Q2 2026 NeurAxis Inc Earnings Call

August 11, 2026

Speaker #1: Good morning, everyone, and welcome to the Neuraxis Report's second quarter fiscal year 2026 financial results conference call. All participants will be in a listen-only mode.

Operator 2: Good morning, everyone, and welcome to the Neuraxis second quarter fiscal year 2026 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. I would now like to hand the floor over to Ben Shamsian, investor relations. Sir, please go ahead.

Operator: Good morning, everyone, and welcome to the Neuraxis second quarter fiscal year 2026 financial results conference call. All participants will be in a listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star and then one on your touch-tone phones. To withdraw your questions, you may press star and two. Please also note today's event is being recorded. I would now like to hand the floor over to Ben Shamsian, investor relations. Sir, please go ahead.

Speaker #1: Should you need assistance, please signal a conference specialist by pressing the star key, followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then one, on your touchtone phones.

Speaker #1: To withdraw your questions, you may press star and two. Please also note today's event is being recorded. I would now like to hand the floor over to Ben Shamsian, Investor Relations.

Speaker #1: Sir, please go ahead.

Speaker #2: Thank you, and good morning, everyone. Thank you for joining us for Neuraxis second quarter 2026 financial results and corporate update conference call. Joining us on the call today is Brian Carrico, CEO of Neuraxis, and Tim Hendricks, CFO of Neuraxis.

Ben Shamsian: Thank you, and good morning, everyone. Thank you for joining us for Neuraxis' second quarter 2026 financial results and corporate update conference call. Joining us on the call today is Brian Carrico, CEO of Neuraxis, and Tim Henrichs, CFO of Neuraxis. At the conclusion of today's prepared remarks, we will open the call to questions. Please follow the operator's instructions to ask a question. Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Neuraxis. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance.

Speaker #2: At the conclusion of today's prepared remarks, we will open the call to questions. Please follow the authorized instructions to ask a question. Today's event is being recorded and will be available for replay through the webcast information provided in the press release.

Speaker #2: Finally, I'd like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Neuraxis.

Ben Shamsian: Finally, I'd like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of Neuraxis. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance.

Speaker #2: Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay.

Ben Shamsian: Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the risk factors set forth in the company's filings with the SEC. Neuraxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to now turn over the event to Brian Carrico, Chief Executive Officer of Neuraxis. Brian, please proceed.

Speaker #2: Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the risk factors set forth in the company's filings with the SEC.

Speaker #2: Neuraxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to now turn over the event to Brian Carrico, Chief Executive Officer of Neuraxis.

Speaker #2: Brian, please proceed.

Speaker #3: Thank you, Ben, and good morning to everyone joining us. Q2 was an important quarter for Neuraxis, and I look forward to delivering several key progress updates today.

Brian Carrico: Thank you, Ben, and good morning to everyone joining us. Q2 was an important quarter for Neuraxis, and I look forward to delivering several key progress updates today. It was our second full quarter of operating with a Category I CPT code for PENFS, which confirmed what we learned in the first quarter regarding what drives adoption and where we need to focus our commercial resources. This allowed us to stick to the plan and taking what we learned in Q1 to make disciplined strategic decisions in Q2 that will certainly play out in Q3 and Q4. Our strategy is centered on two priorities. Number one, securing the remaining insurance coverage, which I have meaningful updates to report today. And number two, maximizing execution in covered markets while positioning the organization to scale rapidly as new coverage comes online. I will structure my remarks today around six areas.

Speaker #3: It was our second full quarter of operating with a category one CPT code for PENFS, which confirmed what we learned in the first quarter regarding what drives adoption and where we need to focus our commercial resources.

Speaker #3: This allowed us to stick to the plan in taking what we learned in Q1 to make disciplined, strategic decisions in Q2 that will certainly play out in Q3 and Q4.

Speaker #3: Our strategy is centered on two priorities. Number one, securing the remaining insurance coverage, which I have meaningful updates to report today. And number two, maximizing execution and covered markets while positioning the organization to scale rapidly as new coverage comes online.

Speaker #3: I will structure my remarks today around six areas. Revenue in second quarter highlights, insurance coverage status and payer progress, key performance indicators or KPIs, commercialization including our current structure, new hires, and upcoming changes, the opportunity within VA medical centers, and a summary of our focus to next steps.

Brian Carrico: Revenue and Q2 highlights, insurance coverage status and payer progress, key performance indicators or KPIs, commercialization, including our current structure, new hires, and upcoming changes, the opportunity within VA medical centers, and a summary of our focus and next steps. Following my remarks, Tim Henrichs, our CFO, will review our financial results for Q2 2026. For Q2 2026, revenue was $1.928 million, compared with $894,000 in Q2 2025, representing 116% year-over-year revenue growth. The quarter was successful on many fronts, especially looking at the strategic changes we made commercially and the progress we made with payers. Q2 continued to confirm proof of concept with physician and patient demand continuing to build, but utilization is strong where healthcare providers with the right combination of payer coverage, physician engagement, and operational capacity are in place.

Speaker #3: Following my remarks, Tim Hendricks, our CFO, will review our financial results for the second quarter of 2026. For the second quarter of 2026, revenue was $1.928 million compared with $894,000 in Q2 2025, representing 116% year-over-year revenue growth.

Speaker #3: The quarter was successful on many fronts, especially looking at the strategic changes we made commercially and the progress we made with payers. Q2 continued to confirm proof of concept with physician and patient demand continuing to build, but utilization is strong where healthcare providers with the right combination of payer coverage, physician engagement, and operational capacity are in place.

Speaker #3: Therefore, we have accelerated commercial hiring in markets where PENFS has strong insurance coverage and the greatest near-term growth potential, which I will discuss later in the call.

Brian Carrico: Therefore, we have accelerated commercial hiring in markets where PENFS has strong insurance coverage and the greatest near-term growth potential, which I will discuss later in the call. In Q2, we continue to see a strong improvement in average selling price, driven by the continued mix shift toward covered and reimbursed procedures and away from discounted financial assistance channels. That mix shift is important because it supports stronger revenue quality, margin potential, and long-term scalability. Tim will discuss this in more detail. Some Q2 highlights include, based on the Q1 experience, which was confirmed again in Q2, we increased headcount with our commercial sales, marketing, and medical affairs support teams.

Speaker #3: In Q2, we continue to see a strong improvement in average selling price driven by the continued mixed shift toward covered and reimbursed procedures and away from discounted financial assistance channels.

Speaker #3: That mixed shift is important because it supports stronger revenue quality margin potential and long-term scalability. Tim will discuss this in more detail. Some second quarter highlights.

Speaker #3: Include based on the Q1 experience, which was confirmed again in Q2, we increased headcount with our commercial sales marketing and medical affairs support teams.

Speaker #3: Number two, we continue to operate with more than 100 million covered lives, but most importantly, I'm happy to report we had significant gains with two large key commercial payers again taking what we learned in Q1 and aggressively adding to our strategy to optimize coverage policy.

Brian Carrico: Number 2, we continue to operate with more than 100 million covered lives, but most importantly, I am happy to report we had significant gains with two large key commercial payers, again, taking what we learned in Q1 and aggressively adding to our strategy to optimize coverage policy. Number 3, we took steps to address the remaining gaps we need to close, including payer coverage, clinical reinforcement, market level execution, C-suite and administrator financial education, and consistent face-to-face communication with each institution. Number 4, we gained more consistent market feedback around hospital economics. The patients in some of our best accounts are waiting for multiple months for care due to capacity issues, which should not be the case. We expect this strategy and message to be meaningful, especially as we gain more policy coverage and move into 2027.

Speaker #3: Number three, we took steps to address the remaining gaps we need to close including payer coverage, clinical reinforcement, market-level execution, C-suite and administrator financial education, and consistent face-to-face communication with each institution.

Speaker #3: Number four, we gained more consistent market feedback around hospital economics, the patients, and some of our best accounts are waiting for multiple months for care due to capacity issues, which should not be the case.

Speaker #3: We expect this strategy and message to be meaningful, especially as we gain more policy coverage and move into 2027. In short, the quarter moved us from theory to evidence where proof of concept continued to succeed.

Brian Carrico: In short, the quarter moved us from theory to evidence where proof of concept continued to succeed. The barriers that historically limited IB-Stim adoption continue to be better defined, and that gives us a crystal clear roadmap, which we are assertively addressing with disciplined actions beginning in Q2 and into Q3. All right. Now let us talk about insurance status. Insurance policy coverage remains the single most important driver of scalable growth. Q1 confirmed that a single substantial medical policy, while extremely valuable, is not sufficient by itself, and Q2 is no different. We are still treating only a fraction of the patients who could benefit from PENFS. Even within markets where coverage is already in place, we have barely begun to penetrate the available patient population.

Speaker #3: The barriers that historically limited IV stem adoption continue to be better defined and that gives us a crystal clear roadmap, which we are assertively addressing with disciplined actions beginning in Q2 and into Q3.

Speaker #3: All right. Now let's talk about insurance status. Insurance policy coverage remains the single most important driver of scalable growth. Q1 confirmed that a single substantial medical policy while extremely valuable is not sufficient by itself, and Q2 was no different.

Speaker #3: We are still treating only a fraction of the patients who could benefit from PENFS. Even within markets where coverage is already in place, we have barely begun to penetrate the available patient population providers continue to need confidence that coverage exists across a meaningful portion of their payer mix before they fully activate programs and allocate consistent clinic time.

Brian Carrico: Providers continue to need confidence that coverage exists across a meaningful portion of their payer mix before they fully activate programs and allocate consistent clinic time. Based on these learnings, we elevated our market access strategy and pulled several additional levers, resulting in significant progress with two large payers. We are cautiously optimistic that these efforts will result in additional coverage in H2 2026 or early 2027. Furthermore, we are applying these same advanced strategies to all payers. Our payer outreach now includes multiple parallel channels, direct engagement with commercial payers, their medical policy teams, inclusion in the addition of the Category I CPT code to state Medicaid fee schedules where new codes for 2026 are not yet fully loaded. Physician and KOL advocacy to reinforce the clinical need and the published evidence. Advocacy engagement with both the pediatric and multiple adult academic medical societies.

Speaker #3: Based on these learnings, we elevated our market access strategy and pulled several additional levers, resulting in significant progress with two large payers. We are cautiously optimistic that these efforts will result in additional coverage in the second half of 2026 or early 2027.

