NeuroPace - Earnings Call - Q1 2025

Executive Summary

• Q1 2025 revenue reached $22.5M (+24% YoY) with gross margin of 77.0%, both record levels for the company; RNS System sales rose 26% YoY (29% excluding NAUTILUS study implants in Q1 2024).
• Results beat Wall Street: revenue $22.5M vs consensus $21.8M*, EPS (-$0.21) vs consensus (-$0.235)*; management raised FY25 revenue guidance to $93–$97M (from $92–$96M) while maintaining GM 73–75% and OpEx $92–$95M.
• Strategic updates: portfolio refocus to core RNS (SEEG distribution to wind down in Q4’25–Q1’26), minimal tariff impact expected, and strong 3‑year PAS data (82% median seizure reduction; 42% ≥6‑month seizure‑free) to support adoption.
• Near-term catalysts: NAUTILUS pivotal data and FDA submission in 2H 2025; continued Project CARE expansion and AI-enabled software release in 2H 2025.

What Went Well and What Went Wrong

What Went Well

• Record quarterly revenue and margin execution: $22.5M revenue (+24% YoY) and 77.0% GM, driven primarily by higher RNS volumes and manufacturing efficiencies.
• RNS adoption momentum and prescriber growth, aided by Project CARE referrals/implants; CEO: “We had a strong first quarter… driven by strong growth in our core RNS business”.
• Compelling clinical validation: PAS 3‑year data showed an 82% median seizure reduction and 42% of patients with ≥6 months seizure‑free; management is leveraging the data in field engagement.

What Went Wrong

• Operating expenses rose 8% YoY to $22.5M on increased R&D (AI and next-gen platform) and clinical trial costs; net loss was $6.6M (vs $8.9M in Q1’24).
• Cash burn increased to $7.5M in Q1 (from $4.8M in Q4’24 and $1.8M in Q3’24), though balance sheet strengthened via equity raise; CFO expects sufficient cash to reach breakeven per long-range plan.
• Gross margin guidance implies a step-down from Q1’s 77% despite RNS strength; CFO reiterated quarter-to-quarter variability and maintained 73–75% full-year GM.

Transcript

Operator (participant)

Greetings and welcome to the NeuroPace First Quarter 2025 earnings conference call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Jeremy Feffer of LifeSci Advisors. Please go ahead.

Jeremy Feffer (Managing Director)

Good afternoon. Thank you for joining us for NeuroPace's First Quarter 2025 Financial and Operating Results conference call. On today's call, we will hear from Joel Becker, Chief Executive Officer, and Rebecca Kuhn, Chief Financial Officer. Earlier today, NeuroPace released financial results for the first quarter ended March 31st 2025. A copy of the press release is available on the company's website at neuropace.com. Before we begin, I would like to remind you that throughout this call, we will make statements that include forward-looking statements within the meaning of federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements made during this call that relate to expectations or predictions of future events, results, or performance are forward-looking statements.

All forward-looking statements, including those around NeuroPace's projections, business opportunities, commercial expansion, market conditions, clinical trials, and those related to our operating trends and future financial performance, expense management, estimates of market opportunity, and forecasts of market and revenue growth, are based on current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For more detailed descriptions of the risks and uncertainties associated with our business, please refer to the risk factors section of our public filings with the SEC, including our annual report on Form 10-K for the year ended December 31st 2024, filed with the SEC on March 4th 2025, and any other reports that we may file with the SEC in the future.

This conference call contains time-sensitive information, which we believe is accurate only as of this live broadcast on May 13th, 2025. NeuroPace 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. With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker. Joel?

