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Neuraxis, INC (NRXS)·Q2 2024 Earnings Summary

Executive Summary

  • Q2 2024 revenue was $0.612M, down 5.3% year over year as discounted patient-assistance volume offset higher unit sales; gross margin remained robust at 88.0% and net loss was $2.918M .
  • Management emphasized accelerating insurance coverage (22.5M covered lives at quarter-end, with a 12M‑member plan launching coverage Oct 1) and reiterated expectations for revenue ramp in late 2024 and into 2025 .
  • CEO highlighted an improving demand backdrop and a growing account base despite reimbursement lags; CFO noted unit sales increased 16% YoY in Q2 while mix toward assistance programs lowered ASPs and revenue .
  • Additional capital was secured via convertible notes in Q2 ($4.935M funded by 6/30) and access to $4.2M of capital was reiterated on the call, extending liquidity ahead of expected coverage-driven revenue conversion .

What Went Well and What Went Wrong

What Went Well

  • Insurance coverage momentum: Covered lives reached ~22.5M, up sharply from ~4.5M in 2023; a not‑for‑profit plan with >12M members committed to coverage beginning Oct 1, positioning covered lives to exceed 35M near‑term and targeting ~50M by YE24 .
  • Demand and unit volume: “The demand for our product is at record levels,” with management citing more accounts ordering and a 16% YoY unit increase in Q2 (despite lower recognized revenue due to discounts) .
  • Pipeline and label expansion: FDA submission for IB‑Stim label expansion (age 8–21) and RED device submission (clearance expected late Q4’24) expand TAM and potential near‑term product mix tailwinds .

What Went Wrong

  • Top-line pressure and mix: Revenue declined 5.3% YoY as a higher mix of patient-assistance orders (discounted pricing) offset unit gains, and certain customers deferred shipments pending reimbursement process alignment .
  • Operating expense intensity: Operating loss nearly doubled YoY to $2.207M on public company costs, market access and sales buildout, severance, and other one-time items .
  • Reimbursement lag: Accounts receiving “no-authorization required” responses often saw non-payment; management noted these accounts are “ready to begin treating again once larger payers have a policy in place,” underscoring timing risk .

Financial Results

MetricQ4 2023Q1 2024Q2 2024
Revenue ($USD Millions)$0.532 $0.647 $0.612
Gross Margin %86.4% 88.4% 88.0%
Operating Loss ($USD Millions)—$(1.832) $(2.207)
Net Loss ($USD Millions)$(5.300) $(2.121) $(2.918)
Diluted EPS ($)—$(0.32) $(0.42)
  • YoY in Q2 2024: Revenue down 5.3%; gross margin 88.0% vs 89.5% in Q2 2023, driven by mix toward discounted assistance programs .
  • Segment reporting: Not applicable (IB‑Stim is the only marketed product) .

KPIs and Balance Sheet

KPI / MetricQ4 2023Q1 2024Q2 2024
Covered Lives (end of period)~16.0M —~22.5M
Unit Sales Growth YoY——+16% (CFO)
Cash and Equivalents ($USD Millions)$0.079 $0.082 $1.765
Convertible Notes Outstanding (current portion, net)——$4.729

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Covered LivesFY 2024Aim for ≥50M by YE24 >35M by Oct 1 (new 12M‑member plan), targeting ~50M by YE24 Maintained/On track
Revenue Trajectory2H24 / 2025Expect revenue increase late 2024 into 2025 Reiterated: growth acceleration late 2024 and into 2025 Maintained
RED (Rectal Expulsion Device)2024Commercialization “in 2024” FDA submission made; clearance expected late Q4 2024 Timeline clarified
IB‑Stim Label Expansion (8–21 yrs)2024–2025—FDA submission filed for broader age label New item

Earnings Call Themes & Trends

TopicQ-2 (Q4 2023)Q-1 (Q1 2024)Current (Q2 2024)Trend
Insurance coverage expansion16M covered lives; YE24 target ≥50M —22.5M covered; +12M plan goes live Oct 1; >35M near-term Positive momentum
Volume vs. revenue mixRevenue fell; more accounts and GPS assistance usage Revenue down YoY on fewer shipments during reimbursement transition Units +16% YoY; assistance mix lowers ASP and revenue Near-term headwind
Product pipelineHighlighted RED commercialization in 2024 —RED FDA submission; clearance expected late Q4; IB‑Stim label expansion submitted Advancing
Reimbursement processLag between policy and orders noted Continued billing/coding implementation comments “No-authorization required” responses often unpaid; expect acceleration as policies publish Structural lag, improving
Liquidity/financingNoted financing in late 2023 Convertible notes issued in Q1 $4.935M additional convertible notes funded by 6/30; access to ~$4.2M capital Strengthened runway

Management Commentary

  • CEO (press release): “We now have 22.5 million lives under insurance coverage… While revenues in 2Q24 declined 5.3% YoY… demand for our product is at record levels… we expect to roughly double our lives under insurance coverage to 50 million… and received a commitment from our largest payer to date with over 12 million covered lives, with launch expected on October 1st.”
  • CEO on pipeline: “We have made the submission to the FDA and expect [RED] to receive FDA clearance late in the fourth quarter of 2024… [and] made an FDA submission to expand our label… to the 8–21 year old patient population.”
  • CFO (call): “Our unit sales were up 16% in the quarter year-over-year… Due to a lack of written insurance policy coverage, [assistance] patients are paying a discounted price and lowering our average selling price and revenues.”
  • CFO (call): “In addition to cash on hand, we have access to $4.2 million of capital as a result of our recent financing transactions with healthcare-focused investors.”

Q&A Highlights

  • Coverage-to-revenue conversion timing: Management reiterated that billing/coding implementation lags policy publication; expect order flow to improve as policies go live (notably the >12M member plan on Oct 1) .
  • Mix dynamics: Unit growth (+16% YoY) contrasted with revenue softness due to discounted patient-assistance programs until widespread policy coverage is adopted .
  • Liquidity and runway: Team emphasized additional capital access (~$4.2M) alongside Q2 note funding to bridge to late‑2024 inflection .
  • Pipeline milestones: RED clearance expected late Q4 2024 and IB‑Stim label expansion submission could broaden eligibility (8–21 years), supporting medium-term adoption .

Estimates Context

  • Wall Street consensus (S&P Global) for Q2 2024 EPS and revenue was unavailable for benchmarking at this time. When available, we will anchor comparisons to S&P Global consensus.
  • No formal quantitative revenue or EPS guidance was provided; management maintained directional commentary for a 2H24/2025 acceleration tied to coverage and RED .

Key Takeaways for Investors

  • Near-term set-up: Q3 should benefit from continued coverage decisions; Q4 is a potential inflection as a >12M member plan starts coverage Oct 1 and RED clearance is targeted late Q4 (potential catalysts) .
  • Demand vs. recognition: Unit growth and account additions are encouraging; revenue recognition remains gated by payer policies and provider billing readiness—watch for ASP normalization as coverage broadens .
  • Gross margin quality: 88.0% GM underscores attractive unit economics; mix shift (assistance) is the primary lever depressing revenue/GM delta vs. potential steady-state .
  • OpEx discipline ahead: Investments in market access and public company infrastructure elevated OpEx; operating leverage should improve as coverage converts to reimbursed volume .
  • Balance sheet and funding: Q2 convertible inflows ($4.935M funded by 6/30) plus access to ~$4.2M capital bolster liquidity into anticipated late‑2024 ramp; monitor note terms and dilution risk .
  • Regulatory/label expansion: RED and IB‑Stim label expansion (8–21 yrs) broaden use cases and could accelerate adoption post-clearance .
  • Execution watchlist: (1) Publication of new payer policies, (2) conversion of “no‑auth” accounts into reimbursed orders, (3) RED clearance timing, (4) cash burn vs. funding cadence .

Supporting documents and sources:

  • Q2 2024 8‑K Results Press Release (Item 2.02):
  • Q2 2024 10‑Q: financials, liquidity, notes, and MD&A:
  • Q1 2024 10‑Q: prior-quarter figures and commentary:
  • Q4 2023 Press Release: revenue, margin, coverage updates:
  • Earnings call transcript (Q2 2024) excerpts:
  • Company press posts on Q2 call logistics: