NPCE

Core Commercial Performance

• Core RNS business for the current adult focal epilepsy indication delivered over 20% year-over-year growth in the first half of 2026, consistent with the company's long-term growth framework.
• The company reached all-time highs in active prescribers, active accounts, and patient pipeline, indicating broad, durable adoption of the RNS platform.
• Most growth continues to come from increased adoption and utilization at level four comprehensive epilepsy centers, while community access initiatives are expanding referral pathways to support more patients.

IGE PMA Supplement Regulatory Update

• As previously announced, the FDA notified the company the IGE PMA supplement was not approvable in its current form and requested additional clinical evidence, not related to device safety.
• The FDA response was not a full disapproval, and the regulatory process remains interactive; the agency recommended the Submission Issue Request (SIR) process which the company is currently pursuing.
• FDA requests additional information on clinical benefit across patient subgroups (including by baseline GTC seizure frequency) and the clinical meaningfulness of GTC seizure reduction.
• The company plans to submit an amendment with totality of evidence, including additional subgroup analysis, patient/physician reported outcomes, published/real-world evidence, and 24-month data showing 100% median GTC seizure reduction among evaluable patients.
• Preparation of required data analysis is on track, and the SIR meeting with the FDA is expected to be scheduled in the next few weeks; the company expects the amendment review will not reset the full 180-day FDA review clock (agency retains discretion over this).

Product Development Highlights

• Launched ECOG Assistant, the first AI tool in Neuropace's planned AI product suite, and the first AI tool in the neuromodulation space designed to help clinicians identify ECOGs of interest, review trends, and assess circadian seizure patterns.
• ECOG Assistant leverages the RNS System's unique ability to continuously collect intracranial EEG data, and uses AI trained on Neuropace's proprietary physician-labeled dataset to improve clinical workflow efficiency and support more individualized treatment decisions; early clinical feedback has been encouraging.
• Completed a key training phase for the company's multimodal foundational AI model, which is already learning clinically relevant brain activity patterns with the potential to uncover individualized patterns undetectable via traditional methods; the company now holds over 27 million proprietary intracranial EEG recordings to support AI development.
• Advanced development of remote care capabilities, which will enable telehealth programming of RNS devices and at-home patient MRI preparation without in-person physician presence; the company expects to submit remote care for FDA clearance by the end of 2026.
• Development of the next generation implantable hardware platform is actively underway in the development phase, with planned improvements including expanded system capacity, support for additional lead configurations, and integrated Bluetooth low energy connectivity to support future AI and remote care capabilities.

• Full-year 2026 total revenue guidance is increased to a range of $99.5 million to $101.5 million, up from the prior guidance range of $99 million to $101 million. The revision reflects higher expected full-year service revenue of ~$1 million, up from prior guidance of $500,000.
• Full-year 2026 core RNS revenue guidance is maintained at $98.5 million to $100.5 million, representing expected 21% to 23% YoY growth; the revenue guidance does not include any contribution from the IGE indication expansion. Third quarter RNS revenue growth is expected to be similar to the first half 2026 growth rate of ~20% YoY.
• Full-year adjusted gross margin guidance is increased to 82% to 83%, up from the prior range of 81.5% to 82.5%, reflecting first-half performance, favorable pricing, and effective manufacturing cost management.
• Full-year adjusted operating expense guidance is maintained at $90 million to $92 million, including ~$10 million in non-cash stock-based compensation. Within this range: adjusted sales & marketing is expected to be $46 million to $48 million, adjusted R&D is expected to be ~$27 million, and adjusted G&A is expected to be ~$17 million.
• Full-year adjusted EBITDA loss guidance is improved to a range of $7.5 million to $8.5 million, down from the prior expected loss range of $8.5 million to $9.5 million.
• The company maintains a long-term target of achieving cash flow breakeven by the end of 2027.

Neuropace reports financial results for continuing operations (excluding the discontinued Dixie Medical distribution arrangement). For Q2 2026:

• Total continuing operations revenue: $22.8 million, up 17% year-over-year (YoY).
• RNS System revenue: $22.5 million, 98.7% of total continuing revenue, representing 21.3% YoY growth.
• Service revenue: $302,000, 1.3% of total continuing revenue, down from $937,000 YoY. For the first half of 2026:
• Total RNS System revenue: $44.2 million, representing 20.4% YoY growth.

