Q1 2025 NeurAxis Inc Earnings Call
Operator: Good day and thank you for standing by.
Good day, and thank you for standing by welcome to the new Axis first quarter 2025 results and update call.
Operator: Welcome to the NeurAxis first quarter 2025 results and update call. At this time, all participants are in a listen-only mode.
At this time all participants are in a listen only mode.
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Operator: Please be advised that today's conference is being recorded.
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Ben Shamsian: I would now like to hand the conference over to Ben Shamsian, Investor Relations. Please go ahead. Thank you and good morning everyone. Thank you for joining us for NeurAxis' first quarter 2025 financial results and corporate update conference call. Joining us on today's call is Brian Carrico, CEO of NeurAxis, and Tim Henrichs, CFO of NeurAxis.
Ben Champion: I would now like to hand, the conference over to Ben Champion Investor Relations. Please go ahead.
Speaker Change: Thank you and good morning, everyone.
Speaker Change: You for joining us for <unk> first quarter 2025 financial results and corporate update conference call joining us on today's call is Brian Caracol CEO of neuro access and some Patrick's CFO of near Axis at the conclusion of today's prepared remarks, we will open the call for questions. If you are listening via the webcast.
Ben Shamsian: At the conclusion of today's prepared remarks, we will open the call for questions. If you are listening via the webcast, you can send in questions through the portal or you can simply email me at NeurAxisNRXS at lithiumpartners.com. If you're dialed into the live event, you can press star and one one button.
You can send in questions through the portal or you can simply email me at neuro access M. R S and.
Speaker Change: Lytham partners Dot Com, if you have dialed into the lives of.
Speaker Change: Life.
Speaker Change: You can.
Ben Shamsian: Today's event is being recorded and will be available for replay through the webcast information provided in the press release.
Press Star and one one button 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.
Ben Shamsian: 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 and based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. 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.
Speaker Change: Regarding the goals strategies beliefs expectations and future potential operating results of <unk>. Although management believes these statements are reasonable based on estimates assumptions and projections as of today. These statements are not guarantees of future performance time sensitive information may no longer.
Speaker Change: 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 Neuraxis undertakes no obligation to update or revise any of these forward.
Ben Shamsian: NeurAxis undertakes no obligation to update or revise any of these forward-looking statements.
Ben Shamsian: With that said, I would like to now turn the event over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed. Thank you, Ben.
Brian Caracol: Looking statements with that I would like to now turn the event over to Brian <unk>, Chief Executive Officer of Neuro access Brian. Please proceed.
Brian Carrico: Good morning and thank you for attending the first quarter 2020-25 earnings call. During today's call, I will highlight the continued execution and our commercialization strategies for IV stem, our neuromodulation technology, and REDD, our product for patients with evacuation. We will recap Q1 and discuss the milestones and growth plans for 2025 as we come off another strong quarter of execution and growth. We continue the commercialization of our market-leading PENFS technology an inch closer to the ability to scale nationally.
Speaker Change: Thank you Ben.
Speaker Change: Good morning, and thank you for attending the first quarter 2025 earnings call.
Speaker Change: During today's call I will highlight the continued execution of our commercialization strategies for IV, Stan our Neuromodulation technology and read our product for patients with evacuation disorder.
Speaker Change: We will recap Q1 and discuss the milestones and growth plans for 2025, as we come off another strong quarter of execution and growth.
Speaker Change: We continue the commercialization of our market leading <unk>.
Speaker Change: Technology and its closer to the ability to scale nationally.
Brian Carrico: Following my remarks, Tim Henrichs, our CFO, will review our financial results for the first quarter of 2025. Let's first review the recent achievements. As I just mentioned, we are coming off another quarter of growth year-over-year, marking the third consecutive quarter of double-digit growth. As I mentioned on our last call, we are laser-focused on the new CAT-1 CPT code, which will become effective January 1, 2026, and claiming the remaining policy coverage needed to give access to the children who need IV stem. I will speak about these announcements in more detail later in the call. 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.
Speaker Change: Following my remarks, Tim Hinrichs, our CFO will review our financial results for the first quarter of 2025.
Speaker Change: Let's first review the recent achievements as I just mentioned, we are coming off another quarter of growth year over year, marking the third consecutive quarter of double digit growth as I mentioned on our last call. We are laser focused on the new cat, one CPT code, which will become effective January one 2020.
Speaker Change: And claim and the remaining policy coverage needed to get access to the children, who need IV step I will speak about these announcements in more detail later in the call.
Speaker Change: We're continuing to execute at a high level on our growth objectives Rubin. The foundation that strong published data will drive insurance expansion, leading to sustainable revenues and margins.
Brian Carrico: We laid out these objectives in previous calls and continue to put the final pieces in place to allow blanket insurance coverage, and in turn, the scaling of PNFS revenue. In recent months, we've made significant achievements as we advanced and hit milestones, aiming for cash flow breakeven and profitability. Regarding IV-STEM, we are primarily focused on revenue trajectory, and we had significant growth of 40% in Q3 of 2024, 43% growth in Q4 of 2024, and 39% in Q1 of 2025. We continue to see only the very beginnings of new insurance policy coverage taking effect. As such, I'm excited to share with you that the momentum has continued into Q2.
Speaker Change: We laid out these objectives in previous calls and continue to put the final pieces in place to allow blanket insurance coverage and in turn the scaling of P. NFS revenues.
Speaker Change: In recent months, we've made significant achievements as we advance and hit milestones aiming for cash flow breakeven and profitability.
