Q2 2024 electroCore Inc Earnings Call
Speaker Change: [music].
Greetings and welcome to the electric car second quarter 'twenty 'twenty four earnings conference call.
Speaker Change: At this time all participants are in listen only mode. Please make sure you meet yourself.
Speaker Change: A question and answer session will follow the formal presentation.
Operator: If anyone should require operator assistance during the conference, please press star then zero on your phone. It is now my pleasure to introduce your host, John Goldberger. Thank you, sir. You may begin. Thank you all.
Speaker Change: Operator.
Speaker Change: The company. Please press Star then zero on that side.
Speaker Change: As a reminder, this conference is doing well.
Speaker Change: Right.
Speaker Change: It is now my pleasure to introduce your host John called Becker. Thank you. Sir you may begin thank you.
Daniel Goldberger: Thank you all for participating in today's electroCore earnings call. My name is Dan Goldberger, I'm the Chief Executive Officer of electroCore, and I'm also a member of the Board of Directors.
Dan Goldberger: You all for participating in today's electric core earnings call. My name is Dan Goldberger, I'm, the Chief Executive Officer of electric core and I'm also a member of the board of directors.
Daniel Goldberger: A copy of the press release is available on the company's website. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation any guidance, outlook, or future financial expectations or operational activities and performance, are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. You should not place undue reliance on these statements.
Speaker Change: Joining me today is Brian Posner, Chief Financial Officer.
Speaker Change: Earlier today electric or published results for the second quarter ended June 32024.
Dan Goldberger: A copy of the press release is available on the company's website.
Dan Goldberger: Before we begin I'd like to remind you that management will make statements. During this call that include forward looking statements within the meaning of the federal Securities laws, which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1995.
Dan Goldberger: Any statements contained in this call that are not statements of historical fact should be deemed to be forward looking statements.
Dan Goldberger: All forward looking statements, including without limitation any guidance or outlook for future financial expectations or operational activities and performance are based upon the company's current estimates and various assumptions.
Dan Goldberger: These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied.
Dan Goldberger: These forward looking statements.
Dan Goldberger: Accordingly.
Dan Goldberger: You should not place undue reliance on these statements.
Dan Goldberger: 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.
Daniel Goldberger: 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, August 7, 2024. Stimulating the vagus nerve affects many important autonomic functions in the brain and in the body, including neurotransmitter levels, inflammation levels, and metabolism. Thus, a large and growing database confirms the safety and efficacy of the technique. Brian will discuss the financials in more detail later in the call.
Dan Goldberger: Electric cord 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 August seven 2024.
Electric car: Electric car was founded in 2005 to commercialize the use of our proprietary noninvasive vagus nerve stimulation for medical and general wellness applications.
Speaker Change: The vagus nerve is the longest cranial nerve in the body, bringing information from the visceral Oregon's to the brain.
Speaker Change: Stimulating the vagus nerve affect many important autonomic functions in the brain and the body, including neurotransmitter levels inflammation levels and metabolism.
Speaker Change: Surgically implanted vagus nerve stimulators had been available from other companies for more than 40 years for chronic conditions like epilepsy and depression, so a large and growing database confirms the safety and efficacy of the tax team.
Speaker Change: 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.
Speaker Change: Our pipeline of potential 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.
Speaker Change: We are excited to report our seventh consecutive record revenue quarter at $6 $1 million for the three months ended June 30th 2024.
Speaker Change: 73% increase over the prior year.
Speaker Change: It's a 69% five year compound annual growth rate.
Speaker Change: We reported 86% gross margins and a 46% reduction in the company's net loss from the same period in 2023.
Speaker Change: Continue to make progress towards positive cash flow as revenue increases gross margin expands and we maintain discipline around operating expenses.
Speaker Change: Brian will discuss the financials in more detail later in the call.
Daniel Goldberger: We launched our U.S. prescription headache business in 2017. 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 through prescriber professional channels, and through CERT-managed care systems in the United States. You'll recall that our GammaCore prescription therapy is free to patients covered by Veterans Administration benefits.
Brian Posner: We launched our U S prescription headache business in 2017, selling primarily to specialty pharmacies. Since then our prescription headache business has grown worldwide, including sales that are covered by national health systems, such as the VA Hospital system in the United States and the National Health service in the United.
Speaker Change: Kingdom.
Speaker Change: Cash pay sales through prescriber professional channels and through certain managed care systems in the United States. We launched two new Nonprescription General wellness product lines last year to date again is a direct to consumer health and wellness brand and taxed in is our grand for human performance for active duty military personnel.
Speaker Change: <unk>.
Speaker Change: True Vegas sales exceeded our expectations for the quarter, we reported small taksim sales for the quarter, but added substantially to the funnel of future opportunities.
Speaker Change: The VA hospital system continues to be our largest revenue channel.
Speaker Change: You'll recall that our gamma court prescription therapy is free to patients covered by veterans administration benefits, representing about 9 million covered lives across approximately 1300 health care facilities.
Speaker Change: In the VA channel grew 120% to $4 $6 million in the second quarter of 2024 from $2 $1 million during the second quarter of 2023.
Speaker Change: 160, VA facilities have purchased prescription gamma core products through June 30 of 2024 as compared to 138 through June 30th 2023.
Speaker Change: The VA Hospital administration headache centers of excellence estimates approximately 600000 patients are being treated for headache in the VA Hospital system.
