Neuraxis, Inc.

Ladies and gentlemen, thank you for standing by. Welcome to the Near Access Report, fourth quarter 2025 financial results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you would need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would like now to turn the conference over to Ben Shemzian, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you for joining us for Neuraxis' fourth quarter and full year 2025 financial results and corporate update conference call. Joining us on the call today is Brian Carrico, CEO of Neuraxis, and Tim Hendricks, CFO of Neuraxis. At the conclusion of today's prepared remarks, we will open the call to questions. If you are listening through the webcast, please follow the operator's instructions, or you can send me an email at nrxx at listenpartners.com with your question. If you are dialed into the live phone, you can, again, follow the operator's instructions. Today's event is being recorded and available through replay through the webcast information provided in the press release. Finally, I'd like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential operating results of NeurAxis. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today, these statements are not guaranteed of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including but not limited to the factors set forth by the company's filings in the SEC. NARACIS undertakes no obligation to update or revise any of these forward-looking statements. With that said, now I would like to turn the call over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Thank you, Ben. Good morning, and thank you for attending our fourth quarter and full year 2025 earnings call. During today's call, I will highlight the continued execution of our commercialization strategy for IV Stems. our neuromodulation technology for both the pediatric and adult patient populations. The continued execution has set the stage for the growth we expect in 2026. Today we will recap Q4 and quickly turn to the first quarter, which I believe is most important and what everyone is looking to hear. To recap Q4 in a nutshell, we continued our commercial scaling strategy, We picked up 45 million covered lives for our proprietary PENFS technology and were granted a federal FSS contract with the IB STEM as our first listed product to allow our teams to sell within the VA. Following my remarks, Tim Hendricks, our CFO, will review our financial results for the fourth quarter of 2025. Let's first talk about the commercial execution of reimbursement progress. As we have mentioned in the past, the years leading up to January 1st of this year, we're focused on achieving two critical milestones, securing a Category 1 CPT code and obtaining written insurance policy coverage to enable widespread sustainable growth. Once it became clear that the Category 1 CPT code would become effective on January 1st, 2020-26, we implemented a more focused commercial strategy. and that strategy remained unchanged through the first quarter. The objective for the first quarter was straightforward. Deploy the strategy, gather real-world data, and learn as much as possible about what drives adoption and what gaps remain. With the knowledge gained during Q1 to date, we now have a much clearer and more actionable growth roadmap. For the first time, the story has become significantly easier to understand. With a Category 1 CPT code in place and more than 100 million covered lives, our focus has shifted from access creation to execution, identifying what remains missing and closing those gaps to unlock maximum growth. Today, I will outline what we have successfully put in place, what we have learned, and where our execution efforts are focused going forward. Overall, I'm extremely pleased with the first quarter performance across all fronts, including revenue progression, stronger than expected operational fundamentals, and importantly, the clarity gained around the remaining drivers of growth, which allow us to now begin deploying a more comprehensive commercial strategy. We will provide detailed KPIs and financial metrics on our next earnings call when we will have a full quarter of operating data. From an adoption standpoint, We are seeing excellent performance from accounts that have a Category 1 CPT code, strong medical policy coverage, a physician champion, and a dedicated IB STEM clinic time each week. Conversely, institutions with only partial or limited policy coverage are submitting fewer patients as physicians still perceive that a meaningful portion of patients lack reimbursement certainty. In line with our plan and expectations, overall patient submissions have increased significantly following the implementation of the Category 1 CPT code. While a small number of hospitals with strong policy coverage have not yet reached expected utilization levels, these cases are not representative of broader trends. As anticipated, expansion of our commercial footprint remains essential, and we will now begin to scale these capabilities alongside growing reimbursement access. Importantly, the most important piece of knowledge I set out to understand in Q1 was whether insurance companies without PENFS written policy coverage would cover IV stem with the Cat 1 code, or if we would indeed need written policy coverage to see patients covered. We have confirmed that payers do not provide coverage based solely on the CPT code, and therefore, written medical policy coverage remains essential. While I will not discuss specific payer negotiations today, We are very confident in our positioning with the remaining key players, key payers. The potential impact is significant, particularly when considering that current submission growth is being driven by only approximately 10% of children's hospitals nationwide. Our strategy therefore remains laser focused on expanding medical policy coverage while simultaneously increasing the commercial footprint. Securing additional payer coverage remains our highest priority. At the same time, our internal prior authorization team continues to expand, helping hospitals reduce administrative burden, improve reimbursement confidence, and ultimately increase patient access, a critical step toward broad national adoption. We continue to make meaningful progress with the nation's largest insurers and remain in active dialogue as multiple payers approach scheduled medical policy review cycles through the first half of 2026. In late December, we announced policy coverage from a major national health insurer spanning multiple states and represented about 45 million health plan members. Our advocacy efforts center around the urgent need for pediatric coverage and the clinical risks of the off-label drugs with FDA black box warnings. Based on external expert opinion, we believe we have the most comprehensive payer engagement effort in our industry. Discussions with payers have been constructive, and we're confident this multi-channel approach will drive favorable policy consideration. That said, we expect policy changes and prior authorization to prove us to unfold gradually, not overnight. I now want to focus on and highlight the catalyst for what we expect to be continued revenue growth in