Q2 2024 NeurAxis Inc Earnings Call

Speaker Change: Good day and thank you for standing by. Welcome to NeurAxis Report's second quarter 2024 financial results.

Speaker Change: At this time, all participants are in a listen-only mode.

Speaker Change: After the speaker's presentation, there will be a question and answer session.

Speaker Change: To ask a question during the session, you need to press star 1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised, today's conference is being recorded. I would like to hand the conference over to your speaker today, Vin Chambers saying you may begin.

Operator: Next 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 will need to press star-one-one on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star-one-one again. Please be advised that today's conference is being recorded. I would like to hand the conference over to your speaker today, Ben Shamsay, and you may begin.

Ben Shamsay: Good morning, everyone, and thank you for joining us for NeurAxis' second quarter 2024 Financial Results and Corporate Update Conference. Joining us on today's call is Brian Carrico, CEO of NeurAxis, and Tim Hendrix, CFO of NeurAxis.

Vin Chambers: Good morning everyone and thank you for joining us for NeurAxis' second quarter 2024 financial results and corporate update conference call.

Speaker Change: Joining us on today's call is Brian Carrico, CEO of NeurAxis, and Tim Hendricks, CFO of NeurAxis.

Ben Shamsay: 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 a question to nrxs at lyttonpartners.com. If you are dialed into a live call and would like to ask a question, you can follow the instructions provided by the operator by pressing star and one one button.

Speaker Change: At the conclusion of today's prepared remarks, we will open the call to questions.

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 emailing a question to nrxs at lithiumpartners.com.

Speaker Change: If you are dialed into the live call and would like to ask a question, you can follow the instructions provided by the operator by pressing star and one one button.

Ben Shamsay: Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd 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.

Speaker Change: Finally, I would like to call your attention to the customary Safe Harbor disclosures.

Speaker Change: 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.

Speaker Change: 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 Shamsay: 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.

Speaker Change: Time-sensitive information may no longer be accurate at the time of any telephonic 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 company's filings with the SEC.

Ben Shamsay: NeurAxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would now like to turn the event over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Brian Carrico: NeurAxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would now like to turn the event over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian , please proceed.

Brian Carrico: Thank you, Ben. Good morning, and thank you for attending the second quarter 2024 earnings call. During today's call, I will highlight the many recent accomplishments in our revolutionary neuromodulation technology commercialization strategy. We will discuss the milestones and growth plans for 2024 and into 2025 as we continue the strong execution of the commercialization of our market-leading PENFS technology. Following my remarks, Tim Hendricks, our CFO, will review our financial results for the second quarter of 2024.

Brian Carrico: Thank you, Ben. Good morning, and thank you for attending the second quarter 2024 earnings call.

Brian Carrico: During today's call, I will highlight the many recent accomplishments in our revolutionary neuromodulation technology commercialization strategy.

Brian Carrico: We will discuss the milestones and growth plans for 2024 and into 2025 as we continue the strong execution of the commercialization of our market-leading PENFS technology.

Tim Hendricks: Following my remarks, Tim Hendricks, our CFO , will review our financial results for the second quarter 2024.

Brian Carrico: First, we're going to review recent achievements and milestones. We are continuing to execute at a high level on our growth objectives, rooted in the foundation that strong published data will drive insurance expansion, leading to sustainable revenues and margins. We laid out these objectives in previous calls and are coming off another very successful quarter where we continue to put the final pieces in place to allow blanket insurance coverage and, in turn, the scaling of PENFS revenue.

Tim Hendricks: First, we're going to review the recent achievements and milestones.

Tim Hendricks: We are continuing to execute at a high level on our growth objectives, rooted in the foundation that strong published data will drive insurance expansion, leading to sustainable revenues and margins.

Tim Hendricks: We laid out these objectives in previous calls and are coming off another very successful quarter where we continue to put the final pieces in place to allow blanket insurance coverage and, in turn, the scaling of PENFS revenues.

Brian Carrico: In recent months, we have made significant achievements as we advanced and hit milestones, forging a clear path to profitability in 2025. Regarding IV-STEM, we are primarily focused on revenue trajectory, and we had a significant change from Q1 to Q2 as new insurance policy coverage is taking effect and some of the issues from Q1 are resolving.

Tim Hendricks: In recent months, we have made significant achievements as we advanced and hit milestones, forging a clear path to profitability in 2025. Regarding IV-STEM, we are primarily focused on revenue trajectory.

Tim Hendricks: And we had a significant change from Q1 to Q2 as new insurance policy coverage is taking effect and some of the issues from Q1 are residing.

Brian Carrico: Further to that point, we are very optimistic, based on the strong first month of Q3, that real revenue growth is taking hold based on the continued adoption of insurance policy coverage. As we all know, the scientific community has accepted our flagship technology, but has been hindered by a lack of written insurance policy coverage. The largest payers have been waiting for the Academic Society to publish guidelines for functional abdominal pain associated with IVF.

Tim Hendricks: Further to that point, we are very optimistic, based on the strong first month of Q3, that real revenue growth is taking hold based on the continued adoption of the insurance policy coverage.

Tim Hendricks: As we all know, the scientific community has accepted our flagship technology, but has been hindered by a lack of written insurance policy coverage.

Tim Hendricks: The largest payers have been waiting on the Academic Society to publish guidelines.

Brian Carrico: The most important recognition any technology can receive, any medtech technology can receive, is independent guidelines by the Academic Society because this is an independent review of the literature, and a grade is assigned, which payers accept as the standard. We are thrilled to announce a systematic review by the Academic Society, NASPAGN, was released at a conference in late May, showing our technology has the highest grade certainty level and the largest magnitude effect. NASTIGAN, as mentioned in earlier calls, is the North American Society for Pediatric Gastroenterology, Hepatology, and Nutrition, and they are the academic society for pediatric gastroenterology where our technology resides.

Speaker Change: for functional abdominal pain associated with IVF. The most important recognition any technology can receive, any med tech technology can receive, is independent guidelines by the academic society because this is an independent review of the literature and a grade is assigned, which the payers accept as the standard.

