Q3 2025 ElectroCore Inc Earnings Call
Speaker #1: Welcome to zoom . Enter your meeting . ID , followed by pound . Enter your participant ID . You have joined the meeting as an attendee and will be muted throughout the meeting .
Speaker #2: Of the Private Securities Litigation Reform Act of 1995 . Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements .
Speaker #2: All forward looking statements , including , without limitation , any guidance , outlook or future financial expectations or operational activities and performance , are based upon the company's current estimates and various assumptions .
Speaker #2: These statements involve risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements .
Speaker #2: 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 company's filings with the Securities and Exchange Commission .
Speaker #2: Electrocore disclaims any intention or obligation except as required by law , to update or revise any financial projections or forward looking statements , whether because of new information , future events or otherwise .
Speaker #2: This conference call contains time sensitive information that is accurate only as of the live broadcast today , November 5th , 2025 . To begin , our chairman would like to share a few thoughts on the company's strategy and future doctor Errico , thank you .
Speaker #2: Dan . Good afternoon everyone , and thank you for joining electroCore, Inc. third quarter 2020 Earnings call . My name is Tom Errico , and as the newly elected chairman of the board , it's an honor to address you today .
Speaker #2: As a founder , practicing physician , consistent investor and daily user of our noninvasive vagal nerve stimulation technology for over 15 years , I am deeply committed to our mission of transforming lives .
Speaker #2: Today , I'll outline our strategic vision and discuss the background behind our key shift to accelerate growth . Dan and Josh will follow with an in-depth review of our financial and operational performance .
Speaker #2: Let's begin . Electrocore was established to modernize vagal nerve stimulation by developing a non-invasive technology , starting with our FDA approved medical device for the prevention and treatment of migraines and cluster headaches .
Speaker #2: While I personally do not suffer from these conditions , I use non-invasive vagal stimulation daily . About 12 years ago , during an investment meeting on vagal nerve stimulation in New York City , Doctor Kevin Tracey , the pioneer of VNS , was asked if he used the technology himself at that time , he used an auricular device for at least 20 minutes a day .
Speaker #2: When questioned about this commitment , he answered because it gives me a daily , overwhelming sense of well-being . As a routine user , of VNS .
Speaker #2: His words strongly resonated with me and helped explain the positive performance enhancing effects I was experiencing . Fast forward a decade or so and research from Air Force Labs has further confirmed the remarkable performance benefits of non-invasive vagal nerve stimulation associated with Electrocore technology .
Speaker #2: As a practicing physician , working with both adults and children , I encounter patients daily who could benefit from the substantial health and wellness impacts of VNS .
Speaker #2: Expanding access to this technology inspired us to . Launch two Vega as a Microcap company listed on Nasdaq . We are uniquely positioned to innovate , although we contend with challenges related to scale and visibility .
Speaker #2: Previously, the company anticipated achieving positive quarterly cash flow from operations by the end of 2025. Along the way, opportunities emerged to significantly boost shareholder value by redirecting investments towards areas with higher growth potential.
Speaker #2: We were confident navigating this pivot . Having experienced quarters with modest shortfalls but approaching positive cash flow on an adjusted EBITDA basis after thorough evaluation .
Speaker #2: The board determined that maintaining the status quo would cap our growth and market penetration , failing to realize acres full potential and meet shareholders expectations to accelerate progress , we executed targeted investments , completed a strategic acquisition , expanded our medical division through key hires , onboarded a new software AI partner to enhance our wellness app , and welcome two new board members from Microsoft and Google .
Speaker #2: These immediate investments may slightly delay near-term profitability , but we are confident that they will set the stage for accelerated revenue growth in future quarters .
Speaker #2: We are managing these expenditures rigorously and strategically to ensure sustainable , long term value creation , to provide greater transparency and detail . Our path to profitability would have likely yielded limited short term gains , primarily from one FDA cleared medical device within the VA and the Single wellness product through Vega .
Speaker #2: Instead , we chose to defer profitability and invest in three priority areas to broaden our product range diversify revenue streams , and enhance long term shareholder value .
Speaker #2: This intentional diversification also reduces customer concentration , risk and is expected to increase electric cars resilience over time . Pivot one the Neurometrix acquisition we acquired the quell portfolio , including a second FDA cleared neuromodulation therapy from Neurometrix and a minimal upfront cost .
Speaker #2: Aside from the transaction expenses and a minor tapped royalty, Quell Fibromyalgia gained FDA De Novo authorization in 2022, becoming the first non-drug device indicated for fibromyalgia-related chronic pain.
