NeuroPace Q1 2025 Earnings Report

NeuroPace EPS Results

• Actual EPS: -$0.21
• Consensus EPS: -$0.26
• Beat/Miss: Beat by +$0.05
• One Year Ago EPS: N/A

NeuroPace Revenue Results

• Actual Revenue: $22.52 million
• Expected Revenue: $21.85 million
• Beat/Miss: Beat by +$676.00 thousand
• YoY Revenue Growth: N/A

NeuroPace Announcement Details

• Quarter: Q1 2025
• Date: 5/13/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, May 13, 2025
• Conference Call Time: 4:30PM ET

NeuroPace (NASDAQ:NPCE) operates as a medical device company in the United States. The company develops RNS system, a brain-responsive neuromodulation system that delivers personalized, real-time treatment at the seizure source for treating medically refractory focal epilepsy. It also records continuous brain activity data and enables clinicians to monitor patients in person and remotely. Its RNS System includes RNS neurostimulator, cortical strip and depth leads, and Patient Remote Monitor, as well as other implantable and non-implantable accessories. The company sells its products to hospital facilities for initial RNS system implant procedures and for replacement procedures. NeuroPace, Inc. was incorporated in 1997 and is headquartered in Mountain View, California.

NeuroPace Q1 2025 Earnings Call Transcript

Key Takeaways

• NeuroPace reported Q1 2025 revenue of $22.5 million, up 24% year-over-year, with core RNS sales increasing 26% (29% excluding Nautilus study implants) driven by a record number of prescribers and Project CARE momentum.
• Completed a $75 million follow-on equity financing and announced the wind-down of SEEG distribution after Q3 2025 to sharpen focus on higher-margin RNS opportunities, improving long-term margin profile.
• Presented three-year post-approval study data showing an 82% median reduction in seizures and 42% of adults seizure-free for over six months, underscoring NeuroPace’s leadership in neuromodulation.
• Advanced clinical development with the NAUGHTLIST idiopathic generalized epilepsy study on track for second-half 2025 FDA submission and progress toward a pediatric focal epilepsy indication via real-world data.
• Raised full-year 2025 revenue guidance to $93 million–$97 million (16%–21% growth), reaffirming a >20% CAGR through 2027 and targeting cash-flow breakeven by year-end 2027.

Presentation

[Operator]

Greetings, and welcome to the NeuroPace First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. A question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeremy Feffer of LifeSci Advisors. Please go ahead.

[Jeremy Feffer, Managing Director at LifeSci Advisors, LLC]

Good afternoon. Thank you for joining us for Neuropace's first quarter twenty twenty five financial and operating results conference call. On today's call, we will hear from Joel Becker, Chief Executive Officer and Rebecca Kuhn, Chief Financial Officer. Earlier today, NeuroPace released financial results for the first quarter ended 03/31/2025. Copy of the press release is available on the company's website at neuropace.com.

[Jeremy Feffer, Managing Director at LifeSci Advisors, LLC]

Before we begin, I would like to remind you that throughout this call, we will make statements that include forward looking statements within the meaning of federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that relate to expectations or predictions of future events, results or performance are forward looking statements. All forward looking statements, including those around Neuropace's projections, business opportunities, commercial expansion, market conditions, clinical trials, and those related to our operating trends and future financial performance, expense management, estimates of market opportunity and forecast of market and revenue growth are based on current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements.

[Jeremy Feffer, Managing Director at LifeSci Advisors, LLC]

For more detailed descriptions of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the SEC, including our annual report on Form 10 ks for the year ended 12/31/2024 filed with the SEC on 03/04/2025, and any other reports that we may file with the SEC in the future. This conference call contains time sensitive information, which we believe is accurate only as of this live broadcast on 05/13/2025. NeuroPace disclaims any intention or obligation except as required by law to update or revise any financial projections or forward looking statements whether because of new information, future events or otherwise. And with that, I will now turn the call over to NurOpaces Chief Executive Officer, Joel Becker. Joel?

[Joel Becker, CEO & Board Member at NeuroPace]

Thank you, Jeremy, and good afternoon, everyone. I will start out today's call by reviewing our performance in the first quarter, as well as providing additional insights around our key business priorities for the remainder of 2025 and beyond. Before turning the call over to our CFO, Rebecca Kuhn, to present the details of our financial performance for the quarter ended 03/31/2025, which will be followed by a Q and A session. Let's get started. We had a strong first quarter generating total revenue of $22,500,000 an increase of 24% compared to $18,100,000 in the prior year period, driven by strong growth in our core RNS business.

