Core Insights - The merger between electroCore, Inc. and NeuroMetrix, Inc. has been completed, enhancing electroCore's position in the bioelectronic technology market focused on non-invasive health solutions [1][3] - The acquisition of NeuroMetrix's Quell® Fibromyalgia Solution expands electroCore's portfolio and is expected to significantly increase its addressable market for chronic pain and wellness treatments [2][3] Company Overview - electroCore, Inc. is a commercial-stage bioelectronic technology company dedicated to improving health and quality of life through innovative non-invasive technologies [5] - Following the merger, NeuroMetrix will become an indirect wholly-owned subsidiary of electroCore, with its shares being de-listed from the Nasdaq Capital Market [3][7] Market Position and Strategy - The merger allows electroCore to leverage established distribution channels, particularly within the VA Hospital System, to accelerate the adoption of the Quell Fibromyalgia solution [3] - The addition of the Quell solution diversifies electroCore's offerings in non-pharmaceutical, non-invasive nerve stimulation, reinforcing its leadership in the bioelectronic technology sector [3]

Employee and Operational Changes - The Company reduced its employee headcount by 50% at the end of Q1 2024 to lower operating expenses and shift to a more variable cost structure[15] - The legacy ADVANCE business was terminated in Q2 2024 due to its negative cash flow contribution[20] - The Company terminated its at-the-market common stock facility to streamline operations[20] - As of December 31, 2024, the company had 13 full-time employees, with an average tenure of over 15 years[100] Mergers and Acquisitions - The Company entered into a Merger Agreement with electroCore on December 17, 2024, with the merger expected to close in early Q2 2025[16][27] - Upon completion of the merger, each share of common stock will be converted into cash consideration based on the Company's Net Cash, with a minimum requirement of $8 million[24] - The merger includes a Contingent Value Rights Agreement, allowing stockholders to receive payments based on future product sales and milestones[29] - Preferred stock will continue to exist post-merger but will no longer be convertible into common stock, instead receiving the same merger consideration as common stock[211] - Unvested restricted stock awards (RSAs) will be converted into the right to receive merger consideration, regardless of vesting conditions[212] - Outstanding options to purchase common stock will fully vest and become exercisable, with cash consideration provided for options with an exercise price below the cash consideration[213] Product Development and Market Position - The Company holds proprietary intellectual property on its leading products, Quell® and DPNCheck®, which address chronic pain and peripheral neuropathy[14] - Quell wearable technology has shipped over 205,000 devices since its launch in Q2 2015, addressing chronic pain with advanced nerve stimulation techniques[49] - DPNCheck has shipped over 9,300 devices and has been used in over 2.6 million patient studies, providing rapid and accurate nerve conduction testing for peripheral neuropathies[51][54] - Quell received FDA Breakthrough Device Designation for fibromyalgia in 2021 and for chemotherapy-induced peripheral neuropathy (CIPN) in early 2022, with a De Novo submission planned for 2024[44][45] - The Quell device incorporates advanced algorithms for therapeutic stimulation and has been validated through extensive clinical studies[49][43] - The DPNCheck device is recognized as the only objective and standardized test for peripheral neuropathies available at the point-of-care[68] - Quell is the only FDA-authorized non-pharmaceutical treatment for fibromyalgia, highlighting its unique market position[67] Financial Performance and Challenges - The company has incurred significant operating losses since inception and cannot assure future profitability[107] - The company expects to incur further losses while working to grow sales of its products, facing significant challenges and uncertainties[122] - The company has incurred an accumulated deficit of $218 million as of December 31, 2024, and cannot assure future profitability[120] - Cash, cash equivalents, and investment-grade securities totaled $13 million as of December 31, 2024, which are expected to meet operating requirements for at least the next twelve months[121] - The company’s future revenue is heavily reliant on the commercial acceptance of its products, particularly Quell and DPNCheck, which are currently not generating sufficient revenue to cover operating expenses[130] Market and Regulatory Environment - Chronic pain affects nearly 100 million adults in the U.S., with an estimated annual healthcare cost impact exceeding $250 billion[39] - The annual direct cost of treating diabetes in the U.S. exceeds $100 billion, with diabetic peripheral neuropathy affecting over 50% of the diabetic population[41] - Changes in Medicare Advantage (MA) risk adjustment payments have led to significant reductions in DPNCheck sales, with no near-term recovery expected[47] - The MA market experienced substantial changes in 2023 due to new CMS rules, which materially adversely affected DPNCheck revenue for 2023 and 2024[126] - The company faces risks including regulatory inquiries, unfavorable changes to payment policies, and manufacturing issues that could adversely affect product adoption[128] Intellectual Property and Competition - As of December 31, 2024, the company holds 46 issued U.S. patents and 43 foreign patents, with a focus on wearable therapeutic products[71] - The company has faced challenges in enforcing its intellectual property rights, which could result in substantial costs and divert attention from other business aspects[173] - Patent rights may not provide adequate protection, and competitors could develop similar technologies without infringing on existing patents[175] - The company faces competition from established companies with greater resources and distribution channels, which could hinder revenue generation[147] Cybersecurity and Operational Risks - Cybersecurity incidents could compromise sensitive data and disrupt operations, potentially leading to financial claims and reputational damage[148] - The company has implemented a risk-based approach to cybersecurity, aligning its practices with industry standards[195] - The Board of Directors and Audit Committee oversee cybersecurity risks, ensuring regular communication regarding threats and incidents[198] - The company relies on third-party manufacturers for components, and any adverse changes in relationships could impact future revenues[107] Legal and Compliance Issues - The FDA classifies the company's products as Class II medical devices, requiring pre-market review and clearance through the 510(k) process[82] - Non-compliance with FDA regulations could lead to significant penalties, including product recalls, which would adversely affect financial results[162] - The company is subject to extensive post-marketing regulatory requirements, and failure to comply could result in enforcement actions and delays in product distribution[158] - Product liability claims pose a risk, as the medical device industry is historically litigious, which could lead to increased costs and damage to reputation[167]