Speaker Change: Regarding the IV stem, we're primarily focused on our revenue trajectory and we had significant growth of 40% in Q3 of 2024, 43% growth in Q4 of 2024 and 39% in Q1 of 2025.
Speaker Change: We continue to see only the very beginnings of new insurance policy coverage taken effect.
Speaker Change: As such I am excited to share with you that the momentum has continued into Q2.
Brian Carrico: I now want to focus on and highlight the catalyst for what we expect to be continued revenue growth in the coming quarter. In the perfect world that we have been working toward in our nearing, children's hospitals could access blanket insurance policy coverage and utilize a Category 1 CPT code. For mass scaling and exponential growth, there are two critical components. First, the patient needs to be covered by insurance. And second, the physician needs to be compensated for their time in the form of RVUs, or relative value units, which happens with a Category 1 CPP code. continue to move closer to this full picture being in place.
Speaker Change: I now want to focus on and highlight the catalyst for what we expect to be continued revenue growth in the coming quarters.
Speaker Change: In the perfect World that we have been working toward and are nearing children's hospitals could access blanket insurance policy coverage and utilize a category one CPT code.
Speaker Change: For mass scaling an exponential growth there are two critical components.
Speaker Change: The patient needs to be covered by insurance and second the physician needs to be compensated for their time in the form of RV used or relative value units whats happened with the category one CPT code.
Speaker Change: We continue to move closer to this full picture being in place as mentioned earlier the category. One CPT code has been awarded by the American Medical Association CPT panel and will become effective this coming January.
Brian Carrico: As mentioned earlier, the Category 1 CPT code has been awarded by the American Medical Association CPT panel and will become effective this coming January 1st. Regarding insurance policy coverage, we went from 4 million covered lives just over a year ago to 51, about 51 million covered lives today. So, what does it take to earn the remaining payers? As we all know, the scientific community has accepted our flagship technology, but stronger revenues have been hindered by a lack of written insurance policy. The most important recognition any medical 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 payer generally accepts as the standard.
Speaker Change: Regarding insurance policy coverage, we went from 4 million covered lives just over a year ago to 51 about 51 million covered lives today.
Speaker Change: So what does it take to earn the remaining payers as we all know the scientific community has accepted our flagship technology, but stronger revenues have been hindered by a lack of written insurance policy coverage.
Speaker Change: The most important recognition any medical technology can receive independent guidelines by the academic side. This is an independent review of the literature and a graded aside which the payer generally accepted as the standard.
Brian Carrico: We announced previously that a systematic review by the Academic Society, NASPGN, was released, showing our technology has the highest-grade certainty level and largest magnitude effect. NASPGN is the North American Society for Pediatric Gastroenterology, Hepatology, and Nutrition, and they are the Academic Society for Pediatric Gastroenterology, where our technology resides. This systematic review is in abstract form now, but we believe this information is the work being used to publish guidelines in the coming months. We are told by the largest payers that this publication is needed for policy coverage, so we are eagerly waiting for this publication to get to the payers.
Speaker Change: We announced previously the systematic review by the academic Society that again was released filling our technology has the highest grade certainty level and largest magnitude effect naphtha began as the North American Society for Paediatric, Gastroenterology, Hepatology and nutrition and are the academic society for pediatric neurology.
Where our technology resides.
Speaker Change: This systematic review as an abstract form now, but we believe this information is the work being used the published guidelines in the coming weeks.
We are told by the largest payers that this publication is needed for policy coverage. So we're eagerly waiting for this publication to get to the payers.
Brian Carrico: Sticking with insurance policy coverage, I want to go into detail about the most important aspect of our growth. As we have stated consistently, policy coverage is the key to exponential revenue growth. Again, we have had this indication long enough that the academic society and the physicians within the society who treat these patients at the 260 children's hospitals in the United States have been aware and are supportive, but the insurance policy coverage and CAT-1 CPT code are imperative for seamless treatment. We also stated that once the insurance policy coverage is written and in place, the children's hospitals that were not already utilizing IV stem take about 120 days to get the technology loaded, their processes in place, and begin ordering.
Speaker Change: Particularly with insurance policy covered.
Speaker Change: Want to go into detail about the most important aspect of our growth.
Speaker Change: As we have stated consistently policy covers the key to exponential revenue growth again, we've had this indication long enough that the academic society and the physicians within the society, who treat these patients at the 260 children's hospitals in the United States had been aware and are supportive, but the insurance policy coverage in cat, one CPT code or a pair.
Speaker Change: <unk> for seamless treatment.
Speaker Change: We also stated that once the insurance policy coverages written and in place.
Speaker Change: Children hospitals that were not already utilize notwithstanding take about 120 days to get the technology loaded their processes in place and begin to order.
Brian Carrico: With all of that said, our total covered lives today stand at about 51 million. Additionally, as expected, we have countless payers currently in the review process. Regarding children's hospitals, many have been ordering for years, but for a variety of reasons, we have not received early insurance policy coverage in those geographic regions. Once insurance policy coverage is written in these areas, the children's hospitals are expected to increase revenue very quickly because the product is already in their system, therefore not needing the 120 days to get set up. The second part of the seamless treatment for patients, along with policy coverage, is the Category 1 CPT code.
Speaker Change: With all of that said, our total covered lives today stand at about $51 million. Additionally.
Speaker Change: Additionally, as expected we have countless payers currently in the review process regarding.
Speaker Change: Regarding children's hospitals, many had been ordering for years, but for a variety of reasons. We have not received our early insurance policy coverage in those geographic regions.
Speaker Change: Once insurance policy coverages written in these areas. The children's hospitals are expected to increase revenue very quickly because the product is already in their system. Therefore, not meeting the 120 days to get set up.
Speaker Change: The second part of the seamless treatment for patients along with policy coverage is the category one CPT code as everyone. Now knows we have achieved the company's most important milestone to date in the form of a category, one CPT code, which will allow for more seamless billing and reimbursement.
Brian Carrico: As everyone now knows, we have achieved the company's most important milestone to date in the form of a Category 1 CPT code, which will allow for more seamless billing and reimbursement. This is a permanent billing code that will become effective on January 1st. The reason this code is so critical is that it brings a permanent code, making it much easier for revenue cycle teams to bill the procedure. It will bring a permanent reimbursement amount, and it will provide RV use. which is how most physicians' productivity is measured. One could argue that physicians in a children's hospital are currently treating patients for free because there is no RVU, which will no longer be the case come January 1st.
Speaker Change: This is a permanent billing code that will become effective on January one. The reason. This code is so critical is that it brings a permanent code, making it much easier for our revenue cycle teams to build the procedure. It will bring a permanent reimbursement amount and it will provide our views.
Speaker Change: Which is how most physicians productivity is measured.
Speaker Change: One could argue that physicians in a children's hospital are currently treating patients for free because there is no RV, you, which will no longer be the case come January one.
Brian Carrico: I want to move to the FDA milestones. Moving to FDA expansions, we have expanded our IV stem label to include a patient population beyond the current 11 to 18 years of age to 8 to 21 years of age, significantly increasing the number of children we can treat. Regarding RED, or the rectal expulsion device, our point of care device that identifies patients with pelvic floor dysfunction and provides immediate, actionable test results in patients with chronic constipation. We received FDA clearance on that technology on December 6th and are in the middle of a soft launch phase. As we look into 2025, we have submitted to the FDA for an expanded FDA indication for functional dyspepsia in children 8 to 21 years of age.
Speaker Change: I want to move to the FDA milestones.
Speaker Change: Moving to FBA expensive expansion, we have expanded our IV <unk> label to include a patient population beyond the current 11% to 18 years of age two 8% to 21 years abate significantly increasing the number of children and we can treat.
Speaker Change: Regarding red or the rectal expulsion device or point of care device that identifies patients with pelvic floor dysfunction and provides immediate actionable road test results in patients with chronic constipation, we received FDA clearance on that technology on December six and there are middle or in the middle of a soft launch space.
Speaker Change: As we look into 2025, we have submitted to the FDA for an expanded FDA indication for functional dyspepsia in children, aged 21 years of age. This is critical because it would nearly double our market opportunity. Additionally, this indication will rely on the same category one CPT code the same insurance policy coverage.
Brian Carrico: This is critical because it would nearly double our market opportunity.
Brian Carrico: Additionally, this indication will rely on the same Category 1 CPT code, the same insurance policy coverage, the same children's hospital call point, the same pediatric gastroenterologist physician, and will utilize the same W-2 sales For more information visit www.FEMA.gov Now I would like to focus on how our efforts translate to revenue growth and why we continue to be bullish on significant revenue growth as we move closer to national insurance coverage and the effective date for the Category 1 CPT. We are beginning to see many of the achievements reflected in the numbers. In the first quarter alone, 300 patients were treated through full purchase order or patient assistance programs, an annualized rate of 1,200.
Speaker Change: The same children's hospital call point, the same pediatric gastrologist position and we will utilize the same W. Two sales force.
Speaker Change: Now I would like to focus on how our efforts translate to revenue growth and why we continue to be bullish on significant revenue growth as we move closer to national insurance coverage and the effective date for the category one CPT code.
Speaker Change: We are beginning to see many of the achievements reflected in the numbers in the first quarter alone 300 patients were treated through full purchase order or patient assistance programs and annualized rate of 200 patients. While this marks an important growth. It still represents just 2% of the 600000 severely ill.
Brian Carrico: While this marks important growth, it still represents just 0.2% of the 600,000 severely affected children in the United States suffering from IBS who are in urgent need of IV stem. Additionally, we had 130 patients via the Patient Assistance Program who did not utilize the program, which would have taken our treated patients to 413 for the quarter. I want to highlight the sustained and increasing demand for IBM.
Speaker Change: <unk> children in the United States suffering from Ibs, who are in urgent need of IV step.
Speaker Change: Additionally, we had 130 patients via the patient assistance program, who did not utilized the program, which would have taken our treated patients to 413 for the quarter.
Speaker Change: I want to highlight the sustained and increasing demand for IV stern, while our revenue growth has accelerated in recent quarters. The facts remain that we're still creating a miniscule portion of the addressable market because national policy covered in the cat one have yet to be put in place. The positive change. We do see here is largely due to accounts getting more comfortable with building.
Brian Carrico: While our revenue growth has accelerated in recent quarters, the facts remain that we are still treating a minuscule portion of the addressable market because national policy covers in the cap one have yet to be put in place. The positive change we do see here is largely due to accounts getting more comfortable with billing and coding. Physicians seeing the Academic Society guidelines abstract, stating PENFS has the highest rate of evidence and only the very slightest insurance policy coverage taking effect. On average, selling prices for patients receiving IV STEM through financial assistance or our patient assistance program are about 65% below our list price.
Speaker Change: Coating physicians seeing the academic society guidelines abstract, stating PFS is the highest rate of evidenced in only the very quite as insurance policy coverage taken effect.
Speaker Change: On average selling prices for patients receiving IV stand through financial assistance or our patient assistance program are about 65% below our list price the insurance barriers, causing us to leave significant dollars on the table.
Brian Carrico: The insurance barrier is causing us to leave significant dollars on the table. As insurance coverage increases across the country, the percentage of sales through full price purchase orders will also increase.
Speaker Change: As insurance coverage increases across the country the percentage of sales through full price purchase orders will also increase this is why our number one priority continues to be written insurance policy coverage as we now know the cat one code will be effective on January the.
Brian Carrico: This is why our number one priority continues to be written insurance policy coverage, as we now know the CAP-1 code will be effective on January 1st. The point of action is clear. We believe that strong, peer-reviewed publications and key society support from the likes of NASPIC and the American Academy of Pediatrics result in successful coverage from insurance companies, which results in strong revenue. Our internal prior authorization team continues to grow and be successful as it reduces the workload for clinical staff, which allows greater access for pediatric patients and ultimately assisting in acquiring a permanent billing.
Speaker Change: The point of access clear, we believe its strong peer reviewed publications and Keith Society support from the likes of Nast against and the American Academy of Pediatrics result, successful coverage from insurance companies, which results strong revenues.
Speaker Change: Our internal prior authorization team continues to grow and be successful as it reduces the workload for clinical staff, which allows greater access for pediatric patients and ultimately assisting in acquiring a permanent billing code.
Brian Carrico: We believe that in time most accounts will move their prior authorizations to the NeurAxis team as we see more and more added each quarter. We expect revenue growth to accelerate meaningfully as we move toward our goal of cash flow breakeven based on two catalysts, the continued gain of policy coverage from the carriers for IB-STEM along with the Category 1 CPT code.
Speaker Change: We believe that in time, most accounts will move their prior authorizations to the <unk> team as we see more and more added each quarter.
Speaker Change: We expect revenue growth to accelerate meaningfully as we move toward our goal of cash flow breakeven based on two catalysts to continue gain that policy coverage from the carriers for IV stem along with the category one CPT code.
Brian Carrico: As mentioned earlier in the call, we received FDA clearance for R.E.D. for adult patients on December 6, 2024. I want to talk a little bit more about R.E.D. erectile expulsion device product, which we believe to be a great opportunity for NeurAxis. We now have FDA clearance, which allows us to soft-launch the technology. REDD is a self-inflating balloon that is an easy-to-use, office-based, point-of-care interrectal function test that identifies patients with chronic constipation due to pelvic floor dysinertia and who are unlikely to improve with increased laxity. The current treatment involves much trial and error by the physician as to which treatment will work and RED will allow the physician to streamline the diagnosis and choose the best treatment option after the first visit, which is a win for the patient.
Speaker Change: As mentioned earlier in the call we received FDA clearance for Red for adult patients on December six 2024, I want to talk a little bit more about red.
Speaker Change: The record was fall ex Ballston device product, which we believe to be a great opportunity for <unk>. We now have FDA clearance, which allows us to source lots of technology rather than itself in planning balloon that is an easy to use office based point of care and erectile function tests that identify patients with chronic constipation due to <unk>.
Speaker Change: Albert floor Dyssynergia, Andrew are unlikely to improve with increased lack of abuse. The current treatment involves musk trial and error by the physician as to which treatment will work in red will allow a physician to streamline diagnosis and choose the best treatment option. After the first visit which is a win for the patient.
Brian Carrico: Because the technology already has a Category 1 CPT filling code assigned to the procedure and strong national reimbursement, we believe that providers will be able to bring this clinically beneficial technology to their practice immediately. As we continue the soft launch, we will learn much more about revenue expectations in the coming months.
Speaker Change: Because the technology already has a category one CPT billing code assigned to the procedure and strong national reimbursement, we believe that providers will be able to frame. This clinically beneficial technology to their practice immediately.
Speaker Change: As we continue the soft launch we will learn much more about revenue expectations in the coming months.
Brian Carrico: In summary, we're pleased with continued and consistent execution of building the foundation of strong data and academic society support. Nothing happens as fast as we want, but we are inching much closer to the final insurance policy coverages and effectiveness of the CAT I code, which we believe will set the stage for seamless patient treatment and result significant growth and profitability.
Speaker Change: In summary, we're pleased with continued consistent execution of building the foundation of strong data in academic Society support.
Nothing happens as fast as we want but we are as you're much closer to the final insurance policy coverages and effectiveness of the Cat One code, which we believe will set the stage for seamless patient treatment and results significant growth and profitability.
Timothy Henrichs: I will now turn the call over to Tim, our CFO, to discuss the financials. Tim? 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 10Q. I'll add some color on key areas of the financial results as well as an outlook on certain areas. The hard work that our team has put in the last few years is beginning to bear fruit. We are continuing our strong momentum, which began in the third quarter of 2024.
Speaker Change: I will now turn the call over to Tim our CFO to discuss the financials.
Tim Hinrichs: Thank you, Brian and let me add my welcome to everyone joining us on this call.
Speaker Change: These financial results were included within our press release, which was issued earlier also provided a more detail within our 10-Q.
Speaker Change: I'll add some color on key areas of the financial results as well as the outlook on certain areas.
Speaker Change: The hard work that our team has put into last year's is beginning to bear fruit.
Speaker Change: We are continuing our strong momentum, which we which began in the third quarter of 2024.
Timothy Henrichs: This momentum has continued here into the second quarter of 2025.
Speaker Change: This momentum has continued here into the second quarter of 2025.
Timothy Henrichs: The good news is we are only in the early innings of our ramp as we expect the number of covered lives to continue to grow and our Cat 1 CPT code goes effective on January 1st of 2026. In addition, we are optimistic with regard to the commercialization of REDD with our soft launch in Q1 2025, as Brian mentioned moments ago. Given our current cost structure, our goal as a company to reach cash flow breakeven is achievable. With the issuance of the guidelines expected in the near future, the Cat 1 CPT billing code going effective on January 1st, and the significant increase in covered lives from a year ago, we expect our sales volume to continue to grow as we have demonstrated in the last three quarters.
Speaker Change: The good news is we are only in the early innings of that ramp as we expect the number of covered lives to continue to grow and our capital on CPT code goes effective on January one 2026.
Speaker Change: In addition, we are optimistic with regards to the commercially commercialization of Red.
Speaker Change: Our soft launch in Q1, 'twenty five as Brian mentioned moments ago.
Speaker Change: Given our current cost structure, our goal as a company to reach cash flow breakeven is achievable.
Speaker Change: With the issuance of the guidelines are expected in the near future. The cat one CPT billing code going effective on January one.
Speaker Change: And a significant increase in covered lives from a year ago we.
Speaker Change: We expect our sales volume to continue to grow as we have demonstrated in the last three quarters.
Timothy Henrichs: The continuation of our track record of that sales growth, strong gross margins, and operating expense cost management will allow us to achieve that cash flow breaking.
Speaker Change: The continuation of our track record of that sales growth strong gross margins and operating expense cost management will allow us to achieve that cash flow breakeven.
Timothy Henrichs: With that, I will go through some financial highlights in greater detail. Revenue in the first quarter of 2025 was $896,000, up 39%, compared to $647,000 in the first quarter of 2024. Unit sales increased approximately 46% due to growth from patients with full insurance reimbursement coverage and the company's financial assistance program that provides discounts to patients without insurance coverage. The company has made great strides in recent months in gaining insurance coverage and recent results are indicative of that success. As Brian mentioned, the strong momentum has continued in the second quarter of 2025, which we expect to be our fourth consecutive quarter of revenue growth year over year.
Speaker Change: With that I will go through some financial highlights in greater detail.
Speaker Change: Revenue in the first quarter of 2025.
It was $896000 up 39% compared to $647000 in the first quarter of 2024.
Speaker Change: Unit sales increased approximately 46% due to growth from patients with full insurance reimbursement coverage and the company's financial assistance program that provides discounts to patients without insurance coverage.
Speaker Change: The company has made great strides in recent months, a gaining of insurance coverage and recent results are indicative of that success.
Brian Caracol: Brian mentioned the strong momentum has continued in the second quarter of 2025, which we expect to be our fourth consecutive quarter of revenue growth year over year.
Timothy Henrichs: As mentioned before, we remain highly focused on expanding our insurance coverage despite the inherent lag from insurance coverage device orders, which we have spoken about before. Recent performance indicates strong demand and acceptance on the part of health care providers and patients for our product. Gross margin in the first quarter of 2025 was 84.4%, compared to 88.4% in the fourth quarter of 2024. Although we saw an increase in sales volume, the 400 basis point decrease year over year was due to a higher growth rate of the company's discounted financial assistance patients over the full reimbursement patients and higher device manufacturing and shipping costs.
Brian Caracol: As mentioned before we remain highly focused on expanding our insurance coverage.
Brian Caracol: The inherent lag from insurance coverage device orders, which we have spoken about before recent performance indicates strong demand and acceptance on the part of health care providers and patients.
Brian Caracol: <unk>.
Brian Caracol: Gross margin in the first quarter of 2025 was 84, 4%.
Brian Caracol: Fair to 88, 4% in the fourth quarter up 24.
Brian Caracol: We saw an increase in sales volume of 400 basis point decrease year over year was due to a higher growth rate of the company's discounted financial assistance patients over the full reimbursement patients and higher device manufacturing and shipping costs.
Timothy Henrichs: We expect our gross margin to recover into next year because when the Category 1 CPT code becomes effective on January 1st, the devices currently sold at a discount will eventually transition to full reimbursement revenue upon insurance coverage, which will boost both our future revenues and gross margin.
Brian Caracol: We expect our gross margin to recover into next year, because when the category one CPT code becomes effective January one.
Brian Caracol: The device is currently sold at a discount will eventually transition to full reimbursement revenue upon insurance coverage, which will boost both our future revenues and gross margin.
Timothy Henrichs: Total operating expenses in the first quarter of 2025 were $3.1 million, an increase of 27% compared to the first quarter of 2024, primarily due to the settlement of a loss. Excluding the one-time legal settlement charge, the company's operating expenses would have remained relatively flat compared to the first quarter of 2024. Selling expenses in the first quarter of 2025 were $134,000, a 68% increased to $80,000 in the first quarter of 2024. due to higher sales volume and temporary commission structure to facilitate growth and adoption in new states. Research and development expenses in the first quarter of 2025 were $61,000 compared to only $6,000 in the first quarter of 2024.
Brian Caracol: Total operating expenses in the first quarter of 2025 with $3 1 million, an increase of 27% compared to the first quarter of 2024, primarily due to the settlement of a lawsuit.
Brian Caracol: Excluding the one time legal settlement charge the company's operating expenses would have remained relatively flat compared to the first quarter of 2024.
Speaker Change: Selling expenses in the first quarter of 2025 or 134000% to 68%.
Brian Caracol: Increased $80000 in first quarter of 2024.