[Joel Becker, CEO & Board Member at NeuroPace]

These results reflect solid execution on our strategy focused on expanding access to RNS therapy with another quarter of a record number of prescribers and ongoing momentum from our Project CARE access initiative. In the quarter, RNS sales increased by 26% or 29% when excluding the impact of Nautilus study implants in Q1 twenty twenty four. We're encouraged by the accelerating growth we saw in the first quarter, driven by sustained strength in RNS adoption at level four centers and contributions from our Project CARE activities. In addition to these strong operating results, we executed on a number of important strategic initiatives in the first quarter, including holding an Investor Day in January, where we articulated our long term vision and plans for the company, completed a $75,000,000 follow on equity financing adding a number of high quality shareholders while transitioning a long term shareholder, refocused our product portfolio on the significant opportunities in our higher margin RNS business by clarifying our SEEG plans beyond 2025 and completed one year follow-up of the NAUGHTLIST study, a busy and successful first quarter of twenty twenty five. During our Investor Day, we discussed three key pillars of our growth strategy: clinical, product, and market development.

[Joel Becker, CEO & Board Member at NeuroPace]

Today, I'd like to offer an update on the progress on our clinical development initiatives. We have made very good progress on three key programs, including our post approval study in adults with focal epilepsy, the NAUGHTLIST idiopathic generalized study, and the Pediatric Focal Epilepsy Indication Expansion Study. In April, at the American Academy of Neurology Annual Meeting, we presented three year effectiveness data from the post approval study of the RNS System. This study is the largest prospectively enrolled FDA reviewed study ever done in neuromodulation in the drug resistant epilepsy population. It showed an eighty two percent median reduction in seizures in adults treated with brain responsive stimulation for drug resistant focal epilepsy.

[Joel Becker, CEO & Board Member at NeuroPace]

Additionally, forty two percent of study participants had periods of more than six months of seizure freedom, which can be life changing for drug resistant epilepsy patients. Development of this level and type of evidence, as well as demonstration of these best in class results further demonstrates Neuropace's leadership in the field of neuromodulation treatment for drug resistant epilepsy. Moving to our ongoing NAUGHTLIST pivotal study. Planned progress was made during the quarter in line with expectations with study follow-up visits completed in March and primary safety and effectiveness endpoint evaluations ongoing. Study progress remains on track and we expect to announce data and file the FDA submission during the second half of twenty twenty five.

[Joel Becker, CEO & Board Member at NeuroPace]

In addition, we continue to work on a pediatric focal epilepsy indication with FDA and the National Evaluation System for Health Technology or NEST, an organization focused on the use of real world data to expand indications for use with a focus on underserved populations. This initiative leverages data from the Pediatric Epilepsy Research Consortium or PERC, which has gathered an extensive set of data from children treated with RNS therapy across 27 pediatric centers. Data is also drawn from more than 25 peer reviewed publications. We've had multiple discussions with the FDA on how this data can support an expanded indication and we're optimistic about receiving the NEST Mark, an important milestone that would validate the data as the basis for an approvable study protocol. Under this strategy, we expect to complete our data analysis and submit the data to the FDA in the second half of the year.

[Joel Becker, CEO & Board Member at NeuroPace]

I would now like to discuss our recently announced decision to terminate our distribution of SEEG products. The distribution agreement was appropriate for our company when it was signed three years ago. However, our RNS business and the opportunities associated with it have evolved significantly since that time and we now have clinical indication expansion initiatives and a product development pipeline that we expect to yield significant opportunities in the near term. We believe that the best use of our resources to create value for the NeuroPace community of patients, clinicians, and shareholders is by doing what we are uniquely positioned to do, which is to focus on the significant opportunities within our RNS portfolio and make the RNS system the standard of care for the treatment of drug resistant epilepsy patients. Our distribution arrangement will continue as usual through Q3 twenty twenty five, after which we will begin winding down the relationship in the fourth quarter of twenty twenty five, continuing through the first quarter of twenty twenty six.

