling R&D at roughly two and a half million. This year not that higher number that I don't know why that popped in my head I apologize.

Jeffrey Scott Cohen: Not a problem. Thanks for that. And then, I guess, lastly, maybe talk about inventories currently and how they've been and how you expect that to play out this year. I'm sure you're building up some inventory on TrueVega Plus and perhaps Text in Black and reducing inventory on that. U.S. Commercial

Speaker Change: Not a problem.

Daniel S. Goldberger: Lastly, maybe I'll talk about inventories.

Jeffrey Scott Cohen: And Oh, they've been and how you expect that to play out over this year I'm sure you're building up some insurance your vehicle plus and.

Jeffrey Scott Cohen: Perhaps touch them block and reducing inventory.

Jeffrey Scott Cohen: U S commercial.

Jeffrey Scott Cohen: Okay.

Brian M. Posner: Yeah, so I'll start. And the bottom line is we've worked out a lot of inventory over the years. For the first quarter since I think Dan and I have been with the company, we don't have the captioned long-term inventory anymore, which is a function of revenue, right, and forecasted revenue. So, you know, we're very optimistic about the future. Dan, I don't know if you want to add anything about the supply chain for the new products or not, but yeah.

Jeffrey Scott Cohen: Yeah.

Speaker Change: I'll start.

Brian M. Posner: Bottom line is we've worked out a lot of inventory over the years.

Brian M. Posner: For the first quarter since I think Dan and I have been with the company. We don't have the caption long term inventory.

Dan: Anymore, which is a function of revenue right and forecasted revenue yeah.

Dan: We're very optimistic about the future of Dan I don't know if you want to add anything about the supply chain for the new products are okay.

Daniel S. Goldberger: The inventories, we're still running heavy on inventory as a multiple of daily sales because we're not very good at predicting product mix, for example, like you touched on, Jeff, with how many of the 350s are we going to sell versus the pluses. So we're keeping more inventory, more days of inventory, but as we gain more understanding of the business and specifically the product mix, I think we're going to be able to steadily reduce inventory as a multiple of days.

Dan: The inventories were still running heavy on inventory as a multiple as a daily sales because we're not very good at predicting product makes for example, like you touched on Jeff.

Daniel S. Goldberger: How many of the screen fifties or are we going to sell versus the pluses are so where we're keeping more inventory more days of inventory, but as we gain more understanding of the business and specifically the product mix I think we're gonna be able to steadily.

Daniel S. Goldberger: Use inventory as a multiple it's oh, okay sales.

Jeffrey Scott Cohen: In other words, continue to generate cash from inventory. Okay, that does it for us. Thanks for taking the time to answer our questions.

Daniel S. Goldberger: In other words, thanks for continuing to generate cash from inventory.

Speaker Change: Got it.

Speaker Change: Okay. That's helpful. Thanks for taking our questions. Thank you.

Operator: Our next question comes from Bruce Jackson with the Benchmark Company. Please proceed with your question.

Jeffrey Scott Cohen: Our next question comes from Bruce Jackson with the Benchmark Company. Please proceed with your question.

Walter Schenker: Hi, good afternoon, and thanks for taking my questions. I want to start with the VA. How much of your VA revenue comes from the Centers of Excellence, the headache Centers of Excellence?

Bruce Jackson: Hi, good afternoon, and thanks for taking my questions I wanted to start with the V. A.

Bruce Jackson: How much of your revenue comes from these centers of excellence the headache centers of excellence.

Daniel S. Goldberger: You know, that's a good question. We don't break that down in our public discourse.

Bruce Jackson: Yeah. That's a good question, we don't we don't break that out in our public discourse Doctor.

Daniel S. Goldberger: Dr. David Seiko, who runs the Headache Centers of Excellence. I believe there are 20 of them around the country right now. The newest guidelines and best practices for managing complex headache have GammaCore as first-line therapy, but we have not been breaking out by facility the revenue contribution by facility.

Daniel S. Goldberger: Dr. David CECO, who runs the headache centers of excellence I believe there are 20 of them around the country right now.

