Good day, everyone, and welcome to the NeurAxis Report Second Quarter 2025 Financial Results. [Operator Instructions] Please note that this conference is being recorded. Now it's my pleasure to turn the call over to Ben Shamsian. Please go ahead.

Thank you. Good morning, everyone. Thank you for joining us for NeurAxis Second Quarter 2025 Financial Results and Corporate Update Conference Call. Joining us on the call today is Brian Carrico, CEO of NeurAxis; and Tim Henrichs, CFO of NeurAxis. At the conclusion of today's prepared remarks, we will open the call to questions. If you are listening through the webcast, you can send in through the portal or simply email me at NRXS@lythampartners.com. [Operator Instructions]. Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd like to call your attention to the customary safe harbor disclosures regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations, and future potential results of NeurAxis. Although management believes these statements are reasonable based on estimates, assumptions, and projections as of today. These statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties, and other factors, including, but not limited to, the factors set forth in the company's filings with the SEC. Neuraxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, now I would like to turn over the event to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Thank you, Ben. Good morning, and thank you for attending the second quarter 2025 earnings call. During today's call, I will highlight the continued execution of our commercialization strategies for IB-Stim, our neuromodulation technology and RED, our product for patients with evacuation disorder. These achievements have set the stage for strong growth in the recent quarters and even stronger growth in 2026 and beyond. We will recap Q2 and discuss the milestones and growth plans for the balance of 2025 as we come off an excellent quarter of both execution and growth. Following my remarks, Tim Henrichs, our CFO, will review our financial results for the second quarter of 2025. I want to begin today by focusing on how our efforts continue to translate to revenue growth and why we continue to be bullish on significant revenue growth as we achieve critical milestones and move closer to national insurance coverage and the effective date for the Category I CPT code. While our revenue growth has accelerated in recent quarters, the facts remain that we are still treating virtually no one within the addressable market because national policy coverage and the Category I CPT code have yet to be put in place. The positive change we do see here is largely due to accounts getting more comfortable with billing and coding, physicians seeing the academic society guidelines stating PENFS is one of only a few therapies with the highest rate evidence, PENFS being the only FDA- approved or cleared treatment recommended in the guidelines and only minimal medical policy coverage taking effect. On average, selling prices for patients receiving IB-Stim through financial assistance are about 65% below our list price. The insurance barrier continues to cause us to leave significant dollars on the table. As insurance coverage increases across the country,…

Thank you, Brian, and let me add my welcome to everyone joining us on this call. These financial results were included within our press release, which was issued earlier and were also provided in more detail within our 10-Q. I will add some color on key areas of the financial results as well as an outlook on certain areas. The second quarter of 2025 marked the fourth straight quarter of double- digit revenue growth year-over-year, and this growth is marginally reflective of the significant milestones that we recently achieved through the FDA indication expansion to functional dyspepsia with nausea, the published NASPGHAN Academic Society guidelines and the release of the proposed Category I CPT code, RVUs, and reimbursement. We are proud of these achievements and our market penetration, albeit small at this point, despite the fact that we are in the early stages of our ramp as we expect the number of covered lives to continue to grow as we approach the new CPT code effective date of January 1. In addition, we continue to be optimistic with the commercialization of RED through our soft launch in 2025. We expect revenues to continue to grow in the second half of the year as new physician offices set up clinics and continue to place orders as they work the device and procedure into their patient workflow. These operational and clinical achievements, coupled with our current revenue growth trend, strong gross margins, and operating expense leverage demonstrate that our goal as a company to reach cash flow breakeven remains achievable. With that, I'll go into the financial highlights in more detail. Revenues in the second quarter of 2025 were $894,000, up 46% compared to $612,000 in the second quarter of 2024. Revenue for the 6 months ended June 30, 2025, increased $531,000…

Thank you, Tim. To summarize, while we have recently achieved several critical milestones, we are still in the very early stages of what we expect to be substantial top and bottom line growth over the coming quarters. Our disciplined execution of the commercialization strategy is starting to deliver tangible results as evidenced by the accelerating growth in the past quarters. We are also strengthening the foundation for future expansion, highlighted by the Category I CPT code, expanded indications and RVU assignment and values to reimbursement. With that, operator, we'd be happy to take any questions. [Operator Instructions]

One moment for our first question please. It comes from the line of Chase Knickerbocker with CHLM.

Congrats on the quarter. So maybe just first, Brian, could you share any kind of perceptions that have come across in conversations with any of these larger insurance plans that you've been talking to post guideline publishing as far as their perceptions on the guidelines and kind of how they're thinking about it? And if you don't have that kind of direct feedback, anything that you think is worthwhile sharing as far as what the perceptions of the guidelines may be from those key stakeholders?

Yes, Chase, I would say that over the last 2 to 3 years, we have built a good relationship from a response standpoint with the majority of the 12 payers that we're still -- that we believe are priorities. And since we've released the guidelines, I believe we've gotten response from all 12. And the responses have been, I would say, faster than normal. And the fact that -- the example I gave on the call, one payer has agreed to do an interim review due to the guidelines. We take that as positive. I would say -- I believe we have 17 insurance plans nationally at this point. And I don't -- and I would say not one of them has tipped their hand ahead of time before they told us they had coverage. So I -- full transparency, I would just say the responsiveness to the e- mails and the guidelines and as quickly as they responded was very favorable. And I can't go into any more detail, but two or three payers have expressed -- we had very favorable responses and likelihood for coverage in this fall is very good. So overall, it's positive. But again, this is the one thing, again, we can't control is how quickly payers write policy covered. Do they wait until their annual review or do they do an interim review? Again, there are 12 primary payers that account for roughly 175 million to 185 million covered lives. And those 12 payers are our primary focus. So there's been nothing negative, I would say that part. There's been no negative response that this -- we need something else or this didn't meet the criteria, et cetera. So Chase, I'm not sure if that answers your question. But...

No, it does, Brian. Maybe just kind of off that, do you have any goals as far as kind of how you hope to have that coverage come in as far as what it looks like from a prior authorization perspective, any sort of steps, that sort of thing as far as kind of what your expectations are now, obviously, post you guys seeing the guidelines, speaking with physicians and having some at least interim kind of interaction with some of these plans?

Well, as you may -- as some of the callers may or may not know, the expect -- based on previous plans, some plans -- most plans require a prior authorization, but some plans don't. Most plans require a step therapy. They require the patients to fail one or more medications, and we have a couple of plans that don't require that. Our expectation after the guidelines, which clearly show the medications have low to no evidence, and PENFS has the evidence that it does, our expectation is that those medication requirements are removed. I believe that is going to be a longer process. I don't think that's going to happen in every policy initially. I think that's a longer process. And the push from the academic society and the physicians are that IB-Stim is used earlier in the treatment cycle as early as first line. I know in many children's hospitals, it's offered first line along with other treatment options, which is a significant advancement from where we were years ago and even a year ago. So the guidelines have been extremely helpful from that standpoint. I think our expectation from the payers is that first write policy coverage, and we're asking and requesting to have the medications removed as a first-line treatment. If it's any constellation, I would say that most patients by the time they've gotten to a pediatric gastroenterologists have tried a medication. And if they haven't, they oftentimes try them very quickly. And as we all know, they oftentimes don't work, and therefore, we can move quickly to IB-Stim. Would we like to see it removed? Absolutely. From an evidence standpoint, should it be removed? Absolutely. Do I think it's going to be a process and some will remove it and some won't until later? Absolutely.

Got it. And maybe just on the sales force. I mean, if we think about kind of the next kind of stage of growth and kind of preparing for that with some sales force expansion, is the trigger for something like that, a larger coverage policy coming in? Or maybe talk about kind of how you see the ramping of the business as far as kind of the trigger for the sales force expansion?

Well, I would tell you that the urgency on the payer policy side is met in parallel with the urgency on the commercial side. And on the commercial side, as you know, Chase, many may know, we've had these relationships for 4, 5, 6 years and the academic and the bias in these physicians is high. So yes, we plan to expand the sales force as we get larger insurance policy coverages. But having that said, many children's hospitals today don't allow lunches, dinners, et cetera. So most of the work is done currently through Zoom, phone calls, academic meetings, et cetera. Our focus between now and January 1 and ongoing, more so than ever before is a 4- or 5-pronged approach from a newly hired and very talented marketing director that came from the med tech space from a company that was acquired by Stryker. And she's implementing again this 4- or 5-pronged approach that includes many avenues, including key opinion leaders speaking around the country at division meetings, at dinners to bring physicians completely up to speed, not just the physicians that see these patients every day, but the entire division. And it's important that we have such a strong presence around the country because treating one or two patients per day or per week is much different than treating multiple patients per day or 10 patients per week. So it's not just getting the IB-Stim into the program from a marketing standpoint, but it's making sure that these children's hospitals in these programs have what we can look to be called disorders of the gut-brain interaction or DGBI clinic days or IB-Stim clinic days. The most successful programs in the country have IB-Stim clinic mornings or days, whereas they have 8 or 10 or 12 or 16 slots per day, and they know the week before that when a patient comes in, they have those slots that can be filled with patients in need. And I say that's important because if we have policy coverage and we don't have slots available, we know there are significant wait times in children's hospitals. So that would present a capacity issue. So the commercialization side of this and the marketing side is not just bringing this product in and bringing it -- but making sure it's top of mind and the utilization is critical. So as important as the sales force is, I would tell you today that the marketing side of this and being top of mind and creating an IB-Stim clinic day or multiple IB-Stim clinic days within a practice depending on how many physicians they have is equally important. So we're putting significant dollars right now into the marketing side, into the key opinion leaders and the speaking series that we're launching in early January. And again, 4 or 5 other levers around that through the academic society to make sure that this technology is top of mind based on the evidence that's been published.