Speaker #3: Furthermore, we are applying these same advanced strategies to all payers. Our payer outreach now includes multiple parallel channels. Direct engagement with commercial payers and their medical policy teams, inclusion in the addition of the category one CPT code to state Medicaid fee schedules where new codes for 2026 are not yet fully loaded.

Speaker #3: Physician and KOL advocacy to reinforce the clinical need in the published evidence, advocacy engagement with both the pediatric and multiple adult academic medical societies, navigation and messaging guidance from former payer executives and medical directors to refine our approach with the appropriate decision makers, and continued expansion of our internal prior authorization team to enhance administrative efficiency for providers and improve reimbursement confidence.

Brian Carrico: Navigation and messaging guidance from former payer executives and medical directors to refine our approach with the appropriate decision makers, and continued expansion of our internal prior authorization team to enhance administrative efficiency for providers and improve reimbursement confidence. As we look at the specific success with the two payers mentioned, I want to highlight the implementation of additional strategies resulting in the progress we saw is consistent with the previous success where I have repeatedly said, getting in front of the right people is the key. It is far from easy, but it is the key. As usual, I will not disclose specific payer names or details of the discussions, but we recently gained improved access to medical directors and other decision makers at two of the largest remaining payers without existing medical policy coverage.

Speaker #3: As we look at the specific success with the two payers mentioned, I want to highlight the implementation of additional strategies resulting in the progress we saw is consistent with the previous success where I have repeatedly said getting in front of the right people is the key.

Speaker #3: It's far from easy, but it's the key. As usual, I will not disclose specific payer names or details of the discussions, but we recently gained improved access to medical directors and other decision makers at two of the largest remaining payers without existing medical policy coverage.

Speaker #3: Those conversations reinforced our belief that the challenge has often been access to the right decision makers rather than fundamental opposition to the therapy. Our message to payers remains consistent.

Brian Carrico: Those conversations reinforced our belief that the challenge has often been access to the right decision makers rather than fundamental opposition to the therapy. Our message to payers remains consistent. IB-Stim addresses a large unmet need in pediatric functional abdominal pain and related disorders, offers a favorable safety profile, provides an evidence-based alternative to off-label medication use, including drugs with FDA black box warnings, and is becoming the standard of care in children's hospitals nationally. The clinical evidence, published treatment guidelines, broad academic society and KOL support, Category I CPT code, and existing payer precedent together create a strong foundation for additional policy coverage. In parallel to pursuing those remaining payers, our goal is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online.

Speaker #3: IV STEM addresses a large unmet need in pediatric functional abdominal pain and related disorders, offers a favorable safety profile provides an evidence-based alternative to off-label medication use, including drugs with FDA black box warnings, and is becoming the standard of care in children's hospitals nationally.

Speaker #3: The clinical evidence, published treatment guidelines, broad academic society and KOL support, category one CPT code, and existing payer precedent together create a strong foundation for additional policy coverage.

Speaker #3: In parallel to pursuing those remaining payers, our goal is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online.

Speaker #3: As we manage Medicaid beneficiary access to PNFS, many states, as I mentioned, have yet to include CPT code 64567 on their 2026 fee schedule updates.

Brian Carrico: As we manage Medicaid beneficiary access to PENFS, many states, as I mentioned, have yet to include CPT code 64567 on their 2026 fee schedule updates. This hinders medically necessary coverage through EPSDT special provision due to lack of payment methodology. It also delays program launches and impacts account activation due to health equity considerations, not to mention the inability to have a full-scale IB-Stim program with this payer void in those specific states. Importantly, these are implementation issues rather than clinical adoption issues. In markets where medical policy coverage and fee schedule inclusion are in place, the CPT code is having the intended effect. Following our successful CPT code milestone and expanded age indication for PENFS, the insurance policy operation has become incredibly intense with multiple layers of ongoing strategy with several payers simultaneously.

Speaker #3: This hinders medically necessary coverage through the EPSDT special provision due to lack of a payment methodology. It also delays program launches and impacts account activation due to health equity considerations—not to mention the inability to have a full-scale IV STEM program with this payer void in those specific states.

Speaker #3: Importantly, these are implementation issues rather than clinical adoption issues. In markets where medical policy coverage and fee schedule inclusion are in place, the CPT code is having the intended effect.

Speaker #3: Following our successful CPT code milestone and expanded age indication for PENFS, the insurance policy operation has become incredibly intense, with multiple layers of ongoing strategy with several payers simultaneously.

Speaker #3: Therefore, we're adding a VP of Healthcare Economics and Policy to dedicate sole focus to those key upstream initiatives. This role will be responsible for economic evidence generation for payers, health technology strategy, and payer advocacy.

Brian Carrico: Therefore, we are adding a VP of healthcare economics and policy to dedicate sole focus on those key upstream initiatives. This role will be responsible for economic evidence generation for the payers, health technology strategy, and payer advocacy. Our Vice President of Market Access and Reimbursement will shift their focus to key downstream initiatives, execution on facility and practice solutions, implementation of access pathways, reimbursement pull-through, and program and procedure economics, which have all become a much bigger responsibility. KPIs. As we did in Q1, we will now provide meaningful KPIs each quarter going forward under the new CPT code environment. This section includes the metrics that best explain both current performance and future growth potential.

Speaker #3: Our vice president of market access and reimbursement will shift their focus to key downstream initiatives, execution on facility and practice solutions, implementation of access pathways, reimbursement pull-through, and program and procedure economics.

Speaker #3: Which have all become a much bigger responsibility. KPIs. As we did in Q1, we will now provide meaningful KPIs each quarter going forward under the new CPT code environment.

Speaker #3: This section includes the metrics that best explain both current performance and future growth potential. The purpose of this KPI framework is not only to report historical performance, but to help investors understand the mechanics of adoption.

Brian Carrico: The purpose of this KPI framework is not only to report historical performance, but to help investors understand the mechanics of adoption where coverage exists, whether providers have operational capacity, how patient identification converts to treatment, and how reimbursed utilization affects revenue quality and margin potential. These are year-to-date numbers through Q2 2026. Revenue of $3.6 million in 2026 versus $1.8 million in 2025, up 98%. IB-Stim average selling price, $1,003 in 2026 versus $772 in 2025, up 30%. Year-to-date internal prior authorization approval percentage, 31% in 2026 versus 12% in 2025. Year-to-date number of ordering accounts, 88 accounts have ordered year-to-date versus 76 at the same point last year, up 16%. Year-to-date revenue per ordering IB-Stim account. In 2026 through 30 June, each account that has ordered averaged $40,000 versus $24,000 in 2025, up 68%. Now I want to move to commercialization.

Speaker #3: Where coverage exists, whether providers have operational capacity, how patient identification converts to treatment, and how reimbursed utilization affects revenue quality and margin potential. These are year-to-date numbers through Q2 2026.

Speaker #3: Revenue of $3.6 million in 2026 versus $1.8 million in 2025. Up 98%. IV STEM average selling price. $1,003 in 2026 versus $772 in 2025, up 30%.

Speaker #3: Year-to-date internal prior authorization approval percentage is 31% in 2026 versus 12% in 2025. Year-to-date number of ordering accounts: 88 accounts have ordered year-to-date, versus 76 at the same point last year, up 16%.

Speaker #3: Year-to-date revenue per ordering IV STEM account. In 2026 through June 30th, each account that's ordered averaged $40,000 versus $24,000 in 2025, up 68%. Now I want to move to commercialization.

Speaker #3: Commercial execution is now the primary driver of growth. I will reiterate that our sole commercial focus is to execute aggressively in markets where policy coverage exists, while preparing the commercial infrastructure to scale as additional coverage comes online.

Brian Carrico: Commercial execution is now the primary driver of growth. I will reiterate that our sole commercial focus is to execute aggressively in markets where policy coverage exists while preparing the commercial infrastructure to scale as additional coverage comes online. We have moved into an execution phase, aligning our commercial organization around the markets and accounts with the strongest coverage, demand, and utilization potential. We are prioritizing hospitals based on reimbursement, patient opportunity, and their ability to dedicate clinic capacity to IB-Stim. The most successful accounts share three common characteristics, which we have discussed before. Strong medical policy coverage across a meaningful portion of the payer mix. That is number one. Number two, at least one physician champion who understands the clinical data. Number three, dedicated clinic time or a consistent workflow to identify, authorize, and treat eligible patients. Where one of those elements is missing, utilization is not optimized.

Speaker #3: We have moved into an execution phase aligning our commercial organization around the markets and accounts with the strongest coverage, demand, and utilization potential. We are prioritizing hospitals based on reimbursement, patient opportunity, and their ability to dedicate clinic capacity to IV STEM.

Speaker #3: The most successful accounts share three common characteristics, which we've discussed before. Strong medical policy coverage across a meaningful portion of the payer mix. That's number one.

Speaker #3: Number two, at least one physician champion who understands the clinical data. And number three, dedicated clinic time or a consistent workflow to identify, authorize, and treat eligible patients.

Speaker #3: Where one of those elements is missing, utilization is not optimized. Our commercial model is therefore being built to identify the missing element at each account and address it directly, whether that means payer support, clinical reinforcement, operational workflow, or economic education for administrators.

Brian Carrico: Our commercial model is therefore being built to identify the missing element at each account and address it directly, whether that means payer support, clinical reinforcement, operational workflow, or economic education for administrators. We are also being disciplined about how we deploy resources. We are not expanding broadly into markets that lack sufficient payer coverage. Instead, we are focusing in-depth on select markets where coverage and demand are already favorable, with the expectation that this approach will generate higher returns and more predictable growth. Regarding new hires and upcoming commercial changes, as stated earlier, we took what we learned in Q1 and made several changes in Q2 to align the organization for scale. We have been and will continue to be diligent with capital, but we have reached the point where we will be very aggressive commercially going forward, beginning in the states where we have optimal policy coverage.

Speaker #3: We are also being disciplined about how we deploy resources. We are not expanding broadly into markets that lack sufficient payer coverage. Instead, we are focusing in-depth on select markets where coverage and demand are already favorable, with the expectation that this approach will generate higher returns and more predictable growth.

Speaker #3: Regarding new hires and upcoming commercial changes, as stated earlier, we took what we learned in Q1 and made several changes in Q2 to align the organization for scale.

Speaker #3: We have been and will continue to be diligent with capital, but we have reached the point where we will be very aggressive commercially going forward beginning in the states where we have optimal policy coverage.

