NanoVibronix, Inc. (NAOV)·Q2 2021 Earnings Summary

Executive Summary

• Q2 2021 revenue was $0.318M, up 18% year over year; gross margin expanded sharply to 65% on higher-margin distributor sales and absence of special discounts. EPS improved to $(0.01) from $(0.20) in Q2 2020 and $(0.20) in Q1 2021. The quarter included first shipment under UPPI’s expanded contract (minimum $7.8–$8.0M over three years), supporting multi-quarter ramp potential .
• Management signaled demand exceeding supply across commercial, insurance and VA channels; engaged additional manufacturers in the UK, Israel, US and Mexico to scale output. Cash was $5.7M at quarter-end with zero long-term debt, providing runway for commercialization and capacity expansion .
• Strategic catalysts: launch of OTC PainShield RELIEF, Medicare reimbursement initiatives (CMS code for PainShield, CMS request submitted for UroShield/PainShield Plus), and Australian TGA registration for UroShield—broadening addressable market and access channels .
• Nasdaq compliance issues were resolved twice in 2021 (minimum equity and bid price), mitigating listing risk; however, legal proceedings (Protrade arbitration) and remaining internal control remediation remain watch items .

What Went Well and What Went Wrong

What Went Well

• Revenue growth and margin expansion: Revenue +18% YoY to $0.318M; gross margin rose to 65% (from 14%) on improved pricing to distributors and no special discounts in 2021 .
• Distribution and product launches: “Opening availability of our pain management device to the mass market should greatly expand our revenue potential” (PainShield RELIEF OTC). “We fulfilled the first [UPPI] order in Q2 2021 and are working diligently to accelerate manufacturing and fulfill subsequent orders” .
• Reimbursement and regulatory momentum: CMS code for PainShield (K1004) and CMS request submitted for UroShield/PainShield Plus; UroShield added to Federal Supply Schedule; TGA registration approval in Australia .

What Went Wrong

• Supply constraints: “The demand we are experiencing exceeds our supply…we are actively searching for additional manufacturers” — constraining near-term revenue conversion despite strong order backlog .
• Elevated OpEx vs revenue scale: Total operating expenses of $1.199M (~377% of revenue) as the company ramps selling/marketing and G&A, keeping operating margin deeply negative despite gross margin gains .
• Ongoing legal and control risks: Protrade arbitration seeks ~$3M; internal control material weaknesses (including over-issuance remediation) still in process—potentially distracting management and adding costs .

Financial Results

Segment/geography revenue

KPIs and balance metrics (scaling)

Observations:

• Gross margin improvement is a significant surprise given microcap scale—driven by pricing mix and tightened discounting policies. EPS improvement reflects derivative liability mark-to-market gains and lower G&A vs prior-year settlement noise, partially offset by higher selling/marketing .
• US revenue mix rose materially (92% of Q2 sales), consistent with UPPI channel shipments and DME/VA access; Europe mix declined with pandemic-related impacts and distributor cadence .

Guidance Changes

Note: Company did not issue formal numerical guidance ranges; commentary indicates directional revenue/margin tailwinds tied to distribution, reimbursement, and capacity expansion .

Earnings Call Themes & Trends

Management Commentary

• “Opening availability of our pain management device to the mass market should greatly expand our revenue potential and provide us with the opportunity to scale and leverage our manufacturing and distribution infrastructures” — Brian Murphy, CEO .
• “The demand we are experiencing exceeds our supply…we are actively searching for additional manufacturers…to expand output” — Brian Murphy .
• “We are nearing an inflection point…received approval for reimbursement of PainShield with a dedicated product code from CMS, launched PainShield Plus, significantly expanded a distribution agreement…and refined manufacturing processes” — Brian Murphy .
• “We recently completed the application process with CMS to receive a reimbursement code for our UroShield and PainShield Plus devices and have been granted approval and reimbursement at favorable rates from the Federal Supply Schedule” — Brian Murphy .

Q&A Highlights

• No public Q2 2021 earnings call transcript was available; management’s disclosures above derive from the press release and 10-Q narrative .

Estimates Context

• Wall Street consensus estimates via S&P Global for NAOV’s Q2 2021 EPS and revenue were unavailable; coverage appears limited for this microcap. As a result, we cannot formally assess beats/misses versus consensus. Values retrieved from S&P Global were unavailable due to data constraints.

Key Takeaways for Investors

• Margin quality improved materially; with 65% gross margin, the pricing mix/distributor strategy is working. Sustained gross margin ≥60% would be a key validator as revenue scales .
• Sequential step-up from Q1 ($0.103M) to Q2 ($0.318M) demonstrates initial conversion of UPPI pipeline; watch quarterly cadence of UPPI orders and OTC RELIEF sell-through for sustained momentum .
• Near-term bottleneck is supply: additional manufacturing capacity is the gating factor for revenue acceleration; monitor timing of UK/Israel/US/Mexico onboarding and lead times .
• Reimbursement/access catalysts (CMS, VA, TGA) expand TAM and reduce frictions; successful CMS outcomes for UroShield/PainShield Plus could unlock Medicare volume, especially in urology indications .
• Legal/control overhangs (Protrade arbitration; internal control remediation) are non-fundamental but can add costs/volatility; track resolution milestones and remediation updates in subsequent filings .
• Liquidity runway ($5.7M cash, nil long-term debt) supports commercialization and capacity scaling; however, cash burn and working capital needs should be monitored given negative operating cash flow YTD .
• Without sell-side estimates, price reactions may key off operational catalysts (OTC launch, reimbursement wins, manufacturing scale-up) and recurring proof points in quarterly revenue progression; near-term trading likely headlines-driven.