Q2 2025 ElectroCore Inc Earnings Call
This call is being recorded its now my pleasure to introduce you to your host Dan Goldberger Electric course, Chief Executive Officer.
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Yeah.
Thank you all for participating in today's electrical earnings call. Joining me today is Joshua Les our Chief Financial Officer, and our Investor Relations firm F. N K I R earlier today electric or published results for the second quarter ended June 32025.
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Todd.
A copy of the press release is available on the company's website.
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Before we begin I'd like to remind you that management will make statements. During the call that include forward looking statements within the meaning of the federal Securities laws.
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Which are made pursuant to the safe Harbor provisions of the private Securities Litigation Reform Act of 1095.
Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements.
All forward looking statements, including without limitation any guidance outlook or our future financial expectations or operational activities and performance are based upon the company's current estimates and various assumptions.
These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.
Accordingly, you should not place undue reliance on these statements.
For a list of the risks and uncertainties associated with the company's business. Please see the Companys filings with the Securities and Exchange Commission.
Electric cord disclaims any intention or obligation, except as required by law to update or revise any financial projections or forward looking statements, whether because of new information future events or otherwise.
This conference call contains time sensitive information that is accurate only as of the live broadcast today August six 2025.
I want to take a moment and welcome James Theophilus to our board of directors as an independent director.
Mr. Theophilus is a very accomplished young men and a successful executive at Microsoft including prior roles in the global healthcare and life Sciences business for Microsoft, helping with the integration of nuance and the launch of multiple health care specific products for Microsoft.
He now serves on the Azure plus AI team.
Adding all go to market for finance and Microsoft for this product family.
With the <unk> family has been an equity investor in electric course since inception, almost 20 years ago and I don't think they sold any significant amount of their position in all that time.
Look forward to working with Mr. Theophilus to build shareholder value at electrical.
Turning to our results Electricar posted record revenue in the second quarter and continues to evolve from a single product into a broad based bio electronic technology company.
We now offer a growing suite of medical devices and wellness products that service, both medical and consumer markets.
The VA hospital system continues to be our largest customer and as expected we returned to above market growth in that channel.
We closed the acquisition of neuro metrics on May <unk> and the integration has been completed ahead of schedule.
We've added serious talent to our team headlined by Kelly Benning, as senior Vice President of <unk>, and James Theophilus as an independent director along with other superstars in all functional areas of the company.
So those who are new to the story electric core pioneered noninvasive vagus nerve stimulation today. The company offers a growing suite of noninvasive bio electronic technologies that reduce chronic pain and improved quality of life for patients and wellness consumers in the United States and select international markets.
Our expanding portfolio is supported by a robust pipeline of indications and applications driven by clinicians researchers and wellness advocates science and data will always be our north star.
Suite of medical devices, and wellness products that service, both medical and consumer markets.
The VA hospital system continues to be our largest customer and as expected we returned to above market growth in that channel we.
Our five year compound annual growth rate is about 58% in the second quarter of 2025 revenue reached a record $7 4 million up 20% year over year and 10% sequentially.
We closed the acquisition of neuro metrics on May <unk> and the integration has been completed ahead of schedule.
We've added serious talent to our team headlined by Kelly Benning, as senior Vice President of Tobago, and James Theophilus as an independent director along with other superstars in all functional areas of the company.
Gross margins remained strong at 87% up slightly from 86% last year, we model gross margins in the mid <unk> going forward.
So those who are new to the story electric core pioneered noninvasive vagus nerve stimulation.
VA revenue grew 12% sequentially from $4 7 million in Q1 to $5 3 million in the second quarter of 2025.
Today, the company offers a growing suite of noninvasive bio electronic technologies that reduce chronic pain and improved quality of life for patients and wellness consumers in the United States and select international markets.
As of June 32025, 188, VA facilities have purchased prescription gamma core products up from 175, a year ago.
Our expanding portfolio is supported by a robust pipeline of indications and applications driven by clinicians researchers and wellness advocates science and data will always be our north star are.
The VA headache centers of excellence estimates approximately 600000 patients are being treated for headache in the VA hospital system, including approximately 24000 cluster headache patients.
Our five year compound annual growth rate is about 58% in the second quarter of 2025 revenue reached a record $7 4 million up 20% year over year and 10% sequentially.
We've now <unk> devices to approximately 10700 veterans roughly 2% of the addressable headache market, we see within the VA system.
The total addressable market within the VA channel is even larger if we include headache in post traumatic stress disorder patients or headache in mild traumatic brain injury patients.
Gross margins remained strong at 87% up slightly from 86% last year, we model gross margins in the mid <unk> going forward.
We believe there are as many as 550000 fibromyalgia patients in the VA Hospital system based on published incidents and prevalence data.
<unk> revenue grew 12% sequentially from $4 $7 million in Q1 to $5 3 million in the second quarter of 2025.
Our recently acquired wholly owned subsidiary Euro metrics is dispensed less than 500 qualify bromal just stimulators since launch in 2024. So we believe there is plenty of room to grow here as well.