Speaker #2: In addition to quell fibromyalgia . We added the over-the-counter quell relief brand to our platform . According to Persistence Medical Research via a Global News Wire article .
Speaker #2: Global fibromyalgia treatment revenue reached $1.3 billion in 2022 , with a projected Cager of 7% to 2.7 billion by 2033 . This acquisition diversifies our offering within the VA and meaningfully mitigates product risk in that channel .
Speaker #2: We launched 12 fibromyalgia through our sales force in July and its early performance has exceeded expectations . Third quarter and fourth quarter projected results should cover the full acquisition costs and support years of revenue growth .
Speaker #2: Dan will share more details on this . Pivot to strengthening our VA channel . Our foundation in VA medical sales is robust . Although we saw a temporary slowdown in Q4 2024 due to external macroeconomic and political factors .
Speaker #2: We navigated these headwinds effectively . VA revenue growth resumed and we secured a new five year contract and upgrade from our previous three year agreement .
Speaker #2: We are selectively expanding our VA sales team and pursuing multiple strategies to boost adoption and drive growth within the VA . Beyond VA .
Speaker #2: There are short term opportunities in certain managed care systems . Even though our therapy has included in formularies , we recently finalized a contract that provides a clearer route to access and coverage .
Speaker #2: We have made a modest investment in the dedicated sales team to create a sustained revenue stream . Pivot three developing our wellness division .
Speaker #2: We have enhanced our expertise in the wellness division and strengthened our board . James Theophilos , formerly at Microsoft and now at Google , is a member of the Theophilos family .
Speaker #2: Our largest investor , and I look forward to continued collaboration with him on the board . More recently , we welcomed Elena Bonfiglioli from Microsoft to our board .
Speaker #2: She brings expertise in artificial intelligence , international product development and wellness . Her insights are shaping our approach to developing integrated software applications for our wellness products .
Speaker #2: Through her introduction , we partnered with Strategy , a European software and AI firm , to build software that complement Truvada and quell , providing users with personalized , data driven experiences and potentially generating new recurring revenue streams .
Speaker #2: We're not just participating in the $600 million global VNS market . We're targeting the fast growing , non-invasive category , aiming at an 80 to 120 million global wellness opportunity with Truvada and Quell .
Speaker #2: If we succeed in building out AI integrated software , we could establish a recurring revenue model in a market growing 15% annually with data supported by insight , Ace analytics and global wellness Institute .
Speaker #2: Additionally , I want to mention another significant investor in Electrocore , Steven Zhang , an experienced China based investor . Electrocore is broadening its options outside the US through a royalty based arrangement with his company to commercialize Electrocore products in China .
Speaker #2: Timelines for approval and commercialization depend always on local regulatory processes, but this arrangement requires no capital investment from Acore. Regulatory and commercialization efforts fall to the licensee.
Speaker #2: We appreciate Mr. Zhang's ownership and enthusiasm for our products . This teamed with with Miss Bonfiglioli's residence and connections in the EU and the Middle East .
Speaker #2: We have made a direct decision to broaden our opportunity outside of the US . Dan can provide more specifics . As a founder , investor and daily use of user of non-invasive VNS , I remain confident that prioritizing focused investments over immediate quarterly profitability is the right long term strategy for our shareholders .
Speaker #2: Dan will outline our revised timeline shortly . The board's decisions are intended to transform how people manage their health by merging the ancient practice of neuromodulation with cutting edge AI and data technology .
Speaker #2: In summary , Electrocore stands at a pivotal moment through acquisitions , expanded channels , board enhancements and advanced software integration . We aim for sustained growth and broader impact .
Speaker #2: We are evolving into the company we always aspired to be . Thank you for the ongoing support from our shareholders , employees and users .
Speaker #2: I look forward to what the future holds . I'll now hand things over to Dan for a detailed review of our quarterly performance .
Speaker #2: We welcome your questions . Thank you . Dan . Thank you . Tom . Turning to the details on the third quarter , Electrocore delivered another strong performance extending .
Speaker #2: Our growth trend and strengthening our foundation for scale. The VA hospital system remains our largest customer and continues to grow. Following the closing of the Neurometrix acquisition on May 1, 2025.
Speaker #2: Quell is showing strong early traction as a non-invasive pain therapeutic for fibromyalgia in the VA hospital system . Truvada sales also returned to growth , driven primarily by our e-commerce store at Triple W , com and an expanding network of affiliates who actively promote Truvada to their audiences .