Joel Becker (CEO)

Thank you, Jeremy, and good afternoon, everyone. I will start out today's call by reviewing our performance in the first quarter, as well as providing additional insights around our key business priorities for the remainder of 2025 and beyond. Before turning the call over to our CFO, Rebecca Kuhn, to present the details of our financial performance for the quarter ended March 31, 2025, which will be followed by a Q&A session. Let's get started. We had a strong first quarter, generating total revenue of $22.5 million and an increase of 24% compared to $18.1 million in the prior year period, driven by strong growth in our core RNS business. These results reflect solid execution on our strategy focused on expanding access to RNS therapy with another quarter of a record number of prescribers and ongoing momentum from our Project CARE Access initiative.

In the quarter, RNS sales increased by 26%, or 29% when excluding the impact of NAUTILUS study implants in Q1, 2024. We are encouraged by the accelerating growth we saw in the first quarter, driven by sustained strength in RNS adoption at level four centers and contributions from our Project CARE activities. In addition to these strong operating results, we executed on a number of important strategic initiatives in the first quarter, including holding an Investor Day in January where we articulated our long-term vision and plans for the company, completed a $75 million follow-on equity financing, adding a number of high-quality shareholders while transitioning a long-term shareholder, refocused our product portfolio on the significant opportunities in our higher margin RNS business by clarifying our SEEG plans beyond 2025, and completed one-year follow-up of the NAUTILUS study. A busy and successful first quarter of 2025.

During our investor day, we discussed three key pillars of our growth strategy: clinical, product, and market development. Today, I'd like to offer an update on the progress on our clinical development initiatives. We have made very good progress on three key programs, including our post-approval study in adults with focal epilepsy, the NAUTILUS idiopathic generalized study, and the pediatric focal epilepsy indication expansion study. In April, at the American Academy of Neurology annual meeting, we presented three-year effectiveness data from the post-approval study of the RNS System. This study is the largest prospectively enrolled FDA-reviewed study ever done in neuromodulation in the drug-resistant epilepsy population. It showed an 82% median reduction in seizures in adults treated with brain-responsive stimulation for drug-resistant focal epilepsy. Additionally, 42% of study participants had periods of more than six months of seizure freedom, which can be life-changing for drug-resistant epilepsy patients.

Development of this level and type of evidence, as well as demonstration of these best-in-class results, further demonstrates NeuroPace's leadership in the field of neuromodulation treatment for drug-resistant epilepsy. Moving to our ongoing NAUTILUS pivotal study, planned progress was made during the quarter in line with expectations, with study follow-up visits completed in March and primary safety and effectiveness endpoint evaluations ongoing. Study progress remains on track, and we expect to announce data and file the FDA submission during the second half of 2025. In addition, we continue to work on a pediatric focal epilepsy indication with FDA and the National Evaluation System for Health Technology, or NEST, an organization focused on the use of real-world data to expand indications for use with a focus on underserved populations.

This initiative leverages data from the Pediatric Epilepsy Research Consortium, or PERC, which has gathered an extensive set of data from children treated with RNS therapy across 27 pediatric centers. Data is also drawn from more than 25 peer-reviewed publications. We've had multiple discussions with the FDA on how this data can support an expanded indication, and we're optimistic about receiving the NEST Mark , an important milestone that would validate the data as the basis for an approvable study protocol. Under this strategy, we expect to complete our data analysis and submit the data to the FDA in the second half of the year. I would now like to discuss our recently announced decision to terminate our distribution of SEEG products. The distribution agreement was appropriate for our company when it was signed three years ago.

However, our RNS business and the opportunities associated with it have evolved significantly since that time, and we now have clinical indication expansion initiatives and a product development pipeline that we expect to yield significant opportunities in the near term. We believe that the best use of our resources to create value for the NeuroPace community of patients, clinicians, and shareholders is by doing what we are uniquely positioned to do, which is to focus on the significant opportunities within our RNS portfolio and make the RNS System the standard of care for the treatment of drug-resistant epilepsy patients. Our distribution arrangement will continue as usual through Q3 2025, after which we will begin winding down the relationship in the fourth quarter of 2025, continuing through the first quarter of 2026.