Daniel S. Goldberger: The newest.

Daniel S. Goldberger: Guidelines best practices.

Daniel S. Goldberger: Or managing complex headache has gamma core as first line therapy.

Daniel S. Goldberger: But we have not been breaking out by facility the revenue contributions.

Walter Schenker: Okay, so GammaCore is the first final alternative for these centers. What do you think needs to happen in order to get greater uptake from the VA system?

Daniel S. Goldberger: Okay.

Walter Schenker: So Kim of course, the first time, an alternative for these for these centers.

Walter Schenker:

Walter Schenker: What do you think needs to happen in order to get greater uptick from VA system.

Daniel S. Goldberger: So, great question. We think we're still less than 1% penetrated within the VA hospital system. Every facility is different and has to be treated as a different customer. But in general, we start off in neurology, which is where complex headaches are treated. And our goal is to work through the facility to women's health, pain management, health and wellness, and ultimately to primary care. And so, within each facility, we have a lot of opportunities to go deeper. Headache is treated in the emergency room and is treated in primary care in greater numbers than by the specialist department.

Speaker Change: So a great question, yes.

Daniel S. Goldberger: Yeah, we think we're still less than 1% penetrated within the VA Hospital system.

Daniel S. Goldberger: Every facility is different and has to be treated as a different customer.

Daniel S. Goldberger: But in general we started off in neurology, which is where the complex headaches are treated and our goal is to work through this facility to women's health to pain management.

Daniel S. Goldberger: To health and wellness and ultimately our two primary care and so within each facility, we have a lot of opportunities to go deeper.

Daniel S. Goldberger: Headache is treated in the emergency room and is treated in primary care in greater numbers than by the specialist departments.

Walter Schenker: Okay, and then last question is on the study that's being conducted in Newcastle. Is that for Parkinson's? And the release date for the data seems to have moved out a bit. Is that just because of the standard Data analysis and if you're working with physicians who are very busy, or is there some other factor involved there?

Daniel S. Goldberger: Okay.

Daniel S. Goldberger: And then last questions on the the study that's being conducted in Newcastle.

Walter Schenker: That for Parkinson's and the AR to release date for the data it seems to have moved out a bit.

Walter Schenker: Because of the standard.

Walter Schenker: Data analysis, and Youre working with physicians are very busy or is there. Some other factor involved there.

Daniel S. Goldberger: So, we really don't know. I wish I knew more.

Speaker Change: So we really don't know I wish I knew more hi, this is an investigator initiated trial.

Daniel S. Goldberger: Finance by the U K Ministry of health and and the European Union.

Daniel S. Goldberger: This is an investigator-initiated trial financed by the UK Ministry of Health and the European Union. The investigators are full-time clinicians. [inaudible] We had the last patient, last visit in December, late December of 2023, and we're anxious to see the data. And they will share the data with us when they share the data with us. It's completely out of our control.

Daniel S. Goldberger: The investigators are fulltime clinicians.

Daniel S. Goldberger: They.

Walter Schenker: Okay, got it. Thank you very much for taking my questions. Absolutely.

Daniel S. Goldberger: Had the last patient last visit in December or late December of 2023, and we're anxious to see the data and they will share the data with us when they share the data with it it's completely out of our control.

Walter Schenker: Okay got it. Thank you very much for taking my questions.

Daniel S. Goldberger: Absolutely. Thanks for your interest.

Speaker Change: Absolutely thanks for your interest.

Operator: Our next question comes from Swayampakula Ramakanth with HC Wainwright. Please proceed with your question.

Daniel S. Goldberger: Our next question comes from <unk> Rama Catholic with H C. Wainwright. Please proceed with your question.

Swayampakula Ramakanth: Thank you. This is R.K. from HITCHCMN. I have a couple of quick questions.

Swayampakula Ramakanth: Thank you this is RK from H C Wainwright.