the coming quarters. Two elements remain key to IB STEM's success. First, the insurance coverage for access, which I just discussed in detail. Second, commercial footprint expansion in several areas. Now that we have 100 million covered lives and continue to see positive payer momentum supported by the clinical practice guidelines, commercial readiness for 2026. In addition to the insurance element just mentioned, the commercial execution is equally important and the primary focus of our commercial team. As the new CPT code takes effect and coverage becomes more available, It is paramount for children's hospitals to have enough dedicated time slots each week to treat patients in need. Our commercial organization is fully aligned for the 2026 transition. We've prioritized target accounts based on their utilization potential and launched comprehensive education and outreach, including direct engagement with 75 children's hospitals who previously ordered IV stim, which does not include new accounts in Q1. Division chief meetings with detailed RVU and financial modeling, which will become more and more important. Comprehensive partnership with NASP, again, beginning with a CME-credited presentation. We did one in November. We'll do another one this spring. Integrated marketing, which highlights the positive reimbursement shift, which appears as strong or better than we expected. Field programs focused on the clinical and economic value of the new CPT code. and we're working closely with all stakeholders to ensure there are dedicated weekly time slots available for patient treatment with IV stem. These coordinated efforts are cultivating awareness and positioning IV stem for broad adoption now that the new CPT code has taken effect. Most importantly, these efforts require people, so we are in the process of hiring experienced and successful people on several fronts, including medical science liaisons to ensure our data is well-known and top of mind. We're hiring market development specialists to ensure the financial stakeholders understand the positive economics in the IB STEM procedure, a digital marketing expert focused on ensuring we have a presence in front of all patients and physicians, and salespeople to make sure we are covering all aspects. We will hire each position and duplicate those positions which are most successful in the areas where we have the most opportunities. This brings me to our commercial strategy for IV STEM in adults. As many of you know, the category one code for IV STEM applies equally to adult patients as it reflects the same physician work performed using the same device technology. What may be less widely understood, however, is that while IV STEM has FDA clearance for adult use, that clearance was based on extrapolation from adolescent clinical data rather than a large standalone adult randomized study. With that said, it is important to note that several studies using our technology have included young adults in their 20s. And importantly, the underlying pathophysiology of these conditions is not meaningfully different between adolescents and adults. The FDA recognized this overlap along with the alignment across Rome diagnostic criteria in the device's favorable safety profile in supporting broader use. Nonetheless, broad medical policy coverage for adults is not expected in the near term. Based on what we learned during the first quarter, we believe payer coverage in the adult population will likely require completion of a large, randomized, controlled trial. Importantly, this does not change our execution priorities. Our primary commercial focus will remain within the children's hospitals, where coverage expansion continues to accelerate, as well as within the Veterans Administration System. That said, we are pursuing the adult IB STEM opportunity through two parallel strategic pathways. First, we have executed an agreement with the Cleveland Clinic to conduct a randomized controlled trial evaluating IV stems specifically in adult patients with functional dyspepsia. This study is designed to generate the clinical evidence required to support future medical policy coverage. Second, as previously highlighted as one of our key fourth quarter milestones, we were awarded a federal supply schedule, or FSS contract, enabling commercial access to the U.S. Department of Veteran Affairs. The VA healthcare system serves nearly 7 million active patients annually, with functional dyspepsia estimated to affect approximately 3% of this population. Given the typical adoption timelines within the VA, I did not expect Q1 orders. However, we are already seeing multiple facilities placing orders with a growing number moving through the process. We are actively dedicating commercial resources to this channel and expect our sales footprint as utilization data and clinical adoption continue to develop. Stepping back, the most important point is this. The fundamental barriers that historically limited adoption are now being systematically removed. With the category one code in place, expanding medical policy coverage, accelerating patient utilization, and a scalable commercial infrastructure now operational We believe IB STEM has entered the early stages of its true commercialization phase. Execution is now the primary driver of growth. As coverage expands and utilization continues to scale across hospitals, payers, and federal healthcare systems, we believe the gap between clinical demand and current adoption will continue to close. Our focus remains disciplined, data-driven, and centered on building long-term sustainable value. To summarize what we learned in to date, children's hospitals who have strong insurance policy coverage, at least one physician champion, and adequate IB STEM clinic time are performing extremely well. The void of any one of these three is a barrier to making sure every child has access. Written insurance policy coverage is essential to patients being treated through insurance. Number three, We learned which gaps need addressed such as clinical reinforcement to ensure all physicians are aware of the data along with keeping IV stem top of mind. Number four, we learned communication is key to understand which barriers or perceived barriers still exist. Number five, we learned the economics are very strong for the PENFS procedure in Children's Hospital. Delivery of this information to the administrators and financial stakeholders and the children's hospitals will be a strong focus of our team going forward. And finally, revenue has been surprisingly better than I expected in Q1. It has also been heavier at the top than I expected, but that is great in the fact that we now know what a children's hospital with all pieces in place can do, and that is outstanding for our future. Make no mistake, we have work to do and gaps to fill, but the hurdles we face today are nowhere near the hurdles we have overcome to be in this situation. We have never been better positioned operationally, commercially, or strategically than we are today, and we believe the progress underway in 2026 represents the beginning of a multi-year growth cycle for the company. I will now turn the call over to our CFO, Tim Hendricks, to discuss the financials.

