CeriBell Q1 2025 Earnings Call Transcript

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Operator

thank you for standing by. At this time, I would like to welcome you to the Cerebell Q1 twenty twenty five Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer session. I would now like to turn the conference over to Elizabeth Spariccio, Investor Relations.

Operator

Please go ahead.

Elizabeth Sparicio
Investor Relations Associate at Gilmartin Group

Good afternoon, and thank you all for participating in today's call. Joining me from Cerebell are Jane Shao, Co Founder and Chief Executive Officer and Scott Bloomberg, Chief Financial Officer. Earlier today, Cerebell issued a press release announcing financial results for the quarter ended 03/31/2025. A copy of the press release is available on the Investor Relations section of the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward looking statements within the meaning of federal securities laws and that these are being made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995.

Elizabeth Sparicio
Investor Relations Associate at Gilmartin Group

Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward looking statements. 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 and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the Securities and Exchange Commission, including our annual report on Form 10 ks filed with the SEC on 02/25/2025. This conference call contains time sensitive information and is accurate only as of the live broadcast today, 05/08/2025.

Elizabeth Sparicio
Investor Relations Associate at Gilmartin Group

Cerebell 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 turn the call over to Jane.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Thanks, Elizabeth. Good afternoon, and thank you all for joining us on our first quarter twenty twenty five earnings call. Today, I share the key highlights from our first quarter results, as well as our strategic priorities for 2025. Scott will then provide a more detailed analysis of our financial performance and discuss our full year 2025 guidance. The first quarter marked a strong start to the year for XERIBEL.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

We delivered robust revenue growth and made measurable progress across every strategic initiative outlined on our last call. Total revenue for the first quarter of twenty twenty five was $20,500,000 This reflects 42% growth over the same period last year and 11% growth over the fourth quarter of twenty twenty four. We are also pleased to deliver 88% gross margin in Q1. Once again, our strong Q1 performance was driven by our team's continued success in acquiring and launching new accounts, while also driving utilization across our account base. As Scott will detail, our first quarter performance has given us greater conviction in revenue growth expectation for the full year of 2025.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Importantly, we're also reaffirming our confidence in achieving profitability in the future using only current cash on hand despite a dynamic trade environment. Underpinning our growth is the clinical value that we deliver to our customer every day. As of 03/31/2025, we had five fifty eight active accounts, representing an increase of 29 during the first quarter. Among these were our first cohort of VA hospitals where our Clarity algorithm has now been integrated. This followed the receipt of authority to operate from the federal government in November 2024.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

This ATO is a testament to Sarah Bell's ability to comply with extensive cybersecurity standards, which have become increasingly important for hospitals. More recently, we're proud to have also received FedRAMP high authorization from the U. S. Government. This represents an even more significant validation of our cybersecurity standards and enables other government agencies to utilize the Ceribot system.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

For context, FedRAMP High is the U. S. Government's most stringent category for review of cloud enabled technology that handle highly sensitive information. Following this authorization, Faribel is one of the only 51 companies and the only medical device manufacturer to have received this authorization. While we're delighted by our success to date, we believe that we're still in the early stage of the adoption curve for our products.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Based on our market research and assumptions, we only serve around 3% of The U. S. Populations who could benefit from our technology. We're confident in our ability to leverage our unmatched AI capability and extensive clinical evidence to establish Veribel as the standard of care. Through Q1, we continued to invest in and expand our commercial organization.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

We're on track to meet our goal of expanding our account acquisition team to 55 territory managers by mid-twenty twenty five. Given the nature of our sales cycle, we expect that this expansion will begin impacting our rate of our account acquisition growth in 2026. Meanwhile, we are continuing to invest in our clinical account manager or CAM team to serve our growing account base. As by far the most studied and proven rapid EEG solution on the market, we have also continued to build on our efforts to expand awareness regarding the clinical and economic benefits of Cerebell. We are directly engaging with clinicians, investing in marketing initiatives, and importantly, generating further clinical and health economics data.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