Financial Data and Key Metrics Changes - Revenue for 2024 was $25,200,000, up 57% from $16,000,000 in 2023, driven by increased sales of prescription gammaCore devices and non-prescription Truvega products [9][28] - Gross margins improved to 85% in 2024 from 83% in 2023, with total operating expenses rising to approximately $33,600,000 from $32,500,000 in the previous year [10][28] - The net loss for 2024 was $11,900,000, a significant improvement from $18,800,000 in 2023, with adjusted EBITDA net loss decreasing to $9,000,000 from $15,400,000 [30][31] Business Line Data and Key Metrics Changes - Sales in the VA channel grew 85% to $17,800,000 in 2024 from $9,600,000 in 2023, with fourth-quarter sales increasing 47% to $4,600,000 [13] - Truvega net sales reached $2,800,000 in 2024, a 174% increase over 2023, with fourth-quarter sales approximately $1,200,000, a 271% increase year-over-year [14] - TaxSim sales for human performance were $1,200,000 in 2024, down from $1,700,000 in 2023, with revenue from this product line being difficult to predict due to the DoD acquisition process [18] Market Data and Key Metrics Changes - The company has approximately 30,000,000 covered lives in the U.S. for its products, with the VA hospital system being the largest customer [11] - Revenue from channels outside the U.S. was flat at $1,900,000 for 2024, with most revenue generated from the UK through NHS-funded gammaCore sales [20] Company Strategy and Development Direction - The company aims to become a leader in the bioelectronic health and wellness sector, with plans to leverage the acquisition of NeuroMetrix to enhance its product offerings [21][23] - The strategy includes expanding the Truvega brand through e-commerce and exploring new channels, including influencers and affiliates [16][35] - The company is focused on maintaining gross margins in the mid-80s while navigating potential impacts from trade policies [10] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about long-term prospects, citing continued revenue growth in core business lines and the potential for new product introductions [32] - The company is aware of macroeconomic disruptions affecting VA hospital customers but has not seen direct impacts on business cadence [34] - Future growth is expected from prescription gammaCore sales, direct-to-consumer initiatives, and new product acquisitions [39] Other Important Information - The company ended 2024 with approximately $12,200,000 in cash, a significant increase from $10,600,000 in 2023, and plans to maintain discipline around operating expenses [31][38] - The acquisition of NeuroMetrix is expected to close in the second quarter of 2025, which will provide additional growth opportunities [22][39] Q&A Session Summary Question: Plans for selling the Quell product post-acquisition - Management plans to integrate Quell into existing sales channels and provide training to the sales team after the acquisition closes [45][46] Question: Update on the Jerns channel - Management acknowledged slower traction but noted an increase in prescribers and optimism for future growth [55][59] Question: Comparison of Kaiser channel to VA system - Management indicated that the Kaiser system is more challenging to penetrate but once established, it offers a sticky business opportunity [65][67] Question: Confidence in achieving mid-80s gross margin - Management expressed confidence in maintaining mid-80s gross margins in 2025, with potential impacts from new product mixes in the future [89] Question: Capital adequacy and funding needs - The company has sufficient cash to execute its plans and does not anticipate needing to raise additional capital in the near term [95]

Group 1 - Monteverde & Associates PC is investigating NeuroMetrix, Inc. regarding its proposed merger with electroCore, Inc. [1] - Under the merger agreement, NeuroMetrix shareholders are expected to receive approximately $9 million, which represents the balance of NeuroMetrix's net cash at the transaction's closing [1] - Monteverde & Associates PC has a successful track record in recovering funds for shareholders and is recognized as a Top 50 Firm by ISS Securities Class Action Services Report [1][3] Group 2 - The firm is headquartered in the Empire State Building, New York City, and specializes in class action securities litigation [1][3] - The firm encourages shareholders with concerns to contact them for additional information at no cost [4]

Core Viewpoint - NeuroMetrix, Inc. has entered into a definitive merger agreement with electroCore, Inc., which is expected to close in late Q1 2025, allowing NeuroMetrix shareholders to receive cash and contingent value rights [1][2][4] Group 1: Merger Details - A subsidiary of electroCore will merge with NeuroMetrix, making NeuroMetrix a wholly owned subsidiary of electroCore [2] - NeuroMetrix estimates that shareholders will receive approximately $9 million in net cash at closing, subject to adjustments for transaction expenses and liabilities [2] - Shareholders will also receive one non-tradeable contingent value right (CVR) per share, entitling them to future net proceeds from the divestiture of the DPNCheck platform and royalties on Quell product sales, capped at $500,000 [3] Group 2: Strategic Implications - The merger is seen as a positive outcome for NeuroMetrix shareholders, allowing for efficient cash return and potential upside through the CVR [4] - The transaction is expected to enhance patient access to Quell wearable neuromodulation technology through electroCore's commercial channels [4] - NeuroMetrix plans to divest the DPNCheck platform to ensure continued benefits for patients and physicians [4] Group 3: Company Background - NeuroMetrix develops neurotechnology devices targeting chronic pain and diabetes, with products including the Quell neuromodulation platform and DPNCheck screening test [5] - electroCore focuses on non-invasive vagus nerve stimulation technology for medical conditions and wellness products [6]

Core Insights - NeuroMetrix, Inc. reported a net loss per share of 75 cents for Q3 2024, an improvement from a net loss of $1.66 in the same quarter last year [1] - Total revenues for the quarter were $0.6 million, down approximately 51% from $1.2 million in Q3 2023, primarily due to decreased sales of the DPNCheck product [1][2] Revenue Breakdown - Revenue from the Quell product line grew 50% year over year, reaching $0.2 million compared to $0.1 million in Q3 2023, driven by enhanced marketing efforts and partnerships [4] - DPNCheck reported revenue of $0.4 million, a significant 58% decline from Q3 2023, attributed to reduced demand in the Medicare Advantage market due to CMS policy changes [5] Gross Profit and Operating Expenses - Gross profit for Q3 2024 was $0.3 million, down from $0.8 million in the prior-year period, influenced by lower sales volume and an unfavorable product mix [6] - Operating expenses decreased by 25% to $2.1 million from $2.7 million in Q3 2023, reflecting cost-saving measures including workforce reductions [7] Net Income - The net loss for Q3 2024 was $1.5 million, an improvement from the net loss of $1.8 million in the same quarter last year, indicating effective cost management despite revenue decline [7] Balance Sheet Update - As of September 30, 2024, NeuroMetrix held $14.8 million in cash and equivalents, down from $18 million at the end of 2023, with total assets declining to $17.2 million [8] - Stockholders' equity decreased from $20.1 million at the end of 2023 to $16 million as of September 30, 2024 [8] Other Developments - The company is exploring strategic alternatives to maximize shareholder value and has phased out its ADVANCE product line to focus on core products, Quell and DPNCheck [9]

