electroCore - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue grew 23% year over year to $6.7M but was a slight miss versus S&P Global consensus ($6.72M actual vs $6.93M estimate; GAAP EPS -$0.47 vs -$0.447 estimate), with softness in U.S. commercial Rx and TAC-STIM offset by strong VA channel and Truvaga growth. Revenue Consensus Mean and EPS estimates from S&P Global shown with asterisks below.*
• Mix and operating cost seasonality mattered: gross margin held at 85% (up 100 bps YoY), but SG&A rose on seasonality and one-time NeuroMetrix transaction/severance (~$665k total).
• Management introduced 2025 revenue guidance of ~$30M and net cash use for the next three quarters of $3.8–$4.3M, and reiterated mid‑80s gross margin expectations, framing a path to cash neutrality at ~$9M quarterly revenue via 65% contribution margins on incremental sales.
• Near-term catalysts: (1) five-year VA Federal Supply Schedule (FSS) contract effective June 15, 2025; (2) NeuroMetrix/Quell integration and potential lift in H2 2025–2026; (3) Truvaga expansion (Amazon channel, Apple Health integration).

What Went Well and What Went Wrong

• What Went Well
  • VA and wellness momentum: Rx gammaCore VA revenue up 22% YoY to $4.7M; Truvaga up 187% YoY to $1.1M; gross margin held at 85%. “We maintained gross margins...”.
  • Structural wins: new five-year VA FSS contract begins June 15, 2025, supporting durable VA access.
  • Portfolio expansion: closed NeuroMetrix; Quell added ~$170k unaudited Q1 net sales and broadens addressable market; pilot distribution for Spark Biomedical’s Sparrow underway in limited VA sites.
• What Went Wrong
  • Softer channels: U.S. commercial Rx down 33% YoY to $289k as cash-pay users migrate to Truvaga; TAC-STIM down 70% YoY to $90k and remains lumpy.
  • Higher operating costs: SG&A rose on seasonality, severance, and NeuroMetrix transaction-related expenses (~$665k).
  • Cash burn: cash, cash equivalents, restricted cash and marketable securities fell to ~$8.0M at 3/31/25 (from ~$12.2M at 12/31/24), and net cash used in operating activities in Q1 was $4.4M (seasonal).

Transcript

Speaker 0

Welcome to the electroCore First Quarter 2025 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. It is now my pleasure to introduce your host, Dan Goldberger, electroCore's Chief Executive Officer.

Dan Goldberger (CEO and Director)

Thank you all for participating in today's electroCore earnings call. Joining me today is Joshua Lev, our Chief Financial Officer, and our investor relations firm, FNK IR. Earlier today, electroCore published results for the first quarter ended March 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. 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. electroCore 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, May 7, 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. I'll discuss this acquisition later in the call. electroCore was founded in 2005 and pioneered non-invasive vagus nerve stimulation. Today, the company offers a suite of non-invasive 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, non-invasive bioelectronic technologies. 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 2025, we reported revenue of $6.7 million, a 23% increase over the first quarter of the prior year. Gross margins were 85% in the first quarter of 2025 as compared to 84% last year, and we expect our gross margins to remain in the mid-80s. Prescription gammaCore VA revenue grew 22% to $4.7 million in the first quarter of 2025 from $3.9 million during the first quarter of 2024. 175 VA facilities have purchased prescription gammaCore products through March 31, 2025, as compared to 151 through March 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 a restructuring of our field sales organization. As these headwinds have abated, we are regaining momentum.

We've started adding field sales headcount in the second quarter of 2025. March and April 2025 monthly revenues in our VA channel have accelerated to about $1.7 million. The VA Hospital Administration Headache Centers of Excellence estimates approximately 600,000 patients are being treated for headache in the VA hospital system, including approximately 24,000 cluster headache patients. We believe there are as many as 550,000 fibromyalgia patients in the VA hospital system based on published incidence 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 mechanisms, which we believe represents approximately 1.6% of the total addressable headache market within the VA system.

Neurometrics has previously dispensed approximately 350 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. Longer term, we will evaluate market access through other third-party payer systems and hospital networks for our prescription product suite. Truvaga is our direct-to-consumer general wellness brand for stress, relaxation, quality of sleep, and mental acuity. In the first quarter of 2025, Truvaga net sales were approximately $1.1 million, a 187% increase from the first quarter of 2024. Our revenue return on advertising spend was approximately 2.26 for the first quarter of 2025. In other words, during the first quarter of 2025, for every $1 we spent on media, we generated $2.26 of revenue. Truvaga return rates remain steady at approximately 10%-11% of shipments for the first quarter of 2025.