[Joel Becker, CEO & Board Member at NeuroPace]

Importantly, the SAEG market is well served by multiple providers and we are confident our customers will have ample access to comparable diagnostic products through other channels. Our team is already working to ensure a smooth and supported transition for all of our customers. Financially, this change enhances our margin profile going forward as SEEG gross margins have historically been around 50% versus gross margin on our RNS system over 78%. From a revenue perspective, given the timing of this proposed change, we do not anticipate any material revenue impact in 2025 as we will sell remaining inventory during the transition period, the impact of which is fully reflected in our revised guidance that Rebecca will outline later on. Additionally, given the timing and magnitude of our RNS opportunities, we continue to expect a 20% plus CAGR through 2027 and remain on track for achieving cash flow breakeven by year end 2027.

[Joel Becker, CEO & Board Member at NeuroPace]

The first quarter of twenty twenty five is a strong start to the year operationally, financially, and strategically. I will now turn the call over to Rebecca to review our financial results for the first quarter as well as our guidance for the full year of 2025. Rebecca?

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

Thank you, Joel. Our revenue was $22,500,000 for the first quarter of twenty twenty five, representing growth of 24% compared to $18,100,000 for the first quarter of twenty twenty four. Revenue growth was primarily driven by increased sales of the RNS system, which grew 26% compared to the prior year. Excluding the contribution from NADALIST study cases in the first quarter of twenty twenty four, RNS sales grew 29%. Sales of Dixie Medical FEEG products also contributed to growth in the quarter.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

Gross margin for the first quarter of twenty twenty five was 77% compared to 73.6% in the first quarter of twenty twenty four. Gross margin for our R and S products was particularly strong this quarter, benefiting from improved manufacturing efficiency as fixed overhead costs were absorbed across a higher volume of units. This growth was partially offset by the lower gross margin from distribution of SEEG products. R and D expense was $7,400,000 in the first quarter of twenty twenty five compared with $5,800,000 in the same period of 2024. This increase was primarily due to increased personnel and program expenses for product development, including AI powered software and next generation device platform projects and expenses of our clinical trials.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

SG and A expense was $15,000,000 in the first quarter of twenty twenty five compared with $15,100,000 in the prior year period. This decrease was primarily due to a reduction in general and administrative personnel related expenses, partially offset by an increase in sales and marketing personnel related expenses and sales, field support and commercial operations costs. Total operating expenses were $22,500,000 in the first quarter of twenty twenty five compared with $20,900,000 in the same period of the prior year, representing an increase of 8%. With revenue growing by 24% for the quarter, we continue to demonstrate strong operating leverage, resulting from our focus on driving revenue growth while also effectively managing our operating expenses and gross margin. We plan to continue to focus on balancing these objectives as we drive toward cash flow breakeven.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

Loss from operations was $5,100,000 in the first quarter of twenty twenty five compared with $7,500,000 in the prior year period. We recorded $2,200,000 of interest expense in the first quarter of twenty twenty five compared to $2,300,000 in the prior year period. Net loss was $6,600,000 for the first quarter of twenty twenty five compared with $8,900,000 in the first quarter of twenty twenty four. Our cash burn in the first quarter of twenty twenty five was $7,500,000 Our cash and short term investments balance as of 03/31/2025 was $66,300,000 Bolstered by our recent successful equity raise, we expect our strengthened balance sheet will be sufficient to support our planned operations as represented in the long range plan we presented at our Investor Day in January until achieving cash flow breakeven. Our long term borrowings totaled $59,800,000 as of 03/31/2025.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

As a reminder, the final maturity of our debt is 09/30/2026. Regarding annual guidance for 2025, we are increasing our total revenue guidance to a range of $93,000,000 to $97,000,000 This updated guidance reflects an increase of approximately 16% to 21% over our reported revenue for 2024. This growth is expected to be mostly driven by an increase in sales of our RNS system, with growth from sales of SEEG products continuing to make a meaningful contribution. We expect our gross margin to be in a range of 73% to 75% for 2025. As noted previously, we may see some small variability quarter to quarter due to fluctuations in the proportion of SEEG revenue to total revenue and other factors.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

As recently announced, we expect the tariffs associated with the U. S. Government's recently implemented trade policies to have a minimal impact on our operations and financial results, including our gross margins. We expect operating expenses for 2025 to range between $92,000,000 and $95,000,000 including approximately $11,000,000 in stock based compensation, a noncash expense. I would now like to turn the call back over to Joel for closing remarks. Joel?

[Joel Becker, CEO & Board Member at NeuroPace]

Thank you, Rebecca. I am pleased to report that our team is successfully executing our plans and appreciate all their hard work. We are working to deliver on several sales, clinical and product development milestones throughout the remainder of 2025. These initiatives will further advance our plans to establish the RNS system as the leader in the treatment of drug resistant epilepsy patients. This concludes our prepared remarks.

