[Special Note Regarding Forward-Looking Statements](index=3&type=section&id=SPECIAL%20NOTE%20REGARDING%20FORWARD-LOOKING%20STATEMENTS) This report contains forward-looking statements about the Company's future results, financial condition, and operations, identifiable by specific forward-looking terminology - This report contains forward-looking statements about the Company's future results, financial condition, and operations, identifiable by words such as "anticipate," "expect," "plan," and "will."[9](index=9&type=chunk) - These statements are based on current expectations and projections, but are subject to substantial risks and uncertainties detailed in the "Risk Factors" section"[10](index=10&type=chunk) - Key forward-looking statements cover areas like expected future growth, market potential, demand forecasting, market acceptance, reimbursement, third-party performance, regulatory developments, cash flow breakeven, R&D, product performance, sales and marketing impact, organizational culture, competition, economic conditions, and intellectual property"[11](index=11&type=chunk)[14](index=14&type=chunk) [Part I. Financial Information](index=5&type=section&id=PART%20I.%20FINANCIAL%20INFORMATION) [Item 1. Financial Statements (Unaudited)](index=5&type=section&id=Item%201.%20Financial%20Statements%20%28Unaudited%29) This section presents the unaudited interim condensed financial statements, including balance sheets, statements of operations, stockholders' equity, and cash flows, prepared under GAAP and SEC rules for interim reporting, providing a snapshot of the company's financial position and performance for periods ended June 30, 2025 and 2024 [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) | Metric | June 30, 2025 (in thousands) | December 31, 2024 (in thousands) | Change (in thousands) | % Change | | :-------------------------- | :----------------------------- | :------------------------------- | :-------------------- | :------- | | Cash and cash equivalents | $22,857 | $13,430 | $9,427 | 70.2% | | Short-term investments | $39,284 | $39,325 | $(41) | -0.1% | | Accounts receivable | $13,554 | $12,851 | $703 | 5.5% | | Inventory | $16,346 | $13,381 | $2,965 | 22.2% | | Total current assets | $93,742 | $81,339 | $12,403 | 15.2% | | Total assets | $106,114 | $94,647 | $11,467 | 12.1% | | Accounts payable | $4,721 | $2,954 | $1,767 | 59.8% | | Accrued liabilities | $9,740 | $9,787 | $(47) | -0.5% | | Total current liabilities | $17,143 | $15,156 | $1,987 | 13.1% | | Long-term debt | $58,616 | $59,525 | $(909) | -1.5% | | Total liabilities | $86,676 | $86,634 | $42 | 0.05% | | Total stockholders' equity | $19,438 | $8,013 | $11,425 | 142.6% | | Accumulated deficit | $(546,190) | $(530,950) | $(15,240) | 2.9% | [Condensed Statements of Operations and Comprehensive Loss](index=6&type=section&id=Condensed%20Statements%20of%20Operations%20and%20Comprehensive%20Loss) Three Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----- | :----- | :----- | :------- | | Revenue | $23,520 | $19,256 | $4,264 | 22.1% | | Cost of goods sold | $5,388 | $5,122 | $266 | 5.2% | | Gross profit | $18,132 | $14,134 | $3,998 | 28.3% | | Sales and marketing expenses | $12,043 | $9,756 | $2,287 | 23.4% | | Research and development expenses | $6,845 | $6,065 | $780 | 12.9% | | General and administrative expenses | $6,068 | $4,543 | $1,525 | 33.6% | | Total operating expenses | $24,956 | $20,364 | $4,592 | 22.5% | | Loss from operations | $(6,824) | $(6,230) | $(594) | 9.5% | | Net loss and comprehensive loss | $(8,651) | $(7,514) | $(1,137) | 15.1% | | Net loss per share, basic and diluted | $(0.26) | $(0.26) | $0.00 | 0.0% | Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------------------ | :----- | :----- | :----- | :------- | | Revenue | $46,044 | $37,380 | $8,664 | 23.2% | | Cost of goods sold | $10,570 | $9,903 | $667 | 6.7% | | Gross profit | $35,474 | $27,477 | $7,997 | 29.1% | | Sales and marketing expenses | $23,046 | $19,789 | $3,257 | 16.5% | | Research and development expenses | $14,285 | $11,849 | $2,436 | 20.6% | | General and administrative expenses | $10,114 | $9,614 | $500 | 5.2% | | Total operating expenses | $47,445 | $41,252 | $6,193 | 15.0% | | Loss from operations | $(11,971) | $(13,775) | $1,804 | -13.1% | | Net loss and comprehensive loss | $(15,240) | $(16,439) | $1,199 | -7.3% | | Net loss per share, basic and diluted | $(0.47) | $(0.58) | $0.11 | -19.0% | [Condensed Statements of Stockholders' Equity](index=7&type=section&id=Condensed%20Statements%20of%20Stockholders%27%20Equity) - Total Stockholders' Equity increased from **$8,013 thousand** as of January 1, 2025, to **$19,438 thousand** as of June 30, 2025[22](index=22&type=chunk) - Key changes in H1 2025 included a net loss of **$(15,240) thousand**, **$69,384 thousand** from a follow-on offering, a **$(49,546) thousand** repurchase of common stock, and **$5,854 thousand** in stock-based compensation[22](index=22&type=chunk) - Total Stockholders' Equity decreased from **$20,654 thousand** as of January 1, 2024, to **$9,885 thousand** as of June 30, 2024, primarily due to net losses[24](index=24&type=chunk) [Condensed Statements of Cash Flows](index=9&type=section&id=Condensed%20Statements%20of%20Cash%20Flows) Six Months Ended June 30 (in thousands) | Metric | 2025 | 2024 | Change | % Change | | :------------------------------------ | :----- | :----- | :----- | :------- | | Net cash used in operating activities | $(9,568) | $(11,428) | $1,860 | -16.3% | | Net cash (used in) provided by investing activities | $(205) | $5,633 | $(5,838) | -103.6% | | Net cash provided by financing activities | $19,200 | $581 | $18,619 | 3204.7% | | Net increase (decrease) in cash and cash equivalents | $9,427 | $(5,214) | $14,641 | -280.8% | | Cash, cash equivalents and restricted cash, end of period | $22,979 | $12,966 | $10,013 | 77.2% | - Net cash provided by financing activities significantly increased in H1 2025, driven by **$69.7 million** from a follow-on offering and **$58.6 million** from the MidCap Term Loan, partially offset by a **$49.5 million** stock repurchase and **$60.5 million** CRG Term Loan repayment[27](index=27&type=chunk) [Notes to Unaudited Interim Condensed Financial Statements](index=11&type=section&id=Notes%20to%20Unaudited%20Interim%20Condensed%20Financial%20Statements) [1. The Company](index=11&type=section&id=1.%20The%20Company) - NeuroPace, Inc. is a medical device company focused on treating drug-resistant focal epilepsy with its RNS System, commercialized in the U.S. since **2014**[32](index=32&type=chunk) - The At-the-Market (ATM) equity offering program was terminated in February 2025, with **$38.3 million** remaining unused[33](index=33&type=chunk) - A follow-on offering in February 2025 generated **$69.7 million** in net proceeds, with **$49.5 million** used to repurchase shares from KCK Ltd[34](index=34&type=chunk) - As of June 30, 2025, the Company had an accumulated deficit of **$546.2 million** and **$62.1 million** in cash, cash equivalents, and short-term investments[35](index=35&type=chunk) - Management believes current liquidity will fund operations for at least the next **12 months**, and the Company was in compliance with all MidCap Credit Agreement covenants as of June 30, 2025, with trailing 12-month RNS System revenue of **$71.6 million**[36](index=36&type=chunk)[37](index=37&type=chunk)[39](index=39&type=chunk) [2. Summary of Significant Accounting Policies](index=12&type=section&id=2.%20Summary%20of%20Significant%20Accounting%20Policies) - The unaudited interim condensed financial statements conform to GAAP and SEC rules for interim reporting, with certain disclosures condensed or omitted[40](index=40&type=chunk)[41](index=41&type=chunk) - Estimates, particularly for inventory provisions, require significant judgment, and actual results may materially differ[42](index=42&type=chunk) - The Company's contract liabilities (deferred revenue) were **$0.7 million** as of June 30, 2025, with **$1.6 million** in remaining performance obligations expected to be recognized by March 2026[49](index=49&type=chunk)[50](index=50&type=chunk) - NIH grant funding for Lennox-Gastaut Syndrome research provided **$0.1 million** in H1 2025, a decrease from **$1.0 million** in H1 2024[51](index=51&type=chunk)[53](index=53&type=chunk) - The Company is evaluating the impact of new accounting pronouncements, including ASU 2023-09 (Income Tax Disclosures), ASU 2024-03 (Expense Disaggregation), and ASU 2025-05 (Credit Losses for Accounts Receivable)[57](index=57&type=chunk)[58](index=58&type=chunk)[61](index=61&type=chunk) [3. Fair Value Measurements](index=15&type=section&id=3.