Swayampakula Ramakanth:

Swayampakula Ramakanth: So, you know, the VA channel continues to grow and continues to grow at a very good clip. This quarter, as you said, you did close to 130% growth year-over-year, though the number of centers grew less than 30 centers compared to last year. So, I understand some parts of it are probably the depth within certain centers, but how much, you know, assuming that, you know, you're not going to add more centers or not in big amounts from here onwards, how sustainable is this growth?

Swayampakula Ramakanth: A couple of quick questions. So.

Swayampakula Ramakanth: The var channel companies took it all in country Mr. Marotta.

Swayampakula Ramakanth: A good clip.

Swayampakula Ramakanth: This this quarter that I just said.

Swayampakula Ramakanth: You did.

Swayampakula Ramakanth: 230% growth year over year.

Swayampakula Ramakanth: Sure.

Swayampakula Ramakanth: Hum.

Swayampakula Ramakanth: Although the number of centers.

Swayampakula Ramakanth: Good on the less than 30 centers compared to last year.

Swayampakula Ramakanth: So.

Swayampakula Ramakanth: I understand some parts of it is probably at a depth between certain centers.

Swayampakula Ramakanth: Alright.

Swayampakula Ramakanth: How much.

Swayampakula Ramakanth: Assuming that you're not going to add more centers are not Martin Martin they'd come arms.

Swayampakula Ramakanth: From here onwards.

Swayampakula Ramakanth: How sustainable is this growth.

Swayampakula Ramakanth: And, you know, are there places in the current centers where you're not at all tapped, and, you know, you're kind of asking your sales folks to go figure out these additional centers where you could commercialize gamma core?

Swayampakula Ramakanth: And you know are there places and the current centers.

Speaker Change: No not at all.

Swayampakula Ramakanth: You're kind of asking your sales folks to go figure it out.

Swayampakula Ramakanth: Additional centers, where you could commercial lines chemical.

Daniel S. Goldberger: Yeah, R.K., you're absolutely on the right track. It's far more efficient for us to go deeper into a facility where we have an existing business, for at least two reasons. The first is that the supply chain folks know us and have loaded us into their computer systems, and the second is that once our sales guy has identified a champion within the facility, he has a reason, or she has a reason to be in the facility, and can spend additional time calling on other prescribers within neurology, for example, but even more importantly, calling on other departments within the facility. So we're coaching our team to go deeper within the facilities The other driver we have is just old-fashioned feet on the street.

Swayampakula Ramakanth: Yeah.

Speaker Change: K, you're you're absolutely on the right track, it's it's far more efficient for us to go deeper.

Daniel S. Goldberger: Into a facility, where we have our existing business.

Daniel S. Goldberger: For at least two reasons. The first is that the supply chain folks know wasn't as lauded us into their computer systems.

Daniel S. Goldberger: Is that a once our our sales guy has identified a champion within that facility. He has a reason or she has a reason to be in that facility and can spend additional time, calling on other prescribers within neurology for example, but even more importantly, calling out now.

Daniel S. Goldberger: Other departments within that facility so.

Daniel S. Goldberger: We're coaching our team.

Daniel S. Goldberger: To go deeper within the facilities that have already opened up.

Speaker Change: The other driver we have is just as old fashioned Steve.

Daniel S. Goldberger: Feet on the street, we are scaling the business with.

Daniel S. Goldberger: We are scaling the business with what I call 1099 reps, right? These are independent agents. They get paid straight commission, two or three or four other products in their bag that they are selling to the same customer, into the same facility. And as long as we have success, That success breeds success, and it's becoming more and more efficient for us to recruit additional new 1099 reps. We can scale the business in that direction as well, just by having additional feet on the ground.

Daniel S. Goldberger: What I'd called 10, 99 reps right. These are.

Daniel S. Goldberger: Independent agents, they get paid straight commission they probably have.

Daniel S. Goldberger: Two or three or four other products in their bag.

Daniel S. Goldberger: That they are selling into the same.

Daniel S. Goldberger: Into the same customer into the same facility.

Daniel S. Goldberger: And as we have success.

Daniel S. Goldberger: That success breeds success and it's becoming.

