CeriBell, Inc. Q2 FY2025 earnings call

• Jane Chao reported total revenue of $21.2 million for Q2 2025, a 38% y-o-y growth, with 584 active accounts. They raised full-year 2025 revenue guidance to $85 million to $88 million.
• Invested in commercial infrastructure, including territory managers and clinical account managers.
• Shared patient stories illustrating the value of Ceribell's solution, such as a case where the system ruled out seizures for a patient.
• Progress in NICU pilot, positive reception at the American Delirium Society Conference, and efforts to defend intellectual property against Natus Medical Incorporated.
• Focus on becoming the standard-of-care for seizure management, expanding markets via product development, and generating clinical and health economic evidence.

Total revenue for the second quarter of 2025 was $21.2 million, reflecting 38% growth over the same period last year. Product revenue for Q2 2025 was $15.9 million (a 38% increase from Q2 2024), and subscription revenue was $5.3 million (a 41% increase from Q2 2024). Gross margin for Q2 2025 was 88%. Total operating expenses for Q2 2025 were $33.6 million, an increase of 56% compared to Q2 2024. Net loss was $13.6 million for Q2 2025.

• Raised full-year 2025 revenue guidance to $85 million to $88 million from prior $83 million to $87 million.
• Expect full-year 2025 gross margins in the mid- to high-80% range.
• Implemented supply chain mitigation efforts, including establishing a production line in Vietnam to be operational by end of Q3, to derisk supply chain and maintain gross margins.

• Intellectual property infringement risk: Ceribell filed complaints with the U.S. International Trade Commission and U.S. District Court of Delaware against Natus Medical Incorporated for patent infringement and unfair competition.

Q: Congrats on the good quarter and the guide raise. Maybe just to start on the question. I'd love to kind of get kind of an update on some of the momentum in the business and what you're seeing on account adds and the awareness of Ceribell out there and utilization...

A: Travis, I can take that. Yes, we're seeing good momentum on all fronts. As a reminder, we -- most of the commercial investments we've made over the past year, especially on the territory manager side, given the sales cycle, we don't expect to drive tangible growth in the account base until next year. Of course, internally, we're tracking along on the underlying metrics around the stages of pipeline and the number of customers we touched and how those progressed through the pre-PO stages, and it's going quite well. So we continue to have confidence that that's going to bear fruits. As far as usage goes, our CAMs continue to make an impact. As we've talked about over the past number of calls, we do see lower seasonal usage in Q2 and Q3 relative to Q4 and Q1, but the outcome this quarter was well in line with what we expected.

Q: Congrats on a good quarter as well. Maybe for me, can you remind us of what seasonality is like with respect to EEG? And just speak to some of the trends you saw on utilization at your hospitals, think about any color on new or existing accounts?

A: Typically, we see a reduced seasonal usage in Q2 and Q3 relative to Q4 and Q1. That aligns pretty well with the macro level data that we get from various sources around what ICU census is. So we believe that that's a direct cause. We've seen it over this year, and we've seen it in the past years as well. And so we've appropriately prepared for it. What we look at internally, and Jane can speak more to this, is some of the initiatives that our CAMs are undertaking to drive usage, and those are -- have been very effective.

Q: Congrats on a nice quarter. I wanted to ask first on utilization. As the account base keeps growing, curious if you could talk a little bit about segmentations of utilization growth and how they grow over time. Is this simply a matter if you kind of look at tenure of accounts, do they kind of linearly grow in utilization? Or is there something else that you see in the data set that makes some accounts drive utilization more than others? Just trying to get an understanding of what kind of underlying trends there look like when you look at the accounts segmented by utilization?

A: Yes. We look at our utilization, I would say, in 3 dimensions in growth. The first one is departmental penetration or expansion. In many of our accounts, we are still not in all the departments and all the departments would include all the ICUs, emergency department as well as the floor. So in many of these accounts, we'll be intentionally driving departmental expansion. The second dimension is physician training. So in many of the departments we are already in, we have not been able to always train 100% of the providers on the bed side, partially driven by the natural turnover and also it's driven by -- it's very challenging to train the night shifts or the weekend shifts. So we have specific initiatives internally to address that. The third dimension, as I mentioned earlier, is really focused on specific population and supporting the nursing and physician team to think about driving protocolization. So these are overall the 3 dimensions, I would say, they apply to majority of our customers because most of our customers have ICU and ED, have the different physician provider groups as well as the different patient population.

Q: I was hoping to start on the pipeline. Jane, it's great to hear that the early buzz is being generated by the delirium indication. And I was hoping to just review just the economic value proposition as you see it rolling out? And is it going to be driven by decreased length of stay, decreased kind of workup costs in terms of pinning down delirium. But if in the future, once approved, if a hospital adopts the Ceribell technology and utilizes the point-of-care EEG to make a delirium diagnosis, I mean, how much cost savings could we see and maybe compare the economic value proposition to the Ceribell EEG solution?

