Q1 2024 NeurAxis Inc Earnings Call

Operator: Good day, and thank you for standing by. Welcome to NeurAxis Reports, the first quarter 2024 financial results.

Good day and thank you for standing by if you walk into <unk> to support the first quarter 2024 financial results. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question during the special need to press Star one on your telephone you will then hear an automated message advising your hand is race to withdraw your question. Please.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star 1-1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to turn the call over to your speaker today, Ben Jamison. You may begin.

Press Star one again, please be advised today's conference is being recorded I would now like to turn the call over to your speaker today, Ben Jackson you may begin.

Ben Jamison: Good morning everyone, and thank you for joining us for NeurAxis' first quarter 2024 financial results and corporate update conference call. Joining us on the call are Brian Carrico, CEO of NeurAxis, and Tim Hendricks, CFO of NeurAxis.

Speaker Change: Good morning, everyone and thank you for joining us for near accidents first quarter of 2024 financial results and corporate update conference call joining us on the call is Brian Caracal CEO of neuro access and Tim Hendrix CFO I've never access at the conclusion of today's prepared remarks, we will open the call to questions.

Ben Jamison: At the conclusion of today's prepared remarks, we will open the call to questions. If you are listening through the webcast, you can send in a question through the portal using the Ask a Question box or by simply emailing questions to nrxs at lithiumpartners.com. If you are dialed into the call live and would like to ask a question, you can follow the instructions provided by the operator by pressing the star and 11 buttons.

Speaker Change: If you are listening through the webcast you can send in a question through the portal utilizing the ask a question box or by simply E mailing questions too and our excess and Lytham partners Dot Com. If you are dialed into the call life I would like to ask a question you can follow the instructions provided by the operator by pressing.

Speaker Change: Istar and 11 button Crazy.

Ben Jamison: Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd also like to call your attention to the Customary Safe Harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of NeurAxis. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance.

Speaker Change: Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd also like to call your attention to the customary safe Harbor disclosures regarding forward looking information the conference call today will contain certain forward looking statements, including statements regarding the goals strategies beliefs.

Speaker Change: <unk> expectations and future potential operating results of near Axis. Although management believes these statements are reasonable based on estimates assumptions and projections as of today. These statements are not guarantees of future performance.

Ben Jamison: Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Additionally, actual results may differ materially as a result of risks, uncertainties, and other factors, including, but not limited to, the factors set forth in the company's filings with the SEC. NeurAxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to turn the event over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Speaker Change: Sensitive information may no longer be accurate at the time of any tullow panic or webcast replay actual results may differ materially as a result of risks uncertainties and other factors, including but not limited to the factors set forth in the Companys filings with the SEC.

Speaker Change: <unk> takes no obligation to update or revise any of these forward looking statements with that said I would like to turn the event over to Brian <unk>, Our Chief Executive Officer of near Axis. Brian. Please proceed.

Brian Carrico: Good morning, and thank you for attending the first quarter 2024 earnings call. During today's call, I will highlight the many recent accomplishments in our revolutionary neuromodulation technology commercialization strategy. We will also discuss the milestones and growth plans for 2024 and beyond as we continue to execute the commercialization of our market-leading PE and FF technologies. Following my remarks, Tim Hendricks, our CFO, will review our financial results for the first quarter of 2024. For those of you new to our story, NeurAxis is a leader in the field of neuromodulation.

Ben Jackson: Thank you Ben.

Speaker Change: Good morning, and thank you all for attending the first quarter 2024 earnings call.

Brian Caracal: During today's call I will highlight the many recent accomplishments and our revolutionary Neuromodulation technology commercialization strategy.

Brian Caracal: We will also discuss the milestones and growth plans for 2024 and beyond as we continue to execute the commercialization of our market leading <unk> technology.

Brian Caracal: Following my remarks, Jim Hinrichs, our CFO will review our financial results for the first quarter of 2024.

Brian Caracal: For those of you new to our story <unk> is a leader in the field of Neuromodulation. Our initial focus is the pediatric and adult Gi space, specifically on disorders of gut brain interaction or D. GPI, which include functional abdominal pain associated with Ibs.

Brian Carrico: Our initial focus is the pediatric and adult GI space, specifically disorders of gut-brain interaction, or DGBIs, which include functional abdominal pain associated with IBS, functional dyspepsia, irritable bowel syndrome, and more. With our targeted indications, we have a large total addressable market with $9 billion on the pediatric side and over $14 billion on the adult side. While we are currently focused on the pediatric space, we are evolving into the adult space later this year on two fronts, which I will discuss later. Our proprietary technology can be referred to as Percutaneous Electrical Nerve Field Stimulation or PENFS. Percutaneous Electrical Nerve Field Stimulation targets nerves, including the vagus nerve, to alter pain transmission at the CNS or central level.

Brian Caracal: Actual dyspepsia irritable bowel syndrome, and more with our targeted indications we have a large total addressable market with $9 billion on the pediatric side and over $14 billion in the adult side.

Brian Caracal: While we are currently focused on the pediatric space, we are evolving into the adult space. Later this year on two fronts, which I will discuss later.

Brian Caracal: Our proprietary technology could be referred to as percutaneous electrical nerve field stimulation or P E and F. At.

Brian Caracal: Percutaneous electrical nerve field stimulation target nerves and putting the vagus nerve to ultra pain transmission at the CNS or central level.

Brian Carrico: This is accomplished via a set of electrode needle arrays placed into and around the auricular area. We currently have one FDA authorization for functional abdominal pain associated with irritable bowel syndrome in children 11 to 18 years of age. We are also working on other indications, including, but not limited to, functional dyspepsia in children, post-concussion syndrome in children, pediatric chemotherapy-induced nausea and vomiting, and our first adult indication of functional abdominal pain in irritable bowel syndrome.

Brian Caracal: This was accomplished via a set of electrode needle arrays placed into it around the irregular area.

Brian Caracal: We currently have one authorization from the FDA for functional abdominal pain associated with irritable bowel syndrome in children of 11 to 18 years of age.

Brian Caracal: We are also working on other indications, including but not limited to functional dyspepsia and children posting cushings syndrome in children pediatric chemotherapy induced nausea, and vomiting, and our first adult indication of functional abdominal pain and irritable bowel syndrome.

Brian Carrico: With that brief review behind us, I would like to review our recent achievements. I want to start by saying that although we were just here eight weeks ago, we have had a tremendous run of continued execution since the last call. To name just a few of these achievements.

Brian Caracal: With that brief review behind US I would like to review our recent achievements.

Brian Caracal: I want to start by saying that although we were just here eight weeks ago. We have had a tremendous run of continued execution since the last call to name just a few of these achievements.

Brian Carrico: We've advanced and hit more milestones, continuing our clear path to profitability in the next 12 months. We closed the necessary financing expected to take us to profitability. We just received confirmation from a Blue Cross Blue Shield licensee in Florida covering six million lives, bringing our covered lives to 22 and a half million and up 400% year over year. We also received verbal approval for our first state Medicaid program. We received written approval from a managed Medicaid in South Carolina, saw a large multi-site registry get published, and we advance red, closer to FDA submission. We broke several records related to patient demand. We announced our first of four Centers of Excellence, and much more, all of which I will highlight throughout the call.

We've advanced that hit more milestones continuing our clear path to profitability in the next 12 months.

Brian Caracal: We closed the necessary financing expected to take us to profitability.

Brian Caracal: We just received confirmation from our Blue Cross Blue Shield license D. In Florida, covering 6 million lives, bringing our covered lives to $22 5 million and up 400% year over year.

Brian Caracal: We received verbal approval for our first state Medicaid program. We received written approval from a managed Medicaid in South Carolina we.

Brian Caracal: We saw a large multi site registry get published.

Brian Caracal: Advanced Red closer to FDA submission.

Brian Caracal: He broke several records related to patient demand.

Brian Caracal: We announced our first of four centers of excellence and much more all of which I'll highlight throughout the call.

Brian Carrico: I want to start this part by highlighting the demand for IV STEM and get right to the overall numbers for Q1 with some detail. Although the official reported shift revenues were down in Q1 year over year, strictly due to short-term insurance issues, the patient numbers were up significantly, showing the growth and high demand in the business, which will soon translate into revenues with insurance policy coverage. To highlight this number, I want to first point out that we had enough patients come for treatment to get us to $1.8 million in quarterly revenue, which would translate to a $7.2 million annual run rate.

Brian Caracal: Yeah.

Brian Caracal: I want to start this part by highlighting the demand for IV stem and get right to the overall numbers for Q1 with some details although the official reported shift revenues were down in Q1 year over year strictly due to short term insurance issues that patient numbers were up significantly showing the growth in high demand in the business, which will soon translate to revenues with insurance.

Brian Caracal: All of the coverage.

Brian Caracal: To highlight this number I want to first point out that we had enough patients come for treatment.

Brian Caracal: To get us to $1 8 million in quarterly revenue, which would translate to a $7 $2 million annual run rate further.

Brian Carrico: Furthermore, these patients came from a small number of children's hospitals that adopted IV STEM prior to insurance policy coverage being in place. Second, we had enough patients come to us to be up 27% year over year if insurance policy coverage had been in place in those areas. To explain this further, we generated $646,000 in Q1 revenue from 222 patients but had another 231 patients come to GPS, of which only 42 patients received devices in the quarter. The remaining 189 patients would potentially have resulted in $900,000 in revenue if they had insurance coverage.

Brian Caracal: Furthermore, these patients came from a small number of children's hospitals that have adopted IV step prior to insurance call. It insurance policy coverage being in place.

Brian Caracal: Second we had enough patients come to us to be up 27% year over year, if insurance policy coverage is in place in those areas.

Brian Caracal: To explain this further we generated $646000 in Q1 revenue.

Brian Caracal: For 222 patients, but had another 231 patients come to GPS of which only 42 patients received devices in the quarter the.

Brian Caracal: The remaining 189 patients would've potentially resulted in $900000 of revenue bad insurance coverage.

Brian Carrico: Furthermore, we missed out on $250,000 in Q1 2024 that we had a year ago from very strong accounts, children's hospital accounts, due to recent authorization issues that will reside throughout the next 12 months as more payer coverage is written. Those three avenues equate to a revenue total of $1.8 million in Q1 2024, with insurance coverage, equating to a growth rate of 27% year over year. And this is how we know the demand is there and why we continue to be so bullish on the growth trajectory. To further break down the Q1 2024 numbers,

Brian Caracal: Furthermore, we missed out on $250000 in Q1, 2024 that we had a year ago from very strong accounts children's hospital account due to recent authorization issues that will reside throughout the next 12 months as more payer coverage is written.

Brian Caracal: Those three avenues equate to a revenue totaled $1 8 million in Q1 of 2024 with insurance coverage.

Brian Caracal: Waiting to a growth rate of 27% year over year amidst this how we know the demand is there and why we continue to be so bullish on the growth trajectory.

Brian Caracal: To further breakdown.

Brian Caracal: Q1 2024 numbers.

Brian Carrico: 888 IV stem devices were shipped, which treated about 222 children. Children's hospitals and private pediatric GI practices accounted for 49% of sales through a purchase order process, indicating the patient had insurance coverage for IV stem therapy. The remaining 51% where patients-purchased devices, through various financial assistance programs offered through our IV-STEM Guidance and Patient Support Program, indicated that insurance coverage was unavailable for those patients.

Brian Caracal: 888, IV stem devices were shipped which treated about 222 children.

Brian Caracal: Children's hospitals, and private pediatric Gi practices accounted for 49% of sales through a purchase order process, indicating the patient had insurance coverage for IV <unk>.

The remaining 51%.

Brian Caracal: Were purchased where patient purchase devices through various financial assistance programs offered through our IV stem guidance and patient support program, indicating that insurance coverage was unavailable for those patients.

Brian Carrico: This data demonstrates why increasing insurance coverage for PENFS has been and continues to be our top priority. The GPS program is primarily in place to increase access to care for children. GPS provides prior authorization services for select accounts, patient advocacy services where families are educated on how to make consumer appeals for coverage, and several financial assistance options. In the first quarter, GPS assisted 231 patients, a 40% increase year-over-year.

This data demonstrates why increasing insurance coverage for <unk> has been and continues to be our top priority.

