electroCore Q1 2025 Earnings Call Transcript

Quartr
Provided by Quartr
May 7, 2025

There are 5 speakers on the call.

Operator

Greetings and welcome to the Electrocor First Quarter twenty twenty five Earnings Conference Call. At this time, all participants have been placed in a listen only mode. Please make sure to mute yourself. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded.

Operator

It's now my pleasure to introduce your host, Dan Goldberger, Electrocor's Chief Executive Officer.

Speaker 1

Thank you all for participating in today's Electrocor earnings call. Joining me today is Joshua Lev, our Chief Financial Officer and our Investor Relations firm, FNK IR. Earlier today, Lectricor published results for the first quarter ended 03/31/2025. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during the call that include forward looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.

Speaker 1

Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation any guidance, outlook or future financial expectations or operational activities and performance are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements. Accordingly, you should not place undue reliance on these statements. For a list of the risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission.

Speaker 1

Electrocor 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. This conference call contains time sensitive information that is accurate only as of the live broadcast today, 05/07/2025. This quarter marked an acceleration of electroCore's transformation into a broader bioelectronic technology company offering medical devices and wellness products for a variety of customers. This transformation significantly broadens our addressable market and diversifies our revenue. A key component is the acquisition of the Quell product line from Neurometrics Inc.

Speaker 1

I'll discuss this acquisition later in the call. ElectroCore was founded in 02/2005 and pioneered noninvasive vagus nerve stimulation. Today, the company offers a suite of noninvasive bioelectronic technologies that reduce chronic pain and improve quality of life for patients and consumers in The United States and select markets overseas. Our portfolio includes a robust pipeline of future indications and use cases as clinicians, researchers and wellness advocates advance our understanding of the benefits of bioelectronic technologies. Our mission is to improve health and quality of life through innovative, noninvasive bioelectronic technologies.

Speaker 1

All our product offerings are rooted in clinical science. Science and data will always be our guiding star. We have demonstrated sustained growth with a five year compound annual growth rate of approximately 58%. In the first quarter of twenty twenty five, we reported revenue of $6,700,000 a 23% increase over the first quarter of the prior year. Gross margins were 85 in the first quarter of twenty twenty five as compared to 84% last year, and we expect our gross margins to remain in the mid-80s.

Speaker 1

Prescription gammaCore VA revenue grew 22% to $4,700,000 in the first quarter of twenty twenty five from $3,900,000 during the first quarter of twenty twenty four. '1 hundred and '70 '5 VA facilities have purchased prescription gammaCore products through 03/31/2025, as compared to 151 through 03/31/2024. I am pleased to report a return to sequential growth in the VA hospital system after a slowdown in the fourth quarter due to macro forces and restructuring of our field sales organization. As these headwinds have abated, we are regaining momentum. We started adding field sales headcount in the second quarter of twenty twenty five.

Speaker 1

March and April 25 monthly revenues in our VA channel have accelerated to about $1,700,000 The VA Hospital Administration Headache Centers of Excellence estimates approximately six hundred thousand patients are being treated for headache in the VA hospital system, including approximately twenty four thousand cluster headache patients. We believe there are as many as five hundred and fifty thousand fibromyalgia patients in the VA hospital system based on published incidents and prevalence data. We continue to make our therapy available either through our federal supply schedule contract or via our distribution partnership with Level Government Services. Since 2022, we've dispensed gammaCore devices to approximately 9,500 veterans leveraging these contracting mechanism, which we believe represents approximately one point six percent of the total addressable headache market within the VA system. Neurometrics has previously dispensed approximately three fifty Quell fibromyalgia stimulators in the short time that product has been available through the VA, leaving plenty of room for growth of the Quell fibromyalgia product line.

Speaker 1

Longer term, we will evaluate market access through other third party payer systems and hospital networks for our prescription product suite. TRUVEGA is our direct to consumer general wellness brand for stress, relaxation, quality of sleep and mental acuity. In the first quarter of twenty twenty five, TRYbega net sales were approximately $1,100,000 a 187% increase from the first quarter of twenty twenty four. Our revenue return on advertising spend was approximately 2.26 for the first quarter of twenty twenty five. In other words, during the first quarter of twenty twenty five, for every $1 we spent on media, we generated $2.26 of revenue.