%20Fair%20Value%20Measurements) Financial Assets at Fair Value (in thousands) | Asset Type | June 30, 2025 | December 31, 2024 | | :------------------------------------------------ | :-------------- | :---------------- | | Money market funds, included in cash and cash equivalents | $21,660 | $13,349 | | Fixed income mutual fund, included in short-term investments | $39,284 | $39,325 | | Total | $60,944 | $52,674 | - All financial assets measured at fair value are classified as **Level 1**, based on quoted prices in active markets[64](index=64&type=chunk)[67](index=67&type=chunk) - The Company recognized less than **$0.1 million** in unrealized losses from short-term investments in H1 2025, compared to **$0.1 million** in unrealized gains in H1 2024[69](index=69&type=chunk) [4. Balance Sheet Components](index=16&type=section&id=4.%20Balance%20Sheet%20Components) Inventory (in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | % Change | | :--------------- | :-------------- | :---------------- | :----- | :------- | | Raw materials | $6,314 | $4,248 | $2,066 | 48.6% | | Work-in-process | $1,501 | $1,778 | $(277) | -15.6% | | Finished goods | $8,531 | $7,355 | $1,176 | 16.0% | | Total | $16,346 | $13,381 | $2,965 | 22.2% | Property and Equipment, net (in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | % Change | | :------------------------------------ | :-------------- | :---------------- | :----- | :------- | | Machinery, equipment, furniture and fixtures | $4,862 | $4,659 | $203 | 4.4% | | Computer equipment and software | $1,932 | $1,932 | $0 | 0.0% | | Leasehold improvements | $2,435 | $2,435 | $0 | 0.0% | | Less: Accumulated depreciation | $(8,073) | $(7,974) | $(99) | 1.2% | | Property and equipment, net | $1,156 | $1,052 | $104 | 9.9% | Accrued Liabilities (in thousands) | Category | June 30, 2025 | December 31, 2024 | Change | % Change | | :-------------------------- | :-------------- | :---------------- | :----- | :------- | | Payroll and related expenses | $7,082 | $8,178 | $(1,096) | -13.4% | | Inventory purchases | $665 | $575 | $90 | 15.6% | | Professional fees | $562 | $50 | $512 | 1024.0% | | Interest payable | $442 | $0 | $442 | N/A | | Other | $989 | $984 | $5 | 0.5% | | Total accrued liabilities | $9,740 | $9,787 | $(47) | -0.5% | [5. Commitments and Contingencies](index=17&type=section&id=5.%20Commitments%20and%20Contingencies) - The Company's non-cancelable operating lease for its Mountain View facilities was amended in August 2022 to extend through June 2030, with an option to extend to June 2035[75](index=75&type=chunk) Maturities of Operating Lease Liabilities as of June 30, 2025 (in thousands) | Year | Amount | | :------------------------ | :----- | | 2025 (remaining six months) | $1,471 | | 2026 | $3,031 | | 2027 | $3,122 | | 2028 | $3,215 | | 2029 | $3,312 | | Thereafter | $1,705 | | Total undiscounted lease payments | $15,856 | | Total operating lease liability | $12,903 | - The exclusive distribution agreement with DIXI Medical USA Corp. for Stereo EEG products expires on September 30, 2025, and the Company notified DIXI Medical of its intent not to renew[80](index=80&type=chunk) - The Company is not involved in any pending legal proceedings that are believed to have a material adverse effect on its business, financial condition, or cash flows[85](index=85&type=chunk) [6. Debt](index=19&type=section&id=6.%20Debt) - The CRG Term Loan, initially **$50.0 million** borrowed in September 2020, was fully repaid in June 2025 for **$61.9 million**, including principal, interest, and a reduced backend fee of **$4.5 million (8%)**[88](index=88&type=chunk)[96](index=96&type=chunk) - A **$0.5 million** loss on debt extinguishment was recorded due to the CRG Term Loan repayment[96](index=96&type=chunk) - In June 2025, the Company entered into the MidCap Credit Agreement, securing a **$60.0 million** term loan (MidCap Term Loan) and a **$15.0 million** revolving credit facility (Revolver), maturing June 4, 2030[97](index=97&type=chunk)[98](index=98&type=chunk) - The MidCap Term Loan bears interest at **30-day SOFR plus 5.5% (2.0% SOFR floor)** and is subject to prepayment premiums and a **2%** exit fee[98](index=98&type=chunk)[99](index=99&type=chunk) Future Minimum Payments for MidCap Term Loan as of June 30, 2025 (in thousands) | Year | Amount | | :------------------------ | :----- | | 2025 (remaining six months) | $2,945 | | 2026 | $6,124 | | 2027 | $6,124 | | 2028 | $6,140 | | 2029 | $6,124 | | Thereafter | $64,244 | | Total | $91,701 | [7. Common Stock](index=21&type=section&id=7.%20Common%20Stock) - The Company is authorized to issue **200,000,000 shares** of **$0.001** par value common stock[104](index=104&type=chunk) - No dividends were declared as of June 30, 2025, or December 31, 2024[104](index=104&type=chunk) Common Stock Reserved for Future Issuance (Shares) | Plan | June 30, 2025 | December 31, 2024 | | :------------------------------------------ | :-------------- | :---------------- | | Shares available for future grant (2021 Plan) | 2,690,819 | 2,201,012 | | Outstanding options (2021 Plan) | 2,284,737 | 1,987,784 | | Outstanding options (2023 Inducement Plan) | 380,424 | 380,424 | | Outstanding restricted stock units (2021 Plan) | 1,590,869 | 1,480,338 | | Common stock available for ESPP | 710,239 | 475,416 | | Total | 7,657,088 | 6,524,974 | [8. Stock-Based Incentive Compensation Plans](index=21&type=section&id=8.%20Stock-Based%20Incentive%20Compensation%20Plans) Stock Option Activity (Six Months Ended June 30, 2025) | Metric | Number of Shares | Weighted Average Exercise Price | | :-------------------------- | :--------------- | :------------------------------ | | Balances as of January 1, 2025 | 2,368,208 | $6.01 | | Granted | 474,472 | $11.16 | | Exercised | (122,972) | $4.32 | | Cancelled | (54,547) | $11.62 | | Balances at June 30, 2025 | 2,665,161 | $6.89 | | Vested and exercisable at June 30, 2025 | 1,680,932 | $5.18 | - The Employee Stock Purchase Plan (ESPP) had **710,239 shares** available for purchase as of June 30, 2025, and issued **66,627 shares** in H1 2025[110](index=110&type=chunk) Restricted Stock Units Activity (Six Months Ended June 30, 2025) | Metric | Number of Shares Underlying Outstanding Restricted Stock Units | Weighted Average Grant Date Fair Value | | :-------------------------- | :------------------------------------------------ | :------------------------------------- | | Unvested, January 1, 2025 | 1,480,338 | $8.92 | | Granted | 717,958 | $12.18 | | Vested | (515,459) | $9.48 | | Cancelled | (91,968) | $8.93 | | Unvested, June 30, 2025 | 1,590,869 | $10.21 | Total Stock-Based Compensation Expense (in thousands) | Period | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :-------------------------- | :------------------------------- | :------------------------------- | :------------------------------ | :------------------------------ | | Total stock-based compensation | $3,228 | $2,548 | $5,854 | $5,088 | - Total unrecognized stock-based compensation expense was **$20.5 million** as of June 30, 2025, to be amortized over a weighted average remaining period of **2.6 years**[113](index=113&type=chunk) [9. Income Taxes](index=23&type=section&id=9.%20Income%20Taxes) - No federal or state income tax provision or benefit was recorded due to net losses incurred since inception, with net deferred tax assets fully offset by a valuation allowance[115](index=115&type=chunk) - The Company is evaluating the effects of the recently signed One Big Beautiful Bill Act (OBBBA) but does not expect a material impact on current year financial statements[117](index=117&type=chunk)[119](index=119&type=chunk) [10. Net Loss per Share Attributable to Common Stockholders](index=24&type=section&id=10.%20Net%20Loss%20per%20Share%20Attributable%20to%20Common%20Stockholders) Net Loss per Share Attributable to Common Stockholders (Basic and Diluted) | Period | 2025 | 2024 | | :-------------------------- | :----- | :----- | | Three Months Ended June 30 | $(0.26) | $(0.26) | | Six Months Ended June 30 | $(0.47) | $(0.58) | - Potentially dilutive securities were excluded from the diluted net loss per share calculation due to the Company's net loss, resulting in basic and diluted net loss per share being the same[120](index=120&type=chunk) [11. Segment Information](index=24&type=section&id=11.%20Segment%20Information) - The Company operates as one operating and reportable segment, with all long-lived assets based in the United States[121](index=121&type=chunk) - Nearly all revenue is generated from sales in the United States, with **$0.4 million** in non-U.S. revenue for the six months ended June 30, 2025[121](index=121&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=25&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management's discussion and analysis covers the Company's financial condition and results of operations, including revenue, expenses, liquidity, capital resources, accounting policies, JOBS Act impact, RNS System, R&D, and recent financing activities [Overview](index=25&type=section&id=Overview) - NeuroPace's RNS System is the only commercially available brain-responsive neuromodulation system for drug-resistant focal epilepsy, showing **82.0% median seizure reduction** at **36 months** post-implant[124](index=124&type=chunk)[125](index=125&type=chunk) - The NAUTILUS study for generalized epilepsy met its primary safety endpoint, and the Company plans to file for expanded FDA indication in H2 2025[126](index=126&type=chunk) - As of June 30, 2025, the Company had an accumulated deficit of **$546.2 million** and **$62.1 million** in cash, cash equivalents, and short-term investments, expecting continued net losses in the near term[129](index=129&type=chunk)[130](index=130&type=chunk) [Collaborations and Partnerships](index=26&type=section&id=Collaborations%20and%20Partnerships) - The exclusive distribution agreement with DIXI Medical for Stereo EEG products will expire on September 30, 2025, with the Company notifying its intent not to renew in March 2025[132](index=132&type=chunk) - The collaboration agreement with Rapport Therapeutics, Inc. to leverage RNS System data for biomarker monitoring in clinical trials was extended through the end of 2027[133](index=133&type=chunk)[134](index=134&type=chunk) [Factors Affecting Our Performance](index=27&type=section&id=Factors%20Affecting%20Our%20Performance) - Commercial success depends on increasing clinician, hospital, and patient awareness and acceptance of the RNS System, requiring significant investment in training, education, and marketing[135](index=135&type=chunk) - The Company aims to improve gross margin by leveraging manufacturing capacity to spread fixed costs over increased RNS System production volume and investing in efficiencies[138](index=138&type=chunk) - Continued investment in R&D, including clinical studies and AI-enabled software tools, is planned to improve the RNS System and expand its addressable market[139](index=139&type=chunk) - Gross margin variability is expected due to the extended replacement cycle of newer RNS devices and changes in the product mix between RNS System and DIXI Medical products[141](index=141&type=chunk) [Components of Our Results of Operations](index=28&type=section&id=Components%20of%20Our%20Results%20of%20Operations) - Revenue is primarily derived from RNS System sales to hospitals, fluctuating with procedure volume and mix, and also includes sales of DIXI Medical products (expiring Sept 2025) and services to Rapport[142](index=142&type=chunk)[143](index=143&type=chunk)[144](index=144&type=chunk) - Cost of goods sold includes materials, personnel, manufacturing overhead, inventory adjustments, and DIXI product costs; gross margin is expected to increase long-term with production volume[146](index=146&type=chunk)[148](index=148&type=chunk) - Operating expenses (sales and marketing, R&D, general and administrative) are expected to increase in absolute dollars due to additional personnel, market penetration efforts, new product development, and public company compliance[150](index=150&type=chunk)[151](index=151&type=chunk)[152](index=152&type=chunk) [Results of Operations](index=30&type=section&id=Results%20of%20Operations) [Comparison of the Three Months Ended June 30, 2025 and 2024](index=30&type=section&id=Comparison%20of%20the%20Three%20Months%20Ended%20June%2030%2C%202025%20and%202024) - Revenue increased by **$4.3 million (22%)** to **$23.5 million**, driven by higher RNS System unit sales and DIXI Medical product sales[156](index=156&type=chunk) - Gross margin improved from **73.4%** to **77.1%**, primarily due to lower fixed costs per RNS System unit from increased production volume[157](index=157&type=chunk) - Sales and marketing expenses rose by **$2.3 million (23%)** to **$12.0 million**, mainly due to increased personnel-related expenses and sales/marketing costs[158](index=158&type=chunk)[159](index=159&type=chunk) - Net loss increased by **$1.1 million (15%)** to **$(8.7) million**, partly due to a **$0.5 million** loss on extinguishment of the CRG Term Loan[155](index=155&type=chunk)[163](index=163&type=chunk) [Comparison of the Six Months Ended June 30, 2025 and 2024](index=31&type=section&id=Comparison%20of%20the%20Six%20Months%20Ended%20June%2030%2C%202025%20and%202024) - Revenue increased by **$8.7 million (23%)** to **$46.0 million**, driven by higher RNS System unit sales and DIXI Medical product sales[165](index=165&type=chunk) - Gross margin improved from **73.5%** to **77.0%**, primarily due to lower fixed costs per RNS System unit from increased production volume[166](index=166&type=chunk) - Sales and marketing expenses increased by **$3.3 million (16%)** to **$23.0 million**, mainly due to higher personnel-related expenses and increased sales/marketing costs[167](index=167&type=chunk) - Net loss decreased by **$1.2 million (-7%)** to **$(15.2) million**, despite increased R&D expenses due to higher personnel costs and reduced grant funds[164](index=164&type=chunk)[168](index=168&type=chunk) [Liquidity and Capital Resources](index=33&type=section&id=Liquidity%20and%20Capital%20Resources) - As of June 30, 2025, the Company had **$62.1 million** in cash, cash equivalents, and short-term investments, with **$58.6 million** outstanding under the MidCap Term Loan[172](index=172&type=chunk) - A February 2025 follow-on offering generated **$69.7 million** in net proceeds, with **$49.5 million** used to repurchase shares from KCK Ltd[173](index=173&type=chunk) - The At-the-Market (ATM) equity program was terminated in February 2025, after raising **$0.2 million** net proceeds in January 2025[174](index=174&type=chunk) - The CRG Term Loan was fully repaid in June 2025 using proceeds from the new MidCap Term Loan[178](index=178&type=chunk) - The MidCap Term Loan, a **$60.0 million** facility, was secured in June 2025, maturing June 4, 2030, and includes a **$15.0 million** revolving credit facility[179](index=179&type=chunk)[180](index=180&type=chunk) - Future minimum payments for the MidCap Term Loan total **$91.7 million**, with **$6.1 million** due within twelve months, and operating lease liabilities total **$15.9 million**[183](index=183&type=chunk) - The Company expects existing cash to fund operations for at least **12 months** but may require additional financing for continued growth and R&D[185](index=185&type=chunk)[186](index=186&type=chunk) Summary Statements of Cash Flows (in thousands) | Metric | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------ | :------------------------------- | :------------------------------- | | Net cash used in operating activities | $(9,568) | $(11,428) | | Net cash (used in) provided by investing activities | $(205) | $5,633 | | Net cash provided by financing activities | $19,200 | $581 | | Net increase (decrease) in cash and cash equivalents | $9,427 | $(5,214) | [Critical Accounting Policies and Estimates](index=36&type=section&id=Critical%20Accounting%20Policies%20and%20Estimates) - There were no material changes to the Company's critical accounting policies during the three months ended June 30, 2025[196](index=196&type=chunk) [JOBS Act Accounting Election](index=36&type=section&id=JOBS%20Act%20Accounting%20Election) - The Company is an "emerging growth company" and has elected to use the extended transition period for complying with new or revised accounting standards, which may affect comparability with other public companies[197](index=197&type=chunk) - The Company will cease to be an emerging growth company by December 31, 2026, or earlier if certain revenue or market capitalization thresholds are met[198](index=198&type=chunk) [Recent Accounting Pronouncements](index=37&type=section&id=Recent%20Accounting%20Pronouncements) - Refer to Note 2 of the unaudited interim condensed financial statements for additional information on recent accounting pronouncements[201](index=201&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=38&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) This section discusses the Company's market risk exposure, primarily interest rate sensitivity, noting that short-term, low-risk financial instruments would not be materially affected by a 10% interest rate change, and inflation or exchange rate fluctuations have not significantly impacted operations - As of June 30, 2025, the Company held **$62.1 million** in cash, cash equivalents, and short-term investments[202](index=202&type=chunk) - An immediate **10%** change in interest rates would not materially affect the fair value of these financial instruments due to their short-term maturities and low-risk profile[202](index=202&type=chunk) - The Company does not believe that inflation, interest rate changes, or exchange rate fluctuations have had a significant impact on its results of operations for any periods presented[203](index=203&type=chunk) [Item 4. Controls and Procedures](index=39&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes in internal control over financial reporting during the quarter - Management concluded that disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025[205](index=205&type=chunk) - No changes in internal control over financial reporting occurred during the quarter ended June 30, 2025, that materially affected, or are reasonably likely to materially affect, internal control over financial reporting[207](index=207&type=chunk) [Part II. Other Information](index=40&type=section&id=PART%20II.%20OTHER%20INFORMATION) [Item 1. Legal Proceedings](index=40&type=section&id=Item%201.%20Legal%20Proceedings) The Company is not currently involved in any material legal proceedings expected to adversely affect its business, financial position, results of operations, or cash flows - The Company is not currently a party to any material legal proceedings that, if determined adversely, would have a material adverse effect on its business, financial position, results of operations, or cash flows[210](index=210&type=chunk) [Item 1A. Risk Factors](index=41&type=section&id=Item%201A.%20Risk%20Factors) This section outlines significant risks and uncertainties that could materially affect the Company's business, financial condition, and results of operations, covering RNS System reliance, market acceptance, supply chain, competition, regulatory compliance, data privacy, intellectual property, financial performance, and stock ownership [Summary Risk Factors](index=41&type=section&id=Summary%20Risk%20Factors) - The Company relies on its RNS System as its primary revenue source, and failure to market it effectively or expand market share would negatively impact sales and financial results[213](index=213&type=chunk) - Commercial success depends on significant market acceptance and increasing the number of patients treated, both within Level 4 comprehensive epilepsy centers (CECs) and in the community[213](index=213&type=chunk) - The Company is vulnerable to supply shortages and price fluctuations due to its dependence on a limited number of single-source suppliers for manufacturing its products[213](index=213&type=chunk) - Inadequate or unfavorable reimbursement for RNS System procedures and ongoing patient care could diminish sales or affect profitability[213](index=213&type=chunk) - The planned expiration of the exclusive distribution agreement with DIXI Medical will result in a loss of associated revenue, potentially affecting revenue growth and the ability to achieve cash flow breakeven[215](index=215&type=chunk) [Risks related to operational, commercial and manufacturing matters](index=42&type=section&id=Risks%20related%20to%20operational%2C%20commercial%20and%20manufacturing%20matters) - The Company's business primarily depends on successfully marketing its RNS System, currently indicated only for adults with drug-resistant focal epilepsy in the U.S., and expanding its adoption in CECs and community settings[214](index=214&type=chunk)[216](index=216&type=chunk) - Manufacturing operations are subject to FDA's Quality System Regulation (QSR); non-compliance or disruptions (e.g., supply chain issues, equipment malfunction) could harm the business[226](index=226&type=chunk)[227](index=227&type=chunk) - Reliance on a limited number of single-source suppliers for critical RNS System components makes the Company vulnerable to supply shortages, price fluctuations, and quality issues[230](index=230&type=chunk)[231](index=231&type=chunk) - Competition from other treatment options (ablative/resective surgery, VNS, DBS) and larger, well-capitalized companies poses a significant risk to sales and market share[240](index=240&type=chunk)[241](index=241&type=chunk) - Delays or inability to obtain expanded FDA labeling for generalized epilepsy and pediatric focal epilepsy, or delays in FDA reviews due to staffing changes, could harm growth potential[263](index=263&type=chunk)[265](index=265&type=chunk) [Risks related to government regulation and our industry](index=54&type=section&id=Risks%20related%20to%20government%20regulation%20and%20our%20industry) - Failure to comply with U.S. federal and state healthcare laws (e.g., Anti-Kickback Statute, False Claims Act, HIPAA) could lead to substantial criminal, civil, and administrative penalties, exclusion from federal programs, and reputational harm[270](index=270&type=chunk)[271](index=271&type=chunk)[274](index=274&type=chunk) - Regulatory compliance is expensive, complex, and uncertain; non-compliance with FDA regulations (e.g., QSR, PMA process) could result in enforcement actions, product recalls, and delays in approvals[279](index=279&type=chunk)[281](index=281&type=chunk)[287](index=287&type=chunk) - Modifications to products may require new FDA clearances or approvals; disagreement with the FDA on such requirements could lead to recalls or cessation of marketing[293](index=293&type=chunk)[295](index=295&type=chunk) - Healthcare reform initiatives (e.g., OBBBA, Inflation Reduction Act) and other legislative proposals could limit product pricing, coverage, and reimbursement, adversely affecting business and financial condition[301](index=301&type=chunk)[302](index=302&type=chunk) - Clinical studies for label expansion or new products may be delayed, suspended, or terminated due to various factors, increasing expenses and delaying market access[307](index=307&type=chunk)[308](index=308&type=chunk) [Risks related to privacy, information technology and cybersecurity](index=63&type=section&id=Risks%20related%20to%20privacy%2C%20information%20technology%20and%20cybersecurity) - The Company's processing of sensitive and personal information subjects it to stringent and evolving data privacy and security laws (e.g., CCPA, EU GDPR), contractual obligations, and industry standards[313](index=313&type=chunk)[316](index=316&type=chunk)[317](index=317&type=chunk) - Failure to comply with data privacy and security obligations could lead to significant costs, liabilities, investigations, fines, litigation, and reputational harm[313](index=313&type=chunk)[323](index=323&type=chunk) - Disruptions in IT systems or data (e.g., breaches, ransomware, unauthorized access) could result in unauthorized use/disclosure of sensitive information, fraudulent activity, and adverse consequences including regulatory actions and reputational damage[324](index=324&type=chunk)[327](index=327&type=chunk)[330](index=330&type=chunk) - The use of AI/ML technologies in product development and future iterations presents privacy and security risks, subject to increasing regulation and scrutiny, potentially leading to biased decisions or competitive disadvantages[319](index=319&type=chunk)[343](index=343&type=chunk) [Risks related to our intellectual property](index=68&type=section&id=Risks%20related%20to%20our%20intellectual%20property) - The Company's success depends on obtaining, maintaining, protecting, enforcing, and defending patent and other intellectual property (IP) protection for its RNS System and other products[348](index=348&type=chunk) - Changes in patent laws or their interpretation, or failure to successfully prosecute patent applications, could diminish IP protection, allowing competitors to commercialize similar products[349](index=349&type=chunk)[352](index=352&type=chunk) - Patents could be found invalid or unenforceable if challenged in court or administrative bodies, leading to loss of exclusive rights or inability to commercialize products[358](index=358&type=chunk)[359](index=359&type=chunk) - Risk of patent or other IP litigation, which can be costly, divert management attention, require payment of damages, or prevent marketing of products[360](index=360&type=chunk)[361](index=361&type=chunk) - The inability to protect the confidentiality of trade secrets and other proprietary information could harm the business and competitive position[395](index=395&type=chunk)[397](index=397&type=chunk)[399](index=399&type=chunk) [Risks related to financial matters](index=82&type=section&id=Risks%20related%20to%20financial%20matters) - The Company has a history of net losses and expects to continue incurring losses; inability to achieve or sustain profitability could negatively impact stock value[404](index=404&type=chunk) - Future capital requirements are significant, and additional funding may be needed but might not be available on acceptable terms, leading to dilution or restrictive debt covenants[405](index=405&type=chunk)[416](index=416&type=chunk) - The MidCap Term Loan contains restrictive and financial maintenance covenants; non-compliance could lead to an event of default, requiring immediate repayment and harming the business[406](index=406&type=chunk) - The planned expiration of the DIXI Medical distribution agreement will result in a loss of associated revenue, potentially affecting revenue growth, cash flow breakeven, and long-range revenue growth[407](index=407&type=chunk) - The Company's ability to use its net operating losses (NOLs) to offset future taxable income may be subject to limitations due to ownership changes or statutory/regulatory changes[417](index=417&type=chunk) [Risks related to ownership of our common stock](index=89&type=section&id=Risks%20related%20to%20ownership%20of%20our%20common%20stock) - Future equity or debt financings could lead to immediate dilution for existing stockholders and a decline in stock price[434](index=434&type=chunk) - Sales of a substantial number of common stock shares in the public market or the perception of such sales could depress the market price[435](index=435&type=chunk) - Concentration of ownership among executive officers, directors, and principal stockholders (approximately **57.5%**) may prevent new investors from influencing significant corporate decisions[438](index=438&type=chunk) - The Company's stock price has been volatile and may continue to fluctuate due to various factors, including financial performance, regulatory changes, and general economic conditions[439](index=439&type=chunk)[440](index=440&type=chunk) - Provisions in corporate charter documents and Delaware law could make an acquisition more difficult and prevent attempts by stockholders to replace or remove current management[447](index=447&type=chunk)[449](index=449&type=chunk) [General risk factors](index=93&type=section&id=General%20risk%20factors) - Unstable market and economic conditions, including global volatility, inflation, interest rate changes, and geopolitical conflicts, may have serious adverse consequences on the Company's business, financial condition, and share price[456](index=456&type=chunk)[457](index=457&type=chunk) - Business disruptions from natural or man-made disasters, or public health crises, could seriously harm future revenue and financial condition and increase costs, especially given the single manufacturing facility in an earthquake-prone area[458](index=458&type=chunk) - Litigation and other legal proceedings are inherently unpredictable, costly, and could negatively impact the Company's reputation, financial condition, and divert management attention[459](index=459&type=chunk)[460](index=460&type=chunk)[461](index=461&type=chunk) - Failure to maintain proper and effective internal control over financial reporting could negatively impact investor confidence and the value of common stock[466](index=466&type=chunk)[467](index=467&type=chunk) - Partnering with or acquiring other businesses could require significant management attention, disrupt business, dilute stockholder value, and harm results of operations[469](index=469&type=chunk)[470](index=470&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=96&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) No unregistered sales of equity securities occurred during the period, and net proceeds from the April 2021 IPO were used for general corporate purposes as planned - There were no unregistered sales of equity securities during the period[471](index=471&type=chunk) - The net proceeds of **$105.5 million** from the April 2021 initial public offering have been used for general corporate purposes, including cash used in operations and capital expenditures, with no material change in planned use[472](index=472&type=chunk)[473](index=473&type=chunk) [Item 3. Defaults Upon Senior Securities](index=97&type=section&id=Item%203.%20Defaults%20Upon%20Senior%20Securities) This item is not applicable to the Company for the reporting period - This item is not applicable[475](index=475&type=chunk) [Item 4. Mine Safety Disclosures](index=98&type=section&id=Item%204.%20Mine%20Safety%20Disclosures) This item is not applicable to the Company for the reporting period - This item is not applicable[476](index=476&type=chunk) [Item 5. Other Information](index=98&type=section&id=Item%205.%20Other%20Information) No directors or officers adopted, modified, or terminated Rule 10b5-1 trading plans or non-Rule 10b5-1 trading arrangements during the quarter ended June 30, 2025 - No directors or officers adopted, modified, or terminated any Rule 10b5-1 trading plans or "non-Rule 10b5-1 trading arrangement" during the quarter ended June 30, 2025[477](index=477&type=chunk) [Item 6. Exhibits](index=99&type=section&id=Item%206.%20Exhibits) This section lists the exhibits filed as part of the Form 10-Q, including corporate governance documents, employment agreements, debt agreements, and certifications - The exhibits include corporate governance documents (Amended and Restated Certificate of Incorporation, Bylaws), employment agreements (Separation Agreement, Offer Letter), debt agreements (Credit, Security and Guaranty Agreement), and certifications (Principal Executive Officer, Principal Financial Officer)[479](index=479&type=chunk) - Schedules and exhibits to the Credit, Security and Guaranty Agreement have been omitted in accordance with Rule 601(a)(5) of Regulation S-K[480](index=480&type=chunk) [Signatures](index=100&type=section&id=Signatures) This section contains the required signatures for the Quarterly Report on Form 10-Q, confirming its submission by NeuroPace, Inc.'s President and CEO, and CFO - The report was duly signed on August 12, 2025, by Joel Becker, President and Chief Executive Officer, and Patrick Williams, Chief Financial Officer[483](index=483&type=chunk)[484](index=484&type=chunk)

[Executive Summary & Key Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Key%20Highlights) [Q2 2025 Performance Overview](index=1&type=section&id=Q2%202025%20Performance%20Overview) NeuroPace reported **record quarterly revenue** of **$23.5 million** in Q2 2025, a **22%** year-over-year increase, and subsequently raised its **full-year 2025 revenue guidance** to between **$94 million** and **$98 million**, while also increasing its **gross margin guidance** and confirming CMS maintains current MS-DRG assignment for RNS System procedures, ensuring **reimbursement stability**, with NAUTILUS data on track for FDA submission for IGE indication expansion - Reported **record quarterly revenue** of **$23.5 million** in Q2 2025[1](index=1&type=chunk) - Increased **full-year 2025 revenue guidance** to between **$94 million** and **$98 million**[2](index=2&type=chunk) - Increased **gross margin guidance** to between **75%** and **76%**[2](index=2&type=chunk) - CMS maintains current MS-DRG assignment for RNS System® procedures, preserving **reimbursement stability**[2](index=2&type=chunk)[5](index=5&type=chunk) - Remain on track to submit NAUTILUS data to FDA for potential IGE indication expansion in the second half of 2025[2](index=2&type=chunk) [Financial Highlights](index=1&type=section&id=Financial%20Highlights) NeuroPace's Q2 2025 revenue grew **22%** year-over-year to **$23.5 million**, with RNS System revenue increasing **16%** in Q2 and **21%** in the first half of 2025, achieving a strong gross margin of **77.1%** due to manufacturing efficiencies and a positive product mix, and successfully refinanced its existing debt into a new **$75 million** credit facility Q2 2025 Revenue and Gross Margin Highlights | Metric | Q2 2025 | YoY Growth | | :------------------- | :-------- | :--------- | | Revenue | $23.5 million | 22% | | RNS System Revenue (Q2) | N/A | 16% | | RNS System Revenue (H1) | N/A | 21% | | Gross Margin | 77.1% | N/A | - Refinanced existing debt into a new **$75 million** credit facility with MidCap Financial at **favorable terms**[5](index=5&type=chunk) [Operational & Strategic Highlights](index=1&type=section&id=Operational%20%26%20Strategic%20Highlights) The NAUTILUS study for RNS therapy in IGE demonstrated a **statistically significant safety profile** and **clinically meaningful improvement** in secondary effectiveness endpoints, including a **79%** median GTC seizure reduction at 12 months, while NeuroPace also saw **increased momentum** from Project CARE, achieved **record highs** in active accounts and prescribers, and secured a favorable CMS outcome for RNS procedures - Announced compelling one-year preliminary data from the NAUTILUS study evaluating RNS therapy in IGE, demonstrating a **statistically significant safety profile** and **clinically meaningful improvement** across multiple prespecified secondary effectiveness endpoints, including **79%** median GTC seizure reduction at 12 months[5](index=5&type=chunk) - Built on Project CARE **momentum** with an increasing contribution in the second quarter compared with the first quarter of 2025[5](index=5&type=chunk) - Achieved **record highs** in number of both active accounts and prescribers[5](index=5&type=chunk) [CEO Commentary](index=1&type=section&id=CEO%20Commentary) CEO Joel Becker highlighted the company's continued momentum in Q2 2025, emphasizing significant progress in key initiatives for sustained long-term growth, including advancing RNS therapy access and adoption, supporting operating leverage, and making important clinical, regulatory, and R&D advancements, such as the NAUTILUS and pediatric PMA supplement programs, and AI software development - Advancing strategy to drive increased access to and adoption of RNS therapy and supporting operating leverage as the company scales[4](index=4&type=chunk) - Made important clinical and regulatory and research and development progress, including advancing NAUTILUS and pediatric PMA supplement programs[4](index=4&type=chunk) - Advancing AI software development programs, reflecting **leadership in the field** and commitment to addressing **unmet patient needs**[6](index=6&type=chunk) [Detailed Financial Results](index=2&type=section&id=Detailed%20Financial%20Results) [Second Quarter 2025 Financial Results](index=2&type=section&id=Second%20Quarter%202025%20Financial%20Results) NeuroPace reported Q2 2025 total revenue of **$23.5 million**, a **22%** increase year-over-year, **primarily driven by** RNS System sales, with gross margin improving to **77.1%**, total operating expenses rising to **$25.0 million** largely due to **one-time personnel costs**, resulting in a net loss of **$8.7 million**, and the company ending the quarter with **$62.1 million** in cash, cash equivalents, and short-term investments, and improved free cash flow to (**$2.3 million**) Q2 2025 Key Financial Metrics | Metric | Q2 2025 (in thousands) | Q2 2024 (in thousands) | YoY Change | | :------------------------- | :--------------------- | :--------------------- | :--------- | | Total Revenue | $23,520 | $19,256 | +22.1% | | Gross Margin | 77.1% | 73.4% | +3.7 ppts | | Total Operating Expenses | $24,956 | $20,364 | +22.5% | | Loss from Operations | $(6,824) | $(6,230) | +9.5% | | Net Loss | $(8,651) | $(7,514) | +15.1% | | Net Loss Per Share (basic & diluted) | $(0.26) | $(0.26) | 0% | - Revenue growth **primarily driven by** increased sales of the RNS System and meaningful revenue from SEEG products[6](index=6&type=chunk) - Total operating expenses increase largely driven by **one-time personnel expenses** totaling **$1.9 million**, including severance and recruiting, and **$1.6 million** in personnel-related expenses for an executive transition[7](index=7&type=chunk)[8](index=8&type=chunk) Cash and Debt Position (as of June 30, 2025) | Metric | Amount (in millions) | | :-------------------------------------- | :------------------- | | Cash, cash equivalents and short-term investments | $62.1 | | Long-term borrowings | $58.6 | | Free cash flow (Q2 2025) | ($2.3) | | Free cash flow (Q2 2024) | ($4.0) | [Updated Full Year 2025 Financial Guidance](index=2&type=section&id=Updated%20Full%20Year%202025%20Financial%20Guidance) NeuroPace has increased its **full-year 2025 total revenue guidance** to between **$94 million** and **$98 million**, representing **18%-23%** growth over 2024, and raised its **gross margin guidance** to **75%-76%**, while maintaining its total operating expenses guidance range of **$92 million** to **$95 million** Updated Full Year 2025 Financial Guidance | Metric | Previous Guidance | Updated Guidance | YoY Growth (vs. $79.9M in 2024) | | :----------------------- | :---------------- | :--------------- | :------------------------------ | | Total Revenue | $93M - $97M | $94M - $98M | 18% - 23% | | Gross Margin | 73% - 75% | 75% - 76% | N/A | | Total Operating Expenses | $92M - $95M | $92M - $95M | N/A | - Total operating expenses guidance includes approximately **$11 million** in stock-based compensation, a **non-cash expense**[12](index=12&type=chunk) [Company Information](index=2&type=section&id=Company%20Information) [Webcast and Conference Call Information](index=2&type=section&id=Webcast%20and%20Conference%20Call%20Information) NeuroPace hosted a conference call on August 12, 2025, to discuss its second quarter 2025 financial results, with details for accessing the live and archived webcast, as well as participating via telephone, provided - Conference call held on Tuesday, August 12, 2025, at **4:30 P.M. Eastern Time**[11](index=11&type=chunk) - Live and archived webcast available at https://viavid.webcasts.com/starthere.jsp?ei=1724652&tp_key=858d589533[11](index=11&type=chunk) - Webcast will be archived on the Company's investor relations website for at least **90 days**[11](index=11&type=chunk) [About NeuroPace, Inc.](index=3&type=section&id=About%20NeuroPace%2C%20Inc.) NeuroPace, Inc. is a medical device company