Brian Caracal: The GPS program is primarily an <unk> in place to increase access to care for children.

Brian Caracal: GPS provides prior authorization services for select accounts patient advocacy services, where families are educated on how to do consumer appeal for coverage and several financial assistance options.

Brian Caracal: In the first quarter GPS assisted 231 patients a 40% increase year over year.

Brian Carrico: As we mentioned on our last call, prior authorization services were launched in May of 2023 and served 191 patients through the end of the first quarter 24, with 87 of those 191 patients coming in the most recent quarter, again showing this program's growth and importance. As insurance coverage increases across the country, the percentage of sales through purchase orders will also increase. This is why our number one priority continues to be written insurance policy coverage. Our plan of action is clear.

Brian Caracal: As we mentioned on our last call. Prior authorization services were launched in May of 2023, and served 191 patients through the end of first quarter 'twenty four with 87 of those 191 patients coming in the most recent quarter again, showing this programs growth in importance.

Brian Caracal: As insurance coverage increases across the country the percentage of sales through purchase orders will also increase this is why our number one priority continues to be written insurance policy coverage. Our plan of action is clear we believe that strong peer reviewed publications and key society support from the likes of <unk> and the American Academy of.

Brian Carrico: We believe that strong, peer-reviewed publications and key society support from the likes of Naspian and the American Academy of Pediatrics result in successful coverage from insurance companies, which results in strong revenue. With this formula, we have rapidly reached 22.5 million covered lives as of today, a 400% increase year-over-year. As mentioned earlier, we have great confidence that throughout 2024, we will significantly expand upon the 22.5 million covered lives already in place and obtain broad coverage by all the major insurance companies by the end of 2025.

Brian Caracal: Tricks results successful coverage from insurance companies, which result strong revenues.

Brian Caracal: With this formula we are rapidly reached $22 5 million covered lives as of today, a 400% increase year over year.

Brian Caracal: As mentioned earlier, we have great confidence that throughout 2024, we will significantly expand upon the $22 5 million covered lives already in place and obtain broad coverage by all the major insurance companies by the end of 2025.

Brian Caracal: With the support that we already have with the primary academic societies in this broad coverage over the next few years, we expect a significant acceleration of revenue.

Brian Carrico: With the support that we already have with the primary academic societies and this broad coverage over the next few years, we expect a significant acceleration of revenue. In total, to date, about 2,900 children have been treated with the IVSTEM PENFS therapy, which treats functional abdominal pain associated with IBS in patients 11 to 18 years of age.

Speaker Change: In total to date 2900, <unk> about 2900 children have been treated with the IV <unk> therapy with street folks hold dominant pain associated with Ibs in patients 11 to 18 years of age.

Brian Carrico: In 2023, we treated 830 of the 600,000 debilitated children with IV STEM, representing a penetration rate of 0.14%. In the first quarter of 2024, we treated 222 patients. We believe this continues to be less than one quarter of 1% of all children that suffer from functional abdominal pain and could benefit from our therapy.

Speaker Change: In 2023, we treated 830 of the 600000 debilitated children with IV stem, representing a penetration rate of one 4%.

Speaker Change: In the first quarter of 2024, we treat at 222 patients. We believe this continues to be less than one quarter of 1% of volatility that suffer from folks on.

Speaker Change: Functional abdominal pain and could benefit from our therapy.

Brian Carrico: From a commercialization standpoint, we know there is a very large market with an unmet need, and the key to success in the MedTech space is strong insurance reimbursement. This plan is on schedule, and the proof of concept is apparent, as we have seen 14 studies published by independent investigators from top children's hospitals. The studies include a preclinical study, a placebo RCT, long-term data, health economic data, quality of life data, real-world registry data, and many others.

Speaker Change: Yes.

Speaker Change: From a commercialization standpoint, we know there is a very large market with an unmet need and the key to success in the med Tech space is strong insurance reimbursement. This plant is on schedule and the proof of concept is apparent as we are seeing 14 studies published by independent investigators from top children's hospitals.

Speaker Change: Studies include a preclinical study a placebo RCT long term data health economic data quality of life data real World Registry data and many others. These 14 study that led to early insurance policy coverage for major Blue Cross Blue Shield plans nationally.

Brian Carrico: These 14 studies have led to early insurance policy coverage for major Blue Cross Blue Shield plans nationally, and we have just announced new policies bringing our total covered lives to over 22 million with multiple payers, both small and large, currently in the review stage. In Q1, a national multi-site registry was published of 292 patients showing sustained benefits and abdominal pain symptoms up to 12 months post-treatment. This publication caps off an incredibly deep and robust compilation of data showing why PENFS is moving towards standard of care.

Speaker Change: We've just announced new policies, bringing our total covered lives to over $22 million with multiple payers, both small and large currently under review stage.

In Q1 National multi site registry was published a 292 patients showing sustained benefit and abdominal pain symptoms up to 12 months post treatment.

This publication caps off an incredibly deep and robust <unk>.

Speaker Change: <unk> of data showing <unk> NFS is moving towards standard of care.

Brian Carrico: Additionally, we have just learned that the first state Medicaid office will write policy for PENFS. And we also just learned of approval for a Blue Cross Blue Shield licensee in Florida with six million covered lives, as mentioned, bringing our total covered lives to 22 and a half million.

Speaker Change: Additionally, we have just learned that the first state Medicaid office will write policy for NFS and we also just ran a approval for a blue Cross Blue Shield licensee in Florida was $6 million covered lives again as mentioned, bringing our total covered lives to $22 5 million.

Brian Carrico: Furthermore, we know there are multiple payers inching closer to what we believe will be written policy coverage, and we will announce those as soon as possible. We aim to continue succeeding with payers throughout 2024, setting the stage for a significant revenue ramp in 2025. From a proof-of-concept standpoint, we see children's hospitals with moderate policy coverage translating into nice revenue. We have two examples of hospitals with moderate insurance policy coverage, and each is on pace to generate over $500,000 in annual revenue in 2024.

Speaker Change: Furthermore, we know there are multiple payers inching closer to what we believe will be written policy coverage and we will announce those as soon as possible.