Speaker #2: As Doctor Errico noted , Electrocore pioneered non-invasive vagus nerve stimulation . Today , we are broadening that innovation into a suite of non-invasive bioelectronic technologies that improve quality of life for patients and for wellness consumers in the United States , and select international markets .
Speaker #2: Science and data continue to guide every step we take in the third quarter of 2025 , revenue reached a record $8.7 million , up 33% year over year , and 18% sequentially .
Speaker #2: Gross margins remained strong at 86% , up slightly from 84% last year . We modeled gross margins in the mid 80s , going forward , prescription device revenue grew 19% year over year to $6.8 million , driven by both Gammacore and Quell .
Speaker #2: Sales in the VA hospital system . As of September 30th , 2025 , 195 VA hospital facilities have purchased prescription gammacore products , up from 166 a year ago .
Speaker #2: The VA had eight Centers of Excellence estimates , approximately 600,000 patients are being treated for headache in the VA hospital system , including approximately 24,000 cluster headache patients .
Speaker #2: We have now dispensed 12,000 gammacore devices , roughly 2% of the addressable VA headache market , with additional opportunity among patients experience headaches related to PTSD and mild traumatic brain injury .
Speaker #2: We believe there are as many as 550,000 fibromyalgia patients in the VA hospital system based on published incidence and prevalence data. NeuroMetrix has dispensed less than 700 Quell fibromyalgia stimulators since launch in 2024.
Speaker #2: So we believe there's plenty of room to grow here as well . We plan to continue growing our VA hospital business by adding W2 and 1099 staff in select locations through 2026 , while the VA remains our largest customer , we are also investing in sales talent to focus on a large commercial managed care system .
Speaker #2: In the third quarter , our DME distributor journey was finally able to add Gammacore Sapphire to their to their contract . With that managed care system .
Speaker #2: This step could remove a lot of the friction prescribers have faced and opens an additional pathway for growth , health and wellness product revenue reached $1.9 million , a 54% increase sequentially and 121% year on year .
Speaker #2: That includes a $500,000 , one time Truvada order for a third party clinical trial . Excluding that transaction , Truvada revenue grew 18% sequentially and 79% year on year .
Speaker #2: We believe this return to sequential growth is a result of the shift away from Amazon and the team's increased focus on driving sales through other direct to consumer platforms .
Speaker #2: Return on advertising spend or Roas , Roas for the period was approximately 1.80 , meaning for every $1 spent on media we generated nearly $1.80 of revenue return rates across our e-commerce platforms are approximately 11 to 12% , consistent with prior periods .
Speaker #2: We have sold more than 19,000 handsets , powering more than 1.6 million user sessions on our mobile app . We plan to continue making marketing and promotional investments in our platform to drive growth in 2026 and beyond .
Speaker #2: For example , national media outlets like Women's Health and Men's Health have been driving website traffic . Miranda Kerr mentioned on the Skinny Confidential podcast this month .
Speaker #2: Affiliates like Trumet, Ben Greenfield, and Luke Story have been promoting Truvada, and Truvada will soon be available through online retail outlets like Best Buy and Rehab Mart.
Speaker #2: We expect to add new use cases and target demographics for our Nvns products and launch additional health and wellness offerings such as quell relief for lower extremity pain .
Speaker #2: In addition , on the recommendation of our new board member Elena Bonfiglioli , we've begun developing our next generation application to complement Vega and quell creating personalized , data driven user experiences and potentially a new recurring revenue stream based on the opportunities in front of us .
Speaker #2: We are investing now in people , marketing and product to accelerate growth and drive scale . In 26 and 2027 . As Doctor Errico described , this is a strategic decision to prioritize growth and long term value creation , delaying company wide profitability as measured by adjusted EBITDA , until the back half of 2026 .
Speaker #2: We believe that a true copycat from Eastern Europe has been infringing our patents and trademarks . You may have seen some filings in federal court in the District of New Jersey about our escalating dispute .
Speaker #2: The case is ongoing and we will refrain from commenting beyond the public filings . Josh will discuss operating expense , cash trajectory and guidance in more detail later in the call .
Speaker #2: However , our cash balance as of September 30th , 2025 was $13.2 million . We used approximately $1.5 million in the three months ended September 30th , 2025 , and a total of approximately $6.5 million in the first nine months of the year to fund operations .
Speaker #2: We forecast a pro forma cash balance at December 31st , 2025 , at approximately $10.5 million . Let me return to the three pivots that Doctor Erica mentioned earlier .
Speaker #2: The Neurometrix acquisition closed on May 1, 2025, was integrated and launched in our VA hospital channel ahead of schedule, and has exceeded our revenue expectations.