Speaker 1

TRUVEGA return rates remained steady at approximately 10% to 11% of shipments for the first quarter of twenty twenty five. We are increasing our media budget 5% every month to continue driving growth in this channel. Since launching TRUVEGA, we have sold more than 14,000 handsets and customers have conducted in excess of 500,000 sessions using the mobile app. We believe that the TRUVEGA business will continue to scale if we can maintain or improve these metrics and add product offerings. Most of our TRUVEGA revenue comes through our e commerce platform, www.truvega.com.

Speaker 1

Following the successful launch of TRUVEGA Plus in April 2024, we began exploring additional channels to reach consumers, including influencers, affiliates and resellers. In February 2025, we launched TRUVEGA Plus on Amazon. Since launching on Amazon, more than 200 units have sold through that platform. More recently, we announced that TruVega Plus now works with the Apple Health app, providing our TruVega Plus customers using the iOS operating system with an ability to better track their health. Our U.

Speaker 1

S. Prescription channel recorded revenue of $289,000 during the quarter ended 03/31/2025, down 33% from Q1 twenty twenty four. As expected, many cash pay customers have migrated to the TRUVEGA brand as awareness grows, and we continue modeling flat revenue from this prescription channel for the time being. As of 03/31/2025, we have enrolled 144 TruVega Plus partners, including 49 gs concierge accounts who offer both product lines. We look forward to adding Quell Fibromyalgia to these accounts as well.

Speaker 1

Revenue from channels outside The United States or OUS of $513,000 for the quarter ended 03/31/2025, increased from $449,000 for the same time last year. Most of our OUS revenue continues to be generated in The United Kingdom by prescription gammaCore sales funded by NHS, and we modeled flat revenue from this category for the time being. We are on track to launch TRUVEGA in The UK and Canada later this year. Josh will discuss operating expense and cash trajectory in more detail. Structurally, the first quarter always has higher disbursements as we pay down liabilities accrued over the course of the prior year and incur legal and audit expense associated with year end reporting.

Speaker 1

This year, we had additional onetime expense for severance associated with an internal restructuring and finalizing and closing the acquisition of Neurometrics. While we used about 4,200,000 in cash during the first quarter for all of these disbursements, our modeling with conservative revenue growth anticipates about $4,000,000 net cash required for the rest of 2025. We're currently on track to spend less than $2,000,000 in net cash in the second quarter with further declines expected as revenue grows throughout the year. Let me take a moment to walk you through our path to profitability. Seasonal and nonrecurring expenses of about $665,000 incurred in the first quarter will not repeat in the second, third and fourth quarters.

Speaker 1

Meanwhile, the contribution margin of incremental revenue is about 65% with our current product mix. For all these reasons, we model that the business could be cash neutral with quarterly quarterly revenue of about $9,000,000. That's about 34% more than the $6,700,000 of revenue we are reporting for the first quarter, and I believe we can get there towards the end of this year or early in 2026. Now I'd like to turn to our business development activities. Last week, we closed the previously announced acquisition of Neurometrics, giving us access to the Quell platform and accelerating our mission to become the clear leader in the bioelectronic health and wellness sector.

Speaker 1

U. S. Consumers spend nearly $20,000,000,000 annually out of pocket for chronic pain treatments, including headache and fibromyalgia, among others. It's estimated that approximately six percent of US adults suffer from fibromyalgia, and there are few credible treatment options available today. Quell is an exquisite treatment modality available by prescription for treating fibromyalgia and over the counter for relieving lower extremity pain.

Speaker 1

The product line has been underfunded for the last year and a half as Neurometrics went through its strategic process. Quell revenue was about $700,000 in 2024 and $170,000 in the first quarter of twenty twenty five based on preliminary unaudited numbers. We have moved the inventory and assets to our Rockaway, New Jersey facility. We will be supply limited until we can restart production in Rockaway. So Q2 twenty twenty five revenue is likely to be similar to Q1 twenty twenty five.

Speaker 1

Once Rockaway is up and running, we will add prescription Quell Fibromyalgia to our prescription distribution channels and Qual two point o for lower extremity pain to our direct to consumer channels. I'm optimistic that we'll be able to increase revenue in the back half of twenty five and generate meaningful revenue from the product line in 2026. Fibromyalgia is a prescription, noninvasive neurostimulation device. Quell Fibromyalgia is FDA authorized, covered by 27 issued U. S.

Speaker 1

Utility patents, and Neurometrics invested more than ten years and tens of millions of dollars in clinical work and product development. Wellfabromyalgia provides flexible, precise, high power neurostimulation in a form factor the size of a credit card. Our business becomes more complex as we add new products and services like Quell. We'll migrate towards reporting revenue results by channel as well as by product category as we go throughout the year. We're excited about the acquisition of Neurometrics and are confident that we can leverage our established distribution channels, especially the VA hospital system, to accelerate adoption of the Quell Fibromyalgia solution.

Speaker 1

On 02/27/2025, we announced a distribution agreement with Spark Biomedical giving us access to the Sparrow Ascent product line, an FDA cleared noninvasive transcutaneous auricular neuromodulation device available by prescription for the treatment of opioid withdrawal symptoms. We plan to offer Sparrow in a limited number of VA hospital sites beginning in the second quarter of twenty twenty five. If successful, we hope to expand distribution later this year. We believe the total addressable market in The United States for Sparrow is $2,400,000,000 associated with opioid detox and another $3,700,000,000 in relapse prevention. More information on Spark Biomedical can be found at www.sparkbiomedical.com.

Speaker 1

Now I'll turn the call over to Josh for a review of our financials and select guidance. Josh?

Speaker 2

Thank you, Dan. Net sales for the quarter ended 03/31/2025, were $6,700,000 an increase of 23% as compared to $5,400,000 for the quarter ended 03/31/2024. The increase of $1,300,000 is due to an increase in net sales across our prescription gammaCore devices sold in The VA and outside The United States and revenue from the sales of our non prescription general wellness TruVega products. Gross profit for the quarter ended 03/31/2025, was $5,700,000 as compared to $4,600,000 for the quarter ended 03/31/2024. The increase in gross profit was primarily driven by the increase in net sales.

Speaker 2

Gross margin was 85% for the quarter ended 03/31/2025, as compared to 84% for the quarter ended 03/31/2024. Total operating expenses in the first quarter of twenty twenty five were approximately $9,500,000 as compared to $8,400,000 in the first quarter of twenty twenty four. Research and development expense in the first quarter of twenty twenty five was $642,000 as compared to $399,000 in the first quarter of twenty twenty four. This increase was primarily due to an increase in headcount. We expect R and D expense to continue at this level for the next few quarters.

Speaker 2

Selling, general and administrative expense in the first quarter of twenty twenty five was $8,900,000 as compared to $8,000,000 in the first quarter of twenty twenty four. This increase was primarily due to our greater investment in selling and marketing activities consistent with our increase in sales and increase in expenses associated with year end reporting and separation costs associated with headcount reductions. For the remainder of 2025, we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts and expect our general and administrative expenses to be in line with 2024 expenses. GAAP net loss in the first quarter of twenty twenty five was $3,900,000 compared to $3,500,000 in the first quarter of twenty twenty four. The increase in GAAP net loss is primarily attributed to a change in below the line items, including $83,000 of interest income and $48,000 of benefit from income tax, offset by $164,000 of transaction fees in the first quarter of twenty twenty five as compared to $225,000 of interest income and $122,000 of benefits from income tax, offset by just $4,000 of other expenses during the first quarter of twenty twenty four.

Speaker 2

Net loss per share for the first quarter of twenty twenty five was $0.47 as compared to a $0.53 per share net loss in the first quarter of twenty twenty four. Adjusted EBITDA net loss in the first quarter of twenty twenty five of $3,100,000 was flat compared to adjusted EBITDA net loss of $3,200,000 in the first quarter of twenty twenty four. A reconciliation of GAAP net loss to non GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release. Cash, cash equivalents, marketable securities and restricted cash at 03/31/2025, totaled approximately $8,000,000 as compared to approximately $12,200,000 as of 12/31/2024. Net cash used in operating activities for the first quarter of twenty twenty five was $4,400,000 as compared to $1,300,000 in the fourth quarter of twenty twenty four.

Speaker 2

The increase in net cash used in operating activities is due to seasonal expenses and changes in working capital typically realized in the first quarter of the year. For the full year of 2025, we expect total revenue to be approximately $30,000,000 and net cash used for the next three quarters to be between $3,800,000 and $4,300,000

Speaker 1

And now I'll turn the call back to Dan. Thank you, Josh. I'm excited about the opportunities ahead. Revenue continues to grow in our core business lines, and we see momentum in both our VA and direct to consumer channels. We're moving through the second quarter of twenty twenty five with new bioelectronic products and technologies that we believe fit extremely well into our established channels.

Speaker 1

In addition, we are past the quarter that carries the highest level of CAF disbursement, and I'm optimistic that our operating metrics will continue to improve as revenues grow, the onetime expenses fall away, and we maintain discipline over operating expenses. Demand

Speaker 2

for gammaCore in

Speaker 1

the VA channel continues to grow based on our clinical performance and our increased presence in the field. Our VA revenue had a slow January but accelerated nicely in March and April. We received a new FSS contract, which will be effective on 06/15/2025, for at least five years until 02/1930, and we've begun working with Level to make the Quell and Sparrow product lines available through their government contracting platforms. We rely on our field sales organization to drive revenue growth in the VA hospital and other prescription and B2B channels. During the second quarter of twenty twenty five, we've refocused our efforts on onboarding new headcount.

Speaker 1

As of May 2025, we completed a restructuring of our field sales function, and we have 49 active ten ninety nine entities representing about 80 sales agents, including sub reps, managed by 10 territory business managers who are salaried employees. We expect the size of our team to grow in the second half of twenty twenty five as we balance investment in future revenue growth with the path to profitability. TriVega Plus has been favorably received by the market since its April 2024 launch. The brand continues to show tons of potential as a direct to consumer general wellness offering. We sell TRUVEGA products direct to consumer through our e commerce site, www.truvega.com and amazon.com.

Speaker 1

Truvega is also available through a small but growing number of business to business to consumer initiatives such as Truvega Partners, Perks at Work and through a handful of resellers. We continue exploring the expansion of the Tribega proposition through new product offerings and new channels like Amazon and new features like the integration with the Apple Health app. The pipeline of interest from different branches of our active duty military continues to develop through our tax products, and tax stim revenue will continue to be hard to predict as active duty units evaluate and purchase in bulk for pilot deployment. For the first quarter of twenty twenty five, our sales and marketing expense increased by approximately $432,000 while sales grew by $1,300,000 We believe this leverage is sustainable as we begin selling additional products such as Quell and Sparrow Ascent through our existing channels. We continue working towards adding new products to our established sales channel.

Speaker 1

The acquisition of Neurometrics and the distribution agreement with Spark Biomedical will provide patients and prescribers with more noninvasive bioelectronic therapies for chronic pain and opioid withdrawal issues, respectively. These products, along with the existing products that we currently sell into the prescription VA channel, allow our field sales team to offer a growing suite of bioelectronic self administered therapies for certain debilitating conditions. As we continue to add new products to our established channels, we will also continue working towards additional indications for prescription gammaCore to treat post traumatic stress disorder and other clinical opportunities. I do not think we have much exposure to the recent changes in tariff policy. A small fraction of our direct material costs, mostly batteries, comes from China and Southeast Asia.

Speaker 1

Even if the cost of those components doubles, it would amount to only a few points of our gross margin. In summary, I believe we are poised for growth and improved operating metrics through the remainder of 2025, and we will have a variety of strategic levers to continue growing the business. I want to make a take a moment to recognize the extraordinary efforts and success of the Neurometrics team led by Doctor. Shay Ghazani. I hope that we can be good stewards of their legacy.

Speaker 1

At this time, I'll return the call over to the operator. Operator, please open the line for questions.

Operator

Thank you, Dan. We're now going to open up the Q and A session. There are two ways you can ask a question during this part of the webinar. The first option is to use the raise your hand feature located at the bottom of your screen. When you click that, the operator will know you want to ask a live question and you'll be placed into queue to be called on.

Operator

Just a quick note, when you're called on, you may need to unmute your microphone. The second option is to use the Q and A widget. This allows you to type out your question and we'll take questions from there as well. We don't get to your question today due to time constraints, someone from the IR team will follow-up with you after the call. Now that we'll now with that, we'll pause for a moment to give everyone time to add their questions to the queue.

Operator

First question comes from Tyler Berson.

Speaker 3

Hello, Josh and Dan, can you hear me?

Speaker 1

Yes. Hi, Tyler. How are you today?

Speaker 3

Doing great. Congrats on the quarter. Really excited to see what Neurometrics can do here in 2025. Couple of quick questions on that product line that maybe you could help me out with. The first one, so it looks like the company, specifically across the board for Neurometrics, was getting a gross margin of about 55% at the end of twenty twenty four.

Speaker 3

What kind of estimates do you have for Quell in regarding margin when you kind of get to the end of this year with manufacturing setup?

Speaker 1

Great question, Tyler. And unfortunately, I don't have a precise answer for you yet. In the last week, we've shut down the manufacturing line in Woburn, moved the raw material and finished goods here. Once we restart the manufacturing line and and move the supply chain. Right?

Speaker 1

The the various vendors that supply components to us will be able to better answer that question. In general, I think our overhead absorption should be substantially better than the legacy Neurometrics structure. They're they're unfortunately, as the business declined, they were not they were under absorbing in their previous structures. So I'm optimistic that we'll be well above the the 60% mark, but I really can't be any more precise than that right now. In ninety days, when we do our next call, we'll have better numbers for you.

Speaker 3

Great. And in that same kind of vein then, you you kind of highlighted there at the end that you're not really concerned about tariff complications regarding the electroCore product line. Regarding the composition of the Quell, are there any components or parts of that device that might be more subject, to kind of tariff exposure?

Speaker 1

We don't think so. The, the electromechanical components were generally gen were they they generally come from domestic suppliers. There are some comp components that do come from Southeast Asia, but we've got plenty to to get started with. So I think the the exposure is similar to what we have in our Truvega and Saphyr product lines.

Speaker 3

Okay. Fantastic. Well, I have any more questions, I'll get back in queue. Thank you both again.

Speaker 1

Thank you, Tyler.

Operator

Thank you. And a reminder again, if you have a question, you can use the raise your hand button or use the Q and A widget. The next question comes from Jeff Cohen. The question is, hi, Dan. Pro form a cash is is now at what?

Operator

How does it look after the neuro close?

Speaker 1

So the cash at March 31 is probably about where we are today. The total cost of the transaction was not cash the risk of oversimplifying, the compensation to shareholders of Neurometrics came from cash that was previously on the Neurometrics balance sheet. We had some out of pocket expenses for our lawyers and our auditors, but those were relatively small.

Operator

Great. Thank you. Another question follow-up. Any development news on the Kaiser system?

Speaker 1

So we continue to have small revenues through our Kaiser relationship. We've increased the number of prescribers. I mentioned in my prepared remarks that we are adding headcount to our sales function and specifically we are adding headcount to focus on the Kaiser opportunity on the West Coast. So I continue to see that as a back half of this year opportunity.

Operator

Great. Thank you. We're going to take our next question from RK from HCW. RK?

Speaker 4

Can you hear me?

Speaker 1

Yes. Hi, RK.

Speaker 4

Hi. So regarding the top line revenues that you just announced, how should we think about growth of that? And also on the tax team product, I know it is very lumpy and it is very difficult to to model out of the credit. But in general, you know, what are the pushes and pulls on that on that part of this on that segment of the business?

Speaker 1

Yeah. I'll start with with TaxDim first. I think we said we had $90,000 of revenue from TaxDim in the March. We will have a similar revenue line in the current quarter.

Speaker 1

We have RFPs, that are out there for several million dollars of business, but I can't see beyond this sort of hundred thousand dollars per quarter revenue line that that we're currently running. Most of our revenue, as you know, comes, from our prescription gammaCore business, and most of that is in the VA hospital system or in in The United Kingdom the NHS. You know, the the VA hospital business returned to sequential growth. April was strong, and so I think we're gonna see, you sort of mid to high single digit sequential growth in that channel in the current quarter. And with the addition of Quell, with the addition of headcount in the field, I think we're going to be accelerating beyond that sort of low sorry, mid to high single digits back into the teens mid teens growth as we go through the year.

Speaker 4

Fantastic. On the VA business, as you said, you know, you have additional three years that you but you recently got your got approved. So with with that, when we need your wings, are you trying to increase, you know, more more support in in in terms of sales in the VA hospital? And, you know, you know, with now that you have additional products like Spiral product, how how how much resources are you spending, and how quickly can you expand that business? I know you're kind of keeping your eyes on profitability, but, you know, if that's not, you know, something that you need to be concerned every quarter, how much more can you can you spend to grow that business as we can?

Speaker 1

Yeah. So excellent question. It's a five year contract, not a three year. Sorry. Just to be clear, it's okay.

Speaker 4

Sorry. Sorry.

Speaker 1

I have to brag when we can. Josh did a great job on that. You know, we had we restructured our sales leadership somewhat, and and I don't wanna talk too much about hiring practices on a public call. But we've added two more employees in April. We're gonna add some more w two employees as we go through the current quarter.

Speaker 1

Each w two employee gives us an opportunity to engage as many as eight to 10 additional ten ninety nines. And so expect that you'll see us adding headcount pretty aggressively now that we've gotten through the more painful restructuring part of our sales alignment. So sorry about being a little bit vague, but I need to be careful when we talk about personnel issues.

Speaker 4

No. No. I I totally understand that. And then, you know, on the TruVega business, it it seems to be growing pretty pretty good. So what is the how much I know you're started talking about utilizing Amazon and other resellers.

Speaker 4

How much of that effort is actually, you know, converting into into meaningful dollars? I I know it's early stages, but still, what sort of KPI are you are you watching and and you're actually recognizing?

Speaker 1

Yeah. So Amazon, I think we said in our prepared remarks, it was a few hundred units

Speaker 4

Mhmm.

Speaker 1

That we sold through Amazon, which is a pretty fast start for February to the March. The economics of Amazon are different, and so we need to make sure that we understand our total cost of sales in that channel, but everything looks pretty exciting right now. We also said in our prepared remarks that we're increasing our media spend 5% per month sequentially. Our return on advertising spend has consistently been above two. And so I think a conservative way to model it is that if we're increasing the media spend 5% per month, that's that's what that's what kind of revenue growth we are looking for as well.

Speaker 1

In addition, at the bit at the risk of repeating ourselves, you know, we also went live on Apple Health, in, just the last couple of weeks, and that's gonna bring additional eyeballs, additional awareness to the to the brand. And so I'm optimistic about getting a lift from that as well.

Speaker 4

Okay. Talking about, you know, lift in revenues, you have two additional entities One is the data which is one of the distribution business and the neuro met neuro metrics which is just completed acquisition. I I know it's early, but how, you know, how should we think about contributions from that? I know you made some remarks in the opening, you know, in in your opening statements, but but in general, you you know, how soon could they they become meaningful?

Speaker 4

Is it more in the back end of this year, or should we kind of, you know, be be really careful and wait till, like, 2026 to get totally excited about that?

Speaker 1

Yeah. Someplace in the middle. Sparrow, we are limited to six pilot sites, and we're gonna be very conservative about making sure we we have a business model that works before we expand that. So I think from a a material revenue, that's very much a 2026 story pending success in the pilot locations where we are launching. With Quell, these are unaudited preliminary numbers, but Quell Fibromyalgia and and legacy refills for previous products were about a hundred and $70,000 of revenue in the first quarter.

Speaker 1

You know, we'll we'll come I I I reserve the right to adjust that number once once we have a chance to prepare the pro form a audited financials. But April was on that same pace. Again, it's unaudited unaudited preliminary numbers that we inherited. So, you know, I think that kind of revenue, hundred and $50,000 for the current quarter. We're gonna be supply limited until until Manny can get the manufacturing facility here in Rockaway validated.

Speaker 1

But once once we do that, once our manufacturing facility is validated and we have supply, I think I I think we can have some upside surprises, putting the Quell Fibromyalgia project into the hands of our sales guys. They're they're pretty we're pretty excited about it. Our sales folks are pretty excited about it as well. Some of our customer service folks are already using the device to manage their own conditions. So it it could be a nice upside surprise for us.