Daniel Goldberger: We've dispensed GammaCore devices to approximately 6,100 veterans since 2022, representing approximately 1% of the total addressable market within the VA system. Triveka Plus is a mobile app-enabled general wellness product. We believe that the Truvega business can scale nicely if we maintain or improve these metrics. This version was developed in collaboration with AFRL, and we believe that at least some tax STEM sales were deferred as customers waited for the new handset. Revenue from channels outside of the United States.
Speaker Change: We've dispensed gamma core devices to approximately 6100 veterans since 2022, representing approximately 1% of the total addressable market within the VA system.
Speaker Change: Several contracting mechanisms to support sales to individual VA facilities, including open market access our federal supply services contract and our distribution agreement with level of government services.
Speaker Change: During the second quarter of 2024 sales through level accounted for approximately 27% of our VA sales up from 13% during the first quarter of 2024.
Speaker Change: Tobago is currently positioned as a direct to consumer general wellness product Prestress relaxation sleep and mental acuity.
Speaker Change: For the second quarter of 2024 total true Vega net sales.
Speaker Change: Were approximately $572000 as compared to $290000 during the second quarter of 2023, our revenue return on advertising spend what the industry calls a media efficiency ratio or M. A R was approximately $2 eight one in the second.
Speaker Change: In other words, we're spending one dollar to generate $2 81 sensitive revenue.
Speaker Change: True Vega return rates increased slightly to approximately 10% of shipments.
Speaker Change: In April 2024, we launched true Vega, plus our second two Vega product offering <unk>.
Speaker Change: <unk> plus is a mobile app enabled general wellness product. The first few months of sales of true Vega plus have again exceeded expectations and we are enthusiastic about the potential our new mobile app enabled product provides for future iterations of our technology and engagement with consumers.
Speaker Change: Since launching two Vega, plus we sold approximately 1200 handsets and customers have conducted approximately 60000 sessions using the mobile app.
Speaker Change: We believe that the true Vega business can scale nicely, if we maintain or improve these metrics.
Speaker Change: Most of our true Vega revenues generated through our E Commerce platform Www Dot true Vega Dot com.
Speaker Change: Following the successful launch of trabecular, plus we are exploring other channels to reach consumers, including Influencers affiliates and resellers.
Speaker Change: Tax him for human performance is being sold to select Air Force Special forces and Army Special forces units for accelerated training sustained attention produced for tea and improve.
Speaker Change: As defined by the Air Force Research laboratory or a F. R L.
Speaker Change: No prescription is required and more information is available at www dot taxed in dot com for the second quarter ended June 32024, we recorded $55000 of taxes themselves as compared to $311000. During the same period last year, we announced the.
Speaker Change: Actual launch of our second generation taxed in handset in June 2024.
Speaker Change: This version was developed in collaboration with a F. R. L and we believe that at least some tax time sales were deferred as customers waited for the new handset.
Speaker Change: We have a growing sales funnel for tax for them and we continue to believe that revenue from this product line is likely to be lumpy as active duty units purchased in bulk for pilot deployment to that end, we expect revenues for tax them in the third quarter and back half of 'twenty 'twenty four to be higher than in the second quarter and first half of 'twenty.
Speaker Change: 24, respectively.
Speaker Change: Our U S prescription gamma core channel, including G C direct and <unk> recorded revenue of $476000. During the second quarter of 2024 up 7% from $445000 in the second quarter of 2023.
Speaker Change: There were 2216 cumulative revenue generating cash pay prescribers as of June 32024 up from 1451 on June 30th 2023.
Speaker Change: We previously stated that 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.
Speaker Change: We began experienced that migration during the quarter as certain G. Concierge as customers are evaluating the true Vega product line.
Speaker Change: Last year, we announced a distribution agreement with <unk> health care they'll see that we believe will add more than 12, and a half million covered lives within a select managed care health system. The business model that assurance is similar to how we work with the VA Hospital system journey.
Speaker Change: Parents handles adjudication billing and collections, while the electric car ships directly to patients and five in servicing and patient support.
Speaker Change: Our field sales team is responsible for building awareness among clinicians within those managed care systems. We continue to work with Sharon's on the implementation, including the expansion into new geographic territories. Our field sales function is developing champions within the targeted managed care system and while it is taking longer than we had hoped we.
Speaker Change: Still believe journeys could be an important source of revenue growth in the second half of 2024 and beyond.
Speaker Change: Revenue from channels outside of the United States.
Speaker Change: Oh U S increased by 9% to $464000 in the second quarter of 2024 as compared to $424000 for the second quarter of 2023.
Speaker Change: <unk> of our O U S revenue continues to be generated in the United Kingdom by prescription Gamma core sales funded by the National Health service or NHS.
Brian Posner: Now I'd like to turn to our scientific... Last week, we announced that the Air Force Research Laboratories published a paper entitled Transcutaneous Cervical Vagus Nerve Stimulation Enhances Second Language Vocabulary Acquisition while Simultaneously Mitigating Fatigue and Promoting Focus in the journal Scientific Research. The paper was published in the journal Scientific Research and was supported by the DARPA Targeted Neuroplasticity Training Program. Two of our investigator-initiated trials, the acute stroke trial in Leiden, Netherlands, and the gait and mobility trial in Parkinson's disease in Newcastle, United Kingdom, have been fully enrolled, and we expect to report top-line data later this year.
Speaker Change: Now I'd like to turn to our scientific progress.
Speaker Change: Last week, we announced that the Air Force Research laboratories, published a paper entitled Transco, Chinese cervical vagus nerve stimulation enhances second language vocabulary acquisition, while simultaneously mitigating fatigue and promoting folks and the journal scientific reports.
Speaker Change: The papers based on a study that was conducted at the defense language instituted in Monterey, California.
Speaker Change: U S Department of Defense's Premier language and was supported by the DARPA targeted Neuroplasticity training program.
Speaker Change: The paper showed a significant positive effect of N VNS on language recall pay.
Speaker Change: Paper goes onto document that the recall advantage that emerged during training with sustain after the completion of treatment.
Speaker Change: Two of our investigator initiated trials, the acute stroke trials and by the Netherlands, and the gate and mobility trial in Parkinson's disease, and Newcastle United Kingdom had been fully enrolled and we expect to report topline data later this year.
Speaker Change: We continue to work with the FDA on a pathway for post traumatic stress or P. T. S D level, but that timeline continues to be uncertain.
Speaker Change: We will 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 Bryan.
Speaker Change: Brian.
Brian Posner: Thank you Dan. Net sales for the three months ended June 30, 2024 were $6.1 million, an increase of 73% as compared to $3.6 million during the three months ended June 30, 2023. Gross profit increased by $2.3 million for the three months ended June 30, 2024, compared to the three months ended June 30, 2023. Gross margin increased to 86% for the three months ended June 30, 2024, as compared to 84% for the three months ended June 30, 2023.
Brian Posner: Thank you again net sales for the three months ended June 32024 for $6 $1 million, an increase of 73% as compared to $3 6 million. During the three months ended June 30th 2023.
Brian Posner: The increase of $2 $6 million is due to an increase in net sales across the majority of our major channels.
Speaker Change: I think our prescription gamma core medical devices sold to the U S and abroad and revenue from the sales of our non prescription general wellness for Vega brand.
Brian Posner: Gross profit increased by $2 $3 million for three months ended June 30 of 2024 compared to the three months ended June 32023.
Speaker Change: Gross margin increased to 86% in the three months ended June 32024, as compared to 84% for the three months ended June 32023.
Brian Posner: Total operating expenses in the second quarter of 2024 for approximately $7 $9 million as compared to $8 million in the second quarter 2023.
Brian Posner: Research and development expense in the second quarter of 2024 was $600,000, as compared to $1.2 million in the second quarter of 2023. This decrease is primarily due to a significant reduction in investment. This significant improvement was primarily due to the increase in net sales to $6.1 million for the second quarter of 2024. A reconciliation of GAAP net loss to non-GAAP-adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release.
Speaker Change: Research and development expense in the second quarter of 2024 was $600000 as compared to $1 $2 million in the second quarter of 2023.
Speaker Change: This decrease is primarily due to a significant reduction in investments.
Speaker Change: Selling general and administrative expense of $7 $3 million for the three months ended June 32024 increased 458000, or 7% as compared to $6 $8 million for the comparable period in 2023.
Speaker Change: This increase was primarily due to a greater variable selling and marketing costs consistent with our increase in sales.
Speaker Change: GAAP net loss for the second quarter of 2024 was $2 $7 million or <unk> 38 per share as compared to the $4 9 million dollar net loss of $1 three per share for the second quarter of 2023.
Speaker Change: This significant improvement was primarily due to the increase in net sales of $6 $1 million for the second quarter of 2024.
Speaker Change: Adjusted EBITDA net loss in the second quarter of 2024 was $1 $9 million as compared to adjusted EBITDA net loss of $4 $5 million in the second quarter of 2023.
Speaker Change: These improved results are also primarily due to the 73% increase in the second quarter 2024 net sales.
Speaker Change: A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release.
Brian Posner: Cash, cash equivalents, marketable securities, and restricted cash at June 30th, 2024 totaled approximately $14.5 million as compared to approximately $10.6 million as of December 31st, 2023. In June 2024, the company raised net proceeds of approximately $9 million through a registered direct offering and concurrent private placements priced at the market under NASDAQ rules.
Speaker Change: Cash cash equivalents marketable securities and restricted cash at June 30 of 2024 totaled approximately $14 $5 million as compared to approximately $10 $6 million as of December 31 2023 in.
Dan Goldberger: In June 2024, the company raised net proceeds of approximately $9 billion through a registered direct offering and concurrent private placements priced at the market under NASDAQ rules and now I'll turn the call back over to Dan.
Daniel Goldberger: And now, I'll turn the call back over to Dan.
Dan Goldberger: Thank you Brian.
Dan Goldberger: I am incredibly proud of our continually growing revenue and the operating leverage we're seeing in the business, our operating metrics, especially revenue and gross margin continue to beat internal expectations.
Dan Goldberger: And I'm very enthusiastic about the company's long term prospects across all brands and product lines.
Daniel 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. Our FSS contract has been extended to September 14, 2024, and we continue working with our VA contract specialists to secure a new follow-on contract.
Speaker Change: Demand for our prescription gamma for therapy in the VA channel continues to grow based on clinical performance and our increased presence in the field. Our FSS contract has been extended to September 14th 2024, and we continue working with our V. A contract specialists to secure a new follow on contract.
