electroCore, Inc. Q3 FY2025 earnings call

• Strategic Shifts: The company shifted strategy to accelerate growth, including targeted investments, a strategic acquisition, and expansions in medical and wellness divisions.
• Acquisition: Acquired NeuroMetrix, including the Quell portfolio. Quell Fibromyalgia launched in the VA hospital system in July and has exceeded expectations. The acquisition diversifies the offering within the VA and mitigates product risk.
• VA Channel: The VA hospital system remains the largest customer. Revenue growth resumed after a temporary slowdown, and a new 5-year contract was secured. The company is expanding the VA sales team and targeting managed care systems.
• Wellness Division: Enhanced expertise in the wellness division, partnered with StratejAI for AI-integrated software to enhance Truvaga and Quell, aiming to create personalized experiences and recurring revenue streams. Targeting a $80 million to $120 million global wellness opportunity with Truvaga and Quell.
• Global Expansion: Broaden options outside the U.S. through a royalty-based arrangement with a China-based investor, though regulatory and commercialization timelines depend on local processes.

Prescription device revenue was $6.8 million, accounting for approximately 78.16% of the total revenue of $8.7 million. Health and wellness product revenue reached $1.9 million, making up about 21.84% of the total revenue. Prescription device revenue grew 19% year-over-year to $6.8 million, driven by gammaCore and Quell sales in the VA hospital system. Health and wellness product revenue was $1.9 million, a 54% increase sequentially and 121% year-on-year, with Truvaga revenue excluding a one-time clinical trial order growing 18% sequentially and 79% year-on-year.

• Increased full-year 2025 revenue guidance from $30 million to $31.5 million to $32.5 million.
• Expect approximately $10.5 million of cash at December 31, 2025.
• Aim for cash positive operations as measured by adjusted EBITDA with approximately $12 million in quarterly revenue.
• Expect to reach $12 million in quarterly revenue and positive adjusted EBITDA in the second half of 2026.
• Expect to use approximately $5 million of cash to fund operations in the first 9 months of 2026, after which the business is expected to be self-funding.

• Litigation: Pending litigation related to copycat vagus nerve stimulation devices, such as the case with Pulsetto.
• Government Shutdown Impact: TAC-STIM sales to active duty military were affected by the government shutdown, with current quarter sales halted and conservative 2026 forecasts.
• Regulatory and Commercialization Timelines: Uncertainties in regulatory processes and commercialization timelines in China for international expansion.

Q: Jeffrey Cohen asked about NeuroMetrix's pre-acquisition channels and the Truvaga clinical trial.

A: Daniel Goldberger responded that prescription Quell for fibromyalgia was sold in a few VA hospitals off contract and through small cash pay customers via HealthWarehouse prior to acquisition, and the Truvaga sale for a clinical trial is for a long COVID subject trial with limited shared protocol details.

Q: RK of H.C. Wainwright asked about Quell's performance in the VA space and learnings for salespeople.

A: Daniel Goldberger explained that moving production to New Jersey and adding Quell to the VA hospital contract led to faster uptake, with safety profile and unmet clinical need for fibromyalgia driving adoption, and shared insights on training sales teams.

Q: Jeremy Pearlman asked about VA segment growth and geographies.

A: Daniel Goldberger stated growth is from new accounts and increased utilization from existing customers, with strong presence in Texas, Southeast, and West Coast, and greenfield territory in New England, Mid-Atlantic, and rest of the Midwest.

Q: Walter Schenker asked about Quell royalties and China commercialization.

A: Daniel Goldberger confirmed royalty payments will decline, and the Chinese investor plans to commercialize as a prescription medical device with trials taking years, potentially migrating data back to the U.S. for additional indications.

Q: Question about combatting copycat vagus nerve stimulation devices.

A: Daniel Goldberger stated there is litigation in Federal Court District of New Jersey against Pulsetto, focusing on winning the case and not commenting beyond public filings.

Q: Question about breaking out neuro revenue for Q3.

A: Daniel Goldberger responded that Quell fibromyalgia net revenue in Q3 was $595,000 and Truvaga revenue was $1,674,000.