A: Yes. Thank you, Josh. We see a lot of parallel in terms of health economics benefit between delirium and seizure since we are not launching delirium yet, so we probably won't be able to provide super specific health economics benefit as we do on seizure. However, at a high level, one angle is what you already mentioned, since most of all these patients are under DRG -- most of these patients for inpatient under DRG, which means the revenue is relatively fixed. So reducing length of stay will be a major value driver. There are plenty of clinical evidence has shown that when patients have delirium, the ICU or the hospital length of stay is significantly higher. So we expect that when you have a more objective continuous measurement that help physicians to optimize the management of delirium, we could potentially see a signal there as we did in seizure. And also similar to seizure, we received the breakthrough on delirium as well, and there could be association of NTAP and breakthrough, which we commonly see. And of course, there's always uncertainty there. So overall, we see a lot of parallel, and this is what we will be focusing on in generating more clinical evidence as well as health economics evidence when we launch new indications.

Q: Just on the -- just to start off with costs for Scott. Just on the ongoing legal, you mentioned that your G&A was a little elevated in Q2 because you're prepping for all of this. How should we think about the incremental cost over the next couple of years for legal? And then just on the delirium, I think, how do we think about the -- as you come to market with this product, how do we just think about -- is there a certain like -- I guess, with status epilepticus, there's a certain pathway, a guideline on how to treat those patients already in place. Is there something similar with delirium that there's a specific pathway of how to treat them or it just changes the -- what the -- how they're going to treat them if they know they have delirium?

A: On the cost of legal, we do expect an ongoing cost associated with the action. Of course, that will depend on the response and how long that lasts. But what I'll say to guide you is the amount of increase that we saw relative to normal in Q2 should about reflect what we're going to see in the coming quarters of '25 and '26.

A: And on the delirium treatment, it is true that it's different from seizure management, in that seizure management focused on very clear first-line, second-line treatment, and that's mostly medication. Delirium doesn't have a single medication and that's proven to be effective or recommended by the guidelines, especially in the hypo delirium patient population. However, that being said, there's clear treatment pathways that the societies has developed a clear guideline and that involves in looking into potential medication, especially sedatives that can cause delirium, therefore, to eliminate certain medication from the patient or finding other root cause, potentially infection and other underlying unbalanced iron level. So those can be different root cause for delirium. It's critical to identify those root cause and that can help delirium management. Another factor of delirium is that these patients often stay ICU for days or even weeks. And it's a disease state that can wax and wane and evolve over time. So often when physicians put patients in one treatment path, it's very hard for physicians to know -- it could be hard for physicians to know whether or not they are on the right path. And this is where we received some of the feedback from the key opinion leaders at ADS that objective and the continuous monitoring device can help the physician not only to more accurately and potentially detect delirium early, but to know that whether or not they're on the right path in managing these patients.

Q: I guess, firstly, could you delve into the neonate indication a little bit? Could you talk a little bit more about the pilot and number of patients and number of centers that you would anticipate to run through this, and as far as timing, when we may see some initial data?

A: Yes. We don't disclose specific patient population or specific sites, but the pilot is still, I would say, relatively small. We are not talking about hundreds of sites. We're talking about probably single double -- low double-digits. And the reason is that for the pilot, we're really trying to achieve, one, to further validate the ease of use and signal quality of our FDA-cleared hardware, which is both the recorder as well as the headcap. And B, probably more importantly, it's, again, understand specific patient needs here in this very unique patient population and also the specific dynamics workflow in the NICU. So all this would inform us when we developed our -- when we are developing our go- to-market plan. As we mentioned in the last earnings call, we will be sharing FDA clearance or approval when they come or other strategic regulatory milestones. So at the moment, we do not have those milestones to share, but we are -- what we can share is everything is on track related to our pipeline according to our internal milestone and some of them are even ahead of schedule.

Q: And then secondly, could you talk a little bit about the shift on the manufacturing to Vietnam? You did mention this could occur by the end of Q3. Is that going to be a sole shift in its entirety? Or do you expect to have 2 facilities running? And then just clarify for us, would that be separating both Clarity as well as the headbands?

A: We expect to maintain our current suppliers in China as well. The Vietnam facility is really to derisk the single country supplier as well as to be able to change our manufacturing jurisdiction in order to take advantage of the different trade policies we see. So I would consider it an added line. As it relates to manufacturing, we do a lot of the manufacturing related to the headbands internationally in China, Vietnam with final assembly and inspection here in the U.S. and the recorders have always been and will continue to be manufactured here in the U.S.

Q: Congrats on a nice quarter. I wanted to ask here, I think I heard in the prepared remarks that there would be opportunistic investments for the territory count. What are some of the drivers that would determine whether you make those investments?

A: It's part of our core strategy and how we operate is we always run pilots. So usually, before we invest extensively in any initiative or function, we would have a rather proven pilot. So we have multiple commercial pilot ongoing. And as we see strong signals, and that's when we will pull the trigger to take those opportunities.

Q: Okay. So strong signals from within a region or specific territory. Okay. Very helpful, Jane. And then what are you hearing anecdotally so far? What are your sales folks seeing in the field from the competition given their recent launch?

A: Yes. We created the point-of-care EEG category. So there has been competition pretty much since day 1 we launched the product. With our success growing, we see more emerging players and more activities. However, we see the competition activity not really impacting our commercial performance, as you could see from our Q2 performance and that we have high confidence to raise our 2025 guidance. The reason is that we fundamentally believe that our product is significantly superior than what's available from the competition. It's highly validated by hundreds of thousands of patients and our clinical evidence. The fact that we have a FedRAMP, which is one of the highest cybersecurity certification that any company can get, it really differentiates us as our customers paying more attention to cybersecurity now. So overall, we remain highly confident that we will be the dominant -- remain the dominant category leader.