Profitability metrics (non-GAAP adjusted):

• Adjusted gross margin: 83.4% (down 60 bps YoY due to modestly higher material costs, partially offset by favorable pricing).
• Adjusted total operating expense: $21.9 million, up 3% YoY (well below revenue growth, demonstrating operating leverage):
  • Adjusted sales & marketing: $11.5 million (52.5% of total operating expense), up from $10.7 million YoY
  • Adjusted R&D: $6.3 million (28.8% of total operating expense), up from $6.0 million YoY
  • Adjusted G&A: $4.1 million (18.7% of total operating expense), down from $4.6 million YoY
• Adjusted operating loss: $2.8 million, improved from a $5.0 million loss YoY
• Adjusted EBITDA loss: $2.8 million, improved from a $4.9 million loss YoY
• GAAP net loss from continuing operations: $6.2 million, improved from a $10 million loss YoY Ending Q2 2026 cash, cash equivalents, short-term investments, and restricted cash totaled $51.9 million, with long-term borrowings of $59.0 million.

• The timing and outcome of the IGE PMA supplement amendment review remain uncertain: the FDA has discretion to reset the full 180-day review clock even though the company does not expect this, and there is a risk the agency could require additional data or restrict the approved label to narrower patient subpopulations.
• The company continues to operate at a net loss, and profitability is dependent on continued revenue growth, operating leverage, and disciplined cost management; there is no guarantee the company will achieve expected profitability targets on the current timeline.
• Clinical adoption of new platform capabilities including AI tools and remote care may be slower than expected, limiting the impact of these investments on revenue growth.
• Product development timelines for next-generation hardware and new capabilities are subject to unforeseen technical and regulatory delays.

Q: The SIR meeting with FDA for the IGE PMA supplement has not yet been scheduled; what is the expected timeline for the meeting and subsequent resubmission, and will the company expand into community epilepsy centers before IGE approval?

A: Data preparation for the meeting remains on track, and the SIR meeting is expected to occur within the next few weeks. The company expects the full 180-day FDA review clock will not be restarted after amendment submission, and aims to submit the amendment before the end of 2026 following alignment at the SIR meeting. The company is already expanding into community centers now to support the current adult focal indication, laying infrastructure in advance of potential IGE approval. Community expansion supports current business growth by expanding referral pathways while preparing for future indication expansion.

Q: How did the clinical community react to the FDA's non-approvable letter for the IGE PMA supplement, and what is the current status of next-generation platform development?

A: Most participating investigators have been updated directly on the FDA feedback; they remain confident in the underlying clinical trial data, recognize the significant unmet need for IGE treatment options, and have offered support to the company. The next-generation implantable hardware platform is in active development (no longer in early research, now in full development), with key improvements including expanded device capacity, additional lead configuration support, and integrated Bluetooth connectivity that will complement current AI and remote care development. A full public timeline is available in the company's investor day materials on its website.

Q: 2027 consensus estimates project ~23% top-line growth; does this include reasonable assumptions about potential IGE contribution, and how will Neuropace's new AI capabilities be monetized?

A: The company will not provide 2027 guidance until there is greater clarity on IGE approval timing, and reaffirms the core focal indication business is expected to grow ~20% annually long-term, consistent with prior commentary. Near-term, AI tools like ECOG Assistant are monetized indirectly by improving RNS System uptake: they increase clinical workflow efficiency, enable higher patient volumes per physician, and improve patient outcomes, all of which drive higher RNS unit sales. Future additional AI monetization pathways may exist, but these are downstream and have not been finalized.

Q: How long does it take new accounts to contribute meaningful implant volume, and what are the adoption dynamics for the IGE indication compared to the current focal indication?

A: For new level three and community centers, timelines vary based on existing infrastructure: centers with existing neurosurgery capacity can be trained and start implanting fairly quickly, while centers needing new infrastructure may take longer. For the existing core business, growth is driven primarily by increasing adoption among additional physicians at existing level four centers, which is a faster process than opening entirely new centers. Focal epilepsy patients require a multi-step evaluation process (including invasive localization monitoring) that can take 6-12+ months, with patient dropout along the pipeline. IGE patients do not require invasive localization, so pipeline friction is much lower, which is expected to support faster adoption dynamics after approval.