[Joel Becker, CEO & Board Member at NeuroPace]

I would now like to turn the call over to the operator who will open the call for questions. Operator?

[Operator]

Thank you. We'll now be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your lines in the question queue. You may press star two to remove your question from the queue.

[Operator]

For participants using speaker equipment, it may be necessary to pick up your hands up before pressing the star keys. Our first question is from Mike Kratke with Leerink Partners.

[Mike Kratky, Senior Managing Director - Medical Devices & Technology at Leerink Partners]

Yes. Hi, everyone. Thanks very much for taking our questions and congrats on a solid quarter. Maybe just to start, would love to hear just on the 77% gross margin that you saw during the quarter. Based on your press release in April, I think Dixie has about 50% gross margin.

[Mike Kratky, Senior Managing Director - Medical Devices & Technology at Leerink Partners]

So does that imply that you had pretty negligible Dixie revenue this quarter? And are there any other one time dynamics that could explain that? And then I have a follow-up question.

[Joel Becker, CEO & Board Member at NeuroPace]

Thanks, Mike. And you're right, gross margin was strong here in the quarter. I'll ask Rebecca to comment on some of the dynamics in particular here as you know with regard to mix. But I would also note that as we've commented previously, our gross margin is primarily impacted by the performance of our R and S business. Our R and S business is the biggest fraction of our business by far and R and S business Gross margin is primarily impacted by volumes and efficiencies associated with what we do in the R and S business.

[Joel Becker, CEO & Board Member at NeuroPace]

So I'd say I'd point your focus toward R and S execution with, Rebecca, anything you'd add there on mix?

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

I would just emphasize that our gross margin was particularly strong, and we really attribute that to the R and S business, much more so than anything else, mix or anything else. We had just a really strong quarter, largely driven by increased production volumes in our R and S manufacturing.

[Joel Becker, CEO & Board Member at NeuroPace]

So Mike as you know we've talked about previously our production volumes being our primary driver there and then we have been taking price increases as well and I think we've done a particularly nice job of executing with customers on those reasonable price increases. And I think that's all just showing up here in the gross margin line.

[Mike Kratky, Senior Managing Director - Medical Devices & Technology at Leerink Partners]

Yes, understood. Super helpful. And maybe just one quick one. In terms of the commentary that you provided, it does sound like maybe that would be more of a durable impact in terms of fixed cost absorption, price increases. So how should investors think about the upside to that 78% gross margin that you called out in your early April press release?

[Joel Becker, CEO & Board Member at NeuroPace]

Well, I think as we've talked about previously as well and I'll invite any commentary from Rebecca here too, but gross margin is impacted by a number of different things and can move around a little bit from quarter to quarter. That said, I do think as you note here that it's worth mentioning that production volume as well as selling the value of the RNS system with customers are both durable and reproducible things that are actual operating levers that we have in the business. So while gross margin can certainly bounce around a little bit again from period to period, what we see as the underlying drivers are real operating things that are going on in the business.

[Mike Kratky, Senior Managing Director - Medical Devices & Technology at Leerink Partners]

Thanks very much.

[Joel Becker, CEO & Board Member at NeuroPace]

Thanks, Mike.

[Operator]

Our next question is from Frank Takkinen with Lake Street.

[Nelson Cox, Equity Research Associate at Lake Street Capital]

Hey, this is Nelson Cox on for Frank. Congrats on all the progress here. As it relates to Project CARE, can you talk a little bit about how referral volumes have been impacted in level four centers and geographies where you have had Project CARE established for a few quarters now? Just any color there, I think would be helpful.

[Joel Becker, CEO & Board Member at NeuroPace]

Thank you, Nelson. Yeah, it's a great question. And Care, as we mentioned in our prepared remarks, as well as in the release is certainly something that's been impacting the business. We're pleased to see it. And we do see both with regard to referral as well as implants contributing here to growth.

