CeriBell - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue was $20.49M, up 42% year over year and 11% sequentially; gross margin was 88%. Management raised FY2025 revenue guidance to $83–$87M from $81–$85M, citing broad-based adoption and stronger visibility.
• Results beat Wall Street consensus: revenue by ~$1.19M and EPS by ~$0.10; management acknowledged an approximate $1M beat and raised FY guide more than the beat due to improved execution confidence.
• Strategic advances: FDA 510(k) clearance for pediatric Clarity (ages ≥1) and FedRAMP High authorization, expanding addressable market and enabling broader government deployments; active accounts rose to 558 (+29 q/q).
• Tariffs risk timing: no material gross margin impact until at least Q4 2025 given FIFO inventory; full tariff impact estimated at <10 margin points post-inventory, with mitigation plans (automation, vendor negotiations, potential reshoring).
• Near-term cadence: management noted winter seasonality boosted Q1 utilization; expects potential utilization moderation in Q2 before re-acceleration later in the year.

What Went Well and What Went Wrong

What Went Well

• Strong growth and beat: revenue $20.49M (+42% y/y; +11% q/q) and gross margin 88%; CFO: “we now expect full year 2025 total revenue to range from $83M to $87M”.
• Strategic milestones: FDA clearance for pediatric Clarity and FedRAMP High authorization; CEO: “Clarity is now the first and only FDA‑cleared seizure detection algorithm indicated for patients aged 1 year and above… FedRAMP High… only medical device manufacturer to have received this authorization”.
• Account expansion: active accounts reached 558 (+29 in Q1) with strong utilization; CEO: “continued success in acquiring and launching new accounts while also driving utilization”.

What Went Wrong

• Operating expense ramp: OpEx rose to $32.21M (+55% y/y) as the company invests in commercial/R&D and public-company costs; noncash stock-based comp was $2.3M in Q1 and guided to ~$50M for FY2025.
• Continued net losses: Q1 net loss was $(12.78)M; EPS $(0.36), reflecting growth investments despite strong margin profile.
• Tariff overhang: management outlined potential gross margin headwinds starting Q4 2025 under proposed 145% tariffs on imports from China, albeit mitigated by inventory timing and action plans.

Transcript

Operator (participant)

Thank you for standing by. At this time, I would like to welcome you to the Ceribell Q1 2025 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question-and-answer session. If you would like to ask a question during this time, simply press star followed by the number one on your telephone keypad. If you would like to withdraw your question, press star one again. I would now like to turn the conference over to Elizabeth Spariccio, Investor Relations. Please go ahead.

Elizabeth Spariccio (Head of Investor Relations)

Good afternoon, and thank you all for participating in today's call. Joining me from Ceribell are Jane Chao, Co-founder and Chief Executive Officer, and Scott Blumberg, Chief Financial Officer. Earlier today, Ceribell issued a press release announcing financial results for the quarter ended March 31st, 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. 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-K filed with the SEC on February 25th, 2025. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, May 8th, 2025. Ceribell 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. I will turn the call over to Jane.

Jane Chao (Co-founder and CEO)

Thanks, Elizabeth. Good afternoon, and thank you all for joining us on our First Quarter 2025 Earnings Call. Today, I shared 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 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 2025 was $20.5 million. This reflects 42% growth over the same period last year and 11% growth over the fourth quarter of 2024. We were also pleased to deliver an 88% growth 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 expectations for the full year of 2025. 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 customers every day. As of March 31, 2025, we had 558 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.

This ATO is a testament to Ceribell's ability to comply with extensive cybersecurity standards, which have become increasingly important for hospitals. More recently, we're proud to have also received a 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 Ceribell system. For context, FedRAMP High is the U.S. government's most stringent category for review of cloud-enabled technology that handles highly sensitive information. Following this authorization, Ceribell is one of the only 51 companies and the only medical device manufacturer who 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. 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 Ceribell as the standard of care. Through Q1, we continued to invest in and expand our commercial organization. We're on track to meet our goal of expanding our account acquisition team to 55 territory managers by mid-2025. Given the nature of our sales cycle, we expect that this expansion will begin impacting our rate of 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 Ceribell. We are directly engaging with clinicians, investing in marketing initiatives, and, importantly, generating further clinical and health economics data.

During the first quarter, we're pleased to see three separate publications reinforce the clinical benefit of using Ceribell. 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 Ceribell 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. Recently, we were thrilled to receive FDA 510(k) 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 validation process. Our Pediatric Clarity algorithm is designed to be used with our existing Ceribell EEG headbands, which are already cleared for use in patients of all ages. We believe Ceribell 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 the emergency department.

Studies have also shown that up to 98% of pediatric patients in ICU who experience just 12 minutes of seizure in a one-hour window suffer from neurological decline. Yet, despite EEG being critical for proper patient management, pediatric patients in the ED are often discharged without any EEG. The children often receive their first EEG in the outpatient setting, days, weeks, or even months later, and sometimes not at all. We estimate that 80% of pediatric emergency department visits occur at general or non-children's hospitals, 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. Clarity 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.

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 a 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. 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, remains 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. 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. 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 a successful strategy for Ceribell since the initial introduction of Clarity in 2020. We are excited to replicate our proven approach with Pediatric Clarity and our future product launches. Our near-term focus will remain on expanding Ceribell access to millions of patients who are receiving delayed or suboptimal diagnosis due to the inherent limitation of the conventional EEG.

Over time, these incremental patient populations will meaningfully impact our total addressable market and stand to create real growth upsides. Importantly, we believe we will 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 Ceribell 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 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 (CFO)

Thank you, Jane. Good afternoon, everyone. As Jane mentioned, total revenue for the first quarter was $20.5 million, a 42% increase from $14.4 million in the same period of the prior year. The increase was primarily driven by continued commercial expansion, resulting in increased adoption of the Ceribell system across new and existing accounts. Within existing accounts, we saw strong growth in usage and purchase trends. We attribute this success to our CAM strategy, but the benefits of seasonal trends, including many hospitals' increased ICU patient census in the winter months. Product revenue from the first quarter of 2025 was $15.6 million, representing an increase of 41% from $11.0 million in the first quarter of 2024.

Description revenue for the first quarter of 2025 was $4.9 million, representing an increase of 45% from $3.4 million in the first quarter of 2024. Gross margin for the first quarter of 2025 was 88% compared to 86% in the prior year period. Total operating expenses for the first quarter of 2025 were $32.2 million, an increase of 55% compared to $20.8 million in the first quarter of 2024. Non-cash, stock-based compensation expense was $2.3 million in the first quarter of 2025. 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 proceeded to make key hires across our sales and marketing and R&D teams.

As it relates to our sales force, as Jane noted, we are on track to achieve our goal of 55 CAM managers by mid-year and are continuing to strategically expand our CAM team. We expect further opportunistic investments in our commercial team to continue to 2025. Meanwhile, we are maintaining our expectation that stock-based compensation expense will contribute approximately $50 million to total operating expenses for the full year of 2025. As a reminder, we expect expenses associated with the annual equity grant process to increase to gaining usage. Net loss was $12.8 million for the first quarter of 2025, or a loss of $0.36 per share, compared to a loss of $8.5 million or a loss of $1.56 per share in the first quarter of 2024. An average weighted share count of 35.9 million shares was used to determine loss per share in the first quarter of 2025.

Our cash, cash equivalents, and marketable securities as of March 31, 2025, were $182.7 million. Turning now to our outlook for the remainder of 2025. Given our momentum in the first quarter of 2025, we now expect full year 2025 total revenue to range from $83-$87 million, up from our prior guidance of $81-$85 million, which represents annual growth of 27%-33% over 2024. Moving down the P&L, even in the face of substantially increased tariffs on goods imported from China, we continue to expect growth margins for the full year of 2025 to be in the mid-80% range. This contemplates our high degree of confidence in our expectations for current product inventory located within the United States to fully meet demand through at least the third quarter of 2025.

Therefore, we do not expect to see any material impact to gross margins with incremental tariffs on imports in China until at least the fourth quarter of 2025. 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 for 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 2025. To be clear, this assumes no change in currently proposed tariffs and no benefit from our own mitigation strategy, including potentially reshoring 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. 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 growth margin around 80% in the medium term, with a clear path to continue to deliver margins in the mid-80% range over the medium to long term.

This is due to our mitigation strategies, which we believe are quickly actionable, our relatively low nominal cost basis for goods imported from China, and the fact that 25% of our revenue comes from subscription products, which generate a 97% growth margin and are not subject to tariffs. Finally, even assuming the current tariff rate and no incremental revenue from pipeline initiatives, we continue to have a great deal of conviction in our ability to reach a fast low breakeven with current gaps on hand. With that, I'll turn the call back to Jane.

Jane Chao (Co-founder and CEO)

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 Ceribell employees for their continued commitment to our customers and the patients we serve.

Finally, we appreciate your support and continued interest in 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&A. Operator.

Operator (participant)

Thank you. We will now begin the question and answer session. If you have dialed in and would like to ask a question, please press star one on your telephone keypad to raise your hand and join the queue. If you would like to withdraw your question, simply press star one again. First question comes from Travis Steed from Bank of America. Please go ahead.

Stephanie Piazzola (VP Equity Research Medical Technology)

Hi, this is Stephanie Piazzola. I am for Travis. Congrats on the good quarter, and thanks for taking the question. I wanted to ask on Q1, you beat by $1 million, and you are raising the full year guide by about $2 million at the midpoint.

I 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? Just thinking about cadence, do we see that raise show up in any particular quarter? I have a follow-up.

Scott Blumberg (CFO)

Hey, Stephanie, thanks for the question. Yeah, we beat consensus by about $1 million 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've 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.

It is really a matter of an additional quarter of visibility and execution giving us the confidence to raise.

Stephanie Piazzola (VP Equity Research Medical Technology)

Great, thanks. 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. On a full year basis, you mentioned a less than 10-point impact to gross margin, and that does not include any mitigation, I believe you said. Just curious if you could elaborate on potential mitigation actions that you could take to potentially offset some of that headwind. Thank you.

Scott Blumberg (CFO)

Sure. First of all, acknowledging that the trading 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. We do not expect an impact over the coming couple of quarters. In Q4 and in early 2026, we would expect some impact, the degree of which really depends on what the ultimate policy is and how much clarity there is. The comment about returning to the mid-80% range is really dependent on how quickly we get that clarity so we can execute on the strategies. As far as the strategies go, I think it's important to acknowledge that we did not get to 88% margins by chance. We have really focused on supply chain extensively since the beginning of the company. A lot of the strategies we have in place were things we were already working on, and we are really double down and accelerating them.

One is automation. Second is cost negotiation with vendors. Third is reduction of costs 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. Ultimately, we are looking at and have pretty detailed plans for reshoring, but we're really waiting for greater clarity on where the ultimate U.S. trade policy settles before we execute on those plans, but they're ready to go. As I mentioned, that'll take a couple of quarters to execute on in a few years.

Operator (participant)

Our next question comes from Robert Marcus from JPMorgan.

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

Scott Blumberg (CFO)

Yeah, 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. It's bounded since we expect to be in the mid-80% 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 raised in the IPO, which was substantially more than we initially intended to raise. We are investing a bit more than we had previously intended before the IPO on R&D. We are also looking at opportunistic areas to invest in sales infrastructure to drive growth. One example is that we are running a pilot on driving usage within the emergency departments. Our strategy is generally to run commercial pilots, and then if it works well, double down, and if it is not working well, adjust. 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 are always keeping an eye on that.

We have a very high degree of confidence that we can execute that while making these additional investments.

Great. 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? How should we think about the incremental revenues potentially just in light of the TAM expansion over the long term? Thanks.

Jane Chao (Co-founder and CEO)

Thank you 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 a 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.

With the full launch, we will start to anticipate additional revenue in the outer years.

Operator (participant)

Next question comes from Margaret Andrew from William Blair.

Margaret Andrew (Senior Research Analyst)

Hey, good afternoon, folks. Thanks for taking the question. Yeah, maybe I'll just start with guidance first. Scott, your math tracks, at least with our model, and maybe we do not 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. That does not even account for the nice number and Clarity where those metrics looked really nice versus our model as well. Two questions around that. One, is my math right?

Why should or should not utilization rates grow above this quarter's specific rate? Two, what seasonality should we expect going into Q2 and throughout 2025? Do you think that the sell-side numbers maybe for Q2 prior to going into this quarter should go up, or are they pretty where they are? Thanks.

Scott Blumberg (CFO)

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 is higher ICU census given respiratory illness. We have historically seen an increase in usage in Q4 and Q1, and of course, we are just coming out of that. 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. 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. Ultimately, over the long term, we have a very high degree of confidence that our strategies are working. It's important to note that we still feel that we're somewhere in the neighborhood of 20-30% penetrated within our established account base. We have a lot of room to keep growing and driving utilization.

Margaret Andrew (Senior Research Analyst)

Okay. Maybe utilization dips down a little bit, comes back up in Q4, but directionally, it seems like the CAM strategy is paying off.

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 (CFO)

I won't comment on individual models. I 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. As we grow, the number of accounts we're adding relative to the total account base gets less and less. We get less impact from new account adds. 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.

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 Andrew (Senior Research Analyst)

Okay, super helpful. Maybe just to walk through some of these CAM investments, because again, it does seem to be paying off in higher utilization. Can you give us some context over some of the initiatives that are playing out? Not that you're hiring people, but they're doing something in the field. What are they doing? How broadly are some of those initiatives playing out at this point? How should that play out as we look out through 2025 and 2026? Thank you.

Jane Chao (Co-founder and CEO)

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 guidelines.

For example, American Heart Association has a level one recommendation of using EEG promptly after cardiac arrest patients after initial survival. Despite the level one recommendation started in 2020, many hospitals still were not aware of this guideline. Our CAM team often goes in and partners with the nursing and physician team to develop more standardized protocols 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. Our team will go in, re-educate, not just how to apply the device, but latest guidelines and some of the disease state education. The third area we focus on is departmental expansion. In many of our accounts, we're not fully penetrated. We're not in all the ICU, the floor, and emergency department yet.

That's another third area we focus on.

Operator (participant)

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

Josh Jennings (Managing Director)

Hi, good afternoon. Great start to the year. Wanted to just build on your last answer, Jane, and just trying to think about the opportunities in the customer base to expand in departments, as you said, ICU, floor. Any kind of quantification in terms of the opportunity for that expansion within your customer base? And then also just 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. Sorry for the two-tiered question.

Jane Chao (Co-founder and CEO)

Yeah, thank you, Josh. For the first question, we stated that we estimate we are currently in 3% of the U.S.

The market for seizure. The math there is we are 10% penetrated in the hospital number, roughly. For the accounts we are in, we estimate we are serving about 20-30% of the patients for the hospitals we are in. That goes back to the drivers I mentioned earlier. We're not serving all the patients. We're not serving all the departments. There is 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 TeleStroke, this hub-and-spoke model that works very well. In the spoke satellite hospitals, they tend to have an even bigger gap in conventional EEG, often it is Monday to Friday, 9:00 A.M. to 5:00 P.M., or not have EEG at all.

Our strategy there is really to leverage their own health economics data, their own impact for patient studies to further drive that. It is a strategy we have been applying for the past few years. As Scott mentioned, we're trying different investment opportunities on the commercialization front. One area we're investing in is to build up the hospital healthcare system team, and that team can further drive the strategy.

Josh Jennings (Managing Director)

Excellent. 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 do not believe you're seeing anything in the field. Again, our checks suggest that competitive systems are not rising to the level of Ceribell, but maybe just help us understand what you're seeing competitively out in the marketplace.

Thanks for taking the questions.

Jane Chao (Co-founder and CEO)

Yeah. It's very much aligned with what you stated, Josh. We have seen some emerging competitors trying to enter the category we have created, which is a point-of-care EEG. We remain the clear category leader. 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. We also want to remind everyone that we're only in 3% U.S. market. As Scott already mentioned, we are raising our revenue guidance in 2025, and that also implies that we're not seeing a meaningful difference on the competitive front.

Josh Jennings (Managing Director)

Thank you.

Operator (participant)

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

Jon Young (Director and Equity Research Analyst)

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

Scott Blumberg (CFO)

The comments I gave as it relates to our margins has no change in pricing policy. We have continued to make appropriate but not egregious increases in pricing to our customers, and we have continued to deliver value to them both as a cost saver and revenue generator. Customers have been receptive to that. We have not contemplated, or our guidance does not contemplate any change in strategy such as tariff-based price increases. Of course, that is something we may look at, but not included in those numbers.

Jon Young (Director and Equity Research Analyst)

Great. Thanks.

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 (CFO)

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

Jon Young (Director and Equity Research Analyst)

Great. Thanks so much, Scott.

Operator (participant)

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

Jeffrey Cohen (Managing Director and Director of Equity Research)

Hi, Jane and Scott. Thanks for taking our questions. One shorter, one longer one. First, could you comment on Pediatric Clarity as far as number of SKUs and the actual headband itself and its manufacturers? Same process, same unit, and same number of leads?

Jane Chao (Co-founder and CEO)

Just to make sure I understand the question, it's a Pediatric Clarity in terms of whether or not it's an additional product in terms of SKU?

Jeffrey Cohen (Managing Director and Director of Equity Research)

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? The hardware portion.

Jane Chao (Co-founder and CEO)

Yeah. Our hardware has already been approved, cleared by FDA for all ages. There are already different sizes of headband using the existing product. Even before this Pediatric Clarity, we actually have pediatric patients using Ceribell system. They just not use Clarity. They only use the hardware as the base version. 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 PICU, pediatric ICU, and they all have pediatric population in their emergency department, we would expand Clarity usage from adult to pediatric.

Jeffrey Cohen (Managing Director and Director of Equity Research)

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

Jane Chao (Co-founder and CEO)

Yeah. Yeah. The clinical context of your question, let me lay that out first. Before Ceribell, many ICUs have some level of access of EEG. By contrast, the majority of emergency departments almost never use EEG.

Because conventional EEG can take hours or even days, it does not work with the timeframe that ED operates on, which is 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 that is clear-see 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. Within the hospital clinical setting, often the ICU would support or even recommend our product to the emergency department.

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

Jeffrey Cohen (Managing Director and Director of Equity Research)

To your senses, the awareness is coming, both 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 (Co-founder and CEO)

That is correct.

Jeffrey Cohen (Managing Director and Director of Equity Research)

Perfect. Thanks for taking our questions.

Jane Chao (Co-founder and CEO)

Thank you, Jeff.

Operator (participant)

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

Jane Chao (Co-founder and CEO)

Thank you.

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

Operator (participant)

This concludes the meeting. You may now disconnect.