Greetings, and welcome to the CVRx Third Quarter 2025 Earnings Conference Call. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Mike Vallie from ICR Healthcare. Thank you, sir. You may begin.

Good afternoon. Thank you for joining us today for CVRx's Third Quarter 2025 Earnings Conference Call. Joining me on today's call are the company's President and Chief Executive Officer, Kevin Hykes; and Chief Financial Officer, Jared Oasheim. The remarks today will contain forward-looking statements, including statements about financial guidance. These statements are based on plans and expectations as of today, which may change over time. In addition, actual results could differ materially due to a number of risks and uncertainties, including those identified in the earnings release issued prior to this call and in the company's SEC filings. I would now like to turn the call over to CVRx's President and Chief Executive Officer, Kevin Hykes.

Thanks, Mike. Good afternoon, everyone, and thank you for joining our third quarter earnings call. Q3 was a strong quarter for CVRx. We grew revenue by double digits year-over-year and expanded our commercial footprint. Our newer reps are hitting their stride, driving procedure volumes and building productive relationships with the physicians and APPs that manage heart failure patients in the community. Let me remind you of our 3 strategic priorities for 2025. Our first priority is building a world-class sales organization that develops sustainable Barostim programs with deep therapy adoption. Our sales force transformation is progressing well and turnover is returning to more normal levels. The first wave of the sales reps hired earlier this year are getting up to speed and making meaningful contributions. We will continue hiring high-quality talent but at a more measured pace that aligns with our territory expansion plans rather than the accelerated hiring that was needed to support the transformation. With this foundation in place, we're now concentrating on onboarding the new reps and accelerating their path to productivity. Second, we are targeting centers with the highest potential for sustainable programs and implementing a best practice playbook to drive deep therapy adoption. Our refined approach to account targeting guides our expansion strategy, focusing on high potential Tier 1 and Tier 2 accounts. That being said, we're also selectively pursuing pragmatic opportunities in Tier 3 and Tier 4 accounts where we see committed physician champions, administrative support and the right fundamentals. We added 10 net new centers this quarter and are seeing traction with this approach. Our top accounts are demonstrating the deepening adoption that is the hallmark of an established Barostim program. More than 20% of our active implanting centers achieved 3 or more implants in Q3, and our highest performing sites are now…

Thanks, Kevin. Let me walk through our third quarter financial results. Revenue was $14.7 million for the 3 months ended September 30, 2025, an increase of $1.3 million or 10% over the 3 months ended September 30, 2024. Revenue generated in the U.S. was $13.5 million for the 3 months ended September 30, 2025, an increase of $1.2 million or 10% over the 3 months ended September 30, 2024. Revenue units in the U.S. totaled 420 and 394 for the 3 months ended September 30, 2025 and 2024, respectively. The increases were primarily driven by continued growth in the U.S. heart failure business as a result of the expansion into new sales territories, new accounts and increased physician and patient awareness of Barostim. As of September 30, 2025, the company had a total of 250 active implanting centers in the U.S. compared to 240 as of June 30, 2025. Active implanting centers are customers that have completed at least 1 commercial heart failure implant in the last 12 months. The number of sales territories in the U.S. increased by 3 to a total of 50 during the 3 months ended September 30, 2025. Revenue generated in Europe was $1.2 million for the 3 months ended September 30, 2025, an increase of $0.1 million or 12% over the 3 months ended September 30, 2024. Total revenue units in Europe decreased to 50 for the 3 months ended September 30, 2025, compared to 56 in the prior year period. The number of sales territories in Europe remained consistent at 5 for the 3 months ended September 30, 2025. Gross profit was $12.8 million for the 3 months ended September 30, 2025, an increase of $1.5 million or 15% over the 3 months ended September 30, 2024. Gross margin increased to 87% for…

Thank you, Jared. Looking ahead, we now have the fundamentals in place to positively impact the lives of a meaningful number of heart failure patients and to create significant value in doing so. Our sales team is becoming more productive, and we're seeing positive signals from payers across the board. Our clinical evidence is expanding and our awareness efforts are gaining traction. Financially, we're demonstrating improving operating leverage in our business model as we scale. Combined with our strong cash position, this gives us the resources and runway necessary to execute our strategy. Now, I'd like to open the line for questions. Operator?

[Operator Instructions] Our first question comes from John Young with Canaccord Genuity.

Congratulations on the quarter. Maybe I can start on the guidance. I appreciate the narrowed range, but perhaps you could walk us through why you cut the higher end given that it sounds like reps are starting to hit their stride from your commentary. Are you expecting more of a benefit in 2026 than from the productivity? Is there anything you're seeing today in the business that that as well?