based in Mountain View, Calif., dedicated to improving the lives of individuals with epilepsy by reducing or eliminating debilitating seizures, with its RNS System being the first and only commercially available, brain-responsive platform that delivers personalized, real-time treatment at the seizure source, aiming to establish a new standard of care for drug-resistant epilepsy and potentially other brain disorders - NeuroPace is a medical device company focused on transforming the lives of people living with epilepsy[13](index=13&type=chunk) - Its RNS System is the first and only commercially available, brain-responsive platform that delivers personalized, real-time treatment at the seizure source[13](index=13&type=chunk) - The platform aims to drive a better standard of care for patients with drug-resistant epilepsy and has potential for other brain disorders[13](index=13&type=chunk) [Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) This section contains forward-looking statements regarding NeuroPace's future plans, including **potential indication expansion** for its RNS System, **increased adoption** of RNS therapy, and anticipated financial performance for 2025, cautioning investors that actual results may **materially differ** from these statements due to various risks, such as market acceptance, regulatory compliance, and product development challenges, as detailed in the company's SEC filings - Statements include expectations regarding **potential indication expansion** for the RNS System and software/product development efforts[14](index=14&type=chunk) - Includes expectations for increasing access to and adoption of RNS therapy, and the ability to maintain or increase gross margin[14](index=14&type=chunk) - Anticipated revenue, gross margin, and operating expenses for the year ending 2025 are forward-looking[14](index=14&type=chunk) - Actual results or events could **materially differ** due to various factors, including market acceptance, regulatory risks, and operating expenses, as described in SEC filings[14](index=14&type=chunk) [Investor Contact](index=3&type=section&id=Investor%20Contact) This section provides contact information for NeuroPace's investor relations, including the Head of Investor Relations, Scott Schaper, and general investor email addresses - Investor Contact: Scott Schaper, Head of Investor Relations[15](index=15&type=chunk) - Email contacts: sschaper@neuropace.com and investors@neuropace.com[15](index=15&type=chunk) [Condensed Financial Statements](index=4&type=section&id=Condensed%20Financial%20Statements) [Condensed Statements of Operations](index=4&type=section&id=Condensed%20Statements%20of%20Operations) The unaudited condensed statements of operations detail NeuroPace's financial performance for the three and six months ended June 30, 2025, and 2024, presenting key figures such as revenue, cost of goods sold, gross profit, operating expenses, loss from operations, and net loss Condensed Statements of Operations (Unaudited) | (in thousands, except share and per share amounts) | Three Months Ended June 30, 2025 | Three Months Ended June 30, 2024 | Six Months Ended June 30, 2025 | Six Months Ended June 30, 2024 | | :------------------------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | :------------------------------- | | Revenue | $23,520 | $19,256 | $46,044 | $37,380 | | Cost of goods sold | $5,388 | $5,122 | $10,570 | $9,903 | | Gross profit | $18,132 | $14,134 | $35,474 | $27,477 | | Sales and marketing | $12,043 | $9,756 | $23,046 | $19,789 | | Research and development | $6,845 | $6,065 | $14,285 | $11,849 | | General and administrative | $6,068 | $4,543 | $10,114 | $9,614 | | Total operating expenses | $24,956 | $20,364 | $47,445 | $41,252 | | Loss from operations | $(6,824) | $(6,230) | $(11,971) | $(13,775) | | Net loss and comprehensive loss | $(8,651) | $(7,514) | $(15,240) | $(16,439) | | Net loss per share attributable to common stockholders, basic and diluted | $(0.26) | $(0.26) | $(0.47) | $(0.58) | [Condensed Balance Sheets](index=5&type=section&id=Condensed%20Balance%20Sheets) The unaudited condensed balance sheets provide a snapshot of NeuroPace's financial position as of June 30, 2025, and December 31, 2024, detailing current and total assets, current and long-term liabilities, and stockholders' equity Condensed Balance Sheets (Unaudited) | (in thousands, except share and per share amounts) | June 30, 2025 | December 31, 2024 | | :------------------------------------------------- | :------------ | :---------------- | | **Assets** | | | | Cash and cash equivalents | $22,857 | $13,430 | | Short-term investments | $39,284 | $39,325 | | Total current assets | $93,742 | $81,339 | | Total assets | $106,114 | $94,647 | | **Liabilities and Stockholders' Equity** | | | | Accounts payable | $4,721 | $2,954 | | Total current liabilities | $17,143 | $15,156 | | Long-term debt | $58,616 | $59,525 | | Total liabilities | $86,676 | $86,634 | | Total stockholders' equity | $19,438 | $8,013 |

Core Insights - NeuroPace, Inc. reported record quarterly revenue of $23.5 million for Q2 2025, representing a 22% increase from $19.3 million in Q2 2024 [1][4][6] - The company raised its full-year 2025 revenue guidance to between $94 million and $98 million, indicating growth of 18% to 23% compared to $79.9 million in 2024 [1][15] - Gross margin guidance for 2025 was increased to between 75% and 76%, up from previous guidance of 73% to 75% [1][15] - NeuroPace is on track to submit NAUTILUS data to the FDA for potential IGE indication expansion in the second half of 2025 [1] Financial Performance - Total revenue for Q2 2025 was $23.5 million, a 22% increase year-over-year [4][6] - RNS System revenue grew 21% in the first half of 2025 compared to the first half of 2024, and 16% in Q2 2025 compared to Q2 2024 [4][6] - Gross margin for Q2 2025 was 77.1%, compared to 73.4% in Q2 2024 [5][6] - Total operating expenses in Q2 2025 were $25.0 million, up from $20.4 million in the same period of the prior year [7] Strategic Developments - The company made significant progress in clinical and regulatory initiatives, including advancing the NAUTILUS and pediatric PMA supplement programs [3] - NeuroPace achieved record highs in the number of active accounts and prescribers [6] - The company received a favorable outcome in CMS's FY 2026 Inpatient Prospective Payment System final rule, maintaining reimbursement stability for RNS procedures [6] Cash Flow and Debt - Cash, cash equivalents, and short-term investments as of June 30, 2025, totaled $62.1 million, down from $66.3 million at the end of the prior quarter [10] - Free cash flow for the quarter was ($2.3) million, an improvement from ($4.0) million in Q2 2024 [10] - The company refinanced existing debt into a new $75 million credit facility with favorable terms [6]

Core Viewpoint - NeuroPace, Inc. has responded positively to the Centers for Medicare & Medicaid Services (CMS) decision not to finalize the proposed reassignment of epilepsy neurostimulator cases in the FY 2026 Inpatient Prospective Payment System (IPPS) rule, maintaining the current reimbursement structure for its RNS System procedures [1][2]. Company Overview - NeuroPace, Inc. is a medical technology company based in Mountain View, California, focused on improving the lives of individuals with epilepsy by reducing or eliminating seizures through its innovative RNS System [3]. - The RNS System is the first and only commercially available brain-responsive platform that provides personalized, real-time treatment at the source of seizures, aiming to enhance care for patients with drug-resistant epilepsy and potentially benefiting those with other brain disorders [3]. Regulatory Engagement - The company appreciates CMS's willingness to consider public comments and its decision to retain the existing MS-DRG assignment for RNS System procedures, which supports hospitals serving Medicare beneficiaries with epilepsy [2]. - NeuroPace plans to continue collaborating with CMS on improvements related to MS-DRG and reimbursement policies to ensure access to the RNS System for all eligible patients [2].