[Joel Becker, CEO & Board Member at NeuroPace]

As we've mentioned previously, we do see increasing referral volumes into level four centers from the level three and community centers. And we think that's logical for a couple of reasons. One, as people look more carefully at their drug resistant epilepsy patient population, patients are uncovered that maybe were out in that population that because they didn't have as close a relationship with or to the RNS technology or the centers that more frequently use RNS, they didn't have a place to refer those patients and we can help make those connections one and then two, as centers work to get up and running to become implanting centers, sometimes there can be a gap there either training or putting other assets in place and so while they're going through that process, then they'll identify patients that eventually they would want to treat locally, but during that period of time they're happy to have them referred out and implanted, and then get the patients back to manage them. So I think there are a couple of dynamics there where referral has absolutely been something as part of care that we see as a growth driver and we think it's both helpful in terms of more broadly increasing access to RNS as well as increasing access to patients that will be treated at the local centers.

[Nelson Cox, Equity Research Associate at Lake Street Capital]

Okay, that's helpful. And then you've talked about personnel investments. How should we think about kind of hiring cadence throughout the year as much as you can?

[Joel Becker, CEO & Board Member at NeuroPace]

You bet. Great question. Thank you. And we're being consistent here. We've talked in the past about incremental investment in our commercial organization.

[Joel Becker, CEO & Board Member at NeuroPace]

We've talked about how we did that in '23. We continued to in '24 and had talked about how that group then had come through training and was was then out working independently in their territories really in the second half of twenty twenty four. And so we're, we're pleased to see those folks beginning to have good impacts there and, and expect even even more so as they as they continue to get more and more experienced in their territories. And we expect to have similar dynamics in 2025. We continue to invest in and prepare the commercial organization both to take advantage of the opportunities that we have today in our core level four centers to increase adoption and utilization, to expand into care centers, and then to make sure we have people on the ground and ready in our targeted geographies to cover our targeted centers with the significant opportunities that we have coming in terms of indication expansion, both with a focus on IgE patients as well as pediatric focal patients.

[Joel Becker, CEO & Board Member at NeuroPace]

So, you know, I think we've we've demonstrated that we've been disciplined in our operating expense investment in the commercial organization. But you've also seen I think a consistency here in our investment there and we expect that to continue and it's fully reflected in how we've thought about the guide for the year as well as our plans.

[Nelson Cox, Equity Research Associate at Lake Street Capital]

Perfect. Congrats on the strong quarter guys.

[Joel Becker, CEO & Board Member at NeuroPace]

Thanks, Nelson.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

Thank you.

[Operator]

Our next question is from Ross Osborne with Cantor Fitzgerald.

[Ross Osborn, Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald]

Hey, guys. Congrats on the strong quarter. Looking at Project CARE, how difficult or easy has it been to get docs up to speed in performing RNS procedures in a community setting? And how much incremental support from your team do these doctors require relative to the level four centers?

[Joel Becker, CEO & Board Member at NeuroPace]

It's a great question, Ross. And it varies a bit by center. Maybe for context, I would have folks think a little bit about that when we start a center, and whether that's starting a current prescriber, or a new implanting physician in a current center, or we start a new center, the same types of training and support that we do to start new customers is the same either in level four centers or in entirely new centers. And so we know how to do that pretty well and our organization is is completely fossil and experienced in doing so. Now when you think a little bit more specifically about the dynamics around care centers, those centers can have a little bit of a different complexion center to center as well.

[Joel Becker, CEO & Board Member at NeuroPace]

Now while it's true that these centers and clinicians hadn't previously been able to implant the RNS system prior to the care expansion, a number of them have come from places where either as part of their fellowship or as part of where they previously practiced, they're familiar with neuromodulation and familiar with RNS. And so of course there's refresher and appropriate understanding of you know the technology advancements that have been made because we continue to improve the technology. But again, a lot of the of the folks that we're involved with do have some familiarity. So there's there's new work that needs to be done, in particular in a couple of areas, one in contracting. So you know, we've got to get contracts put in place with these centers and everything that goes along with that where, you know, with current customers, we've already gone through that, number one.

[Joel Becker, CEO & Board Member at NeuroPace]

And number two, then for folks that either have infrastructure that needs to be put in place or referral network development that needs to take place, those are things that that we work on specifically when we open these new centers. So there certainly is support that's required. And so none of that easy. But with regard to your question of difficult and easy, it's really the execution around that versus thinking about anything as difficult or easy as things we haven't done before. These are all things we've done before with people who are out there doing them every day.

[Ross Osborn, Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald]

Great. And then as you've moved into the community setting, have you seen more patients coming into the funnel that are requesting your RNS system?