Speaker #3: First, we are strengthening commercial leadership and coordination. The sales organization was aligned under a full-time vice president of sales role effective May 1st. While marketing was elevated under a vice president of marketing role at the same time.

Brian Carrico: First, we are strengthening commercial leadership and coordination. The sales organization was aligned under a full-time Vice President of Sales role effective 1 May, while marketing was elevated under a Vice President of Marketing role at the same time. This created tighter coordination across field execution, messaging, account support, digital awareness, and market development as we expanded the teams. In Q2, we also added a digital marketing expert to bring real SEO focus to the patients and physicians in states where we have the best coverage. We added a medical science liaison to deliver science-based talks at grand rounds, division talks, and educational dinners. We also added a psychologist with her doctorate as a strategic clinical adoption director to drive utilizations and programs by expanding the referral sources and educating on the importance of treating earlier in the patient's life cycle.

Speaker #3: This created tighter coordination across field execution, messaging, account support, digital awareness, and market development as we expanded the teams. In Q2, we also added a digital marketing expert to bring real SEO focus to the patients and physicians in states where we have the best coverage.

Speaker #3: We added a Medical Science Liaison to deliver science-based talks at grand rounds, division talks, and educational dinners. We also added a psychologist with her doctorate as Strategic Clinical Adoption Director to drive utilization and programs by expanding the referral sources and educating on the importance of treating earlier in the patient's life cycle.

Speaker #3: Although only six weeks in, we are seeing direct results of all three new hires. Our payer access work will continue to receive dedicated leadership focus including commercial payers, Medicaid, and managed Medicaid opportunities by adding a full-time dedicated health economic and policy expert, which I mentioned earlier, who has been successful in his or her past bringing a procedure to market and gaining medical policy coverage through strategic and aggressive means.

Brian Carrico: Although only 6 weeks in, we are seeing direct results of all three new hires. Our payer access work will continue to receive dedicated leadership focus, including commercial payers, Medicaid, and managed Medicaid opportunities by adding a full-time dedicated health economic and policy expert, which I mentioned earlier, who has been successful in his or her past, bringing a procedure to market and gaining medical policy coverage through strategic and aggressive means. Second, we launched a more targeted regional sales rep coverage model in key states with policy coverage, which is also showing direct impact due to being in person much more often. Frequency of visits matter. To drive clinical buy-in and utilization, our team needs to be in front of clinicians and hospital support teams more consistently. Third, we are increasing the rigor of our sales training.

Speaker #3: Second, we lost a more targeted regional sales rep coverage model in key states with policy coverage, which has also shown direct impact due to being in person much more often.

Speaker #3: Frequency of visits matters. To drive clinical buy-in and utilization, our team needs to be in front of clinicians and hospital support teams more consistently.

Speaker #3: Third, we are increasing the rigor of our sales training. This includes internal and external training focused on product knowledge, clinical data, payer dynamics, provider economics, and execution discipline.

Brian Carrico: This includes internal and external training focused on product knowledge, clinical data, payer dynamics, provider economics, and execution discipline. As additional policy coverage comes online, we need the team to be prepared to convert coverage into predictable utilization. Fourth, we are launching a focused initiative around an integrative health programs within pediatric GI. Many of our most important referral sources already operate within this model, which emphasizes multidisciplinary care and reduced reliance on medication. We view these programs as an important entry point for broader and earlier IB-Stim adoption. To support this effort, we added a Doctor of Psychology as a Director of Clinical Adoption and Patient Access, as I mentioned. This role will be relationship-driven and patient-focused, helping institutions expand access, integrate IB-Stim earlier in the treatment pathway, and operationalize program growth.

Speaker #3: As additional policy coverage comes online, we need the team to be prepared to convert coverage into predictable utilization. Fourth, we are launching a focused initiative around an integrative health programs within pediatric GI.

Speaker #3: Many of our most important referral sources already operate within this model, which emphasizes multidisciplinary care and reduced reliance on medication. We view these programs as an important entry point for broader and earlier IV STEM adoption.

Speaker #3: To support this effort, we added a doctor of psychology. As the director of clinical adoption and patient access, as I mentioned. This role will be relationship-driven and patient-focused, helping institutions expand access, integrate IV STEM earlier in the treatment pathway, and operationalize program growth.

Speaker #3: Fifth, we are actively pursuing additional talent in areas that can accelerate adoption in addition to the VP of market access and policy, including a VP of provider, a director or VP of provider economics to communicate the economic and operational value of IV STEM to administrators and hospital stakeholders to gain exponentially more IV STEM clinic time.

Brian Carrico: Fifth, we are actively pursuing additional talent in areas that can accelerate adoption in addition to the VP of Market Access and Policy, including a VP of Provider, a Director or VP of Provider Economics to communicate the economic and operational value of IB-Stim to administrators and hospital stakeholders to gain exponentially more IB-Stim clinic time. We are also adding sales professionals in markets with adequate payer coverage and clear utilization potential. Finally, we are launching what we refer to internally as a strategic market initiative for select regions. The concept is to coordinate payer access, field execution, clinical education, market development, prior authorization support, marketing, digital marketing awareness, KOL division talks, grand rounds, dinner presentations, MSL support, and patient-facing messaging in the same targeted markets. The objective is to create local intensity in those states where we have payer coverage. The overall principle is simple.

Speaker #3: We are also adding sales professionals in markets with adequate payer coverage and clear utilization potential. And finally, we're launching what we refer to internally as a strategic market initiative for select regions.

Speaker #3: The concept is to coordinate payer access, field execution, clinical education, market development, prior authorization support, marketing, digital marketing awareness, KOL division talks, grand rounds, dinner presentations, MSL support, and patient-facing messaging in the same targeted markets.

Speaker #3: The objective is to create local intensity in those states where we have payer coverage. The overall principle is simple: coverage unlocks the opportunity, but execution determines the level of growth.

Brian Carrico: Coverage unlocks the opportunity, but execution determines the level of growth. To recap, our sole commercial focus is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online. VA opportunity. I now want to spend a few minutes on the U.S. Department of Veterans Affairs opportunity. As previously announced, we were awarded a Federal Supply Schedule contract enabling commercial access to the U.S. Department of Veterans Affairs. The VA healthcare system serves nearly 7 million active patients annually, and functional dyspepsia is estimated to affect approximately 3% of that population. Given typical VA adoption timelines, we did not expect meaningful Q1 or Q2 orders.

Speaker #3: To recap, our sole commercial focus is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online.

Speaker #3: VA opportunity. I now want to spend a few minutes on the Veterans Administration opportunity. As previously announced, we were awarded a federal supply schedule contract, enabling commercial access to the US Department of Veterans Affairs.

Speaker #3: The VA healthcare system serves nearly 7 million active patients annually, and functional dyspepsia is estimated to affect approximately 3% of that population. Given typical VA adoption timelines, we did not expect meaningful Q1 or Q2 orders.

Speaker #3: However, we only launched in three small territories with W2 reps who were simultaneously calling on children's hospitals in that region, limiting their time, and we were already seeing multiple VA facilities placing orders, reorders, and many more moving through the activation process.

Brian Carrico: However, we only launched in three small territories with W2 reps who are simultaneously calling on children's hospitals in that region, limiting their time, and we are already seeing multiple VA facilities placing orders, reorders, and many more moving through the activation process. This early activity reinforces our belief that the VA will become a meaningful channel over time. The pediatric commercial market remains our primary focus, but the VA represents a second meaningful growth platform with several attractive characteristics. A large patient population with significant unmet need, centralized federal purchasing infrastructure, a pathway that is not dependent on commercial payer coverage in the same way as the broader non-VA adult market. Strong alignment with non-drug approaches for chronical functional GI conditions, and the potential to leverage experienced, 1099 VA-focused personnel and clinical education resources.

Speaker #3: This early activity reinforces our belief that the VA will become a meaningful channel over time. The pediatric commercial market remains our primary focus, but the VA represents a second meaningful growth platform with several attractive characteristics.

Speaker #3: A large patient population with significant unmet need, centralized federal purchasing infrastructure, a pathway that is not dependent on commercial payer coverage in the same way as the broader non-VA adult market, strong alignment with non-drug approaches for chronically functional GI conditions, and the potential to leverage experienced 1099 VA-focused personnel and clinical education resources.

Speaker #3: To that point, we made the decision in Q2 to begin with 10 1099 territory reps calling on one to three VA hospitals each. The team spent June and into July interviewing offered 10 positions in 10 territories, the last week of July, and the expectation is they are trained and in the field selling by September 15th so that by the end of this calendar year, we have a strong read on the VA revenue opportunity which will allow us to expand significantly in early 2027 in the remaining VA hospitals with 1099 reps.

Brian Carrico: To that point, we made the decision in Q2 to begin with 10 1099 territory reps calling on one to three VA hospitals each. The team spent June and into July interviewing, offered 10 positions in 10 territories the last week of July, and the expectation is they are trained and in the field selling by 15 September, so that by the end of this calendar year, we have a strong read on the VA revenue opportunity, which will allow us to expand significantly in early 2027 in the remaining VA hospitals with 1099 reps. This effort is being led and run by our VP of market development, who spent most of his career at Zimmer Biomet, and he will report up to our VP of sales.

Speaker #3: This effort is being led and run by our VP of market development who spent most of his career at Zimmer, and he will report up to our VP of sales.

Speaker #3: More broadly, for the adult IV STEM opportunity outside the VA, we continue to believe that broad medical policy coverage will require a large randomized controlled trial.

Brian Carrico: More broadly for the adult IB-Stim opportunity outside the VA, we continue to believe that broad medical policy coverage will require a large randomized controlled trial. On that note, there is a large multi-site randomized controlled trial evaluating IB-Stim in adult patients with functional dyspepsia in the early stages. That study is designed to generate the evidence needed to support future adult medical policy coverage while our near-term commercial focus remains strictly on children's hospitals and the VA. To summarize, Q2 was successful for several reasons. First, revenue was up 116% year-over-year. We added several key commercial team members to focus and drive utilization in the states where we have the best coverage. We made meaningful progress with two large payers, and we gained enough knowledge to make an easy decision to aggressively target the VA hospitals. The three priorities are crystal clear. Number one, insurance coverage.

Speaker #3: On that note, there is a large multi-site randomized controlled trial evaluating IV STEM in adult patients with functional dyspepsia in the early stages. That study is designed to generate the evidence needed to support future adult medical policy coverage while our near-term commercial focus remains strictly on children's hospitals in the VA.