During the first quarter, we are pleased to see three separate publications reinforce the clinical benefit of using Cerevel. These papers articulated the advantage of nursing driven rapid EEG protocols, the clinical value of assessing seizure in stroke and stroke mimic patients, and the significant decrease in time to diagnose and treatment in pediatric patients for cerebell EEG cohort when compared to using conventional EEG. Beyond investing in sales and marketing efforts, we are also investing in our product development pipeline. Our goal remains to make EEG a new vital sign. We believe these investments will enable us to extend the benefits of our technology to even more patients.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Recently, we were thrilled to receive FDA five ten clearance of Clarity for seizure detection in pediatric patients. CLARITY is now the first and only FDA cleared seizure detection algorithm indicated for patients aged one year and above, thereby expanding our addressable patient population. The development of our pediatric algorithm was supported by EEG data collected from over 1,700 patients. FDA data indicates that this is the largest validation data set ever used for FDA clearance of a seizure detection algorithm. This reflects the scale of our extensive EEG database and the rigor of our algorithm and the validation process.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Our pediatric clarity algorithm is designed to be used with our existing cerebellum EEG headphones, which are already cleared for use in patients of all ages. We believe cerebellum with clarity will have a profound impact on the lives of children at risk of seizure who are particularly vulnerable to preventable secondary brain injury caused by seizure. In fact, seizures are a leading neurological cause of pediatric visits to emergency departments. Studies have also shown that up to ninety eight percent of pediatric patients in ICU who experienced just twelve minutes of seizure in a one hour window suffer from neurological decline. Yet, despite EEG being critical for appropriate patient management, pediatric patients in the ED are often discharged without any EEG.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

These children often receive their first EEG in the outpatient setting days, weeks, or even months later, and sometimes not at all. We estimate that eighty percent of pediatric emergency department visits occur at general or non children's hospital, which represents our core customer base today, Yet, there is typically a significant shortage of pediatric epileptologists in general EDs. The shortage results in potentially even greater clinical gaps than for adult population. Polarity is a powerful tool to help both epileptologists and ED physicians fill these gaps. Following this clearance, we plan to conduct a limited commercial release and pilot.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Specifically, we will focus on pediatric expansion within our existing ED accounts, as well as children's hospitals. This will enable us to better understand how to best leverage the natural synergies of the pediatric CLARITY opportunity with our existing product and ED strategy, as well as potential future indications including CLARITY for neonates. Ultimately, we will refine our broader go to market strategy with an even more comprehensive offering for the wider population. To summarize, this pediatric clearance marks the first step on our path to entering another exciting segment of our core seizure market. We look forward to providing more updates in our next call.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Moving to our pipeline. We are pleased to report that the timeline for other opportunities discussed on our last earnings call, specifically neonate clarity and delirium remain on track. On a go forward basis, we intend to provide pipeline updates only on clearances or other meaningful regulatory or strategic changes. At a high level, we feel our pediatric clearance is illustrative of some of the unique dynamics inherent in our regulatory and commercialization pathways. First, there is a very high degree of synergy and interdependency across our existing products and anticipated future indications.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Second, we are truly pioneering novel solutions and endeavoring to improve care by transforming care pathways. Third, we believe the regulatory frameworks for our potential new indications are faster and lower cost compared to those for most medical devices. Due to the nature of algorithm development and ability to leverage our extensive EEG database and AI expertise. As a result, we want to be incredibly strategic and precise in how we bring this potentially transformational innovation to market. We anticipate using at least one year following regulatory clearance of any indication related product expansions to pilot our approach and potentially continue to optimize our products.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