Daniel S. Goldberger: More and more efficient for us to recruit additional new 10 99 reps. So we.

Daniel S. Goldberger: We can we can scale the business in that direction as well just by having additional feet on the street.

Daniel S. Goldberger: Okay.

Swayampakula Ramakanth: Thanks for that. And then, you know, talking about some of these new indications that you're looking at and also the recent data that you released on PTSD, when you look at VA centers, you know, these are the places where you would see these additional indications or commercializing for additional indications as an opportunity. How much of the feedback that you get from the VA hospitals are you kind of utilizing to think about new indications for GammaCore? And just on the PTSD itself, you know, how soon do you think you can get that indication? so that you can start commercializing it for that as well.

Speaker Change: Thanks for that and then.

Daniel S. Goldberger: You know.

Swayampakula Ramakanth: Talking about some of these new indications that youre looking at that also there is some data that you released I believe on PTSD.

Swayampakula Ramakanth: And then when you look at.

Swayampakula Ramakanth: Centers.

Swayampakula Ramakanth: The other places.

Swayampakula Ramakanth: You would see additional indications are commercializing, but I just want indications as an opportunity.

Swayampakula Ramakanth: How much of.

Swayampakula Ramakanth: Yes.

Swayampakula Ramakanth: How much of the.

Swayampakula Ramakanth: Feedback that you get from the VA hospitals are you kind of utilizing too.

Swayampakula Ramakanth: To think about new indications for four for gamma car.

Swayampakula Ramakanth: Hum.

Swayampakula Ramakanth: Just on the PTSD itself you know how how soon do you think you can get that indication.

Swayampakula Ramakanth: So that you can start commercializing for that as well.

Daniel S. Goldberger: Yeah, so that's a great question. I'm very superstitious about the FDA process, so I'm not going to speculate about the timing of getting the additional label extension. We are aware that there are off-label prescriptions of GammaCore for PTSD in the VA hospitals and also in our cash pay business. In the VA hospital system, we don't see the diagnosis, so we don't have a clear view as to what percentage of our prescriptions are for PTSD or Parkinson's or the other indications that we're working on, but we are aware that there is at least some off-label prescribing going on.

Speaker Change: Yeah, So great question.

Daniel S. Goldberger: I guess I'm very superstitious about the FCA process. So we're not going to speculate about the timing.

Daniel S. Goldberger: Of getting the additional the the label extension.

Daniel S. Goldberger: We are aware of.

Daniel S. Goldberger: That there is off label prescription of gamma core four P. T. S D. In the VA hospitals, but also in our cash pay business in the VA Hospital system.

Daniel S. Goldberger: We we don't see the diagnosis. So we don't have we don't have a clear view as to what percentage of our prescriptions are for PTSD or Parkinson's or or are the other indications that we're working on but we are aware of that.

Daniel S. Goldberger: That there is at least some off label prescribing going on.

Swayampakula Ramakanth: And on the tax stem business, you know, you said that the second quarter could be flat. I understand that, but going into the third quarter, September happens to be the fiscal year for the government. So, as you enter the next fiscal year, how are you thinking about growth? Can there be additional contracts coming through, or is this a long-drawn process, and it's really hard to read in terms of new contracts coming in during the next fiscal year?

Speaker Change: Okay. Thanks for that.

Daniel S. Goldberger: On the tax time business.

Swayampakula Ramakanth: You said that the second quarter could be flat.

Swayampakula Ramakanth:

Swayampakula Ramakanth: I understand that but.

Swayampakula Ramakanth: You know going into third quarter September happens.

Swayampakula Ramakanth: To be there in the fiscal <unk>.

Swayampakula Ramakanth: Clear for the government so to you.

Swayampakula Ramakanth: As you enter the next fiscal year, how are you thinking about.

Swayampakula Ramakanth: Gross can there'll be additional contracts coming through or is this is this a lot.

Swayampakula Ramakanth: Long drawn process.

Swayampakula Ramakanth: It's really hard to read.

Swayampakula Ramakanth: In terms of new contracts coming in in the next fiscal year I'm just I'm just trying to think about the cadence of I know you said, it's really hard to predict the cadence of numbers, but at the same time I'm just trying to get a feel for it.

Swayampakula Ramakanth: I'm just trying to think about the cadence of, I know you said it's very hard to predict the cadence of numbers, but at the same time, I'm just trying to get a feel for it. What are the ways that can be pushed and pulled on that number? Yeah, so we're

Swayampakula Ramakanth: Yes.

Swayampakula Ramakanth: They're basically can be push and pull on that number.

Daniel S. Goldberger: Yeah, so we're already getting, I'll call them contingent purchase orders, and the contingency is around the DOD budget process. Things have settled down, but every time there was a continuing resolution in Congress, our purchasing contracting process came to a full halt, so we do have a funnel of these contingent purchase orders. But I have no visibility as to the timing of those contingent purchase orders, and we're not going to try and give any revenue guidance around them until we know for sure what the delivery and revenue recognition dates are going to be.

Swayampakula Ramakanth: So we are we're already getting.

Daniel S. Goldberger: I'll call them contain contingent purchase orders and the contingency is around the.

Daniel S. Goldberger: The D O D budget process.

Daniel S. Goldberger:

Daniel S. Goldberger: Things are settled down but every time there was a continuing resolution in Congress.

Daniel S. Goldberger: The our purchasing contracting process came to a full halt.

Daniel S. Goldberger: <unk>.

Daniel S. Goldberger: So we do have a funnel.

Daniel S. Goldberger: Of these contingent purchase orders.

Daniel S. Goldberger: Right.

Daniel S. Goldberger: I have no visibility as to the timing of those contingent purchase orders and we're not going to try and.

Daniel S. Goldberger: Do you have any any revenue guidance around it until we know for sure that what the delivery and revenue recognition dates are going to be.

Speaker Change: Perfect. Thank.

Swayampakula Ramakanth: Thank you very much. An excellent quarter. Yeah.

Speaker Change: Thank you very much excellent quarter.

Speaker Change: Thank you.

Swayampakula Ramakanth: Yeah.

Operator: As a reminder, if you'd like to ask a question, please press star 1 on your telephone keypad. One moment, please, while we poll for questions. Our next question comes from Walter Schenker with AMZ Partners. Please proceed with your question.

Swayampakula Ramakanth: As a reminder, if you'd like to ask a question. Please press star one on your telephone keypad one moment, please while we poll for questions.

Operator: Our next question comes from Walter Schenker with ANZ Partners. Please proceed with your question.

Walter Schenker: Oh, so anyway, Hey, Dan.

Walter Schenker: Anyway, hi, Dan. A series of unrelated questions. There is published data, this is about the military, on learning and on improved learning and on improved performance by drone pilots. Do you have any color that you can comment on, on what type of areas in the military are buying this, or is it still just for what type of units or just some sense?

Walter Schenker: It reads of unrelated questions.

Walter Schenker: There is published data this is on the military.

Walter Schenker: On learning and on.

Walter Schenker: Improved learning.

Walter Schenker: <unk> improved performance by drone pilots.

Walter Schenker: Do you have any color that you can comment on on what type of areas.

Walter Schenker: Areas in the military are buying this or is it still.

Walter Schenker: Sure.

Walter Schenker: What type of units or just some sense.

Dan: Yeah. So.

Daniel S. Goldberger: So there's very little that we're allowed to say publicly, but several Army Special Forces battalions have acquired a significant number of handsets for pilot deployment, a similar number of Air Force Special Forces units. And then AMC, Air Mobility Command, which are the very large, long-distance transport aircraft that the Air Force deploys, those are the three areas that are in pilot deployment.

Dan: There's very little that we're allowed to say publicly but.

Daniel S. Goldberger: Several.

Daniel S. Goldberger: Several army special forces.

Daniel S. Goldberger: <unk> have.

Daniel S. Goldberger: Have have acquired a significant number of handsets so pilot deployment.