We are increasing our media budget 5% every month to continue driving growth in this channel. Since launching Truvaga, 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 Truvaga business will continue to scale if we can maintain or improve these metrics and add product offerings. Most of our Truvaga revenue comes through our e-commerce platform, www.truvaga.com. Following the successful launch of Truvaga Plus in April 2024, we began exploring additional channels to reach consumers, including influencers, affiliates, and resellers. In February 2025, we launched Truvaga Plus on Amazon. Since launching on Amazon, more than 200 units have sold through that platform. More recently, we announced that Truvaga Plus now works with the Apple Health app, providing our Truvaga Plus customers using the iOS operating system with an ability to better track their health.

Our U.S. prescription channel recorded revenue of $289,000 during the quarter ended March 31, 2025, down 33% from Q1 2024. As expected, many cash-pay customers have migrated to the Truvaga brand as awareness grows, and we continue modeling flat revenue from this prescription channel for the time being. As of March 31, 2025, we have enrolled 144 Truvaga Plus partners, including 49 GConcierge accounts who offer both product lines. We look forward to adding Quell fibromyalgia to these accounts as well. Revenue from channels outside the U.S. or OUS of $513,000 for the quarter ended March 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 model flat revenue from this category for the time being.

We are on track to launch Truvaga in the U.K. 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. This year, we had additional one-time expense for severance associated with an internal restructuring and finalizing and closing the acquisition of Neurometrics. While we used about $4.2 million in cash during the first quarter for all these disbursements, our modeling with conservative revenue growth anticipates about $4 million net cash required for the rest of 2025. We're currently on track to spend less than $2 million 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 non-recurring expenses of about $665,000 incurred in the first quarter will not repeat in the second, third, and fourth quarters. 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 revenue of about $9 million. That's about 34% more than the $6.7 million 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. U.S.

Consumers spend nearly $20 billion annually out of pocket for chronic pain treatments, including headache and fibromyalgia, among others. It's estimated that approximately 6% of U.S. 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. 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 2025, 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 2025 revenue is likely to be similar to Q1 2025.

Once Rockaway is up and running, we will add prescription Quell fibromyalgia to our prescription distribution channels and Quell 2.0 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 2025 and generate meaningful revenue from the product line in 2026. Quell fibromyalgia is a prescription non-invasive nerve stimulation device. Quell fibromyalgia is FDA authorized, covered by 27 issued U.S. utility patents, and Neurometrics invested more than 10 years and tens of millions of dollars in clinical work and product development. Quell fibromyalgia provides flexible, precise, high-power nerve stimulation 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. On February 27, 2025, we announced a distribution agreement with Spark Biomedical, giving us access to the Sparrow Ascent product line, an FDA-cleared non-invasive transcutaneous auricular neuromodulator 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 2025. If successful, we hope to expand distribution later this year. We believe the total addressable market in the United States for Sparrow is $2.4 billion associated with opioid detox and another $3.7 billion in relapse prevention. More information on Spark Biomedical can be found at www.sparkbiomedical.com.

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

Joshua Lev (CFO)

Thank you, Dan. Net sales for the quarter ended March 31, 2025, were $6.7 million, an increase of 23% as compared to $5.4 million for the quarter ended March 31, 2024. The increase of $1.3 million 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 Truvaga products. Gross profit for the quarter ended March 31, 2025, was $5.7 million as compared to $4.6 million for the quarter ended March 31, 2024. The increase in gross profit was primarily driven by the increase in net sales. Gross margin was 85% for the quarter ended March 31, 2025, as compared to 84% for the quarter ended March 31, 2024.

Total operating expenses in the first quarter of 2025 were approximately $9.5 million as compared to $8.4 million in the first quarter of 2024. Research and development expense in the first quarter of 2025 was $642,000 as compared to $399,000 in the first quarter of 2024. This increase was primarily due to an increase in headcount. We expect R&D expense to continue at this level for the next few quarters. Selling, general, and administrative expense in the first quarter of 2025 was $8.9 million as compared to $8 million in the first quarter of 2024. This increase was primarily due to our greater investment in selling and marketing activities consistent with our increase in sales, an 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 2025 was $3.9 million compared to $3.5 million in the first quarter of 2024. 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 2025, 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 2024.

Net loss per share for the first quarter of 2025 was $0.47 as compared to a $0.53 per share net loss in the first quarter of 2024. Adjusted EBITDA net loss in the first quarter of 2025 of $3.1 million was flat compared to adjusted EBITDA net loss of $3.2 million in the first quarter of 2024. 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 March 31, 2025, totaled approximately $8 million as compared to approximately $12.2 million as of December 31, 2024. Net cash used in operating activities for the first quarter of 2025 was $4.4 million as compared to $1.3 million in the fourth quarter of 2024.

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 million and net cash used for the next three quarters to be between $3.8 million and $4.3 million. Now, I'll turn the call back to Dan.

Dan Goldberger (CEO and Director)

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 2025 with new bioelectronic products and technologies that we believe fit extremely well into our established channels.

In addition, we are past the quarter that carries the highest level of cash disbursement, and I'm optimistic that our operating metrics will continue to improve as revenues grow, the one-time expenses fall away, and we maintain discipline over operating expenses. Demand for gammaCore in 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 June 15, 2025, for at least five years until 2030, and we've begun working with Level to make the Quell and Sparrow Ascent 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 2025, we've refocused our efforts on onboarding new headcount. As of May 2025, we completed a restructuring of our field sales function, and we have 49 active 1099 entities representing about 80 sales agents, including subreps, managed by 10 territory business managers who are salaried employees. We expect the size of our team to grow in the second half of 2025 as we balance investment and future revenue growth with the path to profitability. Truvaga 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 Truvaga products direct-to-consumer through our e-commerce site, www.truvaga.com, and amazon.com. Truvaga is also available through a small but growing number of business-to-business-to-consumer initiatives such as Truvaga Partners, Perks at Work, and through a handful of resellers.

We continue exploring the expansion of the Truvaga 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 TacStim products, and TacStim 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 2025, our sales and marketing expense increased by approximately $432,000, while sales grew by $1.3 million. 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.

The acquisition of Neurometrics and the distribution agreement with Spark Biomedical will provide patients and prescribers with more non-invasive 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 cost, mostly batteries, comes from China and Southeast Asia. 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 take a moment to recognize the extraordinary efforts and success of the Neurometrics team led by Dr. Shai Gozani. I hope that we can be good stewards of their legacy. At this time, I'll return the call over to the operator. Operator, please open the line for questions.

Thank you, Dan. We're now going to open up the Q&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. Just a quick note, when you're called on, you may need to unmute your microphone. The second option is to use the Q&A widget. This allows you to type out your question, and we'll take questions from there as well. If 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, with that, we'll pause for a moment to give everyone time to add their questions to the queue. First question comes from Tyler Burson.

Tyler Burson (Analyst)

Hello, Joshua and Dan, can you hear me? Yeah. Hi, Tyler. How are you today? Doing great. Congrats on the quarter. Really excited to see what Neurometrics can do here in 2025.

A 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 2024. What kind of estimates do you have for Quell regarding margin when you kind of get to the end of this year with manufacturing set up?

Dan Goldberger (CEO and Director)

Great question, Tyler. 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 move the supply chain, right, the various vendors that supply components to us, we'll be able to better answer that question. In general, I think our overhead absorption should be substantially better than the legacy Neurometrics structure.

Unfortunately, as the business declined, they were underabsorbing in their previous structure. I'm optimistic that we'll be well above the 60% mark, but I really can't be any more precise than that right now. In 90 days, when we do our call, we'll have better numbers for you.

Tyler Burson (Analyst)

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

Dan Goldberger (CEO and Director)

We don't think so. The electromechanical components generally come from domestic suppliers. There are some components that do come from Southeast Asia, but we've got plenty to get started with.

I think the exposure is similar to what we have in our Truvaga and Sapphire product lines.

Tyler Burson (Analyst)

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

Dan Goldberger (CEO and Director)

Thank you, Tyler.

Thank you. A reminder again, if you have a question, you can use the raise your hand button or use the Q&A widget. The next question comes from Jeff Cohen. The question is, "Hi Dan, pro forma cash is now at what? How does it look after the NeuroClose?"

The cash at March 31 is probably about where we are today. The total cost of the transaction was not cash. At 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. Great.

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

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. I continue to see that as a back half of this year opportunity.

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

R. K. (Managing Director and Senior Healthcare Analyst)

Good afternoon. Can you hear me?

Dan Goldberger (CEO and Director)

Yeah. Hi, RK.

R. K. (Managing Director and Senior Healthcare Analyst)

Hi. Regarding the top-line revenues that you just announced, how should we think about growth of that? Also, on the TacStim product, I know it is very lumpy and it is very difficult to model or predict.

But in general, what are the pushes and pulls on that part of this, on that segment of the business?

Dan Goldberger (CEO and Director)

Yeah. I'll start with TacStim first. I think we said we had $90,000 of revenue from TacStim in the March 31st quarter. We will have a similar revenue line in the current quarter. We have RFPs that are out there for several million dollars of business, but I can't see beyond this sort of $100,000 per quarter revenue line 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 the United Kingdom through the NHS. The VA hospital business returned to sequential growth. April was strong, and so I think we're going to see sort of mid to high single-digit sequential growth in that channel in the current quarter.

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.

R. K. (Managing Director and Senior Healthcare Analyst)

Fantastic. On the VA business, as you said, you have additional three years that you recently got approved. With that wind beneath your wings, are you trying to increase more support in terms of sales in the VA hospitals? Now that you have additional products like Sparrow products, 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 if that's not something that you need to be concerned every quarter, how much more can you spend to grow that business as much as you can?