We believe this will allow us to refine our messaging and sales approach and better understand how the new product offering impacts the hospital workflows. We expect this will enable us to most effectively bring products to market quickly while optimizing our business plans based on real world feedback. This has been strategy for Cerebell since the initial introduction of CLARITY in 2020. We're excited to replicate our proven approach with pediatric CLARITY and our future product launches. Our near term focus will remain on expanding XEREDOL access to millions of patients who are receiving delayed or suboptimal diagnosis due to the inherent limitation of the conventional EEG.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Over time, these incremental patient populations will meaningfully impact our total addressable market and stand to create real growth upsides. Importantly, we believe we'll be able to target these novel patient populations within our existing call points largely by leveraging our existing sales force. We're encouraged by our progress in Q1, and we'll continue focusing on initiatives to sustain growth through 2025 and beyond. Specifically, we plan to invest in our commercial organization to drive adoption of the Cerebell System for seizure detection in both new and existing accounts, continue to drive awareness of seizures in the acute care setting by maintaining a leading presence in generating clinical and economic evidence, and finally make further strides in expanding our market through further product development and commercial launches. With that, I'll now turn the call over to Scott Blumberg, our CFO, to provide a review of our first quarter results and outlook for the remainder of 2025.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Thank you, Jane. Good afternoon, everyone. As Jane mentioned, total revenue for the first quarter was $20,500,000 a 42% increase from $14,400,000 in the same period of the prior year. The increase was primarily driven by continued commercial expansion, resulting in increased adoption of the Cerebell system across new and existing accounts. Within existing accounts, we saw strong growth in usage and purchase trends.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

We attribute the success to our CAN strategy plus the benefits of seasonal trends, including many hospitals increased ICU patient census in the winter months. Product revenue from the first quarter of twenty twenty five was $15,600,000 representing an increase of 41% from $11,000,000 in the first quarter of twenty twenty four. Subscription revenue for the first quarter of twenty twenty five was $4,900,000 representing an increase of 45% from $3,400,000 in the first quarter of twenty twenty four. Gross margin for the first quarter of twenty twenty five was 88 compared to 86% in the prior year period. Total operating expenses for the first quarter of twenty twenty five were $32,200,000 an increase of 55% compared to $20,800,000 in the first quarter of twenty twenty four.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Non cash stock based compensation expense was $2,300,000 in the first quarter of twenty twenty five. The increase in operating expenses was primarily attributable to investments in our commercial organization, increased headcount to support the growth of the business and expenses related to operating as a public company. More specifically, we continue to make key hires across our sales and marketing and R and

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

D teams.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

As it relates to our sales force, as Jay noted, we are on track to achieve our goal of 55 territory managers by midyear and are continuing to strategically expand our TAM team. We expect further opportunistic investments in our commercial team to continue in 2025. Meanwhile, we are maintaining our expectation that stock based compensation expense will contribute approximately $50,000,000 to total operating expenses for the full year 2025. As a reminder, we expect expenses associated with the annual equity grant process to increase beginning in Q2. Net loss was $12,800,000 for the first quarter of twenty twenty five or a loss of $0.36 per share compared to a loss of $8,500,000 or a loss of $1.56 per share in the first quarter of twenty twenty four.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

An average weighted share count of 35,900,000.0 shares was used to determine loss per share in the first quarter of twenty twenty five. Our cash, cash equivalents and marketable securities as of 03/31/2025 were $182,700,000 Turning now to our outlook for the remainder of 2025. Given our momentum in the first quarter of twenty twenty five, we now expect full year 2025 total revenue to range from 83,000,000 to $87,000,000 up from our prior guidance of 81,000,000 to $85,000,000 which represents annual growth of 27% to 33% over 2024. Moving down the P and L, even in the face of substantially increased tariffs on goods imported from China, we continue to expect gross margins for the full year 2025 to be in the mid-eighty percent range. This contemplates our high degree of confidence in our expectation for current product inventory located within The United States to fully meet demand through at least the third quarter of twenty twenty five.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Therefore, we do not expect to see any material impact to gross margins and incremental tariffs on imports in China until at least the fourth quarter of twenty twenty five. Looking ahead, under the latest assumption, which is that imports in China will be subject to 145% in tariffs in addition to the 25% in tariffs that have been in place since 2018, we believe the impact to our gross margin from the new tariffs will still be less than 10 percentage points. This compares to gross margins of 88% in the first quarter of twenty twenty five. To be clear, this assumes no change in currently proposed tariffs and no benefit from our own mitigation strategies, including potentially restoring our manufacturing, which we are actively considering. When we have greater clarity regarding international trade policies, we are confident in our ability to move quickly to fully execute these contingency plans likely within a matter of quarters, not years.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Independent of potential tariff mitigation efforts, we are also leaning further into our pre existing cost reduction strategies, the effect of which would be amplified if current proposed tariffs remain in place. Ultimately, based on what we know today, we are confident in our ability to maintain a strong above industry average gross margin around 80% in the medium term with a clear path to continue to deliver margins in the mid-eighty percent range over the medium to long term. This is due to our mitigation strategies, which we believe are quickly actionable, a relatively low nominal cost basis for goods imported in China, and the fact that 25% of our revenue comes from subscription products, which generate a 97% gross margin and are not subject to tariffs. And finally, even assuming the current tariff rate and no incremental revenue pipeline initiatives, we continue to have a great deal of conviction in our ability to reach cash flow breakeven with current cash on hand. With that, I'll turn the call back to Jane.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Thank you, Scott. And thank you all for your time today. In conclusion, I'm very pleased with our strong first quarter performance, which positions us well for continued success through 2025 and beyond. I'd like to thank our Therabell employees for their continued commitment to our customers and the patients we serve. Finally, we appreciate your support and continued interest in Cerebell.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

And we look forward to providing you with updates on our progress in the quarters to come. I will now turn the call over to the operator for any Q and A. Operator?

Operator

Thank you. We will now begin the question and answer session. First question comes from Travis Steed from Bank of America. Please go ahead.

Stephanie Piazzola
Stephanie Piazzola
VP - Equity Research at Bank of America

Hi, this is Stephanie Piazzolla on for Travis. Congrats on the good quarter and thanks for taking the question. I wanted to ask on Q1, you beat by $1,000,000 and you're raising the full year guide by about $2,000,000 at the midpoint. So wanted to ask what's driving the raise in the guide by more than the beat? And what now looks better versus your previous expectation?

Stephanie Piazzola
Stephanie Piazzola
VP - Equity Research at Bank of America

And just thinking about cadence, do we see that ratio up in any particular quarter? And then I have a follow-up.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Hey, Stephanie, thanks for the question. Yeah, we beat consensus by about $1,000,000 in Q1. I think more than that, we got greater confidence in all of the strategies that we've been implementing both on the account acquisition and account management side. I think you'll see our usage per account has grown pretty substantially Q1 over Q4. As we said in our prepared remarks, we expect that there's a little bit of seasonality in that number, but we have a high degree of confidence that our strategies are working.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

So it's really a matter of an additional quarter of visibility and execution is giving us the confidence to raise.

Stephanie Piazzola
Stephanie Piazzola
VP - Equity Research at Bank of America

Great. Thanks. And then for my follow-up, just wanted to ask a little bit more on tariffs and your ability to keep gross margin for the year in the same mid to high 80% range despite tariffs potentially having some impact in Q4 and just your confidence there. And then on a full year basis, you mentioned a less than 10 impact to gross margin and that doesn't include any mitigation, I believe you said. So, just curious if you could elaborate on potential mitigation actions that you could take to potentially offset some of that headwind.

Stephanie Piazzola
Stephanie Piazzola
VP - Equity Research at Bank of America

Thank you.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Sure. Well, first of all, acknowledging that the trade environment is incredibly dynamic with that caveat, as I mentioned, we have about two quarters of runway here where we're operating off of inventory that was acquired before the tariffs. So, we don't expect an impact over the coming couple of quarters. In Q4 and in early twenty twenty six, we would expect some impacts, the degree of which really depends on what the ultimate policy is and how much clarity there is. And then the comment about returning to the mid-eighty percent range is really dependent on how quickly we get that clarity so we can execute on the strategies.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

As far as the strategies go, I think it's important to acknowledge that we didn't get to 88% margins by chance. We've really focused on supply chain extensively since the beginning of the company. A lot of the strategies we have in place were things we're already working on and we're really double down in accelerating them. One is automation. Second is cost negotiation with vendors.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Third is reduction of cost of shipping. One thing that's important to note is that some of these cost reduction initiatives under the current tariff structure would have a kind of synergistic effect where it would magnify as it would lower the nominal cost base of the product. And then ultimately, we are looking at and have pretty detailed plans for reshoring, but we're really waiting for a greater clarity on where the ultimate US trade policy settles before we execute on those plans, but they're ready to go. And as I mentioned, that will take a couple of quarters, a few quarters to execute on not a few years.

Operator

Our next question comes from Robert Marcus from JPMorgan.

Rohin Patel
Rohin Patel
Vice President at JP Morgan

Hi, this is actually Rohan on for Roddy. Congrats on a nice quarter. Thanks for taking our question. I guess I wanted to start off and follow-up on the gross margin point, but zero in on OpEx. You reiterated the expectation of reaching cash flow breakeven with the current cash on hand.

Rohin Patel
Rohin Patel
Vice President at JP Morgan

So just want to get a sense for your thoughts on OpEx this year between SG and A and R and D? And then how you're thinking about that trending maybe a bit longer term? And then I had a follow-up as well.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Yes. As it relates to the impact of tariffs on margins, I think it's important to note that we expect the impact to be transient. So it's bounded since we expect to be in the mid-eighty percent range in the not too distant future. As it relates to OpEx, some of the investments we made, which we outlined on our last earnings call, are related to the capital raising the IPO, which was substantially more than we initially intended to raise. So we are investing a bit more than we had previously intended before the IPO on R and D.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

We're also looking at opportunistic areas to invest in sales infrastructure to drive growth. One example is that we're running a pilot on driving usage within the emergency departments and our strategy is generally to run commercial private pilots and then if it works well, double down and if it's not working well, adjust. And with the capital we raise, we feel very confident in our ability to do that. We understand the critical importance of achieving positive cash flow without additional capital, so we're always keeping our eye on that. We have a very high degree of confidence that we can execute that while making these additional investments.

Rohin Patel
Rohin Patel
Vice President at JP Morgan

Great. And then I had another question on the pediatric software approval and your limited launch of that this year. I guess, is there any contribution from that factored into the current guidance for 2025? And how should we think about the incremental revenues potentially just in light of the TAM expansion over the long term? Thanks.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Thanks for the question. The short answer in 2025, the pediatric clarity will not have an impact on the 2025 guidance. However, as we talked about earlier, we do see meaningful expansion there, both in children's hospital as well as pediatric population in the emergency department. After we finish our limited commercial release, which will be about a year frame, we will do a full launch and we still for launch. We will start to anticipating additional revenue in the outer years.

Operator

Next question comes from Margaret Andrew from William Blair.

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

Hey, good afternoon, folks. Thanks for taking the question. Yeah, maybe I wanted to start with guidance first. Scott, your math tracks at least with our model and maybe we don't have a specific utilization rate but at least based on our model and some reasonable assumptions. If we keep utilization flat versus with what happened maybe in the first quarter for the rest of the year, it gets us to that high end or maybe even above the high end of your revenue guidance range.

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

And that doesn't even account for the nice number and clarity where those metrics looked really nice versus our model as well. So two questions around that. One, my math right? And why should or shouldn't utilization rates grow above this quarter's specific rate? And then two, what seasonality should we expect, going into Q2 and throughout 2025?

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

Do you think that the sell side numbers maybe for Q2 prior going into this quarter should go up or are they pretty

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

just stay where they are? Thanks.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Yes, I think as it relates to seasonality, let me get to the reason behind that, which is really having to do with ICU census. In the winter months, there's higher ICU census given respiratory illness. And so we've historically seen an increase in usage in Q4 and Q1, of course, we're just coming out of that.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

So we did have a pretty high Q1. Last year, Q1 to Q2, we saw a slight sequential decline in usage. It's a little bit hard to truly isolate the impact from the CAM strategies, which we're very confident are driving usage from seasonality, but we do expect that seasonality did drive some of that number in Q1. So I wouldn't be surprised if in the near term quarters you might see that number potentially go down from where it was in Q1 temporarily as a result of seasonality. But ultimately, the long term, we have a very high degree of confidence that our strategy is working.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

It's important to note that we still feel that we're somewhere in the neighborhood of 20% to 30% penetrated within our established account base. So we have a lot of room to keep growing and driving utilization.

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

Okay. And so maybe utilization dips down a little bit, comes back up in Q4, but directionally, it seems like the CAM strategy is paying off. And so the prior number at least relative to this one we had utilization down 8% sequentially into Q2. Is that too aggressive? Is that about right relative to maybe the ED visits that you're seeing?

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

I won't comment on individual models. Would say that sequentially Q2 over Q1, as we continue growing the business, right, throughout the history of the business, we've had sequential increases quarter over quarter. But as we grow, the number of accounts we're adding relative to the total account base gets less and less. So we get less impact from new account adds. So over time, I would expect for the seasonality as it relates to Q1 to Q2 to increase in terms of how visible it is in the numbers.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

So Q2 to Q1, I would expect a much more modest increase, if any, than we saw Q4 to Q1 as a result of that seasonality.

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

Okay. Super helpful. And then maybe just to walk through some of these CAM investments, because again, it does seem to be paying off in higher utilization. So can you give us some context over some of the initiatives that are playing out? Not that you're hiring people, but they're they're doing something in the field.

Margaret Kaczor Andrew
Research Analyst - Healthcare at William Blair

So, what are they doing? How broadly are some of those initiatives, playing out at this point? And how should that play out as we look out through '25 and '26? Thank you.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Yeah, we focus on a few different dimensions in driving utilization with our CAM team. The first area we focus on is to raise the disease awareness, especially leveraging existing guideline. For example, American Heart Association has a level one recommendation of using EEG promptly after cardiac arrest patient after initial survival. Despite the level one recommendation started in 2020, many hospitals, they all were not aware of this guideline. So, our camp team often go in and partner with the nursing and physician team to develop more standardized protocol.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

So, proper care can be delivered. The second dimension we focus on is in general, the physician education as well post pandemic. There are still a lot of turnover both at physician level as well as nursing level. So, our team will go in reeducate not just how to apply the device, but latest guideline and some of the disease state education. The third area we focus on is departmental expansion in many of our accounts were not fully penetrated.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

We're not in all the ICU, the floor and emergency department yet. So that's another third area we focus on.

Operator

Our next question comes from Josh Jennings from TD Cowen. Please go ahead.

Joshua Jennings
Managing Director at TD Cowen

Hi, good afternoon. Great start to the year. Wanted to just build on your last answer Jane and just trying think about the opportunities in the customer base to expand in departments as you said ICU, floor, ER. Any kind of quantification in terms of the opportunity for that expansion within your customer base and then also just we our check suggests that, you guys have been effective at kind of landing an account at the mothership in a hospital network and then expanding out into the satellites. Maybe just talk about the opportunity within your customer base there as well.

Joshua Jennings
Managing Director at TD Cowen

So sorry for the two tiered question.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Yeah, thank you, Josh. For the first question, we stated that we estimate we are currently in three percent of The U. S. Market for seizure And the mass there is where ten percent penetrated in the hospital number roughly. And for the accounts we're in, we estimate that we're serving about twenty to thirty percent of the patients for the hospitals we are in.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

So, that goes back to the drivers I mentioned earlier. We're not serving all the patients. We're now serving all the departments. So, there's about 70% opportunity just within the accounts we're in. For your second question, we do see a large synergy across different hospitals, especially similar to Tali stroke, this hub and spoke model that works very well.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

In the spoke satellite hospitals, they tend to have even bigger gap in conventional EEG often is Monday to Friday nine to five or not have EEG at all. So, strategy there is really to leverage their own health economics data, their own impactful patient studies to further drive that. So, we it's a strategy we have been applying for the past few years. And as Scott mentioned, we're trying different investment opportunities on the commercialization front. And one area we are investing in is to build up the hospital healthcare system team and that team can further drive this strategy.

Joshua Jennings
Managing Director at TD Cowen

Excellent. And I wanted to just also learn about, sorry to ask you to help us with this, but just in terms of the competitive landscape, are you seeing any, is there anything on your radar? We don't believe you're seeing anything in the field. And again, our check suggests that there's competitive systems are not rising to the level of cerebellum, but maybe just help us understand what you're seeing competitively out in the marketplace. Thanks for taking the questions.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Yeah, it's very much aligned with which you stated Josh. We have seen some emerging competitors taking it, trying to enter the category we have created, which is a point of care EEG. And we remained a clear category leader. And also we are highly confident we'll keep this leadership position with our technology, both hardware and algorithm that's unmatched. Also our clinical evidence and our patents.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

We also want to remind everyone that we're only in three percent U. S. Market. As Scott already mentioned, we are raising our revenue guidance in 2025. And that also implies that we're not seeing meaningful difference on the competitive front.

Joshua Jennings
Managing Director at TD Cowen

Thank you.

Operator

Our next question comes from John Young from Canaccord. Please go ahead.

John Young
Director - Healthcare Equity Research at Canaccord Genuity - Global Capital Markets

Hi, Dan and Scott. It's John on for Bill tonight. Thanks for taking our questions and congratulations on the quarter. I wanted just to talk about pricing. What pricing is factored into your gross margin comments, Scott, that you mentioned on the call?

John Young
Director - Healthcare Equity Research at Canaccord Genuity - Global Capital Markets

And can you just talk broadly about your ability to raise prices in this tough macro environment? How receptive are hospitals to that? And I have a follow-up. Thank you.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

The comments I gave as it relates to our margins has no change in pricing policy. We've continued to make appropriate, but not egregious increases in pricing to our customers. And we've continued to deliver value to them both as a cost saver and revenue generator. So customers have been receptive to that. We have not contemplated or our guidance does not contemplate any change in strategies such as tariff based price increases.

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

But of course, that's something we may look at, but not included in those numbers.

John Young
Director - Healthcare Equity Research at Canaccord Genuity - Global Capital Markets

Great. Thanks. And if you did have to raise prices based on tariffs, how quickly could you do that? Are these annualized contracts? Or could you do it pretty immediately?

Scott Blumberg
Scott Blumberg
Chief Financial Officer at CeriBell

Generally speaking, contracts are a year, sometimes two years, but they expire on a rolling basis. There's not a set time at which they expire. So we would generally our pricing increases or changes have to do with the individual customers' contract life cycle, which is spread throughout the year.

John Young
Director - Healthcare Equity Research at Canaccord Genuity - Global Capital Markets

Great. Thanks a lot, Scott.

Operator

Our next question comes from Jeffrey Cohen from Ladenburg Thalmann. Please go ahead.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Hi, Jane and Scott. Thanks for taking our questions. One shorter one, one longer one. Firstly, you comment on pediatric clarity as far as number of SKUs and if the actual headband itself and its manufacturers, same process, same unit and same number of leads?

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Just to make sure I understand the question, is the pediatric clarity in terms of whether or it's an additional product in terms of SKU?

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Yes. Are there different sizes available as far as the headband? And is the unit itself as far as the leads the same as adult?

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Got you.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

The hardware

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

portion.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Yeah. So, our hardware has already been approved, cleared by FDA for all ages. So, there's already different sizes of headband using the existing product. Even before this pediatric Clarity, we actually have pediatric patients using Cerebell system.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

They just not use Clarity. They only use the hardware as the base version. So, with Clarity Pediatric, this would not be an independent product. This is more likely, say, when we go back to the existing base account, if they have a PQ pediatric ICU, and they all have pediatric population in their emergency department, we would expand clarity usage from adult to pediatric.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Got it, that's helpful. And then secondly, you touched on it a little bit, I'm curious if you could expand upon and talk about kind of the internal permeation at a facility, whether it pulled or pushed toward the ICU, from the ICU toward the ER or vice versa? What are you seeing as far as practice that's going on now as far as the ER departments coming up to speed beyond the traditional penetration in ICU.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Yeah,

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

so the clinical context of your question, let me lay that out first before Sarah Bell many ICUs have some level of access of EEG, but by contrast majority of emergency department almost never use EEG, because conventional EEG can take hours or even days. It does not work with the timeframe that ED operates on with often minutes or hours. Therefore, our initial entrance to the hospital often is ICU because they have used conventional EEG before and it's more a tool they clear C expansion and advantage over conventional EEG. With that success, we start to introduce EEG to the emergency department a few years back, and that has been very successful. And within the hospital clinical setting often the ICU would support, or even recommend our product to the emergency department.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

And the reason is that quite often patients could be empirically treated in the ED without EEG. So that patient could be intubated with the suspicion of seizure without confirmed EEG and this patient will be sent to the ICU and that could lead to ICU bed unnecessary ICU length of stay, which is also reflected in our clinical study. It's one of the drivers we could reduce length of stay. So, we can really cover the hospital entire patient workflow starting from ED all the way to ICU.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

So your sense of the awareness in ER is coming well, from the company and your clinical organization, capital organization, as well as internally from the ICU departments. But case by case, I imagine.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

That's correct.

Jeffrey Cohen
MD - Equity Research at Ladenburg Thalmann & Co. Inc

Perfect. Thanks for taking our questions.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Thank you, Jeff.

Operator

There are no further questions at this time. I'll turn the call back over to Jane Chao, Co Founder and CEO.

Jane Chao
Jane Chao
Co-Founder, President, CEO & Director at CeriBell

Thank you. Thank you everyone for joining the call. We very much appreciate your interest in Cerebell. Again, we are very excited and pleased about our first quarter and look forward to continuing sharing our future quarters with you all.

Operator

This concludes the meeting. You may now disconnect.

Executives
    • Jane Chao
      Jane Chao
      Co-Founder, President, CEO & Director
    • Scott Blumberg
      Scott Blumberg
      Chief Financial Officer
Analysts
    • Elizabeth Sparicio
      Investor Relations Associate at Gilmartin Group
    • Stephanie Piazzola
      VP - Equity Research at Bank of America
    • Rohin Patel
      Vice President at JP Morgan
    • Margaret Kaczor Andrew
      Research Analyst - Healthcare at William Blair
    • Joshua Jennings
      Managing Director at TD Cowen
    • John Young
      Director - Healthcare Equity Research at Canaccord Genuity - Global Capital Markets
    • Jeffrey Cohen
      MD - Equity Research at Ladenburg Thalmann & Co. Inc

Key Takeaways

  • Q1 2025 revenue of $20.5 M represented 42% YoY growth and 11% QoQ, with an 88% gross margin, leading Cerebell to raise its full-year guidance to $83–$87 M and reaffirm confidence in profitability with existing cash.
  • Active accounts grew to 558 in Q1 (+29), including the first VA hospital integrations post-ATO, and Cerebell earned FedRAMP High authorization, making it one of only 51 companies—and the sole medical device maker—approved at this security level.
  • The company received FDA 510(k) clearance for its Clarity algorithm in pediatric seizure detection (ages one+), backed by the largest validation dataset of 1,700+ EEG records, and plans a limited commercial release to tap new pediatric ED and children’s hospital markets.
  • Ongoing investments in commercial expansion include growing to 55 territory managers by mid 2025 and bolstering the clinical account management team, targeting broader utilization across ICUs, emergency departments, and additional hospital units amid just ~3% current U.S. market penetration.
  • To counter potential China import tariffs, Cerebell is accelerating supply chain automation, vendor cost negotiations, shipping optimizations, and has ready-to-execute reshoring plans, aiming to sustain mid–high 80% gross margins and reach cash flow breakeven.
AI Generated. May Contain Errors.
Earnings Conference Call
CeriBell Q1 2025
00:00 / 00:00

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