Speaker #3: To summarize, Q2 was successful for several reasons. First, revenue was up 116% year over year. We added several key commercial team members to focus and drive utilization in the states where we have the best coverage.

Speaker #3: We made meaningful progress with two large payers, and we gained enough knowledge to make an easy decision to aggressively target the VA hospitals. The three priorities are crystal clear.

Speaker #3: Number one, insurance coverage. We made significant gains as I mentioned again with two key commercial insurance payers. We were hiring an experienced VP of market access and policy to aggressively implement the strategy and leverage to gain the remaining policy coverage.

Brian Carrico: We made significant gains, as I mentioned again, with two key commercial insurance payers. We are hiring an experienced VP of market access and policy to aggressively implement the strategy and levers to gain the remaining policy coverage. Number two, commercial execution. Our goal is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online. We added several key commercial hires in Q2 and will add several more commercial hires in Q3 to saturate the areas with policy coverage. The number three priority, we made the decision based on Q1 and early Q2 to aggressively expand into the VA with 1099 sales reps, with the expectation that the first 10 are actively trained and selling by 15 September. At this stage, success is straightforward in concept, though complex in execution.

Speaker #3: Number two, commercial execution. Our goal is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online.

Speaker #3: We added several key commercial hires in Q2 and will add several more commercial hires in Q3 to saturate the areas with policy coverage. And the number three priority, we made the decision based on Q1 and early Q2 to aggressively expand into the VA with 1099 sales reps with the expectation that the first 10 are actively trained and selling by September 15th.

Speaker #3: At this stage, success is straightforward in concept, though complex in execution. Expand payer coverage and execute with intensity in the markets where strong coverage exists.

Brian Carrico: Expand payer coverage and execute with intensity in the markets where strong coverage exists. We are moving decisively on both fronts. While monthly revenue may fluctuate and payer coverage exact timing remains difficult to predict, the underlying demand is more than clear. With that, I will now turn the call over to Tim Henrichs, our Chief Financial Officer, to discuss the financial results in more detail. Tim?

Speaker #3: We are moving decisively on both fronts. While monthly revenue may fluctuate and the exact timing of payer coverage remains difficult to predict, the underlying demand is more than clear.

Speaker #3: With that, I will now turn the call over to Tim Hendricks, our Chief Financial Officer, to discuss the financial results in more detail. Tim?

Speaker #1: Thank you, Brian, and I appreciate everyone joining us on the call today as well. These financial results were included within our press release, which was issued earlier this morning, and were also provided in more detail within our 10-Q.

Tim Henrichs: Thank you, Brian, and appreciate everyone joining us on the call today as well. These financial results were included within our press release, which was issued earlier this morning and were also provided in more detail within our 10-Q. My comments will cover our financial results and liquidity position in more detail, including a bit of an outlook, given the continued momentum we saw in the second quarter of 2026. The second quarter marks the eighth straight quarter of double-digit revenue growth year-over-year. The Category I CPT code, increased payer and reimbursement coverage, and a Federal Supply Schedule, just a few reasons as to why our growth continued into the second quarter, and in fact, accelerated since the first quarter.

Speaker #1: My comments will cover our financial results and liquidity position in more detail including a bit of an outlook given the continued momentum we saw in the second quarter of 2026.

Speaker #1: The second quarter marks the eighth straight quarter of double-digit revenue growth year over year. The category one CPT code increased payer and reimbursement coverage and a federal supply schedule.

Speaker #1: Just a few reasons as to why our growth continued into the second quarter and in fact accelerated since the first quarter. And that mix of execution has expanded both our gross margin and operating leverage as we believe we remain well positioned to deliver on our commitments financial, clinical, or otherwise to both our patients and investors.

Tim Henrichs: That mix of execution has expanded both our gross margin and operating leverage as we believe we remain well-positioned to deliver on our commitments, financial, clinical, or otherwise, to both our patients and investors. Let's dive into the financial highlights in more detail. Revenue in the second quarter of 2026 of $1.9 million was up 116% compared to $894,000 in the second quarter of 2025, while revenue for the six months ended 30 June 2026, of $3.5 million increased 98% compared to $1.8 million for the six months ended 30 June 2025. Another first for us as the second quarter of 2026 yet marked again the strongest quarterly revenue performance in our history.

Speaker #1: So let's dive into the financial highlights in more detail. Revenue in the second quarter of 2026 of $1.9 million was up 116% compared to $894,000 in the second quarter of 2025, while revenue for the six-month end of June 30, 2026, up 3.5 million, increased 98% compared to $1.8 million for the six-month end of June 30, 2025.

Speaker #1: And another first for us, as the second quarter of 2026 yet again marked the strongest quarterly revenue performance in our history. IB STEM unit deliveries increased 60% and 48% for the three- and six-month periods ended June 30, 2026, respectively.

Tim Henrichs: IB-Stim unit deliveries increased 60% and 48% for the three and six months ended 30 June 2026, respectively, compared to prior periods, due to the continuance of what we saw in Q1 2026, which is a function of increased full reimbursement health insurance payer coverage we were awarded in Q4 2026 and the IB-Stim Category I CPT code with the 1 January 2026 effective date. In Q2 2025, we were selling more units through our discounted financial assistance program than through full reimbursement insurance coverage. That patient mix has since reversed itself in Q1 and Q2 2026, significantly in favor of higher margin full reimbursement payers.

Speaker #1: Compared to prior periods, due to the continuance of what we saw in the first quarter of 2026—which is a function of increased full reimbursement, health insurance payer coverage—we were awarded in the fourth quarter of 2026 the IB-STEM Category I CPT code, with the January 1, 2026 effective date.

Speaker #1: In the second quarter of 2025, we were selling more units through our discounted financial assistance program than through full reimbursement insurance coverage. That patient mix has since reversed itself in the first and second quarters of 2026, significantly in favor of higher-margin, full reimbursement payers.

Speaker #1: And as a direct result of that payer mix shift, our IB-Stim average selling price increased 28%, from $778 per device in the second quarter of 2025 to $992 per device in the second quarter of 2026, and increased 30%, from $772 in the six months ended June 30, 2025, to $1,003 in the six months ended June 30, 2026.

Tim Henrichs: As a direct result of that payer mix shift, our IB-Stim average selling price increased 28% from $778 per device in Q2 2025 to $992 per device in Q2 2026, and increased 30% from $772 in the six months ended 30 June 2025, to $1,003 in the six months ended 30 June 2026. Given the broad acceptance and operating momentum since the IB-Stim Category 1 CPT code became effective on 1 January, we expect the positive mix shift impact on revenue and gross margin that I will discuss next to continue.

Speaker #1: And given the broad acceptance and operating momentum since the IB-STEM category one CPT code became effective on January 1st, we expect a positive mix shift impact on revenue and gross margin, which I will discuss next, to continue.

Speaker #1: Gross margin in the second quarter of 2026 increased 230 basis points to 85.9% in the second quarter of 2026 compared to 83.6% in the second quarter of 2025.

Tim Henrichs: Gross margin in Q2 2026 increased 230 basis points to 85.9% in Q2 2026 compared to 83.6% in Q2 2025, and increased 210 basis points to 86.1% during the six months ended 30 June 2026, from 84% during the six months ended 30 June 2025. Gross margin expansion is a direct result of the adoption of the Category I CPT code and increased payer coverage as our unit growth shifted from discounted financial assistance to full reimbursement payers. Although our current market access strategy is targeting all payers, our efforts to achieve more insurance coverage are particularly focused on the largest payers. We expect that our success in that venture will continue to push our gross margins higher in future quarters due to the adoption trend we've experienced in Q1 and Q2 2026.

Speaker #1: An increase of 210 basis points to 86.1% during the six months ended June 30, 2026, from 84% during the six months ended June 30, 2025.

Speaker #1: Gross margin expansion is a direct result of the adoption of the category one CPT code and increased payer coverage as our unit growth shifted from discounted financial assistance to full reimbursement payers.

Speaker #1: And although our current market access strategy is targeting all payers, our efforts to achieve more insurance coverage are particularly focused on the largest payers.

Speaker #1: We expect that our success in that venture will continue to push our gross margins higher in future quarters, due to the adoption trend we've experienced in the first and second quarters of 2026.

Speaker #1: Total operating expenses in the second quarter of 2026 were $3.8 million, an increase of 53% compared to $2.5 million in the first quarter of 2025.

Tim Henrichs: Total operating expenses in Q2 2026 were $3.8 million, an increase of 53% compared to $2.5 million in Q1 2025. Total operating expenses for the six months ended 30 June 2026, were $6.9 million, a 25% increase compared to $5.5 million for the six months ended 30 June 2025. We measure, manage, and present our operating expenses on three functions, selling, research and development, and general and administrative. Consistent with H2 2025, we reclassified $392,000 and $758,000 from general and administrative expenses into selling expenses for the three and six months ended 30 June 2025, respectively, and $57,000 and $114,000 from general and administrative expenses into research and development costs for the three and six months ended 30 June 2025, respectively, to conform to the current period and more transparent presentation as these costs are leading indicators of our future success.

Speaker #1: Total operating expenses for the six-month end of June 30, $6.9 million, a 25% increase compared to $5.5 million, for the six-month end of June 30, 2025.

Speaker #1: We measure, manage, and present our operating expenses along three functions: selling, research and development, and general and administrative. Consistent with the second half of 2025, we reclassified $392.8 million from general and administrative expenses into selling expenses for the three- and six-month periods ended June 30, 2025, respectively, and $57.1 million from general and administrative expenses into research and development costs for the three- and six-month periods ended June 30, 2025, respectively.

Speaker #1: To conform to the current period and more transparent presentation as these costs are leading indicators. Of our future success. Selling expenses in the second quarter of 2026 were $862,00, a 0, a 61% increase compared to $534,000 in the second quarter of 2025.

Tim Henrichs: Selling expenses in Q2 2026 were $862,000, a 61% increase compared to $534,000 in Q2 2025. Selling expenses for the six months ended 30 June 2026 were $1.7 million, a 63% increase compared to $1 million for the six months ended 30 June 2025. The increases are due to commissions that are directly related to our higher sales volume and additional sales rep and marketing personnel, including recruiting costs and higher travel expenses to drive growth attributable to the IB-Stim Category I CPT code and increased payer coverage as we go deeper into our existing accounts. Research and development expenses in Q2 2026 were $274,000, an increase of 138% compared to $115,000 in Q2 2025.

