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NM

NEUROONE MEDICAL TECHNOLOGIES Corp (NMTC)·Q1 2025 Earnings Summary

Executive Summary

  • Record quarter: total revenue of $6.3M, comprised of $3.3M product revenue (+235% YoY) and a one-time $3.0M Zimmer Biomet license payment; net income of $1.8M (EPS $0.06) vs. $(0.14) in Q1 FY24, reflecting stronger margins and opex control .
  • Reaffirmed FY25 guidance: product revenue $8–10M and product gross margin 47–51%; management noted product revenue will decline sequentially in Q2 given initial Zimmer stocking but ramp through year as launch expands .
  • Commercial traction: OneRF installed at 5 epilepsy centers with 18 in active discussions; early outcomes reported as seizure-free or significantly reduced seizures; new ICD-10-PCS inpatient code effective Oct 1, 2024 supports reimbursement workflows .
  • Compliance/milestones: Regained Nasdaq minimum bid compliance; trigeminal nerve RF ablation 510(k) on track for 1H CY2025, a potential late-2025 revenue contributor if cleared .

What Went Well and What Went Wrong

What Went Well

  • Significant operating leverage: product revenue rose to $3.3M (+235% YoY) and product gross margin reached 58.9% (vs. 27.2% a year ago), driving net income of $1.8M and EPS of $0.06 .
  • Strategic distribution and economics: expanded exclusive Zimmer Biomet distribution with $3.0M upfront license payment and improved transfer pricing; management expects the partnership to “boost NeuroOne revenue and drive improved profitability” .
  • Early clinical validation and adoption: “in all but 1” OneRF procedures, patients are seizure-free; one patient is >9 months seizure-free; 5 centers installed and discussions with 18 more centers underway; new ICD-10-PCS code effective Oct 1, 2024 supports hospital billing .
    • Quote: “This technology is a game changer… neurosurgeon [can] use the same electrode for both diagnostic and ablation… creating a unique, competitive and a first-mover advantage.” — Dave Rosa, CEO .

What Went Wrong

  • Sequential volatility near-term: CFO guided Q2 product revenue will decline sequentially due to completion of initial Zimmer stocking order in Q1; ramp expected thereafter as launch expands .
  • One-time nature of license uplift: the $3.0M license revenue from Zimmer is non-recurring upfront, elevating total Q1 revenue comparability; FY25 guidance explicitly excludes license revenue .
  • Liquidity still tight at quarter-end (pre-April raise): cash and equivalents were $1.1M as of Dec 31, 2024, albeit debt-free; working capital was $4.1M; company subsequently highlighted Nasdaq compliance regained, but funding expansion came post-quarter .

Financial Results

Quarterly performance vs. prior quarters

MetricQ3 FY2024Q4 FY2024Q1 FY2025
Product Revenue ($)$825,776 $0.3M $3,274,167
License/Collaboration Revenue ($)——$3,000,000
Total Revenue ($)——$6.3M
Product Gross Profit ($)$281,872 —$1,926,889
Product Gross Margin (%)——58.9%
Total Operating Expenses ($)$3,075,773 $3.0M $3,215,682
Net Income (Loss) ($)$(2,767,525) $(3.3)M $1,785,322
Diluted EPS ($)$(0.10) —$0.06

Notes:

  • Q4 FY2024 press release provides quarterly product revenue and net loss but does not disclose exact EPS or product gross profit/margin for the quarter .

Q1 FY2025 revenue composition

ComponentAmount ($)
Product Revenue$3,274,167
License Revenue (Zimmer upfront)$3,000,000
Total Reported Revenue$6.3M

Additional KPIs and balance sheet snapshots

KPI/MetricQ1 FY2025
OneRF installed centers5
Additional centers in discussion18
Patient outcomes (early experience)Seizure-free or materially reduced/severity reduced; longest seizure-free >9 months
ICD-10-PCS code effectiveOct 1, 2024
Cash & Equivalents$1.1M (Dec 31, 2024)
Working Capital$4.1M (Dec 31, 2024)
Debt$0 (Dec 31, 2024)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Product RevenueFY2025$8.0–$10.0M (Dec 17, 2024) $8.0–$10.0M (Feb 12, 2025) Maintained
Product Gross MarginFY202547%–51% (Dec 17, 2024) 47%–51% (Feb 12, 2025) Maintained
Trigeminal Nerve RF 510(k) submission timingRegulatory milestone“First half of fiscal 2025” (Dec 2024) “First half of calendar 2025” (Feb 2025) Clarified timing basis

Guidance color from call: Q2 product revenue will be down sequentially due to initial stocking in Q1, then ramp through the year as the launch expands .

Earnings Call Themes & Trends

TopicQ-2 (Q3 FY2024)Q-1 (Q4 FY2024)Current (Q1 FY2025)Trend
Zimmer Biomet distributionNon-binding term sheet for distribution; initial shipments/ablations; training under way Exclusive expansion signed; $3.0M upfront; launch prep Expanded partnership live; initial stocking completed; improved transfer pricing Accelerating commercialization
Clinical outcomes (OneRF)First RF ablations; >50 ablations on 3 patients 12 patients; positive outcomes Majority seizure-free; one >9 months seizure-free Strengthening validation
Reimbursement/codingCMS ICD-10-PCS code granted effective 10/1/24 Code effective 10/1/24 reiterated Code effective; supports billing/claims Foundation in place
Trigeminal nerve ablationDevelopment progress; 510(k) expected 1H FY2025 510(k) expected 1H FY2025 510(k) submission on track for 1H CY2025; potential 2025 revenue Nearing submission
Spinal Cord Stimulation (SCS)Acute animal study; CAD/lab progress; design finalized Acute study planned; chronic study next Acute study completed; exploring partners Partnering focus
sEEG-based drug deliveryFeasibility in vivo; partner discussions Design freeze; award at CNS Feasibility reinforced; continuing partner discussions Ongoing BD activity
Capital/ListingATM/Private placement in Aug 2024 Credit facility (later terminated) Regained Nasdaq compliance Improved standing

Management Commentary

  • “We have achieved record product sales of $3.3 million as well as record product gross margins of 58.9%... Combined, we are reporting total first quarter revenue of $6.3 million” — Dave Rosa, CEO .
  • “The expanded partnership with Zimmer Biomet includes improved transfer prices and is expected to boost NeuroOne revenue and to drive improved profitability given their extensive distribution network and scale.” — Dave Rosa .
  • “We expect product revenue to be in the range of $8 million to $10 million… and product gross margins to be between 47% and 51%. Importantly, this guidance excludes our upfront license payments received from Zimmer.” — Dave Rosa .
  • “We remain on track to submit a 510(k) application to the FDA in the first half of calendar year 2025 for our new trigeminal nerve radiofrequency ablation system designed to treat patients with debilitating facial pain.” — Dave Rosa .

Q&A Highlights

  • Drivers of strong outcomes: Management attributes results to single-hospitalization workflow using the same device for diagnosis and ablation, which may improve precision and outcomes; clinical success is typically measured at 1-year post-surgery, with one patient >9 months seizure-free to-date .
  • Gross margin sustainability: Long-term gross margin guidance (47–51%) reaffirmed; Q1’s ~59% was elevated due to a transitional period before finalizing Zimmer’s expanded agreement; margins expected within guided range going forward .
  • Trigeminal 510(k) process/timing: Remaining sterilization/packaging testing underway; submission targeted 1H CY2025; prior OneRF brain submission took ~5 months from submission to clearance, though no guarantee .
  • FY25 cadence: CFO flagged Q2 product revenue down sequentially post-stock order, with ramp thereafter across the year .

Estimates Context

  • We attempted to retrieve S&P Global (Capital IQ) consensus estimates for quarterly EPS and revenue but were unable to access them due to a daily request limit. As a result, we cannot provide a definitive beat/miss versus Wall Street consensus for Q1 FY2025 at this time. If desired, we can refresh this comparison when access is available.

Key Takeaways for Investors

  • Commercial inflection: Expanded Zimmer partnership, initial stocking, improving transfer pricing, and early clinical validation underpin a credible revenue ramp, albeit with expected Q2 sequential dip before reacceleration .
  • Margin trajectory: Structural gross margin step-up from channel economics and scale; Q1’s ~59% product GM likely above the long-term range, but 47–51% remains credible given improved transfer pricing and manufacturing mix .
  • Pipeline catalysts: Trigeminal 510(k) submission in 1H CY2025 and potential late-2025 revenue if cleared; active BD across SCS and drug delivery expand optionality beyond epilepsy .
  • Liquidity/derisking: While Q1 cash was $1.1M with no debt, management subsequently emphasized improved standing (Nasdaq compliance regained) and later raised capital in April (not part of Q1 but relevant to ongoing funding runway) .
  • Concentration and comparability: Q1 includes a non-recurring $3.0M license payment; investors should focus on product revenue trajectory relative to the $8–10M FY25 guide and Zimmer sell-through cadence .
  • Trading setup: Near-term softness possible around Q2 sequential revenue decline, but constructive path into 2H FY25 with broader Zimmer launch, site adds, and potential regulatory catalyst on trigeminal nerve ablation .