electroCore, Inc.

Thanks and welcome to the ElectroCorps first quarter 2025 earnings conference call. At this time, all participants have been placed in a listen-only mode. Please make sure to mute yourself. A question and answer session will follow the formal presentation. As a reminder, this conference call is being recorded. It's now my pleasure to introduce your host, Dan Goldberger, ElectroCorps' Chief Executive Officer.

Thank you all for participating in today's Electricor earnings call. Joining me today is Joshua Lev, our chief financial officer and our investor relations firm, FNK IR. Earlier today, Electricor published results for the first quarter ended March 31, 2025. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during the call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements. All forward-looking statements, including without limitation, any guidance, outlook, or future financial expectations or operational activities and performance are based upon the company's current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list of the risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission. Electro Corps disclaims any intention or obligation except as required by law to update or revise any financial projections or forward-looking statements, whether because of new information, future events, or otherwise. This conference call contains time-sensitive information that is accurate only as of the live broadcast today, May 7th, 2025. This quarter marked an acceleration of Electric Core's transformation into a broader bio-electronic technology company offering medical devices and wellness products for a variety of customers. This transformation significantly broadens our addressable market and diversifies our revenue. A key component is the acquisition of the Quell product line from Neurometrics Inc. I'll discuss this acquisition later in the call. ElectriCorps was founded in 2005 and pioneered non-invasive vagus nerve stimulation. Today, the company offers a suite of non-invasive bioelectronic technologies that reduce chronic pain and improve quality of life for patients and consumers in the United States and select markets overseas. Our portfolio includes a robust pipeline of future indications and use cases as clinicians, researchers, and wellness advocates advance our understanding of the benefits of bioelectronic technologies. Our mission is to improve health and quality of life through innovative, non-invasive bioelectronic technologies. All our product offerings are rooted in clinical science. Science and data will always be our guiding star. We have demonstrated sustained growth with a five-year compound annual growth rate of approximately 58%. In the first quarter of 2025, we reported revenue of $6.7 million, a 23% increase over the first quarter of the prior year. Gross margins were 85% in the first quarter of 2025 as compared to 84% last year, and we expect our gross margins to remain in the mid-80s. Prescription Gamma Core VA revenue grew 22% to $4.7 million in the first quarter of 2025 from $3.9 million during the first quarter of 2024. 175 VA facilities have purchased prescription Gamma Core products through March 31, 2025, as compared to 151 through March 31, 2024. I am pleased to report a return to sequential growth in the VA hospital system after a slowdown in the fourth quarter due to macro forces and a restructuring of our field sales organization. As these headwinds have abated, we are regaining momentum. We've started adding field sales headcount in the second quarter of 2025. March and April 25, monthly revenues in our VA channel have accelerated to about $1.7 million. The VA Hospital Administration Headache Centers of Excellence estimates approximately 600,000 patients are being treated for headache in the VA hospital system, including approximately 24,000 cluster headache patients. We believe there are as many as 550,000 fibromyalgia patients in the VA hospital system based on published incidents and prevalence data. We continue to make our therapy available either through our federal supply schedule contract or via our distribution partnership with level government services. Since 2022, we've dispensed GammaCore devices to approximately 9,500 veterans leveraging these contracting mechanism, which we believe represents approximately 1.6% of the total addressable headache market within the VA system. Neurometrics has previously dispensed approximately 350 Quell Fibromyalgia Stimulators in the short time that product has been available through the VA. leaving plenty of room for growth of the Quell Fibromyalgia product line. Longer term, we will evaluate market access through other third-party payer systems and hospital networks for our prescription product suite. Truvega is our direct-to-consumer general wellness brand for stress, relaxation, quality of sleep, and mental acuity. In the first quarter of 2025, Truvega net sales were approximately $1.1 million, a 187% increase from the first quarter