Dan Goldberger (CEO and Director)

Yeah. Excellent question.

It's a five-year contract, not a three-year. Just to be clear, that's okay. Sorry, sorry. I have to brag when we can. Josh did a great job on that. We restructured our sales leadership somewhat, and I don't want to talk too much about hiring practices on a public call, but we've added two more employees in April. We're going to add some more W-2 employees as we go through the current quarter. Each W-2 employee gives us an opportunity to engage as many as 8-10 additional 1099s. I 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. Sorry about being a little bit vague, but I need to be careful when we talk about personnel issues.

R. K. (Managing Director and Senior Healthcare Analyst)

No, no. I totally understand that.

On the Truvaga business, it seems to be growing pretty good. How much, I know you started talking about utilizing Amazon and other resellers. How much of that effort is actually converting into meaningful dollars? I know it's early stages, but still, what sort of KPI are you watching and you're actually recognizing?

Dan Goldberger (CEO and Director)

Yeah. Amazon, I think we said in our prepared remarks, it was a few hundred units that we sold through Amazon, which is a pretty fast start for middle of February to the end of March. The economics of Amazon are different, and 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 2. I think a conservative way to model it is that if we're increasing the media spend 5% per month, that's what kind of revenue growth we are looking for as well. In addition, at the risk of repeating ourselves, we also went live on Apple Health in just the last couple of weeks, and that's going to bring additional eyeballs, additional awareness to the brand. I'm optimistic about getting a lift from that as well.

R. K. (Managing Director and Senior Healthcare Analyst)

Okay. Talking about lift in revenues, you have two additional entities to start talking about soon. One is the Sparrow, which is more of a distribution business, and the Neurometrics, which is just completed acquisition. I know it's early, but how should we think about contributions from that?

I know you made some remarks in your opening statements, but in general, how soon could they become meaningful? Is it more in the back end of this year, or should we kind of be really careful and wait till like 2026 to get totally excited about that?

Dan Goldberger (CEO and Director)

Yeah. Someplace in the middle. Sparrow, we are limited to six pilot sites, and we're going to be very conservative about making sure we have a business model that works before we expand that. I think from 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 legacy refills for previous products were about $170,000 of revenue in the first quarter. I reserve the right to adjust that number once we have a chance to prepare the Proforma audited financials.

April was on that same pace. Again, it's unaudited preliminary numbers that we inherited. I think that kind of revenue, $150,000 for the current quarter, we're going to be supply limited until Manny can get the manufacturing facility here in Rockaway validated. Once we do that, once our manufacturing facility is validated and we have supply, I think we can have some upside surprises putting the Quell fibromyalgia project into the hands of our sales guys. 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. It could be a nice upside surprise for us.

R. K. (Managing Director and Senior Healthcare Analyst)

Fantastic. Last question from me. I'm sorry I'm kind of fogging the thought.

On the R&D front, I think if I heard Josh correctly, you're expecting to increase a little bit of the R&D expense throughout the year. What are the things that we should be looking out for from the R&D front in terms of additional indications or things that could help sustain the growth?

Dan Goldberger (CEO and Director)

Yeah, great question. We're going to hold our R&D line pretty steady at that $642,000. Most of that is our medical affairs staff. Most of what they're going to be doing this year is sales support, talking about the data in post-traumatic stress disorder, talking about the recently published data that came out around traumatic brain injury 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.

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 we're kind of on hold with PTSD until we get that.

R. K. (Managing Director and Senior Healthcare Analyst)

Thank you. Thanks for taking all my questions.

Dan Goldberger (CEO and Director)

Of course. Thanks for your support, RK.

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

Josh, do you have any thoughts on that?

Joshua Lev (CFO)

Yeah. 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.

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. As Dan mentioned, we did have a restructuring during this quarter around some of that sales staff, but net net, we're only adding, I think, one or two people. That fixed portion of it should remain flat. When you think about G&A expense, however, I think what we said in the script is that we believe that it's going to maintain around the 2024 levels. If you take a look at historical levels of that G&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&A should pan out.

We do not see or expect to have much change in that G&A expense. It is typically that first quarter where we have the seasonal expenses associated with filing of our full-year financials, as well as some of these reorganizations that we were doing that really affected it this past quarter. Of course, the last piece is Neurometrics.

Thank you, Josh. We are 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.

Dan Goldberger (CEO and Director)

Yeah. Thank you, Rob, and thank you all for joining us today. Lots going on. I am 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. I want to thank the employees of Neurometrics and Dr.

Shai 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. I think we've got a very, very bright future ahead. I'm thrilled to be here. Thanks, everybody.