Daniel S. Goldberger: Similar number of Air Force Special forces units, and then AMC Air Mobility command.

Daniel S. Goldberger: Which are the very large long distance transport aircraft.

Daniel S. Goldberger: That the Air Force deploys.

Daniel S. Goldberger: Those are the three areas that are in pilot deployment at this point.

Daniel S. Goldberger: Okay.

Walter Schenker: totally unrelated questions. You briefly mentioned at some point, and I'll plug my wife, that one of the benefits, although there are many benefits, you've done some stuff on gastroparesis, is that GammaCore may help or does help people with some stomach issues. You mentioned some people might be using it off-label in conjunction with other light-loss drugs, which sometimes cause different stomach issues. Is that actually, is there any material comment you can make on that, or a couple of doctors have tried it, or who knows?

Speaker Change: Oh totally unrelated questions.

Walter Schenker: You had briefly mentioned at some point.

Walter Schenker: Two a pug about my wife.

Walter Schenker: That.

Walter Schenker: One of the benefits.

Walter Schenker: Well there are many benefits.

Walter Schenker: Done some stuff on Gastroparesis is that.

Walter Schenker: The Gamba core may help where does help people with some stomach issues. You had mentioned some people might be using it off label in conjunction with Deloitte was drugs, which sometimes cause different stomach issues.

Walter Schenker: Is that actually is there any.

Walter Schenker: Material comments, you can make on that or a couple of doctors have tried it or who knows it's always good to have something related to weight loss by the way in this morning.

Walter Schenker: It's always good to have something related to weight loss. I can certainly use something, but what you're describing is anecdotal commentary that we've heard from several of our customers, especially in functional medicine, integrative medicine, cash-pay practices where they're dealing with complicated patients. And they are prescribing a lot of those new injectable weight loss drugs. Nothing that I would describe as scientific, certainly no prospective trials, but it's a lot of fun to hear the anecdotes that it's working as a combination therapy for weight loss and gastroparesis. And lastly, now that Truvaga Plus is, at least as I look at it, a cleaner sale. You buy it, you've got it forever, you keep recharging it, you know, you don't have to reload or anything.

Walter Schenker: I I can certainly use something but so.

Walter Schenker: What you're describing is anecdotal com.

Walter Schenker: Commentary that we've heard from several of our customers.

Walter Schenker: Especially in the functional medicine, integrative medicine cash pay practices, where they're dealing with complicated patients.

Walter Schenker: And they are prescribing a lot of those.

Walter Schenker: New injectable weight loss drugs, nothing that that I would describe as scientific certainly no.

Walter Schenker: Prospective trials, but it's it's a lot of fun to hear the anecdotes that it's it's working as a combination therapy in weight loss and Gastroparesis.

Walter Schenker: And lastly, now that <unk> plus is at least as I look ahead to a clean herself you boy you've got it forever to keep recharging. It no you don't.

Walter Schenker: I have to reload or anything.

Daniel S. Goldberger: Have you thought about possibly marketing it through other channels or other people beyond just your limited exposure on the Internet? I mean, theoretically, again, it could be at a drug store, it could be at health nutrition stores, it could be, you know, QVC, you name it, lots of different places. So... What do you think about expanding beyond just you and the internet?

Speaker Change: Have you thought about or where are you in possibly marketing it through other channels or other people beyond just your limited exposure on the Internet.

Daniel S. Goldberger: Radically again, it could be at a drugstore or it could be.

Daniel S. Goldberger: Nutrition stores it could be.

Daniel S. Goldberger: <unk> you name it lots of different places.

Daniel S. Goldberger: So.

Daniel S. Goldberger: What are your.

Daniel S. Goldberger: You talked about expanding beyond just you and the internet.

Walter Schenker: Yeah, I really appreciate the opportunity to expand on it, and look, we think those are all very important 2025 initiatives. It's the first new product launch that the company has done in a long time with a new team of people. We wanted to keep a lid on it, so to speak, for the first 30, 60 days. Right now, it's going very smoothly. We haven't had any significant product problems. And so if we run another 30 days the way the first 30 days have gone, and the return rates stay where they are, then I think you'll see us looking to more aggressively expand into a variety of... other direct-to-consumer distribution channels, both brick-and-mortar as well as internet sales.