Importantly, the SEEG market is well-served by multiple providers, and we are confident our customers will have ample access to comparable diagnostic products through other channels. Our team is already working to ensure a smooth and supported transition for all of our customers. Financially, this change enhances our margin profile going forward, as SEEG gross margins have historically been around 50% versus gross margin on our RNS System over 78%. From a revenue perspective, given the timing of this proposed change, we do not anticipate any material revenue impact in 2025, as we will sell remaining inventory during the transition period, the impact of which is fully reflected in our revised guidance that Rebecca will outline later on. Additionally, given the timing and magnitude of our RNS opportunities, we continue to expect a 20% plus CAGR through 2027 and remain on track for achieving cash flow break-even by year-end 2027.

The first quarter of 2025 was a strong start to the year operationally, financially, and strategically. I will now turn the call over to Rebecca to review our financial results for the first quarter, as well as our guidance for the full year of 2025. Rebecca?

Rebecca Kuhn (CFO)

Thank you, Joel. Our revenue was $22.5 million for the first quarter of 2025, representing growth of 24% compared to $18.1 million for the first quarter of 2024. Revenue growth was primarily driven by increased sales of the RNS System, which grew 26% compared to the prior year. Excluding the contribution from NAUTILUS trial cases in the first quarter of 2024, RNS sales grew 29%. Sales of Dixie Medical SEEG products also contributed to growth in the quarter. Gross margin for the first quarter of 2025 was 77% compared to 73.6% in the first quarter of 2024. Gross margin for our RNS products was particularly strong this quarter, benefiting from improved manufacturing efficiency as fixed overhead costs were absorbed across a higher volume of units. This growth was partially offset by the lower gross margin from distribution of SEEG products.

R&D expense was $7.4 million in the first quarter of 2025, compared with $5.8 million in the same period of 2024. This increase was primarily due to increased personnel and program expenses for product development, including AI-powered software and next-generation device platform projects, and expenses of our clinical trials. SG&A expense was $15 million in the first quarter of 2025, compared with $15.1 million in the prior year period. This decrease was primarily due to a reduction in general and administrative personnel-related expenses, partially offset by an increase in sales and marketing personnel-related expenses and sales, field support, and commercial operations costs. Total operating expenses were $22.5 million in the first quarter of 2025, compared with $20.9 million in the same period of the prior year, representing an increase of 8%.

With revenue growing by 24% for the quarter, we continued to demonstrate strong operating leverage resulting from our focus on driving revenue growth while also effectively managing our operating expenses and gross margin. We plan to continue to focus on balancing these objectives as we drive toward cash flow break-even. Loss from operations was $5.1 million in the first quarter of 2025, compared with $7.5 million in the prior year period. We recorded $2.2 million of interest expense in the first quarter of 2025, compared to $2.3 million in the prior year period. Net loss was $6.6 million for the first quarter of 2025, compared with $8.9 million in the first quarter of 2024. Our cash burn in the first quarter of 2025 was $7.5 million. Our cash and short-term investments balance as of March 31st, 2025, was $66.3 million.

Bolstered by our recent successful equity raise, we expect our strengthened balance sheet will be sufficient to support our planned operations, as represented in the long-range plan we presented at our Investor Day in January, until achieving cash flow break-even. Our long-term borrowings totaled $59.8 million as of March 31, 2025. As a reminder, the final maturity of our debt is September 30, 2026. Regarding annual guidance for 2025, we are increasing our total revenue guidance to a range of $93 million-$97 million. This updated guidance reflects an increase of approximately 16%-21% over our reported revenue for 2024. This growth is expected to be mostly driven by an increase in sales of our RNS System, with growth from sales of SEEG products continuing to make a meaningful contribution. We expect our gross margin to be in a range of 73%-75% for 2025.

