Q2 2026 Neuropace Inc Earnings Call

August 11, 2026

Speaker #1: Hello, everyone. Thank you for joining us, and welcome to the NeuroPace Q2 2026 earnings call. After today's prepared remarks, we will host a question-and-answer session.

Operator: Hello, everyone. Thank you for joining us, and welcome to the NeuroPace Q2 2026 earnings call. After today's prepared remarks, we will host a question and answer session. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. I will now hand the conference over to Scott Schaper, Head of Investor Relations. Scott, please go ahead.

Speaker #1: If you would like to ask a question, please press star 1 to raise your hand. To withdraw your question, press star 1 again. I will now hand the conference over to Scott Scaper, Head of Investor Relations.

Speaker #1: Scott? Please go ahead.

Speaker #2: Thank you, operator. And welcome to NeuroPace's second quarter, 2026 earnings conference call. Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent performance and strategic progress, followed by a detailed financial review and outlook from Patrick Williams, our Chief Financial Officer.

Scott Schaper: Thank you, operator, and welcome to NeuroPace's Q2 2026 earnings conference call. Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent performance and strategic progress, followed by a detailed financial review and outlook from Patrick Williams, our Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our financial outlook for 2026, our commercial strategy, clinical and product development initiatives, regulatory matters, including our PMA supplement for expanded indications into idiopathic generalized epilepsy, or IGE, and our expectations regarding operating performance and profitability.

Speaker #2: Following our prepared remarks, you will open the call for questions. Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws.

Scott Schaper: Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our financial outlook for 2026, our commercial strategy, clinical and product development initiatives, regulatory matters, including our PMA supplement for expanded indications into idiopathic generalized epilepsy, or IGE, and our expectations regarding operating performance and profitability.

Speaker #2: These statements include, among others, comments regarding our financial outlook for 2026, our commercial strategy, clinical and product development initiatives, regulatory matters including our PMA supplement for expanded indication into idiopathic generalized epilepsy, or IGE, and our expectations regarding operating performance and profitability.

Speaker #2: Forward-looking statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially.

Scott Schaper: Forward-looking statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We undertake no obligation to update or revise any forward-looking statements except as required by law. As of 30 June 2026, the company is now reporting its former distribution arrangement with DIXI Medical as discontinued operations. In accordance with U.S. GAAP, and unless otherwise noted, the financial results discussed in this call reflect continuing operations. Prior period amounts have been recast to exclude the results from the distribution arrangement with DIXI Medical for the 2026 reporting periods and applicable comparable periods presented.

Speaker #2: A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q.

Speaker #2: We undertake no obligation to update or revise any forward-looking statements except as required by law. As of June 30, 2026, the company is now reporting its former distribution arrangement with Dixie Medical as discontinued operations.

Scott Schaper: As of 30 June 2026, the company is now reporting its former distribution arrangement with DIXI Medical as discontinued operations. In accordance with U.S. GAAP, and unless otherwise noted, the financial results discussed in this call reflect continuing operations. Prior period amounts have been recast to exclude the results from the distribution arrangement with DIXI Medical for the 2026 reporting periods and applicable comparable periods presented.

Speaker #2: In accordance with U.S. GAAP and unless otherwise noted, the financial results discussed in this call reflect continuing operations. Prior period amounts have been recast to exclude the results from the distribution arrangement with Dixie Medical for the 2026 reporting periods and applicable comparable periods presented.

Speaker #2: See the accompanying financial statements for the GAAP presentation of continuing and discontinuing operations. In addition, we will discuss certain non-GAAP financial measures on today's call, including adjusted EBITDA.

Scott Schaper: See the accompanying financial statements for the GAAP presentation of continuing and discontinuing operations. In addition, we will discuss certain non-GAAP financial measures on today's call, including adjusted EBITDA. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which is available on the investor relations section of our website. With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker.

Speaker #2: Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which is available on the Investor Relations section of our website.

Speaker #2: With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker.

Speaker #3: Thanks, Scott. And good afternoon, everyone. I will begin with an overview of our second quarter results and the continued execution of our commercial strategy.

Joel Becker: Thanks, Scott, and good afternoon, everyone. I will begin with an overview of our Q2 results and the continued execution of our commercial strategy. I will then provide updates on our ongoing IGE regulatory process and product development initiatives. After that, Patrick will walk through our financial results and updated outlook before we open the line for questions. To start, our Q2 performance reflects continued momentum in the core RNS business and disciplined execution across the organization. Total revenue was $22.8 million, including RNS System revenue of $22.5 million, representing 21% RNS System growth compared with the prior year period. Throughout H1 2026, RNS revenue grew in excess of 20% consistent with the underlying long-term growth framework we have established for our current indication. During the quarter, we again reached new all-time highs in active prescribers, active accounts, and our patient pipeline.

Speaker #3: I will then provide updates on our ongoing IGE regulatory process and product development initiatives. After that, Patrick will walk through our financial results and updated outlook before we open the line for questions.

Speaker #3: To start, our second quarter performance reflects continued momentum in the core RNS business and disciplined execution across the organization. Total revenue was $22.8 million, including RNS system revenue of $22.5 million, representing 21% RNS system growth compared with the prior-year period.

Joel Becker: Total revenue was $22.8 million, including RNS System revenue of $22.5 million, representing 21% RNS System growth compared with the prior year period. Throughout H1 2026, RNS revenue grew in excess of 20% consistent with the underlying long-term growth framework we have established for our current indication. During the quarter, we again reached new all-time highs in active prescribers, active accounts, and our patient pipeline.

Speaker #3: Throughout the first half of 2026, RNS revenue grew in excess of 20%, consistent with the underlying long-term growth framework we have established for our current indication.

Speaker #3: During the quarter, we again reached new all-time highs in active prescribers, active accounts, and our patient pipeline. We view these as important indicators of the breadth and durability of adoption across the business.

Joel Becker: We view these as important indicators of the breadth and durability of adoption across the business. The majority of our growth continues to be generated within level 4 comprehensive epilepsy centers, driven by increased adoption and utilization among existing and new prescribers. At the same time, our community access initiatives continue to contribute by expanding referral pathways and helping more patients move toward appropriate evaluation and treatment. Patrick will provide more details on the quarter and our full financial guidance, including our increased revenue guidance to $99.5 million to $101.5 million with underlying RNS revenue growth still on track at 21% to 23% year over year. Additionally, we continued to demonstrate strong gross margin performance and disciplined allocation of resources in operating expense management. Let me now turn to clinical development and our IGE PMA supplement.

Speaker #3: The majority of our growth continues to be generated within Level 4 Comprehensive Epilepsy Centers, driven by increased adoption and utilization among existing and new prescribers.

Speaker #3: At the same time, our community access initiatives continue to contribute by expanding referral pathways and helping more patients move toward appropriate evaluation and treatment.

Speaker #3: Patrick will provide more details on the quarter and our full financial guidance, including our increased revenue guidance to $99.5 million to $101.5 million with underlying RNS revenue growth still on track at 21 to 23 percent year over year.

Joel Becker: Patrick will provide more details on the quarter and our full financial guidance, including our increased revenue guidance to $99.5 million to $101.5 million with underlying RNS revenue growth still on track at 21% to 23% year over year. Additionally, we continued to demonstrate strong gross margin performance and disciplined allocation of resources in operating expense management. Let me now turn to clinical development and our IGE PMA supplement.

Speaker #3: Additionally, we continued to demonstrate strong gross margin performance and disciplined allocation of resources and operating expense management. Let me now turn to clinical development and our IGE PMA supplement.

Speaker #3: As we communicated on July 28, the FDA informed us that the PMA supplement was not approvable in its current form due to requests for additional information regarding the clinical evidence supporting the submission.

Joel Becker: As we communicated on 28 July, the FDA informed us that the PMA supplement was not approvable in its current form due to requests for additional information regarding the clinical evidence supporting the submission. Given how recently we held that call, I will not repeat every detail today. For a more detailed discussion, please refer to a replay of our IGE PMA supplement call, which is available on our website. However, I did want to highlight a few key points. For clarity, this was not the outcome we expected, and we were disappointed not to receive an initial approval. At the same time, there are several important elements of the agency's communication and our subsequent interactions that inform our view that there is a path towards approval.

Speaker #3: Given how recently we held that call, I will not repeat every detail today. For a more detailed discussion, please refer to a replay of our IGE PMA supplement call, which is available on our website.

Speaker #3: However, I did want to highlight a few key points. For clarity, this was not the outcome we expected, and we were disappointed not to receive initial approval.

Joel Becker: However, I did want to highlight a few key points. For clarity, this was not the outcome we expected, and we were disappointed not to receive an initial approval. At the same time, there are several important elements of the agency's communication and our subsequent interactions that inform our view that there is a path towards approval.

Speaker #3: At the same time, there are several important elements of the agency's communication and our subsequent interactions that inform our view that there is a path toward approval.

Speaker #3: First and foremost, in our communications with the FDA, we made clear that the agency's response was not a disapproval, and the process has remained highly interactive.

Joel Becker: First and foremost, in our communications, the FDA made clear that the agency's response was not a disapproval, and the process has remained highly interactive. The agency strongly recommended that we use the Submission Issue Request, or SIR process, which we are now pursuing, to align on the content of an amendment response. The agency's additional questions are not related to safety. Rather, the FDA is seeking additional information and context around the clinical benefit observed across certain patient subgroups, including by baseline GTC seizure frequency, as well as the clinical meaningfulness of reducing GTC seizures. Our planned amendment will present the totality of the evidence, including additional subgroup analysis, patient and physician-reported outcomes, relevant published and real-world evidence, and the 24-month data, which showed a 100% median reduction in GTC seizures among evaluable patients.

Speaker #3: The agency strongly recommended that we use the Submission Issue Request, or SIR, process, which we are now pursuing, to align on the content of an amendment response.

Speaker #3: The agency's additional questions are not related to safety. Rather, the FDA is seeking additional information and context around the clinical benefit observed across certain patient subgroups, including by baseline GTC seizure frequency, as well as the clinical meaningfulness of reducing GTC seizures.

Joel Becker: Rather, the FDA is seeking additional information and context around the clinical benefit observed across certain patient subgroups, including by baseline GTC seizure frequency, as well as the clinical meaningfulness of reducing GTC seizures. Our planned amendment will present the totality of the evidence, including additional subgroup analysis, patient and physician-reported outcomes, relevant published and real-world evidence, and the 24-month data, which showed a 100% median reduction in GTC seizures among evaluable patients.

Speaker #3: Our planned amendment will present the totality of the evidence, including additional subgroup analysis, patient- and physician-reported outcomes, relevant published and real-world evidence, and the 24-month data, which showed a 100% median reduction in GTC seizures among evaluable patients.

Speaker #3: On timing, we continue to expect the amendment may be reviewed without resetting the full 180-day clock, though the agency has discretion. Preparation of our data analysis needed before requesting an SIR meeting with the FDA remains on track.

Joel Becker: On timing, we continue to expect the amendment may be reviewed without resetting the full 180-day clock, though the agency has discretion. Preparation of our data analysis needed before requesting an SIR meeting with the FDA remains on track, and we expect to schedule the SIR meeting over the next few weeks. This meeting will allow us to discuss our planned approach with the agency before submitting our amendment response. Consistent with our previous commentary, we continue to see a path forward towards approval and will provide an update as we gain greater clarity on the regulatory timeline and future interactions. Moving out of product development, during the quarter, we launched ECoG Assistant, the first AI algorithm-based tool in our planned suite of NeuroPace AI products.

Speaker #3: And we expect to schedule the SIR meeting over the next few weeks. This meeting will allow us to discuss our planned approach with the agency before submitting our amendment response.

Speaker #3: Consistent with our previous commentary, we continue to see a path forward toward approval and will provide an update as we gain greater clarity on the regulatory timeline and future interactions.

Joel Becker: Consistent with our previous commentary, we continue to see a path forward towards approval and will provide an update as we gain greater clarity on the regulatory timeline and future interactions. Moving out of product development, during the quarter, we launched ECoG Assistant, the first AI algorithm-based tool in our planned suite of NeuroPace AI products.

Speaker #3: Moving out of product development. During the quarter, we launched ECOG Assistant, the first AI algorithm-based tool in our planned suite of NeuroPace AI products.

Speaker #3: ECOG Assistant is the world's first AI algorithm-based tool in the neuromodulation space, designed to help clinicians identify ECOGs of interest, review trends over time, and assess circadian patterns.

Joel Becker: ECoG Assistant is the world's first AI algorithm-based tool in the neuromodulation space, designed to help clinicians identify ECoGs of interest, review trends over time, and assess circadian patterns. It is made possible by the RNS System's unique ability to continuously monitor, record, and analyze each patient's intracranial EEG data over time, creating a capability unique to the RNS platform. By applying AI developed from our proprietary physician-labeled data set, ECoG Assistant is intended to make review more efficient while providing clearer, more accessible insights to support individualized treatment decisions. The early feedback from the field has been encouraging, both in terms of workflow efficiency and the clinical usefulness of the information. Physicians are already finding new ways to use these insights to inform treatment decisions, including medication timing, therapy adjustments, and longer-term patient management.

Speaker #3: It is made possible by the RNS system's unique ability to continuously monitor, record, and analyze each patient's intracranial EEG data over time, creating a capability unique to the RNS platform.

Speaker #3: By applying AI developed from our proprietary physician-labeled dataset, ECOG Assistant is intended to make review more efficient while providing clearer and more accessible insights to support individualized treatment decisions.

Joel Becker: By applying AI developed from our proprietary physician-labeled data set, ECoG Assistant is intended to make review more efficient while providing clearer, more accessible insights to support individualized treatment decisions. The early feedback from the field has been encouraging, both in terms of workflow efficiency and the clinical usefulness of the information. Physicians are already finding new ways to use these insights to inform treatment decisions, including medication timing, therapy adjustments, and longer-term patient management.

Speaker #3: The early feedback from the field has been encouraging, both in terms of workflow efficiency and the clinical usefulness of the information. Physicians are already finding new ways to use these insights to inform treatment decisions, including medication timing, therapy adjustments, and longer-term patient management.

Speaker #3: At one epilepsy center, a physician used the circadian pattern data alongside the patient's clinical report to provide additional context for treatment planning. Prior to reviewing the information, the physician had been considering an increase in stimulation settings.

Joel Becker: At one epilepsy center, a physician used the circadian pattern data alongside the patient's clinical report to provide additional context for treatment planning. Prior to reviewing the information, the physician had been considering an increase in stimulation settings. The ECoG Assistant insights helped inform the physician's independent clinical decision-making, and the physician ultimately chose to adjust the timing of the patient's medication instead. We have also seen clinicians use event timing information to identify periods when medication coverage may be inadequate and adjust patients to longer-acting medication formulations. More broadly, clinicians are reporting that the updated tool simplifies review and provides meaningful time savings across a full RNS clinic. The launch is also giving our commercial team a new way to expand the scope of the discussions within existing accounts.

Speaker #3: The ECOG Assistant insights helped inform the physician's independent clinical decision-making, and the physician ultimately chose to adjust the timing of the patient's medication instead.

Speaker #3: We have also seen clinicians use event timing information to identify periods when medication coverage may be inadequate, and adjust patients to longer-acting medication formulations.

Joel Becker: We have also seen clinicians use event timing information to identify periods when medication coverage may be inadequate and adjust patients to longer-acting medication formulations. More broadly, clinicians are reporting that the updated tool simplifies review and provides meaningful time savings across a full RNS clinic. The launch is also giving our commercial team a new way to expand the scope of the discussions within existing accounts.

Speaker #3: More broadly, clinicians are reporting that the updated tool simplifies review and provides meaningful time savings across a full RNS clinic. The launch is also giving our commercial team a new way to expand the scope of discussions within existing accounts.

Speaker #3: By demonstrating how the ECOG Assistant can simplify data review and support clinical decision-making, the team is engaging a broader group of physicians and reinforcing the differentiated value of the long-term data generated by the RNS system.

Joel Becker: By demonstrating how ECoG Assistant can simplify data review and support clinical decision-making, the team is engaging a broader group of physicians and reinforcing the differentiated value of the long-term data generated by the RNS System. These early examples illustrate why ECoG Assistant is strategically important. Beyond delivering meaningful efficiency in routine patient review, ECoG Assistant demonstrates how our unique device capabilities and associated proprietary data assets can be translated into practical capabilities that support more informed treatment decisions and improve the experience of managing RNS patients with capabilities that uniquely differentiate the RNS System. The remainder of our product development roadmap also continues to progress, including additional AI-enabled tools, development of our multimodal foundational model, Remote Care capabilities, automated detection, and our next-generation system.

Speaker #3: These early examples illustrate why ECOG Assistant is strategically important. Beyond delivering meaningful efficiency in routine patient review, ECOG Assistant demonstrates how our unique device capabilities and associated proprietary data assets can be translated into practical capabilities that support more informed treatment decisions and improve the experience of managing RNS patients with features that uniquely differentiate the RNS system.

Joel Becker: Assistant demonstrates how our unique device capabilities and associated proprietary data assets can be translated into practical capabilities that support more informed treatment decisions and improve the experience of managing RNS patients with capabilities that uniquely differentiate the RNS System. The remainder of our product development roadmap also continues to progress, including additional AI-enabled tools, development of our multimodal foundational model, Remote Care capabilities, automated detection, and our next-generation system.

Speaker #3: The remainder of our product development roadmap also continues to progress, including additional AI-enabled tools, development of our multimodal foundational model, remote care capabilities, automated detection, and our next-generation system.

Speaker #3: During the quarter, related to our multimodal foundational model, we completed a key phase of model training and continued testing its ability to interpret increasingly complex patterns in intracranial EEG data.

Joel Becker: During the quarter, related to our multimodal foundational model, we completed a key phase of model training and continued testing its ability to interpret increasingly complex patterns in intracranial EEG data. Encouragingly, the model is learning clinically relevant patterns in brain activity, suggesting the potential to uncover individualized patterns and relationships that are difficult to detect using traditional approaches. We believe this is an important step toward generating new insights, and as the model continues to train and refine, see meaningful opportunity to further personalize therapy, optimize treatment, and improve patient outcomes over time. Importantly, all of this is made possible by NeuroPace's proprietary data asset, which now includes more than 27 million intracranial EEG recordings generated from recordings within the RNS System.

Speaker #3: Encouragingly, the model is learning clinically relevant patterns in brain activity, suggesting the potential to uncover individualized patterns and relationships that are difficult to detect using traditional approaches.

Speaker #3: We believe this is an important step toward generating new insights and, as the model continues to train and refine, see meaningful opportunity to further personalize therapy optimize treatment, and improve patient outcomes over time.

Joel Becker: We believe this is an important step toward generating new insights, and as the model continues to train and refine, see meaningful opportunity to further personalize therapy, optimize treatment, and improve patient outcomes over time. Importantly, all of this is made possible by NeuroPace's proprietary data asset, which now includes more than 27 million intracranial EEG recordings generated from recordings within the RNS System.

Speaker #3: Importantly, all of this is made possible by NeuroPace's proprietary data asset, which now includes more than 27 million intracranial EEG recordings generated from recordings within the RNS System.

Speaker #3: We also continue to make strong development progress on remote care, which is designed to allow physicians to program RNS patients through telehealth and enable patients to prepare their device for an MRI without requiring the physician to be physically present.

Joel Becker: We also continue to make strong development progress on Remote Care, which is designed to allow physicians to program RNS patients through telehealth and enable patients to prepare their device for an MRI without requiring the physician to be physically present. By reducing the need for certain in-person visits, Remote Care has the potential to lessen the travel burden for patients, expand access for those who live farther from epilepsy centers, and allow physicians to manage patients more efficiently. During the quarter, we further advanced usability testing and validation activities, and we expect to submit Remote Care to the FDA by the end of 2026. We continue to allocate resources toward programs that can improve patient care, increase physician efficiency, and expand the long-term value of the RNS platform. With that, I will turn the call over to Patrick for a detailed review of the quarter financials and outlook. Patrick?

Speaker #3: By reducing the need for certain in-person visits, remote care has the potential to lessen the travel burden for patients expand access for those who live farther from epilepsy centers, and allow physicians to manage patients more efficiently.

Speaker #3: During the quarter, we further advanced usability testing and validation activities, and we expect to submit Remote Care to the FDA by the end of 2026.

Joel Becker: During the quarter, we further advanced usability testing and validation activities, and we expect to submit Remote Care to the FDA by the end of 2026. We continue to allocate resources toward programs that can improve patient care, increase physician efficiency, and expand the long-term value of the RNS platform. With that, I will turn the call over to Patrick for a detailed review of the quarter financials and outlook. Patrick?

Speaker #3: We continue to allocate resources toward programs that can improve patient care, increase physician efficiency, and expand the long-term value of the RNS platform. With that, I will turn the call over to Patrick for a detailed review of the quarter's financials and outlook.

Speaker #3: Patrick?

Speaker #1: Thank you, Joel. I will review our second quarter 2026 financial performance in more detail and then discuss our updated full-year guidance. As Scott mentioned, beginning this quarter, results from our distribution agreement with Dixie Medical are being reported as discontinued operations.

Patrick Williams: Thank you, Joel. I will review our Q2 2026 financial performance in more detail and then discuss our updated full-year guidance. As Scott mentioned, beginning this quarter, results from our distribution agreement with DIXI Medical are being reported as discontinued operations. Accordingly, unless otherwise noted, the financial results discussed today reflect continuing operations and exclude the impact of DIXI Medical in both the current and applicable prior year periods. As we have previously prepared, you can reference the additional tables in today's earnings release to help with modeling historical financials. In addition, gross margin and operating expenses are discussed on an adjusted non-GAAP basis, excluding stock-based compensation. Reconciliations to the most directly comparable GAAP measures are also included in today's press release. Total revenue in Q2 was $22.8 million, an increase of 17% compared with $19.5 million in the prior year period.

Speaker #1: Accordingly, unless otherwise noted, the financial results discussed today reflect continuing operations and exclude the impact of Dixie Medical in both the current and applicable prior-year periods.

Speaker #1: As we have previously prepared, you can reference the additional tables in today's earnings release to help with modeling and historical financials. In addition, gross margin and operating expenses are discussed on an adjusted non-GAAP basis, excluding stock-based compensation.

Patrick Williams: As we have previously prepared, you can reference the additional tables in today's earnings release to help with modeling historical financials. In addition, gross margin and operating expenses are discussed on an adjusted non-GAAP basis, excluding stock-based compensation. Reconciliations to the most directly comparable GAAP measures are also included in today's press release. Total revenue in Q2 was $22.8 million, an increase of 17% compared with $19.5 million in the prior year period.

Speaker #1: Reconciliations to the most directly comparable GAAP measures are also included in today's press release.

Speaker #3: Total revenue in the second quarter was $22.8 million, an increase of 17% compared with $19.5 million in the prior-year period. Service revenue was $302,000 compared with $937,000 a year ago.

Patrick Williams: Service revenue was $302,000 compared with $937,000 a year ago, representing an expected headwind of more than 300 basis points to total company revenue growth. RNS System revenue was $22.5 million, representing growth of 21.3% compared with $18.6 million in Q2 2025. Growth was supported by continued adoption and utilization and favorable pricing compared to the prior year. For H1 2026, RNS revenue was $44.2 million, representing growth of 20.4% compared to H1 2025. As we have previously discussed, we believe evaluation over 6-month periods provides an informative view of underlying performance in a procedure-based business. H1 growth was consistent with our long-term framework for the current adult focal epilepsy indication. Adjusted gross margin was 83.4% in Q2, compared with 84.0% in the prior year period.

Speaker #3: Representing an expected headwind of more than 300 basis points to total company revenue growth.

Speaker #1: RNS System revenue was $22.5 million, representing growth of 21.3% compared with $18.6 million in the second quarter of 2025. Growth was supported by continued adoption and utilization, as well as favorable pricing compared to the prior year.

Speaker #3: For the first half of 2026, RNS revenue was 44.2 million dollars representing growth of 20.4% compared to the first half of 2025. As we have previously discussed, we believe evaluation over six-month periods provides an informative view of underlying performance and a procedure-based business.

Patrick Williams: As we have previously discussed, we believe evaluation over 6-month periods provides an informative view of underlying performance in a procedure-based business. H1 growth was consistent with our long-term framework for the current adult focal epilepsy indication. Adjusted gross margin was 83.4% in Q2, compared with 84.0% in the prior year period.

Speaker #3: First-half growth was consistent with our long-term framework for the current adult focal epilepsy indication.

Speaker #1: Adjusted gross margin was 83.4% in the second quarter compared with 84.0% in the prior-year period. The slight year-over-year decline is driven by modestly higher material costs partially offset by favorable pricing.

Patrick Williams: The slight year-over-year decline is driven by modestly higher material costs, partially offset by favorable pricing. GAAP gross margin was 82.8%. Total adjusted operating expense was $21.9 million, compared to $21.3 million in Q2 2025. Operating expense increased approximately 3%, meaningfully below our revenue growth of 17%, reflecting continued operating leverage while we invest in the business. Adjusted sales and marketing expense was $11.5 million, compared with $10.7 million in the prior year period. The increase was primarily related to sales and field support personnel and other sales-related expenses associated with the continued scaling of our commercial activities. Adjusted research and development expense was $6.3 million, compared with $6.0 million in the prior year period. The increase primarily reflects product development-related investments supporting our next generation platform and AI-enabled tools. Adjusted general and administrative expense was $4.1 million, compared with $4.6 million in the prior year period.

Speaker #1: Gap gross margin was 82.8%. Total adjusted operating expense was $21.9 million, compared with $21.3 million in the second quarter of 2025. Operating expense increased approximately 3%, meaningfully below our revenue growth of 17%.

Speaker #1: Reflecting continued operating leverage while we invest in the business. Adjusted sales and marketing expense was 11.5 million dollars compared with 10.7 million dollars in the prior-year period.

Speaker #1: The increase was primarily related to sales and field support personnel and other sales-related expenses associated with the continued scaling of our commercial activities. Adjusted research and development expense was 6.3 million dollars compared with 6.0 million dollars in the prior-year period.

Patrick Williams: The increase was primarily related to sales and field support personnel and other sales-related expenses associated with the continued scaling of our commercial activities. Adjusted research and development expense was $6.3 million, compared with $6.0 million in the prior year period. The increase primarily reflects product development-related investments supporting our next generation platform and AI-enabled tools. Adjusted general and administrative expense was $4.1 million, compared with $4.6 million in the prior year period.

Speaker #1: The increase primarily reflects product development-related investments supporting our next-generation platform and AI-enabled tools. Adjusted general and administrative expense was $4.1 million, compared with $4.6 million in the prior-year period.

Speaker #1: The year-over-year decline primarily reflects one-time executive transition expenses incurred in the prior-year quarter, partially offset by higher personnel-related expenses in the current period. Adjusted loss from operations was $2.8 million, compared with a loss of $5.0 million in the second quarter of 2025.

Patrick Williams: The year-over-year decline primarily reflects one-time executive transition expenses incurred in the prior year quarter, partially offset by higher personnel-related expenses in the current period. Adjusted loss from operations was $2.8 million, compared with a loss of $5.0 million in Q2 2025. Adjusted net loss was $3.9 million, compared with a net loss of $6.8 million in the prior year period. Adjusted EBITDA loss was $2.8 million, compared with an adjusted EBITDA loss of $4.9 million in Q2 2025. GAAP net loss from continuing operations was $6.2 million, compared with a net loss of $10 million in the prior year period. We ended the quarter with $51.9 million in cash equivalents, short-term investments, and restricted cash, compared with $54.8 million at the end of Q1 2026. Long-term borrowings total $59.0 million as of 30 June 2026.

Speaker #1: Adjusted net loss was $3.9 million, compared with a net loss of $6.8 million in the prior-year period. Adjusted EBITDA loss was $2.8 million, compared with an adjusted EBITDA loss of $4.9 million in the second quarter of 2025.

Speaker #1: GAAP net loss from continuing operations was $6.2 million, compared with a net loss of $10 million in the prior-year period. We ended the quarter with $51.9 million in cash, cash equivalents, short-term investments, and restricted cash, compared with $54.8 million at the end of the first quarter 2026.

Patrick Williams: GAAP net loss from continuing operations was $6.2 million, compared with a net loss of $10 million in the prior year period. We ended the quarter with $51.9 million in cash equivalents, short-term investments, and restricted cash, compared with $54.8 million at the end of Q1 2026. Long-term borrowings total $59.0 million as of 30 June 2026.

Speaker #1: Long-term borrowings totaled 59.0 million dollars as of June 30, 2026. Turning now to our outlook for 2026. We are increasing full-year total revenue guidance to a range of 99.5 million dollars to 101.5 million dollars compared to our previous range of 99 million to 101 million dollars.

Patrick Williams: Turning now to our outlook for 2026. We are increasing full-year total revenue guidance to a range of $99.5 million to $101.5 million, compared to our previous range of $99 million to $101 million. The increase in total revenue guidance reflects improved visibility into service revenue, which we now expect to be approximately $1 million for the full year, up from previous guidance of $500,000. Underlying RNS revenue outlook is unchanged at $98.5 million to $100.5 million, or growth of 21% to 23% from our current adult focal indication. We expect our Q3 RNS revenue growth to be similar to our H1 RNS growth rate of approximately 20% year over year. Consistent with our prior guidance, the revenue range does not include any contribution from the expanded IGE indication.

Speaker #1: The increase in total revenue guidance reflects improved visibility into service revenue, which we now expect to be approximately $1 million for the full year, up from previous guidance of $500,000.

Speaker #1: Underlying RNS revenue outlook is unchanged at $98.5 million to $100.5 million, or growth of 21% to 23% from our current adult focal indication.

Patrick Williams: Underlying RNS revenue outlook is unchanged at $98.5 million to $100.5 million, or growth of 21% to 23% from our current adult focal indication. We expect our Q3 RNS revenue growth to be similar to our H1 RNS growth rate of approximately 20% year over year. Consistent with our prior guidance, the revenue range does not include any contribution from the expanded IGE indication.

Speaker #1: We expect our third quarter RNS revenue growth to be similar to our first half RNS growth rate of approximately 20% year over year. Consistent with our prior guidance, the revenue range does not include any contribution from an expanded IGE indication.

Speaker #1: We are increasing full-year adjusted gross margin to a guidance range of 82% to 83%, compared to our previous range of 81.5% to 82.5%. The updated outlook reflects our first-half performance, favorable pricing, and continued management of manufacturing costs and product mix.

Patrick Williams: We are increasing full-year adjusted gross margin to a guidance range of 82% to 83%, compared to our previous range of 81.5% to 82.5%. The updated outlook reflects our H1 performance, favorable pricing, and continued management of manufacturing costs and product mix. We continue to expect full-year adjusted operating expenses to range from $90 million to $92 million as we continue to invest in our business to drive increased physician and patient adoption. This range includes approximately $10 million of stock-based compensation, which is a non-cash expense. Within operating expenses, we continue to expect adjusted sales and marketing expense of $46 million to $48 million. These investments support targeted commercial expansion, market development, patient pathway resources, and the continued scaling of our field organization. We continue to expect adjusted research and development expense of approximately $27 million.

Speaker #1: We continue to expect full-year adjusted operating expenses to range from $90 million to $92 million, as we continue to invest in our business to drive increased physician and patient adoption.

Speaker #1: This range includes approximately $10 million of stock-based compensation, which is a non-cash expense. Within operating expenses, we continue to expect adjusted sales and marketing expense of $46 million to $48 million. These investments support targeted commercial expansion, market development, patient pathway resources, and the continued scaling of our field organization.

Patrick Williams: This range includes approximately $10 million of stock-based compensation, which is a non-cash expense. Within operating expenses, we continue to expect adjusted sales and marketing expense of $46 million to $48 million. These investments support targeted commercial expansion, market development, patient pathway resources, and the continued scaling of our field organization. We continue to expect adjusted research and development expense of approximately $27 million.

Speaker #1: We continue to expect adjusted research and development expense of approximately 27 million dollars our R&D investment is focused on the next generation RNS platform the NeuroPace AI suite remote care clinical and regulatory programs and other capabilities that strengthen the long-term differentiation of the platform.

Patrick Williams: Our R&D investment is focused on the next generation RNS platform, the NeuroPace AI suite, Remote Care, clinical and regulatory programs, and other capabilities that strengthen the long-term differentiation of the platform. We continue to expect adjusted general administrative expense of approximately $17 million, reflecting the systems and infrastructure needed to support a growing organization while maintaining disciplined management of corporate overhead. We now expect full-year adjusted EBITDA loss to be between $7.5 million and $8.5 million, improved from our previous expectation of a loss between $8.5 million and $9.5 million. We remain focused on balancing investment in the company's long-term growth opportunities with continued financial discipline and progress towards sustainable profitability. With that, I will turn the call back to Joel.

Speaker #1: We continue to expect adjusted general and administrative expense of approximately $17 million, reflecting the systems and infrastructure needed to support a growing organization while maintaining disciplined management of corporate overhead.

Speaker #1: We now expect full-year adjusted EBITDA loss to be between $7.5 million and $8.5 million, improved from our previous expectation of a loss between $8.5 million and $9.5 million.

Patrick Williams: We now expect full-year adjusted EBITDA loss to be between $7.5 million and $8.5 million, improved from our previous expectation of a loss between $8.5 million and $9.5 million. We remain focused on balancing investment in the company's long-term growth opportunities with continued financial discipline and progress towards sustainable profitability. With that, I will turn the call back to Joel.

Speaker #1: We remain focused on balancing investment in the company's long-term growth opportunities with continued financial discipline and progress towards sustainable profitability. With that, I will turn the call back to Joel.

Speaker #2: Thank you, Patrick. To close, our second quarter results demonstrate continued execution in the areas that we control. The core RNS business delivered an excess of 20% growth during the first half consistent with our long-term framework for the current adult focal epilepsy indication.

Joel Becker: Thank you, Patrick. To close, our Q2 results demonstrate continued execution in the areas that we control. The core RNS business delivered in excess of 20% growth during the H1, consistent with our long-term framework for the current adult focal epilepsy indication. We continue to expand adoption, increase utilization, and build referral pathways while maintaining strong financial discipline and investing in the long-term growth of the company. We remain laser-focused on advancing the IGE opportunity and bringing this therapy to patients. At the same time, our other strategic initiatives remain on track. Our clinical evidence base continues to strengthen, as demonstrated by the NAUTILUS study publication in Epilepsia. Our product development process is working, as evidenced by the launch of ECoG Assistant and the initial examples of its demonstration of unique device platform technology capability and its translation into value in clinical practice.

Speaker #2: We continue to expand adoption, increase utilization, and build referral pathways, while maintaining strong financial discipline and investing in the long-term growth of the company.

Speaker #2: We remain laser-focused on advancing the IGE opportunity and bringing this therapy to patients. At the same time, our other strategic initiatives remain on track.

Joel Becker: We remain laser-focused on advancing the IGE opportunity and bringing this therapy to patients. At the same time, our other strategic initiatives remain on track. Our clinical evidence base continues to strengthen, as demonstrated by the NAUTILUS study publication in Epilepsia. Our product development process is working, as evidenced by the launch of ECoG Assistant and the initial examples of its demonstration of unique device platform technology capability and its translation into value in clinical practice.

Speaker #2: Our clinical evidence base continues to strengthen, as demonstrated by the Nautilus study publication in Epilepsia. Our product development process is working, as evidenced by the launch of ECOG Assistant and the initial examples of its demonstration of unique device platform technology capability and its translation into value in clinical practice.

Speaker #2: And our broader product development programs continue to progress. We remain focused on executing across the core business. Advancing the IGE regulatory process and developing the differentiated capabilities that can expand the impact and value of the RNS platform over time.

Joel Becker: Our broader product development programs continue to progress. We remain focused on executing across the core business, advancing the IGE regulatory process, and developing the differentiated capabilities that can expand the impact and value of the RNS platform over time. Thank you for your time and continued interest in NeuroPace. Operator, we will now open the line for questions.

Speaker #2: Thank you for your time and continued interest in NeuroPace. Operator, we will now open the lines for questions.

Speaker #3: We will now begin the question-and-answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand.

Operator: We will now begin the question and answer session. Please limit yourself to one question and one follow-up. If you would like to ask a question, please press star one to raise your hand. To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality. If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Anthony Petrone with Mizuho. Your line is open. Please go ahead.

Speaker #3: To withdraw your question, press star one again. We ask that you pick up your handset when asking a question to allow for optimum sound quality.

Speaker #3: If you are muted locally, please remember to unmute your device. Please stand by while we compile the Q&A roster. Your first question comes from the line of Anthony Petrone with Mizuho.

Speaker #3: Your line is open. Please go ahead.

Speaker #4: Thanks and good afternoon everyone. Hope everyone's doing well. Maybe Joel to start here. You mentioned the submission issue request meeting the SIR meeting. I think I may have missed it but is this specific date set yet in September?

Anthony Petrone: Thanks, and good afternoon, everyone. Hope everyone's doing well. Maybe Joel to start here, you mentioned the Submission Issue Request meeting, the SIR meeting. I think I may have missed it, but is a specific date set yet in September? What should we be thinking just after that meeting? How will it play out in terms of milestones? Is there a potential for some Q&A back and forth ahead of a formal submission? Are you still in the camp that a resubmission could happen before the end of the year? I will have one quick follow-up.

Speaker #4: And then, what should we be thinking just after that meeting? How will it play out in terms of milestones? Is there a potential for some Q&A back and forth ahead of a formal submission?

Speaker #4: And are you still on the camp that a resubmission could happen before the end of the year? And I have one quick follow-up.

Speaker #2: Thank you, Anthony. Excellent questions. So specific date for the SIR is not yet set. The specifics that I would offer to you there were in my prepared comments which is that our the preparation of the analysis and development of the data that will go into the SIR request and be the basis for the majority of the discussion is on track.

Joel Becker: Thank you, Anthony. Excellent questions. A specific date for the SIR is not yet set. The specifics that I would offer to you there were in my prepared comments, which is that the preparation of the analysis and development of the data that will go into the SIR request and be the basis for the majority of the discussion is on track. We are in good shape there and things continue to progress. We expect to be submitting for the SIR and having that meeting over the next few weeks, as I think I had commented previously. Again, things continue to move and develop in the direction that we had previously discussed and are on track as well. I will just put in here, you did not specifically ask it, but the periodic ongoing discussions with the agency and interactive engagement has also remained on track.

Speaker #2: So we're in good shape there, and things continue to progress. We expect to be submitting for the SIR and having that meeting over the next few weeks, as I think I had commented previously.

Speaker #2: And so again, things continue to move and develop in the direction that we had previously discussed and are on track as well. I'll just put in here—you didn't specifically ask it—but the periodic, ongoing discussions with the agency and interactive engagement have also remained on track.

Joel Becker: Again, things continue to move and develop in the direction that we had previously discussed and are on track as well. I will just put in here, you did not specifically ask it, but the periodic ongoing discussions with the agency and interactive engagement has also remained on track. With regard to next steps, you laid it out there, but in general, you could think about it as we expect to have that meeting over the next few weeks based on our current understanding, as I had mentioned, on 28 July when we first talked about it.

Speaker #2: With regard to next steps, you laid it out there, but in general you could think about it as: we expect to have that meeting over the next few weeks based on our current understanding, as I had mentioned on the 28th of July when we first talked about it.

Joel Becker: With regard to next steps, you laid it out there, but in general, you could think about it as we expect to have that meeting over the next few weeks based on our current understanding, as I had mentioned, on 28 July when we first talked about it. Our expectation is that we would not require a full restarting of the 180-day clock. Our current expectation based on the way that the agency has interacted with us when we have amended this submission a couple of other times during the review is to stay interactive. As you know, and others know who are listening, it is within the agency's purview to go ahead and restart a clock and take the full 180 days. But with the way that they have been acting with us, we would not think that would be the case.

Speaker #2: Our expectation is that we would not require a full restarting of the 180-day clock. Currently, our expectation—based on the way that the agency has interacted with us when we have amended this submission a couple of other times during the review—is to stay interactive, as you know and as others know who are listening.

Joel Becker: Our expectation is that we would not require a full restarting of the 180-day clock. Our current expectation based on the way that the agency has interacted with us when we have amended this submission a couple of other times during the review is to stay interactive. As you know, and others know who are listening, it is within the agency's purview to go ahead and restart a clock and take the full 180 days. But with the way that they have been acting with us, we would not think that would be the case.

Speaker #2: It's within the agency's purview to go ahead and restart a clock and take the full 180 days, but with the way that they've been acting with us, we wouldn't think that would be the case.

Speaker #2: So I'm going to leave you wanting a little bit on specific dates, Anthony, but you can think about it as we're on track for the SIR.

Joel Becker: I am going to leave you wanting a little bit on specific dates, Anthony, but you can think about it as we are on track for the SIR. We expect the SIR to be happening here over the next few weeks. The majority of what is going to go into the SIR we expect to be what is going to go into the amendment. We think that can happen relatively in a timely fashion following the SIR, and we would expect the agency to work with us interactively and expeditiously following the submission of the amendment. They can take out to the 180 days, but we do not expect that they will.

Speaker #2: We expect the SIR to be happening here over the next few weeks. The majority of what's going to go into the SIR we expect to be what's going to go into the amendment.

Speaker #2: So we think that can happen relatively in a timely fashion following the SIR and then we would expect the agency to work with us interactively and expeditiously following the submission of the amendment.

Speaker #2: They can take out to the 180 days but we don't expect that they will.

Speaker #4: Very helpful. And then, the quick follow-up here is actually on the U.S. market push, and I think the plan here called for expansion into community centers beyond CECs to coincide with the IGE label expansion. But certainly, the core business on the focal side continues to outperform.

Anthony Petrone: Very helpful. The quick follow-up here is actually on the US market push. I think the plan here called for expansion into community centers beyond CECs to coincide with the IGE label expansion. But certainly the core business on the focal side continues to outperform. Just wondering, would you make a push into community ahead of IGE label expansion, or is it still let's get that label expansion and then make that broader push in terms of site expansion? Thanks again.

Speaker #4: So just wondering would you make a push into community ahead of IGE label expansion or is it still let's get that label expansion and then make that broader push in terms of site expansion?

Speaker #4: Thanks again.

Joel Becker: It is a really good question, Anthony, and the short answer is yes. We have the advantage here of having the adult focal indication, obviously already today. That gives us the opportunity to be in the community, be talking with referring physicians, as well as establishing relationships with community-based programs, as well as level 3 programs, such that they can either refer to level 4 centers, refer to level 4 centers for implant, get the patients back and program themselves, or in some cases, level 3 and community centers have both the patient populations as well as the professional staff services and complementary infrastructure to be able to diagnose, manage, and treat patients within those sites.

Speaker #2: It's a really good question, Anthony. And the short answer is yes. We have the advantage here of having the adult focal indication obviously already today and so that gives us the opportunity to be in the community, be talking with referring physicians as well as establishing relationships with community-based programs as well as level three programs such that they can either refer to level four centers, refer to level four centers for implant, get the patients back and program themselves or in some cases level three and community centers have both the patient population as well as the professional staff services and complementary infrastructure to be able to diagnose manage and treat patients within those sites.

Joel Becker: get the patients back and program themselves, or in some cases, level 3 and community centers have both the patient populations as well as the professional staff services and complementary infrastructure to be able to diagnose, manage, and treat patients within those sites.

Speaker #2: So we absolutely are and have been increasing our footprint from a community perspective which has the advantage of laying a bunch of track if you will in anticipation of an indication expansion as well.

Joel Becker: We absolutely are and have been increasing our footprint from a community perspective, which has the advantage of laying a bunch of track, if you will, in anticipation of an indication expansion as well. But we can do that in support of our current business, and it has been beneficial with our current business, while then also preparing for what we plan for in terms of indication expansion.

Speaker #2: But we can do that in support of our current business and it's been beneficial. Our current business while then also preparing for what we plan for in terms of indication expansion.

Speaker #4: Thank you all. Thank you.

Anthony Petrone: Thank you. I will hang up.

Speaker #3: Your next question comes from the line of Lawrence Beagleson with Wells Fargo. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Lawrence Spiegelman with Wells Fargo. Your line is open. Please go ahead.

Speaker #5: Hi. This is Ralph Osborne on for Larry. Thanks for taking our questions. So starting off, would you provide some color on how the clinical community reacted to the FDA letter regarding your application for IGE?

Ross Osborn: Hi, this is Ross Osborn on for Larry. Thanks for taking our questions. Starting off, would you provide some color on how the clinical community reacted to the FDA letter regarding your application for IGE? Were physicians surprised, concerned about your viability to get approval, or understand the FDA's caution and wanting more data?

Speaker #5: Were physicians surprised, concerned about your viability to get approval? Or understand the FDA's caution and wanting more data?

Joel Becker: It's a great question, Ross. We actually had conference call follow-ups not long after we talked with you on the week of the 28th there. I personally, as well as Dr. Morrell, spoke with a vast majority of the investigators that were there. I'd say there are really 3 points of feedback. One, thanks for letting us know and for keeping everybody up to date here real time. Two, just as we do, they remain very confident in the clinical data that was generated from the study. Three, let us know how we can help. People see the need that this patient population has today. As we all know, drug-resistant idiopathic generalized population doesn't have options with regard to neurostimulation, and they're not surgical candidates by the nature of the disease.

Speaker #2: It's a great question, Ralph. And we actually had conference call follow-ups not long after we talked with you on the week of the 28th there.

Speaker #2: And I personally, as well as Dr. Morrell, spoke with a vast majority of the investigators that were there. I'd say there are really kind of three points of feedback.

Speaker #2: One, thanks for letting us know and for keeping everybody up to date here in real time. Two, just as we do, they remain very confident in the clinical data.

Speaker #2: That was generated from the study. And three, let us know how we can help. And because people see the need that this patient population has today as we all know drug-resistant idiopathic generalized population doesn't have options with regard to neurostimulation.

Joel Becker: Three, let us know how we can help. People see the need that this patient population has today. As we all know, drug-resistant idiopathic generalized population doesn't have options with regard to neurostimulation, and they're not surgical candidates by the nature of the disease.

Speaker #2: And they're not surgical candidates by the nature of the disease. And so the clinical community really sees the nature of the unmet need and the gap and what's available to them today.

Joel Becker: The clinical community really sees the nature of the unmet need and the gap in what's available to them today. They have been impressed with and only supported by the publication of the NAUTILUS data in Epilepsia that came out. In particular, the investigators that we're close to are obviously very close to what they saw in their own patient populations, and again, remain confident in the data and want to know what they can do to help.

Speaker #2: They have been impressed with and only supported by the publication of the nautilus data and epilepsia that came out. And in particular the investigators that were close to are obviously very close to what they saw in their own patient populations.

Speaker #2: And again remain confident in the data and want to know what they can do to help.

Speaker #5: Okay, great. And then your next-generation platform came up a couple of times in your prepared remarks. Could you provide a finer point on where you stand in the development timeline, and remind us of some of the improvements?

Ross Osborn: Okay, great. Then your next-generation platform came up a couple of times in your prepared remarks. Could you provide a finer point on where you stand in the development timeline and remind us of some of the improvements?

Speaker #2: You bet. So the next generation platform is our next generation to be specific. That's our next generation hardware platform. Our next generation implantable device.

Joel Becker: You bet. The next-generation platform is our next-gen, to be specific, that is our next-generation hardware platform, our next-generation implantable device. There will be a number of aspects about that, but it will expand the capability and capacity of the system from the management of the potential for additional lead configurations is one. Bluetooth low energy communication is another. You can imagine being able to have the device seamlessly communicate from a Bluetooth perspective is also something that would be particularly helpful. Then a number of other things the platform will do to position further product development that is further down our pipeline, we have not fully talked about yet, but it will be the chassis that we need for that. Those are really the keys.

Speaker #2: And there'll be a number of aspects about that, but it will expand the capability and capacity of the system from the management of the potential for additional lead configurations.

Speaker #2: Is one. Bluetooth Low Energy communication is another. And so, you can imagine being able to have the device seamlessly communicate from a Bluetooth perspective is also something that would be particularly helpful.

Joel Becker: You can imagine being able to have the device seamlessly communicate from a Bluetooth perspective is also something that would be particularly helpful. Then a number of other things the platform will do to position further product development that is further down our pipeline, we have not fully talked about yet, but it will be the chassis that we need for that. Those are really the keys.

Speaker #2: And then a number of other things the platform will do to position further product development that’s further down our pipeline. We haven’t fully talked about that yet, but it’ll be the chassis that we need for that.

Speaker #2: And so those are really the keys. We haven't provided specific timelines outside of the most the thing you could look at to give you the best feeling for timing and timeline that we've communicated publicly would be the investor day materials that are on the website and so you can get a feeling for that there.

Joel Becker: We have not provided specific timelines outside of the most. The thing you could look at to give you the best feeling for timing and timeline that we have communicated publicly would be the Investor Day materials that are on the website. You can get a feeling for that there. But development work is very active. We are no longer in R, we are in D. The D is going to fit very nicely with everything that we are doing now from an AI and Remote Care perspective will just be buttressed by and further supported by that next-generation platform. We can do the things we are doing now on the RNS-320, then it will be just an opportunity for us to do even more of it, even better when we think about the next-generation hardware platform.

Speaker #2: But development work is very active. We're no longer in R—we're in D, and the D is going to fit very nicely with everything that we're doing now from an AI and remote care perspective.

Joel Becker: The D is going to fit very nicely with everything that we are doing now from an AI and Remote Care perspective will just be buttressed by and further supported by that next-generation platform. We can do the things we are doing now on the RNS-320, then it will be just an opportunity for us to do even more of it, even better when we think about the next-generation hardware platform.

Speaker #2: We'll just be buttressed by and further supported by that next-generation platform. So we can do the things we're doing now on the 320, and it'll be just an opportunity for us to do even more of it, and even better, when we think about the next-generation hardware platform.

Speaker #6: Think about it as faster processing, especially with the AI suite of tools that will begin to launch, and obviously with ECOG being the first one that we did.

Patrick Williams: Think about it as after processing, especially with the NeuroPace AI suite of tools that we will begin to launch, and obviously with ECoG being the first one that we did. But we are looking forward to it.

Speaker #6: But it's a we're looking forward to it.

Speaker #5: Makes sense.

Ross Osborn: Makes sense.

Speaker #2: Thanks, Ralph.

Joel Becker: Thanks, Ross.

Speaker #3: Your next question comes from the line of Priya Sajdeva with UBS. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Priya Sachdeva with UBS. Your line is open. Please go ahead.

Speaker #7: Hey guys. Thanks so much for taking the questions. Maybe if I could just touch back on the surmeeting. Joel, I know you mentioned that the current expectation is to stay interactive with the agency.

Priya Sachdeva: Hey, guys. Thanks so much for taking the questions. Maybe if we could just touch back on the SIR meeting. Joel, I know you mentioned that the current expectation is to stay interactive with the agency, but maybe you could help us frame what the potential outcomes could be and how equipped you are to handle any feedback or additional data that is requested. Then one follow-up.

Speaker #7: But maybe you could help us frame what the potential outcomes could be and how equipped you are to handle any feedback or additional data that's requested.

Speaker #7: And then one follow-up.

Joel Becker: It's a great question. We expect to go into the. The purpose of the meeting is really to provide a forum for us to align with the agency on the specifics of what they're looking for and our plans for data and the reporting of that data with them. So we feel like we've got a good roadmap today based on the feedback that we've gotten from the agency, both by way of their letter as well as our interactions with them. We think we're going to go into the meeting with a good direction and approach for what we believe they're looking for. Then, of course, the timing and the amount of additional analysis or work coming out of that will be based on how well, in fact, are we aligned and have we gotten the development correct and aligned with what they're interested in.

Speaker #2: It's a great question. We expect to go into the purpose of the meeting is really to provide a forum for us to align with the agency on the specifics of what they're looking for.

Speaker #2: And our plan for data and the reporting of that data with them so we feel like we've got a good roadmap today. Based on the feedback that we've gotten from the agency, both by way of their letter as well as our interactions with them and so we think we're going to go into the meeting with a good direction and approach for what we believe they're looking for.

Joel Becker: We think we're going to go into the meeting with a good direction and approach for what we believe they're looking for. Then, of course, the timing and the amount of additional analysis or work coming out of that will be based on how well, in fact, are we aligned and have we gotten the development correct and aligned with what they're interested in.

Speaker #2: And then of course the timing and the amount of additional analysis or work coming out of that will be based on how well in fact are we aligned and have we gotten the development correct and aligned with what they're interested in.

Speaker #2: Again, we expect that we do have a pretty good line of sight on that. And so we'll work to turn those that into an amendment.

Joel Becker: Again, we expect that we do have a pretty good line of sight on that. We'll work to turn those conversations and any updates and iteration from that into an amendment. Then submit that amendment in as fast as possible a timeframe as we can coming out of the meeting. A lot of the work is going on now, which is why I provided the update in my prepared comments, specifically that our data analysis and preparation remains on track. We're getting ready to submit that SIR request, and we'll be prepared to go into the SIR meeting. To just specifically answer your question, we expect to be able to turn feedback, unless there's something that just comes that we haven't anticipated, we expect to be able to turn feedback in a pretty timely fashion after the SIR meeting.

Speaker #2: And then submit that amendment in as fast as possible time frame as we can coming out of the meeting. So a lot of the work is going on now which is why I provided the update in my prepared comments specifically that our data analysis and preparation remains on track and we're getting ready to submit that SIR request and we'll be prepared to go into the SIR meeting.

Joel Becker: We're getting ready to submit that SIR request, and we'll be prepared to go into the SIR meeting. To just specifically answer your question, we expect to be able to turn feedback, unless there's something that just comes that we haven't anticipated, we expect to be able to turn feedback in a pretty timely fashion after the SIR meeting.

Speaker #2: And so we to just specifically answer your question, we expect to be able to turn feedback unless there's something that just comes that we haven't anticipated.

Speaker #2: We expect to be able to turn feedback in a pretty timely fashion after the SIR meeting.

Speaker #7: Okay. That's super helpful. Yes. Maybe just one more really nice to hear the all-time high and active prescribers accounts and the patient pipeline. So we'd just love to maybe understand a little bit more what you saw on the ground as it relates to utilization amongst existing centers this quarter and how you're thinking about that when contemplating the guide things.

Priya Sachdeva: Okay. That's super helpful. I guess, maybe just one more. Really nice to hear the all-time high in active prescribers accounts and the patient pipeline. Would just love to maybe understand a little bit more what you saw on the ground as it relates to utilization amongst existing centers this quarter and how you're thinking about that when contemplating the guide. Thanks.

Speaker #2: Thank you, Priya. And I know you've been somebody who's followed this particularly closely, so we appreciate you paying attention to the operating parts of the business.

Joel Becker: Thank you, Priya. I know you've been somebody who's followed this particularly closely, so we appreciate you paying attention to the operating parts of the business. It's fun for an operator to get to talk about that. Really there's two pieces here that form the basis for the expansion in the business. If you think about our field presence, we have a presence in the vast majority of the Level 4 centers today. We have a penetration rate into those centers. The way that we're really working on expanding our footprint is increasing adoption within those centers. If you think about a Level 4 center, on average, it'll have something like 5 or 6 epileptologists. There's maybe 1 or 2 or 3 epileptologists in the center that does the majority of the RNS work.

Speaker #2: It's fun for an operator to get to talk about that. So really there's two pieces here. That form the basis for the expansion in the business.

Speaker #2: If you think about our field presence, we have a presence in the vast majority of the level four centers today. We have a penetration rate into those centers.

Speaker #2: And so the way that we're really working on expanding our footprint is increasing adoption within those centers. So if you think about a level four center on average, it'll have something like five or six epileptologists.

Joel Becker: The way that we're really working on expanding our footprint is increasing adoption within those centers. If you think about a Level 4 center, on average, it'll have something like 5 or 6 epileptologists. There's maybe 1 or 2 or 3 epileptologists in the center that does the majority of the RNS work.

Speaker #2: And there's maybe one or two or three epileptologists in a center that does the majority of the RNS work. And so one step for us to expand beyond below is to increase adoption of additional epileptologists with RNS neurostimulation as a tool within their practice.

Joel Becker: One step for us to expand the envelope is to increase adoption of additional epileptologists with RNS neurostimulation as a tool within their practice. Then within that adoption, we have what we call the modern RNS story to increase utilization, and in particular, we have talked about here on recent calls, number 1, the advent of network stimulation, where people are stimulating both focal regions of the brain as well as stimulating in the thalamus. That has really been an area of expansion for the RNS System, as well as then hybrids to surgical therapy. Standalone surgical therapy volumes actually are going down vis-à-vis neuromodulation. One of the reasons why we think that is going down vis-à-vis neuromodulation is the expanded capability that neuromodulation can provide.

Speaker #2: Then within that adoption, we have what we call the modern RNS story to increase utilization. And in particular, we have talked about here on recent calls, number one, the advent of network stimulation where people are stimulating both focal regions of the brain as well as stimulating in the thalamus.

Speaker #2: And that has really been an area of expansion for the RNS system, as well as then hybrids to surgical therapy. Standalone surgical therapy volumes actually are going down vis-à-vis neuromodulation, and one of the reasons why we think that's going down vis-à-vis neuromodulation is the expanded capability that neuromodulation can provide. In particular, with RNS, you can monitor the brain's activity to inform where you might want to resect or, if you know you have an area where you want to resect but there are also areas you want to treat from a focal perspective that you can't resect, it can be used as a complement to that.

Joel Becker: That has really been an area of expansion for the RNS System, as well as then hybrids to surgical therapy. Standalone surgical therapy volumes actually are going down vis-à-vis neuromodulation. One of the reasons why we think that is going down vis-à-vis neuromodulation is the expanded capability that neuromodulation can provide.

Joel Becker: In particular with RNS, you can monitor the brain's activity to inform where you might want to resect, or if you know you have an area where you want to resect, but there are also areas you want to treat from a focal perspective that you cannot resect, it can be used as a complement to that. So when we think about really expanding our footprint, we have got increasing adoption as well as increasing utilization within the Level 4 centers as our fundamental baseline. Then in addition to that, the question was asked earlier, Anthony asked earlier about expansion into the community and into the referral community, and that has been a big area of focus for us. The last thing I would talk about here is just our increased both investment as well as sophistication in direct to consumer.

Speaker #2: So, when we think about really expanding our footprint, we've got increasing adoption, as well as increasing utilization within the level four centers, as our fundamental baseline.

Speaker #2: Then in addition to that, the question was asked earlier Anthony asked earlier about expansion into the community and into the referral community and that's been a big area of focus for us.

Joel Becker: Then in addition to that, the question was asked earlier, Anthony asked earlier about expansion into the community and into the referral community, and that has been a big area of focus for us. The last thing I would talk about here is just our increased both investment as well as sophistication in direct to consumer.

Speaker #2: In the last thing I'd talk about here is just our increased both investment as well as sophistication and direct-to-consumer. And direct-to-patient and direct-to-patient caregiver as well as direct-to-referral community digital marketing and patient educational efforts are things that are beginning to contribute more and more for us.

Joel Becker: Direct to patient and direct to patient caregiver, as well as direct to referral community digital marketing and patient educational efforts are things that are beginning to contribute more and more for us. So we feel like we have got multiple shots on goal here for developing the market, and that will become even more important as we work through indication expansion.

Speaker #2: And so, we feel like we've got multiple shots on goal here for developing the market. That will become even more important as we work through indication expansion.

Speaker #7: Awesome. Your next question comes from the line of Frank Takinen with Lake Street Capital Markets. Your line is open. Please go ahead.

Priya Sachdeva: Awesome. Thanks.

Operator: Your next question comes from the line of Frank Takkinen with Lake Street Capital Markets. Your line is open. Please go ahead.

Frank Takkinen: Great. Thank you for taking the questions. At the risk of getting a little over our skis, I was hoping to ask about 2027. I think where consensus sits today is about 23% top line growth, and I have previously tagged the RNS business about 20% in line with your guys' commentary. Do you feel right now maybe there is some inclusion of IGE that might not be included in 2027 at this point in time, or do you think that that 123 is a reasonable estimation at this point in time?

Speaker #3: Great, thank you for taking the questions. At the risk of getting a little over our skis, I was hoping to ask about 2027. I think where consensus sits today is about 23% top-line growth, and I've previously tagged the RNS business at about 20%, in line with your guys' commentary.

Speaker #3: Do you feel right now maybe there's some inclusion of IGE that might not be included in 2027 at this point in time, or do you think that that 123 is a reasonable estimation at this point in time?

Speaker #2: Yeah, it's a fair question. I think, as we've talked about, we need to get further clarity on the timing of the IG approval, which we again are very optimistic will happen.

Patrick Williams: Yeah. It is a fair question. I think as we have talked about, we need to get further clarity on the timing of the IGE approval, which we, again, are very optimistic that it will happen. Clearly, we said that we were going to have approval by the middle of 2026. So what I would repeat is that we continue to stay consistent with our long-term plans of growing the business at 20% with the adult focal indication. Give us a little bit of time. We have not given out there 2027 and 2028 when the contribution of IGE is, but as we get clarity on that, we certainly will be ready to speak to it.

Speaker #2: Clearly, we said that we were going to have approval by the middle of 2026. So what I would repeat is that we continue to stay consistent with our long-term plans of growing the business at 20% with the adult focal indication.

Speaker #2: And give us a little bit of time. We haven't given out there 27 and 28 when the contribution of IGE is, but as we get clarity on that, we certainly will be ready to speak to it.

Speaker #3: Okay, that's helpful. And then I wanted to ask a bigger picture question on some of the AI initiatives. How should we think about monetization?

Frank Takkinen: Okay. That is helpful. I wanted to ask a bigger picture question on some of the AI initiatives. How should we think about monetization? Is this really through increased unit volume within the core RNS business, or is there eventually a pathway to more meaningful AI specific revenue?

Speaker #3: Is this really through increased unit volume within the core RNS business or is there eventually a pathway to more meaningful AI-specific revenue?

Speaker #2: Thanks, Frank. It's a great question. And as a basis with the way people should think about it from a business model perspective is enabling unit volume associated with RNS.

Joel Becker: Thanks, Frank. It's a great question. As a basis with the way people should think about it from a business model perspective is enabling unit volume associated with RNS. The ability to both make more efficient the management of a patient as well as then improve outcomes, we think further improve outcomes, are both salutary for the rate of uptake of the RNS System unit sales. I think there are other interesting opportunities that I won't get into a lot of the detail around here today.

Speaker #2: So, the ability to both make more efficient the management of a patient, as well as then improve outcomes—we think further improving outcomes—are both salutary for the rate of uptake of the RNS System unit sales.

Speaker #2: I think there are other interesting opportunities that I won't get into a lot of the detail around here today, but in particular, if you think about the diagnostic capability associated with the system, if you think about what those algorithms can do by way of helping us predict the appropriate detection and therapy settings, and you think about things like some of the partnership work that we've done, we think there are other potential business models to help create recognize rather the value that the AI capability and underlying assets that we have are, but those are further downstream and I'm going to hold off and talking about any of that.

Joel Becker: In particular, if you think about the diagnostic capability associated with the system, if you think about what those algorithms can do by way of helping us predict the appropriate detection and therapy settings, and you think about things like some of the partnership work that we've done, we think there are other potential business models to help recognize rather the value that the AI capability and underlying assets that we have are. Those are further downstream, and then I'm going to hold off in talking about any of that.

Speaker #2: For right now, what you should think about is the efficiency with which we can manage patients. This allows individual clinicians to scale the number of patients in their RNS practice with more efficient and effective data management, as well as detection and therapy parameter settings.

Joel Becker: For right now, what you should think about is the efficiency with which we can manage patients allows for individual clinicians to scale the number of patients in their RNS practice with more efficient and effective data management, as well as detection and therapy parameter settings, and the potential to even further increase what are today best-in-class effectiveness outcomes. All of those things read on increasing RNS unit volume, which is obviously the basis of our business.

Speaker #2: And the potential to even further increase what are today best in class effectiveness outcomes. And so all of those things read on increasing RNS unit volume, which is obviously the basis of our business.

Speaker #1: Yeah, I think the one thing I would add related to ECOG Assistant and IGE is: IGE comes out, and we've talked about the fact that there will be more and more patients outside of Level Four and in that community setting. Creating a tool that's going to really help be more efficient and productive, like we said, in that community setting with ECOG Assistant.

Patrick Williams: Yeah, I think the one thing I would add related to ECoG Assistant and IGE is, as IGE comes out and we've talked about the fact that there'll be more and more patients outside of Level 4 and in that community setting, creating a tool that's going to really help be more efficient and productive, like we said, in that community setting with ECoG Assistant, I think that's going to be very powerful for us and help with the adoption dynamics, which we view as very favorable when it comes to IGE.

Speaker #1: I think that's going to be very powerful for us and help with the adoption dynamics, which we view as very favorable when it comes to IGE.

Speaker #2: Frank, you're going to Ru asking the question, but the only other thing I'd mention—and I said it in my prepared comments—is that I think sometimes the recognition of the importance of the unique capability of the RNS system to monitor, record, and then analyze data, and what that provides us on a macro basis with the 27 million archives that we can now use as a training data set for all of the algorithm work, as well as then our ability to use the algorithms to tailor an individualized therapy for patients, is sometimes not as appreciated as I think it should be.

Joel Becker: Frank, you are going to rue asking the question. But the only other thing I would mention, and I said it in my prepared comments, is that I think sometimes the recognition of the importance of the unique capability of the RNS System to monitor, record, and then analyze data and what that provides us on a macro basis of the 27 million archives that we can now use as a training data set for all of the algorithm work, as well as then our ability to use the algorithms to then tailor an individualized therapy for patients, is sometimes not as appreciated as I think it should be. One. Two, nobody else can follow us in. It is a unique aspect of the platform and something that I think positions us particularly well for the future of where epilepsy therapy is headed. We have seen it in other disease states as well.

Joel Becker: One. Two, nobody else can follow us in. It is a unique aspect of the platform and something that I think positions us particularly well for the future of where epilepsy therapy is headed. We have seen it in other disease states as well.

Speaker #2: One, two—nobody else can follow us in. It is a unique aspect of the platform, and something that I think positions us particularly well for the future of where epilepsy therapy is headed.

Speaker #2: We've seen it in other disease states as well. Individualized patient-tailored personalized therapy wins. And the data and the configurable nature of the platform of the RNS system are unique proprietary and have the potential to create a tremendous amount of value with the technology mode that is supported by a data mode that's only getting bigger and deeper.

Joel Becker: Individualized patient-tailored, personalized therapy wins, and the data and the configurable nature of the platform of the RNS System are unique, proprietary, and have the potential to create a tremendous amount of value with a technology moat that is supported by a data moat that is only getting bigger and deeper.

Speaker #3: Very helpful. Thank you.

Frank Takkinen: Very helpful. Thank you.

Speaker #4: Your next question comes from the line of Michael Krotky with Lyrink Partners. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Mike Kratky with Leerink Partners. Your line is open. Please go ahead.

Speaker #5: Hi everyone, this is Sam on from Mike. Thanks for taking our questions. Just wanted to go back to your comments on record accounts and pipeline.

[Analyst] (Leerink Partners): Hi, everyone. This is Sam on for Mike. Thanks for taking our questions. Just wanted to go back to your comments on record accounts and pipeline. Can you maybe talk about how long it typically takes new accounts to become meaningful contributors of implant volume or reach kind of a peak level of utilization, how long it takes patients to move through your pipeline today, and how that informs your outlook for the rest of the year? Then I have one follow-up.

Speaker #5: Can you maybe talk about how long it typically takes new accounts to become meaningful contributors of implant volume or reach a kind of peak level of utilization?

Speaker #5: How long it takes patients to move through your pipeline today and how that informs your outlook for the rest of the year? And then I have one follow-up.

Joel Becker: Hi, Sam. Thanks for joining. Those are great questions. I will start with the center discussion, and then we will talk a little more about patient pipeline. As I mentioned earlier, we have a presence in the vast majority of the Level 4 centers, and so for us, it is less of a dynamic in terms of getting a center up and going. Although, as we have expanded more into Level 3 and community centers, we have kind of reinvigorated that center startup curve. There, the centers are unique in a lot of ways. Some centers, it is really just a contracting activity. They have the functional neurosurgery capacity, they have the necessary infrastructure, they have the patient population, and it is a pretty quick training exercise, and they are ready to get up and running.

Speaker #2: Hi, Sam. Thanks for joining. Those are great questions. I'll start with the center discussion, and then we'll talk a little bit more about the patient pipeline.

Speaker #2: The as I mentioned earlier, we have a presence in the vast majority of the level four centers. And so for us, there's it's less of a dynamic in terms of getting a center up and going.

Speaker #2: Although, as we have expanded more into Level 3 and community centers, we have kind of reinvigorated that center startup curve. And there, the centers are unique in a lot of ways.

Joel Becker: There, the centers are unique in a lot of ways. Some centers, it is really just a contracting activity. They have the functional neurosurgery capacity, they have the necessary infrastructure, they have the patient population, and it is a pretty quick training exercise, and they are ready to get up and running. Others, depending on the investments that they may need to make in terms of either surgical capacity and/or infrastructure, it can take them a little longer than that.

Speaker #2: For some centers, it's really just a contracting activity. They have the functional neurosurgery capacity, they have the necessary infrastructure, they have the patient population, and it's a pretty quick training exercise—so they're ready to get up and running.

Speaker #2: Others, depending on the investments that they may need to make in terms of either surgical capacity and/or infrastructure, it can take them a little bit longer than that.

Joel Becker: Others, depending on the investments that they may need to make in terms of either surgical capacity and/or infrastructure, it can take them a little longer than that. But for us, the training that it takes for us to bring somebody up the curve is really fairly straightforward. We have a very sophisticated field commercial organization who has done a lot of this work, and that is not our critical path. For us, a lot of it now is really working with individual physicians to expand their adoption. As you might imagine, that is a faster process than trying to get an entire center to develop the infrastructure and have the referral pathways and everything else that they need. With regard to patients in the pipeline, the right way to think about it is based on indication.

Speaker #2: But for us, the training that it takes for us to bring somebody up the curve is really fairly straightforward. We have a very sophisticated field commercial organization.

Joel Becker: But for us, the training that it takes for us to bring somebody up the curve is really fairly straightforward. We have a very sophisticated field commercial organization who has done a lot of this work, and that is not our critical path. For us, a lot of it now is really working with individual physicians to expand their adoption. As you might imagine, that is a faster process than trying to get an entire center to develop the infrastructure and have the referral pathways and everything else that they need. With regard to patients in the pipeline, the right way to think about it is based on indication.

Speaker #2: Who's done a lot of this work, and that's not our critical path. And so for us, a lot of it now is really working with individual physicians to expand their adoption.

Speaker #2: And as you might imagine, that is a faster process than trying to get an entire center to develop the infrastructure and have the referral pathways and everything else that they need.

Speaker #2: With regard to patients in the pipeline, the right way to think about it is based on indication. So, if you think about the steps in the process, a patient with a regional or focal disease will undergo an initial SEEG evaluation, where a scalp EEG—rather, a scalp and video EEG—is kind of a phase one evaluation.

Joel Becker: If you think about the steps in the process, a patient with a regional or focal disease will undergo an initial SEEG evaluation, or a scalp EEG, rather, a scalp and video EEG as kind of a phase I evaluation. Then they move from there to a phase II evaluation, which is an inpatient procedure where SEEG electrodes are used to localize the specific spot or spots of origination of the seizure. Then those patients are adjudicated to either resection or neurostimulation. There is kind of three main steps with the evaluation of a focal patient. That can take anywhere from 6 months to a year.

Speaker #2: Then they move from there to a phase two evaluation, which is an inpatient procedure where SEEG electrodes are used to localize the specific spot or spots of origination of the seizure.

Speaker #2: And then those patients are adjudicated to either resection or neurostimulation. And so there's kind of three main steps with the evaluation of a focal patient.

Speaker #2: And that can take anywhere from six months to a year. In some cases, sadly—in particular, if somebody has to get reworked up, if they get referred in where there isn't a relationship, if they have to get reworked up when they get to a level 4 center—it can even take a little bit longer than that.

Joel Becker: In some cases, sadly, in particular, if somebody has to get reworked up, if they get referred in where there isn't a relationship, if they had to get reworked up when they get to a level 4 center, it can even take a little bit longer than that. It's one of the reasons why we're particularly enthusiastic about the indication expansion into the generalized population. That population, because it's a generalized disease that happens everywhere all at once, localization or that second step beyond just the video and scalp EEG, doesn't need to happen. You can imagine a yield loss of getting someone to be able to organize their lives in such a way to go in for a long-term monitoring as well as an additional invasive procedure with SEEG.

Speaker #2: It's one of the reasons why we're particularly enthusiastic about the indication expansion into the generalized population. That population, because it's a generalized disease that happens everywhere all at once, localization or that second step beyond just the video and scalp EEG doesn't need to happen.

Joel Becker: That population, because it's a generalized disease that happens everywhere all at once, localization or that second step beyond just the video and scalp EEG, doesn't need to happen. You can imagine a yield loss of getting someone to be able to organize their lives in such a way to go in for a long-term monitoring as well as an additional invasive procedure with SEEG.

Speaker #2: And so you can imagine the yield loss of getting someone to be able to organize their lives in such a way to go in for long-term monitoring, as well as an additional invasive procedure with SEEG.

Speaker #2: You can have the likelihood of that being a challenging thing to get organized and then losing patients along the way. But none of that exists with the IGE population.

Joel Becker: You can have the likelihood of that being a challenging thing to get organized and then losing patients along the way. None of that exists with the IGE population. In some ways, if we think about adoption dynamics and patient pipeline friction, we've almost started with the hardest patient population. Frankly, we think the adoption dynamics within the IGE population, because they're otherwise developmentally normal people who don't require invasive monitoring, we think can be a much less frictioned environment to get to neurostimulation therapy, one. Then two, the other major segment that we're working on here is pediatrics. The adoption dynamics within pediatrics, we as well think lend themselves even more than the adult focal population. So we really like our adult focal indication, and we're excited about what we're doing with that. Obviously growing the business 20% year on year with that indication.

Speaker #2: And so in some ways, if we think about adoption dynamics and patient pipeline friction, we've almost started with the hardest patient population. Frankly, we think the adoption dynamics within the IGE population—because they're otherwise developmentally normal people who don't require invasive monitoring—we think can be a much less frictioned environment to get to neurostimulation therapy, one. And then two, the other major segment that we're working on here is pediatrics.

Joel Becker: Then two, the other major segment that we're working on here is pediatrics. The adoption dynamics within pediatrics, we as well think lend themselves even more than the adult focal population. So we really like our adult focal indication, and we're excited about what we're doing with that. Obviously growing the business 20% year on year with that indication. But we think the indication expansion to come can result in even faster patient pipeline and more smooth adoption dynamics.

Speaker #2: And the adoption dynamics within pediatrics, we as well think, lend themselves even more than the adult focal population. So, we really like our adult focal indication and we're excited about what we're doing with that.

Speaker #2: Obviously, growing the business to 20% year on year with that indication, but we think the indication expansion to come can result in even faster patient pipeline and more smooth adoption dynamics.

Joel Becker: But we think the indication expansion to come can result in even faster patient pipeline and more smooth adoption dynamics.

Speaker #3: And related to this year, what I would add is we saw accelerated growth in Q2 over Q1—21% versus 19.5%. And our guidance on the RNS, specifically for the full year, would imply a higher growth rate in the second half.

Patrick Williams: Related to this year, what I would add is, we saw accelerated growth in Q2 over Q1, 21% versus 19.5%. Our guidance on the RNS System specifically for the full year would imply a higher growth rate in the second half. There's a lot of focus as an organization, and I'll say myself personally, on more analytics around that patient pipeline and the field is doing a really good job of tracking that. We have it down to the patient account level, et cetera, and there's more good analytics to come out of that. We're beginning to really peel the onion back on there because clearly that patient identified today and helping them through that journey and converting them quicker and the velocity will be an implant of the future.

Speaker #3: And there's a lot of focus as an organization, and I'll say myself personally, on more analytics around that patient pipeline, and the field is doing a really good job of tracking that.

Speaker #3: We have it down to the patient account level, etc. And there's more good analytics to come out of that. And we're beginning to really peel the onion back on there because clearly that patient identified today and helping them through that journey and converting them quicker in the velocity will be an implant of the future.

Patrick Williams: We have it down to the patient account level, et cetera, and there's more good analytics to come out of that. We're beginning to really peel the onion back on there because clearly that patient identified today and helping them through that journey and converting them quicker and the velocity will be an implant of the future.

Speaker #1: Understood. Thanks for all the color there, guys. And then just as a follow-up, on IGE: can you maybe just talk about your expectations around still kind of expecting a broad label in IGE versus maybe stricter labeling in certain subpopulations, and what ultimately gives you confidence the FDA won't have any material pushback on the labeling front?

[Analyst] (Leerink Partners): Understood. Thanks for all the color there, guys. Just as a follow-up, on IGE, can you maybe talk about your expectations around still expecting a broad label in IGE versus stricter labeling in certain subpopulations and what ultimately gives you confidence the FDA won't have any material pushback on the labeling front?

Speaker #2: Yeah, it's a great question, Sam. And without trying to get into predicting how the discussions are going to go here—because that's really the point of the discussions—is to align on FDA's questions and where they have a need for additional information and context.

Joel Becker: Yeah. It's a great question, Sam. Without trying to get into predicting how the discussions are going to go here, because that's really the point of the discussions, is to align on FDA's questions and where they have a need for additional information and context. Our focus is on providing that information and context and answering their questions on the entire enrolled patient population. We think there's benefit across populations. We think that the clinical meaningfulness and impact on individuals' lives by avoiding even GTC is significant. Again, that's really the purpose of the discussions here, but our focus is on providing information awareness, context, understanding for the entire population that was enrolled in the study.

Speaker #2: Our focus is on providing that information and context and answering their questions. On the entire enrolled patient population. So we think there's benefit across populations.

Speaker #2: We think that clinical meaningfulness and impact on individuals' lives by avoiding even AGTC is significant. And so again, that's really the purpose of the discussions here.

Joel Becker: We think that the clinical meaningfulness and impact on individuals' lives by avoiding even GTC is significant. Again, that's really the purpose of the discussions here, but our focus is on providing information awareness, context, understanding for the entire population that was enrolled in the study.

Speaker #2: But our focus is on providing information, awareness, context, and understanding for the entire population that was enrolled in the study.

Speaker #1: Understood. Thanks.

[Analyst] (Leerink Partners): Understood. Thanks.

Speaker #4: Your next question comes from the line of Lily Lozada with JP Morgan Chase. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Lilia-Celine Lozada with JPMorgan Chase. Your line is open. Please go ahead.

Speaker #5: Hi, everyone. Thanks for taking the question. Maybe just a follow-up on guidance. The range is staying put for the core RNS business, which you mentioned implies a step up in the back half of the year.

Lilia-Celine Lozada: Hi, everyone. Thanks for taking the question. Maybe just to follow up on guidance. The range is staying put for the core RNS business, which you mentioned implies a step up in the H2 of the year, I think about 500 basis points by my math. Can you remind us the drivers of this acceleration and what you're seeing so far into the Q3 to give you the confidence in that step up in the H2? I have a follow-up.

Speaker #5: I think about 500 basis points by my math. So, can you remind us of the drivers of this acceleration, and what you're seeing so far into the third quarter that gives you the confidence in that step up in the back half?

Speaker #5: And then I have a follow-up.

Speaker #3: Yeah, absolutely. I think maybe taking a step back, we do look at our business in what I call these six-month buckets. And I think Joel has consistently said that ever since he's been here.

Patrick Williams: Yeah, absolutely. I think maybe taking a step back, we do look at our business on what I call these 6-month buckets, and I think Joel has consistently said that ever since he's been here. Look, we're a procedure-based business, and so you can have surgeries that can move out from month to month or quarter to quarter. What gives us confidence in the H2 is what we've done historically. If you go back in time and look at even H2 of last year, we grew 32% year-over-year, so it's a really strong comp that we're coming up against. We expect that to happen again. It's everything we talked about, right? The sales team that we added, they're a little bit more tenured. I think we get smarter every day on analytics. We continue to drive deeper into accounts with utilization.

Speaker #3: And so, look, it's a procedure-based business. You can have surgeries that move out from month to month or quarter to quarter.

Speaker #3: What gives us confidence in the second half is what we've done historically. If you go back in time and look at even the second half of last year, we grew 32% year over year.

Patrick Williams: If you go back in time and look at even H2 of last year, we grew 32% year-over-year, so it's a really strong comp that we're coming up against. We expect that to happen again. It's everything we talked about, right? The sales team that we added, they're a little bit more tenured. I think we get smarter every day on analytics. We continue to drive deeper into accounts with utilization.

Speaker #3: So it's a really strong comp that we're coming up against, and so we expect that to happen again. It's everything we talked about, right?

Speaker #3: The sales team, that we added, they're a little bit more tenured. I think we get smarter every day on analytics. We continue to drive deeper into accounts with utilization.

Speaker #3: We talked about all-time highs and subscribers. And so I think for us, you hit the point well, that the second half, depending on the range, you're anywhere from 20% on the low end of the guidance to 23% on the midpoint to 25%.

Patrick Williams: We talked about all-time highs with subscribers, et cetera. I think for us, you hit the point well is that the H2, depending on the range, you're anywhere from 20% on the low end of the guidance to 23% on the midpoint to 25%, and so those are all basically at the midpoint, a step up from the 20% that we saw in the H1. History, and obviously visibility in the business that we have now gives us that confidence.

Speaker #3: And so those are all basically at the midpoint a step up from the 20% that we saw in the first half. So history, and obviously visibility in the business that we have now gives us that confidence.

Lilia-Celine Lozada: Great. As a follow-up, you're on the cusp of sustainable adjusted EBITDA and free cash flow profitability. I'm curious how you're thinking about balancing the top line growth with profitability, especially given you have big opportunities in front of you still with IGE and elsewhere. Should we expect to see more drop through to the bottom line moving forward, or does this give you the opportunity to invest more aggressively behind growth? Thanks for taking the question.

Speaker #5: Great. And then as a follow-up, you're on the cusp of sustainable adjusted EBITDA and free cash flow profitability. So I'm curious how you're thinking about balancing top-line growth with profitability, especially given you still have big opportunities in front of you with IGE and elsewhere.

Speaker #5: So, should we expect to see more drop-through to the bottom line moving forward, or does this give you the opportunity to invest more aggressively behind growth?

Speaker #5: Thanks for taking the question.

Speaker #2: I'd say those are great questions, Lily. What you should think about is that we're going to invest in the business to take advantage of the growth that is in front of us here.

Joel Becker: I'd say those are great questions, Lily, and what you should think about is that we are going to invest in the business to take advantage of the growth that is in front of us here, and we think that we have some significant opportunities. That has all been factored into our long range planning, where we have talked about, and you are talking about adjusted EBITDA here and not cash flow breakeven, but we have talked about cash flow breakeven exiting 2027. We are working to both demonstrate our ability to fund the opportunities on the top line of the business, and that is our first priority, and that is what we have been doing, while demonstrating good financial discipline through the middle part of the income statement, including expanding gross margin performance and a good prioritization of our spending.

Speaker #2: And we think that we have some significant opportunities. That has all been factored into our long-range planning. Where we've talked about—and you're talking about adjusted EBITDA here and not cash flow break-even—but we've talked about cash flow break-even exiting 2027.

Speaker #2: And we are working to both demonstrate our ability to fund the opportunities on the top line of the business, and that's our first priority.

Joel Becker: We are working to both demonstrate our ability to fund the opportunities on the top line of the business, and that is our first priority, and that is what we have been doing, while demonstrating good financial discipline through the middle part of the income statement, including expanding gross margin performance and a good prioritization of our spending.

Speaker #2: And that's what we have been doing. While demonstrating good financial discipline through the middle part of the income statement, including expanding gross margin performance and a good prioritization of our spending.

Speaker #2: And so, we are committed to having a disciplined income statement, with a first priority of pursuing growth. And we think we have significant growth opportunities in front of us.

Joel Becker: We are committed to having a disciplined income statement with a first priority of pursuing growth, and we think we have significant growth opportunities in front of us. We think we can do both, but we are not going to let any of our growth opportunities go wanting in favor of trying to accelerate cash flow breakeven or adjusted EBITDA positive outcome here. But again, I think we have demonstrated here over the past number of years that we can have a good, disciplined approach to the entire income statement. I just said all that stuff with the CFO here sitting across from me, who spends all his time doing all that, and so maybe I should ask him to comment.

Speaker #2: We think we can do both, but we're not going to we're not going to let any of our growth opportunities go wanting. In favor of trying to accelerate cash flow break even or adjusted EBITDA positive outcome here.

Speaker #2: But again, I think we've demonstrated here over the past number of years that we can have a good, disciplined approach to the entire income statement.

Joel Becker: But again, I think we have demonstrated here over the past number of years that we can have a good, disciplined approach to the entire income statement. I just said all that stuff with the CFO here sitting across from me, who spends all his time doing all that, and so maybe I should ask him to comment.

Speaker #2: So, I just said all that stuff with the CFO here sitting across from me, who spends all this time doing all that. And so, maybe I should ask him to comment.

Speaker #3: We've given really good answers, so I don't know what else to say. Look, we'll be good stewards of the shareholders' cash and capital, as Joel said.

Patrick Williams: Really good answer, so I do not know what else to say. Look, we will be good stewards of the shareholders' cash and capital. As Joel said, we just have a huge untapped TAM right now with adult focal. It is only going to get bigger when we get the IGE expansion indication here. As Joel said, we have shown steady progress on cash flow, adjusted EBITDA, whatever profitability metric you want to look at. You will note in our guidance, we did increase our adjusted EBITDA. That was notably because of the increase in revenue guidance on the service side, as well as the fact that we did bump up the gross margin by 50 basis points on the top and the bottom. Again, we believe that shareholder value will be created as we continue to grow our revenue with the strong gross margins that we have.

Speaker #3: We just have a huge untapped hand right now with adult focal. It's only going to get bigger when we get the IGE expansion indication here.

Speaker #3: And so as Joel said, we've shown steady progress on cash flow, adjusted EBITDA, whatever profitability metric you want to look at. You'll note in our guidance, we did increase our adjusted EBITDA.

Speaker #3: That was notably because of the increase in revenue. Guidance on the service side, as well as the fact that we did bump up the gross margin by 50 basis points on the top and the bottom.

Patrick Williams: That was notably because of the increase in revenue guidance on the service side, as well as the fact that we did bump up the gross margin by 50 basis points on the top and the bottom. Again, we believe that shareholder value will be created as we continue to grow our revenue with the strong gross margins that we have.

Speaker #3: So again, we believe that shareholder value will be created as we continue to grow our revenue, with the strong gross margins that we have.

Speaker #4: Your next question comes from the line of Yi Chen with HC Wainwright & Company. Your line is open. Please go ahead.

Operator: Your next question comes from the line of Yi Chen with H.C. Wainwright & Co.. Your line is open. Please go ahead.

[Analyst] (H.C. Wainwright): Hi, this is Katie. I am for Yi. This may be something you are not quite ready to answer yet, but looking at your new AI assistant, is it priced or monetized separately from the RNS System or bundled into existing pricing? As a quick follow-up, is that contributing to the 21% RNS growth you are already guiding to, or is it purely an add-on retention tool at this point?

Speaker #6: Hi, this is Katie. I'm for Yi. This may be something you're not quite ready to answer yet, but looking at your new AI assistant, is it priced or monetized separately from the RNS system, or bundled into existing pricing?

Speaker #6: And as a quick follow-up, is that contributing to the 21% RNS growth you're already guiding to, or is it purely an add-on retention tool at this point?

Speaker #2: Hi, Katie. Thanks for those questions. It is part of the RNS System and is not monetized separately, outside of the increased efficiency and potential for improved outcomes that we think can drive increased adoption.

Joel Becker: Hi, Katie. Thanks for those questions. It is part of the RNS System and not monetized separately outside of the increased efficiency and potential for improved outcomes that we think can drive increased adoption. Everything that is going on in the business has been contemplated as part of the guide. The launch of the ECoG Assistant product here in the middle of the year is also part of what we have contemplated when we put out the guidance that we have.

Speaker #2: And everything that's going on in the business has been contemplated as part of the guide. So, the launch of the ECOG Assistant product here in the middle of the year is also part of what we've contemplated when we put out the guidance that we have.

Speaker #6: Great. Thank you.

[Analyst] (H.C. Wainwright): Great. Thank you.

Operator: There are no further questions at this time. I will now turn the call back to Joel Becker for closing remarks.

Speaker #4: There are no further questions at this time. I will now turn the call back to Joel Becker for closing remarks.

Speaker #2: Thank you, and thanks to all of you for your ongoing interest in and support of NeuroPace. We are focused on leading the transformation of the lives of people suffering from epilepsy by reducing, or even eliminating, the recurrence and occurrence of debilitating seizures.

Joel Becker: Thank you. Thanks all of you for your ongoing interest in and support of NeuroPace. We are focused on leading in transforming the lives of people suffering from epilepsy by reducing or eliminating the recurrence and occurrence of debilitating seizures. We are focused on executing from a commercial referral and direct-to-consumer perspective, expanding adoption and utilization within our current population, expanding indications to the drug-resistant idiopathic generalized population that has no device-based options available to them today, and innovating and further differentiating the unique aspects of the RNS System to build on data, AI analysis tools, and Remote Care. We believe that the ongoing execution and realization of these three market, clinical, and product development core elements of our strategy are and will help advance the standard of care for these patients and be valuable to all of the members of the NeuroPace community. Thank you. Operator?

Speaker #2: And we're focused on executing from a commercial, referral, and direct-to-consumer perspective. We're expanding adoption and utilization within our current population, and expanding indications to the drug-resistant idiopathic generalized population that has no device-based options available to them today.

Joel Becker: expanding indications to the drug-resistant idiopathic generalized population that has no device-based options available to them today, and innovating and further differentiating the unique aspects of the RNS System to build on data, AI analysis tools, and Remote Care. We believe that the ongoing execution and realization of these three market, clinical, and product development core elements of our strategy are and will help advance the standard of care for these patients and be valuable to all of the members of the NeuroPace community. Thank you. Operator?

Speaker #2: And innovating and further differentiating the unique aspects of the RNS system to build on data, AI analysis tools, and remote care, we believe that the ongoing execution and realization of these three core elements of our strategy—market, clinical, and product development—are and will help advance the standard of care for these patients.

Speaker #2: And be valuable to all of the members of the NeuroPace community. Thank you. Operator.

Operator: This concludes today's call. Thank you for attending. You may now disconnect.

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