of 2024. Our revenue return on advertising spend was approximately 2.26 for the first quarter of 2025. In other words, during the first quarter of 2025, for every $1 we spent on media, we generated $2.26 of revenue. TrueVega return rates remain steady at approximately 10% to 11% of shipments for the first quarter of 2025. We are increasing our media budget 5% every month to continue driving growth in this channel. Since launching Truevega, we have sold more than 14,000 handsets and customers have conducted in excess of 500,000 sessions using the mobile app. We believe that the Truevega business will continue to scale if we can maintain or improve these metrics and add product offerings. Most of our Truevega revenue comes through our e-commerce platform, www.truevega.com. Following the successful launch of Truevega Plus in April 2024, we began exploring additional channels to reach consumers, including influencers, affiliates, and resellers. In February 2025, we launched Truevega Plus on Amazon. Since launching on Amazon, more than 200 units have sold through that platform. More recently, we announced that TrueVega Plus now works with the Apple Health app, providing our TrueVega Plus customers using the iOS operating system with an ability to better track their health. Our U.S. prescription channel recorded revenue of $289,000 during the quarter ended March 31, 2025, down 33% from Q1, 2024. As expected, many cash pay customers have migrated to the Trevega brand as awareness grows, and we continue modeling flat revenue from this prescription channel for the time being. As of March 31, 2025, we have enrolled 144 Truvega Plus partners, including 49 G Concierge accounts who offer both product lines. We look forward to adding Quell Fibromyalgia to these accounts as well. Revenue from channels outside the United States, or OUS, of $513,000 for the quarter ended March 31, 2025, increased from $449,000 for the same time last year. Most of our OUS revenue continues to be generated in the United Kingdom by prescription gamma core sales funded by NHS, and we model flat revenue from this category for the time being. We are on track to launch Truvega in the UK and Canada later this year. Josh will discuss operating expense and cash trajectory in more detail. Structurally, the first quarter always has higher disbursements as we pay down liabilities approved over the course of the prior year and incur legal and audit expenses associated with year-end reporting. This year, we had additional one-time expense for severance associated with an internal restructuring and finalizing and closing the acquisition of neurometrics. While we used about $4.2 million in cash during the first quarter for all of these disbursements, our modeling with conservative revenue growth anticipates about $4 million net cash required for the rest of 2025. We're currently on track to spend less than $2 million in net cash in the second quarter with further declines expected as revenue grows throughout the year. Let me take a moment to walk you through our path to profitability. Seasonal and non-recurring expenses of about $665,000 incurred in the first quarter will not repeat in the second, third, and fourth quarters. Meanwhile, the contribution margin of incremental revenue is about 65% with our current product mix. For all these reasons, we model that the business could be cash neutral with quarterly revenue of about $9 million. That's about 34% more than the $6.7 million of revenue we were reporting for the first quarter. And I believe we can get there towards the end of this year or early in 2026. Now, I'd like to turn to our business development activities. Last week, we closed the previously announced acquisition of Neurometrics, giving us access to the Quell platform and accelerating our mission to become the clear leader in the bio-electronic health and wellness sector. US consumers spend nearly $20 billion annually out of pocket for chronic pain treatments, including headache and fibromyalgia among others. It's estimated that approximately 6% of US adults suffer from fibromyalgia, and there are few credible treatment options available today. Quell is an exquisite treatment modality available by prescription for treating fibromyalgia and over-the-counter for relieving lower extremity pain. The product line has been underfunded for the last year and a half as neurometrics went through its strategic process. Quell revenue was about $700,000 in 2024 and $170,000 in the first quarter of 2025 based on preliminary unaudited numbers. We have moved the inventory and assets to our Rockaway, New Jersey facility. We will be supply limited until we can restart production in Rockaway. So Q2 2025 revenue is likely to be similar to Q1 2025. Once Rockaway is up and running, we will add prescription quail fibromyalgia to our prescription distribution channels and quail 2.0 for lower extremity pain to our direct to consumer channels. I'm optimistic that we'll be able to increase revenue in the back