As noted previously, we may see some small variability quarter to quarter due to fluctuations in the proportion of SEEG revenue to total revenue and other factors. As recently announced, we expect the tariffs associated with the U.S. government's recently implemented trade policies to have a minimal impact on our operations and financial results, including our gross margins. We expect operating expenses for 2025 to range between $92-$95 million, including approximately $11 million in stock-based compensation, a non-cash expense. I would now like to turn the call back over to Joel for closing remarks. Joel?

Joel Becker (CEO)

Thank you, Rebecca. I am pleased to report that our team is successfully executing our plans and appreciate all their hard work. We are working to deliver on several sales, clinical, and product development milestones throughout the remainder of 2025. These initiatives will further advance our plans to establish the RNS System as the leader in the treatment of drug-resistant epilepsy patients. This concludes our prepared remarks. I would now like to turn the call over to the operator, who will open the call for questions. Operator?

Operator (participant)

Thank you. We'll now be conducting a question-and-answer session. If you would like to ask a question, please press Star 1 on your telephone keypad. A confirmation tone will indicate your line is on the question queue. You may press Star 2 to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the Star keys. One moment, please, while we poll for questions. Our first question is from Mike Kratky with Leerink Partners.

Mike Kratky (Senior Managing Director)

Yeah, hey, everyone. Thanks very much for taking our questions, and congrats on a solid quarter. Maybe just to start, we'd love to hear just on the 77% gross margin that you saw during the quarter. You know, based on your press release in April, I think Dixie has about 50% gross margin. Does that imply that you had pretty negligible Dixie revenue this quarter? You know, are there any other one-time dynamics that could explain that? I have a follow-up question.

Joel Becker (CEO)

Thanks, Mike. You're right, gross margin was strong here in the quarter. I'll ask Rebecca to comment on some of the dynamics in particular here, as you know, with regard to mix. I would also note that, as we've commented previously, our gross margin is primarily impacted by the performance of our RNS business. Our RNS business is the biggest fraction of our business by far, and the RNS business gross margin is primarily impacted by volumes and efficiencies associated with what we do in the RNS business. I'd say I'd point your focus toward RNS execution. Rebecca, anything you'd add there on mix?

Rebecca Kuhn (CFO)

I would just emphasize that our gross margin was particularly strong, and we really attribute that to the RNS business, much more so than anything else, mix or anything else. We had just a really strong quarter, largely driven by increased production volumes in our RNS manufacturing.

Joel Becker (CEO)

Mike, as you know, we've talked about previously our production volumes being our primary driver there. You know, we have been taking price increases as well, and I think we've done a particularly nice job of executing with customers on those reasonable price increases. I think that's all just showing up here in the gross margin line.

Mike Kratky (Senior Managing Director)

Yeah, understood. Super helpful. Maybe just one quick one. You know, in terms of the commentary that you provided, it does sound like, you know, maybe that would be more of a durable impact in terms of fixed cost absorption, price increases. How should investors think about the upside to that 78% gross margin that you called out in your early April press release?

Joel Becker (CEO)

I think, as we've talked about previously as well, and I'll invite any commentary from Rebecca here too, but, you know, gross margin is impacted by a number of different things and can move around a little bit from quarter to quarter. That said, I do think, as you note here, that it's worth mentioning that, you know, production volume, as well as selling the value of the RNS System with customers, are both durable and reproducible things that, you know, are actual operating levers that we have in the business. While gross margin can certainly bounce around a little bit again from period to period, what we see as the underlying drivers are real operating things that are going on in the business.

Rebecca Kuhn (CFO)

Yeah, not.

Mike Kratky (Senior Managing Director)

Thanks very much.

Joel Becker (CEO)

Thanks, Mike.

Operator (participant)

Our next question is from Frank Takkinen with Lake Street.

Nelson Cox (Equity Research Associate)

Great. Hey, this is Nelson Cox. I'm for Frank. Congrats on all the progress here. I guess as it relates to Project CARE, can you talk a little bit about, you know, how referral volumes have been impacted in level four centers and geographies where you have had Project CARE established for a few quarters now? Just any color there, I think, would be helpful.