Financial Performance - Revenues for Q3 2024 decreased by $616,000 or 51.2% compared to Q3 2023, primarily due to a decline in DPNCheck sales attributed to adverse CMS reimbursement changes [68]. - Gross profit for Q3 2024 decreased by $470,000 or 60.1%, with a gross margin rate of 53.1% compared to 65.0% in the prior year quarter [69]. - Revenues for the nine months ended September 30, 2024 decreased by $2,133,661 or 46.5% compared to the same period in 2023 [72]. - Gross profit for the nine months ended September 30, 2024 decreased by $1,778,546 or 57.4% compared to the same period in 2023 [74]. - Net loss for Q3 2024 was $1.5 million, a decrease of $261,000 from Q3 2023, with net loss per common share improving to ($0.75) from ($1.66) [71]. - Net loss for the nine months ended September 30, 2024 increased by $1,145,792, with net loss per common share at ($3.10) compared to ($4.86) in 2023 [76]. Operating Expenses - Operating expenses declined by $689,000 or 25.1% in Q3 2024, driven by reduced employee headcount and lower research and development spending [70]. - Operating expenses for the nine months ended September 30, 2024 decreased by $248,274 or 3.0% compared to the same period in 2023 [75]. Sales Performance - DPNCheck sales were the primary contributor to the revenue decline in Q3 2024, with international sales also affected by excess inventory at the Japan distributor [68]. - Quell sales provided a small offset to the decline in DPNCheck sales during Q3 2024 [68]. - DPNCheck sales in Asian markets remain unaffected by the reimbursement changes in the Medicare Advantage market [64]. Strategic Initiatives - The company is considering reactivating the promotion of Quell OTC for lower extremity chronic pain in late 2024 or early 2025 [61]. - A De Novo application for marketing Quell-CIPN is planned for filing in late 2024 or early 2025, expanding the portfolio of Quell-based Rx wearable therapeutics [62]. - The company has initiated a strategic review to promote growth of Quell and DPNCheck, exploring various options including potential acquisitions and changes in marketing strategies [66]. - The company is exploring strategic options to maximize shareholder value, including potential asset acquisitions and mergers [78]. Cash and Working Capital - Cash, cash equivalents, and marketable securities as of September 30, 2024 totaled $14,834,600, down from $17,637,675 in September 2023 [78]. - Working capital as of September 30, 2024 was $15,585,819, a decrease from $19,445,277 in September 2023 [79]. - Days sales outstanding (DSO) improved to 32.9 days in 2024 from 50.9 days in 2023, indicating a shift towards cash sales [80]. - Net cash used in operating activities increased by $603,949, reflecting a higher net loss in 2024 [82]. - Equity sales contributed $1,473,700 in financing activities for the nine months ended September 30, 2024, compared to $701,546 in 2023 [85].

Revenue Performance - Quell revenue increased by 50% to $184,000 in Q3 2024 from $123,000 in Q3 2023[3] - DPNCheck revenue of $404,000 in Q3 2024 declined by $568,000 or 58% from Q3 2023[4] - Total revenue in Q3 2024 was $0.6 million, down by $0.6 million or 51% from Q3 2023[5] - Revenue for the nine months ended September 30, 2024, was $2.5 million, a decline of $2.1 million or 47% from the same period in 2023[6] Profitability - Gross profit in Q3 2024 was $0.3 million, down by $0.5 million due to DPNCheck revenue decline and lower production volume[5] - Net loss in Q3 2024 was $1.5 million, or ($0.75) per share, compared to a net loss of $1.8 million, or ($1.66) per share, in Q3 2023[5] - Net loss for the nine months ended September 30, 2024, was $6.0 million, or ($3.10) per share, compared to a net loss of $4.9 million, or ($4.86) per share, in the prior year[6] Expenses - Operating expenses in Q3 2024 were $2.1 million, reduced by $0.7 million or 25% from the prior year[5] Financial Position - As of September 30, 2024, cash, cash equivalents, and securities totaled $14.8 million[6] Strategic Initiatives - The company is actively pursuing a review of strategic alternatives to enhance shareholder value[1]

