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Neuraxis, INC (NRXS)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue rose 40% year over year to $0.67M with approximately 50% unit growth; gross margin remained high at 85.4% while operating loss improved 45% YoY, reflecting early traction from expanded insurance coverage and better ASP mix .
  • Strategic catalysts advanced materially: IB-Stim FDA label expanded to ages 8–21; a permanent CPT Category I code for PENFS was granted (effective Jan 1, 2026); covered lives increased to ~35M; and $5M of new capital was secured to bolster liquidity .
  • Management reiterated growth acceleration into Q4 and 2025, with cash-flow breakeven targeted in 2025; RED (rectal expulsion device) submission is in review with a soft launch planned upon clearance (late Q4 2024 / early Q1 2025) .
  • Estimate comparisons: S&P Global consensus data were unavailable via API at the time of analysis; results are presented vs. prior periods only (we will update vs. Street when available).

What Went Well and What Went Wrong

  • What Went Well

    • “Revenues increased 40% year over year” with “unit sales grew 50%,” showing accelerating demand and early payoff from coverage wins .
    • Structural reimbursement wins: permanent CPT Category I code (effective 1/1/26) and IB-Stim label expansion to ages 8–21 (and up to 4 devices) de-risk billing, expand TAM, and streamline adoption .
    • Covered lives expanded from ~4.5M last year to ~35M, with several large BCBS plans and a major not-for-profit plan enabling access, paving the way for broader revenue conversion in 2025 .

  • What Went Wrong

    • Gross margin dipped ~50bps YoY (to 85.4%) as discounted financial assistance volume outpaced full reimbursement units despite mix improvement QoQ; coverage ramp timing still creates near-term ASP drag .
    • Liquidity was tight at quarter-end (cash $0.26M), necessitating external capital; though a $5M investment was signed post-quarter, the business still depends on coverage adoption to fund scale-up .
    • Several children’s hospitals remain “on pause” pending written coverage policies; billing/coding workflows and payer guideline publication timing continue to create lag between coverage decisions and order run-rate .

Financial Results

Year-over-year and sequential comparisons

Revenue and Profitability

MetricQ3 2023Q2 2024Q3 2024
Revenue ($USD)$477,460 $611,500 $666,625
Gross Profit ($USD)$410,173 $538,042 $569,575
Gross Margin (%)85.9% 88.0% 85.4%
Operating Loss ($USD)$(3,022,339) $(2,206,832) $(1,651,273)
Net Loss ($USD)$(8,625,363) $(2,917,710) $(1,755,234)
Diluted EPS ($)$(2.38) N/A$(0.25)

KPIs and Operating Indicators

KPIQ3 2023Q2 2024Q3 2024
Unit Growth (YoY)N/A+16% (units) ~+50% (units)
Covered Lives~4.5M (Oct-2023 baseline) ~22.5M ~35M
Patients Treated (TTM)N/AN/A~900 (12 months)
Cash and Equivalents ($USD)N/AN/A$260,885 (9/30/24)
Post-Q3 CapitalN/AN/A$5.0M investment signed 11/9/24 (expected close mid-Nov)

Notes:

  • Gross margin YoY -50 bps (mix: growth in discounted financial assistance volume) despite QoQ improvement in fully reimbursed units .
  • No segment reporting (single product line IB-Stim) .

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
Revenue trajectory2H24 → 2025Acceleration in 2H24 and into 2025 tied to coverage wins and RED commercialization Momentum continued into Q4; still expect growth into 2025; RED soft launch late Q4/early Q1 Maintained (timing clarifications)
Cash flow breakeven2025Target 2025 Target 2025; reiterated on Q3 call Maintained
G&A (cash basis)Near termExpected to “settle around ~$2M per quarter” (prior call)CFO: cash ~ $2M/quarter; GAAP to include some RED start-up and LTIP non-cash Maintained (qualitative)
Insurance covered livesYE 2024Target ~50M lives Still possible by YE; publication of NASPGHAN guidelines likely Jan could shift timing; numerous payers “on cusp” Maintained but timing dependent
CPT Category I (PENFS)2026N/AEffective Jan 1, 2026 New long-dated catalyst
IB-Stim labelCurrent11–18 years, 3 devicesExpanded to 8–21 years; 1 device/week for 4 weeks Expanded

Earnings Call Themes & Trends

TopicPrevious Mentions (Q1 2024, Q2 2024)Current Period (Q3 2024)Trend
Insurance coverageQ1: revenue down 20% YoY; units -14% (coverage lag) . Q2: covered lives ~22.5M; large plan (12M lives) effective Oct 1; targeting ~50M by YE .Covered lives ~35M; many payers in review; targeting >50M subject to guideline publication (likely Jan) .Improving; publication is key catalyst
Billing/CPTQ1–Q2: Category 1 CPT sought to streamline reimbursement .CPT Category I granted; effective 1/1/26; expected to simplify billing, add RVUs, and speed adoption .Structural tailwind secured
FDA/LabelQ2: filed to expand IB-Stim to 8–21 .FDA cleared: age 8–21; 1 device/week x4; expands TAM materially .Executed
ASP/MarginsQ2: GM 88.0% (down YoY on assistance mix) .GM 85.4% (down ~50 bps YoY) as assistance units > full-reimbursed units; expect mix to improve as coverage spreads .Near-term headwind; medium-term relief
RED (pipeline)Q2: 510(k) submitted; commercialization expected Q4’24 .Soft launch late Q4/early Q1; expect meaningful 2025 revenue; CPT I and Medicare/commercial coverage already in place .Imminent launch
LiquidityQ2: cash $1.8M; short-term debt elevated .Q3 cash $0.26M; $5M investment signed to replace $3.2M commitment; no LT debt; small ST premium financing .Stabilizing with new capital

Management Commentary

  • “We grew 40% year-over-year in Q3… received notice of our Category 1 permanent CPT billing code, and… FDA clearance for an age expansion from 11 to 18 to 8 to 21 years of age” .
  • CFO: “Gross margin… decreased 50 basis points year-over-year to 85.4%… discounted financial assistance units outpaced the growth of the full reimbursement units” .
  • On CPT Category I impact: “It brings a permanent reimbursement amount and RVUs… This is extremely important when you talk about streamlining and scaling the technology” .
  • On coverage timing: “We’re cautiously optimistic [NASPGHAN] guidelines will be out in January… many payers… are on the cusp of announcing policy coverage” .
  • On RED: “Cautiously optimistic [for] FDA indication by the end of Q4… soft launch… expect meaningful revenues in 2025” .

Q&A Highlights

  • Age expansion and coverage: Age range expansion increases eligible patients within already covered plans, but formal policy updates by payers are still required to count covered lives; the team is working those updates now .
  • Adult IB-Stim indication: Company is preparing an adult expansion submission targeting late 2025; necessary research underway/completed .
  • 50M covered lives and profitability: YE 2024 target still possible but dependent on guideline publication and payer timing; cash-flow profitability targeted in 2025 .
  • Opex cadence: CFO indicated cash G&A around ~$2M per quarter near term; GAAP to reflect some RED start-up and LTIP non-cash expense .
  • RED commercialization: Soft launch late Q4/early Q1 with staged account onboarding; meaningful 2025 revenue expected given CPT I and broad reimbursement .

Estimates Context

  • S&P Global (Capital IQ) quarterly consensus for NRXS (revenue, EPS) was unavailable via API at time of analysis; therefore, we cannot present vs-consensus beats/misses and will update when accessible.
  • Management provides qualitative, not numeric, revenue guidance; consensus adjustments (if any) will likely reflect: (i) faster intake from coverage policy publications; (ii) RED contribution from 1H25; and (iii) improving full-reimbursement mix as billing/coding workflows standardize .

Key Takeaways for Investors

  • Coverage flywheel is working: covered lives rose to ~35M, with guidelines expected to catalyze further policy write-ups; this is the main driver to convert demand to full-reimbursement revenues in 2025 .
  • Structural reimbursement wins de-risk adoption: CPT Category I (effective 2026) and IB-Stim label expansion expand access, simplify billing, and align physician incentives (RVUs), supporting sustained volume ramp .
  • RED is a 2025 growth leg with reimbursement already in place, enabling faster monetization than IB-Stim’s initial trajectory; staged launch minimizes execution risk .
  • Near-term margin variability is mix-driven (financial assistance vs full reimbursement); as policy coverage broadens, ASPs and gross margin should normalize upward from already-strong ~85% levels .
  • Liquidity has been shored up post-quarter with a $5M investment; continued execution on coverage and RED launch remains critical to achieving 2025 cash-flow breakeven .
  • Trading setup: Upcoming catalysts include guideline publication, new payer policies, RED clearance/launch, and continued QoQ revenue scaling—each a potential re-rating event for the stock narrative .

Appendix: Source Documents

  • Q3 2024 Earnings Press Release (8-K Item 2.02): Revenues, GM, operating and net loss, coverage updates, CPT I code, FDA label expansion, capital raise .
  • Q3 2024 Earnings Call Transcript: Strategy, coverage dynamics, CPT I billing/RVUs, RED timeline, opex run-rate, patient volumes, unit growth .
  • Q3 2024 10-Q: Detailed financial statements (revenue, GM, operating loss, net loss, EPS), liquidity, warrants, and balance sheet .
  • Q2 2024 Press Release (8-K): Revenue, GM, coverage lives, RED status, YE coverage target .