As of June 32025, 188, VA facilities have purchased prescription gamma core products up from 175, a year ago.
The VA headache centers of excellence estimates approximately 600000 patients are being treated for headache in the VA hospital system, including approximately 24000 cluster headache patients.
We focused on our success and opportunity in the VA channel, while deferring investments in the larger commercial insurance channels, we intend to turn our attention to commercial market access later this year and we are hopeful those efforts will bear fruit in the future.
We've now <unk> devices to approximately 10700, behrens roughly 2% of the addressable headache market, we see within the VA system.
Our direct to consumer general wellness brand through Vega posted $1 million in Q2 sales that 74% year over year growth, but a frustrating sequential decline I am confident that <unk> will return to sequential growth under Kelly's leadership and the initiatives we have in place our revenue return on advertising <unk>.
Total addressable market within the VA channel is even larger if we include headache in post traumatic stress disorder patients or headache in mild traumatic brain injury patients.
We believe there are as many as 550000 fibromyalgia patients in the VA Hospital system based on published incidence and prevalence data.
And for the period was approximately two point all meaning.
Meaning for every $1 spent on media, we generated nearly $2 of revenue.
Our recently acquired wholly owned subsidiary Euro metrics is dispensed less than 500, <unk> fiber myalgia stimulators since launch in 2024. So we believe there is plenty of room to grow here as well.
Return rates across our e-commerce platforms are approximately 10% to 11% consistent with prior periods.
Two Vega has now sold over 16000 handsets powering more than $1 1 million user sessions on our mobile App, we plan to accelerate marketing and promotional investments and our true Vega platform to drive growth in 2026 and beyond.
We focused on our success and opportunity in the VA channel, while deferring investments in the larger commercial insurance channels, we intend to turn our attention to commercial market access later this year and we're hopeful those efforts will bear fruit in the future.
We believe that a true Vega copycat from Eastern Europe has been infringing our patents and trademarks you may have seen some filings in federal Court and the district of New Jersey about are escalating dispute I'm sure you'll understand if we refrain from commenting beyond the public filings as telling develops her strategic plan, we expect to add new use cases.
Our direct to consumer general wellness brand through Vega posted $1 million in Q2 sales that 74% year over year growth, but a frustrating sequential decline I am confident that <unk> will return to sequential growth under <unk> leadership and the initiatives we have in place our revenue return on advertising spend.
And target demographics per hour and BNS products and launch additional health and wellness offerings, such as <unk> relief for lower extremity pain.
For the period was approximately two point, meaning for every $1 spent on media, we generated nearly $2 of revenue.
Based on the opportunities in front of US we are now investing in people marketing and product to accelerate growth and drive scale in 2026 and 2027.
Return rates across our e-commerce platforms are approximately 10% to 11% consistent with prior periods.
This is a strategic decision to prioritize growth and long term value creation likely delaying company wide profitability.
Two Vega has now sold over 16000 handsets powering more than $1 1 million user sessions on our mobile app.
Our U S prescription channel recorded revenue of $394000. During the quarter ended June 32025 down 17% year over year as expected many cash pay prescription customers have transitioned to the true Vega brand as awareness grows and as of June 32025.
We plan to accelerate marketing and promotional investments and our true Vega platform to drive growth in 2026 and beyond.
We believe that a true data copycat from eastern Europe has been infringing our patents and trademarks.
You may have seen some filings in federal Court and the district of New Jersey about are escalating dispute I'm sure you'll understand if we refrain from commenting beyond the public filings as telling develops her strategic plan, we expect to add new use cases and target demographics per hour and BNS products and launch additional health and wellness offerings such as <unk>.
We've enrolled 182, two days plus partners, including 49, she concierge accounts, who offer both product lines through.
Through the first half of 2025 these customers accounted for approximately $355000 of true Vegas sales, representing what would be a 14% year over year increase through the first six months of the period in that commercial space.
Relief for lower extremity pain.
Just on the opportunities in front of US we are now investing in people marketing and product to accelerate growth and drive scale in 2026 and 2020.
We expect the transition to wellness offerings to continue in this channel as we look forward to adding new products such as qualified <unk> to these accounts as well.
This is a strategic decision to prioritize growth and long term value creation likely delaying company wide profitability.
Revenue from outside the United States was $465000 for the quarter down 9% from the same period last year most of our O U S revenue continues to be generated in the United Kingdom by prescription Gamma core sales funded by NHS and we modeled flat revenue from this category for the time being.
Our U S prescription channel recorded revenue of $394000. During the quarter ended June 32025 down 17% year over year as expected many cash pay prescription customers have transitioned to the true Vega brand as awareness grows and as of June 32025, we've been.
We entered into a term debt facility with Avenue capital on August four 2025, which provided approximately $7 2 million of additional net cash at closing.
Rolled 180 to two data plus partners, including 49, she concierge accounts, who offer both product lines.
Through the first half of 2025 these customers accounted for approximately $355000 of true Vega sales, representing what would be a 14% year over year increase through the first six months of the period in that commercial space.
A second tranche of $4 $5 million may become available to the company as well.
The term of the loan is 48 months, earning cash interest at 12, 5% initially the floating rate will be calculated as WSJ prime plus 5% with that 12, 5% floor.
We expect the transition to wellness offerings to continue in this channel as we look forward to adding new products such as qualified <unk> to these accounts as well.
<unk> capital has been granted a 106351 shares of <unk> common as a commitment fee and up to two $5 million of the principal amount is convertible at $8 46 per share additional disclosure is available in our 10-Q.
Revenue from outside of the United States was $465000 for the quarter down 9% from the same period last year most of our O U S revenue continues to be generated in the United Kingdom by prescription Gamma core sales funded by NHS and we modeled flat revenue from this category for the time being.
This facility gives us increased liquidity as we invest in growth and I believe we are pursuing our growth strategy from a position of strength.
We entered into a term debt facility with Avenue capital on August four 2025, which provided approximately $7 2 million of additional net cash at closing a.
Josh will discuss operating expense cash trajectory and guidance in more detail later in the call. However, our cash balance as of June 32025 was $7 $4 million.
A second tranche of $4 $5 million may become available to the company as well.
That means our cash balance decreased by only $613000 in the three months ended June 32025, and total of approximately $5 million in the first half of the year.
The term of the loan is 48 months, earning cash interest at 12, 5% initially the floating rate will be calculated as WSJ prime plus 5% with that 12, 5% floor.
We expect to consume about $4 million of cash in the second half of the year to execute our plan, including these accelerated investments.
<unk> capital has been granted a 106351 shares of <unk> common as a commitment fee and up to two $5 million of the principal amount of convertible at $8 46 per share additional disclosure is available in our 10-Q.
Which would put our pro forma cash balance at December 31, 2025 at approximately $10 5 million, including the first tranche from the Avon capital loan.
As I mentioned above we have decided to accelerate certain investments in the second half of the year to set the stage for significant revenue growth in 2026 and 2027.
This facility gives us increased liquidity as we invest in growth and I believe we are pursuing our growth strategy from a position of strength.
These investments will be directed towards <unk> initiatives and future prescription indications.
Josh will discuss operating expense cash trajectory and guidance in more detail later in the call. However, our cash balance as of June 32025 was $7 4 million.
Our board and management believe the time is right to invest in growth to create long term value as a result, our operating expenses will increase and the revenue we require to be cash positive will increase accordingly.
That means our cash balance decreased by only $613000 in the three months ended June 32025, and a total of approximately $5 million in the first half of the year.
On our May 25 conference call I said that we needed $9 $5 million of quarterly revenue to be cash positive based.
We expect to consume about $4 million of cash in the second half of the year to execute our plan, including these accelerated investments.
Based on our more aggressive growth strategy will now need 11 $5 million to $12 million of quarterly revenue to cover our increased operating expense plan and demonstrate positive cash from operations.
Which would put our pro forma cash balance at December 31, 2025 at approximately $10 $5 million includes.
That means 55% to 62% more than the $7 $5 million of revenue, we just posted and I expect that we'll be able to hit those metrics later in 2026.
Including the first tranche from the Avon capital loan.
As I mentioned above we have decided to accelerate certain investments in the second half of the year to set the stage for significant revenue growth in 2026 and 2027.
It is important to remember that the contribution margin of our business model is still roughly 55% or more.
These investments will be directed towards two big initiatives and future prescription indications.
Once we generate enough gross profit to cover our operating expenses operating margins could increase dramatically.
Our board and management believe the time is right to invest in growth to create long term value as a result.
Now I'll turn the call over to Josh for a review of our financials and select guidance.
Our operating expenses will increase and the revenue we require to be cash positive will increase accordingly.
Josh.
Thank you Dan net sales for the second quarter of 2025 were $7 4 million, an increase of 20% as compared to $6 1 million for the second quarter of 2024, the increase of $1 $2 million is due to an increase in net sales across our prescription in general wellness.
On our May 25 conference call I said that we needed $9 $5 million of quarterly revenue to be cash positive.
Based on our more aggressive growth strategy will now need 11 $5 million to $12 million of quarterly revenue to cover our increased operating expense plan and demonstrate positive cash from operations.
<unk> products.
Gross profit for the second quarter was $6 4 million as compared to $5 3 million for the second quarter last year gross margin was 87% compared to 86% for the second quarter last year.
<unk>, 55% to 62% more than the $7 $5 million of revenue, we just posted and I expect that we'll be able to hit those metrics later in 2026.
It's important to remember that the contribution margin of our business model is still roughly 55% or more.
Total operating expenses in the second quarter were approximately $9 $9 million.
As compared to $7 9 million in the second quarter last year.
Once we generate enough gross profit to cover our operating expenses operating margins could increase dramatically.
Research and development expense in the second quarter was $511000 as compared to $635000 in the second quarter last year. This decrease was primarily due to reduced development costs.
Now I'll turn the call over to Josh for a review of our financials and select guidance Josh.
Thank you Dan net sales for the second quarter of 2025 were $7 4 million.
For the remainder of 2025, we expect our research and development expense to be higher than the comparable periods in 2024.
An increase of 20% as compared to $6 1 million for the second quarter of 2024, the increase of $1 2 million is due to an increase in net sales across our prescription in general wellness products.
Selling general and administrative expense in the second quarter was $9 4 million as compared to $7 $3 million in the second quarter of 2024.
Gross profit for the second quarter was $6 4 million as compared to $5 3 million for the second quarter last year gross margin was 87% compared to 86% for the second quarter last year.
This increase was primarily due to the greater investments in selling and marketing costs consistent with our increase in sales $548000 of bad debt expense associated with the tax receivable increased expenses associated with professional fees and increased rent expense associated with the <unk>.
Total operating expenses in the second quarter were approximately $9 9 million.
As compared to $7 9 million in the second quarter last year.
<unk> lease expansion for.
For the remainder of 2025, we plan on continuing to make targeted investments in product people sales and marketing to support our commercial efforts.
Research and development expense in the second quarter was $511000 as compared to $635000 in the second quarter last year. This decrease was primarily due to reduced development costs.
GAAP net loss was $3 7 million or a loss of 44 per share as compared to GAAP net loss of $2 $7 million or a net loss of 38 per share in the second quarter of 2024. The increase in GAAP net loss is primarily attributable to an increase in selling.
For the remainder of 2025, we expect our research and development expense to be higher than the comparable periods in 2024.
Selling general and administrative expense in the second quarter was $9 4 million as compared to $7 3 million in the second quarter of 2024.
General and administrative expense, partially offset by an increase in gross profit adjusted.
This increase was primarily due to the greater investments in selling and marketing costs consistent with our increase in sales.
EBITDA net loss was $2 4 million as compared to adjusted EBITDA net loss of $1 9 million in the second quarter of 2024.
$548000 of bad debt expense associated with the tax receivable increase.
A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release.
Increased expenses associated with professional fees and increased rent expense associated with the Rockaway lease expansion for.
For the remainder of 2025, we plan on continuing to make targeted investments in product people sales and marketing to support our commercial efforts.
Cash cash equivalents restricted cash and marketable securities at June 32025 totaled approximately $7 4 million.
GAAP net loss was $3 7 million or a loss of <unk> 44 per share as compared to GAAP net loss of $2 $7 million or a net loss of 38 per share in the second quarter of 2024. The increase in GAAP net loss is primarily attributable to an increase in selling.
As compared to approximately $12 2 million as of December 31, 2024.
Net cash used in operating activities for the second quarter of 2025 was $623000 as compared to $4 $4 million in the first quarter of 2025.
Total cash used in operating activities in the first half of the year was approximately $5 million.
General and administrative expense, partially offset by an increase in gross profit adjusted.
Change in net cash in the second quarter of 2025 was $613000 from the first quarter of 2025. This significant reduction in net cash used is primarily due to changes in working capital as well as an increase of $526000 of cash.
EBITDA net loss was $2 4 million.
As compared to adjusted EBITDA and net loss of $1 9 million in the second quarter of 2024.
Reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release.
From the neuro metrics balance sheet.
Cash cash equivalents restricted cash and marketable securities at June 32025 totaled approximately $7 4 million as compared to approximately $12 2 million as of December 31 2024.
In August 2025, the company raised net proceeds of approximately $7 $2 million to return debt facility with Avenue capital.
Pro forma cash as of June 32025, including proceeds of the term debt would have been $14 $6 million.
Net cash used in operating activities for the second quarter of 2025 was $623000 as compared to $4 $4 million in the first quarter of 2025.
We are reiterating our full year revenue outlook for the full year of 2025, we expect total revenue to be approximately $30 million and net cash used for the next two quarters to be between $3 9 million and $4 4 million.
Total cash used in operating activities in the first half of the year was approximately $5 million.
Pro forma cash balance at December 31, 2025 would have been approximately $10 $5 million.
Change in net cash in the second quarter of 2025 was $613000 from the first quarter of 2025.
Including the first tranche from the Avenue capital loan.
This significant reduction in net cash used is primarily due to changes in working capital as well as an increase of $526000 of cash from the neuro metrics balance sheet.
And now I'll turn the call back to Dan.
Thank you Josh.
I believe we have a tremendous amount of momentum moving into the second half of 2025 revenue in the VA has returned to sequential growth and the integration of neuro metrics has been completed ahead of schedule.
In August 2025, the company raised net proceeds of approximately $7 2 million.
We're moving into the third quarter of 25, with new bio electronic products and technologies that we believe that extremely well into our established channels and are increasing our efforts and investments to become a significant player in the health and wellness space.
Through a term debt facility with Avenue capital.
Pro forma cash as of June 32025, including proceeds of the term debt would have been $14 6 million.
We are reiterating our full year revenue outlook for.
Although we expect profitability to be delayed as we increased spending on <unk> data, our new debt facility can provide us up to approximately $12 million of additional cash to execute on our plan.
For the full year of 2025, we expect total revenue to be approximately $30 million and net cash used for the next two quarters to be between $3 9 million and $4 4 million.
Demand for <unk> in the VA channel continues to grow based on clinical performance and our increased presence in the field.
So form a cash balance at December 31, 2025 would have been approximately $10 $5 million, including the first tranche from the Avenue capital loan.
Our VA business returned to growth in the second quarter, and we're launching prescription 12 fibromyalgia through our field sales organization.
And now I'll turn the call back to Dan.
Thank you Josh.
We rely on our field sales organization to drive revenue growth in the VA hospital, and other prescription and <unk> channels.
I believe we have a tremendous amount of momentum moving into the second half of 2025 revenue in the VA has returned to sequential growth and the integration of neuro metrics has been completed ahead of schedule.
We completed a restructuring of our field sales function earlier this year and we currently have approximately 80 straight commission sales agents, including sub reps managed by 12 territory business managers, who are salaried employees.
We're moving into the third quarter of 2005, with new bio electronic products and technologies that we believe that extremely well into our established channels and are increasing our efforts and investments to become a significant player in the health and wellness space.
Five of our 12 territory business managers are relatively new so we expect the size of our 10 99 team to continue growing in the second half of 2025.
Although we expect profitability to be delayed as we increased spending on <unk> data, our new debt facility can provide us up to approximately $12 million of additional cash to execute on our plan.
True Vega plus has been favorably received by the market since its April 2020 for launch the.
Demand for <unk> in the VA channel continues to grow based on clinical performance and our increased presence in the field.
The brand continues to show tons of potential as a direct to consumer general wellness offerings.
We sell through Vega products direct to consumer through our E Commerce site Triple W. Dot <unk> Dot com, we've hired a new digital health executive Kelly Danny to manage our health <unk> wellness commercial strategy and to accelerate adoption of our true data product line in direct to consumer business to business to consumer channels such as <unk>.
Our VA business returned to growth in the second quarter, and we're launching prescription 12 fibromyalgia through our field sales organization.
We rely on our field sales organization to drive revenue growth in the VA hospital, and other prescription and <unk> channels.
We completed a restructuring of our field sales function earlier this year and we currently have approximately 80 straight commission sales agents, including sub reps managed by 12 territory business managers, who are salaried employees.
Vega partners folks that work and through a handful of resellers. We continue exploring the expansion of the <unk> proposition through new product offerings, New features like the integration with the Apple health App and will be increasingly more aggressive with those infringing our patent portfolio.
Five of our 12 territory business managers are relatively new so we expect the size of our 10 99 team to continue growing in the second half of 2025.
The pipeline of interest from different branches of our active duty military continues to develop for our tax and products and Taksim revenue will continue to be hard to predict as active duty units evaluate and purchase in bulk for pilot deployment. We're.
<unk> plus has been favorably received by the market since its April 2020 for launch the brand continues to show signs of potential of as a direct to consumer general wellness offerings. We.
We're getting better at validating request for proposals for tax them and our funnel currently holds approximately $500000 of open quotes.
We sell through Vega products direct to consumer through our E Commerce site Triple W. Dot <unk> Dot com, we've hired a new digital health executive Kelly, Danny to manage our health and wellness commercial strategy and to accelerate adoption of our <unk> product line in direct to consumer business to business to consumer channels such as <unk>.
For the second quarter of 2025, our sales and marketing expense increased sequentially by approximately $300000. While sales grew by roughly $660000 showing continued operating leverage as we made further investments to drive sales in the future.
<unk> partners.
At work and through a handful of resellers.
We continue exploring the expansion of the true Vega propositions through new product offerings, New features like the integration with the Apple health App and will be increasingly more aggressive with those infringing our patent portfolio.
We incurred the expense of several new W. Two hires during the period that will become productive in the back half of the year and demonstrate the leverage we need to become cash positive in the future as we continue to add new products to our established channels. We will also continue working towards additional indications prescription gamma core to <unk>.
The pipeline of interest from different branches of our active duty military continues to develop for our tax and products and tax <unk> revenue will continue to be hard to predict as active duty units evaluate and purchase in bulk for pilot deployment.
Tree.
Post traumatic stress disorder into other clinical opportunities.
We really have not experienced much tariff exposure, our tariff expense doubled from $2800 in Q1 2025 to $5600 in Q2 2025.
We're getting better at validating request for proposals for tax season, and our funnel currently holds approximately $500000 of open quotes.
But those amounts are obviously very small in summary.
For the second quarter of 2025, our sales and marketing expense increased sequentially by approximately $300000. While sales grew by roughly $660000 showing continued operating leverage as we make further investments to drive sales in the future we.
I believe we are poised for accelerating growth and we'll be increasing our investment in the health and wellness channel through the back half of 2025 with the expectation of broader true Vega adoption in 2026 and beyond.
With the new term debt facility, we believe we have access to enough cash to execute on this plan.
We incurred the expense of several new W. Two hires during the period that will become productive in the back half of the year and demonstrate the leverage we need to become cash positive in the future as we continue to add new products to our established channels. We will also continue working towards additional indications prescription gamma core to <unk>.
At this time, we'll turn the call over to the operator for questions.
Thanks, Dan we're now going to open the floor for Q&A.
As a reminder, the best way to ask a question as to use the raise your hand feature located at the bottom of your screen or if you're dialed in by dialing star nine that will raise your hand.
Three.
Post traumatic stress disorder into other clinical opportunities.
We really have not experienced much tariff exposure, our tariff expense doubled from $2800 in Q1 2025 to $5600 in Q2 2025.
Once you've raised your hand, the operator will place it on the Q.
So to speak when it's your turn you'll be prompted and a muted. So you can ask your question live just a quick reminder, in addition to everything we do on RM you may need to manually on mute your microphone one call them.
But those amounts are obviously very small in summary.
I believe we are poised for accelerating growth and we will be increasing our investments in the health and wellness channel through the back half of 2025 with the expectation of broader true Vega adoption in 2026 and beyond.
You can also take your questions into the Q&A widget on your screen, we will monitor that path panel and address questions from there as well as time allows.
If we're unable to get to your question today due to time constraints someone from the Investor Relations team will follow up with you. After the call, let's pause for a brief moment now to get everyone a chance to raise their hand, and some better question.
With the new term debt facility, we believe we have access to enough cash to execute on this plan.
At this time, we'll turn the call over to the operator for questions.
Our first question will come from Jeff Kong of Ladenburg, Jeff.
Thanks, Dan we're now going to open the floor for Q&A.
As a reminder, the best way to ask a question as to use the raise your hand feature located at the bottom of your screen or if you're dialed in by dialing star nine that will raise around.
Jeff We just made and on mute Hello, Hello, Darren and Josh can you hear me okay.
Once you raise your hand, the operator will place on the queue.
To speak when it's your turn you'll be prompted and a muted. So you can ask your question live just a quick reminder, in addition to everything we do on RM, you may need to manually on mute your microphone when Qualcomm.
Jeff.
Wonderful much broader so just a few questions from our own <unk>.
Firstly.
Could you provide any insight into true bigger as far as <unk>.
You can also take your questions into the Q&A widget on your screen, we will monitor that path panel and address questions from there as well as time allows if we're unable to get to your question today due to time constraints someone from the Investor Relations team will follow up with you after the call.
Composition of revenue with the two current Oscar you said that you have in the marketplace.
Yeah.
It's been an upside surprise to me, but our.
500 dollar tree Vega, plus mobile App enabled to Vega, plus is accounting for about 80% of our revenue in the category and the less expensive to Vegas $3 50.
Let's pause for a brief moment now to get everyone a chance to raise their hand and submit a question.
Our first question will come from Jeff Cohen of Ladenburg, Jeff.
As lagging far behind.
Okay.
Got it okay.
So secondly, could you talk a little bit about.
Have you actually.
Yeah.
Pursued any legal activity as far as Perm infringement.
Sure I participated in on mute Hello, Hello, Darren and Josh can you hear me okay.
So are you doing that through our the eurosport for some type of RCC Court filings. So we should expect to hear about.
Hi, Jeff.
Wonderful much broader so just a few questions from our own.
Firstly.
So there is a.
And then could you provide any insight into true bigger as for some <unk>.
There are some cross complaints have been filed.
In Federal Court and the district of New Jersey.
Composition of revenue with the two current Oscar you said you have in the marketplace.
And we're not going to comment beyond what's in those public filings.
Yeah.
It's been an upside surprise to me, but our.
Okay was there any cost associated during the second quarter or do we expect to see some of the third quarter or you will let us know.
500 dollar tree Vega, plus mobile App enabled to Vega plus.
Yes, there were some legal expense.
Is accounting for about 80% of our revenue in the category and the less expensive to Vegas $3 50.
That would've been.
<unk> incurred in the first and second quarter of this year.
As lagging far behind.
Got it and then lastly for us.
Got it okay.
From reference to new products.
Sure. So secondly, could you talk a little bit about.
Q3, so should we be expecting new products in the marketplace and if so could you talk about what you expect there to be due to senior <unk> type of products.
Have you actually.
Pursued any illegal activity.
Forest Park infringement and if so are you doing that through our the U S courts or some type of RCC Court filings. So we should expect to hear about.
So I.
I don't think I explicitly said new products.
The quell fiber among that that prescription qual fibromyalgia.
So there is a there.
There are some cross complaints have been filed.
The production line is now up and running in Rockaway and in late June we.
In Federal Court and the district of New Jersey.
And we're not going to comment beyond what's in those public filings.
We started to make samples and demos available to our sales force. So that's a that is a product launch, but we've talked about the product.
Okay was there any cost associated during the second quarter or do we expect to see some of them are FERC quarter or you will let us know.
Historically, so I'm not sure if that rises to the level of a new product but from.
Yes, there were some legal expense.
That would've been.
From a revenue point of view, it's going to start we think it will start generating material revenue in the back half of this year.
<unk> incurred in the first and second quarter of this year.
Got it and then lastly for US are you made some reference to new products in Q3, so should we be expecting new products in the marketplace and if so could you talk about or do you expect to be.
Got it okay. Thanks for taking my questions are closer first congrats on the powder I appreciate it Jeff.
As a reminder, we have a question please use the razor and button or dial star nine.
<unk> <unk> type of products.
While we build the queue I'll take a question that was submitted by Andrew Ram how much are you increasing marketing spend on an annualized basis.
So I.
I don't think I explicitly said new products.
The quell fiber among that that prescription qual fibromyalgia.
So we haven't been thank you for the question, Andrew, but we've we're not breaking out components of SG&A.
The production line is now up and running in Rockaway.
And in late June we.
And total SG&A.
We started to make samples and demos available to our sales force. So there that's a that is a product launch, but we've talked about the product.
Fluctuates quite a bit with timing, so I'm afraid I can't explicitly answer that question.
Historically, so I'm not sure if that rises to the level of a new product but.
I think youll see our SG&A line go up five 6% month over month.
From a revenue point of view, it's going to start we think it will start generating material revenue in the back half of this year.
For media.
Well that so sorry, I'm stumbling here a little bit.
Got it okay. Thanks for taking my questions are Those'll first congrats on the quarter I appreciate it Jeff.
SG&A.
Our prescription businesses.
As a reminder, if you have a question please use the razor and button or dial star nine.
Scales with revenue because theres, a large commission component.
And in our direct to consumer business, there's a component that that scales with revenue around media and advertising spend.
While we build the queue I'll take a question that was submitted by Andrew Ram how much are you increasing marketing spend on an annualized basis.
Blended average of all of that is about 30% and so.
So we haven't been thank you for the question, Andrew, but we've we're not breaking out components of SG&A.
If if revenue goes up 20% like it did this quarter.
And that variable component of SG&A would.
And total SG&A.
Would go up 30% of 20% so about 6%.
Fluctuates quite a bit with timing, so I'm afraid I can't explicitly answered that question.
Sorry to be so vague about it.
I think youll see our SG&A line go up five 6% buffer.
Okay. Our next question is coming from Charles Wallace of H C. W.
For media.
Well that so sorry, I'm stumbling here a little bit.
I think we need to on mute.
SG&A.
There you go.
Our prescription businesses.
Hi, This is Charles on for RK. Thanks for taking my question.
Scales with revenue because theres, a large commission component.
I guess first for me.
And in our direct to consumer business, there's a component that that scales with revenue around media and advertising spend.
Can you kind of comment on what ultimately led you guys did.
On the decision to ramp up spending now and proportionally growing profitability and then second question can you comment on.
The blended average of all of that is about 30% and so if a if revenue goes up 20% like it did this quarter than that variable component of SG&A.
The contribution of Amazon sale to buy a home.
In the quarter. Thank you, yes. So we don't have much to say about Amazon just yet we're still working out some issues with the plumbing.
Would go up 30% of 20% so about 6%.
And how orders get transferred from Amazon to our fulfillment.
Sorry to be so vague about it.
And as far as the timing goes.
Okay. Our next question is coming from Charles Wallace of H C. W.
<unk>.
We've restructured our sales force on the prescription side.
We're seeing very exciting green shoots in our direct to consumer business. We closed the acquisition of neuro metrics, we've been able to attract some some really compelling talent.
I think we need to on mute.
To unveil.
There you go.
Hi, This is Charles on for RK. Thanks for taking my question.
I guess first for me can.
Starting with James Theophilus and Kelly venting, who both bring quite a bit of a.
Can you kind of comment on what ultimately led you guys did.
On the decision to ramp up spending now and proportionally growing profitability and then second question can you comment on.
Digital health direct to consumer Knowhow.
So.
For all those reasons. The time is now to put our foot on the gas pedal and drive more aggressive revenue growth.
The contribution of Amazon sales.
Sure.
In the quarter. Thank you, yes. So we don't have much to say about Amazon just yet we're still working out some issues with the plumbing.
Theres plenty of leverage in the income statement with our 80, 586% gross margin. So we're very confident that we're going to get to breakeven in a reasonable amount of time.
And how orders get transferred from Amazon to our fulfillment.
And as far as the timing goes.
Fantastic Thanks for taking my question.
<unk>.
We've restructured our sales force on the prescription side.
And again, if you have a question. Please use the raise your hand button press star nine.
We're seeing very exciting green shoots in our direct to consumer business. We closed the acquisition of neuro metrics, we've been able to attract some some really compelling talent.
Data it appears that has exhausted our questions.
Can I turn the call back over to you.
Starting with James Theophilus and Kelly banning who both bring quite a bit of.
Hi.
Robert I think there's a question in the chat box.
Digital health direct to consumer Knowhow.
About neuro.
<unk> metrics products.
So.
For all those reasons. The time is now to put our foot on the gas pedal and drive more aggressive revenue growth.
Sold over the counter.
Historically.
Historically certain versions of quell.
Theres plenty of leverage in the income statement with our 80, 586% gross margin. So we're very confident that we're going to get to breakeven in a reasonable amount of time.
We're available direct to consumer through under the over the counter label, including Amazon.