Speaker Change: Aimed to continue succeeding with Payors throughout 2024, setting the stage for significant revenue ramp in 2025.

Speaker Change: From proof of concept standpoint, we see the children's hospitals with moderate Pollock, we see children's hospital with moderate policy coverage translating into nice revenue.

Speaker Change: We have two examples of hospitals with moderate insurance policy coverage and each is on pace to generate over $500000 in annual revenue in 2024.

Brian Carrico: When you think about 260 children's hospitals, plus private pediatric gastroenterology offices, plus pediatricians' offices, you can understand why we are bullish on our revenue trajectory in the coming years as policy coverage and coding become formal. And this is with only our first indication.

Speaker Change: When you think about 260 children's hospitals, plus private pediatric Gastrology offices, plus pediatricians offices, you can understand why we are bullish on our revenue trajectory in the coming years as policy coverage and coding become formal and this is with only our first indication.

Brian Carrico: We have several short-term focus opportunities, including insurance policy coverage, which is being successfully addressed, as mentioned earlier, growing our internal prior authorization team to reduce the workload for clinic staff, which allows greater access for pediatric patients, and ultimately assisting in acquiring a permanent Category 1 CPT billing code. Regarding prior authorizations, we built and launched an internal prior authorization team in 2023, as mentioned earlier, to help with the time-intensive prior authorizations required to increase access to care for children. This program has been extremely successful for those children's hospitals that have transferred their prior authorization to NeurAxis.

Speaker Change: We have several short term focus opportunities.

Speaker Change: <unk> insurance policy coverage, which has been successfully addressed as mentioned earlier growing our internal prior authorization team to reduce the workload for clinic staff, which allows greater access for pediatric patients and ultimately assisting in acquiring a permanent category one CPT billing code.

Speaker Change: Yes.

Speaker Change: Regarding prior authorizations, we built and launched an internal prior authorization team in 2023 as mentioned earlier to help with the time intensive prior authorizations required to increase access to care for children.

Speaker Change: This program has been extremely successful for those children's hospitals that have transfer their prior prior authorizations to interactive.

Brian Carrico: This program continues to grow monthly, and we believe that in time, most accounts will move their prior authorizations to the NeurAxis team. Regarding the billing code, we have our own technology-specific billing code now, which is helpful in some areas, but could be challenging for children's hospitals when building their charges to bill insurance. And this has caused a delay in treating patients even after written insurance policy coverage is in place. As mentioned earlier, we are working towards obtaining a CPT Category 1 permanent billing code.

Speaker Change: This program continues to grow monthly and we believe that in time, most accounts will move their prior authorizations to the interactive team.

Speaker Change: Regarding our building code, we have our own technology specific billing code now which is helpful. In some areas, but can be challenging for children's hospitals when building their building.

Speaker Change: Building their charges to bill insurance and.

Speaker Change: This has caused the delay in treating patients even after written insurance policy coverages in place.

Speaker Change: As mentioned earlier, we are working towards obtaining a CPT category, one permanent billing code insurance coverages by far the most critical components of success and our team is diligently addressing that with success.

Brian Carrico: Insurance coverage is by far the most critical component to success, and our team is diligently addressing that with success. We recently launched our Centers of Excellence program, but publicly announced the first one, Children's Hospital of Orange County. Children's Hospital of Orange County has treated 700 patients with IB-STEM and is the first of four Centers of Excellence that will be announced in the coming month. In marketing news, The Balancing Act, a morning television show on Lifetime Network, did a story on a patient from Nemours Children's Hospital in Orlando, Florida. And the piece was aired live on April 15th and April 23rd and will air 500 times in syndication over the next year.

Speaker Change: We recently launched our centers of Excellence program are publicly announced the first one children's hospital of Orange County Children's Hospital of Orange County has treated 700 patients with IV stem and is the first of four centers of excellence that will be announced in the coming months.

Speaker Change: Yes.

Speaker Change: And marketing news the balancing act a morning television show on Lifetime Network did a story on a patient from the Morris Children's Hospital in Orlando, Florida, and the piece was aired live on April 15th and April 23rd.

Speaker Change: <unk> are 500 times in syndication over the next year.

Brian Carrico: From a company standpoint, we own this material for use on our website, social media, and other marketing channels. The response to this patient story has been nothing short of incredible, and we are thrilled that the public... can see the life-changing side of our technology as we see these stories daily. Growth Outlook. We expect revenue growth to accelerate meaningfully in the latter half of 2024 and into 2025 to the point of profitability based on two catalysts, the continued gain of coverage from insurance companies for IV STEM and the commercialization of RET.

Speaker Change: From a company standpoint, we own this material for use on our website social media and other marketing channels.

Speaker Change: Part of this patient story has been nothing short of incredible and we're thrilled with the public.

Speaker Change: You can see the life changing inside of our technology as we see these stories daily.

Speaker Change: Growth outlook.

Speaker Change: We expect revenue growth to accelerate meaningfully in the latter half of 2024 and into 2025 to the point of profitability based on two catalyst. The continued gaining a coverage from insurance companies for IV stem and the commercialization of ret.

Brian Carrico: With regard to expanding insurance coverage, we remain laser focused on gaining insurance policy coverage and shortening the gap between policy coverage effectiveness and utilization within the children's hospital. Demand for our product has never been stronger, but expanding insurance coverage is critical to growing revenues. While we have 22.5 million covered lives currently under coverage, most of them have been effective for less than 90 days. It is important to appreciate that there is typically a 90 to 120 day lag from the time coverage is gained from the insurance companies for PE and NFS to when hospitals begin purchasing the product, as time is needed for billing teams to put the proper processes in place.

Speaker Change: With regards to expanding insurance coverage, we remain laser focused on gaining insurance policy coverage and shortening the gap between policy coverage effectiveness and utilization within the children's hospital.

Speaker Change: Demand for our product has never been stronger, but expanded insurance coverage is critical to growing revenues, while we have $22 5 million covered lives currently under coverage most of it most of them have been effective for less than 90 days.

Speaker Change: It is important to appreciate that there is typically a 90 to 120 day lag.

Speaker Change: The time coverages gain from the insurance company for NFS towards hospitals begin purchasing that product as time is needed for billing teams to put the proper processes in place.

Brian Carrico: In areas where we have new policy coverage, we also see how many payers exist in those areas because so many patients still come to us without policy coverage. Once again, proving why widespread policy coverage is so critical to access for these children. As such, we expect to see a revenue ramp as the year progresses, just from the 22.5 million lives we have under coverage today, but we also expect that number to increase significantly by the end of 2024.

Speaker Change: Yes.

Speaker Change: In areas, where we have new policy coverage. We also see how many payers exist in those areas because so many patients still come to us without policy covered once again proving why widespread policy coverage is so critical to access for these children.

Speaker Change: As such we expect to see a revenue ramp as the year progresses, just from the $22 5 million lives. We have under coverage today, but we also expect that covered lives number to increase significantly by the end of 2024.

Brian Carrico: The biggest challenge for us is speeding up the national insurance policy coverage. Although we have the 22.5 million covered lives, those policies have just taken effect, and we are still at only about 7% of the covered lives nationally.

Speaker Change: The biggest challenge for us a speed to national insurance policy coverage, although we have the $22 5 million covered lives. Those policies have just taken effect and we are still at only about 7% of covered lives nationally.

Brian Carrico: Regarding REDD for adult patients, we are still on track for a late Q2 FDA submission and are cautiously optimistic about FDA clearance this fall, with commercialization commencing in Q4. Let's speak more about RED, or the Rectal Expulsion Device product, which we believe to be a great opportunity for NeurAxis. RED is a self-inflating balloon that is an easy-to-use, office-based, point-of-care anorectal function test to identify patients with chronic constipation due to pelvic floor dysinertia and who are unlikely to improve with increased laxity.

Speaker Change: Regarding red for adult patients were still on track for a late Q2, FDA submission and are cautiously optimistic about FDA clearance. This fall with commercialization commencing in Q4.

Speaker Change: Let's speak more a little bit about red or the rectal expulsion device product, which we believe to be a great opportunity for <unk>.

Speaker Change: Rather the self inflating balloon that is an easy to use office based point of care anorectal function test to identify patients with chronic constipation due to pelvic floor, dyssynergia and who are unlikely to improve with increased laxity abuse.

Brian Carrico: The current treatment is a guessing game by the physician as to which treatment will work, and REDD will allow the physician to streamline the diagnosis and choose the best treatment option after the first visit, which is a real win for the patient. We acquired the right to license this product from the University of Michigan, where it was developed. We are on track for a 510k submission late in Q2 and are cautiously optimistic that this product will be on the market before the end of 2024.

Current treatment of the guessing game by the physician as to which treatment will work in Red will allow the physician to streamline the diagnosis and choose the best treatment option. After the first visit which is a real waiting for the patient.

Speaker Change: We acquired a REIT licensed this product from University of Michigan, where it was developed.

Speaker Change: We are on track for a five 10-K submission late Q2 and are cautiously optimistic that this product will be on the market before the end of 2024 <unk>.

Brian Carrico: If successful, REDD is expected to bring great clinical benefits to patients, and because the technology has a Category 1 CPT billing code assigned and strong national reimbursement, we believe providers will be able to bring this clinically beneficial technology to their practice immediately. In summary, we are pleased with the continued and consistent execution of building the foundation on strong data and academic society support. This has resulted in early insurance adoption, which we expect to ramp revenues in the latter half of 2024, moving us toward profitability, setting the stage for a prosperous 2025. I will now turn the call over to our CFO, Tim Hendricks, to discuss the financials. Tim, please proceed.

Speaker Change: If successful Red is expected to bring great clinical benefits to patients and because the technology has a category one CPT billing code assigned and strong national reimbursement, we believe that providers will be able to bring this clinically beneficial technology to their practice immediately.

Speaker Change: In summary, we are pleased with the continued and consistent execution of building. The foundation on strong data in academic Society support. This has resulted in early insurance adoption, which we expect to ramp revenues in the latter half of 'twenty four moving us toward profitability setting the stage for a prosperous 2025.

Tim Hendrix: I will now turn the call over to our CFO, Tim <unk> to discuss the financials. Tim. Please proceed.

Tim Hendricks: Thank you, Brian, and let me add my welcome to everyone joining us on this call. These financial results were included within our press release, which was issued earlier, and were also provided in more detail within our Q1-24 earnings call. I will add some color on key areas of the financial results, as well as an outlook on certain areas. From a big picture standpoint, we are continuing to execute on our plans, including the commercialization of our PNFS technology.

Tim Hendrix: Thank you, Brian and let me add my welcome to everyone joining us on this call.

Tim Hendrix: These financial results were included within our press release, which was issued earlier and we are also provided in more detail within our Q1 'twenty four 10-Q.

Tim Hendrix: I'll add some color on key areas of our financial results as well as an outlook.

Tim Hendrix: In certain areas.

Tim Hendrix: From a big picture standpoint, we're continuing to execute on our plans, including the commercialization of our NFS technology.

Tim Hendricks: We have been successful in leveraging our 14 completed studies to gain insurance coverage. We have 22.5 million lives currently under coverage, and expect that number to continue to grow through the end of the year. In addition, we are optimistic with regard to the commercialization of R.E.D. in the fourth quarter.

Tim Hendrix: We have been successful in leveraging our 14 completed studies to gain insurance coverage, we have $22 5 million lives currently under coverage and expect that number to continue to grow through the end of the year.

Tim Hendrix: In addition, we are optimistic with regards to the commercialization of breadth in the fourth quarter.

Tim Hendricks: We expect revenue growth in the back half of 2024. Given our current cost structure, our goal as a company to reach profitability is achievable, but a function of our sales volume given our strong growth margin, and our recent successes in obtaining substantially more insurance coverage since December keep us on that path. Finally, we have strengthened our liquidity position heading into 24, as we secured $6.1 million in financial commitments through March of 2025 via convertible notes since November from strong long-term investors who know the medtech space well, with over 1.5 million dollars funded in Q1 of 2024. With that, I will go through the financial highlights in detail.

Tim Hendrix: As such.

Tim Hendrix: We expect revenue growth in the back half of 2024.