Speaker 4

That's it. Last question for me. I'm sorry. I'm kinda fogging the call. On the r and d front, I think if I heard Josh correctly, you you know, you're expecting to increase a little bit of the r and d expense throughout the year.

Speaker 4

What are the things that, you know, we should be looking out for from the r and d front in in terms of additional indication or, you know, things that that could help sustain the growth?

Speaker 1

So yeah. So great question. We're gonna hold our r and d line pretty steady at that 650 $642,000. Most of that is our medical affairs staff, and most of what they're gonna be doing this year is sales support, talking about the data in post traumatic stress disorder, talking about the data, the recently published data that came out around traumatic brain injury you know, with our new Sparrow product, with our new fibromyalgia product being available to support the field sales team. We are still waiting for a response from the FDA.

Speaker 1

I think I think I mentioned last time that we had a sponsor meeting in person at FDA in March of this year. We're still waiting for the FDA's response to that meeting, and and we're kind of on hold with PTSD until we get that.

Speaker 4

Thank you. Thanks for taking all my questions.

Speaker 1

Of course. Thanks thanks for your support, RK.

Operator

We have a follow-up question from Jeff Cohen, who would like some commentary around the SG and A spend for 2025 and the planned cadence for those expenses.

Speaker 4

Josh, do

Speaker 1

you have any thoughts on that?

Speaker 2

Yes. So first, Jeff, thanks so much for the question. We've been consistent over the last few quarters talking about how our variable sales and marketing expense is going to continue to be at that roughly 30% range. So as you think about your model, what I would do is look at that sales spend and look at the revenue and take that 30%. The fixed portion of that remains fairly flat.

Speaker 2

As Dan mentioned, we did have a restructuring during this quarter, around some of that sales staff, but, you know, net net net, we're only adding, I think, one or two people. So that that fixed portion of it should remain flat. When you think about g and a expense, however, you know, I think what we said in the script is is that we believe that it's gonna maintain around the 2024 level. If you take a look at historical levels of that g and a expense and you look at that quarterly cadence of how that looked, that would be a good representation of the way that our G and A should pan out. We don't see or expect to have much change in that G and A expense.

Speaker 2

It's typically that first quarter where we have the the seasonal expenses associated with filing of our of our, you know, full year financials as well as some of these reorganizations that we were doing that really affected it this past quarter. And then of course, the last piece is Neurometrics.

Operator

Well, you, Josh. We're going to turn the call back over to Dan now to read his closing statement and follow-up with any other questions that may have been left open in the queue after this call.

Speaker 1

Yes. Thank you, Rob, and thank you all for joining us today. Lots going on. I'm very, very excited about returning to sequential growth in our core prescriptions channels. Obviously, closing the Neurometrics transaction has been a big deal for us.

Speaker 1

I want to thank the employees of Neurometrics and Doctor. Shay Gozani for all of their work over the years and for helping us right now with a difficult transition and moving everything to Rockaway. Of course, I also want to thank all of our patients and their providers and our employees, for the outstanding work that's going on. And I think we've got a very, very bright future ahead. I'm thrilled to be here.

Speaker 1

Thanks, everybody.

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Key Takeaways

  • Revenue of $6.7M in Q1 FY25, up 23% YoY, with VA prescription gammaCore revenue rising 22% and sequential growth returning in the VA channel as field sales headcount is rebuilt.
  • TRUVEGA wellness brand sales hit $1.1M (+187% YoY) with a 2.26 ROAS, steady 10–11% return rates, and expanded D2C reach via increased media spend, Amazon launch, and Apple Health integration.
  • Acquired Neurometrics to add the Quell platform, delivering $170K of Q1 fibromyalgia revenue, supply-limited Q2 sales, and expectations to ramp meaningful Quell sales in H2 2025 and into 2026.
  • Cash burn totaled $4.2M in Q1 with an expected ~$4M needed for the rest of 2025, modeling cash neutrality at ~$9M in quarterly revenue and full-year 2025 revenue guidance around $30M.
  • Signed distribution deal with Spark Biomedical for the FDA-cleared Sparrow Ascent opioid withdrawal device, set for limited VA pilot launches in Q2 FY25 with potential U.S. TAM of $6.1B.
AI Generated. May Contain Errors.
Earnings Conference Call
electroCore Q1 2025
00:00 / 00:00