Speaker Change: Due to the higher sales volume and temporary commission structure.
Brian Caracol: <unk> growth and adoption in new states.
Speaker Change: Research and development expenses.
Speaker Change: The first quarter of 2025% or $61000 compared to only $6000 in the first quarter of 2024.
Timothy Henrichs: The increase is due to higher spending on a medical research study and costs to develop the REDD device that we eventually soft-launched in the first quarter.
Speaker Change: The increase is due to higher spending on medical research study.
Got to develop the red device.
Speaker Change: So we soft launched in the first quarter.
Timothy Henrichs: general and administrative expenses of $2.9 million in the first quarter of 2025 were 23% higher than the $22.3 million in the first quarter of 2024. The increase was due to One, the settlement of a lawsuit. two expenses related to the introduction of an annual short-term and long-term incentive plan that did not exist in the first quarter of 2024. 3. Higher Advertising Costs to Expand Market Awareness and four, third party costs incurred to enhance the company's internal control environment. partly offset by a one-time hiring grant in 2024 and lower third-party professional service costs as our new hires have absorbed the work internally.
Speaker Change: General and administrative expenses of $2 $9 million in the first quarter of 2025 or 23% higher than the $22 3 million in the first quarter of 2024.
Speaker Change: The increase was due to.
Speaker Change: One the settlement of a lawsuit.
Speaker Change: <unk> expenses related to the introduction of an annual short term and long term incentive plan that did not exist in the first quarter of 24 three.
Speaker Change: Three higher advertising costs to expand market awareness.
Speaker Change: And for third party costs incurred to enhance the company's internal control environment.
Partly offset by a one time hiring grants in 2024 and lower third party professional service costs as our new hires have absorbed the work internally.
Timothy Henrichs: Excluding the one-time legal settlement charge, general and administrative expenses would have decreased 4% year over year. We anticipate that in the near term, we will be able to leverage our operating expenses levels to deliver strong top-line growth.
Speaker Change: Excluding the onetime legal settlement charge general and administrative expenses would have decreased 4% year over year.
Speaker Change: We anticipate that really near term, we will be able to leverage our operating expenses.
Speaker Change: Levels to deliver strong topline growth.
Timothy Henrichs: Operating loss in the first quarter of 25 was $2.3 million, an increase of 25% compared to a $1.8 million loss in the first quarter of 2024. Excluding the one-time legal settlement charge, the company's operating loss would have improved 9% compared to Q1 of 24. Our net loss in the first quarter was $2.3 million, an increase of 8% compared to $2.1 million in the first quarter of 2020. excluding the one-time legal settlement charge, the company's net loss would have improved 22%. over Q1 of 2014. From a liquidity standpoint, our cash on hand as of March 31st of 25 was $2 million used in operations in Q1 of 25 was $271,000 higher than in Q1 of 24, primarily due to a decrease in the company's payable.
Speaker Change: Operating loss for the first quarter of $25 $2 3 million, an increase of 25% compared to a $1 $8 million loss in the first quarter of 2024, excluding the one time legal settlement charge. The company's operating loss would have improved 9% compared to Q1 of 'twenty four.
Speaker Change: Our net loss in the first quarter was $2 $3 million, an increase of 8% compared to $2 $1 million in the first quarter of 'twenty four.
Speaker Change: Excluding the one time legal settlement charge the company's net loss would have improved 22%.
Speaker Change: Over Q1 of 'twenty four.
Speaker Change: From a liquidity standpoint, our cash on hand as of March 31, 25 was.
Speaker Change: $2 million.
Speaker Change: It's used in operations in Q1 of 'twenty five.
Speaker Change: $271000 higher than in Q1 of 'twenty four primarily due to a decrease in the Companys payables and.
Timothy Henrichs: and we also have no long-term plans.
Speaker Change: And we also have no long term debt.
Brian Carrico: And with that, let me turn the call back over to Brian. Thanks, Tim. To summarize, while we have recently achieved several critical milestones, we're still in the early innings of what we expect to be substantial top and bottom line growth over the coming quarters. Our disciplined execution of the commercialization strategy is starting to deliver tangible results quarter after quarter, as evidenced by the accelerating growth in these past three quarters.
Speaker Change: And with that let me turn the call back over to Brian.
Okay.
Speaker Change: Thanks, Tim to summarize while we have recently achieved several critical milestones we are still in the early innings of what we expect to be substantial top and bottom line growth over the coming quarters, our disciplined execution of our commercialization strategy is starting to deliver tangible results quarter after quarter as evidenced by the accelerating growth in these past three quarters.
Brian Carrico: We are also strengthening the foundation for future expansion, highlighted by the receipt of our Category 1 CPT code and the broadened 510K clearance.
Speaker Change: We're also strengthening the foundation for future expansion highlighted by the receipt of our category, one CPT code and the broadened five 10-K clearance.
Operator: With that, operator, we'd be happy to take any questions. As a reminder, if you'd like to ask a question at this time, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1 1 again.
Speaker Change: With that operator, we'd be happy to take any questions.
Speaker Change: As a reminder, if you'd like to ask a question at this time. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
Ben Shamsian: Okay, we have some questions that were sent to us by investors.
Speaker Change: We have some questions that were sent to us by investors.
Brian Carrico: First, let's speak about the guidelines. When do you expect them, and can you talk about the timeline of receiving the guidelines until you see strong orders? Yeah, Ben, as we discussed, the two things we do not control are the timing of the guidelines and the writing of the policy coverage by payers.
