electroCore, Inc. Q2 FY2025 earnings call

Key Points - ElectroCore posted record revenue in Q2 2025 and continues to evolve into a broad-based bioelectronic technology company. - Closed acquisition of NeuroMetrix on May 1st with integration completed ahead of schedule. - VA hospital system is the largest customer and returned to above-market growth. - Truvaga posted $1 million in Q2 sales with $500 Truvaga Plus accounting for about 80% of revenue in the category. - Believes a Truvaga copycat from Eastern Europe has been infringing patents and trademarks, with filings in Federal Court in the District of New Jersey. - Planning to accelerate marketing and promotional investments in Truvaga platform to drive growth in 2026 and beyond. - Entered into a term debt facility with Avenue Capital providing approximately $7.2 million of additional net cash at closing. - Expect to consume about $4 million of cash in the second half of 2025 to execute growth plan.

In the second quarter of 2025, electroCore posted record revenue of $7.4 million, up 20% year-over-year and 10% sequentially. Gross margins were 87%, up slightly from 86% last year. VA revenue grew 12% sequentially from $4.7 million in Q1 to $5.3 million in Q2 2025, with 188 VA facilities having purchased prescription gammaCore products as of June 30, 2025. Truvaga posted $1 million in Q2 sales, a 74% year-over-year growth but a sequential decline. U.S. prescription channel recorded revenue of $394,000 during the quarter, down 17% year-over-year. Revenue from outside the United States was $465,000 for the quarter, down 9% from the same period last year.

Guidance - Reiterates full year 2025 revenue outlook of approximately $30 million. - Now needs $11.5 million to $12 million of quarterly revenue to be cash positive, which is 55% to 62% more than the $7.5 million revenue just posted. - Expect to hit the metrics later in 2026. - Pro forma cash balance at December 31, 2025 is expected to be approximately $10.5 million including the first tranche from the Avenue Capital loan.

Risks - There is a risk of patent infringement related to the Truvaga copycat from Eastern Europe, with ongoing legal proceedings in Federal Court in the District of New Jersey. - The company's growth strategy may lead to delayed profitability, and there are uncertainties in achieving the required revenue to be cash positive.

Q: Could you provide any insight into Truvaga as far as composition of revenue with the 2 current SKUs that you have in the marketplace?

A: Our $500 Truvaga Plus mobile app enabled Truvaga Plus is accounting for about 80% of our revenue in the category, and the less expensive Truvaga 350 is lagging far behind.

Q: Could you talk a little bit about have you actually pursued any legal activity as far as patent infringement? And if so, are you doing that through the U.S. Courts or some type of ICC court filings that we should expect to hear about?

A: There's some cross complaints have been filed in Federal Court in the District of New Jersey, and we're not going to comment beyond what's in those public filings.

Q: Was there any cost associated during the second quarter or do we expect to see some of that in the third quarter or you'll let us know?

A: Yes, there was some legal expense that would have been incurred in the first and second quarter of this year.

Q: Should we be expecting new products in the marketplace? And if so, could you talk about it? Do you expect there to be DTC or B2B type of products?

A: The Quell Fibromyalgia -- prescription Quell Fibromyalgia, the production line is now up and running in Rockaway. And in late June, we started to make samples and demos available to our sales force. So that is a product launch, but we've talked about the product historically. So I'm not sure if that rises to the level of a new product. But from a revenue point of view, it'll start generating material revenue in the back half of this year.

Q: How much are you increasing marketing spend on an annualized basis?

A: We're not breaking out components of SG&A and total SG&A fluctuates quite a bit with timing, so I'm afraid I can't explicitly answer that question. I think you'll see our SG&A line go up 5% to 6%. SG&A in our prescription businesses scales with revenue because there's a large commission component. And in our direct-to-consumer business, there's a component that scales with revenue around media and advertising spend. The blended average of all of that is about 30%. And so, if revenue goes up 20%, like it did this quarter, then that variable component of SG&A would go up 30% or 20%, so about 6%.

Q: Can you kind of comment on what ultimately led you guys to, on the decision to ramp up spending now and potentially delaying profitability? And then second question is, can you comment on the contribution of Amazon sales to the handsets in the quarter?

A: We've restructured our sales force on the prescription side. We're seeing very exciting green shoots in our direct-to-consumer business. We closed the acquisition of NeuroMetrix. We've been able to attract some really compelling talent, starting with James Theofilos and Kelly Benning, who both bring quite a bit of digital health direct-to-consumer know how. So for all those reasons, the time is now to put our foot on the gas pedal and drive more aggressive revenue growth. And there's plenty of leverage in the income statement with our 85%, 86% gross margins. So we're very confident that we're going to get to breakeven in a reasonable amount of time. We don't have much to say about Amazon just yet. We're still working out some issues with the plumbing and how orders get transferred from Amazon to our fulfillment.

Q: How will this investment impact the time to profitability and what are your thoughts on 2026 and profitability?

A: We believe that the investments are going to accelerate revenue growth. We just announced 20% year-on-year revenue growth. We wouldn't be making these investments if we didn't think that, that sequential and year-on-year growth rate wouldn't increase. We need to get to $11.5 million of quarterly revenue from $7.5 million, that's 50% plus or minus revenue growth. And I'd love to see that happen sooner or rather than later.

Q: Can you talk about the return on advertising that you're seeing and how that has trended on the Truvaga side?

A: For the quarter just ended, our media efficiency ratio was 2.0. In other words, a dollar of advertising spend generated $2 of revenue. That's a little bit lower than previous periods. We've got a variety of initiatives and as I mentioned, some digital health executives joining the team where I think we're going to be able to return those KPIs to where they were late last year.

Q: Can talk about Truvaga and Apple Health and how that effort's going and what the compatibility is there?

A: A few months ago we announced the integration of Truvaga into Apple Health. In and of itself, that's not a great deal -- great, big deal. But there are a tremendous number of third-party apps that offer diagnostic information, heart rate, breath rate, quality of sleep, and so, it gives us access to that much, much larger biohacker ecosystem through the API that lets us talk to Apple Health. So some folks in the biohacker community have been very active in coming up with use cases and I look forward to being able to make announcements about that later this year.