Thank you, Brian, and let me add my welcome to everyone joining us on this call. These financial results were included within our press release, which was issued earlier this morning. And we're also provided in more detail within our 10K. I will provide some additional details in key areas, such as our financial results and liquidity position, as well as an outlook on certain areas. The fourth quarter of 2025 marked the sixth straight quarter of double digit revenue growth year over year. 2025 was a year of significant milestones for the company. including FDA indication expansion to functional abdominal pain and functional dyspepsia with associated nausea symptoms in both children and adults, IB STEM label expansion from 11 to 18 years of age to eight and up, including an increase of devices per patient for a course of treatment to four, the published NASPGAN academic society guidelines, the new Category 1 CPT code, RVUs, the introduction of the red device, a FSS contract, and last but not least, medical policy coverage representing approximately 45 million health plan members from a major national health insurer in December. The accomplishments position the company extremely well as we continue to grow revenue with stronger gross margins and operating expense leverage. With that, I'll go through the financial highlights in detail. Revenues in the fourth quarter of 2025 were $968,000, up 27% compared to $761,000 in the fourth quarter of 2024. Unit deliveries increased 35% compared to the prior year due to volume growth from patients with full reimbursement health insurance. A marked shift from our historical mix of the company's discounted financial assistance program outpacing the growth of higher margin full reimbursement patients. In fact, the fourth quarter of 2025 marked the seventh straight quarter of double-digit unit growth. And although our average selling price in the fourth quarter of 2025 was lower than the fourth quarter of 2024, it reached its highest level in 2025 thanks to the mix shift to our more profitable reimbursement channel. As previously mentioned, we picked up our largest insurance payer in the fourth quarter who gave immediate effect of full reimbursement that helped drive the mix shift. And given the Category 1 CPT code that went effective on January 1st, we expect a positive mixed shift impact on revenue will continue into the first quarter. Revenues in fiscal year 2025 were 3.6 million, an increase of 33% compared to 2.7 million in fiscal year 2024. Unit deliveries increased 44% due to both patients with full reimbursement health insurance coverage and those participating in our discounted financial assistance program, with the latter slightly outpacing on the growth front for the full year. Growth margin in the fourth quarter of 2025 was 85.4% compared to 86.4% in the fourth quarter of 2024. Despite the meaningful mix shift from discounted financial assistance to full reimbursement coverage in the quarter, the primary drivers, For the 100 basis point decrease, our reserves established for excess and obsolescence inventory and the growth of the red device in the quarter, which has a substantially lower gross margin than IV stim. Gross margin in fiscal year 2025 was 84.2% compared to 86.5% in fiscal year 2024. Despite our increase in revenue, the 230 basis point gross margin decline was due to higher discounting and growth in our financial assistance programs, in particular during the first three quarters, and then excess and obsolete charges on inventory related to our RED device. Despite the decline in our growth margin in the fourth quarter, we expect to reverse that trend in 2026 as the new Category 1 CPT code became effective on January 1st, which will transition currently discounted device sales to full reimbursement revenue with insurance coverage. Total operating expenses in the fourth quarter of 2025 were $2.5 million, an increase of 20% compared to $2.1 million in the third quarter of 2024. We measure and manage our operating expenses along three functions, selling, research and development, and general and administrative. And as we continue to grow at a double-digit pace, we realize that investors will benefit from a more transparent presentation of our selling and research and development costs, as those are indicators of our future success. As a result, we reclassified $297,000 and $57,000 from general and administrative expenses into selling expenses and research and development costs respectively in the fourth quarter of 2024 to conform to the current period presentation. Selling expenses in the fourth quarter of 2025 were $518,000 a 31% increase compared to $396,000 in the fourth quarter of 2024. The increase is due to sales commissions that are directly related to our higher sales volume, a temporary commission structure to facilitate growth and adoption in new states, and higher targeted marketing costs as we prepared for IB STEM's Category 1 CPT code that became effective on January 1st. Research and development expenses in the fourth quarter of 2025 were $137,000, an increase of 15% compared to $120,000 in the fourth quarter of 2024. The increase is reflective of higher year-over-year spending on a medical research project. General and administrative expenses of $1.9 million in the fourth quarter of 2025 were 17% higher than the $1.6 million in the fourth quarter of 2024. The increase was due to the introduction of a long-term incentive plan in 2025 that did not exist in 2024, and third-party costs incurred to enhance the company's systems and internal control environment, partially offset by the absence of certain one-time non-recurring consulting and advisory costs incurred in 2024. Total operating expenses in fiscal year 2025 were $10.8 million, an increase of 14% compared to $9.5 million in the fourth quarter of 2024. And as a note, similar to my comments earlier on the fourth quarter, we reclassified $1.1 million and $228,000 from general and administrative expenses into selling and research and development costs, respectively, for the full fiscal year 2024 to conform to the current period presentation. The increase in operating expenses year over year was due to higher selling expenses from commissions, headcount, and marketing costs focused on health insurance carriers and a one-time non-recurring legal settlement. Our operating loss in the fourth quarter of 2025 of $1.7 million was 17% higher compared to a $1.5 million loss in the fourth quarter of 2024. And our net loss in the fourth quarter of 2025 was $1.7 million, 18% higher compared to $1.4 million in the fourth quarter of 2024. Our higher gross profit from increased quarterly sales year-over-year was offset by the higher operating expenses that I just discussed. Our operating loss in fiscal year 2025 of $7.8 million was 9% higher compared to $7.2 million loss in fiscal year 2024. Our higher gross profit from increased sales year over year was offset by the higher operating expenses. Our net loss in fiscal year 2025 of $7.8 million was 5% lower compared to $8.2 million in fiscal year 2024, primarily due to higher sales and the absence of one-time non-recurring settlements related to a convertible note dispute and certain pre-IPO Series A preferred stock shareholder claims incurred in 2024. partially offset by higher operating expenses. Cash on hand as of December 31st, 2025 was $5 million. Our free cash flow in the fourth quarter of 2025 was 2 million, half a million higher than our quarterly burn rate of 1.5 million due to higher marketing expenses as we successfully focused on healthcare insurers for additional coverage. and an inventory bill to prepare for the increased demand in Q126 related to the January 1st effective date of IV STEM's Category 1 CPT code. Since then, we have improved our current liquidity position here in the first quarter of 2026 by raising an incremental $2.6 million through our at-the-market equity facility and the exercise of warrants. Our current cash balance is over $6 million. And given our current Q1 burn rate, our balance sheet provides us with sufficient capital to execute on our growth plans with no near-term need for additional financing at this time. We still have approximately $1.2 million remaining in our existing ATM facility, which, if utilized strategically for further growth, would extend our liquidity position further along with future warrant exercises. And with that, I'll turn the call back over to Brian.