[Joel Becker, CEO & Board Member at NeuroPace]

It's a great question. I think as we get, so the short answer would be not really, not yet. As we expand out into the care centers, you know, the work there is really on the individual centers and the people's practices associated with those centers and the patients that they're already managing. And generally, there's a good group to work from there. That said, where we have seen increasing patient engagement is is an in parallel set of activities that we haven't talked about quite as much, but we gave some visibility to in January at our Investor Day is our increased focus on direct to patient.

[Joel Becker, CEO & Board Member at NeuroPace]

And as part of direct to patient, we are both our activity as well as the targeting of our activity here and here's where the Venn diagrams overlap a little bit with care because of the digital media nature of the direct to patient work that we do. We can even target that work into geographies to where we have specific care accounts. We do see increasing numbers. We think direct to patient is a good channel for us to create awareness and do a certain amount of education and get people into the appropriate physician group as well as our nurse navigator team. And we're doing more of that and we think we see elasticity.

[Joel Becker, CEO & Board Member at NeuroPace]

As our activity rates are going up, we're also seeing increased rates of patient engagement. So, the two things are working together. And I do think over time, we'll see kind of the traffic merge here on direct to patient as well as care.

[Ross Osborn, Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald]

Thanks for taking our questions. Congrats again.

[Joel Becker, CEO & Board Member at NeuroPace]

Thanks, Ross.

[Operator]

Our next question is from Priya Sakdeva with UBS.

[Priya Sachdeva, Director - Equity Research at UBS Group]

Hi, guys. Thanks so much for taking the question and congrats on a great quarter. Maybe first, if I could just follow-up on Mike's question from earlier on the gross margin front. Your guidance implies a step down for the rest of the year. So I guess we're just trying to understand what's driving that step down in an environment where we should see R and S growth expanding and driving margin expansion and declining DICI revenue.

[Priya Sachdeva, Director - Equity Research at UBS Group]

So if you could just expand a little bit on the thought process there. Thanks.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

Sure. Hi, Priya. So as we said in our prepared remarks, gross margin was particularly strong in the first quarter and it can fluctuate quarter to quarter. So we're really pleased by the performance in Q1. There are a number of things, small things that can add up and number of things contributed in the first quarter.

[Rebecca Kuhn, CFO & VP of Finance and Administration at NeuroPace]

But given that it can bounce around a little bit quarter to quarter, where we feel good about the guidance that we established earlier and we're sticking with that guidance.

[Priya Sachdeva, Director - Equity Research at UBS Group]

Okay, understood. That was super helpful. And maybe just one follow-up if I could. Congrats on presenting the post approval study data, super compelling. I just wanted to know if there's any early feedback from physicians that you're hearing on the ground and how you're going to leverage that momentum into Nautilus and the peds indication? Thanks.

[Joel Becker, CEO & Board Member at NeuroPace]

Great question Priya, thank you. And yes, so just as a reminder for everybody, on the April 7, the post approval study data was presented at the American Association of Neurology meeting and that data was the largest FDA reviewed prospective neuromodulation study in the focal drug resistant epilepsy population, three twenty four patients, 32 centers. So a significant study with a significant group of patients and a high level of evidence. And so since that time, the sales force so about a month, the sales force has had the information has been out engaging with and talking to customers. And it's been great to see the reaction both in some cases customers reacting in a way where that can be new information to them, especially some of our newer customers that being particularly encouraging and supportive of their emerging practices with RNS.

[Joel Becker, CEO & Board Member at NeuroPace]

With some who are maybe more familiar with neuromodulation more broadly, it's an opportunity for us to start the conversation about our restart the conversation in some cases and start the conversation around RNS and how RNS is different and better than other neuromodulation choices that customers have. That that's done a couple of things, both of which we think good. One, that has caused us to be able to, you know, have the reason why. Here's what's new. Here's the new information to talk about when it comes to RNS and we've got that.

[Joel Becker, CEO & Board Member at NeuroPace]

The second is then really engaging customers and seeing them ask a lot of questions about the data. Okay, well, so tell me about this part of the data or tell me about that part of the data. And those are really engaging opportunities for us that, you know, allow for education and discussion about how RNS can play a role in people's practices. So we've we've been really pleased with the reaction so far. You know, I think it's it's logical that we'd be pleased with the reaction so far.