John, happy to cover that one. Yes, we were really happy with the results we saw in Q3. We're starting to see more of those new reps on the U.S. side get up that productivity curve, but we know the work is not yet done in that arena, and we don't want to get too far ahead of ourselves. The performance that we saw in Q3, we saw that continue into October that gives us the confidence in the guide that we set out by raising the midpoint of the old guidance that we had previously issued.

Then just on 2026, I'm not sure if you are willing to give any commentary yet, but it looks like the Street is modeling about 18.5% growth in '26. Are you comfortable with that level at this point?

Yes, it's a good question. We're coming off a year where the midpoint of the updated range will be growth of about 10% compared to 2024. Having that as our baseline, we're still anticipating to continue to invest in this business where we're going to be adding more sales reps, activating more territories and continuing to invest in the rest of the business. I think as we march into 2026, we're starting to target growth kind of in the mid-teens to see it accelerate from the growth rates we're seeing in 2025 and then eventually getting back to those longer-term targets of seeing higher growth rates in the mid-20% but that's out in 2027 and beyond.

Our next question comes from Matt O'Brien with Piper Sandler.

This is Samantha on for Matt today. A good performance in the quarter. I also wanted to touch on the productivity improvements with the sales force. Could you give any more color or quantification, how many of the sales reps are kind of giving up to the productivity that you'd like to see? Would you say everyone's ramp? Just any more color there would be great.

Yes. Thanks, Samantha. I'll take that. It's Kevin. I would say we're pleased with what we're seeing from the new reps, particularly those we've hired in the last 3 quarters. As Jared mentioned in his comments, I believe more reps today are active and contributing in the quarter than we've ever seen before. We're seeing them start to come up the curve and understand their roles and get comfortable in their territories and contribute. We're nowhere near yet seeing the full productivity that we would expect from these new hires. I think there's still some work to do there. As we've communicated in the past, depending on the background of the individual and the territory that they're assuming or building from scratch, it can take 6 to 9 to 12 months for them to really start to contribute. I would say at this point, we're really pleased with what we're seeing and no reason to think that we won't see continued improvement.

One more from us. It was great to see the Category I code finalized in the physician fee schedule that was published just a few days ago. How should we be thinking about the reimbursement changes that are going to be implemented starting January 1?

Sure. That's a great question. I would say, overall, we're thrilled with the developments over the last year in reimbursement and what we see on the sort of horizon. We're seeing really strong support from the MACs for traditional Medicare, improving rates from the Medicare Advantage carriers, some really positive signals, both at the prior auth level as well as at the kind of second and third level reviews and even at the administrative law judge level. Those are each different points during the appeals process where you challenge a payer to cover a case, and we're seeing improving trends in all those areas. Obviously, Category I in January will be an important next step for us. That eliminates the payer's ability to automatically deny our prior authorizations on the basis of them being experimental. This means as of January 1, each authorization has to be reviewed by a human clinician and reason must be given for why it's being denied. So that -- I wouldn't characterize that as an immediate sort of step function change, but it will certainly, as it becomes more-and-more impactful as we enter the second and third quarter of the year, we will see the friction in the system reduced, and we believe it will result in higher rates of approval and shorter times to those approvals for prior authorizations.

Our next question comes from Robbie Marcus with JPMorgan.

This is actually Rohin on for Robbie. I have a question on margins. Gross margin came in a decent clip ahead of expectations in the quarter. I was just wondering if you could provide some further color on how much of this is due to better pricing versus some of the manufacturing efficiencies that you called out? Is this a new steady state that we should expect heading into 2026 just from a gross margin perspective?

Ron, I think we tried to call it out in the earlier remarks. It is a mix. It's a bit of increased ASPs and an improvement in the cost per unit. ASPs for the quarter were north of $31,000 on a worldwide basis. That's a pretty good step up from what we saw in Q3 last year, where it was just below $30,000 per unit across the whole across the globe for ASPs. I do think the bigger chunk that drove this improvement in Q3 margins was the cost per unit. We're continuing to build more-and-more units in our facility here in Minneapolis. As a result of that, we're seeing our labor and overhead costs spread over more units seeing that cost come down. I think the ASP side of the house, we're not ready to just bake it in just yet longer term, but we do think there is promise that we could maintain these levels moving forward. Then on the cost side, we do think these are production levels that we're going to continue at or continue to increase upon. That should give us comfort to be able to keep these costs in a similar range moving forward.

I guess I also wanted to clarify a prior point that you might have made. Just kind of heading into 2026, given the new Category I code, set to take effect in the favorable PFS rates and extension of the APC payment. It also seems like you have a better grasp on the commercial organization as we sit here today. Is it fair to say that all these developments in conjunction should drive an acceleration in sales growth in 2026? Just could you frame that, some of the puts and takes for investors based on how you're thinking about it today?

Yes. That's a great kind of summary of what we have going into 2026. I think part of this is we're coming off a year from '24 to '25, where we went through a sales force transformation. We really implemented this go-to-market strategy that was brought forward at the end of 2024. We're starting to see some really nice results here in the third quarter and driving into the end of the year. I think as we're moving into '26, we are expecting to see a reacceleration of growth. As I mentioned earlier, kind of initially targeting the mid-teens for what we would expect for growth rates '26 over 2025, but there is potential for exceeding those expectations if everything lines up for us with the Category I taking effect with payers moving in the right direction for prior auth approval rates and the time to those approvals. I think the base case for us at this point is seeing that reacceleration go from about 10% to the mid-teens as we move into 2026.

Our next question comes from Brandon Vazquez with William Blair.

Max on for Brandon. Kevin, you mentioned you guys are focused on getting these newly hired reps up to speed more quickly. Can you just touch on how you guys are approaching that? What specifically you guys are doing that's giving you confidence that they will get up the productivity curve quicker? What's giving you confidence that newer reps that you hire will fall into the same playbook? Then I have a follow-up.

Sure. Great question. I would say it starts with the people that we're hiring. As we've talked about extensively over the last 18 months, we're really trying to develop a sales team that has program development that has market development skills that has sort of a process-driven mentality different than what you'd often find in an early-stage sort of start-up environment or in a more mature industry where you're fighting for market share. These are people that know how to develop new programs and introduce new therapies. That's the raw material that goes into it. We've made significant investment in our sales training resources, both the curriculum and the experts that we've hired that train these reps and have instituted a much more deliberate and systematized sales training process that we believe compresses their time to comfort with our therapy and with their territories and with the process necessary to open a sustainable Barostim account. That differs by person, of course, but we're pleased with what we're seeing, and we're pleased anecdotally, at least today to see some of these reps getting up to speed much faster than has historically been the case. It's probably a combination of all those things. It also comes with picking the right accounts, right? We think we know enough about this market today that we can be better at selecting where to spend our time to pick the right accounts that can get up to speed perhaps more quickly than in the past. It's a combination of factors, but we're pleased with what we're seeing.

Then, Kevin, just on the RCT, can you guys just touch on additional milestones? What might be left there following the next steps in November? Maybe just remind us all what you guys are going after there and what positive results in the future could mean for the TAM?

Sure. That's a great question. As a reminder, so we are in discussions. We've submitted an IDE for a very significant randomized controlled trial that would triple our TAM by both moving the EF, the ejection fraction cutoff from 35 to 50 and also moving the cutoff for something called NT-proBNP. That's a biomarker that describes the stability of heart failure. That would move from its current level of 1,600 up to 5,000. So the patients that are in that expanded range have a very similar disease, and we believe will respond similarly to Barostim therapy. This represents a pretty compelling way to expand that indication to an adjacent group of patients who are very much today in the environments that our sales reps are calling on. That's the goal behind the trial. We have submitted the IDE, as I mentioned, to FDA. We hope to hear back from them sometime in November. If we can indeed reach agreement on a trial design, we would then go to CMS and submit for a category B IDE coverage designation. That's a very necessary second step. That means that CMS will agree to pay for the patients who receive our device in this trial. With that second approval, if successful, we would begin center outreach and would anticipate treating the first patients in this trial sometime in the first half of 2026.

Our next question comes from Frank Takkinen with Lake Street Capital Markets.

I'm going to pick up on the RCT a little deeper there. Kevin, maybe talk to how many patients you're thinking will be enrolled in this trial? Then on the category B, do you think you can get a reimbursement rate similar to the ASP that you're currently collecting?

Sure. Thanks, Frank. As I think maybe we mentioned on a prior call, we're seeing this trial at roughly around 2,000 patients randomized to either Barostim therapy or guideline-directed medical care. That would make it one of the largest cardiovascular device trials ever conducted. This would be seen as a significant sort of scientific contribution to the field. It would likely involve 100-plus centers given the assumed enrollment rates by center. It would likely take us about 4 years to enroll this trial with another 18 months to 2 years of follow-up after that point. It would be a significant trial, a significant investment. We believe there is a good likelihood that CMS will, in fact, cover this under a category B IDE designation. The criteria for that designation are clear and are not subjective, and we've designed the trial in a manner that we think would meet those criteria. As it relates to ASPs, I'll let Jared speak to that.

Yes, happy to jump in on that piece, Frank. Our expectation is that CMS would reimburse the hospital at the exact same rate that they're reimbursing them today in the outpatient setting. If they're being reimbursed $45,000 today under the New Tech APC 1580, they'd get a similar reimbursement if these patients are enrolled through the clinical trial.

Then I think, Kevin, I heard you speak to the concept of sales force is stable now and still intending to grow that sales force been in the range of 3 new sales territories per quarter. Is that the right way to think about it in 2026?

Yes, I think it is. Thank you. I think at this point, we're pleased with what we're seeing, but we're still working the kinks out of our system, and we think that's probably the right number of new territories per quarter to model going forward. We're hopeful eventually that may increase, but for now, that's the right spot to start.

Our next question comes from Chase Knickerbocker with Craig-Hallum Capital Group.

I just wanted to dig in a little bit more on the guide as well. Q4 implies essentially flat year-over-year growth and less sequential growth relative to the past 6 or 7 quarters. I guess what are you seeing so far in the quarter through October that's the driver here? I'm just kind of having trouble squaring the commentary that some of the reps are getting up to speed faster than expected. I would think with many of your reps now, getting to that productive kind of 6-plus months in their territory point. I'm just having trouble squaring that. Is there conservatism in that guide? I mean maybe just kind of speak to the moving pieces.

Yes. Good question, Chase. I mean, as comparing year-over-year, I think we've talked about this the last few quarters, we had a bit of a reset with our top line numbers back in Q1. We've been working to grow that number sequentially after that sales force transformation took place. We've been seeing that sequential growth rate in the range of 8% to 10%. I think if I look at the guide that's out here for worldwide numbers for Q4, the midpoint would get us to about 6% sequential growth. A little bit of a step back. I think what we're seeing is more reps are getting up the productivity curve, more territories are becoming active. Again, we just want to make sure that we're kind of through the thick of it here before we would get much more aggressive with the numbers coming out. I think even at the midpoint, we're talking growth north of $1 million sequentially from Q3 to Q4.

Can you maybe speak to how rep tenure has progressed? Has any kind of update to any of the turnover metrics, etc., just kind of health of the sales force update?

Yes. I think we last gave updates a couple of months ago on the percentage of reps that were hired in 2024, 2025. We haven't seen significant changes there. I think Kevin alluded to this in his prepared remarks that we're back to hiring per normal levels. We're not out there accelerating our hiring to backfill a bunch of reps that were turned over. At this stage, we haven't seen significant movement in those percentages of reps that were hired in 2024 and 2025. Just to close it out, I mean, overall turnover kind of returning back to those normal levels. I think we've alluded to it in the past, annual turnover levels that we think to be normal are kind of in that range of 10% to 20%.

Then just maybe on the OPPS, any sort of engagement around Level 6 neurostimulator code outside of the comments you submitted? Then second, Jared, just I appreciate those thoughts for '26. I mean maybe just also some thoughts on expenses next year, just how you plan to manage the business from an OpEx perspective as we look at 2026?

Yes. On the OPPS side, I think everybody is sitting and waiting for when that final rule will post. Just a reminder for everybody that CMS did come out this year in the proposed rule back in July that we would be mapped to the New Tech APC 1580 for 2026. We don't expect that to change in the final rule, but there is still a chance for some upside where they could create a Level 6 neurostim code. We're still waiting for that final rule, which we understand could be published any day now. We'll come back and give updates on that as information becomes available, but there's no additional information behind the scenes. It's all of us just waiting for CMS to release this rule. On 2026 spend, so we do anticipate that we're going to continue to see leverage in this model. If we're modeling mid-teens top line growth with slight improvements on margins, we're not intending all of that gross profit to be spent within operating expenses. We would expect the OpEx growth to be at a lower rate than what we're modeling for top line. Again, we'll come out with more detail on that when we finalize guidance for 2026.

Our final question comes from Ross Osborn with Cantor Fitzgerald.

Congrats on the progress. Maybe just a quick modeling question from us. Your 2025 OpEx guide implies a sequential step down. Is that fair to assume the savings will come from the R&D line sequentially?

Yes, it's a good question, Ross. Actually, I think we expect that movement would likely happen within SG&A sequentially from Q3 to Q4. Q4 is typically a lighter quarter when it comes to trade show and marketing spend. We would typically see a little or fewer dollars going into that bucket in the fourth quarter as compared to the third.

Then looking at your top accounts doing 3 or more implants and the highest at greater than 10. Are there any structural differences between those averaging 3 versus 10? Or do you think those currently averaging 3 have the ability to ramp to 10 over time?

That's a great question. I'll take that. Thanks, Ross. I would say it's the latter. There are no structural differences there. We think this is ultimately the effect of us sort of steadily improving the mix of accounts that we have and their likelihood of deep adoption and the tools that we're applying to them, this methodical process of getting the right stakeholders in place, getting administrative support in place and building a robust and resilient network in these accounts that allows them to build this into how they treat the disease. We're pleased with what we're seeing. No reason to believe that they couldn't all be operating at that level. In fact, that's our goal.

We have reached the end of our question-and-answer session. I would now like to turn the floor back over to Kevin Hykes for closing comments.

Thank you, operator, and thanks, everyone, for joining today. We appreciate your continued support and look forward to updating you on our progress next quarter. Thank you.

This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation.