Neuraxis(NRXS) - 2024 Q1 - Earnings Call Transcript

Financial Data and Key Metrics - Q1 2024 revenue was $647,000, down 19.7% YoY from$ 805,000 in Q1 2023, primarily due to fewer shipments from certain customers managing through the insurance reimbursement process [35] - Gross profit for Q1 2024 was $572,000, with a gross margin of 88.4%, slightly up from 88.1% in Q1 2023 [36] - Net loss in Q1 2024 was$ 2.1 million, a 2.4% improvement from $2.2 million in Q1 2023, driven by the absence of debt-related costs and higher general and administrative expenses [37] - Operating loss for Q1 2024 was$ 1.8 million, compared to $896,000 in Q1 2023, due to lower sales volume, increased payroll, and higher public company costs [29] Business Line Data and Key Metrics - 888 IB-Stim devices were shipped in Q1 2024, treating 222 children, with 49% of sales through purchase orders (insurance-covered) and 51% through patient financial assistance programs [1] - The GPS program assisted 231 patients in Q1 2024, a 40% YoY increase, with prior authorization services launched in May 2023 serving 191 patients through Q1 2024 [2] - To date, approximately 2,900 children have been treated with IB-Stim, with a penetration rate of 0.14% in 2023 and less than 0.25% of the total addressable market in Q1 2024 [6] Market Data and Key Metrics - Covered lives for IB-Stim reached 22.5 million, a 400% YoY increase, with expectations to expand significantly by the end of 2024 [4][5] - The first state Medicaid office has written policy for PENFS, and a Blue Cross Blue Shield licensee in Florida with 6 million covered lives was approved, contributing to the 22.5 million total [8] - The company has achieved 7% of national covered lives, with policies recently taking effect, and expects a revenue ramp as more policies become effective [20] Company Strategy and Industry Competition - The company's top priority is increasing insurance coverage for PENFS, leveraging strong peer-reviewed publications and support from academic societies like NASPGHAN and the American Academy of Pediatrics [3][7] - The commercialization of RED (Rectal Expulsion Device) is on track for FDA submission in late Q2 2024, with potential market entry by the end of 2024, offering a significant opportunity in the adult market [20][21] - The company is focused on obtaining a permanent Category 1 CPT billing code for IB-Stim, which is critical for streamlining billing processes and increasing access to care [13] Management Commentary on Operating Environment and Future Outlook - Management expects revenue growth to accelerate in the latter half of 2024 and into 2025, driven by expanded insurance coverage and the commercialization of RED [17][22] - The company is optimistic about achieving profitability by 2025, supported by strong gross margins and increasing sales volume [26] - The biggest challenge is the speed of gaining national insurance policy coverage, with a 90-120 day lag between policy coverage and hospital purchasing [18][20] Other Important Information - The company secured$ 6.1 million in financial commitments through convertible notes, with $1.5 million funded in Q1 2024, strengthening its liquidity position [27][38] - A national multi-site registry of 292 patients showed sustained benefits of PENFS up to 12 months post-treatment, supporting its move toward becoming a standard of care [8] - The company launched its Centers of Excellence program, with the first center at Children's Hospital of Orange County, which has treated 700 patients with IB-Stim [14][15] Summary of Q&A Session Question: Capital allocation plans for 2024 and 2025 - The company plans to allocate capital to areas with positive PENFS policy coverage, educate families and physicians, leverage data for more policy coverage, and invest in RED technology [48] Question: Path to profitability - The company believes it has enough patient demand to achieve profitability, with the key challenge being the speed of gaining national insurance coverage [49][50] Question: Challenges in gaining written policy coverage - The primary challenge is the speed of getting policy coverage in place, as the data is already published and the company is awaiting payer announcements [52] Question: Plans to increase visibility among the investment community - The company is conducting weekly investor meetings, outsourcing investor relations, and participating in monthly conferences to drive interest in the stock [53] Question: Concerns about Q1 revenue decline - The company is not concerned about the Q1 revenue decline, attributing it to short-term insurance issues and expecting revenue growth as policy coverage expands [54]