half of 25 and generate meaningful revenue from the product line in 2026. Well, fibromyalgia is a prescription non-invasive nurse simulation device. Well, fibromyalgia is FDA authorized, covered by 27 issued US utility patents and neurometrics invested more than 10 years and tens of millions of dollars in clinical work and product development. Well, fibromyalgia provides flexible, precise, high-power nerve stimulation in a form factor the size of a credit card. Our business becomes more complex as we add new products and services like Well. We'll migrate towards reporting revenue results by channel as well as by product category as we go throughout the year. We're excited about the acquisition of neurometrics and are confident that we can leverage our established distribution channels, especially the VA hospital system, to accelerate adoption of the Quell fibromyalgia solution. On February 27th, 2025, we announced a distribution agreement with Spark Biomedical, giving us access to the Sparrow Ascent product line, an FDA cleared non-invasive transcutaneous auricular neuromodulation device available by prescription for the treatment of opioid withdrawal symptoms. We plan to offer Sparrow in a limited number of VA hospital sites beginning in the second quarter of 2025. If successful, we hope to expand distribution later this year. We believe the total addressable market in the United States for Sparrow is $2.4 billion associated with opioid detox and another $3.7 billion in relapse prevention. More information on Spark Biomedical can be found at www.sparkbiomedical.com. Now, I'll turn the call over to Josh for a review of our financials and select guidance.

Josh? Thank you, Dan. Net sales for the quarter ended March 31st, 2025 were $6.7 million, an increase of 23% as compared to $5.4 million for the quarter ended March 31st, 2024. The increase of $1.3 million is due to an increase in net sales across our prescription GammaCore devices sold in the VA and outside the United States and revenue from the sales of our non-prescription general wellness TrueVega products. Gross profit for the quarter ended March 31st, 2025 was $5.7 million as compared to $4.6 million for the quarter ended March 31st, 2024. The increase in gross profit was primarily driven by the increase in net sales. Gross margin was 85% for the quarter ended March 31st, 2025 as compared to 84% for the quarter ended March 31st, 2024. Total operating expenses in the first quarter of 2025 were approximately $9.5 million as compared to $8.4 million in the first quarter of 2024. Research and development expense in the first quarter of 2025 was $642,000 as compared to $399,000 in the first quarter of 2024. This increase was primarily due to an increase in headcount. We expect R&D expense to continue at this level for the next few quarters. Selling general and administrative expense in the first quarter of 2025 was $8.9 million as compared to $8 million in the first quarter of 2024. This increase was primarily due to our greater investment in selling and marketing activities consistent with our increase in sales, an increase in expenses associated with year-end reporting, and separation costs associated with headcount reductions. For the remainder of 2025, We plan on continuing to make targeted investments in sales and marketing to support our commercial efforts and expect our general and administrative expenses to be in line with 2024 expenses. GAAP net loss in the first quarter of 2025 was $3.9 million compared to $3.5 million in the first quarter of 2024. The increase in gap net loss is primarily attributed to a change in below the line items, including $83,000 of interest income and $48,000 of benefit from income tax offset by $164,000 of transaction fees in the first quarter of 2025. as compared to $225,000 of interest income and $122,000 of benefits from income tax offset by just $4,000 of other expenses during the first quarter of 2024. Net loss per share for the first quarter of 2025 was 47 cents as compared to a 53 cents per share net loss in the first quarter of 2024. Adjusted EBITDA net loss in the first quarter of 2025 of $3.1 million was flat compared to adjusted EBITDA net loss of $3.2 million in the first quarter of 2024. A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release. cash, cash equivalents, marketable securities, and restricted cash at March 31st, 2025, totaled approximately $8 million as compared to approximately $12.2 million as of December 31st, 2024. Net cash used in operating activities for the first quarter of 2025 was $4.4 million as compared to $1.3 million in the fourth quarter of 2024. The increase in net cash used in operating activities is due to seasonal expenses and changes in working capital typically realized in the first quarter of the year. For the full year of 2025 we expect total revenue to be approximately $30 million and net cash used for the next three quarters to be between $3.8 million and $4.3 million. And now I'll turn the call back to Dan.