Thanks, Tim. To summarize, we're very happy with the way Q1 is coming along. I would just say that revenue, as I said, is better than I expected. And most importantly, we've learned what gaps are needed to fill. And we can finally be able to turn this into the commercial strategy and hire the people necessary to have the comprehensive footprint that we need. So with that, I'll turn this back to the operator. And I look forward to questions.

Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced. And to withdraw your question, please press star 11 again. And the first question will come from Chase Knickerbocker with Craig Hallam. Your line is open.

Good morning. Thanks for taking the questions and congrats on all the progress here. Lots of things to go through, but maybe just first, Brian, in Q1, can you just give us a sense for the magnitude of inflection in PA requests and any improvement in PA rates since that level one code And then just last on that front, with that large payer win in Q4, can you just confirm that under that coverage policy that there is not a PA that is being required in the market right now? Thanks.

Yeah, Chase, good to talk to you. Yeah, two good questions. Let's first talk about the prior authorization. So we do, and this number will change, but in the first quarter, the revenue, you know, if we did... $100 in revenue in Q1, $20 is revenue that comes from accounts that we do the prior authorizations for. So I can only speak for what we see. We are continuing to do prior authorizations for more and more children's hospitals, but it's up, not the approval rate, but the submission rate is up close to 10x from what we saw in 2025. So that That's first, which is outstanding. It doesn't mean the approval rate is that high. Now, on the Q1 call, I will give more specifics about the exact numbers that we see, and I'll also talk about approval percentage that we see. For example, if last year, you know, 1% of submissions were approved, and this year it's 2%. Now, those are just made-up numbers, and they're not even close to accurate. But I'll give more information on the approval rate and percentage to give everybody a general idea along with some examples. on the Q1 call. Regarding the large payer, that's correct. There is no prior authorization required from the large payer as long as they meet, you know, have the correct diagnosis codes in place. And that's been very beneficial. And I'll go ahead and get ahead of one of these questions coming. With that payer, yes, of course, we're seeing a direct effect from a revenue standpoint in certain areas where that payer has significant presence. But at the same time, we have countless children's hospitals that let's just say their hospital is 20% of their patients or 25% of their patients are that payer. That sounds wonderful. But when the other 75% of their patients are not covered, they're still essentially not treating. Maybe one or two of their physicians are, but as a group they're not treating because they still view this as a health equity issue. And if the majority of their patients can't have access to it, they're not giving access to even that small group. So with bigger payers and additional larger payers coming on board, you won't just get the benefit of that new large payer. You'll get the benefit of the payers we have plus the new one because they want to see that 50%, 60%, 70% of their patients are are covered before they start to offer this across the board with all physicians from a referring standpoint. And there are other, you know, small barriers that will just take time, and I can give more examples of those around IV stem clinic time as we get further into the questions. So, Chase, I hope that answers your question. If not, I'll go into more detail.

No, no, good color. Maybe just kind of along those lines on kind of number of accounts since Jan 1 with all these kind of developments aligning. Can you just kind of give us a sense for kind of number of new accounts? And then on the highest, like your highest adopters, you know, I think some of those have a fair amount of exposure to that payer we want at the end of the year. Can you give us a sense for utilization trends there? If you've seen a meaningful kind of inflection in Q1, it certainly sounds like you have, but maybe just some color there.

