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NeuroMetrix, Inc. (NURO)·Q3 2024 Earnings Summary

Executive Summary

  • Q3 2024 revenue was $0.59M, down 51.2% year over year; gross margin was 53.1% vs 65.0% in Q3 2023, and net loss was $1.51M with diluted EPS ($0.75) .
  • Quell revenue grew 50% YoY to $0.184M, while DPNCheck revenue fell 58% YoY to $0.404M due to CMS Medicare Advantage risk-adjustment changes; operating expenses were reduced 25% YoY to $2.05M .
  • Liquidity remained solid with $14.8M in cash, cash equivalents and securities; working capital was $15.6M, current ratio 13.9, and no debt (negative net debt) .
  • Management continues its strategic alternatives review and is advancing Quell indications (CIPN De Novo planned late 2024/early 2025) and re-activation of OTC sales; VA channel is a focus area for Quell uptake .
  • Wall Street consensus EPS and revenue estimates via S&P Global were unavailable for NURO (tool mapping error), so estimate comparisons are not provided (Values retrieved from S&P Global).

What Went Well and What Went Wrong

What Went Well

  • Quell product momentum: revenue up 50% YoY to $0.184M in Q3; management highlighted broadening channels (telemedicine, VA) and OTC reactivation plans .
  • Cost discipline: operating expenses fell 25.1% YoY ($2.05M vs $2.74M), reflecting Q1 reduction-in-force and ongoing cost controls .
  • Liquidity and capital structure: $14.8M cash/securities, working capital $15.6M, current ratio 13.9, no term debt; net debt negative, supporting runway into 2025 .
    • “At current scale, we are adequately funded with approximately $16.4 million in liquid assets and quarterly cash usage of about $1.4 million, which we plan to further decrease going forward” — Thomas Higgins, Q2 call .

What Went Wrong

  • DPNCheck headwinds: revenue down 58% YoY to $0.404M in Q3, driven by CMS MA changes; total company revenue down 51.2% YoY .
  • Gross margin compression: GM% fell to 53.1% (from 65.0% YoY and 64% sequentially), driven by mix shift away from high-margin DPNCheck and lower volume absorption .
  • Continued losses: Q3 net loss of $1.51M and EPS ($0.75), only modestly worse than Q2 ($1.49M, $0.74) as revenue declined sequentially .

Financial Results

MetricQ3 2023Q1 2024Q2 2024Q3 2024
Revenue ($USD)$1,203,164 $1,093,556 $769,148 $587,314
Gross Margin %65.0% 47.3% 64.0% 53.1%
Operating Expenses ($USD)$2,742,680 $3,771,008 $2,320,574 $2,054,005
Net Loss ($USD)$(1,768,737) $(3,029,574) $(1,487,932) $(1,508,226)
Diluted EPS ($)$(1.66) $(1.67) $(0.74) $(0.75)

Segment/Product revenue trend:

Product Revenue ($USD)Q2 2024Q3 2024
Quell (Fibromyalgia + OTC)$192,000 $184,000
DPNCheck$536,000 $404,000

Liquidity KPIs:

KPIQ1 2024Q2 2024Q3 2024
Cash, Cash Equivalents & Securities ($USD)$17,599,110 $16,429,956 $14,834,600
Working Capital ($USD)$18,304,763 $16,869,? (not disclosed in Q2 8-K)$15,585,819
Current Ratio (x)10.9 —13.9
Net Debt ($USD)$(15,690,994) —$(13,624,729)

Guidance Changes

MetricPeriodPrevious GuidanceCurrent GuidanceChange
RevenueFY 2024Not provided Not provided; focus on Quell growth (VA, OTC restart) and DPNCheck diversification Maintained: no formal quantitative guidance
Gross Margin %FY 2024Not provided Not provided; mix and volume sensitivity highlighted Maintained
OpExFY 2024Not provided Continued cost discipline after RIF (> $0.5M/quarter savings) Informal: cost reduction commentary (no numeric guide)
Pipeline (Quell CIPN)2024–2025510(k) initially, then De Novo; timeline evolving De Novo submission planned late 2024/early 2025 Strategic shift to De Novo