[Joel Becker, CEO & Board Member at NeuroPace]

When we look at the data, and I know many of you here on the call are familiar with it, but again as a reminder, median seizure reduction rates sixty two percent at six months, eighty two percent at three years. When you take a look at VNS and DBS, so sixty two percent median seizure reduction at six months for RNS, thirty percent for VNS, and twenty three percent for DBS. When you take a look at three years, eighty two percent for RNS, forty four percent for VNS, and forty percent for DBS. So the data is different, and it's different both with regard to median seizure reduction as well as seizure freedom. And this is an area where we've seen, you know, a lot of interest from customers as well.

[Joel Becker, CEO & Board Member at NeuroPace]

When you kind of take it back to your question about customer interest, both the median seizure reduction rates as well as the seizure freedom rates. The seizure freedom rates, more than forty percent of patients in the study saw more than six months of seizure freedom. And that can be life changing for an epilepsy patient. And again, it's different than other options people have. At last follow-up, twenty seven percent of RNS patients were seizure free.

[Joel Becker, CEO & Board Member at NeuroPace]

At last follow-up in their most recent studies, eight percent of ENS and four percent of DBS were seizure free. So it's been great to get out there. It's always great for a sales force to have something new. And we think about the post approval study data is like a product. And so we've launched it like a product.

[Joel Becker, CEO & Board Member at NeuroPace]

And so to engage with new as well as current customers in both education, as well as in comparison with other choices that they have for their patients. The post approval study data has been great to get out and get started with and we look forward to to that impact throughout the year. Thanks, Priya.

[Operator]

Our next question is from Rohan Patel with JPMorgan.

[Rohin Patel, Vice President at JP Morgan]

Hey, thanks for taking the question. I also I wanted to follow-up on the previous question and specifically on Project Care. You talked about an increase in implants and referrals through the program versus fourth quarter. Is there any more kind of quantitative color you can provide as far as like percentage of total implants and any potentially any KPIs you can discuss about just how the three year post approval data may have contributed to some momentum in the community setting during the quarter? And then I had a follow-up.

[Joel Becker, CEO & Board Member at NeuroPace]

So a couple of things there. Thank you, Ryan. I appreciate the interest in Care. I think what I punch up in terms of growth contribution is that R and S growth in the quarter was really driven by a couple of things. One implants and referrals from care centers both on a sequential as well as yearly as you might imagine comparison basis.

[Joel Becker, CEO & Board Member at NeuroPace]

And then a significant amount of growth as well from new prescribers in our Level four centers. So you'll recall the three legs of the growth strategy here in the near term being one, increasing adoption and utilization in level four centers, two, expanding into care, and three, expanding indications. And so all three of those things are what are driving here over this period of time increased access to RNS. And so in Q1, the significant drivers were implants and referrals from care and increased numbers of prescribers in level four. To the second part of your question, I don't think that with the post approval study data, we really saw an impact in Q1 just given the timeline.

[Joel Becker, CEO & Board Member at NeuroPace]

So the data was presented on the April 7. And so we wouldn't have we wouldn't have had the launch of the data with the commercial organization out engaged to the way they have been prior to that in them getting those materials.

[Rohin Patel, Vice President at JP Morgan]

Got it. That's that's helpful. And then I also wanted to ask on some of the new RNS product features and the next generation platform. At the analyst day, you talked about a new software iteration potentially later this year. So just wanna get a refresh timeline for that and how you're thinking about potentially monetizing it.

[Rohin Patel, Vice President at JP Morgan]

Will it be some add on subscription or would it just be a free of charge software upgrade for existing customers? So how should and then how should we think about the timing as well for a next generation RNS? Thanks.

[Joel Becker, CEO & Board Member at NeuroPace]

Great questions and thanks for the diligence in remembering and following up on that from the Investor Day. We remain on track with the software release for 2025. We showed it in the second half of the year and we remain on track for that. In terms of monetization, we talked a little bit about that at the Investor Day where there may be options in terms of monetizing both the data as well as the suite of software tools in future business models. But here, excuse me, here what we're really focused on is increased ease of use and efficiency and how that relates to more people choosing RNS as a therapy in our current and traditional business model.

[Joel Becker, CEO & Board Member at NeuroPace]

So you can expect that the software releases for the the RNS three twenty to be really driving increased implants through ease of use efficiency and the ability to monitor and manage patients. Nothing further to report here that I'd update from on the next generation platform outside of what we presented at the Investor Day. You know, we continue that work and things are going apace. But I guess the concrete point here would be that, know, just confirming the second half twenty five to later this year on the software release, we remain on track.

[Rohin Patel, Vice President at JP Morgan]

Great. Thanks, Joel.