Dan Goldberger: We have approximately 40 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.
Speaker Change: This hybrid structure is very scalable as we deploy prescription gamba core around the country.
Daniel Goldberger: The Trivega Plus launch has been favorably received by the market. We're selling Truvega products through our e-commerce site, www.truvega.com, and we will explore expanding the Truvega proposition through new product offerings and new channels to increase the lifetime value of each customer as we go forward. Longer term, we continue to 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.
Speaker Change: The true Vega plus launch has been favorably received by the market.
Speaker Change: The brand continues to show tons of potential as a direct to consumer general wellness offering.
Speaker Change: We're selling through Vega products through our E Commerce site Triple W. Dot true Vega Dot com and we will explore expanding the true Vega proposition through new product offerings, and new channels to increase the lifetime value of each customer as we go forward.
Speaker Change: The pipeline of interest from different branches of our active duty military continues to develop for our Taksim products Q2, 'twenty 'twenty four sales attached to them were impacted by the timing of the launch of our new handset and should resume in the back half of the year, we expect the tax and revenue will be hard to predict.
Speaker Change: The short term as axis duty units evaluate and purchase involved for pilot deployment.
Speaker Change: Longer term, we continue to 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.
Daniel Goldberger: During the second quarter of 2024, our sales and marketing expense increased by approximately $286,000 over the second quarter of 2023, while sales grew by $2.6 million. Most of the top line revenue growth of $2.6 million dropped to the bottom line as our net loss declined by $2.2 million, signaling real leverage in the P&L. Further out, we're working towards establishing additional indications for prescription gamma core to treat post-traumatic stress disorder, opioid use disorder, and other clinical operations.
Speaker Change: During the second quarter of 2024, our sales and marketing expense increased by approximately $286000 over the second quarter of 2023.
Speaker Change: Sales grew by $2 $6 million.
Speaker Change: Most of the topline revenue growth of $2.6 million drop to the bottom line is our net loss declined by $2 $2 million signaling real leverage in the P&L.
Speaker Change: Further out we are working towards establishing additional indications for prescription gamma core to treat post traumatic stress disorder opioid use disorder and other clinical opportunities.
Daniel Goldberger: In June 2024, we raised net proceeds of approximately $9 million through a registered direct offering and concurrent private placements priced at the market under NASDAQ rules. We had $14.5 million of cash equivalents as of June 30, 2024, and we will maintain discipline around fixed operating costs. We expect that commissions and media spend will scale with revenues, and we model approximately 30% of related sales on a blended basis. Therefore, we expect that our cash used will continue to decline sequentially as revenue increases. In summary, I believe the business is demonstrating operating leverage, and we will have a variety of levers to pull to continue growing the business. Thank you.
Speaker Change: In June 2024, we raised net proceeds of approximately $9 million through a registered direct offering and concurrent private placements priced aftermarket under NASDAQ rules.
Speaker Change: We had 14 and a half million dollars of cash and equivalents at June 32024, and we will maintain discipline around fixed operating expenses.
Speaker Change: We expect that commissions and media spend scaled with revenues and we model approximately 30% of related sales on a blended basis there.
Speaker Change: Therefore, we expect that our cash use will continue to decline sequentially as revenue increases.
Speaker Change: In summary, I believe the business is demonstrating operating leverage and you will have a variety of levers to pull to continue growing the business I'm confident that we can generate positive cash flow early next year with the financial resources on our balance sheet at June 30th 2024.
Speaker Change: At this time I'll turn the call over to the operator operator, please open the line for questions.
Operator: Thank you. We will now be conducting the question and answer session. If you would like to ask a question, please press star then 1 on your telephone keypad. We will just pause for a moment to allow questioners to enter the queue.
Speaker Change: Thank you we will now be conducting the question and answer session.
Speaker Change: He would like to ask a question. Please press Star then one on your telephone keypad.
Speaker Change: If you would like to turn to your questions on the queue. Please press Star then two.
Speaker Change: We will just pause for a moment to allow question nice to enter the queue.
Speaker Change: Yep.
Speaker Change: Your first question comes from Jeffrey Cohen with Ladenburg Thalmann.
Jeffrey Cohen: Hey, Dan and Colin how are you.
Jeff: Hi, Jeff.
Jeffrey Cohen: Okay. So I've got a bunch of Soma short, though.
Speaker Change: Sure It's outstanding where we are currently as far as a good number seven point award.
Speaker Change: We have 4.6 million outstanding and then about another $1 billion six a pre funded warrants that get into the go into the EPS calculation.
Speaker Change: If so what do you use this quarter silver little falls.
Unidentified Speaker: Yeah, for this quarter, uh... was an average of 7 million, 7-0-4-6.
Speaker Change: Yeah for this quarter.
Speaker Change: On the table.
Speaker Change: Alrighty.
Speaker Change: It was an average of 77046.
Unidentified Speaker: That reflects the Judenreich cell. That's correct.
Speaker Change: That reflects the are the children rational.
Speaker Change: That's correct.
Speaker Change: Hum.
Speaker Change: Okay got it so thanks for that.
Speaker Change: Well I have you on board.
Speaker Change: What was the cash loss for the quarter, our golf the adjustment number one point on that the cab 2.7, what was the cash number.
Unidentified Speaker: The cash used from operations was about a little bit under a million dollars.
Speaker Change: Cash used from operations was about a little bit under a millionaire.
Speaker Change: Yeah.
Speaker Change: Okay.
Unidentified Speaker: Fantastic. Okay, so a couple other questions. I guess I wanted to get a little more device-related. So the second-gen text in black that I saw, Dan, that's going to be back half stronger than front half, perhaps sequentially based but probably lumpy and a bit shy of what we previously thought. That's more like, I don't know, one million, one and a half million for a year, maybe.
Speaker Change: Fantastic. Okay. So couple other question Luca so long its getting a little more.
Speaker Change: Sure.
Speaker Change: The second thing to do.
Speaker Change: In block.
Speaker Change: Our assault and that's gonna be backhaul stronger than from Hall.
Speaker Change: Perhaps sequentially days, but probably lumpy and a bit shy of what we previously thought but it's more like.
Speaker Change: I dunno, one or one and a half million for your movie.
Unidentified Speaker: I've got visibility to at least that number.
Speaker Change: That's ive got visibility to at least that number.
Speaker Change: Yeah.
Speaker Change: Deliveries this quarter.
Speaker Change: We're held back waiting for the official launch of a new generation.
Speaker Change: Ration.
Speaker Change: So.
Speaker Change: Those are good numbers for walking around with and it'll be we have a large commitment in the fourth quarter for delivery in October so pretty comfortable with the range, which you have.
Speaker Change: Got it okay.
Carol McCoy: Can you talk little bit about ex U S. We've heard a lot about who you are and it shows in the UK with Carol Mccoy, but other territories arbitrary choice prescription wars as well as other territories to tissue was.
Unidentified Speaker: So yeah, UK. 4, 5, 6% range. It's a steady-eddy kind of a business. And we do not have visibility on other geographies getting into reimbursement at this point in time. So, other geographies are more of a 2025 story.
Speaker Change: So, yes U K, we have expectations that it will continue to grow sort of mid single digits and.
Speaker Change: Four or five 6% range its a steady Eddie.
Speaker Change: Kind of the business and we do not have visibility on other geographies getting into reimbursement at this point in time. So other geographies are more of a 2025 story.
Speaker Change: Okay got it and and currently commercial was the <unk>.
Speaker Change: Very good versus the plus the differential is.
Speaker Change: Uh huh.
Speaker Change: 352 minutes sessions on the regular true big.
Speaker Change: And.
Unidentified Speaker: The True Vega Plus, which is
Speaker Change: The true Vega, plus which is.
Speaker Change: I'm limited with defense through different colored cops available.
Speaker Change: Correct.
Speaker Change: Excellent.
Andre: Ashley I'm Andre that's.
Speaker Change: That's exactly how our marketing folks would like you to describe it.
Speaker Change: Yeah, I wasn't sure if I wanted to paint with a green one but I went for the.
Andre: So much transition charcoal color.
Speaker Change: Okay.
Speaker Change: Okay.
Speaker Change: Yeah. So.
Speaker Change: U S parish in the case of a.
Speaker Change: Description focus I know youre working on joint seat because it feels like more U S payers can come around to be able to your point.
Speaker Change: Perhaps not occur as well where in another sure yeah. It works really well for some large amount of payers being covered.
Speaker Change: So we're really focused on on getting traction and penetration.
Speaker Change: In the journeys managed care relationships and we think that's going to be an excellent.
Speaker Change: Benchmark or reference case for the more traditional national and regional payers.
Speaker Change: We do have had some small payer wins.
Speaker Change: The regional payers some of the Blue Cross the blues and.
Speaker Change: Local geographies, but we're really with a small team we're focused on on making the journey managed care relationship really jump out later this year.
Daniel Goldberger: Got it. And then lastly, talk about those two papers, one on stroke, one on gait, the second one's in the UK. The first one's where and when will we see that, and we'll be at a conference.
Speaker Change: And then lastly talk about those two papers one on stroke one on gate.
Speaker Change: The ones in the UK, the first ones, where and when will we see there.
Speaker Change: We will be able to call for <unk>.
Daniel Goldberger: So, yeah, the stroke trial is being done in Leiden in the Netherlands and was fully enrolled in the first quarter of this year, and these are both investigator-initiated trials, so we have no influence on the timing of when the data is going to be available. They're both European trials, one in the UK and one in the Netherlands, and you know better than I do that academics take the summer off, so it's been a little bit frustrating getting any communication from them in the short run, but I'm looking forward to being able to speak more clearly about the top-line data both at the end of the year.
Speaker Change: So yes, so the this the stroke.
Speaker Change: The stroke trial is being done in lighting in the Netherlands.
Speaker Change: And was fully enrolled in the first quarter of this year and these are both investigator initiated trials, we have no influence on the timing of when that data is going to be available.
Speaker Change: They are both European trials, one in the U K, one in Netherlands, and you know.
Speaker Change: Better than I do that academics take the summer off so it's been a little bit frustrating getting any communication from them in the short run, but I'm looking forward to that.
Speaker Change: Being able to speak more clearly about the top line data by the end of the year.
Speaker Change: Okay perfect. Thanks for taking all my questions I appreciate it.
Speaker Change: Of course, Geoffrey Thanks for your support.
Speaker Change: Your next question comes from Anthony Vendetti with Maxim Group.