Speaker Change: First let's speak about the guidelines.
Speaker Change: When do you expect them and can you talk about the timeline of.
Speaker Change: Receiving the guidelines until you see strong orders.
Then from those.
Ben Champion: Yes, Ben as we discussed the two things we do not control the timing of the guidelines and the right hand of the policy covered by payers. It was announced at a conference last weekend in San Diego that Dr. Miranda and I attended the guidelines are expected to be published by the end of this month. So that would tell you in the next three weeks.
Brian Carrico: It was announced at a conference last weekend in San Diego that Dr. Miranda and I attended that the guidelines are expected to be published by the end of this month, so that would tell you in the next three weeks. From there, orders will increase based on the policy coverage expected from those guidelines, which we're cautiously optimistic won't take.
Speaker Change: From their oral will increase based on the policy coverage expected from those guidelines, which were costs cautiously optimistic won't take too long.
Brian Carrico: The reason these guidelines are so impactful is because they are independent, they are by the academic society, and NeurAxis has zero control over what they say and when they're Of course, they've taken much longer than anyone expected, but it was announced last week at a podium presentation that they will be published in the month of May. From there, the guidelines will be sent to the payers that we've been in communication with. Many of the payers previously, the large blue crosses have taken somewhere in the neighborhood of 90 to 120 days to write policy covers. There's no guarantee that the bigger payers will do it that quickly, but we're cautiously optimistic that they'll do it relatively the same time.
Ben Champion: The reason these guidelines are so impactful because they are independent they are by the academic society interact with zero control over what they say.
Speaker Change: And when they are published and of course, they have taken much longer than anyone expected.
Speaker Change: But when it was announced last week at a podium presentation that they will be published in the month of May.
Speaker Change: From there the guidelines will be.
Speaker Change: Debt to the payers that we've been in communication with.
Speaker Change: <unk>.
Speaker Change: Many of the payers previously.
Speaker Change: <unk> wood crosses have taken somewhere in the neighborhood of 9100 to 120 days to write policy coverage, there's no guarantee that the bigger payers, we will do it that quickly.
Speaker Change: But we're cautiously optimistic that.
Speaker Change: You'll do it relatively the same timeframe.
Operator: Okay.
Timothy Henrichs: Ken, we have a question for you. Can you talk about how you see your operating expenses in the near and medium term going forward? Sure, there's actually two answers to that question.
Speaker Change: Okay.
Speaker Change: Kevin we have a question for you.
Speaker Change: Can you talk about how you see your operating expenses in the near and medium term going forward.
Speaker Change: Sure.
Speaker Change: There's actually two answers to that question now just to review our current states excluding.
Timothy Henrichs: Now just to review our current state... Excluding the legal settlements in the first quarter here of 25, our operating expense dollars were relatively flat from the first quarter a year ago, while our revenue was up 39%. So we spent wisely because we have high caliber team members that have grown the top line and increased our research and development and marketing expenses, while we self funded those expenditures by obtaining cost reductions in other areas such as insurance and professional services without sacrificing quality. solid performance and execution from the team. Then from a percentage standpoint, our operating expenses as a percent of sales, excluding the legal settlement.
Speaker Change: Excluding the legal settlements in the first quarter hereof 25, our operating expense dollars were relatively flat from the first quarter a year ago.
Speaker Change: While our revenue was up 39%.
Speaker Change: So we have spent wisely because.
Speaker Change: As we have high caliber team members that have grown the top line and increased our research and development and marketing expenses, while we self funded those expenditures by obtaining cost reductions in other areas such as insurance and professional services without sacrificing quality.
Speaker Change: Solid performance and execution from the team.
From a percentage standpoint, our operating expenses as a percent of sales excluding the legal settlement.
Timothy Henrichs: is down for the third consecutive quarter, demonstrating that we are leveraging our fixed costs and not adding expenses anywhere near the rate of sales growth.
Speaker Change: Is down for the third consecutive quarter Derma.
Speaker Change: Demonstrating that we are leveraging our fixed costs and not adding expenses anywhere near the rate of sales growth.
Timothy Henrichs: So in the near and medium term, I expect two things. First, that our operating expense dollars will likely increase, because I believe we'll need to invest in our sales and marketing teams going forward to meet the upcoming demand we expect from the guidelines. CAT-1 CPT code, and then increased insurance coverage. Second, I expect our operating expenses as a percent of sales to continue to decrease, as we've seen in the last three quarters, as our top line in gross profit will outpace any... in Operating Expenses.
Speaker Change: The near and medium term I expect two things first that our operating expense dollars will likely increase because I believe we will need to invest in our sales and marketing teams going forward to meet the upcoming demand we expect from our guidelines.
Speaker Change: The cat one CPT code and then increased insurance coverage.
Speaker Change: Second I expect our operating expenses as a percent of sales to continue to decrease as we've seen in the last three quarters as our topline and gross profit.
Speaker Change: What pace any increases in operating expenses.
Operator: Okay thank you.
Brian Carrico: Brian, we have a question regarding red. Can you provide some more color on what you've learned so far and how you're thinking about it going forward? Yeah, so we continue in the soft launch stage and The response continues to be stronger than what we expected. The uptick in revenue in accounts beginning to utilization has been slower. The, you know, these adult GI practices are large. They have committees, boards, CEOs, and that takes time. Many of those committees were canceled in March and early April because of spring breaks and moved back a month. This is no different than a value analysis.
Speaker Change: Okay. Thank you.
Speaker Change: We have a question regarding red.
