NPCE — NeuroPace, Inc.

NeuroPace Q4 2025 Earnings Call Summary

1. Key Financial Results and Metrics

• Q4 Revenue: $26.6 million, a 24% year-over-year increase.
• RNS System Revenue: $22.4 million, up 26% year-over-year.
• Gross Margin: 77.4%, improved from 75.4% in Q4 2024; RNS gross margin at 80.5%.
• Operating Expenses: $22.3 million, up from $19.8 million in Q4 2024, reflecting a 13% increase.
• Loss from Operations: $1.8 million, improved from a loss of $3.7 million a year prior.
• Net Loss: $2.7 million, down from $5.3 million in Q4 2024.
• Adjusted EBITDA: Positive $900,000, marking the second consecutive quarter of positive adjusted EBITDA.
• Cash Position: $61.1 million at the end of Q4, with positive operating cash flow of approximately $500,000.

2. Strategic Updates and Business Highlights

• Market Growth: Continued strong adoption of the RNS System, particularly in Level 4 centers, with a 29% growth in the second half of 2025.
• Clinical Development: Submitted a PMA supplement for expanded indication in idiopathic generalized epilepsy (IGE) to the FDA, with positive early results from the NAUTILUS study.
• Product Development: Advancements in AI tools, including Seizure ID, aimed at improving clinician workflow and patient outcomes.
• Commercial Investments: Increased focus on expanding the sales team and enhancing referral pathways through nurse navigators to streamline patient access to therapy.

3. Forward Guidance and Outlook

• 2026 Revenue Guidance: Reiterated guidance of $98 million to $100 million, reflecting 20% to 22% growth in the RNS business, excluding contributions from IGE.
• Q1 2026 Revenue Guidance: Expected to be in the range of $21 million to $22 million, with a more conservative growth outlook in the first half of the year.
• Adjusted EBITDA for 2026: Projected loss of $9 million to $10 million, with expectations for improvement in the second half of the year.

4. Bad News, Challenges, or Points of Concern

• DIXI Medical Revenue Decline: Revenue from DIXI Medical decreased by 4% to approximately $3 million, as the partnership concluded, which may impact overall revenue in the near term.
• Operational Challenges: Potential bottlenecks in the referral process and implanting capacity were acknowledged, although management believes there is sufficient capacity in the system.
• Market Risks: The need for extended payer coverage for the new IGE indication post-approval could delay revenue generation from this segment.

5. Notable Q&A Insights

• Generalized Epilepsy Opportunity: Management indicated that while the IGE indication could be a significant revenue generator, there are steps needed post-approval, including payer coverage and training for referring physicians.
• Pricing Impact: Historical pricing increases have contributed to gross margins, but Q4 did not see any unusual pricing dynamics affecting growth.
• Seizure ID Implementation: The Seizure ID tool will be included with RNS System use, aimed at enhancing efficiency for clinicians without additional costs for access.
• Pediatric Collaboration: Ongoing work with NEST for pediatric indications is progressing, but no specific submission timeline was provided.

Overall, NeuroPace demonstrated strong financial performance in Q4 2025, with positive momentum in revenue growth and strategic initiatives aimed at expanding its market presence and product offerings. However, challenges remain in transitioning to new indications and managing operational efficiencies.