Speaker #1: Selling expenses for the six months ended June 30, 2026, were $1.7 million, a 63% increase compared to $1 million for the six months ended June 30, 2025.

Speaker #1: The increases are due to commissions that are directly related to our higher sales volume, and additional sales reps and marketing personnel — including recruiting costs and higher travel expenses — to drive growth attributable to the IB-STEM Category I CPT code and increased payer coverage as we go deeper into our existing accounts.

Speaker #1: Research and development expenses in the second quarter of 2026 were $274,000, an increase of 138% compared to $115,000 in the second quarter of 2025.

Speaker #1: Research and development expenses for the six-month end of June 30, 2026, were $374,000, a 68% increase compared to $222,000 for the six-month end of June 30, 2025.

Tim Henrichs: Research and development expenses for the six months ended 30 June 2026 were $374,000, a 68% increase compared to $222,000 for the six months ended 30 June 2025. The increases are reflective of the additional clinical research studies in 2026 as we continue our expansion of IB-Stim's FDA indications, partially offset by proceeds received for devices used in these clinical research studies. General administrative expenses of $2.6 million in Q2 2026 increased 46% compared to $1.8 million in Q2 2025. The increase was due to incremental clinical headcount and advisory costs to educate and promote broader market access to payers and hospitals, incremental stock compensation expense from the third year of a three-year vesting plan, higher benefit costs, and higher estimated incentive plan costs due to current performance.

Speaker #1: The increases are reflective of the additional clinical research studies in 2026 as we continue our expansion of IB STEM's FDA indications for partially offset by proceeds received for devices used in these clinical research studies.

Speaker #1: General administrative expenses of $2.6 million in the second quarter of 2026 increased 46% compared to $1.8 million in the second quarter of 2025. The increase was due to incremental clinical headcount and advisory costs to educate and promote broader market access to payers and hospitals, incremental stock compensation expense from the third year of a three-year vesting plan, higher benefit costs, and higher estimated incentive plan costs due to current performance.

Speaker #1: General administrative expenses of $4.9 million for the six-month period ended June 30, 2026, increased 14% compared to $4.3 million for the six-month period ended June 30, 2025, due to additional clinical headcount and the market access stock compensation benefit and incentive costs I just mentioned, partially offset by the absence of the one-time, non-recurring legal settlement charge.

Tim Henrichs: General and administrative expenses of $4.9 million for the six months ended 30 June 2026 increased 14% compared to $4.3 million for the six months ended 30 June 2025, due to additional clinical headcount and the market access, stock compensation, benefit, and incentive costs I just mentioned, partially offset by the absence of the one-time non-recurring legal settlement charge in 2025. Overall, we continue to demonstrate our ability to deliver operating expense leverage and achieve cash flow breakeven in the future as our revenue growth for the three and six months ended 30 June 2026 was 116% and 98%, respectively, compared to the same periods in 2025, which continues to outpace our operating expense growth by two to four times. Our operating loss in Q2 2026 was $2.1 million, 24% higher compared to a $1.7 million loss in Q2 2025.

Speaker #1: In 2025. Overall, we continue to demonstrate our ability to deliver operating expense leverage and achieve cash flow break even in the future as our revenue growth for the three and six-month end of June 30, 2026, was $116% and $98%, respectively, compared to the same periods in 2025, which continues to outpace our operating expense growth by 2 to 4 times.

Speaker #1: Our operating loss in the second quarter of 2026 was $2.1 million, 24% higher compared to the $1.7 million loss in the second quarter of 2025, and our net loss in the second quarter of 2026 at $2.1 million was 23% higher compared to $1.7 million in the second quarter.

Tim Henrichs: Our net loss in Q2 2026 at $2.1 million was 23% higher compared to $1.7 million in Q2 2025. Our higher gross profit from increased quarterly sales year-over-year was offset by higher selling expenses directly attributable to higher volume, higher R&D costs as we continue to pursue additional IB-Stim FDA indications, and higher general administrative costs due to higher headcount compensation and advisory spend. Our operating loss for the six months ended 30 June 2026, at $3.9 million, was 4% lower compared to $4 million for the six months ended 30 June 2025.

Speaker #1: Of 2025. Our higher gross profit from increased quarterly sales year over year was offset by higher selling expenses directly attributable to higher volume higher R&D costs as we continue to pursue additional IB STEM FDA indications and higher general administrative costs due to higher headcount compensation and advisory spend.

Speaker #1: Our operating loss for the six-month end of June 30, 2026, at $3.9 million was 4% lower due to $4 million compared to $4 million for the six-month end of June 30, 2025, and our net loss for the six-month ended June 30, 2026, at $3.8 million was 3% lower compared to $4 million for the six-month ended June 30, 2025, also due to higher gross profit from increased unit deliveries and higher operating expenses partially offset by the absence in 2026 of the one-time non-recurring legal settlement that was incurred in 2025.

Tim Henrichs: Our net loss for the six months ended 30 June 2026 at $3.8 million was 3% lower compared to $4 million for the six months ended 30 June 2025, also due to higher gross profit from increased unit deliveries and higher operating expenses, partially offset by the absence in 2026 of the one-time non-recurring legal settlement that was incurred in 2025. Our earnings per share improved from a loss of $0.22 in Q2 2025 to a loss of $0.19 in Q2 2026. On a year-to-date basis, our earnings per share also improved from a loss of $0.56 for the six months ended 30 June 2025 to a loss of $0.37 for the six months ended 30 June 2026. As it relates to liquidity, cash on hand as of 30 June 2026 was $8.3 million.

Speaker #1: Our earnings per share improved from a loss of $0.22 in the second quarter of 2025 to a loss of $0.19 in the second quarter of 2026.

Speaker #1: On a year-to-date basis, our earnings per share also improved from a loss of $56 cents for the six-month end of June 30, 2025, to a loss of $37 cents for the six-month ended June 30, 2026.

Speaker #1: As it relates to liquidity, cash on hand as of June 30, 2026, was $8.3 million. Our free cash outflow was $1 million and $2.3 million for the three and six months ended June 30, 2026, respectively.

Tim Henrichs: Our free cash outflow was $1 million and $2.3 million for the three and six months ended 30 June 2026. Our 2026 year-to-date average quarterly burn rate of approximately $1.1 million is significantly better than our 2025 average quarterly burn rate of approximately $1.5 million due to our lower operating loss and higher accounts payable as market access services were rendered and therefore unpaid at the end of the quarter. Given that cash position, we have not utilized the at-the-market facility since May. We do believe we will achieve cash flow breakeven in the future, but again, that goal is dependent on the continuation of our growth trajectory and operating leverage to reduce our current cash burn. Regarding cash burn specifically, we have made great strides over the past two years to reach our current level of $1 million for the quarter.

Speaker #1: Our 2026 year-to-date average quarterly burn rate of approximately $1.1 million is significantly better than our 2025 average quarterly burn rate of approximately $1.5 million, due to our lower operating loss and higher accounts payable as market access services were rendered and therefore unpaid at the end of the quarter.

Speaker #1: Given that cash position, we have not utilized the at-the-market facility since May. We do believe we will achieve cash flow break even in the future, but again, that goal is dependent on the continuation of our growth trajectory and operating leverage to reduce our current cash burden.

Speaker #1: Regarding cash burn specifically, we have made great strides over the past two years to reach our current level of $1 million for the quarter.

Speaker #1: However, I do expect it to increase into the second half of the year. As we make decisions to accelerate our revenue growth, our first and second quarter results confirmed our proof of concept with the Cat 1 code and the major payer policy coverage, and we need to take advantage of that momentum.

Tim Henrichs: However, I do expect it to increase into the H2 of the year as we make decisions to accelerate our revenue growth. Our first and second quarter results confirmed our proof of concept with the Category 1 CPT code and the major payer policy coverage, and we need to take advantage of that momentum. As Brian previously mentioned, we learned and made disciplined strategic decisions in the H1 of the year, with further execution expected in the H2. To accomplish that, our recent hirings of sales, marketing, and clinical personnel and additional research and development expenditures will increase our SG&A in the short term. Sales personnel to expand existing and new accounts. Marketing and market access personnel to promote, target, and secure additional patient, hospital, and payer coverage. Clinical personnel to establish a physician champion and go deeper into accounts by expanding treatment access.

Speaker #1: As Brian previously mentioned, we learned and made discipline strategic decisions in the first half of the year with further execution expected in the second half.

Speaker #1: To accomplish that, our recent hirings in sales, marketing, and clinical personnel, along with additional research and development expenditures, will increase our SG&A in the short term.

Speaker #1: Sales personnel to expand existing and new accounts; marketing and market access personnel to promote targets and secure additional patient, hospital, and payer coverage; clinical personnel to establish a physician champion and go deeper into accounts by expanding treatment access.

Speaker #1: Research and development costs as we explain as we expand clinical trials in pursuit of additional FDA indications. All future growth-related expenditures. And with that, let me turn the call back over to Brian.

Tim Henrichs: Research and development costs as we expand clinical trials in pursuit of additional FDA indications. All future growth-related expenditures. With that, let me turn the call back over to Brian.

Speaker #2: Thank you, Tim. With that, operator, Ben will be happy to take any questions.

Brian Carrico: Thank you, Tim. With that, operator and Ben, we will be happy to take any questions.

Speaker #3: We will now begin the question-and-answer session. To ask a question, you may press star, then 1, on your touch-tone phones. If you are using a speakerphone, we ask that you please pick up your handset before pressing the keys.

Operator 2: We will now begin that question and answer session. To ask a question, you may press star and then one on your touch-tone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We will pause momentarily to assemble the roster. Our first question today comes from Chase Knickerbocker from Craig-Hallum. Please go ahead with your question.

Operator: We will now begin that question and answer session. To ask a question, you may press star and then one on your touch-tone phones. If you are using a speakerphone, we do ask that you please pick up your handset before pressing the keys. To withdraw your questions, you may press star and two. Once again, that is star and then one to join the question queue. We will pause momentarily to assemble the roster. Our first question today comes from Chase Knickerbocker from Craig-Hallum. Please go ahead with your question.

Speaker #3: To withdraw your questions, you may press star and 2. Once again, that is star and then 1. To join the question queue, we'll pause momentarily to assemble the roster.

Speaker #3: And our first question today comes from Chase Knickerbocker from Craig Hallam. Please go ahead with your question.

Speaker #4: Good morning. Thanks for taking the questions. Can you maybe just give a little bit more color, Brian, on the progress with the two large payers that you mentioned? I can't help but notice your confidence.

Chase Knickerbocker: Good morning. Thanks for taking the questions. Can you maybe just give a little bit more color, Brian, on the progress with the two large payers that you mentioned? Can't help but notice your confidence. Maybe just a little bit more color on what exactly you are seeing there. Is it just the frequency, the cadence, the kind of context of the conversation, maybe just a little bit more there? Second, as we think about sequential growth from here, do you think about the next step up in growth acceleration being from that next coverage win? Or how do you think about the back half of the year as you think about your business sequentially? Thanks.

Speaker #4: You know, and maybe just a little bit more color on kind of what exactly you're seeing there. Is it just kind of the frequency, the cadence, the kind of, you know, kind of context of the conversation?

Speaker #4: Maybe just a little bit more there. And then just second, as we think about kind of sequential growth from here, do you think about kind of the next step up in kind of growth acceleration being from that kind of next coverage win or kind of how do you think about the back half of the year as you think about your business sequentially?

Speaker #4: Thanks.

Speaker #2: Yeah. My confidence comes from the fact that we've had direct conversations. I wouldn't be confident if we didn't have direct conversations with a payer, who made comments or alluded to the fact that they believe this should—all, they also believe this should be a covered service.

Brian Carrico: Yeah. My confidence comes from the fact that we have had direct conversations. I would not be confident if we did not have direct conversations with a payer who made comments or alluded to the fact that they also believe this should be a covered service. These are direct firsthand conversations. I will just leave it at that. That is where the confidence comes from. Yes, the confidence is high. Regarding sequential growth, can we keep growing? Yes. There are three ways we continue to grow. Of course, adding another growth platform in the VA. If you take the VA aside, there are two primary ways to grow. Number one, we have been a broad organization from a commercial standpoint for a long time because we did not have the knowledge, the coding, the insurance policy coverage to responsibly spend the money in key states. That has changed.

Speaker #2: And these are these are, you know, direct firsthand conversations. I'll just leave it at that. That's where the confidence comes from. And yes, the confidence is high.

Speaker #2: And regarding sequential growth, can we keep growing? Yes. There are two ways we can three ways we continue to grow. Of course, adding another growth platform in the VA, but if you if you take the VA aside, there are two primary ways to grow.

Speaker #2: Number one, we have been a broad organization from a commercial standpoint for a long time because we didn't have the knowledge, the coding, the insurance policy coverage to responsibly spend the money in key states.

Speaker #2: That's changed. I pointed that out today, that we are aggressively saturating the six, or seven, or eight states where we have, you know, I would say decent to good—you know, better than good—insurance policy coverage.

Brian Carrico: I pointed that out today, that we are aggressively saturating the 6 or 7 or 8 states where we have, I would say, decent to good insurance policy coverage. We are going to saturate those states with countless levers. There are a number of covered lives there and patients that we can treat and continue to grow with no more additional policy coverage. I think Q3 will be to be determined and by Q4, I think we will start to see more sequential growth. Without question, the next level, I am not happy with these numbers. Nobody is thrilled with these numbers. Yes, we grew 116%, but the number of patients not being treated. I said it today, we are basically treating no one. That is based on the feedback from the physicians and from the patients that are coming through our prior authorization process.

Speaker #2: And we are going to saturate those states with countless levers and there are a number of covered lives there and patients that we can treat and continue to grow with no more additional policy coverage.

Speaker #2: And I think Q3 will be to be determined, and by Q4, I think we'll start to see more sequential growth. But without question, the next level—you know, I'm not happy with these numbers.

Speaker #2: Nobody's thrilled with these numbers. Yes, we grew 116%, but the number of patients not being treated—again, I said it today—we're basically treating no one.

Speaker #2: And when I say not and that's based on the feedback from the physicians and from the patients that are coming through our prior authorization process.

Speaker #2: We're not treating anyone, and that's basically because of the lack of insurance policy coverage. So the growth comes straightforwardly from focusing on the states where we have policy coverage and saturating those policies we do have.

Brian Carrico: We are not treating anyone, and that is basically because of the lack of insurance policy coverage. The growth comes straightforward from focusing on the states where we have policy coverage and saturating those policies we do have. Number two, those additional payers writing policy coverage. That will not only unlock that new policy coverage, but it unlocks the policy coverage we have, which is not being utilized as a general rule.

Speaker #2: And number two, those additional payers writing policy coverage. That will not only unlock that new policy coverage, but it also unlocks the policy coverage we have, which is not being utilized as a general rule.

Speaker #4: Then just last from me, if we think about kind of what a good account in a good state with substantial policy coverage looks like relative to maybe you know, one that has you know, kind of modest coverage levels.

Chase Knickerbocker: Just last from me, if we think about what a good account in a good state with substantial policy coverage looks like relative to maybe one that has modest coverage levels, can you just give us a sense for revenue and volume per account and how stark the difference is? Thanks for the questions.

Speaker #4: Can you just kind of give us a sense for kind of revenue and volume kind of per account and how it kind of starts the differences?

Speaker #4: Thanks for the questions.

Speaker #2: Yeah, we're actually in the process of looking at that. And, Chase, I could give you off-the-cuff numbers, but I'm going to wait until next quarter.

Brian Carrico: Well, we are actually in the process of looking at that. Chase, I could give you off-the-cuff numbers, but I am going to wait until next quarter. The reason for that is so many children's hospitals have different numbers of providers. Some children's hospitals have 10 providers, some have 20, some have 50. If you are talking about Philadelphia or Boston, they have 70 or 75. To just give it a per revenue number, it would not be accurate. It would not be relative. What we are doing is looking at this by penetration rate and what that means to the children's hospital. What is the penetration rate of that children's hospital? Those are numbers that we will probably add to the KPIs to some level going forward. We have got a great idea of what that looks like right now internally. Thanks, Chase.

Speaker #2: The reason for that is so many children's hospitals have different numbers of providers. Some children's hospitals have 10 providers, some have 20, some have 50, or you know, if you're talking about Philadelphia or Boston, they have 70 or 75.

Speaker #2: So it's a so to just give it a per a revenue number isn't it would not be would not be it wouldn't be accurate.

Speaker #2: It wouldn't be relative. So what we're doing is looking at this by penetration rate and what that means to the children's hospital. What's the penetration rate of that children's hospital?

Speaker #2: And those are numbers that will probably add to the KPIs to some level going forward. But, yeah, we've got a great idea of what that looks like right now internally.

Speaker #2: Thanks, Chase.

Speaker #4: Thanks, Chase.

Chase Knickerbocker: Thanks, guys.

Speaker #3: Once again, if you would like to ask a question, please press star and then 1. To withdraw your question, you may press star and 2.

Operator 2: Once again, if you would like to ask a question, please press star and then one. To withdraw your question, you may press star and two. Our next question comes from Renzy Leads from Micro Cap. Please go ahead with your question.

Operator: Once again, if you would like to ask a question, please press star and then one. To withdraw your question, you may press star and two. Our next question comes from Renzy Leads from Micro Cap. Please go ahead with your question.

Speaker #3: And our next question comes from Renzi Leeds from Microcap. Please go ahead with your question.

Speaker #5: Hi. Congratulations on a strong quarter. I wanted to ask about whether we should expect you to hit 200 million covered lives in 2027?

Renzy Leads: Hi. Congratulations on a strong quarter. I wanted to ask about, do you think we should expect you to hit 200 million covered lives in 2027? Do you have enough visibility to know if that is something we should expect?

Lindsay Leeds: Hi. Congratulations on a strong quarter. I wanted to ask about, do you think we should expect you to hit 200 million covered lives in 2027? Do you have enough visibility to know if that is something we should expect?

Speaker #5: Do you have enough visibility to know if that's something we should expect?

Speaker #2: In 2027, that's certainly—that's the expectation, and then some. I would be, personally, based on what I know at this point, highly disappointed if we weren't over 200 million lives by the end of 2027.

Brian Carrico: In 2027, that is certainly the expectation and then some. I would be personally, based on what I know at this point, highly disappointed if we were not over 200 million lives by the end of 2027, yes.

Speaker #2: Yes.

Speaker #5: Okay. Great. I think you've you've mentioned this number before, but you're talking about additional coverage. I'm locking hospitals because you need to hit a certain percentage of covered lives before a hospital is willing to commit to an aggressive program.

Renzy Leads: Okay. Great. I think you've mentioned this number before, but you're talking about additional coverage unlocking hospitals because you need to hit a certain percentage of covered lives before a hospital is willing to commit to an aggressive program. What is that percentage number that a hospital wants to see?

Lindsay Leeds: Okay. Great. I think you've mentioned this number before, but you're talking about additional coverage unlocking hospitals because you need to hit a certain percentage of covered lives before a hospital is willing to commit to an aggressive program. What is that percentage number that a hospital wants to see?

Speaker #5: What is that percentage number that a hospital typically wants to see?

Speaker #2: 70%.

Brian Carrico: 70%.

Speaker #5: Okay. So, you know, we're thinking if you get a couple more insurance coverages from large programs, that'll put you over that 70% mark at a large number of additional hospitals.

Renzy Leads: Okay. We're thinking if you get a couple more insurance coverages from large programs, that'll put you over that 70% mark at a large number of additional hospitals?

Lindsay Leeds: Okay. We're thinking if you get a couple more insurance coverages from large programs, that'll put you over that 70% mark at a large number of additional hospitals?

Speaker #2: That's accurate.

Brian Carrico: That's accurate.

Speaker #5: Okay.

Renzy Leads: Okay.

Lindsay Leeds: Okay.

Speaker #2: Yes. Each additional payer from here brings significant brings cumulative effects in a number of states and those states continue to expand. With additional policy coverages, yes, you're starting you know, I view this as the bucket has holes in it and the more you and the more holes you fill, the more insurance policy that coverage that comes, the more holes you fill and it becomes in the bucket fills much faster.

Brian Carrico: Yes. Each additional payer from here brings cumulative effects in a number of states, and those states continue to expand with additional policy coverages, yes. I view this as the bucket has holes in it, and the more holes you fill, the more insurance policy that comes, the more holes you fill, and the bucket fills much faster.

Speaker #5: Okay, perfect. I wanted to ask about your R&D spend. Should we expect that in every quarter after this, you’ll continue to be spending on the adult studies and the additional indications?

Renzy Leads: Okay, perfect. I wanted to ask about your R&D spend. Should we expect that in every quarter after this, you will continue to be spending on the adult studies and the additional indications?

Lindsay Leeds: Okay, perfect. I wanted to ask about your R&D spend. Should we expect that in every quarter after this, you will continue to be spending on the adult studies and the additional indications?

Speaker #2: Well, the investigator-initiated trial is at six sites, six centers, six multi-sites. It's an investigator-initiated trial. We are covering the cost of the devices.

Brian Carrico: Well, the investigator-initiated trial is at 6 sites, 6 centers, 6 multi-sites. It is an investigator-initiated trial. We are covering the cost of the devices. We are covering the cost of a research coordinator or partial research coordinator time in certain institutions. This is not a full-blown CRO spend. We are not talking about $5 or $6 million here. We are spending money on a research coordinator. Will this be big dollars? Relatively speaking, from what investors are used to seeing in biotech or med tech from a CRO standpoint, far from it. These will not be big dollars. Will we continue to spend money on a quarterly basis to make sure this study has the resources necessary? Yes.

Speaker #2: We're covering the cost of a research coordinator, or partial research coordinator time, in certain institutions. But this is not a full-blown, you know, CRO spend.

Speaker #2: We're not talking about five or six million dollars here. And but we are spending money on a research coordinator. Will these will this be big dollars relatively speaking from what investors are used to seeing in biotech or medtech from a CRO standpoint, far from it.

Speaker #2: These will not be big dollars. Will we continue to spend money on a quarterly basis to make sure this study has the resources necessary?

Speaker #2: Yes.

Speaker #5: Okay. As far as additional indications other than FAP or dyspepsia—the things that you're already covering today—are you able to say anything about additional indications that you might be pursuing, or will that be coming up in later quarters?

Renzy Leads: Okay. As far as additional indications other than the FAP or dyspepsia, the things that you are already covering today, are you able to say anything about additional indications that you might be pursuing, or will that be coming up in later quarters?

Lindsay Leeds: Okay. As far as additional indications other than the FAP or dyspepsia, the things that you are already covering today, are you able to say anything about additional indications that you might be pursuing, or will that be coming up in later quarters?

Speaker #2: Well, I can tell you that you know, public knowledge on clinicaltrials.gov, you can see that we've got an RCT for cyclic vomiting syndrome in pediatrics.

Brian Carrico: Well, I can tell you that public knowledge on ClinicalTrials.gov, you can see that we have an RCT for cyclic vomiting syndrome in pediatrics. That is progressing. That is at the same call point as what we have now functional in pediatric gastroenterology. There is an adult study being done in the Atlanta VA with Emory University through an NIH-funded study for some adult indications. That is really the focus. The adult RCT on functional dyspepsia is the third focus there. Look, those are ongoing in the background. We are spending virtually zero time and virtually zero resources on those. Our focus is maximizing the indications we have because to look at a number of roughly $2 million in a quarter and to see who is not being treated. I talk about this on a quarterly basis.

Speaker #2: That's progressing. That's the same call point as what we have now—functional, you know, in pediatric gastroenterology. There's an adult study being done at the Atlanta VA with Emory University, through an NIH-funded study, for some adult indications.

Speaker #2: And that's really the focus. The adult RCT on functional dyspepsia is the third focus there. So, look, those are ongoing in the background. We're spending virtually zero time and virtually zero resources on those.

Speaker #2: Our focus is maximizing the indications we have because, you know, it's to look at a number of roughly $2 million in a quarter and to see who's not being treated.

Speaker #2: You know, I talk about this on a quarterly basis. It's difficult to explain the number of patients not being treated because of a number of commercial plans that are hanging in the balance.

Brian Carrico: It's difficult to explain the number of patients not being treated because of a number of commercial plans that are hanging in the balance, and that's our focus.

Speaker #2: And that's our focus.

Speaker #5: Okay. Great. I want to switch to the VA program for a second and ask, those 10 reps that you're deploying, do you have any idea of what you would expect success to be as far as sales per quarter for those reps?

Renzy Leads: Okay, great. I want to switch to the U.S. Department of Veterans Affairs program for a second and ask, those 10 reps that you're deploying, do you have any idea of what you would expect success to be as far as sales per quarter for those reps?

Lindsay Leeds: Okay, great. I want to switch to the U.S. Department of Veterans Affairs program for a second and ask, those 10 reps that you're deploying, do you have any idea of what you would expect success to be as far as sales per quarter for those reps?

Speaker #2: We have clear-cut expectations, but I'm not going to disclose those today. I think next quarterly call we will likely move forward, either talking about what the revenue looks like and breaking that out, or we might wait for Q1 to do that, or in the Q1 report to Q4, discuss how that broke out.

Brian Carrico: We have clear-cut expectations that I'm not going to disclose those today. I think next quarterly call will likely move forward, either talking about what the revenue looks like and breaking that out, or we might wait for Q1 to do that, or in Q1 report into Q4, how that broke out. We'll at least explain what we expect from each territory or each VA going forward in the next call.

Speaker #2: And we'll at least explain what we expect from each territory or each VA going forward in the next call.

Speaker #5: Okay. And you know, kind of the basis of the 1099 is you're not paying them anything unless they're selling devices. Is that correct?

Renzy Leads: Okay. The basis of the 1099 is you're not paying them anything unless they're selling devices. Is that correct?

Lindsay Leeds: Okay. The basis of the 1099 is you're not paying them anything unless they're selling devices. Is that correct?

Speaker #2: Yeah, Lindsay, you're right. This has been a very successful model in medtech and in the VA with 1099 reps for decades. There are many, many successful reps with 15–20 years of experience and outstanding relationships, and we expect this to be successful.

Brian Carrico: Yeah, Lindsay, you are right. This has been a very successful model in med tech, in the VA with 1099 reps for decades. There are many successful reps with 15, 20 years experience, outstanding relationships, and we expect this to be successful.

Speaker #5: Okay, great. That's all my questions. Thank you so much.

Renzy Leads: Okay, great. That is all my questions. Thank you so much.

Lindsay Leeds: Okay, great. That is all my questions. Thank you so much.

Speaker #1: And our next question comes from Sergio Hieber from Microcap Opportunities. Please go ahead with your question.

Operator 2: Our next question comes from Sergio Heiber from MicroCap Opportunities. Please go ahead with your question.

Operator: Our next question comes from Sergio Heiber from MicroCap Opportunities. Please go ahead with your question.

Speaker #3: Hi, good morning. Can you hear me okay?

Sergio Heiber: Hi. Good morning. Can you hear me okay?

Speaker #2: Yes.

Brian Carrico: Yes.

Speaker #3: So yes, congratulations on a good quarter. There's a lot of good stuff there and hopefully the market reaction hasn't been favorable, but you guys did a really great job and I think eventually the market will notice.

Sergio Heiber: So yes, congratulations on a good quarter. There is a lot of good stuff there, and hopefully the market reaction has not been favorable, but you guys did a really great job, and I think eventually the market will notice that. I just have one question regarding OpEx, and the OpEx has been increasing as revenue has increased. When can we see profitability start to kick in, and do you have a forecast still in place that you will hit free cash flow this year?

Speaker #3: I just have one question regarding OPEX, and the OPEX has been increasing. Its revenue has increased, so when can we see the profitability start to kick in? And do you have a forecast still in place that you'll hit free cash flow this year?

Speaker #2: Well, let me— I think Tim will have an answer to that, but let me first say this. We've been extremely diligent with capital, to the point that I think investors across the board— and I'm getting, I've gotten multiple messages already in the last 15 minutes— around the support to spend money in areas where we have insurance policy coverage.

Brian Carrico: Well, I think Tim will have an answer to that. Let me first say this. We have been extremely diligent with capital to the point that I think investors across the board, and I have gotten multiple messages already in the last 15 minutes around the support to spend money in areas where we have insurance policy coverage, and I can assure you I am ahead of that. We are already deploying resources in those areas where we have commercial coverage. Do I want to be profitable, Sergio? Of course, yesterday. But I do not want to be profitable more than I want to drive revenue, and the revenue opportunity in the states where we have insurance policy coverage significantly outweighs the desire to be profitable. So I am going to spend money in the coming months and quarters to drive revenue, in those areas where we have policy coverage.

Speaker #2: And I can assure you, I'm ahead of that. We're already deploying resources in those areas where we have commercial coverage. Do I want to be profitable, Sergio?

Speaker #2: Of course. Yesterday. But I'm not—I don't want to be profitable more than I want to drive revenue. And the revenue opportunity in the states where we have insurance policy coverage significantly outweighs the desire to be profitable.

Speaker #2: And I think that, so I'm going to spend money in the coming months and quarters to drive revenue in those areas where we have policy coverage.

Speaker #2: Number two, one additional large payer—let alone two additional large payers—will unlock significant revenue and give us, you know, a slingshot run at profitability, if not get us to profitability.

Brian Carrico: Number 2, the one additional large payer, let alone two additional large payers, will unlock significant revenue and give us a slingshot run at profitability, if not get us to profitability. So, I do not like patience. I do not like waiting. But that is where we are with one or two of these, more than that, but especially two payers. I know dates, and I understand when things are happening, but I am not going to talk about that today. This all goes back to profitability, and we are being extremely diligent with capital. We have been. But we have the knowledge and understanding right now to go to states where we have policy coverage and drive revenue, and we are going to do it. We are going to spend a little money last quarter, this quarter, and next quarter. So we will see. My expectation is revenue results out of that.

Speaker #2: So, you know, I don't like patience. I don't like, you know, waiting, but that's where we are with one or two of these, you know, more than that, especially two payers.

Speaker #2: I have—I know dates, and I understand when things are happening, but I'm not going to talk about that today. So, this all goes back to profitability, and we're being extremely diligent with capital.

Speaker #2: We have been, but we have the knowledge and understanding right now to go to states where we have policy coverage and drive revenue. And we're going to do it, and we're going to spend a little money last quarter, this quarter, and next quarter.

Speaker #2: So we'll see, and my expectation is revenue results out of that. It will take 90 to, you know, 120 days to see the results after a hire, but that's expected, and we're going to be aggressive.

Brian Carrico: It will take 90 to 120 days to see the results after a hire, but that is expected, and we are going to be aggressive. Tim, you may have something to add to that, but I can tell you from my standpoint, I am here to drive revenue.

Speaker #2: Tim, you may have something to add to that, but I can tell you from my standpoint, I'm here to drive revenue.

Speaker #3: Thank you for the for the question. But let me let me rephrase it in a different way. So what I'm looking for is when can you see scaling leverage because the OPEX is going up about even with the revenue growth.

Sergio Heiber: Thank you for the question. Let me rephrase it in a different way. What I am looking for is when can you see scaling leverage? Because the OPEX is going up about even with the revenue growth. I understand that adding insurance payers will lead to profitability. I am just looking for an answer regarding scaling and how that will leverage.

Speaker #3: So, I understand that adding insurance payers will lead to profitability. I'm just looking for an answer regarding scaling and how that will leverage.

Tim Henrichs: Sergio, the OPEX, first of all, is not going up at the same rate as sales. Year to date, our sales are up 98%. Our operating expenses are not up that much. Nowhere near that, as a matter of fact. Secondly, regarding OPEX, I will refer you to my comments regarding liquidity a little bit earlier. The operating expenses did increase in the Q2, and it is because of decisions we made in the Q2 from what we learned in the Q1. We got some additional insurance coverage in specific states. We hired a few more sales personnel to drive revenue. As Brian mentioned, and he has repeated, he has drilled it into all of us, is that insurance coverage is paramount.

Speaker #4: So Sergio, the OPEX, first of all, is not going up at the same rate as sales. Year to date, our sales are up 98%. Our operating expenses are not up that much—nowhere near that, as a matter of fact.

Speaker #4: Secondly, regarding OPEX, I'll refer you to my comments regarding liquidity a little bit earlier. And so the operating expenses did increase in the second quarter and it's because of decisions we made in the second quarter from what we learned in the first quarter.

Speaker #4: We got some additional insurance coverage and specific states. We hired a few more sales personnel to drive revenue. As Brian mentioned, and he's repeated, he's drilled it into all of us, is that insurance coverage is paramount and what we did in the second quarter is then we sought out third-party experts and we spent dollars and expenses, of course, to get ourselves into a position that Brian just commented on with two significant payers.

Tim Henrichs: What we did in the Q2 is then we sought out third-party experts, and we spent dollars and expenses, of course, to get ourselves into a position that Brian just commented on with two significant payers. We had not gone down that path before. On top of that, Brian commented earlier that in the H2 of the year, we are actually looking to hire somebody full-time. So take it from external costs to internal costs, such that we can continue to take that model and get after the right and talk to the right people at the large payers, so we can tell our story, including the economics of it, so that we can pick up coverage. We will continue to spend on those areas. Third, we hired clinical personnel, psychologists. We hired a medical science liaison.

Speaker #4: We had not gone down that path before. And then on top of that, Brian commented earlier that, in the second half of the year, we're actually looking to hire somebody full-time.

Speaker #4: So, take it from external costs to internal costs, such that we can continue to take that model and get after the right and talk to the right people at the large payers, so we can tell our story, including the economics of it, so that we can pick up coverage.

Speaker #4: And so we will continue to spend on those areas. Third, we hired clinical personnel you know, psychologists. We hired a medical science liaison. Those two people, one of the of the many things that they're doing is to understand exactly the workflow in the hospital and figure out how we can expand IB STEM coverage because the demand is there.

Tim Henrichs: Those two people, one of the many things that they are doing is to understand exactly the workflow in the hospital and figure out how we can expand IB-Stim coverage, because the demand is there. That we know. Is there not enough room? Do we not have a physician champion? Do we not have the right coverage? Brian also pointed out, in many states, we are not added to the Medicaid. Sorry, to the Medicaid list, which we are working on as well. All those things are leading us back to bringing in some internal people and hiring internal people to drive the revenue story for us. We have hired them in the Q2 and late into the Q2. We are going to see the full benefits of those into the Q3 and the Q4.

Speaker #4: That we know. Is there not enough room? Do we not have a physician champion? Do we not have the right coverage? And Brian also pointed out, in many states we're not added to Medicare.

Speaker #4: Sorry, to the Medicare list. Which we're working on as well. All of those all those things are leading us back to bringing in some internal people and hiring internal people to drive the revenue story for us.

Speaker #4: And so we've hired them in the second quarter, and late into the second quarter we're going to see the full benefits of those into the third and the fourth quarter, but we do expect revenue generation from hiring those people.

Tim Henrichs: But we do expect revenue generation from hiring those people, and that's why the operating expenses increased. Like I said, they will increase to the H2 of the year, but we're expecting revenue from that strategy.

Speaker #4: And that's why the operating expenses increased. Like I said, they will increase through the second half of the year, but we're expecting revenue from that strategy.

Speaker #3: Thank you very much, guys. And I I think it's really impressive that the burn rate as far as I can tell, the burn rate actually reduced from what I can see.

Sergio Heiber: Thank you very much, guys. I think it's really impressive that the burn rate, as far as I can tell, the burn rate actually reduced, from what I can see. Is that correct?

Speaker #3: Is that correct?

Speaker #4: Yes, it did come down, Sergio, but just to temper that a bit, and actually, with the first and second quarter, we're pleased with where we were on the cash burn.

Tim Henrichs: Yes. It did come down, Sergio. Just to temper that a bit, with the Q1 and Q2, we're pleased with where we were on the cash burn. But because of what Brian and I just discussed, we hired a number of people that we truly are confident are going to drive revenue for us. But in the meantime, that is going to be some cash burn in the H2 of the year. But once we get the revenue, that will offset it and then some. So there could be a little bit of timing there. So our cash burn could tick up. I believe it will tick up in the H2 of the year. But that's in anticipation of the future revenue growth that we believe we're going to get and get us back down to our current run rate next year.

Speaker #4: But because of what Brian and I just discussed, you know, we hired a number of people that we truly are confident are going to drive revenue for us. But in the meantime, that is going to be some cash burn in the second half of the year.

Speaker #4: But once we get the revenue, that will offset it and then some. So, there could be a little bit of timing there. So our cash burn could tick up.

Speaker #4: I believe it will tick up in the second half of the year, but that's in addition— that's anticipation of the future revenue growth that we believe we're going to get, and get us back down to our current run rate next year.

Speaker #3: So, Tim, the preferred shares' interest rate ends very soon. Do you have plans on how that will be paid going forward?

Sergio Heiber: Tim, the preferred shares, the interest rate ends very soon. Do you have plans on how that will be paid going forward?

Speaker #4: Yes. So, in the first two quarters of the year, we paid it via common stock instead of cash. That is going to be a board decision, you know, so they haven't obviously decided on the third and the fourth quarters yet.

Tim Henrichs: Yes. So in the first 2 quarters of the year, we paid it via common stock instead of cash. That is going to be a board decision. They haven't obviously decided on the Q3 and the Q4. You can go back and look at what was decided in the Q1 and Q2, which was common stock, but no guarantees as to how that will play out in the Q3 and the Q4. That'll be up to the board. There is a trend.

Speaker #4: But you can go back and look at what was decided in the first and second quarter, which was common stock, but no guarantees as to how that will play out in the third quarter and the fourth quarter.

Speaker #4: That'll be up to the board, but there is a trend.

Speaker #3: And then I haven't read the filing yet. Is the going concern still a factor, and is that a factor in consideration for insurance coverage?

Sergio Heiber: I haven't read the filing yet. Is the going concern still a factor, and is that a factor in consideration for insurance coverage?

Speaker #4: I don't think the growing concern is a factor at all for insurance coverage. And the growing concern is still there and will remain there until we—until we're able to reach cash flow break-even slash profitability.

Tim Henrichs: I don't think the going concern is a factor at all for insurance coverage. The going concern is still there and will remain there until we're able to reach cash flow breakeven/profitability, which will be at some point in the future. Our revenues are up 98% on a year-to-date basis, which is substantially higher than what we've had over the last couple of years. As Brian said, we're treating a fraction of what's out there. So we remain obviously very confident that we're going to reach that cash flow breakeven. These next 2 insurers that Brian commented on will be a really big step forward. I think it's going to depend on the insurance coverage.

Speaker #4: Which will be at some point in the future. I mean, our revenues are up 98% on a year-to-date basis, which is substantially higher than what we've had over the last couple of years.

Speaker #4: And as Brian said, we're we're just we're not even treating well, we're treating a fraction of what's out there. So we remain obviously very confident that we're going to reach that cash flow break-even.

Speaker #4: And these next two insurers that Brian commented on will be a really big step forward. I think it's going to rely on, it's going to depend on, the insurance coverage to pick up a big one in the fourth quarter.

Tim Henrichs: We picked up a big one in the Q4, and we expect to pick up some larger ones, obviously here in the H2 of the year into 2027, and that will certainly change our outlook on the going concern. It would be premature for me to comment on that other than it would be more probable at some point in the future with more insurance coverage, obviously.

Speaker #4: And we expect to pick up some larger ones obviously here in the second half of the year into 2027. And that will certainly change our outlook on the growing concern.

Speaker #4: But it would be premature for me to comment on that other than it would be more probable at some point in the future with more insurance coverage obviously.

Speaker #3: Thank you, guys. And once again, congratulations on a great quarter and great progress. Thank you.

Sergio Heiber: Thank you, guys. Once again, congratulations on a great quarter and great progress. Thank you.

Speaker #4: Thanks, Sergio.

Tim Henrichs: Thanks, Sergio.

Brian Carrico: Thanks, Sergio.

Speaker #2: And with that being our final question for this morning, we'll be concluding today's question and answer session. I'd like to turn the floor back over to Brian Carico for closing remarks.

Operator 2: With that being our final question for this morning, we will be concluding today's question and answer session. I would like to turn the floor back over to Brian Carrico for closing remarks.

Operator: With that being our final question for this morning, we will be concluding today's question and answer session. I would like to turn the floor back over to Brian Carrico for closing remarks.

Speaker #3: Thank you, everyone, for your time. I look forward to speaking with anyone who wants to have a follow-up call. I'm happy to take those. Have a nice fall, and we'll talk to you in a few months.

Brian Carrico: Thank you everyone for your time. Look, for anyone who wants to have a follow-up call, I am happy to take those and have a nice fall, we will talk to you in a few months. Thank you.

Speaker #3: Thank you.

Operator 2: The conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.

Operator: The conference has now concluded. We do thank you for attending today's presentation. You may now disconnect your lines.

Q2 2026 NeurAxis Inc Earnings Call

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