Yeah, it's been top-heavy. I would just say that I've been pleasantly surprised with the children's hospitals who have access to that, who are heavy with that payer and had IB STEM clinic time already built in to adapt to that and have physician champions are doing extremely well. But as I mentioned on the call, if they only have that one payer or they don't have the IB STEM clinic time put in place, I'll give you an example. One of the states that is 80% that payer has submitted to us, let's just call it 20 patients in the first eight weeks of the year, you would think that 75% or 80% of those patients would be from that payer, and it's not the case. Only 25% were. So let's just use numbers of 5 out of 20 of those patients were from that payer. The other 15 were other payers from around the country or other payers we don't have policy with. And although that payer, only 25% of their patients are with that payer, they're already booking IV stems out to September. Now, they're fixing that. They're adding more IV stem clinic times. But when I spoke to the account last week, the director says, well, we have to have, we had to put together a plan. We have to present this to a committee, and that has to go to another committee. This is going to take until May or June. The point is, the good news is they're treating a tremendous amount of patients, even though it's only 20% or 25% of the patients that are being approved. but it takes time these children's hospitals take time the good news this is an excellent financial story which i referenced and that now that we've learned uh much more about the payments in the last four or five weeks that becomes a much bigger piece of this story because it allows the children's hospitals to understand they're not going to lose money and in fact they're going to be they should be in the general rule in a very good financial position with the more patients they treat so this is a win for the patient a win for the facility So we need more policy coverage, but it's a long-winded way of saying the children's hospitals that are heavy with the payer that we had. And look, we've got another $55 million covered lives, and we've seen great growth in some of those accounts where we already had that policy coverage, but the Category 1 code was missing. And now we're seeing a significant uptick in prior office submissions. But I think the overlying message here is that Yet, as happy as we are with the accounts that are treating, we're still treating no one, and that's just outstanding news for the big picture. We feel very confident in our position with the larger payers, and that's all I'm going to say. I knew for several months before we got the large payer in December that that was a period that we were going to get that, and I didn't say anything, and I'm not going to say anything now about other payers and the position we're in. We feel like this should be the first-line treatment or as a first-line option for these kids based on the evidence, and that's our stance. So, again, a long-winded way of saying we're very pleased fundamentally when the pieces are in place and when something's missing, at least now we know what's missing and how to address that, and we are doing so aggressively.

Got it. And I know you're not giving... 26 guidance at this time. But I wanted to get some initial thoughts, you know, if you have them. I understand it's very dynamic. I mean, maybe the best way for me to ask it is just as we sit here in Q1, you know, obviously we had about kind of 20% sequential inflection from Q3 to Q4. With all this commentary, I would expect that that, you know, materially accelerates. Any kind of goalposts that you could kind of give us for kind of the revenue inflection that you're seeing thus far through Q1?

No, I think I may have mentioned in Q4 that I thought Q1 had a potential to be light or in line with Q4 just because of the delay in prior authorizations in January and because of IDSTEM clinic time getting set up, just like the example I just gave. I'm only going to say that it was – I'm pleasantly surprised. We've got, what, five weeks until the next call, six weeks. I'll just wait and give detailed KPIs. We are going to give some nice KPIs going forward that are relevant to growth and show the opportunity, and I'm going to wait until then to do so.

Great. Tim, just the last one. Right way to think about SG&A growth in 2026 as you guys are expanding your commercial capabilities.

Yeah, so I think when we move into 2026, when you look at our three buckets, we got one large payer. It's not if, but when we get another large payer, we will then invest back into our selling expenses and our commercial team. But I don't think that rate would be much different than the rate that we're seeing at our current pace. I do believe our R&D expenses will pick up because we are continuing to enhance the device here in 2026. And then from a G&A perspective, year over year, remember in 2025, we had a one-time non-recurring legal settlement. The charge was about $630,000. So that's going to be, that'll be a tailwind. So that in and of itself would put us ahead of ahead of next year, but we've been really focusing on G&A expenses and either taking them down or keeping them flat so that we've got the runway to invest in R&D and in selling expenses. So I expect increases in selling. I expect increases in R&D. And I'm not expecting much of an increase per se in G&A, but that can all change for all the right reasons. as we pick up additional health insurance coverage and need to invest in the business. But I do believe we're going to get operating expense leverage. To your question, Chase, we're not going to add operating expenses. We're nowhere near the pace that the revenue is going to grow, and that's going to help us from a cash flow perspective as well.

Great. Thanks, guys. Congrats again.

Thank you. Thank you, and our next question is going to come from Lindsey Leeds with Microcap Opportunities. Your line's open.

Thank you, and congratulations on a strong Q4. I wanted to ask about the hospital rollouts. You were talking about a hospital that was scheduling all the way into September. What can you say about What kind of staff does a hospital need to schedule these? And kind of what are the barriers to getting that program rolling?