Speaker #2: We had to increase our estimate of future royalties due to the legacy Neurometrix shareholders . Because revenue is ahead of plan , resulting in a non-cash hit to EPs of about a $0.05 per share .
Speaker #2: That's actually great news , even though it negatively impacted our income statement , we're strengthening our VA hospital sales channel by adding talent in key geographies .
Speaker #2: We are further investing in developing a parallel channel to a large managed care system . We're strengthening our wellness initiatives through the addition of key people recruiting influencers , affiliates , and new outlets , and investing in products .
Speaker #2: Quelle relief for lower extremity pain could be an exciting new offering in our direct to consumer channel . I expect that operating expenses will increase as we scale marketing and sales accordingly .
Speaker #2: The quarterly revenue required to reach cash-positive operations is expected to rise. On our August 25th core call, we indicated that approximately $12 million in quarterly revenue would cover our OpEx plan and support positive cash from operations, as measured by adjusted EBITDA.
Speaker #2: Based on our current trajectory , we believe that we can achieve these levels and deliver positive adjusted EBITDA in the second half of 2026 , just to summarize our guidance , first , we are increasing our full year 2025 revenue guidance from 30 million to 31.5 to $32.5 million .
Speaker #2: Second , we expect to have approximately $10.5 million of cash at December 31st , 2025 . Third , we believe that the business can achieve cash positive operations as measured by adjusted EBITDA at approximately $12 million in quarterly revenue .
Speaker #2: Fourth , we expect to reach $12 million in quarterly revenue and positive adjusted EBITDA in the second half of 2026 . And finally , we expect to use approximately $5 million of cash to fund operations in the first nine months of 2026 , after which we expect the business operations will become self-funding .
Speaker #2: Now , I'll turn the call over to Josh for a review of our financials and select guidance . Josh . Thank you . Dan .
Speaker #2: Net sales for the third quarter of 2025 were $8.7 million , an increase of 33% as compared to $6.6 million for the third quarter of 2020 .
Speaker #2: The $2.1 million increase was driven primarily by higher sales of prescription devices and growth in the company's non-prescription general wellness Truvada product.
Speaker #2: Gross profit for the third quarter was $7.5 million , as to $5.5 million for the third quarter last year . Gross margin was 86% , compared to 84% for the third quarter last year .
Speaker #2: Research and development expense in the third quarter was $662,000 , as compared to $521,000 in the third quarter last year . This increase was primarily due to increased development costs associated with our next generation health and wellness mobile application .
Speaker #2: In the three months ended September 30th , 2025 , as compared to the three months ended September 30th , 2024 . Selling , general and administrative expense compared ended September 30th , 2025 , an increase of $2.1 million as compared to $7.6 million for the previous year .
Speaker #2: This increase was primarily due to greater investment in selling and marketing costs, consistent with the company's increase in sales. For the remainder of 2025, the company plans to continue to make targeted investments in sales and marketing to support its commercial efforts.
Speaker #2: Total operating expenses in the third quarter were approximately $10.4 million , as compared to $8.1 million in the third quarter last year . Total other expense was $521,000 for the three months ended September 30th , 2025 , which consisted primarily of $384,000 of acquisition related costs in connection with the change in the estimated liability payable to Pre-closing , shareholders of Neurometrix pursuant to a contingent value Rights Agreement , or CVR , and $150,000 of interest expense on the convertible debt financing with Avenue Capital .
Speaker #2: This compares to total other income of $154,000 for the three months ended September 30th , 2020 . Four , which consisted mainly of interest income .
Speaker #2: GAAP net loss in the third quarter of 2025 was $3.4 million , or a loss of $0.40 per share , as compared to net loss of $2.5 million or loss of $0.31 per share in the third quarter of 2020 .
Speaker #2: For the increase in net loss is primarily attributed to an increase in other expense related to the CVR liability and interest expense on the convertible debt financing with Avenue Capital GAAP net loss per share includes a loss of $0.05 per share and $0.02 per share attributed to the CVR liability and interest expense , respectively .
Speaker #2: Adjusted EBITDA net loss in the third quarter of 2025 was $2 million , as compared to adjusted EBITDA net loss of $2.1 million in the third quarter of 2020 .
Speaker #2: For a reconciliation of GAAP net loss to non-GAAP adjusted EBITDA . Net loss has been provided in the financial statement tables included in today's press release .
Speaker #2: Cash , cash equivalents and restricted cash and marketable securities at September 30th , 2025 , totaled approximately $13.2 million . As compared to approximately $12.2 million as of December 31st , 2020 .
Speaker #2: For . On August 4th , 2025 , we secured a term debt facility with Avenue Capital providing approximately $7.2 million of net cash at closing .
Speaker #2: Additional details on the Avenue Capital facility can be found in our filings . On October 2nd , 2025 , we closed a small private placement with certain institutional investors in satisfaction of an aggregate of approximately $1.9 million of legal services rendered , or to be rendered to the company by the investors .
Speaker #2: Our balance sheet has been strengthened by these transactions , and we have no plans to access the capital markets at this time . For the full year of 2025 , the company is increasing its revenue guidance to 31.5 to $32.5 million and a cash balance of approximately $10.5 million .
Speaker #2: As of December 31st , 2025 , and now I'll turn the call back over to you , Dan . Thank you . Josh , I echo Doctor Errico's enthusiasm about the future of electroCore, Inc. .
Speaker #2: We continue to report above market operating results , prescription device sales continue to grow with sales of both our Gammacore and quell fibromyalgia products .
Speaker #2: Our strategy of offering a suite of Bioelectronic products and technologies into our established channels is developing nicely . Demand for prescription devices in the VA hospital channel is driven by clinical data , and our increased presence in the field .
Speaker #2: The launch of Prescription Quell fibromyalgia has exceeded our expectations . We plan to hire additional W2 territory business managers to increase adoption of our technologies in the VA hospital system , as well as dedicating resources to accelerate adoption in managed care systems .
Speaker #2: We currently have approximately 80 sales agents , including reps managed by an internal sales team of 16 salaried employees . Plus has been favorably received by the market since .
Speaker #2: Since April 2024 , launch . The brand continues to show tons of potential as a direct to consumer general wellness offering , and has returned to sequential growth .
Speaker #2: We sell products direct to consumer through our e-commerce site . And through partners like Ben Greenfield , Perks at Work , True Rehab Mart , Best Buy Online , and through a growing number of affiliates and influencers .
Speaker #2: We continue exploring the expansion of the Tribeca proposition through new product offerings and have begun development of our next generation mobile application . We believe the Trevecca brand has potential to become a significant player in the health and wellness space , and the evolution of the brand is important for providing shareholders with long term value .
Speaker #2: For the third quarter of 2025 , our sales and marketing expense increased sequentially by approximately $640,000 , while sales grew by roughly $1.3 million , demonstrating operating leverage in spite of those increased investments , the acquisition and integration of Neurometrix exceeded our expectations , adding products like fibromyalgia into the prescription VA channel allows our field sales team to offer a growing suite of bioelectronic , self-administered therapies for certain debilitating conditions .
Speaker #2: As we continue to add new products to our established channels , we'll also continue working towards additional indications for prescription gammacore to treat post-traumatic stress disorder and other clinical opportunities .
Speaker #2: In summary , I believe we are poised to accelerate growth and will be increasing our investment in the high margin prescription device space to help underwrite investments in the health and wellness channel .
Speaker #2: With our current cash position , we believe we have access to sufficient liquidity to execute this plan . As we get closer to break even in 2026 .
Speaker #2: At this time , I'll return the call to the operator . Operator , please open the line for questions .
Speaker #3: Thanks , Dan . We're now going to open the line for Q&A from zoom . There are two ways you could participate . The first is to use the raise your Hand icon , which is at the bottom of your screen .
Speaker #3: Clicking this will alert me that you want to be called on to ask a live question , and so you'll be placed in the queue called on , but just note that there's a little bit of a lag , so you're going to need to wait a second before I unmute you after you're called on the second way to participate in Q&A is to use the Q&A widget , which will allow you to type in and text a question in .
Speaker #3: We will take questions from there as well , but just a note , if we run out of time and have a constraint , someone from the IR team will get back to you .
Speaker #3: If your question is not asked on today's call . With that , we're going to go and open up the call and we'll start with Jeff Cohen from Latin Berg .
Speaker #3: New unmute and join us .
Speaker #4: Oh sorry . Can you hear me ? Okay .
Speaker #5: Hi , Jeff .
Speaker #4: Hey . How are you doing ? Sharon , thanks for the call . And also thanks , doctor Erika as well . Just a couple quick questions for you .
Speaker #4: So firstly , congrats on the quell in both the VA channel as well as the other channels . Can you remind us previously what channels Neurometrix was selling into before the acquisition ?
Speaker #5: So the quell prescription quell for fibromyalgia was sold in 4 or 5 VA hospitals off contract through open market access . Prior to the acquisition .
Speaker #5: And there were a few cash-pay customers who were served through Health Warehouse, which is a PDM, but in small numbers.
Speaker #4: Okay . Got it . Can you give us any further color on the half million dollar sale for a clinical trial ? I'm assuming one clinical trial .
Speaker #5: Yeah , it's one clinical trial that's being run in long Covid subjects . There are a variety of of other therapies that are being evaluated .
Speaker #5: It's a pretty large trial . Candidly , we don't know very much about it because it's an investigator initiated trial and they really didn't share the protocol with us , etc.
Speaker #5: .
Speaker #4: Okay . And then lastly , talk about the next gen mobile app that you're working on . I'm assuming a software only and will it be usable for all your platforms ?
Speaker #4: Reading Vega and Quell .
Speaker #5: So great question . So the next update of our app will be Truvada . Plus only it will work with the legacy Truvada plus that we've been selling since inception in April of last year .
Speaker #5: But it is not set up to work with Gammacore or Quell . Quell has its own app , mobile app environment . As we wrap our arms around it next year , we're going to look at harmonizing the various mobile apps for vagus nerve stimulation and and for the quell fibromyalgia apps .
Speaker #5: But that's going to take us a little bit longer to to get our arms around it .
Speaker #4: Perfect . Okay , Dan , I'm not great questions . Thanks for the time .
Speaker #5: Thank you Jeff .
Speaker #3: Great . Our next question comes from R.K. of H.C. Wainwright . Okay . Are you there ?
Speaker #6: Can you hear me ?
Speaker #5: Yes . Hi . Okay . How are you this evening ?
Speaker #6: Good , good . Thank you very much . And thanks for to Doctor Rico for giving those comments . Which is really helpful for us .
Speaker #6: So I have a few questions . So let me start off with , with a high level one in terms of , you know , how the strategy of acquisition of quell fibromyalgia seems to be doing much better than what what we're seeing an internal expectations .
Speaker #6: So can you kind of comment on what's what's helping helping this product , especially in the VA space and , and what sort of learnings do you have at this point that you can help the , the next class of salespeople that you're going to bring on board ?
Speaker #5: Great question . Thanks , R.k . So the timeline is that we in May and June , we did two things . We we moved the production facility down here to Rockaway , new Jersey , and we were able to add prescription quel for fibromyalgia to our VA hospital contract .
Speaker #5: Once we did that, once we had product and contract in June and July, we were able to start training our sales team.
Speaker #5: They in turn were able to start demoing the product to their accounts and and the uptake has been much faster than we expected .
Speaker #5: Our primary headache call point is neurology . The primary call point for fibromyalgia is rheumatology . But both of those cross over in in pain and in polytrauma .
Speaker #5: And we've been very upside surprised at the willingness given the safety profile , that we've already demonstrated with Gammacore , the safety profile of of the Neurometrix call for fibromyalgia , the folks in pain and polytrauma have been very quick to adopt the fibromyalgia solution .
Speaker #5: Part of it is the safety profile . The other is that fibromyalgia patients don't have a lot of other options . It's a it's a surprisingly unmet clinical need .
Speaker #6: Plastic . So you know , thanks for actually telling . Giving me commentary on what is causing that pull . So now that you have it in the VA segment , is it how easy is it to replicate in other areas ?
Speaker #6: Other segments , especially like the Kaiser Permanente or other hospital systems ? Given given the knowledge that you that you have now .
Speaker #5: So we're going to do that carefully . We just got on contract at a large managed care system . I'm not allowed to say Kaiser , but that contract is specific for Gammacore Sapphire .
Speaker #5: We have not even attempted to bring quell fibromyalgia to that system , but obviously that's something that we're going to do once we gain traction with Kaiser .
Speaker #6: Perfect . And then , you know , maybe , maybe , maybe you made some comments that I didn't listen . I was looking on some commentary on Testim and , you know what ?
Speaker #6: What is you know , what should be our expectations in terms of Air Force procurement and also not just for this year , for the , you know , the next 45 days , but thinking about 26 , I do understand it is a lumpy business , but just trying to get a feel for things .
Speaker #5: Yeah . So it's a it's a tale of two cities . The , the anecdotes , the research , the use cases that we hear about from Army and Air Force is incredibly enthusiastic .
Speaker #5: But the actual revenue generation continues to be small and lumpy . We did roughly $140,000 of revenue in the September 30th quarter for text and products sold to active duty military .
Speaker #5: The current quarter , the fourth quarter has come to a screeching halt , largely because of the government shutdown . I think we will get some orders in November and December pending .
Speaker #5: Of course , the government opening up . ET cetera . ET cetera . Our internal forecast for 2026 is about $400,000 for the full year , similar to the sort of $100,000 per quarter pace that we've had in 2025 .
Speaker #5: There's huge upside , R.K. , I just can't . And we're talking we're in conversations about some very large orders , but I just have no credibility to say what the timing of those orders is going to be .
Speaker #5: So we're going to be conservative for 2026 .
Speaker #6: Okay . Thanks . And the last question from me is , as Doctor Erica was talking about China , how how meaningful . Are , you know , in a higher market , is that going to be a and and how how do you really plan to commercialize that opportunity ?
Speaker #5: So great question . We as Electrocore do not plan to commercialize it at all . Mr. Zhang now owns roughly 10% of Electrocore .
Speaker #5: He has a license to commercialize our technology in China , and only in China for the time being , he seems to have significant resources , financial and access to product development and access to manufacturing and what he has shared with me is that he plans to go through the CFDa process in China with a product that uses our technology , but of his own design .
Speaker #5: It'll be manufactured in-country and will pay us a royalty on unit sales and revenue.
Speaker #6: Perfect. Thank you. Thank you very much.
Speaker #5: Absolutely . Thanks for the question .
Speaker #3: Great . Our next question comes from Jeremy Perlman of Maxim Group .
Speaker #5: You need to unmute Jeremy .
Speaker #7: Okay . Can you hear me ? Yes . All right . Thank you for taking my question . Congrats on the quarter . Just firstly , you know , the current growth , let's say just specifically the VA segment , is that coming from more new accounts or increased utilization from existing customers ?
Speaker #5: It's both . Right . We're going deeper into our existing customers . We added what , almost 40 new VA hospitals over the course of the last year .
Speaker #5: And so that's the that's the leading indicator is opening up new hospitals . And then the quell fibromyalgia project quell fibromyalgia product was meaningful revenue in this quarter .
Speaker #5: .
Speaker #7: Right . Is there an expectation for 2026 . How many additional VA hospitals do you hope to start prescribing in ?
Speaker #5: Yes , but it's a secret .
Speaker #7: Secret . Okay , wait then for the for a year's time , we'll hopefully get that answer . And then maybe also is there maybe could you tell us what specific geographies you know , you said there's only only tackled 2% of the potential patient population in the VA system .
Speaker #7: You know , where do you see the the most growth potential geographical wise .
Speaker #5: So so that's a good question . Right now we are strong in Texas . We're strong in the southeast . And all up and down the West Coast .
Speaker #5: The New England Mid-Atlantic , the we're pretty good in the Chicago area . But New England , Mid-Atlantic the rest of the Midwest is is all greenfield territory geographically for us .
Speaker #7: Okay , understood . And then and just maybe one more question related to your , you know , your clinical development pipeline . You know , in the past , you've talked about many other indications , maybe any update on the progress of how any of those trials are going and when we could expect maybe potential new indications .
Speaker #5: Yeah . So I've put we've been putting the most energy into PTSD gammacore in PTSD . And we had meetings with the FDA over the course of this year .
Speaker #5: We're still trying to convince them that the data that we have is adequate . But in the background , we're spinning up . Yet another pivotal trial in PTSD that will start enrolling next year .
Speaker #5: I don't think we need it to get the label , but even if we don't need it , if we don't need it to get the label , it'll be great for marketing support .
Speaker #5: And if the if the if FDA continues to be difficult , we'll have the additional data once and for all to get across the finish line .
Speaker #5: We've had a couple publications about mild traumatic brain injury . Would I know of as concussion . And so now we are doing some planning around what would it take to collect pivotal data to support a de novo submission around mild traumatic brain injury .
Speaker #5: So that's that's going to be a 2027 . Initiative . Neurometrix has quite a bit of data in neuropathy secondary to chemotherapy . And so we're going to look at whether or not we should go after a label extension for the quell product line in that indication .
Speaker #5: And then there's intriguing data in low back pain that will take a look at as we get into 2026 .
Speaker #7: Okay . All right . Great . Thanks for that update . And I'll hop back in the queue .
Speaker #3: Great . Thank you . Our next question comes from Walter Shanker of Mas partners .
Speaker #5: Yeah .
Speaker #8: There you go . Unmuted I think . Yes . Hi . How are you ? Hi , Dan . Just a one quick question .
Speaker #8: My first comment is my wife and I do use the product every day . And at least and we are very happy that we use it every day .
Speaker #8: So it can't hurt to have us do a plug to just our chairman . The quell royalty is capped , which means that this is actually a question that for the current year , since you just paid $100,000 , you've largely paid , and that incrementally there should be minimal payments .
Speaker #8: And next year it's capped at a lower level so that incrementally next year , the royalty payment will be less than it was this year .
Speaker #8: Is that correct ?
Speaker #5: Yes . In spirit , what we didn't pay anything . We adjusted the estimate that flowed through the income statement and now sits on the balance sheet as a future liability .
Speaker #5: The payment , the cash doesn't go out until May or June of next year . But otherwise the income statement affects you're correct .
Speaker #5: .
Speaker #8: The income statement I understood I should have stated more clearly the income statement effect , both in the next quarter and in the coming year , will be will decline .
Speaker #5: Correct .
Speaker #8: Year over year and quarter over quarter . Yes . And secondly , although someone asked the main question , I was curious about , given how large the market is , and given that your Chinese investor is a significant investor , having filed on the company just to further expand .
Speaker #8: So he is planning on moving forward as best you know , as a medical device , not as a consumer device .
Speaker #5: Correct . He is moving forward as a prescription medical device for a really exciting list of indications . And I should have mentioned to the previous caller , is that given the clinical studies that he's planning to to underwrite , we may be able to migrate some of his data back to the US for additional indications .
Speaker #8: And under . Don't ask the question if you don't know the answer , I'm going to ask it anyway . In as he looks at the Chinese market and given what you just said , it , they are .
Speaker #8: They are . Trials are as lengthy as ours . So even if he is very successful , we're talking substantial number of years before that data might be useful either in China or here .
Speaker #5: That's my understanding that that's my understanding . And headache . And in PTSD , you know , where the clinical trial protocol is pretty well understood .
Speaker #5: He can get up and running relatively quickly , but for some of the other , you know , like rheumatoid arthritis , things that he wants to chase , it's going to take longer .
Speaker #5: But in any case , it's years , not months .
Speaker #8: And lastly , not as a question but as a comment . I was the most positive thing in this whole call for me is the fact that you have finally .
Speaker #8: So it's a left handed compliment for something you finally , meaningfully accelerated the penetration in the VA hospital system . Given the fact that there are , you know , we were at 10% penetration and there's a lot of opportunity there if we can continue to expand the hospital penetration .
Speaker #8: .
Speaker #5: Very well said. And thank you for the compliment. It was not left-handed at all.
Speaker #8: Okay . Thanks , Sam .
Speaker #5: Thank you . Walter .
Speaker #3: Okay , Dan . Josh , in our last few minutes here , we're going to try to bang out all of the texted in questions .
Speaker #3: First , what is being done to combat the copycat marketing ? Vagus nerve stimulation devices .
Speaker #5: Yeah . So there's a European company . They go by the name Palmetto . We have sued . They sued us for declaratory judgment that they do not infringe our patents .
Speaker #5: Earlier this year , we very quickly filed a cross complaint that's not only do you not only do you infringe that patent , you infringe this laundry list of additional patents .
Speaker #5: And by the way , there are a bunch of trade related and trademark related cross complaints in all of that . The filings are in the in federal court District of New Jersey , and my lawyers will not let me comment beyond what's in those public filings .
Speaker #5: Obviously , since we are in litigation , we want to focus on winning and winning big . There may be other infringers . We've put them on notice , but we're going to focus on the pending litigation .
Speaker #3: Thank you . Can you guys break out what neuro revenue contributions were for the quarter ? The question came in from Andrew REM .
Speaker #5: So quell fibromyalgia or actually the Full Quell line was $595,000 of net revenue in the third quarter .
Speaker #3: Okay . And how about on Truvada ? Can you did you break that you break that out on Q3 .
Speaker #3: Could
Speaker #5: Think we did , but it was $1,674,000 .
Speaker #3: Okay , well , everyone , thanks for your participation . Dan . I'm going to turn the call back to you for your closing comments .
Speaker #5: Thank you . Rob , thank you all for for your time and attention . I know this was a little bit longer . Call
Speaker #5: special . Thank you to out ?
Speaker #5: Errico , our new chairman , who has been a profound champion for this technology and for this company , for many , many years .
Speaker #5: I want to thank all of our employees and sales reps out there that are are working hard every day . I want to thank the folks in the VA hospital system and our other customers , but especially the federal workers who are struggling under this ridiculous , ridiculous government shutdown stuff going on right now .
Speaker #5: And yeah , there's probably a bunch of other people I need to thank , but thank you all for your time and attention .