Company Overview - NeuroPace, Inc. is a medical device company based in Mountain View, California, focused on transforming the lives of people living with epilepsy by reducing or eliminating debilitating seizures [3] - The company has developed the RNS System, which is the first and only commercially available brain-responsive platform that delivers personalized, real-time treatment at the seizure source [3] - The RNS System aims to improve the standard of care for patients with drug-resistant epilepsy and has potential applications for other brain disorders [3] Financial Results Announcement - NeuroPace will report its financial results for the second quarter of 2025 after market close on August 12, 2025 [1] - A conference call will be held at 1:30 p.m. Pacific Time (4:30 p.m. Eastern Time) to discuss the results [1] Conference Call Participation - Investors can access the live webcast of the conference call at the provided link [2] - For those wishing to participate via telephone, the call can be accessed by dialing +1-877-407-3982 and referencing Conference ID 13754370 [2] - The webcast will be archived on the company's investor relations website and available for replay for at least 90 days after the event [2]

Company Overview - NeuroPace, Inc. is a medical device company focused on transforming the lives of people living with epilepsy by reducing or eliminating debilitating seizures through its RNS System, which is the first and only commercially available brain-responsive platform that delivers personalized, real-time treatment at the seizure source [5] Leadership Change - Patrick F. Williams has been appointed as Chief Financial Officer, effective June 20, 2025, bringing over 25 years of financial and operational management experience in public medical device companies [2][3] - Rebecca Kuhn will depart from her CFO role but will remain in an advisory capacity for twelve months, having contributed significantly to the company over her 25-year tenure [2][3] Strategic Importance - The appointment of Mr. Williams is seen as timely, as the company is at a critical point in its growth trajectory and has significant opportunities for its RNS System [3] - Mr. Williams expressed excitement about joining NeuroPace, highlighting the potential to serve approximately 1.2 million U.S. patients living with drug-resistant epilepsy and the goal of making the RNS System the standard of care [4] Market Potential - The RNS System is positioned to expand access and utilization, with a commitment to product and data development aimed at improving patient outcomes [4]

Group 1 - The Schall Law Firm is investigating claims on behalf of investors of NeuroPace, Inc. for potential violations of securities laws [1] - The investigation centers on whether NeuroPace made false or misleading statements or failed to disclose important information to investors [2] - NeuroPace's press release on May 27, 2025, revealed that the NAUTILUS study did not achieve statistical significance for its primary effectiveness endpoint, leading to a nearly 28.4% drop in shares on the same day [2]

Financial Performance & Growth - NeuroPace's revenue grew by 24% to $22.5 million in Q1 2025[10] - Excluding NAUTILUS study implants in Q1 2024, RNS System revenue grew by 29%[10] - The company anticipates revenue between $93 million and $97 million for 2025, representing a 16%-21% year-over-year growth[71] - Gross margin for Q1 2025 was 77%[71] - Operating expenses for Q1 2025 were $22.5 million[71] - Total cash balance was $66.3 million as of March 31, 2025[69] Market Opportunity & Expansion - The total U S addressable market is >$55 billion[9] - The annual core market opportunity within Comprehensive Epilepsy Centers (CECs) is >$2 billion[9] - Approximately 40% of Drug-Resistant Epilepsy (DRE) patients have generalized epilepsy[57, 61, 66] - Project CARE aims to expand access to the RNS System outside of Level 4 CECs, targeting an additional 1,800 epileptologists and all functional neurosurgeons[53, 61, 66]

Core Viewpoint - Pomerantz LLP is investigating claims of potential securities fraud or unlawful business practices involving NeuroPace, Inc. and its officers or directors [1]. Group 1: Company Performance - On May 27, 2025, NeuroPace announced the preliminary one-year results of the NAUTILUS study, which evaluated the safety and effectiveness of the RNS System for treating drug-resistant idiopathic generalized epilepsy (IGE) [3]. - The study did not achieve statistical significance for its primary effectiveness endpoint, which aimed to demonstrate a longer time to a second generalized tonic-clonic seizure in the active stimulation group compared to the sham stimulation group [3]. - Following the announcement, NeuroPace's stock price dropped by $5.02 per share, representing a decline of 28.39%, closing at $12.66 per share on the same day [3]. Group 2: Legal Investigation - Pomerantz LLP is reaching out to investors of NeuroPace to gather information related to the investigation of potential securities fraud [1]. - The firm is recognized for its expertise in corporate, securities, and antitrust class litigation, having a long history of fighting for victims of securities fraud and corporate misconduct [4].

Core Viewpoint - NeuroPace, Inc. has secured a new $75 million credit facility with MidCap Financial to enhance its financial flexibility and support growth initiatives in the epilepsy treatment market [1][2]. Financing Details - The credit facility consists of a $60 million term loan and a $15 million revolving credit facility, with proceeds from the term loan used to repay an existing loan with CRG Partners IV, L.P. [1][2] - The new loan agreement has a maturity date of five years, with an annual interest rate tied to SOFR, subject to a floor of 2%, plus 5.5% for the term loan and 3.75% for the revolving loan [2]. Strategic Goals - The company aims to use the proceeds to expand patient access to its RNS System, invest in site-of-service expansion, explore new indications, develop direct-to-consumer programs, and generate real-world evidence [2]. - NeuroPace's RNS System is the first commercially available brain-responsive platform designed to provide personalized treatment for drug-resistant epilepsy [4]. Company Background - NeuroPace is based in Mountain View, California, and focuses on transforming the lives of individuals with epilepsy by reducing or eliminating seizures through innovative medical devices [4]. - The company has a unique position in the market with its differentiated RNS System, which aims to improve care standards for patients suffering from various brain disorders [4]. Partner Information - MidCap Financial specializes in providing senior debt solutions to middle-market companies and manages approximately $55 billion in commitments as of March 31, 2025 [5].