Tim Hendrix: Given our current cost structure, our goal as a company to reach profitability is achievable, but a function of our sales volume given our strong gross margins, our recent successes and obtaining.

Tim Hendrix: Substantially more insurance coverage since December keeps us on that path.

Tim Hendrix: Finally, we have strengthened our liquidity position heading into 'twenty, four as we secured $6 $1 million and financial commitments.

Tim Hendrix: Through March of 2025 convertible notes since November.

Tim Hendrix: Strong long term investors, who know the med takes med tech space well.

Tim Hendrix: With over $1 $5 million funded in Q1 of 'twenty four.

Tim Hendrix: With that I will go through the financial highlights in detail.

Tim Hendricks: 2024 First Quarter Revenues: $647,000 compared to $805,000 for the same period in 2023, while revenue was down 19.7% in the quarter compared to last year. We had more accounts ordering from us, and we had more patients coming to us via our patient assistance program, and Brian mentioned earlier what those numbers would turn into with policy coverage. Quarter over quarter, the decrease is primarily due to fewer shipments from certain customers as they manage through the insurance policy reimbursement process, partly offset by an increase in volume from our patient assistance.

Tim Hendrix: 2024 first quarter revenues.

$647000 compared to $805000 for the same period in.

<unk> 2023.

Speaker Change: While revenue was down 19, 7% in the quarter compared to last year, we had more accounts ordering from us and we have more patients coming to us via our patient assistance program and Bryan mentioned earlier, what those numbers turn into with policy coverage.

Speaker Change: The quarter over quarter decrease was primarily due to fewer shipments.

Speaker Change: From certain customers as they manage through the insurance policy reimbursement process.

Speaker Change: Offset by an increase in volume from our patient assistance customers.

Tim Hendricks: New customers and total patients coming to NeurAxis have increased, but they have come through our financial assistance programs due to a lack of written insurance policy coverage, therefore paying a discounted price and lowering our average selling price and revenue for now. As we mentioned before, we are highly focused on expanding our insurance coverage. While we have made great strides in recent months in gaining coverage, note that there is a lag until accounts begin ordering the product while they get their coding and billing processing, and implement it for a new device.

Speaker Change: New customers and total patients coming to interactions have increased but they have come through our financial assistance programs due to a lack of <unk>.

Speaker Change: Written insurance policy coverage, therefore, paying a discounted price and lowering our average selling price and revenue for now.

Speaker Change: As we mentioned before we are highly focused on expanding our insurance coverage. While we have made great strides in recent months and gaining coverage note that there is a lag until accounts began ordering the product.

Speaker Change: While they get their coding and billing processes.

Tim Hendricks: As such, we expect growth in late 2024 and into 2025. Gross profit for the first quarter of 2024 was $572,000 compared to $709,000 in the first quarter of 2023. Although gross profit declined due to sales volume, we continue to have strong margins. Gross margin in the first quarter of 2024 was 88.4%, as compared to 88.1% in the first quarter of 2023, primarily due to growth in our financial assistance program at lower discount rates.

Speaker Change: Implemented for a new device.

Speaker Change: As such we expect growth in late 2024 and into 2025.

Speaker Change: Gross profit for the first quarter of 2024 was $572000.

Speaker Change: <unk> to $709000 in the first quarter of 2023.

Speaker Change: Although the gross profit.

Speaker Change: Climbed due to sales volume we continue to have strong margins gross margin in the first quarter of 2024 was 88, 4% as compared to 88, 1% in the first quarter of 2023, primarily due to growth in our financial assistance program and lower discounts.

Tim Hendricks: Our operating loss for the first quarter of 2024 was $1.8 million, compared to $896,000 in the first quarter of 2020. The increase was due to a number of factors. First, our lower sales volume resulted in a lower gross margin, but the demand is there to turn that around once our new insurance coverage has become reimbursable for our patients. Second, our payroll increased as we continue to build out our market access and sales teams to secure that insurance coverage on behalf of our patients that will benefit from the IV SIM device.

Speaker Change: Our operating loss for the first quarter of 2024 was $1 8 million compared to $896000 in the first quarter of 2023.

Speaker Change: The increase was due to a number of factors.

Speaker Change: First our lower sales volume resulted in lower gross margin.

Speaker Change: But the demand is there to turn that around once our new insurance coverages become reimbursable for our patients.

Second our payroll increased as we continue to build out our market access and sales teams to secure that insurance coverage on behalf of our patients that will benefit from the IV stim device.

Tim Hendricks: Third, we have incremental public company costs in the first quarter of 2024, such as legal, insurance, investor relations, and board, that did not exist in the first quarter of 2023. Our advertising spend increased as we look to expand our market access and awareness.

Speaker Change: Third we have incremental public company costs in the first quarter of 2024, such as legal insurance Investor Relations and board fees that did not exist in the first quarter of 2023.

Speaker Change: Fourth.

Speaker Change: Our advertising spend increased as we look to expand our market access and awareness.

Tim Hendricks: And lastly, we incurred $287,000 related to non-cash, non-returning consulting and hiring. Our net loss in the first quarter of 2024 was $2.1 million, 2.4% favorable to the $2.2 million net loss in the first quarter of 2023, primarily due to the absence of debt discount and issuance cost amortization and interest expense upon conversion of convertible notes in the August 2023 IPO. That benefit was partly offset by higher general and administrative costs. The Absence of a Benefit from Debt Extinguishment in the First Quarter of 2020

Speaker Change: And lastly, we incurred $287000 related to noncash nonrecurring consulting and hiring costs.

Speaker Change: Our net loss in the first quarter of 2024 was $2 1 million.

Speaker Change: Two 4% favorable to the $2 $2 million net loss in the first quarter of 2023, primarily due to the absence of debt discount and issuance cost amortization and interest expense upon conversion.

Vertical notes and the August 2023 IPO.

Speaker Change: That benefit was partly offset by.

Speaker Change: By higher general and administrative costs.

Speaker Change: Absence of a benefit from debt extinguishment in the first quarter of 2023.

Tim Hendricks: A lower benefit from the revaluation of warrants and derivatives as they were recognized upon the August 2023 IPO and a $230,000 non-cash, non-return charge related to a 2023 convertible note settlement from a liquidity standpoint. Cash used by operations for the first quarter of 2024 was $1.3 million compared to $623,000 in the first quarter of 2024. The increased outflow was primarily due to higher general and administrative costs, including market access and sales payroll, as we continue to secure insurance coverage, new public company costs, such as legal insurance, investor relations, and board fees that were not previously incurred, and higher advertising costs as we look to expand our market access, as well as payments made to past due vendors, which did not occur in the first quarter of 2022.

Speaker Change: Lower benefit from the revaluation of warrants and derivatives as they were recognized upon the August 2023 IPO.

Speaker Change: $230000 noncash nonrecurring charge related to a 2023 convertible notes settlement.

Speaker Change: From a liquidity standpoint cash used by operations for the first quarter of 2024 was $1 3 million.

Speaker Change: Compared to $623000 in the first quarter of 2023.

Speaker Change: The increased outflow was primarily due to higher general and administrative costs, including market access and sales payroll as we continue to secure insurance coverage, new public company costs, such as legal insurance Investor Relations and board fees that were not previously incurred.

Speaker Change: And higher advertising costs, as we look to expand our market access.

Speaker Change: As well as payments made the past due vendors, which did not occur in the first quarter of 2023.

Tim Hendricks: As we previously mentioned, but it bears repeating, investors funded $1.5 million in the first quarter of 2024 as part of $6.1 million in commitments from the company secured from investors through convertible notes in Q1 of 2024. Importantly, as we mentioned in our press release this morning, we further strengthened our liquidity position this week as we signed documents for an additional $3 million in convertible notes from a reputable healthcare-focused fund. With that, let me turn the call back over to Brian.

Speaker Change: As we previously mentioned, but it bears repeating.

Speaker Change: Investors funded $1 5 million in the first quarter of 2024 as part of $6 $1 million in commitments from the company's secured from investors through convertible notes in Q1 of 2024.

Speaker Change: Importantly, as we mentioned in our press release this morning.

Speaker Change: Further strengthened our liquidity position. This week as we signed documents for an additional $3 million in convertible notes from a reputable healthcare focused funds.

Speaker Change: With that let me turn the call back over to Brian.

Brian Carrico: Thank you, Tim. Let me conclude the call where I started.

Speaker Change: Yes.

Thank you Tim Let me conclude the call where I started I cannot stress enough how the consistent execution continues to lay the foundation of pathway to meet our goals.

Brian Carrico: I cannot stress enough how consistent execution continues to lay the foundation and pathway to meet our goal. This has led to the milestones we are achieving and is setting NeurAxis up to achieve accelerated growth in the second half of 2024 and into 2025. We remain focused on leveraging the strong data from our studies, leading us to insurance acceptance from the covered lives we have today to a significantly higher number by the end of 2024. Furthermore, we remain very excited about our opportunity with RED, which we expect to become commercial in 2024.

Brian Caracal: This has led to the milestones we are achieving is setting their active sub to achieve accelerated growth in the second half of 2024 and into 2025.

We remain focused on leveraging the strong data from our studies leanness to insurance acceptance from the covered lives we have today to a significantly higher number by the end of 2024.

Brian Caracal: Furthermore, we remain very excited about our opportunity with red, which we expect to become commercial in 2024.

Operator: With that, Operator, we would be happy to take any questions. As a reminder, you can ask a question on the webcast by typing into the Ask a Question box, or if you are dialed in and would like to ask a question, press star 1-1. Again, ladies and gentlemen, if you have a question or a comment, please press star 1-1.

Speaker Change: With that operator, we would be happy to take any questions. As a reminder, you can ask a question on the webcast by typing into the ask a question box or if you're dialed in and we'd like to ask a question to press star one one.

Operator: Again, ladies and gentlemen, if you have a question or a comment, please press star 1-1. If your question has been answered and you have removed yourself from the queue, please press star 1-1 again. We'll pause for a moment to compile the questions on the phone lines. And I'm not showing any questions on the phone line.

Speaker Change: Again, ladies and gentlemen, if you have a question or a comment. Please press star one one extra question has been answered here is to move yourself from the queue. Please press star one again.

Speaker Change: We will pause for a moment to compile the <unk>.

Speaker Change: Questions on the phone lines.

Speaker Change: And I'm not showing any other questions on the phone lines.

Operator: Now, first, how do you plan to allocate capital to drive revenue in 2024 and 2025?

Speaker Change: Now first how do you plan to allocate capital to drive revenue in 2024 and 2025.

Brian Carrico: Well, first, you know, we want to ensure that we don't build a commercial machine. I talked about this on the first call.

Speaker Change: Well first we.

Speaker Change: To ensure we don't build a commercial machine I talked about this on the first call. We don't want to build a commercial machine in areas, where we do not have policy coverage and therefore.

Brian Carrico: We don't want to build a commercial machine in areas where we do not have policy coverage and, therefore, a real revenue source. So we are placing reps in areas with positive PNFS policy coverage. Second, we are spending some capital to educate families about the technology and physicians about the data where there is insurance coverage. Third, we're using resources to leverage our data to drive more policy coverage. Additionally, and equally as important, we are putting time and money toward the RED technology via the FDA process and commercialization.

Speaker Change: A real revenue source, so we're placing reps in areas with positive PFS policy coverage.

Speaker Change: We are spending some capital to educate families about the technology and physicians about the data where there is insurance coverage.

Speaker Change: Third we're using resources to leverage our data to drive more policy coverage.

Speaker Change: And additionally, and equally as important we're putting time and money toward the red technology via the FDA process and commercialization.

Brian Carrico: Great. Thank you. We have some more questions that have come in. Can you speak about your path to profitability?

Speaker Change: Great. Thank you.

Speaker Change: We have some more questions that have come in.

Speaker Change: Can you speak about your path to profitability.

Brian Carrico: Yes, as we mentioned on the call, we already have enough patients coming to NeurAxis to really push towards that profitability number from a cash flow standpoint. And we can dive more into that number on the next call.

Speaker Change: Yes, as we mentioned on the call we already have enough patients coming into our axis.

Speaker Change: To.

Speaker Change: Really push towards that profitable profitability number from a cash flow standpoint.

Speaker Change: And we can dive more into that number over the next call and this is only a fraction of the children's hospitals nationally as we mentioned earlier.

Brian Carrico: And this is only from a fraction of the children's hospitals nationally, as we mentioned earlier. Second, the answer continues to be about how fast we can gain coverage nationally. In areas where we have policy coverage, we still see most patients coming from other payers. We've got some really nice Blue Cross Blue Shield policies. And we still see 60, 70, 80% of the patients coming from those children's hospitals coming from other payers, which speaks to my point earlier about us only having about 7% of covered lives nationally in place. And those policies have either just taken effect, or they have not taken effect. So that's the biggest issue right now.

Speaker Change: This answer is the answer continues to be about how fast we can gain coverage nationally in areas, where we have policy coverage, we still see most patients coming from other payers. So we've got some really nice blue Cross Blue shield policies.

Speaker Change: And we still see 60 70, 80% of the patients coming from those children's hospitals from other payers, which speaks to.

Speaker Change: My point earlier about us only having about 7% of covered lives nationally in place and those policies of either.

Speaker Change: Just taken effect or they have not taken effect. So that's the biggest issue right now.

Brian Carrico: Great. As a reminder, you can ask questions either in the chat or by following the operator's instructions. We have some more questions that were sent in to us. The biggest challenge at this point in terms of gaining written policy, what do you see as the biggest challenge there in terms of written policy?

Speaker Change: Great.

Speaker Change: As a reminder, you can ask questions.

Speaker Change: Hi.

Speaker Change: Either on the on the chat or by pharma.

Speaker Change: Following the operator's instructions, we have some more questions that were sent in to us.

Speaker Change: The biggest challenge at this point to gaming risk policy.

Speaker Change: What do you see the biggest challenge there in terms of written policies.

Brian Carrico: Well, it's speed. How fast can we get this policy coverage in place and execute it? The data is now published and in place, so the key is gaining the attention of the payers to get this policy coverage written and effective. The good news is that we used to be told we needed more data, and we very rarely, if ever, hear that now. We're often aware of policy coverage that cannot be announced until the payer announces it.

Speaker Change: Well its speed how fast can we can we get this policy coverage in place and executed. The data is now published and in place. So the key is gaining the attention of the payers.

Speaker Change: To get this policy coverage written and effective the good news is that we got it used to be told we need more data and we very rarely if ever hear that now we often we're often aware of policy covers it cannot be announced until the payer analysis. So we've talked about this in previous calls we could be aware policy coverage now significant policy coverage that we are aware.

Brian Carrico: So we've talked about this in previous calls. We could be aware of policy coverage now, significant policy coverage that we are aware is becoming effective, but it's not been announced by the payer. So we are not able to announce that yet.

Speaker Change: It is becoming effective but it has not been announced by the payer. So we are not able to announce that yet.

Brian Carrico: The questioner is asking, what plans do you have to increase visibility among the investment community?

Speaker Change: Okay great.

Speaker Change: Questioner is asking what plans do you have to increase visibility among the investment community.

Brian Carrico: significant plans. We're doing it. We have significant weekly meetings with investors. We have two investor relations outsourced. We have one Lipton Partners, that is, we have multiple, as I said, weekly meetings with investors, new investors, and investors who are potential investors. And then we're doing multiple conferences. We're starting to do monthly conferences, both virtually and in person, which we would hope would drive interest in the company and ultimately the stock price and the stock volume.

Speaker Change: Significant plants.

Speaker Change: We are doing.

Speaker Change: We have significant weekly meetings with investors, we have two investor relation outsource.

Speaker Change: We have one lytham partners that is we have multiple.

Speaker Change: As I said weekly meetings on with investors, new investors and investors who are potential investors and then we're doing multiple conferences, we're starting to do monthly conferences, both virtually and in person.

Speaker Change: Which we would hope would drive interest in the company and ultimately the stock price and the stock volume.

Brian Carrico: Okay. Next question regarding Q1 revenues. Are you concerned about the decline in Q1 revenues relative to last year?

Speaker Change: Okay.

Speaker Change: Next question.

Speaker Change: Starting Q1 revenues are you concerned about the decline in the Q1 revenues relative to last year.

Brian Carrico: Well, on the surface, it's frustrating, but we're not concerned. Now, so many accounts had issues with prior authorizations this Q1 versus a year ago, and we know that's a short-term issue. And the number of patients who came to us increased significantly. The demand continues to grow, and this is, again, from only a small number of children's hospitals. Most children's hospitals are waiting for policy coverage before the chief revenue officers will allow the product in. But we're extremely encouraged by the continued ramp in demand, which we know will translate to revenue in the coming months and years.

Speaker Change: Well on the surface.

Speaker Change: It's frustrating and but we're not concerned about so many accounts had issues with prior authorizations. This Q1 versus a year ago, and we know Thats a short term issue and the number of patients who came to us were up significantly the demand continues to grow and this is again from only a small number of children's hospitals, most childrens hospitals are weighted on policy coverage.

Operator: Operator. I believe I don't see any more questions. And I'm not sure I'm going to...

Speaker Change: Before the chief.

Speaker Change: Chief revenue officers will allow the product yet.

Speaker Change: We're extremely encouraged by the continued ramp in demand, which we know will translate to revenue in the coming months and year.

Speaker Change: Yeah.

Operator: And I'm not showing any other questions on the phone lines either, so I guess we'll turn it back to Brian for a closing remark.

Speaker Change: Okay.

Speaker Change: Operator I believe.

Speaker Change: I don't see any more questions.

Speaker Change: And I'm not showing any other questions on the phone months, either so I guess, we'll turn it back to Brian for closing remarks.

Brian Carrico: Sure. I just want to thank everyone for joining the Q1 call and look forward to talking to everyone in the coming weeks and months. Have a nice day.

Brian Caracal: Sure I just want to thank everyone for joining the Q1 call and look forward to talking to everyone in the coming weeks and months have a nice day.

Operator: Thank you, ladies and gentlemen. This concludes today's presentation. You may now disconnect and have a wonderful day.

Speaker Change: Thank you ladies and gentlemen, this does conclude today's presentation. You may now disconnect and have a wonderful day.

Speaker Change: Okay.

Speaker Change: [music].