Joel Becker (CEO)

Thank you, Nelson. Yeah, it's a great question. CARE, as we mentioned in our prepared remarks as well as in the release, is certainly something that's been impacting the business. We're pleased to see it. We do see both with regard to referral as well as implants contributing here to growth. As we've mentioned previously, we do see increasing referral volumes into level four centers from the level three and community centers. We think that's logical for a couple of reasons. One, as people look more carefully at their drug-resistant epilepsy patient population, patients are uncovered that maybe were out in that population that because they didn't have as close a relationship with or to the RNS technology or the centers that more frequently use RNS, they didn't have a place to refer those patients, and we can help make those connections, one.

Two, as centers work to get up and running to become implanting centers, sometimes there can be a gap there, either training or putting other assets in place. While they are going through that process, they will identify patients that eventually they would want to treat locally, but during that period of time, they are happy to have them referred out and implanted and then get the patients back to manage them. I think there are a couple of dynamics there where referral has absolutely been something as part of care that we see as a growth driver. We think it is both helpful in terms of more broadly increasing access to RNS as well as increasing access to patients that will be treated at the local centers.

Nelson Cox (Equity Research Associate)

Okay, that's helpful. You talked about personnel investments. How should we think about kind of hiring cadence throughout the year as much as you can?

Joel Becker (CEO)

You bet. Great question. Thank you. We are being consistent here. You know, we have talked in the past about incremental investment in our commercial organization. We have talked about how we did that in 2023. We continued to in 2024 and had talked about how that group then had come through training and was then out working independently in their territories, really, in the second half of 2024. We are pleased to see those folks beginning to have good impacts there and expect even more so as they continue to get more and more experienced in their territories. We expect to have similar dynamics in 2025.

We continue to invest in and prepare the commercial organization both to take advantage of the opportunities that we have today in our core level four centers to increase adoption and utilization, to expand into care centers, and then to make sure we have people on the ground and ready in our targeted geographies to cover our targeted centers with the significant opportunities that we have coming in terms of indication expansion, both with a focus on IGE patients as well as pediatric focal patients. You know, I think we've demonstrated that we've been disciplined in our operating expense investment in the commercial organization. You've also seen, I think, a consistency here in our investment there, and we expect that to continue. It's fully reflected in how we've thought about the guide for the year as well as our plans.

Nelson Cox (Equity Research Associate)

Perfect. Congrats on the strong quarter, guys.

Joel Becker (CEO)

Thanks, Nelson.

Rebecca Kuhn (CFO)

Thank you.

Operator (participant)

Our next question is from Ross Osborn with Cantor Fitzgerald.

Ross Osborn (Director and Lead Research Analyst)

Hey, guys. Congrats on the strong quarter. Looking at Project CARE, how difficult or easy has it been to get docs up to speed in performing RNS procedures in a community setting? How much incremental support from your team do these doctors require relative to the level four centers?

Joel Becker (CEO)

It's a great question, Ross. You know, it varies a bit by center. Maybe for context, I would have folks think a little bit about that when we start a center, and whether that's starting a current prescriber or a new implanting physician in a current center, or we start a new center, the same types of training and support that we do to start new customers is the same either in level four centers or in entirely new centers. We know how to do that pretty well, and our organization is completely facile and experienced in doing so. Now, when you think a little bit more specifically about the dynamics around care centers, those centers can have a little bit of a different complexion center to center as well.

Now, while it's true that these centers and clinicians hadn't previously been able to implant the RNS System prior to the CARE expansion, a number of them have come from places where either as part of their fellowship or as part of where they've previously practiced, they're familiar with neuromodulation and familiar with RNS. Of course, there's refresher and appropriate understanding of, you know, the technology advancements that have been made because we continue to improve the technology. Again, a lot of the folks that we're involved with do have some familiarity. There's new work that needs to be done, in particular in a couple of areas. One in contracting. You know, we've got to get contracts put in place with these centers and everything that goes along with that where, you know, with current customers, we've already gone through that, number one.