Speaker Change: We are thrilled to announce the systematic review by the Academic Society, NASPGN, was released at a conference in late May, showing our technology has the highest grade certainty level and the largest magnitude effect.

Speaker Change: NASTGN, as mentioned in earlier calls, is the North American Society for Pediatric Gastroenterology, Hepatology, and Nutrition.

Speaker Change: and they are the Academic Society for Pediatric Gastroenterology where our technology resides.

Brian Carrico: This systematic review is not published guidelines, but we believe this information is the work being used to publish guidelines in the coming months. That's important because we have been told by the largest payers that this publication is an internal mandate for policy coverage. So we are eagerly waiting for this publication to get to the payers. Now, dealing with insurance policy coverage, I want to go into detail about the most important aspect of our growth.

Speaker Change: This systematic review is not published guidelines, but we believe this information is the work being used to publish guidelines in the coming months.

Speaker Change: That's important because we have been told by multiple, by the largest payers, that this publication is an internal mandate for policy coverage. So we are eagerly waiting for this publication to get to the payers.

Speaker Change: Sticking with insurance policy coverage, I want to go into detail about the most important aspect of our growth. As we stated, late in 23 and early in 24, written policy coverage is the key to revenue exponentially increasing.

Brian Carrico: As we stated, late in 2023 and early in 2024, written policy coverage is the key to revenue and exponentially increasing. We also stated that once the insurance policy coverage is written and in place, it takes 90 to 120 days for the children's hospital to get the technology loaded, their process is in place, and begin ordering. One example of this is the CARE First Blue Cross Blue Shield policy that took effect in the Washington, D.C., and Maryland areas on January 1st of this year.

Speaker Change: We also stated that once the insurance policy coverage is written and in place, it takes 90 to 120 days for the children's hospital to get the technology loaded, their process is in place, and begin ordering.

Speaker Change: One example of this is the CARE First Blue Cross Blue Shield policy that took effect in the Washington, D.C. and Maryland areas on January 1st of this year.

Brian Carrico: The two primary children's hospitals in that coverage area began ordering in May, increased orders in June, and increased again in July, showing how this process works. With all of that said, I am happy to announce that we have received written confirmation from one of the nation's largest not-for-profit health plans, serving 12.6 members, that they have approved IV stem cell therapy for all pediatric gastroenterologists nationally, and we expect that to take effect around October 1st.

Speaker Change: The two primary children's hospitals in that coverage area began ordering in May, increased orders in June , and increased again in July , showing how this process works.

Speaker Change: With all of that said, I am happy to announce that we have received written confirmation from one of the nation's largest not-for-profit health plans serving 12.6 members that they have approved IV stem for all pediatric gastroenterologists nationally And we expect that to take effect around October 1st

Brian Carrico: We do not yet see written policy coverage in the public domain, so we will technically keep our total lives at 22.5 million versus 4.5 million at the same time last year. But as soon as this policy becomes public, our covered lives will officially be 35.1 million. Covered lies.

Speaker Change: We do not yet see written policy coverage in the public domain, so we will technically keep our total lives at 22.5 million versus 4.5 million at the same time last year. But as soon as this policy becomes public, our covered lives will officially be 35.1 million.

Brian Carrico: In addition to this announcement, we have roughly 15 payers in the review process. Assuming even a few of those payers make positive decisions this fall, we will exceed the 50 million covered lives number we projected early in 2024. Turning data into policy and then into revenue is a process that we believe is beginning to work well, and the expected Academic Society guidelines will only expedite that process. In addition, we have submitted an application for a Category 1 CPT code, which will allow for more seamless billing and reimbursement.

Speaker Change: Covered live.

Speaker Change: In addition to this announcement, we have roughly 15 payers in the review process. Assuming even a few of those payers make positive decisions this fall, we will exceed the 50 million covered lives number we projected early in 2024.

Speaker Change: Turning data into policy and then into revenue is a process that we believe is beginning to work well and the expected Academic Society guidelines will only expedite that process.

Speaker Change: In addition, we have submitted an application for a Category 1 CPT code, which will allow for more seamless billing and reimbursement.

Brian Carrico: Furthermore, we made a submission to the FDA for the expansion of our IV stem label to include a patient population beyond the current 11 to 18 years old to 8 to 21 years old, which would nearly double the number of children we can treat. We're cautiously optimistic that the FDA will clear that age expansion later in 2024. Regarding RED, or the rectal expulsion device, our point-of-care device that identifies patients with pelvic floor dysfunction and provides immediately actionable test results in patients with chronic constipation, is licensed from the University of Michigan.

Speaker Change: Furthermore, we made a submission to the FDA for the expansion of our IV stem label to include a patient population beyond the current 11 to 18 years old to 8 to 21 years old, which would nearly double the number of children we can treat.

Speaker Change: We're cautiously optimistic that the FDA will clear that age expansion later in 2024.

Speaker Change: Regarding RED or rectal expulsion device, our point-of-care device that identifies patients with pelvic floor dysfunction and provides immediately actionable test results in patients with chronic constipation licensed from the University of Michigan.

Brian Carrico: We submitted an FDA 510K in early August, and we are optimistic we will begin commercialization in late 2024. And finally, we have closed the necessary financing with reputable health care funds, ensuring we are properly positioned to reach profitability. I will touch upon each of these areas in more detail throughout the call today, but I want to move to the focus on PENFS or IV STEM. I want to begin by highlighting the work we have done over the last five years to demonstrate and document the true efficacy of our therapy, which now includes 16 publications covering 10 different types of studies. This has resulted in the highest level of evidence available for functional abdominal pain in IVF in children.

Speaker Change: We submitted an FDA 510K in early August and we are optimistic we will begin commercialization in late 2024.

Speaker Change: And finally, we have closed the necessary financing with reputable health care funds, ensuring we are properly positioned to reach profitability. I will touch upon each of these areas in more detail throughout the call today.

Speaker Change: I want to move to the focus on PENFS or

Speaker Change: I want to begin by highlighting the work we have done over the last five years to demonstrate and document the true efficacy of our therapy, which now includes 16 publications covering 10 different types of studies.