Daniel S. Goldberger: I really appreciate the opportunity to expand on it and look we think those are all very important 2025 initiatives.

Walter Schenker: It's a it's the first new product launch that the company has done in a long time with a new team of people.

Walter Schenker: We wanted to keep a lid on it so to speak for.

Walter Schenker: For the first 30 60 days right now it's going very smoothly, we haven't had any.

Walter Schenker: Significant product problems and so if we run another 30 days the way. The first 30 days have gone the return rates stay where they are.

Walter Schenker: Then I think you'll see us looking to more aggressively expand into a variety of.

Walter Schenker: Are there direct to consumer distribution channels.

Walter Schenker: Both.

Walter Schenker: Brick and mortar as well as internet sales.

Daniel S. Goldberger: Okay. Thank you, Dan. Thank you.

Speaker Change: Okay. Thank you Dan.

Walter Schenker: Thank you, Walter. I appreciate your interest.

Speaker Change: Thank you Walter I appreciate your interest.

Operator: Our next question is from Nicholas Sherwood with Maxim Group. Please proceed with your question.

Walter Schenker: Our next question is from Nicholas Sherwood with Maxim Group. Please proceed with your question.

Nicholas Sherwood: Hey guys, congratulations on the quarter. My first question is, do you have any update on your agreement with Jerns Healthcare?

Nicholas Sherwood: Hey, guys. Congrats on the quarter. My first question is do you have any update on your agreement with Sharon's health care.

Daniel S. Goldberger: So, you know, the update, and I think some of it was in our prepared remarks. Most of the work is now on our side to develop prescriber champions. The back office is in place, and by back office, I mean the ability to have a prescription accepted, adjourned, or adjudicated; they were fully loaded into their computer system.

Nicholas Sherwood: So.

Nicholas Sherwood: The update and I think some of it was in our prepared remarks.

Daniel S. Goldberger: Most of the work is now on our side too.

Daniel S. Goldberger: To develop prescriber champions.

Daniel S. Goldberger: Back office is in place and buy back office I mean, the ability to have a prescription accepted at churns adjudicated they.

Daniel S. Goldberger: We're fully loaded into their computer system, we asked it.

Daniel S. Goldberger: We have to, our field sales team has to generate the demand, and they're just getting started doing that, and frankly, having a lot of fun doing it. We're getting excellent reception. You don't see it in the revenue yet, but I think we will before the end of the year.

Daniel S. Goldberger: Our field sales team has to generate the demand and they are just getting started doing that and frankly, having a lot of fun doing it we're getting excellent reception you don't see it in the revenue yet, but but I think we will die before the end of the year.

Nicholas Sherwood: And then, switching gears to Truvega Plus, do you see any sort of, I guess it's not necessarily like SaaS revenue, but do you see any sort of recurring revenue coming from the app through in-app purchases or subscriptions?

Speaker Change: Awesome. Thank you for that color and then switching gears to Vegas plus.

Nicholas Sherwood: Do you see any sort of I guess, it's not necessarily like SaaS revenue, but do you see any sort of like recurring revenue coming from the actor in that purchases or subscriptions.

Daniel S. Goldberger: Yeah, that's in our product development pipeline for 2025 and 2026. It's absolutely the vision to do, to take full advantage of mobile app connectivity, not just for our product, but to interact with other health and wellness apps, you know, with Apple Health. And then the data can also become a value proposition. So, but not this year.

Nicholas Sherwood: Yeah, that's in our our product development pipeline for 2025 and 2026, that's absolutely the vision to do to take full advantage of the mobile app connectivity not just for our products, but to interact with their health and wellness apps, you know with Apple health.

Daniel S. Goldberger: And and then the data can also become a.

Daniel S. Goldberger: A a value proposition, so but not this year.