Well, there's two very separate questions. First, what staff is required depends on the size of the children's hospital, how many physicians are treating them. how many physicians are referring. You know, we have children's hospitals with champions where, you know, there might be 25 or 50 physicians, and there are only one or two specific physicians that are treating IV stem, and only their patients are treating IV stem. And this goes back to needing more and more IV stem clinic time so that everyone can refer their patients, and we're working through that. So the staff that's needed, you know, you need a nurse practitioner or a physician's assistant or a physician to place the device. So that's important. But from a barrier standpoint, and let me just back up, Lindsay. If you have two new patients per week, every week, then that means, you know, because there are four devices per week, that means you need two new patients per week means after four weeks you've got eight placements and they continue to roll over. So you would need like a Tuesday morning from 8 to 12. You need eight 30-minute slots. Um, so then you would need to staff that, and this is where the economics come into play. And, uh, and that's our job to make sure that's clear, uh, as we meet with these children's hospitals. But from a barrier standpoint, I mentioned an example, a second ago of a children's hospital where they've known since February that they were already booking out March, April, May. Now they're into September. Now that once they get through these committees that should come back and they should have plenty of time beginning in let's call it may or June at the latest. but then I expect they'll need to expand again. When I look through Q1, we have some outstanding results, but I would argue that only one children's hospital, one, is treating at capacity. And even that hospital, there are three or four or five large payers that they don't have, which means they're not even treating those patients. So no one's at capacity. But when you talk about who is treating as many patients, every patient that they see that truly needs this, I would argue that only one children's hospital is doing so. And so that's, I think it's very good news. This is very new. Having everything that they need in place is very new and they still don't have all the payer coverage that they need. So the barriers can be many, Lindsay. You're talking about the department, you're talking about the physicians and who is You're talking about the chief of the division. You're talking about the chair of pediatrics, the chief revenue officer, the VP of finance, the CFO. Depending on the size of the hospital, there can be many barriers, many committees that prevent this or slow this down regardless of the clinical need, the clinical demand. So we're working through that. The good news is, at least at the top, there is no resistance there. It's a matter of process and time. And this is where, now that we have the information, I've been very clear in the past about measuring twice and cutting once when it comes to spending money. I feel like making sure you have a revenue source is important and at least understand the people that you need to put in place before you just go higher. And the great news from Q1 is that it's been very clear to us, and we are aggressively hiring to fill these positions to be able to grow and make sure that we're covering 50, 75, 100, 125 children's hospitals. And we'll do that, and it's going to be a process. But fundamentally, better than expected in the places where we have the pieces in place.

Okay, thank you. Are you able to talk about your Veterans Affairs program? Will you be hiring additional staff in Q2, or do you know how long will it take you to know the trajectory of that rollout?

Well, a few things about the VA. The response has been, and the reception of this technology and the data behind the rollout technology has been stronger than I expected, better than we expected. I think by, as I said on the call, I didn't expect orders in Q1. The VAs, by nature, move a little slower, but we have seen several facilities order, and we're seeing reorders, which is excellent. As I see some more facilities order and some more reorders, we'll be a little quicker to at a bigger picture commercial rollout where we are considering making the reps that are covering the VA also cover children's hospitals. You start to have a national sales force, a national payer landscape. It doesn't make sense to have, you know, I'm in Indiana, so I'll use that. It doesn't make sense to have someone in Indiana going on the VA and someone else in Indiana going on the children's hospitals. We need to be able to scale the commercial operation and and so as we continue to transition throughout 2026, we'll move towards that model. I think, you know, one thing that sticks out to me is there was an article I read, a nice article two weeks ago about the VA is just, the FSS contract is just a license to go to the VA and be able to move the technology, and I would argue that Anytime you have an FDA indication, it's just a license to be able to go to the hospital and sell. So this is really no different. Are there some barriers in the VA from a resource standpoint? Of course. There are resource barriers in children's hospitals. There are resource barriers everywhere. So this has been no different. But I'm pleasantly surprised with the uptick in response and positive feedback and initial response. adoption in the VA. So, yes, as we move into Q2, I expect there will be additional hires. I expect by the 1st of 2027 that we're beginning to marry the Children's Hospital and the VA from a commercial standpoint, and we'll talk more about that as we get closer. But make no mistake, we've been very lean, and that's because we needed a revenue source and a Category 1 CPT code and an FSS contract. But as lean and calculated as we've been, We're going to be measured and calculated going forward, but we're going to be very aggressive from a commercial standpoint.

Excellent. Do you have any adult data at all that you're able to take with you to the Veterans Affairs Hospital to maybe promote this IV stem treatment, or are you basing that mainly on the pediatric data?