Speaker Change: This has resulted in the highest level of evidence available for functional abdominal pain in IVFs in children. We at NeurAxis are very proud of this and believe it validates our optimism and expectations for IV STEM.

Brian Carrico: We at NeurAxis are very proud of this and believe it validates our optimism and expectations for IBC. I'm excited to say that the efforts we have put in are finally starting to bear fruit. Not only do we expect this abstract to change the guidelines, but we also expect it to significantly expand insurance coverage with the largest payers. We are beginning to see many of our achievements reflected in the numbers. The number of treated cases has increased to over 850 in the last 12 months, which represents just over one-tenth of one percent of the 600,000 debilitated children in the U.S. who suffer from IBS and are in strong need of IV stem cells.

Speaker Change: I'm excited to say that the efforts we have put in are finally starting to bear fruit. Not only do we expect this abstract to change the guidelines, but we also expect it to significantly expand insurance coverage with the largest payers.

Speaker Change: We are beginning to see many of our achievements reflected in the numbers. The number of treated cases has increased over 850 in the last 12 months which represents just over one-tenth of one percent.

Speaker Change: of the 600,000 debilitated children in the U.S. who suffer from IBS and are in strong need of IV stem.

Brian Carrico: Now I would like to focus on how all of this translates to revenue growth and why we expect revenue growth to accelerate in the second half of 2024 and beyond. I want to start by highlighting the sustained and increasing demand for IV stem cells. As you recall, revenue in Q1 was down 20% year-over-year and units were down 14%.

Speaker Change: Now I would like to focus on how all of this translates to revenue growth and why we expect revenue growth to accelerate in the second half of 2024 and beyond.

Speaker Change: I want to start by highlighting the

Speaker Change: If you recall, revenue in Q1 was down 20% year-over-year and units were down 14%. In the second quarter, we had a strong acceleration with year-over-year revenues declining by roughly 5% and total units increasing by a robust 16%.

Brian Carrico: In the second quarter, we had a strong acceleration with year-over-year revenues declining by roughly 5% and total units increasing by a robust 16%. The positive change here is insurance reimbursement, which has taken a strong turn for the positive as the vast majority of patients in desperate need of IV stem cells their insurance does not cover the product. These patients mostly forego the treatment altogether, but some purchase the devices through various financial assistance programs offered through our IV STEM guidance and patient support program.

Speaker Change: The positive change here is insurance reimbursement, which has taken a strong turn for the positive. There's a vast majority of patients in desperate need of IV stem. Their insurance does not cover the product.

Speaker Change: These patients mostly forego the treatment altogether, but some purchase the devices through various financial assistance programs offered through our IV stem guidance and patient support program.

Brian Carrico: A key point to add here is that the revenue loss from 2023 is from children's hospitals that need written policy coverage from large payers, which is not yet in place. The fact that we are alleviating those losses without these children's hospitals shows the growth in new and existing accounts. Once large payers write policy coverage, the children's hospitals on pause will begin ordering immediately, adding significant revenue. On average, selling prices for patients receiving IV stem cells through patient financial assistance are roughly 60 percent below our list price.

Speaker Change: A key point to add here is that the revenue loss from 2023

Speaker Change: It's from children's hospitals that need written policy coverage from large payers, which is not yet in place. The fact that we are alleviating those losses without these children's hospitals

Speaker Change: shows the growth in new and existing accounts. Once large payers write policy coverage, the children's hospitals on pause will begin ordering immediately, adding significant revenues.

Speaker Change: On average, selling prices for patients receiving IV stem through patient financial assistance are roughly 60% below our list price. The insurance barrier is causing us to leave significant dollars on the table.

Brian Carrico: The insurance barrier is causing us to leave significant dollars on the table. By our calculation, in the first half of 2024, we have left close to two million dollars on the table from just a very small number of children's hospitals, which is not just revenue but margin, and 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 continues to be clear.

Speaker Change: By our calculation, in the first half of 2024, we have left close to $2 million on the table from just a very small number of children's hospitals, which is not just revenue but margin.

Speaker Change: 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.

Brian Carrico: We believe that strong peer-reviewed publications and key society support from the likes of NASBIGINT and the American Academy of Pediatrics result in successful coverage from insurance companies, which results in strong revenue. From a proof-of-concept standpoint, we see children's hospitals with even some policy coverage translating into strong revenue. We have two examples of hospitals with moderate insurance policy coverage, and each is on pace to generate well over $500,000 in annual revenue in 2024, and many more are now growing in that direction.

Speaker Change: Our plan of action continues to be clear. We believe that strong peer-reviewed publications and key society support from the likes of NASPIG and the American Academy of Pediatrics result in successful coverage from insurance companies which result in strong revenues.

Speaker Change: From a proof-of-concept standpoint, we see the children's hospitals with even some policy coverage translating into strong revenue.

Speaker Change: We have two examples of hospitals with moderate insurance policy coverage.

Speaker Change: and each is on pace to generate.

Speaker Change: well over $500,000 in annual revenue in 2024.

Brian Carrico: When you think about 260 children's hospitals plus pediatricians' offices, you can understand why we are bullish on our revenue trajectory as policy coverage and coding become formal, and that is with only our first indication. We have several short-term focus opportunities, including insurance policy coverage, which is being successfully addressed, as mentioned earlier.

Speaker Change: and many more are now growing in that direction. When you think about 260 children's hospitals plus pediatricians' offices, you can understand why we are bullish on our revenue trajectory as policy coverage and coding become formal, and that is with only our first indication.

Speaker Change: We have several short-term focus opportunities, including insurance policy coverage, which is being successfully addressed, as mentioned earlier.

Brian Carrico: Continuing to grow our internal prior authorization team to reduce the work workload for clinic staff, which allows greater access for pediatric patients and ultimately assists in acquiring a permanent billing Regarding prior authorizations, we built and launched an internal prior authorization team in 2023 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 authorizations to us.

Speaker Change: Continuing to grow 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 billing code.

Speaker Change: Regarding prior authorizations, we built and launched an internal prior authorization team in 2023 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 transferred their prior authorizations to us. This program continues to grow monthly, and we believe that in time, most accounts will move their prior authorizations to the NeurAxis team.

Speaker Change: Regarding the billing codes, we have our own Category 3 CPT technology-specific billing code today.

Speaker Change: which is helpful but in some areas but can be challenging for children's hospitals when building their charges to bill insurance.

Speaker Change: This has caused a delay in treating patients even after written insurance policy coverage is in place. As mentioned earlier, we've submitted an application for obtaining a Category 1 CPT permanent billing code. Thank you. Thank you.

Brian Carrico: We expect revenue growth to accelerate meaningfully in the latter half of 2024 and into 2025 to profitability based on two catalysts, the continued gain of coverage from insurance companies for IV stem cell therapy and the commercialization of red. Demand for the product has never been stronger, but expanding insurance coverage is critical to growing revenue. While we have 22.5 million lives currently under coverage, many of them have been affected for less than 120 days.

Speaker Change: We expect revenue growth to accelerate meaningfully in the latter half of 2024 and into 2025 to profitability based on two catalysts, the continued gain of coverage from insurance companies for IV stem and the commercialization of red.

Speaker Change: Demand for the product has never been stronger, but expanding insurance coverage is critical to growing revenues. While we have 22.5 million lives currently under coverage, many of them have been affected for less than 120 days. It is important to appreciate the lag time from coverage.

Brian Carrico: It is important to appreciate the lag time from coverage by insurance companies for PNFS to when hospitals begin purchasing the product as time is needed for billing teams to put the proper processes in place. To that point, we saw coverage that took place in early 2024 beginning to show up in May and June.

Speaker Change: from insurance companies for PNFS to when hospitals begin purchasing the product, as time is needed for billing teams to put the proper processes in place.

Speaker Change: To that point, we saw the coverage that took place in early 2024 beginning to show up in May and June , but Q3 we see an even stronger foothold.

Speaker Change: Regarding REDD for adult patients, we recently filed our FDA submission and are cautiously optimistic about FDA clearance and commercialization commencing in late Q4.

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

Speaker Change: We have now officially licensed this product from the University of Michigan.

Speaker Change: where it was developed and we recently submitted a 510K to the FDA and are optimistic about this product, as I said, being on the market late Q4. If successful,

Brian Carrico: If successful, RED is expected to bring great clinical benefits to patients, and because the technology already has a Category 1 CPT billing code assigned to it and strong national reimbursement, we believe providers will be able to bring this clinically beneficial technology to their practice immediately. RED is a self-employing balloon that is an easy-to-use, office-based, point-of-care interrectal function test to identify patients with chronic constipation due to pelvic floor dysinertia and who are unlikely to improve with increased laxative use.

Speaker Change: REDD is expected to bring great clinical benefits to patients, and because the technology already has a Category 1 CPT billing code assigned and strong national reimbursement, we believe the providers will be able to bring this clinically beneficial technology to their practice immediately.

Speaker Change: RED is a self-employing balloon that is an easy-to-use, office-based, point-of-care interrectal function test to identify patients with chronic constipation due to pelvic floor dysinertia and who are unlikely to improve with increased laxative use.

Brian Carrico: The current treatment involves much trial and error by the physician as to which treatment will work. RED 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. In summary, we are pleased with continued and consistent execution of building the foundation on strong data and academic society support. This has resulted in significant early insurance adoption, which we expect to ramp revenues in the latter half of 2024, moving us toward profitability and setting the stage for a prosperous 2025. I will now turn the call over to our CFO, Tim Henrichs, to discuss the financials. Tim?

Speaker Change: The current treatment involves much trial and error 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.

Speaker Change: In summary,

Speaker Change: We are pleased with the continued and consistent execution of building the foundation on strong data and academic society support.

Speaker Change: This has resulted in significant early insurance adoption which we expect to ramp revenues in the latter half of 2024, moving us towards profitability and setting the stage for a prosperous 2025.

Speaker Change: I will now turn the call over to our CFO , Tim Henrichs, to discuss the financials. Tim? Tim? Tim? Tim?

Tim Hendrix: 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 Q224-10Q. I will add some color to the IP 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 PE NFS technology. We have been successful in leveraging our 16 completed studies to gain insurance coverage.

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

Tim Henrich: These financial results were included within our press release, which was issued earlier, and were also provided in more detail within our Q2-24-10Q. I will add some color on key areas of the financial results, as well as an outlook on certain areas.

Tim Henrich: From a big picture standpoint, we are continuing to execute on our plans, including the commercialization of our PENFS technology.

Tim Henrich: We have been successful in leveraging our 16 completed studies to gain insurance coverage.

Tim Henrich: We expect the number of covered lives to continue to grow through the end of the year. In addition, we are optimistic with regards to the commercialization of REDD in late 2024. As such, we expect revenue growth in the back half of 2024 and into 2025.

Tim Hendrix: We expect the number of covered lives to continue to grow through the end of the year. In addition, we are optimistic with regard to the commercialization of REG in late 2024. As such, we expect revenue growth in the back half of 2024 and into 2025. Given our current cost structure, our goal as a company to reach profitability is achievable and a function of our sales volume, given our strong gross margin. Our recent successes in obtaining substantially more insurance coverage since December keep us on that path.

Tim Henrich: Given our current cost structure, our goal as a company to reach profitability is achievable and a function of our sales volume, given our strong gross margins. Our recent successes in obtaining substantially more insurance coverage since December keeps us on that path.

Tim Hendrix: Finally, we have strengthened our liquidity position in the second quarter of 2024, as we secured an incremental $3 million in funding in May in addition to the $6.1 million in financial commitments in the first quarter of 2024 from strong, long-term investors who know the med tech space well. So far, we have funded $4.9 million, with the remaining $4.2 million coming in monthly installments through 2025.

Tim Henrich: Finally, we have strengthened our liquidity position in the second quarter of 2024, as we secured an incremental $3 million in funding in May, in addition to the $6.1 million in financial commitments in the first quarter of 2024 from strong, long-term investors who know the MedTech space well.