Core Viewpoint - NeuroMetrix, Inc. is currently engaged in a strategic review process aimed at enhancing shareholder value, having evaluated various strategic options over the past six months [2][4]. Group 1: Strategic Review and Financial Performance - The company initiated a review of strategic options in February 2024, focusing on enhancing shareholder value through financial, operational, and commercial optimizations [2]. - An extensive survey of potential transactions was conducted in collaboration with a financial advisor, but none were deemed beneficial for shareholders at this time [3]. - A significant reduction-in-force was implemented at the end of Q1 2024, resulting in a decrease in operating expenses by over $0.5 million per quarter [3]. - As of June 30, 2024, the company reported cash and cash equivalents of $16.4 million [3]. Group 2: Asset Management and Future Outlook - The company is in discussions to sell certain international assets that are not central to its core domestic focus [3]. - The strategic review process is expected to continue, although there is no assurance that it will lead to any specific transaction or outcome [4]. - The company has not established a timetable for the completion of the evaluation process and may not disclose further developments unless necessary [4]. Group 3: Company Overview - NeuroMetrix is a commercial stage healthcare company that develops neurotechnology devices targeting chronic pain and diabetes markets [5]. - The company's products include wearable and hand-held medical devices, supported by proprietary consumables and software solutions [5]. - Key commercial brands include Quell®, a wearable neuromodulation platform, and DPNCheck®, a point-of-care screening test for peripheral neuropathy [5].

Financial Data and Key Metrics Changes - The company reported Q2 revenue of $769,000, a decline from $1.656 million in Q2 2023, primarily due to the DPNCheck product line [5] - Gross profit for the quarter was $492,000, reflecting a gross margin rate of 64%, which is 360 basis points lower than the same quarter last year [6] - Net loss for the quarter was $1.488 million or $0.74 per share, showing a slight improvement from a net loss of $1.5 million in Q2 2023 [7] Business Line Data and Key Metrics Changes - The DPNCheck product line accounted for the entire revenue decline, with the company working to identify new markets for this product [5] - Quell revenue in Q2 was $192,000, representing a year-on-year growth of 47%, indicating positive momentum despite its smaller contribution to total revenue [5][10] - The number of Quell starter kits sold increased by 165% year-over-year, with 540 units sold in the quarter [11] Market Data and Key Metrics Changes - The DPNCheck business experienced a significant drop due to changes in Medicare Advantage, which is in its final year of a phaseout of risk adjustment compensation [13] - The company is exploring opportunities in international markets that are not core to its U.S. focus to offset cash consumption [9] Company Strategy and Development Direction - The company is conducting a strategic review to maximize shareholder value, having explored several potential transactions but found none in the best interest of shareholders at this time [8] - Plans to restart the over-the-counter (OTC) business for lower extremity chronic pain are underway, with expectations to have both parts of the Quell business active by Q4 [10][21] - The company aims to submit a de novo application for chemotherapy-induced peripheral neuropathy (CIPN) by Q4 2024, with a potential commercial launch by the end of 2025 [12] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the challenges faced by the DPNCheck business but expressed optimism about the growth potential of the Quell product line and the planned expansion into the Veterans Administration health system [10][13] - The company is focused on methodical growth, particularly in the VA market, and is ready to increase investments to drive growth [18][21] Other Important Information - The company has approximately $16.4 million in liquid assets and a working capital of $16.9 million, with a quarterly cash usage of about $1.4 million [4][7] - A reduction in force implemented in Q1 2024 is expected to lower operating expenses by over $0.5 million per quarter [9] Q&A Session Summary Question: Long-term growth strategy for the Quell business amidst DPNCheck decline - Management emphasized a methodical approach to growth, focusing on understanding the market before significant investment [17][18] Question: Product effectiveness and market strategy - Management confirmed that Quell provides symptom relief with minimal side effects and plans to restart the OTC business primarily through e-commerce channels [20][22]