Number two, for folks that either have infrastructure that needs to be put in place or a referral network development that needs to take place, those are things that we work on specifically when we open these new centers. There certainly is support that's required. None of that's easy. With regard to your question of difficult and easy, it's really the execution around that versus thinking about anything as difficult or easy as things we haven't done before. These are all things we've done before with people who are out there doing them every day.

Ross Osborn (Director and Lead Research Analyst)

Great. As you've moved into the community setting, have you seen more patients coming into the funnel that are requesting your RNS System?

Joel Becker (CEO)

It's a great question. I think as we get, the short answer would be not really, not yet. As we've expanded out into the care centers, you know, the work there is really on the individual centers and the people's practices associated with those centers and the patients that they're already managing. Generally, there's a good group to work from there. That said, where we have seen increasing patient engagement is in a parallel set of activities that we haven't talked about quite as much, but we gave some visibility to in January at our Investor Day, is our increased focus on direct-to-patient. As part of direct-to-patient, we are both our activity as well as the targeting of our activity here. Here's where the Venn diagrams overlap a little bit with care.

Because of the digital media nature of the direct-to-patient work that we do, we can even target that work into geographies where we have specific care accounts. We do see increasing numbers. We think direct-to-patient is a good channel for us to create awareness and do a certain amount of education and get people into the appropriate physician group as well as our nurse navigator team. We're doing more of that. We think we see elasticity. As our activity rates are going up, we're also seeing increased rates of patient engagement. The two things are working together. I do think over time, we'll see kind of the traffic merge here on direct-to-patient as well as care.

Ross Osborn (Director and Lead Research Analyst)

Thanks for taking our questions. Congrats again.

Joel Becker (CEO)

Thanks, Ross.

Operator (participant)

Our next question is from Priya Sachdeva with UBS.

Priya Sachdeva (Director and Equity Research)

Hi, guys. Thanks so much for taking the question and congrats on a great quarter. Maybe first, if I could just follow up on Mike's question from earlier on the gross margin front. Your guidance implies a step down for the rest of the year. I guess, you know, we're just trying to understand what's driving that step down in an environment where, you know, we should see RNS growth expanding and driving margin expansion and, you know, declining Dixie revenue. If you could just expand a little bit on the thought process there. Thanks.

Rebecca Kuhn (CFO)

Sure. Hi, Priya. As we said in our prepared remarks, gross margin was particularly strong in the first quarter, and it can fluctuate quarter to quarter. We are really pleased by the performance in Q1. There are a number of things, small things that can add up and a number of things contributed in the first quarter. Given that it can bounce around a little bit quarter to quarter, we feel good about the guidance that we established earlier, and we are sticking with that guidance.

Priya Sachdeva (Director and Equity Research)

Okay, understood. That was super helpful. Maybe just one follow-up, if I could. Congrats on presenting the post-approval study data. Super compelling. I just wanted to know if, you know, there's any early feedback from physicians that you're hearing on the ground and how you're going to leverage that momentum into NAUTILUS and the peds indication. Thanks.

Joel Becker (CEO)

Great question, Priya. Thank you. Yes, just as a reminder for everybody, on the 7th of April, the post-approval study data was presented at the American Association of Neurology meeting. That data was the largest FDA-reviewed prospective neuromodulation study in the focal drug-resistant epilepsy population, 324 patients, 32 centers. A significant study with a significant group of patients and a high level of evidence. Since that time, the Salesforce, so about a month, the Salesforce has had the information has been out engaging with and talking to customers. It has been great to see the reaction, both in some cases, customers reacting in a way where that can be new information to them, especially some of our newer customers, and that being particularly encouraging and supportive of their emerging practices with RNS.

With some who are maybe more familiar with neuromodulation more broadly, it's an opportunity for us to start the conversation about RNS, restart the conversation in some cases, and start the conversation around RNS and how RNS is different and better than other neuromodulation choices that customers have. That's done a couple of things, both of which we think are good. One, that has caused us to be able to, you know, have the reason why, here's what's new, here's the new information to talk about when it comes to RNS, and we've got that. The second is then really engaging customers and seeing them ask a lot of questions about the data. Okay, well, so tell me about this part of the data, or tell me about that part of the data.

Those are really engaging opportunities for us that, you know, allow for education and discussion about how RNS can play a role in people's practices. We've been really pleased with the reaction so far. You know, I think it's logical that we'd be pleased with the reaction so far when we look at the data. I know many of you here on the call are familiar with it. Again, as a reminder, median seizure reduction rates, 62% at six months, 82% at three years. When you take a look at VNS and DBS, 62% median seizure reduction at six months for RNS, 30% for VNS, and 23% for DBS. When you take a look at three years, 82% for RNS, 44% for VNS, and 40% for DBS.

The data is different, and it's different both with regard to median seizure reduction as well as seizure freedom. This is an area where we've seen, you know, a lot of interest from customers as well. When you kind of take it back to your question about customer interest, both the median seizure reduction rates as well as the seizure freedom rates, the seizure freedom rates, more than 40% of patients in the study saw more than six months of seizure freedom. That can be life-changing for an epilepsy patient. Again, it's different than other options people have. At last follow-up, 27% of RNS patients were seizure-free. At last follow-up in their most recent studies, 8% of VNS and 4% of DBS were seizure-free. It's been great to get out there. It's always great for a Salesforce to have something new.

We think about the post-approval study data as like a product. We have launched it like a product. To engage with new as well as current customers in both education as well as comparison with other choices that they have for their patients, the post-approval study data has been great to get out and get started with. We look forward to that impact throughout the year. Thanks, Priya.

Operator (participant)

Our next question is from Rohan Patel with J.P. Morgan.

Rohan Patel (Assistance Manager)

Hey, thanks for taking the question. I also wanted to follow up on the previous question and specifically on Project CARE. You talked about an increase in implants and referrals through the program versus fourth quarter. Is there any more kind of quantitative color you can provide as far as like % of total implants and potentially any KPIs you can discuss about just how the three-year post-approval data may have contributed to some momentum in the community setting during the quarter? I had a follow-up.

Joel Becker (CEO)

A couple of things there. Thank you, Rohan. I appreciate the interest in care. I think, you know, what I punch up in terms of growth contribution is that RNS growth in the quarter was really driven by a couple of things. One, implants and referrals from care centers, both on a sequential as well as yearly, as you might imagine, comparison basis. Then a significant amount of growth as well from new prescribers in our level four centers. You'll recall the three legs of the growth strategy here in the near term being one, increasing adoption and utilization in level four centers, two, expanding into care, and three, expanding indications. All three of those things are what are driving here over this period of time, increased access to RNS.

In Q1, the significant drivers were implants and referrals from care and increased numbers of prescribers in level four. To the second part of your question, I do not think that with the post-approval study data, we really saw an impact in Q1 just given the timeline. The data was presented on the 7th of April. We would not have had the launch of the data with the commercial organization out engaged the way they have been prior to that in them getting those materials.

Rohan Patel (Assistance Manager)

Got it. That's helpful. I also wanted to ask on some of the new RNS product features and the next generation platform. At the analyst day, you talked about a new software iteration potentially later this year. I just want to get a refreshed timeline for that and how you're thinking about potentially monetizing it. Will it be some add-on subscription, or would it just be a free-of-charge software upgrade for existing customers? How should we think about the timing as well for a next generation RNS? Thanks.

Joel Becker (CEO)

Great questions. Thanks for the diligence in remembering and following up on that from the Investor Day. We remain on track with the software release for 2025. We showed it in the second half of the year, and we remain on track for that. In terms of monetization, you know, we talked a little bit about that at the Investor Day where there may be options in terms of monetizing both the data as well as the suite of software tools in future business models. Here, excuse me, here what we're really focused on is increased ease of use and efficiency and how that relates to more people choosing RNS as a therapy in our current and traditional business model.

You can expect that the software releases for the RNS 320 to be really driving increased implants through ease of use, efficiency, and the ability to monitor and manage patients. Nothing further to report here that I'd update from on the next generation platform outside of what we presented at the Investor Day. You know, we continue that work, and things are going apace. I guess the concrete point here would be that, you know, just confirming the second half of 2025, the later this year on the software release, we remain on track.

Rohan Patel (Assistance Manager)

Great. Thanks, Joel.

Joel Becker (CEO)

Thank you.

Operator (participant)

Question is from Michael Pollard with Wolfe Research.

Michael Pollard (Research Analyst)

Good afternoon. Thank you. I just have one on the Dixie exit. When the deal was done a few years ago, it was kind of, you know, new product to sell, revenue synergy, but also visibility given the role that that product plays in the diagnostic process. As it goes away, do you feel like you lose anything there, Joel, on like upstream visibility, or did that part of the thesis not pan out? If you do feel like it was helpful, what strategies might you employ without Dixie to kind of keep the visibility up the funnel high? Thank you.

Joel Becker (CEO)

Thank you, Mike. I appreciate the diligence here with regard to leveraging Dixie and everything we learned and everything that we've accomplished with that relationship. You are right, when we engaged in that relationship, in addition to, like you say, having, you know, it was great to at that time have another product in the bag to sell and then additionally allowing further almost what we will call kind of vertical integration upstream into the patient referral and diagnostic process and giving us visibility there. I think we did get that. We certainly did get that in some places. I think we have talked about previously where in places, for example, where we have more senior, more well-established reps or reps that are personnel that kind of come from the industry and the field, they have a lot of those relationships.

There was not quite as much incremental in that case. However, in some places, especially where maybe we had newer people or people who were newer to this space, it was a ready point of entrance to have those discussions. I think a couple of things there. One, we have learned about that, and we have learned about those upstream processes and how it can be important to have that visibility to patients. That is something we can continue to do even today with the RNS System. That is muscle memory that we will continue to exercise. Secondly, you know, we have made the point that, and I would want to reemphasize it, that in our relationship with Dixie, we want to work to transition all of that very well. We have a common set of customers here, and everybody really can rally around the customer.

It is our goal to have that transition and that handoff go well and have all those relationships remain in place such that, you know, we can all work and benefit from the work that's been done as well as the work that we'll do going forward. I fully expect that we'll be able to leverage a lot of the relationships that have been developed and built to make sure that the best care gets delivered for patients. We've learned a fair bit along the way that we can take along with us too.

Michael Pollard (Research Analyst)

Thank you.

Joel Becker (CEO)

Thanks, Mike.

Operator (participant)

Thank you. There are no further questions at this time. I'd like to hand the floor back over to Joel Becker for any closing.

Joel Becker (CEO)

Thank you. As mentioned earlier, during the first quarter here of 2025, NeuroPace continued to make significant progress in advancing our mission, that mission of helping patients who suffer from debilitating seizures. We are doing that by focusing on increasing access and growing our business and executing on key initiatives here to position the business for future growth to continue to advance that mission. During the quarter, we grew by 24%. We grew RNS by 26%, 29% when thinking about NAUTILUS implants being backed out. We had a successful Investor Day. We completed patient follow-up on NAUTILUS. We raised $75 million in equity, evolving our shareholder base of a number of significant achievements. We are executing the strategy, and we are building momentum. We have significant opportunities today and the near future, and we are just getting started.

I would like to thank the NeuroPace team for all their hard work and accomplishments during the quarter that engendered this progress. We look forward to keeping you updated as we move forward. Thank you.

Operator (participant)

This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.