NeuroMetrix, Inc. (NURO)·Q3 2023 Earnings Summary

Executive Summary

• Q3 2023 revenue was $1.20M, down 39% year over year, primarily due to lower DPNCheck sales in Medicare Advantage; gross margin held at 65% and net loss widened to $1.77M ($0.21 per share) .
• Quell Fibromyalgia KPIs improved sequentially: prescribers rose to 125, cumulative prescriptions increased 53% to 752, and cumulative month-refills grew 91% to 663; over 60% of prescriptions were filled (cash-pay) .
• Management is pivoting DPNCheck strategy away from Medicare Advantage to broader value-based care and does not expect a reversal of the MA-driven revenue pressure in 2024 .
• CIPN indication is the next Quell label expansion: NIH trial results support a 510(k) submission once published; potential commercialization before end of 2024, pending FDA review .
• Company received a NASDAQ minimum bid price deficiency notice; shareholders authorized a reverse split (ratio 1:2 to 1:8) at the Board’s discretion to regain compliance .

What Went Well and What Went Wrong

What Went Well

• Quell Fibromyalgia commercialization showed traction: 125 unique prescribers in Q3, cumulative prescriptions up 53% to 752, cumulative month-refills up 91% to 663; “We continue to be encouraged by the market response” .
• Strategic pipeline progress: NIH-funded CIPN trial results support a 510(k) filing; management believes commercialization could begin before end of 2024, pending publication and FDA clearance .
• Gross margin resilient at 65% despite revenue decline, consistent with prior-year quarter .

What Went Wrong

• Revenue fell 39% YoY to $1.20M, with DPNCheck down $0.512M (-35%) YoY; YTD DPNCheck revenue down $1.1M (-23%) due to CMS risk-adjustment changes impacting Medicare Advantage screening programs .
• Net loss widened to $1.77M ($0.21 per share) vs. $1.61M ($0.23) in Q3 2022; operating cash usage ~ $2.1M in the quarter .
• Bid price noncompliance with NASDAQ minimum; reverse split authorized but not yet executed, creating capital markets overhang .

Financial Results

Note: No S&P Global consensus estimates available for NURO this quarter (micro-cap coverage appears limited); therefore, beat/miss vs. street cannot be assessed.

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We continue to be encouraged by the market response to Quell Fibromyalgia during its strategic launch. We now have field sales capabilities in the key markets of Texas, Florida and California.”
• “A recent clinical trial… indicated that Quell improves the symptoms and quality of life for patients with chemotherapy induced peripheral neuropathy (CIPN). The Company plans a 510(k) filing with the FDA in late 2023 or early 2024.”
• “We believe it will be necessary to alter our strategy to move away from Medicare Advantage-focused business to one more broadly addressing value-based care… we do not see a reversal in 2024.”
• “Our gross margin rate in the third quarter was 65%, which is consistent with the third quarter of last year.”
• “On August 3, 2023 the Company received a NASDAQ delisting notice… shareholders authorized the Board… [to] implement a reverse split… at a ratio of between 1:2 to 1:8.”

Q&A Highlights

• AI/data leverage: Management views AI/machine learning as a tool to improve device performance and delivery using rich patient data sets; ongoing use of basic ML techniques .
• Go-to-market and pricing noise: Transition away from OTC pain space to prescription indications with compelling clinical data (fibromyalgia, CIPN) to rise above “noisy” OTC market dynamics .
• Prescriber mix and fulfillment: Rheumatologists, pain specialists, neurologists are primary prescribers; cash-pay via national online pharmacy; FSA/HSA reimbursable .
• Market sizing and diagnosis: Fibromyalgia prevalent (potentially up to ~15M in U.S.), with many undiagnosed; branded drugs largely generic, changing market economics .
• Note: The Q3 2023 transcript contains prepared remarks; Q&A highlights above reflect recent calls around Q2/Q1 to inform investor context .

Estimates Context

• S&P Global/Capital IQ consensus EPS and revenue estimates were unavailable for NURO for Q3 2023; as such, a beat/miss versus Wall Street consensus cannot be assessed this quarter.
• Given the CMS-driven structural pressure on DPNCheck and the sequential decline in cash/securities, sell-side models (where present) may need to lower near-term DPNCheck revenue assumptions and extend the recovery timeline, while increasing Quell Fibromyalgia ramp assumptions into 2024 based on improving KPIs .

Key Takeaways for Investors

• Quell Fibromyalgia adoption is building with sequential KPI improvements; expect the narrative to increasingly center on Quell’s 2024 revenue contribution and CIPN label expansion potential before end-2024, pending FDA .
• DPNCheck faces structural Medicare Advantage headwinds; management is pivoting toward broader value-based care, but investors should not expect a 2024 rebound in MA-related volumes .
• Gross margin stability at ~65–70% provides some buffer; however, operating cash usage and widening net loss highlight the need for disciplined OpEx while Quell scales .
• Capital markets risk remains due to NASDAQ bid price deficiency; reverse split authorization provides a path to compliance, but execution timing is at Board discretion and may be a stock volatility catalyst .
• Near-term trading may hinge on updates to CIPN publication timing and the 510(k) filing; positive regulatory milestones could re-rate the stock on pipeline validation .
• Medium-term thesis rests on Quell becoming a meaningful revenue driver with multiple indications (fibromyalgia, CIPN, potentially long COVID/COPC/edema), offsetting the DPNCheck reset .
• International DPNCheck strength (China/Japan +30% YoY within Q2) is a partial offset but not enough to overcome U.S. MA pressure; watch for progress in large value-based care providers over the next 1–2 quarters .