Speaker Change: Can you provide some more color on what you've learned so far and how you're thinking about that going forward.
Speaker Change: Yeah. So we continue with a soft launch stage.
Speaker Change: Yes.
Speaker Change: The response continues to be stronger than what we had been what we expected.
Speaker Change: The uptick.
And our revenue.
Speaker Change: And accounts beginning the utilization has been slower.
Speaker Change: B.
Speaker Change: These adult Gi practices or large they have come.
Speaker Change: Committees boards Ceos.
Speaker Change: And that takes time many of those committees were canceled in March and early April because of spring breaks and move back a month. This is no different to the value analysis.
Brian Carrico: team were committing in a hospital. So, the response, again, we went to Digestive Disease Week last week, which is the largest global GI conference in the world, and again, the response was excellent. There is a significant need for this technology, and the fact that it already has a Category 1 CPT code and strong national reimbursement eliminates that hurdle. So, this is about ultimately commercial execution. We're slightly changing physician practice habits and practice flow, but this is not a long procedure, so that doesn't appear to be a real hurdle. So, we're excited about this. The response is really strong.
Speaker Change: Theme or committee.
Speaker Change: Hospitals. So the response again, we went to digestive disease week last week, which is the largest global GI conference in the World and again the response was excellent.
Speaker Change: There is a significant need for this technology and the fact that it already has a category one CPT code and strong national reimbursement.
Speaker Change: Eliminates that hurdle. So this is about ultimately commercial execution.
Speaker Change: Slightly changing physician practice habits in practice slow.
Speaker Change: But not this is not a long procedures, so that doesn't appear to be a real hurdle.
Speaker Change: So we're excited about this.
Speaker Change: Sponsors really strong.
Timothy Henrichs: Tim, we have a question for you regarding the legal settlement. Can you provide some color in terms of the scope and sort of what, if we're done with the expenses? that were here. Sure. This legal settlement goes back to 2019. And we've actually provided disclosures in our 10-Q. And so I recommend that investors read that as well. Having said that, to answer the question, What we agreed to do is to settle the case. for $750,000, which will be paid in equal monthly installments beginning in January of 2026 and continuing through the end of December 26.
Speaker Change: Okay.
Speaker Change: Tim we have a question for you regarding the legal settlement.
Speaker Change: Can you.
Speaker Change: Provide some color.
In terms of the scope and sort of what.
Speaker Change: If we're done with.
Speaker Change: With the expenses.
Speaker Change: Sure.
Speaker Change: This this legal settlement goes back to 2019.
Speaker Change: And we've actually provided disclosures in our 10-Q, so I recommend.
Speaker Change: That investors read that as well, having said that to answer the question.
Speaker Change: What we agreed to do is that to settle the case.
Speaker Change: For $750000, which will be paid in equal monthly installments beginning in January of 2006, okay.
Speaker Change: Continuing through the end of December 26, ultimately we look at this as a positive for the company. This long queue. His thoughts it's been out there for a while it gets us behind us.
Timothy Henrichs: Ultimately, we look at this as a positive for the company. This lawsuit has been out there for a while. It gets us behind us. It prevents any further risk of legal fees, potential litigation, and the continuance of it. It's just best to put this behind us since it's been out there for so long. We believe we've negotiated a reasonable settlement in our case with payment terms, and the company and the management team is looking forward to moving on and getting this behind us.
Speaker Change: Any further risk.
Speaker Change: Legal fee potential litigation.
Speaker Change: Continuance of it.
It's best to put this behind us.
Speaker Change: <unk> been out there for so long we believe was negotiated.
A reasonable settlement in our case with payment terms and the company and the management team is looking forward to more.
Speaker Change: Moving on and getting that behind us.
Brian Carrico: Ben, I'll add to that. This happened in 2015. So the risk of anything like this happening. The statutes of limitations have passed, the lawsuit was filed in 2019 as Tim mentioned, but this ultimately boiled down to how much would it cost us to go to trial and this was at or below and then we have no risk and no time spent. We believed in our position, we felt like we would win, but was it worth the time, energy and money of the next 18 to 24 months versus putting this behind us and the answer that the board and the executive team decided was to end it and not to affect our cash flow in 2025.
Speaker Change: Ben I'll add to that this happened in 2015 and 16, so the risk of anything like this happening again.
Speaker Change: <unk> limitations are past the lawsuits filed in 2019 as Tim mentioned, but this ultimately boils down to how much would it cost us to go to trial and this was at or below and then we have no risk and no time spent.
Speaker Change: We believe that our position we felt like we would win but it wasn't worth the time energy and money over the next 18 to 24 months versus putting this behind us and the answer that the board and the executive team decided.
Speaker Change: And not to affect our cash flow in 2025.
Operator: Operator, can you queue for a question? Again, if you'd like to ask a question at this time, please press star 1 1 on your touchtone phone. I'm not showing any phone questions at this time.
Speaker Change: Okay.
Speaker Change: Operator can queue for.
Speaker Change: For questions.
Speaker Change: Again, if you would like to ask a question at this time. Please press star one one on your Touchtone phone.
Speaker Change: I'm not showing any phone questions at this time.
Ben Shamsian: Well, thank you all very much for being with us today. We look forward to communicating with you again soon. We do expect some announcements in the coming three and four weeks. And we'll communicate those through press releases.
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.
Speaker Change: We do expect some some announcements in the coming.
Speaker Change: Three and four weeks and we'll communicate those through press releases, everyone have a nice week. Thank you.
Operator: Everyone have a nice week. Thank you.
Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: Okay.