NeuroPace(NPCE) - 2025 Q2 - Quarterly Results

Executive Summary & Key Highlights Q2 2025 Performance Overview 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] - Increased full-year 2025 revenue guidance to between $94 million and $98 million[2] - Increased gross margin guidance to between 75% and 76%[2] - CMS maintains current MS-DRG assignment for RNS System® procedures, preserving reimbursement stability[2][5] - Remain on track to submit NAUTILUS data to FDA for potential IGE indication expansion in the second half of 2025[2] Financial Highlights 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] Operational & Strategic Highlights 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] - Built on Project CARE momentum with an increasing contribution in the second quarter compared with the first quarter of 2025[5] - Achieved record highs in number of both active accounts and prescribers[5] CEO Commentary 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] - Made important clinical and regulatory and research and development progress, including advancing NAUTILUS and pediatric PMA supplement programs[4] - Advancing AI software development programs, reflecting leadership in the field and commitment to addressing unmet patient needs[6] Detailed Financial Results Second Quarter 2025 Financial Results 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] - 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][8] 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 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] Company Information Webcast and Conference Call Information 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] - 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] About NeuroPace, Inc. 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] - Its RNS System is the first and only commercially available, brain-responsive platform that delivers personalized, real-time treatment at the seizure source[13] - The platform aims to drive a better standard of care for patients with drug-resistant epilepsy and has potential for other brain disorders[13] Forward-Looking Statements 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] - Includes expectations for increasing access to and adoption of RNS therapy, and the ability to maintain or increase gross margin[14] - Anticipated revenue, gross margin, and operating expenses for the year ending 2025 are forward-looking[14] - 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] Investor Contact 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] - Email contacts: sschaper@neuropace.com and investors@neuropace.com[15] Condensed Financial Statements Condensed Statements of Operations 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 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 |