Earnings Call Themes & Trends

TopicPrevious Mentions (Q-2 and Q-1)Current Period (Q3 2024)Trend
Quell growth (Fibromyalgia, OTC)Quell up 47% YoY; OTC restart planned Q4 2024; telemedicine added; VA uptake starting Quell up 50% YoY in Q3; OTC reactivation considered Q4 2024/early 2025 Improving momentum; channel expansion
DPNCheck & MA reimbursementCMS MA changes causing 62% YoY decline in Q2; pursuing alternative markets; Japan inventory overhang 58% YoY decline in Q3; alternative markets pursued; Japan expected to resume orders in Q1 2025 Persistent headwind; potential recovery in Japan timing
Strategic alternatives reviewInitiated Feb 2024; RIF; ATM terminated; board addition; asset monetization explored Review continues; no timetable or assurance; active communications Ongoing; potential corporate actions
CIPN indication pathwayFrom 510(k) to De Novo; Q4 2024 submission target De Novo filing late 2024/early 2025 Advancing regulatory strategy
Cost disciplineRIF reduces OpEx >$0.5M/quarter OpEx down 25% YoY in Q3 Sustained savings

Note: A Q3 2024 earnings call transcript was not available; themes sourced from Q3 10-Q/8-K and Q2 call where appropriate .

Management Commentary

  • “Quell prescription and OTC indications represent a substantial growth opportunity... telemedicine option... reimbursed VA channel... planning to reactivate our OTC business for lower extremity chronic pain” — Shai N. Gozani, CEO (Q2 call) .
  • “We will make a De Novo submission for CIPN by the fourth quarter of this year with a potential commercial launch by the end of 2025” — Shai N. Gozani, CEO (Q2 call) .
  • “At current scale, we are adequately funded with approximately $16.4 million in liquid assets and quarterly cash usage of about $1.4 million” — Thomas T. Higgins, CFO (Q2 call) .
  • Q3 press release emphasized continued strategic alternatives review and Quell business build via direct-to-physician and VA channels .

Q&A Highlights

  • Quell growth pathway: management is methodically scaling commercial investment, focusing on VA and variable-cost contract reps to drive growth while preserving margins .
  • OTC channel strategy: plan to prioritize direct e-commerce; Amazon considered; brick-and-mortar less attractive due to margin profile .
  • Efficacy/positioning: Quell Fibromyalgia targets symptom relief with a favorable safety profile, with positive market feedback supporting expansion .

No Q3 call Q&A available; items reflect Q2 discussion .

Estimates Context

  • We attempted to retrieve S&P Global consensus EPS and revenue estimates for Q3 2024; data were unavailable due to missing CIQ mapping for NURO (tool error). As a result, comparisons to Wall Street consensus are not provided (Values retrieved from S&P Global).

Key Takeaways for Investors

  • Mix shift is central: DPNCheck MA headwinds continue to depress total revenue and margins; Quell growth partially offsets but is still small in absolute dollars .
  • Cost actions are real: OpEx down 25% YoY and >$0.5M/quarter savings from RIF improve cash runway; liquidity remains strong with no debt .
  • Near-term catalysts: CIPN De Novo filing late 2024/early 2025, OTC reactivation, and VA channel scaling could inflect Quell revenue/margins if execution is solid .
  • International DPNCheck: Japan distributor inventory overhang expected to clear by Q1 2025; watch for biosensor order resumption as a potential top-line boost .
  • Strategic review optionality: Ongoing process could lead to asset sales, partnerships, or M&A; timeline uncertain but could be a stock catalyst on announcement .
  • Sequential trend: revenue fell from $0.77M (Q2) to $0.59M (Q3) and GM% to 53.1%; monitor Q4 product mix and OTC restart impact on margin recovery .
  • Estimates unavailable: with no Street consensus, trade setups rely on company KPIs (Quell unit/refill growth, VA rollout, regulatory milestones) and liquidity profile (current ratio 13.9) .