Good afternoon, and welcome to NeuroPace Fourth Quarter 2025 Conference Call. As a reminder, this call is being recorded. I would now like to turn the call over to Scott Schaper, Head of Investor Relations at NeuroPace for a few introductory comments.

Thank you, operator, and welcome to NeuroPace's fourth quarter and full year 2025 earnings conference call. Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent performance and strategic progress, followed by a detailed financial review and outlook from Patrick Williams, our Chief Financial Officer. Following our prepared remarks, we will open the call for questions. Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our financial outlook for 2026 and the first quarter of 2026, our commercial strategy, clinical and product development initiatives, regulatory matters, including our IGE PMA supplement and our expectations regarding operating performance and profitability. Forward-looking statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, except as required by law. In addition, we will discuss certain non-GAAP financial measures on today's call, including adjusted EBITDA. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which is available on the Investor Relations section of our website. With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker. Joel?

Thanks, Scott, and good afternoon, everyone. I will start with an overview of our fourth quarter results and how the team is executing against our strategy. I will then provide updates on our key clinical and product development initiatives and close with a brief recap of why 2025 was such an important execution year and how it sets us up for what we believe could be a transformational 2026. After that, Patrick will walk through the financials and our outlook before we open the line for Q&A. The fourth quarter capped off a strong year for NeuroPace. We delivered strong quarterly revenue of $26.6 million, representing 24% year-over-year growth. This performance was primarily driven by strength in our core RNS business with RNS System revenue of $22.4 million, up 26% year-over-year. These results reflect the execution of the initial parts of our strategy, deepening adoption and utilization within our current adult focal epilepsy indication and customer base while continuing to expand access to RNS therapy through community pathways and preparing for future indication expansion. We again reached new highs in prescribers, accounts and in our patient pipeline, clear reflections of broad-based momentum across the business. Following RNS growth of more than 30% in the third quarter, our 26% growth in the fourth quarter reflects sustained broad-based momentum and continued commercial execution. Taken together, RNS growth in the second half of 2025 was 29%. The majority of our growth continues to come from Level 4 centers, driven by increased adoption and utilization. At the same time, our community access efforts continue to contribute and scale as we expand referral pathways and site engagement. Stepping back, the message is consistent with what we said last quarter. Our results reflect the compounding effects of the recognition of the differentiated capabilities of the RNS…

Thank you, Joel. I will review our fourth quarter and full year 2025 performance in more detail and then provide additional context around our full year 2026 guidance, which is consistent with our pre-announcement in early January. We will also be introducing a non-GAAP profitability metric of adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization and stock-based compensation. We believe this metric can serve as a proxy for current period cash generation as we move toward cash flow breakeven and have provided additional reference tables for both historical and go-forward reconciliations in today's press release. Please note that we have very little depreciation and no amortization. So essentially, stock-based compensation makes up nearly all of the adjusted portion of our adjusted EBITDA. Total revenue in the fourth quarter of 2025 grew 24% to $26.6 million compared with $21.5 million in the prior year quarter. Growth was primarily driven by increased sales of the RNS System, which grew 26% to $22.4 million. Service revenue tied to our data collaborations in the quarter totaled approximately $890,000. Revenue from DIXI Medical was approximately $3 million, representing a decline of 4% compared to the fourth quarter of 2024 and ahead of the previously issued guidance as the team worked to sell existing inventory prior to the ending of our commercial partnership, which concluded on December 31, 2025. As a reminder, the distribution agreement contractually allowed NeuroPace to sell back any remaining inventory at prior paid costs back to DIXI, which already has largely been completed in the first quarter of 2026. Gross margin for the fourth quarter was 77.4% compared with 75.4% in the fourth quarter of 2024 and 77.4% in the third quarter of 2025. The year-over-year improvement was primarily driven by increased revenue contribution from higher-margin RNS revenue,…

Thanks, Patrick. Let me briefly reconnect our results to the strategy. Our path to becoming the standard of care rests on three pillars: market development of our core RNS business, clinical development to expand RNS epilepsy indications and product development to advance our R&D road map, including the NeuroPace AI platform. Significant progress has been and continues to be made on all three pillars, and we are beginning to see the compounding effect of that progress. As you can hear in today's results and outlook, we have been executing and have a lot of opportunity in front of us. The core business is performing at a high level. The strategy is working, and we are executing with increasing consistency and discipline. What makes this moment especially exciting is that the opportunity in front of NeuroPace is getting bigger on multiple fronts at the same time. In the near term, we are still early in penetrating the adult focal epilepsy market, and we continue to see meaningful runway to drive adoption and utilization in Level 4 centers and expand access in the community. We are investing deliberately to scale our commercial engine and to optimize how patients move through the funnel from identification to evaluation to implant, translating strong product demand into durable procedural growth. On the clinical front, we remain encouraged by the opportunity to bring RNS to the IGE population, which remains highly underserved. We continue to engage constructively with the FDA, and we will be thoughtful and disciplined as we prepare for what could be a meaningful new chapter in indication expansion. We have a unique installed base of customers, a unique data set, and we are investing to turn that advantage into practical tools designed to make RNS therapy even more efficient, effective and easy to use. Seizure ID is a near-term example of how we can reduce physician burden and improve utilization. From there, our pipeline development projects are focused on activating our unique data and associated AI capabilities to create a step change in how personalized neuromodulation is delivered adaptively and further enabling RNS' potential to improve outcomes across the responder spectrum and expand the impact of therapy. Looking ahead, we believe we have a durable growth engine in the core business. We are building leverage in the model as we scale, and we are investing in product and clinical programs that we believe can expand the reach of RNS and extend NeuroPace's leadership in personalized closed-loop neuromodulation. We are proud of what the team delivered in 2025, and we are energized by what is possible in 2026 and beyond. Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from the line of Frank Takkinen with Lake Street Capital Markets.

Congrats again on a really solid finish to the year. I was hoping I could start with one on the generalized opportunity. I know we've talked about it a lot, but as we get closer and closer, just looking for additional detail. How should we think about how quickly you can translate from an approval into collecting revenue? And really what I'm getting at is what is left to be done once you do have that approval in hand before you can start shipping product? And then as a bigger picture question, do you think the generalized opportunity could eventually be a larger revenue generator for NeuroPace than the focal opportunity?

Those are great questions, Frank. Thank you. With regard to what's left to be done pending the potential approval, the first things that need to be done are to really extend coverage from -- in the private payer community. And so we have, as you know, a very well-established coverage for the RNS System today for the adult focal indications. And the generalized indication is expected to follow much in the same lines, but we do need to get that coverage extended. As you might expect, we're not waiting for approval to make progress on that. We already have internal processes underway to prepare for and target the key payers to provide for that coverage extension, but that's really the key step. And then, of course, we have the initial introduction training and scaling activities that need to take place, in particular with referring physicians. Our treating physicians are already quite familiar with generalized epilepsy, but a lot of what we see from the referral community and out in the community will take some time for us to bring the therapy and the information and the referral pathways to them. But we do see referral pathways are well established here. A lot of these generalized patients today do end up in Level 4 centers. We have a well-understood technology and well-understood implant techniques. And so that teaching and training is already under our belt. We've got a sales force that we're going to be leveraging into common call points. And so they already understand how to bring the technology out to folks. And so it's really a matter of extending that into the referral community and expanding the coverage for the new indications. And those are things that we'll be looking to move into with some momentum here.

Yes. And Frank, maybe I'll go one layer deeper on some of the details related to reimbursement because I know there's a lot of people that are newer to our story. Number one, it is the exact same device that we'll be implanting, and I think that's important for everyone to understand. It's the same calling point. And from a reimbursement standpoint, it will be the same DRG as well as CPT codes that will be used. And then as Joel said, we will work on the private payers. In terms of the grand scheme of things, Medicare and Medicaid probably makes up 20% to 25% right now of our overall payer mix. And then the rest of it is the private payers, and that will take a little bit of time to get on board. And then you did ask a question, which I know that we were at your conference recently, and we've been talking about this for quite some time. But we certainly believe that when we add this expanded indication that the proverbial 1 plus 1 might be greater than 2 at the end of the day. So obviously, we're excited about this, just came from the National Sales Meeting, a lot of momentum and excitement around IGE coming. And so we look forward to getting the approval and moving forward.

To that end, the underlying etiology here is really the largest overall segment is the adult focal population. And the generalized population breaks out then about 60% focal, about 40% generalized. The biggest of the generalized segments is the idiopathic generalized epilepsy segment, which is what NAUTILUS is focused on here and is about half of that generalized population is the IGE population. So a significant patient segment here that importantly does not have any other approved device indications today, one; 2, has an abbreviated diagnostic pathway. They don't require the specific localization of the seizure site through Phase II testing because it's a generalized seizure, and so they don't need that specific testing. And we know there are patients out there who today don't feel like they have any other options. And so when we think about the potential for adoption dynamics, there will be things, as you point out, at the start that we need to work our way through that will take a little bit of time. But as we do so, we think the dynamics around the idiopathic generalized population, what we can bring to patients that they have nothing for today and the time line associated with being able to have patients go through the treatment and workup protocol can also be shorter than in the adult focal population today. So we like the adoption dynamics associated with IGE, and there'll be some upfront work for us to do. But we think as we work our way through that, this is a meaningful opportunity for us.

Got it. That's great color. I appreciate that. And then maybe just as a quick follow-up for Patrick. I heard the comment about less EBITDA in first half and that ramping really through the back half. Any other finer points you can put on that to kind of get us in the right spot for Q1 adjusted EBITDA?

No, I think we provided, obviously, a retrospective or historical view because we've got a couple of moving parts, right? Continuing operations that we anticipate will happen starting in Q1. So definitely look at Table 1 to update your models for 2025. And then for 2026, you can refer to Table 2. We did not break that out quarterly. There will be a little bit of front-end loading on some of the OpEx. If I kind of looked at it from a first half to second half, a little greater than 50% in the first half, which is why we're seeing adjusted EBITDA go more negative, we'll call it, in the first half, and then it will pick up in the second half. But again, I think you see that we can demonstrate leverage here. We are making a deliberate decision to really lean into investments here, especially on our commercial programming, marketing, sales, head count, et cetera. And so that's probably the best I can give you in terms of just direction and that should get the models in check pretty well.

Your next question comes from the line of Mike Kratky with Leerink Partners.

Congrats on all the progress and the FDA accepting your IGE filing for review. Maybe to start, can you provide -- can you add any additional color just on the magnitude of pricing impact on RNS growth in the fourth quarter? Is that similar to what you've seen historically? And how much of an impact are you expecting that to have on RNS growth for 2026?

It's a great question, Mike. And I would point to over the past several years, we have consistently taken mid-single-digit -- low to mid-single-digit pricing increases annually. And I think with the gross margin profile of the RNS platform, in particular, is now in the low 80%, and that's really been a combination of that disciplined pricing as well as then the volume of the increase in manufacturing. And so we're really pleased with the way with discipline we've been able to manage gross margin. And to your question specifically in Q4, there wasn't anything outstanding there that's different than what we've seen over time with pricing. And we really see the vast preponderance of the growth that we're experiencing associated with initial implants of the RNS System and primarily in our Level 4 centers. So the pricing approach has been a good one. It's been a collaborative one with our customers and largely in line with their increases in reimbursement and costs as well. And so we've been in good lockstep with our customers in that regard and been positive on gross margin along with the volume increases that we've seen as the demand and access to RNS therapy has grown. But there wasn't anything specific or different in Q4 that contributed in an outsized fashion to the growth.

Got it. Very helpful. And maybe just a follow-up. But in terms of what you've seen from Project CARE recently, can you help frame generally how much that's contributing in terms of prescribers or factoring into some of the record numbers that you're seeing recently?

It's a great question. And I think, again, what we're seeing is increasing numbers of prescribers and implanters and active centers. And that's coming from a combination of our Level 4 center growth as well as then more and more growth in the referral community. The CARE program is a part of the growth of what we're seeing in the referral community, but we're also investing further both in our DTC as well as then in our commercial organization expansion in more of an upstream referral focus that isn't necessarily tied to CARE implanting centers as well. And so we really have, I think, three engines for growth here as we work to develop the market and prescribers in particular. One is the ongoing growth that we see in adoption utilization in the Level 4 centers. Two, it's the CARE-specific program centers where there'll be either Level 3 or community centers that both will do implants as well as refer and then a broadening in the community for more prescribing and referring in what we'll call programming centers. And so referral more broadly with CARE and the referring physicians is a nice additive component to what we're also seeing as continued good growth in adoption and utilization within the Level 4 centers. So we're really getting it from multiple spots.

Your next question comes from the line of Priya Sachdeva with UBS.

Congrats on a great quarter and a strong end to the year. Maybe the first question that I have would be just maybe if you could give us a State of the Union on capacity dynamics across implanting centers. What are current backlog dynamics look like? I mean a few of the checks that we've done suggest there could be a bottleneck from a referring physician perspective. So I would love just to hear your thoughts on that and the market more broadly. And then one follow-up.

Thank you, Priya. It's a real good question. And we pay close attention to that as well. And I think I've commented previously, I'll stay in line with that, that generally, when it comes to neurosurgeon capacity, when we ask what our customers tell us is that they have capacity to handle increasing volume of device cases. And remember, for a functional neurosurgeon, the implantation of the RNS device is very well within their training and skill set. And so they can execute these procedures as part of their daily work very well. What we will see on occasion is some centers that will be booking out further within their surgical time line, but that's really the exception rather than the rule. And I think the impression I'd leave you with is there's plenty of capacity in the channel, both for prescribers to refer for epileptologists to then work patients up and take them into case conference and then generally with regard to patients being able to move then into surgery. And one thing I would emphasize here is just that whole flow, that flow of patients is something that we are very much focused on here and are working together with our centers. And that's something that -- you'll hear us refer to nurse navigators. And our nurse navigator team is something that we are investing in meaningfully. In fact, we're doubling that group of people. And what they do is work to help handhold patients through the referral process and the diagnostic process and the evaluation for surgery process that allows for efficient management and scheduling of everything that needs to happen. And so as you know, part of -- when you think about a pipeline and you think about constraints, part of it is balancing demand and part of it is making sure things are flowing well through a pipeline. And our nurse navigator teams working closely with our field representatives and the allied health personnel in the different centers do a lot of that and are going to be doing even more of that here as we've identified that as something that can help, we believe, meaningfully move patients through that pipeline.

And if I could piggyback on the nurse navigators. It's a really important concept. We're starting to talk about it more. And as Joel said, we are leaning into that one. In fact, some of these nurse navigators actually came from Level 4 CECs where they help navigate patients on that side. So that's really a key point of getting them through the channel. And then that's why we also wanted to make sure that they were all on board coming into it at the beginning of this year in anticipation of IGE coming as we move through the year and making sure that they're in place, and we've got the ability to move patients as quickly as possible.

Okay. Great. That was super helpful. Would just love to touch on the Seizure IDE (sic) [ ID ] opportunity and kind of the logistics behind it. Is it a platform that physicians will have to pay a subscription for? Is it something automatically implemented into their in-house softwares? And what, if anything, from a clinic efficiency perspective is baked into the guidance today?

That's a great question, Priya. And the Seizure ID capability, the ability to access that product is something that will come along with people's use and implantation of the RNS System. It's a software capability that will be part of what we provide to customers. And our interest here is really with regard to efficiency and ease of use that allows clinicians to manage the RNS patients that they have in their practice even more effectively and as time efficiently as possible. So what Seizure ID does is it identifies the highly likely seizure activity and then presents that efficiently so that clinicians don't have to spend as much time reviewing all of the data that's available and can spend more time focused on the data that's most likely to result in an action. And so our interest here is in being able to show people how they can have more and more patients as -- RNS patients as part of their practices because they can get a significant amount of data, but they're only -- they only need to review and interact with the most important parts of that data and the data that's going to result in opportunities for them to treat patients better. And so our interest is to make that available by way of then encouraging more and more patients to be able to be treated with RNS Systems and RNS implantation. Does that answer your question, Priya?

Yes.

Your next question comes from the line of Yi Chen with H.C. Wainwright.

This is Eduardo on for Yi. I was hoping if I could -- maybe I'll follow up briefly on the IGE. I'm curious if there's any significant biological differences in the iEEG readings compared to focal epilepsy that can make continuous improvements more challenging. I know that's something really promising about the technology is how you see that year-over-year physicians continuously improve, recognizing and hopefully, all these software improvements will improve that. I'm curious if there's a meaningful difference in the abilities -- the capabilities to improve for IGE versus focal.

It's a great question. And of course, the underlying electrophysiology is different. So with a focal patient, you have a focal region of bad actor activity that then either causes seizures to propagate or multiple sites that cause seizures to propagate from that original nidus of seizure activity. With regard to generalized seizures, they are such as the name indicates, seizures that happen everywhere all at once and are rapidly propagating all over the brain. And so the ability to recognize those seizures and then tailor both implantation techniques as well as detection parameters and therapy parameters are different. What we have found, and this is what -- it was important in NAUTILUS to learn is that we can, in fact, implant our electrodes in the network, the thalamus, the specific anatomic locations in the thalamus. We can, in fact, detect the seizures. We can, in fact, safely deliver the therapy. And so sometimes people will immediately go to the efficacy results associated with a new indication. That's appropriate. We're also very interested in those things. But one of the things that I think we've shown here with the safety and therapy profile is that you can safely and reproducibly treat idiopathic generalized epilepsy patients with the RNS System. And then one of the other unique aspects of the system is our ability to individually tailor therapy. So we know that we can detect and record and analyze idiopathic generalized epilepsy seizures similarly to the way that we do with focal patients. And then we have the ability to, again, update, adapt and tailor both detection as well as therapy in these patients. And so we expect -- we'll learn about it because our data only goes out as far as our data goes so far. But what we've seen in the 12- and 18-month data and what we've seen in the early 24-month data, we'll see what more we learn. And of course, we would plan to follow these patients longer term in a post-approval environment as well is that we expect that both the tailoring of therapy over time for individualized patients will result in their individual improvement. When they see that improvement, the neuroplasticity and kind of the reverse remodeling of seizure activity would occur similarly in patients' brains who have generalized seizure activity. And then the longer that they're in that state, the more and more they improve. So long way around towards saying we think the fundamental underlying parameters of the therapy and the technology apply to treating idiopathic patients and the improvements that we would expect to see, even though the underlying electrophysiology is different.

Yes. I would encourage everyone to answer that question, if you want to see some data on our website, we posted the latest Investor Relations deck. And Slide 12, 13 and 14 get into some discrete details. And as Joel said, you'll see there in our post-approval study for adult focal epilepsy, the progress we've made in years 1, 2 and 3, and we're showing a 77% median seizure reduction at 18 months with our NAUTILUS for IGE, and that is certainly well above the original adult and then pretty far above the adult focal PAS. So again, look at Slides 12, 13 and 14 and see the real-world data that's out there -- real-world clinical data, sorry, that's out there.

Got it. That's really helpful. And then curious about any updates on the pediatrics NEST collaboration, if we should expect anything in 2026 activity in that space?

We have -- thank you for that question, Eduardo. We are very interested in and focused on the expansion of indications into the pediatric space as well. Now you'll remember that the NAUTILUS study does include pediatric indication age range as well. But what we're really focused on here then when you talk about the NEST interaction is the focal pediatric population. And in that population, the approach that we've taken is we're working with NEST and -- which is an FDA adjacent organization, FDA and then people who have generated real-world evidence for focal pediatric patients to use that real-world evidence to develop a data set that can be submitted on a meta-analysis basis to the agency. We've been doing a lot of work with FDA and NEST and investigators. That work does take some extra time, as you might imagine. When you're doing all of the protocol agreement and data analysis upfront in a retrospective analysis, it takes more time to get that organized and then the actual analysis and review process can go more quickly on the back end versus in a prospective study, you start with the protocol and then you have to actually go do the whole study. And so we're not calling a specific submission time here today. But what I'd tell you is that there's a lot of activity going on there. We're really pleased with the level of engagement. The agency has indicated an interest in working in real-world data scenarios, and we'll keep you updated as that develops.

Got it. And congrats again on the quarter and the year.

Thank you, Eduardo.

[Operator Instructions] There's no further questions. I will turn the call back over to Joel Becker, CEO, for closing remarks.

Thank you all for your time and attention today, and thank you to the team here at NeuroPace. We're really pleased with the results in Q4 and in 2025. We're excited about 2026 and all that is to come in what has the potential to be a transformational year for NeuroPace. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.