Now that we have the production of minor amendments required robot.
Fantastic Thanks for taking my question.
Now that we have the production line up and running.
First we want to take advantage of our prescription opportunity in the VA Hospital system.
And again, if you have a question. Please use the raise your hand button or press star nine.
And we will be looking at how how or when to relaunch <unk>.
Data it appears that has exhausted our questions.
Through our direct to consumer channels.
Can I turn the call back over to you.
And then.
There was another question about timing, yes, let me read that out from from the <unk>.
Alright.
Robert I think there is a question in the chat box.
Q&A widget.
How long this investment impact the time to profitability I'm wondering your thoughts on 2020 and profitability.
Neuro prep manure metrics products are sold.
Over the counter.
Historically.
So.
The.
Historically certain versions of quell.
We believe that the investments are going to accelerate revenue growth rate. We just we just announced 20% year on year revenue growth, we wouldn't be making these investments if we didn't think that debt.
We're available direct to consumer through under the over the counter label, including Amazon.
Now that we have a production line of amendments for our core right now.
That.
Now that we have the production line up and running.
Will and year on year growth rate Wouldnt increase.
First we want to take advantage of our prescription opportunity in the VA Hospital system.
We need to we need to get to $11 5 million of quarterly revenue from seven and a half thats, 50% plus or minus revenue growth and I'd love to see that happen sooner or rather than later.
And and we'll be looking at how how or when to relaunch quell.
Through our direct to consumer channels.
And then.
There was another question about timing, yes, let me read that out from from the <unk>.
Great. Thank you Dan.
Q&A widget.
How will this investment.
One more question from a tax Mark can you talk about the return on advertising that you are seeing and how that has trended.
Impact the time to profitability and what are your thoughts on 2020 and profitability.
So.
On the true Vega side.
The.
Yeah, I think we said in the script that of for the quarter just ended.
We believe that the investments are going to accelerate revenue growth rate. We just we just announced 20% year on year revenue growth.
Our our media efficiency ratio was 2.0 in other words.
We wouldn't be making these investments if we didn't think that that.
A dollar of advertising spend generated $2 of revenue.
That.
That's a little bit lower than previous periods, we've got a variety of initiatives and as I mentioned, some digital health executives joining the team where I think we're going to be able to return those.
Shall and year on year growth rate would increase.
We need to we need to get to 11 5 million of quarterly revenue from seven and a half that's 50% plus or minus revenue growth and I'd love to see that happen sooner or rather than later.
Kpis to where they were late last year.
Okay.
What appears to be the final question can you talk about Truvada and Apple health and how that effort is going and what the compatibility is there.
Great. Thank you Dan.
One more question from a tax Mark can you talk about the return on advertising that you are seeing and how that has trended.
Oh, Great question, Yes, so a few months ago, we announced the integration of true Vega into Apple health.
On the true Vega side.
In and of itself.
Yeah, I think we said in the script that of for the quarter just ended.
It's not a great deal great big deal, but.
There are a tremendous number of third party apps that that offer.
Our our media efficiency ratio was 2.0 in other words.
A dollar of advertising spend generated $2 of revenue.
Our diagnostic information heart rate breath rate quality of sleep.
That's a little bit lower than previous periods, we've got a variety of initiatives and as I mentioned, some digital health executives joining the team and we're I think we're going to be able to return those.
And so it gives us access to that much much larger biohacker ecosystem.
Through the API.
That lets us talk to Apple health so.
Kpis to where they were late last year.
Some of some folks into Biohacker community has have been very active in coming up with use cases, and I look forward to being able to make announcements about that in later this year.
Okay.
What appears to be the final question can you talk about Truvada and Apple health and how that effort is going and what the compatibility is there.
Well. Thank you very much that concludes the questions that were submitted I'd now turn the call back over to you.
Oh, Great question, Yes, so a few months ago, we announced the integration of true Vega into Apple health.
Great.
Thank you everybody.
Appreciate your time.
In and of itself.
So many people.
That's not a great deal great big deal, but.
And and <unk>.
There are a tremendous number of third party apps that that offer.
Counterparties have have helped us get to this point.
Special Thanks to James Theophilus and and his family office for their patients and support with us.
Our diagnostic information heart rate breath rate quality of sleep.
Special Thanks to the team at Avenue capital of four providing the the liquidity.
And so it gives us access to that much much larger biohacker ecosystem.
Through the API that lets us talk to Apple health so.
That we've gotten access to and we look forward to great things going forward.
Some of some folks into Biohacker community has have been very active in coming up with use cases, and I look forward to being able to make announcements about that later this year.
That concludes today's call. Thank you.
Well. Thank you very much that concludes the questions that were submitted I now turn the call back over to you.
Great. Thank.
Thank you everybody.
Appreciate your time.
So many people.
And and <unk>.
Counterparties have have helped us get to this point.
Special Thanks to James Theophilus and and his family office for their patience and support with us.
Special Thanks to the team at Avenue capital for providing the the liquidity.
That we've gotten access to and we look forward to great things going forward.
That concludes today's call. Thank you.