Speaker Change: Mhm, absolutely and then.

Nicholas Sherwood: Absolutely. One more, more of a high-level question. You partnered with the NFL last season. Have you received any further interest from them or any other sports leagues or athletes that you can speak about at this time?

Daniel S. Goldberger: One more and more of a high level question you had partnered with the NFL. This last season have you received any further interest from them or any other sports leagues or athletes that you can speak about it at this time.

Daniel S. Goldberger: So, a lot of interest, but nothing that I can speak about publicly, and specifically the NFL research program. They won't even tell us which teams are using it, which is very frustrating as a football fan.

Nicholas Sherwood: So a lot of interest nothing that I can speak about publicly.

Daniel S. Goldberger: And specifically the NFL research program are they won't even tell us which teams are using it which is very frustrating as it is a football fan.

Nicholas Sherwood: Yeah, maybe DraftKing doesn't want you to find out either. But, um, exactly.

Speaker Change: Yeah, maybe a draft came he doesn't want you to find that out either but.

Nicholas Sherwood: Exactly.

Nicholas Sherwood: Looking at, and finally, I think I may have missed these earlier, but what was the DEA, DOD prescribing facility count and also the cash pay prescriber count? You have to go see Andy Bryan.

Nicholas Sherwood: Looking at and finally, just I think I may have missed this earlier, but what was the.

Nicholas Sherwood: E D O D prescribing facility count and also the cash pay prescriber count.

Nicholas Sherwood: You have those handy Brian.

Daniel S. Goldberger: We're looking at our own numbers. [inaudible] 151 VA facilities. Up from 124. Prescription prescribers 2023, up from 1,218.

Nicholas Sherwood: We're looking at we're looking for our own numbers.

Daniel S. Goldberger: Okay.

Daniel S. Goldberger:

Daniel S. Goldberger: Okay.

Daniel S. Goldberger: 151 VA facilities.

Daniel S. Goldberger: Yeah up from 124.

Daniel S. Goldberger: Yeah.

Daniel S. Goldberger: Prescription prescribers 2023.

Daniel S. Goldberger: From 1218.

Daniel S. Goldberger: Okay.

Nicholas Sherwood: Awesome. Thank you so much, and thank you for answering all my questions. I'll return to the queue. Of course. Thanks for your...

Speaker Change: Awesome. Thank you so much and thank you for answering all my questions I'll return to the queue of course, thanks for your interest.

Daniel S. Goldberger: We have reached the end of the question and answer session. I'd now like to turn the call back over to Dan Goldberger for closing comments.

Nicholas Sherwood: We have reached the end of the question and answer session I'd now like to turn the call back over to Dan Goldberger for closing comments.

Daniel S. Goldberger: Thank you, operator. We appreciate everybody joining us on today's call. Our employees continue working tirelessly to deliver products and therapies that improve the health and wellness of patients and customers alike. The team's done a great job of staying nimble, scaling the business, responding to the needs of our customers, and launching a new product. And all of that has resulted in the accelerating growth that we just reported. I also want to say thanks to healthcare professionals and their patients for their loyal support of GammaCore therapy and to the growing number of consumers who have adopted Truvega products as a tool to improve their general wellness. You all have a great day.

Daniel S. Goldberger: Thank you operator, we appreciate everybody joining today's call.

Daniel S. Goldberger: Our employees continue working tirelessly to deliver products and therapies that improve the health and wellness as patients and customers alike.

Daniel S. Goldberger: Team's done a great job of staying nimble scaling the business responding to the needs of our customers launching a new product.

Daniel S. Goldberger: And and and all of that has resulted in the accelerating growth that we just reported.

Daniel S. Goldberger: I also want to say, thanks to the health care professionals and their patients for their loyal support of Canaccord therapy.

Daniel S. Goldberger: And to the growing number of consumers, who have adopted to Vega products as a tool to improve their general awareness.

Daniel S. Goldberger: You all have a great day.

Operator: This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.

Speaker Change: This concludes today's conference you may disconnect your lines at this time and we thank you for your participation.