Anthony Vendetti: Thank you.
Dan Goldberger: So Dan too so.
Daniel Goldberger: And, you know, the commercial payers. I know that's the..., something you're working on. I know that it takes time, as we know, but maybe just an update on where you are with some of them.
Anthony Vendetti: And the commercial payers I know thats, something youre working on and I know that's a it takes time as we know, but maybe just an update on where you are with some of them in and.
Speaker Change: What the expectation is for the rest of this year and 25.
Daniel Goldberger: Yeah, so you know, the VA hospital system is fully integrated. We went on formulary in January of this year, and it's really now more of a develop clinical champions and get penetration within the system than it is getting payers. So that's what our field sales team is focused on right now, demonstrating clinical adoption and driving penetration of that healthcare system. And, similar to Mr. Cohen's question, we really want to demonstrate that we can grow the business before we start directing resources to some of the other more traditional national payers in 2025.
Speaker Change: Yeah. So the VA hospital system is fully.
Anthony Vendetti: Reimbursed.
Speaker Change: For veterans that are covered by the VA Hospital system.
Speaker Change: And the Germans managed care system, which is a larger as measured by covered lives.
Speaker Change: We went on formulary in January of this year, and it's really now more of a.
Anthony Vendetti: Develop clinical champions and get penetration within the system.
Anthony Vendetti: Then it is getting payers. So that's what our our field sales team is focused on right now is demonstrating.
Anthony Vendetti: Clinical adoption and and driving penetration of that health care system and.
Speaker Change: Similarly to Mr. Collins question.
Anthony Vendetti: We really wanted to demonstrate that.
Anthony Vendetti: So that we can grow the business.
Anthony Vendetti: Before we start directing resources to some of the other more traditional national payers in 2025.
Anthony Vendetti: Okay.
Speaker Change: Makes sense and then.
Anthony Vendetti: Would you attribute the the.
Anthony Vendetti: Year over year decline in tax stemmed to the.
Speaker Change: Maybe anticipation of commercial launch of the next generation Texan Yeah.
Speaker Change: That's exactly what I was trying to say is that.
Speaker Change: The.
Speaker Change: Air Force and Army are very we're very aware very closely involved in the development of a new version of tax them and so all of those orders were deferred until we can reliably supply.
Speaker Change: The new heavier black a handset.
Speaker Change: Okay. It makes sense and then and then lastly, just I know theres a number of potential applications for the gamba core.
Speaker Change: What is the next one you intend to.
Speaker Change: Hone in on and focus.
Speaker Change: The $10 million.
Speaker Change: Yes, so PTSD, we announced breakthrough designation.
Speaker Change: A few years ago, we've been working with the agency on.
Speaker Change: On the path forward to get a specific indication for PTSD.
Speaker Change: Substance abuse.
Daniel Goldberger: There's a pivotal trial that's being sponsored by NIDA, the National Institute on Drug Abuse, that is enrolling patients and will read out at the beginning of next year. So those will be the next two sort of categories of label extensions that we're looking for for phagosimulation.
Speaker Change: Theres a pivotal trial, that's being sponsored by National Institute on drug abuse.
Speaker Change: That is enrolling patients and will read out in the beginning of next year. So those will be the next two years.
Speaker Change: Sort of categories of label extension is that we're looking for for vagus nerve stimulation.
Speaker Change: Perfect great. Thank you so much I'll hop back in the queue I appreciate it.
Anthony Vendetti: Thanks Anthony.
Speaker Change: Yeah.
Speaker Change: Your next question comes from Sean Lee with H C Wainwright.
Sean: Hi. Good afternoon. This is Sean standing for RK. Thanks for taking my questions. Of course. Hi, Sean. So, with VA still being your biggest customer and the U.S. federal fiscal year coming up soon, I was wondering if you could elaborate a bit more on the contract extensions and how that's going on. Should we expect any changes for next year? Are there any extensions that you could go into? Thanks.
Speaker Change: Hi, Good afternoon. This is Sean standing in for RK.
Speaker Change: Thanks for taking our question Shaun.
Sean: Hi, guys.
Speaker Change: So with the VA still being your biggest customer.
Speaker Change: U S federal fiscal year coming up soon and I was wondering if you could elaborate a bit more on the contract extension and how thats going on.
Speaker Change: Should we expect any changes for next year are there any expansions that you could go into thanks.
Daniel Goldberger: So yeah, we're working with the contract agent to get a new five-year deal.
Speaker Change: So yes, so we're working with a contract agent to get.
Sean: A new five year SaaS contract are there that office.
Speaker Change: Has just been slow.
Speaker Change: And as a result of that.
Speaker Change: They're back up they've been giving us these three month extensions, which is frustrating, but it doesn't impact our business on a regular basis, we do expect to get a small pricing.
Speaker Change: Price increase through that process.
Speaker Change: A larger percentage of our business is going through level.
Speaker Change: Where the economics are slightly more favorable level.
Speaker Change: I recall it is a a small.
Speaker Change: A service disabled veteran owned small business.
Speaker Change: You know they they did 13% of our VA hospital business in the first quarter. They did 27% of a larger number in the second quarter and we're perfectly comfortable moving a larger portion of the business. So they're contracting mechanism.
Speaker Change: And having multiple channels to be able to service that customer.
Speaker Change: Yeah.
Speaker Change: Okay. Thanks for that and my second question is on the.
Speaker Change: In your prepared remarks, you mentioned the effectiveness of vagus nerve stimulation for accelerating language learning just wondering is that something that's.
Speaker Change: Specific to Taxane or is that also applicable to <unk> and do you have any plans to market towards that.
Speaker Change: Yeah.
Unidentified Speaker: So the trial was done with GammaCore headsets.
Speaker Change: So the trial was done with Gamma court handsets.
Speaker Change: So and then it was funded by the department of Defense.
Speaker Change: The clinical results are absolutely transferred to tax them and could probably be inferred for true Vega, but the true Vega delivers a lower.
Speaker Change: A lower dose so you would need more sessions with true Vega T.
Speaker Change: To get the same.
Speaker Change: Mental acuity benefits, but the more general comment is yes, it's a fundamental.
Speaker Change: The the learning advantage the cognitive enhancement is fundamental to the way this vagus nerve stimulation works.
Speaker Change: And should be applicable across our product lines.
Unidentified Speaker: Okay, great. And that's all I have. Thanks for taking my questions.
Speaker Change: Great. Thanks for taking my questions.
Speaker Change: Of course.
Tyler Bussian: Your next question comes from Tyler Bussian with Bookline Capital Markets.
Speaker Change: Your next question comes from Tyler <unk> with Brookline capital markets.
Tyler: Hey, Brendan did you hear me okay.
Speaker Change: Yes.
Unidentified Speaker: Okay, fantastic.
Speaker Change: Oh, okay. Okay.
Tyler: Thanks for taking my questions I've got two quick ones for you I don't know if I missed it during the presentation. A lot do you happen to have an updated V. A D O D facility count for this quarter.
Speaker Change: Okay.
Speaker Change: The the number that we reported on the prepared remarks was 160.
Speaker Change: Okay 60.
Speaker Change: And my second quick question for yourself.
Speaker Change: Language learning data was there it was very interesting I noticed on clinical trials Gov. There were a few new indications that have popped up from independent investigators are amyloid clearance.
Speaker Change: Or supplement clearance and then also the V. A running looks like alcohol use disorder trials do you have any comments on those type of those new kind of indications are.
Speaker Change: Studies, yes.
Speaker Change: Yes so.
Speaker Change: The the alcohol.
Speaker Change: Is a spin out of the work that's being done on opioid use that night is supporting and the pilot results are very compelling.
Speaker Change: These are all investigator initiated trials, so we're not necessarily privy to.
Speaker Change: You too to the structure of the trial.
Speaker Change: And in many cases, where we're actually.
Speaker Change: Selling handsets.
Speaker Change: To the investigators who have independent funding. So we don't have a lot of input, but we love the research interest and it all adds to the body of knowledge.
Speaker Change: Around vagus nerve stimulation and could lead to future indications.
Speaker Change: Right well. Thank you guys very much appreciate the time.
Unidentified Speaker: Get it? Thanks.
Speaker Change: Yes. Thanks.
Speaker Change: Yeah.
Walter Schenker: Your next question comes from Walter Schenker with Mavpartner.
Speaker Change: Your next question comes from Walter Schenker with MAZ partners.
Speaker Change: Sir your line is open.
Walter Schenker: Yes, if I take myself off mute it works better than if I leave the mute button on.
Walter Schenker: I guess if I take myself off the mute, it works better than if I leave the mute button on. Okay. We hear you better now, Walter. How are you? Okay, well, I'm good. And my plug on the thing, my wife is good, too, as an enthusiastic user of the device. We both are. I've got my brother-in-law and a whole bunch of people.
Walter Schenker: We hear you better now how are you, okay, well I'm good.
Speaker Change: My plug on the thing my wife is good too has an enthusiastic user of the device. We both are my brother in law, but a whole bunch of people.
Speaker Change: Oh, great. It would be correct that the majority of the dollars raised in the recent equity raise was raised from people who are either in management or in some way affiliated with the company.
Unidentified Speaker: Absolutely, directors and officers.
Speaker Change: Absolutely, Yeah directors and officers.
Speaker Change: Right.
Speaker Change: So they put in $5 million of annoying correct.
Unidentified Speaker: More than that, I know it's morphine.
Speaker Change: More than that.
Speaker Change: To close I know it's changed.
Speaker Change: Yeah, Okay. Okay.
Speaker Change: Worth pointing out to people that are unusually long result for a small company.
Speaker Change: Hum.
Speaker Change: Not a setup question.
Speaker Change: It's frustrating to me as an investor given.
Speaker Change: All of the interest in the VA system the additional research.
Speaker Change: The fact that they are the people who have done most of the work on the PTSD.
Speaker Change: And you've indicated although there's no hard data.
Speaker Change: There is some degree of use off label beyond headaches.
Speaker Change: Well with penetration in the headache area or broadly in the VA system is so low.
Speaker Change: Is there a partner or something I know.
Speaker Change: What level is really.
Speaker Change: The game I guess is there some way except hospital by hospital region by region to get.
Speaker Change: A real step up in penetration given I was.
Speaker Change: A few of the hospitals. Therefore was taught me a room.
Daniel Goldberger: Yeah. Look, Walter. That's a great observation.
Speaker Change: Yeah look it's a great observation.
Speaker Change: I do think and if you talk to our sales leadership that we're starting to see a bit of a tipping point.
Daniel Goldberger: I do think, and if you talk to our sales leadership, that we're starting to see a bit of a tipping point where there's good recognition and awareness that the technology is available for headaches and is available for some of these behavioral health indications off-label. And I think you're going to start to see that penetration accelerate as we roll into 2025. We're always open to partnerships.
Speaker Change: Where ah theres good.
Speaker Change: Recognition awareness are that the technology is available for headache and is available for some of these behavioral health indications off label.
Speaker Change: And I think youre going to start to see that penetration accelerating.
Speaker Change: Accelerating as we roll into 2025.
Speaker Change: We're always open to partnerships.
Speaker Change: Where we are.
Speaker Change: Add a variety of conversations but nothing that's close.
Speaker Change: Close enough to it to really start to brag about.
Speaker Change: Okay, and lastly, again, a comment I made this to you, but I want to make it again.
Speaker Change: Especially for the true very good plus.
Speaker Change: And you mentioned this.
Speaker Change: More is better and using vagus nerve.
Speaker Change: Technology and vagus nerve stimulation.
Walter Schenker: And that two minutes twice a day is not as good as four minutes twice a day, or four minutes three times, or four times a day, which is what my wife does. And I think it's useful and important.
Speaker Change: And that absolutely minutes twice a day is not as good as four minutes twice a day or four minutes three times to four times a day with told my wife does.
Speaker Change: And I think it's useful and important.
Speaker Change: Even on the site or broadly victim to continue to explain and try and inform people, but if you use it more it enhances even going back to learning, where you said because the people in the trial use higher levels of simulation.
Speaker Change: Get to the same place you'd have to use you know the consumer product more time, there really needs to be a greater.
Speaker Change: Push by the company.
Walter Schenker: More is better.
Walter Schenker: As opposed to just, you know, again, two minutes twice a day is not really a great place to be. You should be using it more.
Joanne: As opposed to Joanne to two minutes twice a day.
Speaker Change: It's not really a great.
Speaker Change: He used to be you should be using it more.
Daniel Goldberger: You're absolutely right. I think you'll start to see that in our marketing and advertising or promotional information, especially when you're looking at wellness or quality of sleep. You're absolutely right, Walter. All of the data shows that more sessions leads to better outcomes, but of course, you have to trade off convenience for the consumer and end user, how much time they're willing to devote to getting those general wellness benefits. In my personal experience, I do it quite frequently, especially on a stressful day like today.
Speaker Change: At your Youre, absolutely right I think youll start to see that.
Speaker Change: In our in our marketing.
Speaker Change: And advertising or promotional information, especially when youre looking at the wellness.
Speaker Change: Opportunities are for mental acuity for focus.
Speaker Change: Or quality of sleep, you're absolutely right Walter all of the data shows that more sessions leads to better outcomes and but of course, you have to trade off the convenience for the consumer end user how much.
Speaker Change: How much time, they are willing to devote to getting those those general wellness benefits, but.
Speaker Change: In my personal experience I do it quite frankly, especially on a stressful day like today.
Walter Schenker: And it's easy enough to use, watching TV, looking at your computer, doing other stuff with your hands. You don't need your hands while you're doing it. Just sitting there and doing it is pretty easy.
Dan Goldberger: And it's easy enough to use watching T V. Looking at your computer or doing others thought that your hands don't need your hands, while you're doing it just to sit there and do its pretty easy Okay. My dad cylinder. Thank you Dan.
Speaker Change: Thank you. We appreciate your walls here have a great day.
Speaker Change: Okay.
Speaker Change: There are no further questions at this time I would like to turn the call back over to Dan Goldberger for any closing comments.
Daniel Goldberger: Thank you, operator, and thank you all for joining today's call. The team's done a great job of staying nimble, scaling the business, creating operating leverage, and responding to the needs of our customers. I also want to thank healthcare professionals and their patients for their loyal support of GammaCore therapy, and consumers for adopting our Truvega product for general wellness. Thank you all, and have a good evening.
Dan Goldberger: Thank you operator, and thank you all for joining today's call.
Speaker Change: Our employees are working tirelessly to deliver products and therapies that improve the health and wellness with patients and customers and.
Speaker Change: The team's done a great job of staying nimble scaling the business, creating operating leverage and responding to the needs of our customers.
Speaker Change: I want to thank the health care professionals and their patients for their loyal support of Gamma court therapy and consumers for adopting our true Vega products for general wellness. Thank you all and have a good evening.
Speaker Change: That does conclude today's conference you may disconnect. Your lines at this time. Thank you for your participation.
Speaker Change: Yeah.
Speaker Change: Yes.
Speaker Change: [music].
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Speaker Change: Uh huh.
Daniel Goldberger: Okay.
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Walter Schenker: Okay.
Speaker Change: Yes.
Daniel Goldberger: Okay.
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Daniel Goldberger: [music].
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Daniel Goldberger: Yes.
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Speaker Change: Uh huh.
Daniel Goldberger: Okay.
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Daniel Goldberger: Mhm.
Daniel Goldberger: Yeah.
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Daniel Goldberger: Yes.
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Speaker Change: Uh huh.
Daniel Goldberger: Yes.
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Daniel Goldberger: Okay.
Daniel Goldberger: Okay.
Daniel Goldberger: Yes.
Daniel Goldberger: Okay.