Well, there's no large randomized controlled trial yet, but there's absolutely adult data. First off, the fMRI data, it was done at the Atlanta VA showing cognitive changes in patients using the technology. We have many of our studies have patients in their 20s, and from a pathophysiology difference, there should be no difference between a 21-year-old and a 45-year-old. So the physicians have very much understood this, and we've gotten feedback very little pushback on the fact that there's no large randomized controlled trial in adults. But as I mentioned, we've begun that trial at the Cleveland Clinic in adults, and we expect that to be very meaningful. And we're also expecting a publication in a study with patients up to 35 years of age in the coming months from an institution. So, On the surface, that might appear as a barrier, but it has not been a barrier to date, and I don't expect it to be a large barrier if you understand the science.

Okay, perfect. Thank you so much. That's all my questions. Thanks, Lindsay.

As a reminder, to ask a question, please press star 11 on your telephone. The next question comes from Karen Sterling with Kingswood Capital Partners. Your line is open.

Thank you. Good morning. Brian, hi. I would like to basically pick up where Lindsay left off on the IV stem trial in adults. Could you give us a little bit more detail on how that trial is laid out and what your expectations are? How do you expect it to benefit the company going forward?

Well, I expect a large randomized controlled trial at the Cleveland Clinic with a sham arm to, in addition to all the data we already have from a mechanistic standpoint, and as I mentioned, the other study that's going to be published soon in patients at the 35, to be strong enough to convince the academic society who in turn can request coverage from payers. I expect this to help gain us insurance policy coverage on the adult side. One thing I haven't talked about is the amount of inquiries and requests from adult gastroenterologists to utilize IV Stem. But the reality is it would be on a cash basis. And there is no patient assistance program due to federal guidelines on the adult side, now that there's a Category 1 CPT code. And there are – so this is a cash pay, and there is no insurance coverage on the adult side. So this is extremely important to us. It's why we're doing – such a large, from a medical device standpoint, look, this isn't a pharmaceutical. It's not a drug. It doesn't have the same risk side effects, of course, which is one of the many reasons that a pharmaceutical trial is so large. But for a medical device, this is a, from a power calculation standpoint, this will be a really strong study at the Cleveland Clinic, and that's the goal of the study. And it may take, you know, let's call it 18 months to do this study, We'll know more in the next 90 days about how many patients are being enrolled, and we'll be able to have a closer idea and prediction as to when the study will be completed. And then, of course, we go, because we have the data, we already have the indication, we'll be able to go directly to the insurance company. So, Karen, that's the ultimate goal. This is a large market opportunity, extremely large market opportunity. And as we talked about earlier, this was the first FDA-indicated approved or cleared treatment specifically for functional dyspepsia in adults. Right now, the focus is on the VAs where there's an FSS contract and we can help people. In the interim, the focus is on this study and ensuring that it's done as quickly and efficiently as possible.

Got it. Okay. And apart from the approved indications in dyspepsia and IBS, do you have any plans opening up additional expansion markets?

No. Now, are you talking about additional countries or are you talking about additional indications?

Additional indications.

Yeah, we've got a few studies in place. We've got the randomized controlled trial for cyclic vomiting syndrome, which would also be in children's hospitals, the same call point, pediatric gastroenterology. And we've got a couple of other studies that are underway. But I would point to the cyclic vomiting syndrome study as potentially the most meaningful.

Okay. And can you give us a timeline on that?

That's probably also 18 months out, similar to the adult RCT.

Okay, perfect.

Thank you. And it's on clinicaltrials.gov. There is another study in post-op pain at UPMC. It's about a 300-patient RCT study. showing opioid reduction or lack of opioid use. We're eliminating the use of opioids in open bowel surgeries, and that should be done this spring, and there's a lot to discuss about that before I'm going to discuss it, before I discuss it publicly. Our focus is on the Children's Hospital. The opportunity there is incredible, and that's where our focus is.

Thanks very much.

Thank you. I am showing no further questions in the queue at this time. I would now like to turn the call back over to Brian for closing remarks.

Thank you. Thank you all very much for being with us today. I look forward to communicating with everyone again soon. If there are follow-up meetings or follow-up calls or additional questions, as most of you know, I look forward to those and happy to meet. So with that, have a great day, and we'll talk soon. Thank you.

This concludes today's conference call. Thank you for participating, and you may now disconnect.