[Joel Becker, CEO & Board Member at NeuroPace]

Thank you.

[Operator]

Question is from Michael Polar with Wolfe Research.

[Mike Polark, Senior Equity Research Analyst - Medical Devices at Wolfe Research, LLC]

Good afternoon. Thank you. I just have one on the Dixie exit. When the deal was done a few years ago, it was kind of new product to sell, revenue synergy, but also visibility given the role that that product plays in the diagnostic process. And so as it goes away, do you feel like you lose anything there, Joel, on upstream visibility?

[Mike Polark, Senior Equity Research Analyst - Medical Devices at Wolfe Research, LLC]

Or did that part of the thesis not pan out? If you do feel like it was helpful, what strategies might you employ without Dixie to kind of keep the visibility of the funnel high? Thank you.

[Joel Becker, CEO & Board Member at NeuroPace]

Thank you, Mike. And I appreciate the diligence here with regard to leveraging Dixie and everything we learned and everything that we've accomplished with that relationship. You're right, when we engaged in that relationship in addition to like you say having it was great to at that time have another product in the bag to sell and then additionally allowing further almost what we'll call kind of vertical integration upstream into the patient referral and diagnostic process and given us visibility there. And I think we did get that and we certainly did that get that in some places. I think we've talked about previously where in places for example, where we have more senior, more well established reps or reps that are or a personnel that kind of come from the industry in the field.

[Joel Becker, CEO & Board Member at NeuroPace]

They have a lot of those relationships and so there wasn't quite as much incremental in that case. However, in some places, especially where maybe we had newer people or people who were newer to this space, it was a ready point of entrance to have those discussions. So I think a couple of things there. One, we've learned about that and we've learned about those upstream processes and how it can be important to have that visibility to patients. And that's something we can continue to do even today with with the RNS system.

[Joel Becker, CEO & Board Member at NeuroPace]

And so that that's muscle memory that will continue to exercise. And then secondly, we've made the point that and I would want to reemphasize it that in our relationship with Dixie, we want to work to transition all of that very well. We have a common set of customers here and everybody really can rally around the customer. And so it's our goal to have that transition in that handoff go well and have all those relationships remain in place such that, you know, we can all work and benefit from the work that's been done as well as the work that we'll do going forward. So I fully expect that we'll be able to leverage a lot of the relationships that have been developed and built to make sure that the best care gets delivered for patients.

[Joel Becker, CEO & Board Member at NeuroPace]

And we've learned a fair bit along the way that we can take along with us too.

[Mike Polark, Senior Equity Research Analyst - Medical Devices at Wolfe Research, LLC]

Thank you.

[Joel Becker, CEO & Board Member at NeuroPace]

Thanks, Mike.

[Operator]

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Joel Becker for any closing.

[Joel Becker, CEO & Board Member at NeuroPace]

Thank you. As mentioned earlier, during the first quarter here of 2025, NeuroPace continued to make significant progress in advancing our mission, that mission of helping patients who suffer from debilitating seizures. And we're doing that by focusing on increasing access and growing our business and executing on key initiatives here to position the business for future growth to continue to advance that mission. During the quarter, we grew by 24%, we grew RNS by 26%, twenty nine % when thinking about Nautilus implants being backed out. We had a successful Investor Day.

[Joel Becker, CEO & Board Member at NeuroPace]

We completed patient follow-up on Nautilus. We raised $75,000,000 in equity evolving our shareholder base of a number of significant achievements. We're executing the strategy and we're building momentum. We've got significant opportunities today in the near future and we're just getting started. And I'd like to thank the NeuroPace team for all their hard work and accomplishments during the quarter that engendered this progress and we look forward to keeping you updated as we move forward. Thank you.

[Operator]

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.

Participants

Executives

• Joel Becker, CEO & Board Member
• Rebecca Kuhn, CFO & VP of Finance and Administration

Analysts

• Jeremy Feffer, Managing Director at LifeSci Advisors, LLC
• Mike Kratky, Senior Managing Director - Medical Devices & Technology at Leerink Partners
• Nelson Cox, Equity Research Associate at Lake Street Capital
• Ross Osborn, Director, Lead Research Analyst - MedTech and Diagnostics at Cantor Fitzgerald
• Priya Sachdeva, Director - Equity Research at UBS Group
• Rohin Patel, Vice President at JP Morgan
• Mike Polark, Senior Equity Research Analyst - Medical Devices at Wolfe Research, LLC