Tim Henrich: So far we have funded $4.9 million with the remaining $4.2 million coming in monthly installments through 2025.

Tim Hendrix: With that in mind, I will go through the financial highlights in detail. 2024 second quarter revenues were $612,000 compared to $646,000 for the same period in 2020. Although revenues in Q2-24 declined 5% on a year-over-year basis, this is a significant improvement compared to year-over-year declines of 20% and 13% in Q1-24 and Q4-24, respectively. But more importantly, we have more accounts ordering and more patients coming to us via our financial assistance program. As Brian mentioned earlier, our unit sales are up 16% in the quarter year-over-year, and that is why we expect revenue growth in the second half of the year as these discounted financial assistance orders turn into full reimbursement dollars with policy coverage.

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

Tim Henrich: 2024 second quarter revenues were $612,000 compared to $646,000 for the same period in 2023.

Tim Henrich: Although revenues in Q2-24 declined 5% on a year-over-year basis, this is a significant improvement compared to year-over-year declines of 20% and 13% in Q1-24 and Q4-24 respectively.

Tim Henrich: But more importantly, we have more accounts ordering and more patients coming to us via our financial assistance program.

Tim Henrich: As Brian mentioned earlier, our unit sales are up 16% in the quarter year-over-year, and that is why we expect revenue growth in the second half of the year as these discounted financial assistance orders turn into full reimbursement dollars with policy coverage.

Tim Hendrix: The quarter-over-quarter decrease was primarily due to fewer shipments to certain customers as they managed through the insurance reimbursement process to insurance policy coverage, partly offset by an increase in volume from our financial assistance customers. New customers and total patients coming to NeurAxis have increased, but they have come through our financial assistance program. Due to a lack of written insurance policy coverage, they are paying a discounted price and lowering our average selling price and revenue.

Speaker Change: The quarter-over-quarter decrease was primarily due to fewer shipments to certain customers as they managed through the insurance reimbursement process to insurance policy coverage, partly offset by an increase in volume from our financial assistance customers.

Speaker Change: New customers and total patients coming to NeurAxis have increased but they have come through our financial assistance programs.

Speaker Change: Due to a lack of written insurance policy coverage, they are paying a discounted price and lowering our average selling price and revenues.

Tim Hendrix: As mentioned before, we are highly focused on expanding our insurance coverage. While we have made great strides in recent months in gaming coverage, note that there is a lag until accounts begin ordering while our customers get their coating and billing classes implemented for a new device.

Speaker Change: As mentioned before, we are highly focused on expanding our insurance coverage.

Speaker Change: While we have made great strides in recent months in gaining coverage, note that there is a lag until accounts begin ordering while our customers get their coding and billing processes implemented for a new device.

Tim Hendrix: As such, we expect revenue growth late into 2024 and into 2025. Gross profit for the second quarter of 2024 was $538,000 compared to $578,000 in the second quarter of 2023. Although gross profit declined due to sales volume, we continue to have a strong gross margin. Gross margin in the second quarter of 2024 was 88% as compared to 89.5% in the second quarter of 2023. The declines are primarily due to the growth in our financial assistance program, which offers discounts to patients without insurance.

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

Speaker Change: Gross profit for the second quarter of 2024 was $538,000 compared to $578,000.

Speaker Change: in the second quarter of 2023. Although the gross profit declined due to sales volume, we continue to have strong gross margins. Gross margin in the second quarter of 2024 was 88%, as compared to 89.5% in the second quarter of 2023.

Speaker Change: The decline is primarily due to growth in our financial assistance program, which offers discounts to patients without insurance coverage.

Tim Hendrix: Our operating loss for the second quarter of 2024 was $2.2 million compared to $1.1 million in the second quarter of 2025. The increase was due to a number of factors. First, our lower sales volume resulted in lower gross profit, but the demand is there to turn that around once our new insurance coverage has become reimbursable for our pay. Second, payroll increases as we continue to build out our market access and sales teams to secure that insurance coverage on behalf of our patients who will benefit from the IV SIM device.

Speaker Change: Our operating loss in the second quarter of 2024 was $2.2 million, compared to $1.1 million in the second 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 profit, but the demand is there to turn that around once our new insurance coverage has become reimbursable for our patients.

Speaker Change: Second, payroll increases 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.

Tim Hendrix: Third, we have incremental public company costs in the second quarter of 2024, such as legal, insurance, investor relations, exchange listing, and board fees that did not exist in the second quarter of 2022. Fourth, our advertising spending increased as we look to expand our market access. And lastly, we incurred $435,000 related to non-recurring severance and consulting costs, our net loss in the second quarter of 2024 was $2.9 million versus a $2.2 million net loss in the second quarter of 2023, primarily due to higher general administrative costs and the non-cash settlement of certain pre-IPO Series A preferred stock shareholder claims, partly offset by the elimination of debt discount, issuance costs, debt extinguishment, and derivative fair valuation, Our liquidity position has substantially improved as we had $1.8 million cash on hand at the June 30, 2024 compared to $51,000 as of June 30, 2020.

Speaker Change: Third, we have incremental public company costs in the second quarter of 2024 such as legal, insurance, investor relations, exchange listing, and board fees that did not exist in the second quarter of 2023.

Speaker Change: Fourth, our advertising spend increased as we look to expand our market access.

Speaker Change: And lastly, we incurred $435,000 related to non-recurring severance and consulting costs.

Speaker Change: Our net loss in the second quarter of 2024 was $2.9 million versus a $2.2 million net loss in the second quarter of 2023.

Speaker Change: primarily due to higher general administrative costs.

Speaker Change: and the non-cash settlement of certain pre-IPO Series A preferred stock shareholder claims, partly offset by the elimination of debt discount, issuance costs, debt extinguishment, and derivative fair valuation charges.

Speaker Change: Our liquidity position has substantially improved as we had $1.8 million of cash on hand as of June 30, 2024, compared to $51,000 as of June 30, 2023.

Tim Hendrix: That increase is primarily due to the funding of $4.9 million in finance and during the first six months of the year, partially offset by cash used by operations of $2.9 million in 2024 compared to $1.2 million in 2023. The increased outflow was primarily due to higher general and administrative costs, including market assets and sales payroll, as well as continuing to secure insurance coverage. New public company costs such as legal, insurance, investor relations, exchange, listing, and bond fees that were not previously incurred in higher advertising costs as we looked to expand our market access, as well as payments made to pass to vendors, which did not occur in the second quarter of 2023. In addition to cash on hand, we have access to $4.2 million of capital as a result of our recent financing transactions with healthcare-focused investors. With that, let me turn the call back over to Brian.

Speaker Change: That increase was primarily due to the funding of $4.9 million in financing during the first six months of the year, partially offset by cash used by operations of $2.9 million in 2024, compared to $1.2 million.

Speaker Change: in 2023. The increased outflow was primarily due to higher general and administrative costs, including market access and sales payroll, as well as continuing to secure insurance coverage.

Speaker Change: new public company costs such as legal, insurance investor relations, exchange listing, 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 second quarter of 2023.

Speaker Change: In addition to cash on hand, we have access to $4.2 million of capital as a result of our recent financing transactions with healthcare-focused investors.

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

Brian Carrico: Let me conclude with where I started. I cannot stress enough how the consistent execution continues to lay the foundation and pathway to meet our goals, and we are seeing the results of that via insurance policy coverage to release some of the issues that were present and reflected in Q2 and more so to start Q3. This has led to the milestones we are achieving, and it's setting NeurAxis up to achieve accelerated growth in the second half of 2024 and into 2025.

Brian Carrico: Thank you, Tim.

Brian Carrico: Let me conclude with where I started. I cannot stress enough how the consistent execution continues to lay the foundation and pathway to meet our goals. And we are seeing the results of that via insurance policy coverage to release some of the issues that were present and reflected.

Speaker Change: in Q2 and more so to start Q3.

Speaker Change: This is one of the milestones we are achieving, and it's setting NeurAxis up to achieve accelerated growth in the second half of 2024 and into 2025.

Speaker Change: We remain focused on leveraging the strong data from our studies leading us to insurance acceptance from the lives We have covered today to a significantly higher number by the end of 2024

Brian Carrico: We remain focused on leveraging the strong data from our studies, leading us to insurance acceptance from the lives we have covered today to a significantly higher number by the end of 2024. Furthermore, we remain excited about our opportunity with RED, which we expect to become commercial in late 2024 and has the potential to be our largest revenue driver in the 12 months following. With that, operator, we'd be happy to take any questions. Thank you, ladies and gentlemen, if you have a question or a comment at this time.

Speaker Change: Furthermore, we remain excited about our opportunity with REDD, which we expect to become commercial in late 2024 and has the potential to be our largest revenue driver in the 12 months following.

Operator: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 1-1 on your telephone. If your question has been answered, you wish to move yourself from the queue, please press star 1-1 again. We'll pause for a moment while we compile our queue and air us. Our first question comes from Mark Foster on Kerr, Marbock & Co. Your line is open.

Speaker Change: With that, operator, we'd be happy to take any questions.

Speaker Change: Thank you, ladies and gentlemen. If you have a question or a comment at this time, please press star 11 on your telephone. If your question has been answered and you wish to move yourself from the queue, please press star 11 again. We'll pause for a moment while we compile our Q&A roster.

Speaker Change: www.neurasix.com

Speaker Change: Our first question comes from Mark Foster with Kerr, Marbach & Co. Your line is opened.

Mark Foster: Hey, a couple of questions for you. If I look year to date, your operating expenses are averaging roughly two and a half million a quarter. So obviously, to get to break even, you've got ramp sales pretty good to cover that. Then you talk a little bit more. I mean, you've given some indications of what's out there and maybe, teased us a little bit with July.

Mark Foster: Hey Brian , good morning.

Brian Carrico: Good morning.

Mark Foster: Hey, a couple of questions for you. If I look year-to-date, your operating expense is averaging roughly two and a half million a quarter.

Speaker Change: So obviously to get to breakeven, you've got to ramp sales pretty good to cover that. Can you talk a little bit more, I mean, you've given some indications of what's out there and maybe...

Speaker Change: teased us a little bit with July .

Speaker Change: What kind of visibility do you have into that? Can we still expect break-even by the fourth quarter of this year?

Brian Carrico: Good questions. Here are a couple answers to those questions.

Brian Carrico: I won't speak for Tim and the CFO, but I think a significant number of those expenses in the first half of the year and late last year were non-cash, non-recurring. But I won't get into those numbers. And if you have specific questions around the financials, Tim can answer those. Regarding growth, yeah, we've had a very nice start to Q3 because the policy that took effect earlier this year is starting to take hold in only a couple of accounts.

Tim: Good questions, a couple answers to those questions. I won't speak for Tim and the CFO , but I think a significant number of those.

Tim: expenses in the first half of the year and late last year were non-cash, non-recurring. But I won't get into those numbers, and if you have specific questions around the financials, Tim can answer those.

Speaker Change: Regarding the growth, yeah, we've had a very nice start to Q3 because of the policy coverage that took effect earlier this year is starting to take hold in only a couple of accounts.

Brian Carrico: There are three or four large payers that we are told by them are waiting on the guidelines. And 90%, 95% of the children's hospitals nationally are waiting on those large payers. The revenues that we have are from a very small number of children's hospitals.

Speaker Change: You know, there are three or four large payers.

Speaker Change: that we are told by them are waiting on the guidelines and, you know, 90%, 95% of the children's hospitals nationally are waiting on those large payers. The revenues that we have are from a very small number of children's hospitals.

Brian Carrico: We're not attached to the guidelines. The guidelines are going to be published independently. So we don't know if that will happen next week or if that will happen in October or September. We just don't know when those will be published. And that's why those are so strong because they come independently from the Academic Society.

Speaker Change: You know, we don't, you know, we're not attached to the guidelines. The guidelines are...

Speaker Change: going to be published independently, so we don't know if that will happen next week, or if that will happen in October or September . We just don't know when those will be published, and that's why those are so strong, is because they come independently from the Academic Society.

Brian Carrico: Regarding profitability, I think on the last call, I said we expect to be profitable within 12 months, which would be Q1 of 2025. I don't see any reason to change that. You know, I'd call that guidance, but I don't have any reason to change that mindset.

Speaker Change: Regarding profitability, I think on the last call I said we expect to be profitable within 12 months, which would be Q1 of 2025.

Speaker Change: I don't see any reason to change that, you know, I'd call that guidance, but I don't have any reason to change that mindset.

Brian Carrico: We're more confident today, especially with the start of Q3, than we were even six or eight weeks ago. We're very pleased with the insurance policy coverage that's taken effect. And in those areas and how that's translating to revenues in those few areas, and I'll stress few, we have multiple accounts from revenue we lost in 2023. I don't have the exact number in front of me, but, you know, well over a million dollars were accounts with billing, insurance companies receiving no authorization required and then not being paid. So those accounts are all on hold. And as I said today, we've brought that revenue back to, you know, went from down 20% to down 5%.

Speaker Change: We're more confident today, especially with the start of Q3, than we were even six or eight weeks ago. We're very pleased with the insurance policy coverage that's taken effect.

Speaker Change: and in those areas and how that's translating to revenues in those few areas, and I'll stress few. We have...

Speaker Change: countless multiple accounts from revenue we lost in 2023. I don't have the exact number in front of me, but you know well over a million dollars were accounts were billing insurance companies receiving a no authorization required and then not being paid.

Speaker Change: So those accounts are all on hold, and as I said today...

Speaker Change: We've brought that revenue back to, you know, went from down 20%, down 5%, and Q3.

Speaker Change: is looking very nice to date.

Speaker Change: And I think that everyone's going to be pleased with the direction we're going. I can tell you that we're certainly confident in the position and still have no reason to believe that we aren't trending towards profitability in Q1 of 25.

Tim Hendrix: And Mark, let me address the expense question directly. It's a good one, right?

Speaker Change: And Mark, Mark, let me.

Mark Foster: address the expense question directly. It's a good one, right, and we pay attention to it, of course. And you mentioned $2.5 million on average, which obviously is correct through 2122.

Tim Hendrix: And we pay attention to it, of course. And you mentioned $2.5 million on average, which is obviously correct through Q1 and Q2. Specifically, for Q2, our G&A expenses were higher than a year ago by about $1.1 million. But last year, we were not a publicly traded company yet, and that added about $375,000 quarter over quarter. Then, in the current quarter, we actually did incur about $625,000 in one-time costs of severance and consulting that will not recur next year.

Mark Foster: specifically for Q2 where G&A expenses were higher.

Mark Foster: than a year ago by about 1.1 million, but

Mark Foster: Last year, we were not a publicly traded company yet, and that has added about 375,000.

Mark Foster: Terminate recorder.

Tim Hendrix: So that would put our G&A expenses at about $100,000 higher than last year on a pro forma basis. And looking forward, when you exclude these one-time costs in the second quarter in particular, but it would flow into the first quarter as well. Our current quarterly G&A run rate is approximately about 2 million. So just trying to bridge the gap for you between you know the two and a half and the two million because of the one time chart in there. Yeah, that's helpful.

Speaker Change: Then in the current quarter, we actually did incur about $625,000 of

Speaker Change: one-time cost of severance and consulting that will not return.

Speaker Change: next year. So when you put our G&A, so that would put our G&A expenses at about $100,000 higher than last year on a pro forma basis.

Speaker Change: And looking forward, when you exclude these one-time costs in the second quarter in particular, but it would flow into the first quarter as well, our current quarterly G&A run rate is approximately about 2 million.

Speaker Change: So, just trying to bridge the gap for you between, you know, the two and a half and the two million because of one-time charges in there. Yeah, yeah, that's helpful. So, so what's a reasonable cash burn number going forward?

Tim Hendrix: So, what's a reasonable cash burn number going for? So our cash flows are stable depending on the month, but it's in between $400,000 to $500,000 a month. And here today, right on the casual statement that we found in Q today, it's right around $3 million. And that's right at that $500,000 mark on average through the first six months of the year. And we continue to believe that we'll hold that through the remainder of the year.

Speaker Change: So our cash for depending on the month

Speaker Change: But it's in between $400,000 and $500,000 a month. And year-to-date, right in the cash flow statement that we filed in Q today, it's right around $3 million and it's right at that $500,000 mark on average through the first six months of the year. And we continue to believe that we'll hold that.

Speaker Change: through the remainder of the year. From an expense standpoint, those numbers that I just gave you, I don't really expect those to change that much in the last six months of the year. It is, you know, our ability to continue to get insurance coverage, drive IV stem revenue, and then when we get

Speaker Change: We believe when we get the approval from the FDA on REDD, that top-line revenue will drop down. It's pretty healthy gross margins, which will drop all the way down into operating profit and improve our profitability.

Brian Carrico: NeurAxis

Mark Foster: Okay, so you've got 1.8 million cash on hand, you've got 4.2 in these monthly installments, so 6 million. If your cash burn is 500 out of that 6 million, you've got a 12 months runway. So if you think you're profitable in the first quarter, you shouldn't need any additional financing given what you have on the table currently, is that correct?

Speaker Change: position.

Speaker Change: Right, okay. So you've got 1.8 million cash on hand, you've got 4.2 in these monthly installments.

Speaker Change: So $6 million, if your cash burn is $500 out of that $6 million, you've got a 12-month runway. So if you think you're profitable in the first quarter...

Speaker Change: You shouldn't need any additional financing given what you have on the table currently, is that correct?

Brian Carrico: We're cautiously optimistic. We never say never. Of course, you know, we can't dictate. You know, we see the abstract. It was posted. We're told that that's what the guidelines will be published based on. We can't dictate when those guidelines will be published, and then we can't dictate how many months it takes for payers to actually put policy covers in place. Or if there's some additional unexpected, unforeseen hurdle. But assuming the guidelines are published this fall and the insurance companies take those guidelines and translate those into policy coverage as we're told, then we're cautiously optimistic we have the funding we need to get us to profitability based on current knowledge

Speaker Change: We're cautiously optimistic. We would never say never, of course, you know, we can't dictate their, you know.

Speaker Change: We see the abstract that was posted. We're told that that's what the guidelines will be published based on. We can't dictate when those guidelines will be published, and then we can't dictate how many months it takes for payers to actually put policy coverage in place, or if there's some additional unexpected.

Speaker Change: unforeseen hurdle, but assuming the guidelines are published this fall and the insurance companies take those guidelines and translate those the policy coverage as we're told, then we're cautiously optimistic we have the funding we need to get us the profitability based on current knowledge.

Mark Foster: and it seems like your relationships with Inspire, Flagstaff, those firms have been pretty good. If you need to do that, I assume those are still viable options.

Speaker Change: And it seems like you're

Speaker Change: Your relationships with Inspire, Flagstaff, those firms has been pretty good. If you needed to do that, I assume those are still viable options.

Brian Carrico: I wouldn't commit funding for anyone, for them, but I'd say to say we have strong relationships with these investors yet.

Speaker Change: Bye.

Speaker Change: I wouldn't commit funding for anyone.

Speaker Change: for them, but I was confident. It's safe to say we have strong relationships with these investors, yes.

Brian Carrico: Yeah. Okay. Great. Thank you very much.

Operator: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 1 on your telephone.

Speaker Change: Yeah, okay, great. Thank you very much

Speaker Change: Again, ladies and gentlemen, if you have a question or a comment at this time, please press star 1 when on your telephone.

Operator: Hi Brian, we have a question that was sent in. Can you talk about any feedback from doctors or patients who've used IBC?

Brian Carrico: Hey Brian , we have a question that was sent in. Can you talk about any feedback from doctors or patients who've used IBSTEM?

Brian Carrico: Yeah, I mean, at this point, the overwhelming majority of pediatric gastroenterology physicians tell us that there's nothing in this space with as much evidence and nothing that performs nearly as well as I be sinned. And as soon as the blanket policy cover is in place, we will see the results of that. Regarding patients, the number of letters and emails we get from families who have had their lives changed for the better continues to grow exponentially.

Brian Carrico: Yeah, I mean at this point the overwhelming majority of pediatric gastroenterology physicians tell us

Brian Carrico: that there's nothing in this space with as much evidence and nothing that performs nearly as well as IV stem and As soon as the blanket policy coverage is in place, we will see the results of that

Mark Foster: Regarding patients, the number of letters and emails we get from families who have had their life changed to the positive continues to grow exponentially. You have to remember that the revenues we are seeing, and this goes back to Mark's questions, are from only a small number of children's hospitals who have some insurance policy coverage.

Mark Foster: And even those children's hospitals aren't treating most of the children they need to treat.

Mark Foster: Again, as I mentioned earlier, just in the past 12 months, we've only treated about one-tenth of one percent of the children that are debilitated and in need. So it's safe to say that we have complete academic society buy-in and the technology is here to stay.

Operator: Okay, we have another question for you. Can you talk about the timeline for the commercialization of RED, and how do you think about the revenues for the product?

Speaker Change: Okay, we have another question for you, can you talk about the timeline for the commercialization of REDD and how do you think about the revenues for the product?

Brian Carrico: Good question. Two things.

Speaker Change: Good question. Two things. We know the need is immense, and we also know there's already a CPT-CAT-1 billing code and blanket commercial and Medicare insurance policy coverage.

Speaker Change: Predicting revenues is difficult at this point because we cannot market the product. We of course have internal models which we are not ready to share but as we've launched and apply those models to reality we'll be able to share those and give guidance.

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

Brian Carrico: Well, thank you all very much for being with us today. We look forward to communicating with you again soon. Have a great Friday and a great weekend. Thank you.

Speaker Change: i

Speaker Change: Okay.

Speaker Change: Well, thank you all very much for being with us today. We look forward to communicating with you again soon. Have a great Friday and a great weekend. Thank you.

Operator: Thank you. Ladies and gentlemen, this concludes today's presentation. You may now disconnect. Have a wonderful day.

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

Brian Carrico: In Q3, we see an even stronger foothold. Regarding REDD, for adult patients, we recently filed our FDA submission and are cautiously optimistic about FDA clearance and commercialization commencing in late Q4. Let's speak a little bit more about RED, or the Rectal Expulsion Device product, which we believe to be a great opportunity for NeurAxis. We have now officially licensed this product from the University of Michigan, where it was developed, and we recently submitted a 510K to the FDA, and are optimistic about this product, as I said, being on the market late in Q4.

Brian Carrico: We know the need is immense. And we also know there's already a CPT Cat-1 billing code and blanket commercial and Medicare insurance policy coverage. Predicting revenues is difficult at this point because we cannot market the product. We of course have internal models, which we are not ready to share. But as we've launched and applied those models to reality, we'll be able to share those and give guidance.

Operator: And I'm not asking any other questions on the phone lines.

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 codes, we have our own Category 3 CPT technology-specific billing code today, which is helpful in some areas but can be challenging for children's hospitals when building their charges to bill insurance. This has caused a delay in treating patients even after written insurance policy coverage is in place. As mentioned earlier, we've submitted an application for obtaining a Category 1 CPT permanent billing.

Brian Carrico: You have to remember that the revenues we are seeing, and this goes back to Mark's questions, are from only a small number of children's hospitals who have some insurance policies. And even those children's hospitals aren't treating most of the children they need to treat. Again, as I mentioned earlier, just in the past 12 months, we've only treated about one-tenth of one percent of the children that are debilitated and in need. So it's safe to say that we have complete academic society buy-in, and the technology is here to stay.

Tim Hendrix: From an expense standpoint, those numbers I just gave you. I don't really expect them to change that much in the last six months of the year. It is, you know, our ability to continue to get insurance coverage drives IV STEM revenue. And then when we get, we believe when we get the approval from the FDA on red, that top line revenue will drop. It's pretty healthy growth margins, which will drop all the way down into operating profit and improve our profit.