Our next question comes from Lindsay Leeds with Microcap Opportunities.

Congratulations on the milestones you achieved in Q2. I wanted to ask about -- I thought I heard that there was a 65% discount rate on most of the devices you're selling today as well as about 70% of them were not being covered by insurance. I wondered if you could talk a little bit more about that, the devices that are being paid for today, are they mostly cash pay? That's all.

Yes. So let me break that down. This could be very confusing if I don't go from macro to micro. So from a macro level right now, our prior authorization team, if they received 100 patients 70 of those off the top are -- get a no off required, which means they don't have the ability to be treated unless they pay full cash pay of $2,900, which is the cash pay price if no insurance is utilized and that doesn't happen very often because patients want to utilize their health insurance. So 70% of patients off the top as a general rule, can't be treated because there's a no off required. Of those patients remaining, it's about a 50-50 full approval versus patient assistance program. And Tim can speak to this later, but I think it's roughly 50-50. It might even be 55-45. But let's just call it for safe math, 50-50 patients getting full price versus patients that are not getting approved. So they do a prior authorization, they're not approved and they go through the patient assistance program. So now we have the 30 patients that are there, 15 of those are getting full price at $1,195 and the other 15 are based on a patient assistance program that requires federal guidelines around family household size, family household income. And those patients are paying an average of 65% below $1,195. So when you mix that, I don't know the exact number, Tim probably knows today, but around $850 ASP. So you take the $1,195 and then you take the roughly $400 and we get about $850 or something like that. So that's where we are today. Now another stat for you is that of the patients that go through the prior authorization process, I know I just broke down 15 and 15 of the 30 left, but so many of our bigger accounts are doing their own prior authorizations. And I can just tell you our prior authorization team right now because of the Category I code, we were about a 9% approval rate. So 70% are going to be denied immediately. And then of the 30% remaining, 20% of those are denied. So we've got about a 9% approval rate on prior authorizations right now. And that's been consistent dating back to the beginning of the prior authorization team. A significant portion of that, we expect, we're cautiously optimistic will be removed by the category code and the remaining barrier there will be eliminated with positive policy coverage from the payers. I hope I simplified that as much as possible, but I'm happy to take additional questions around that.

That was a great explanation. So let's say there's not coverage for the device today with an insurer, is there any recourse at all?

You mean recourse for the patient or for the payer?

Well, can the patient ask for the device to be approved even though there's not blanket coverage with an insurer?

Yes. So when a patient gets -- when the patient does a prior authorization, whether it be through the children's hospital or through our prior authorization team, there's 1 of 3 responses: approved, denied, or no auth required. If it's no auth required, they -- that's it. They're done. They can essentially either not be treated or they can choose cash pay, which is $2,900. If there's a denial, then they can do an appeal. There can be an appeal done. And then again, at that point, it's either approved or denied. And then obviously, if there's an approval, then the children's hospital orders from us, we ship the product, the patient is treated. The children's hospital bills the insurance company. The insurance company reimburses the hospital based on the contract that lies in place between the children's hospital and the payer, which we don't have access to nor would we ever need access to that.

Are -- is there any movement with you getting approval for adults to use the IB-Stim device?

Yes, that's in our pipeline. We've submitted that to the FDA, and we're in conversations with the FDA. And I think it's likely that we'll have an answer by the Q4 call, one way or the other on the response from the FDA.

I will pass it back to Ben to check for web questions.

We have some questions that were sent in to us. Let's -- the questions are regarding RVUs and reimbursements. Are you satisfied with the recommendation? And how do you see the reimbursements moving forward now that you have the academic society guidelines?

Yes. We're -- first of all, we're -- as I mentioned on the call, we're the only FDA-approved or cleared treatment in the guidelines. Look, it's why the guidelines are so important to payers. Guidelines are written by an academic society. They're never going to sound like someone wants them to sound, but we're the only recommended, approved, or cleared treatment in the guidelines. So we're happy with these. And as I mentioned to Chase earlier, these -- the response has been positive. The timeliness of the response from the payers have been positive. From a timing standpoint, we're pushing as hard as possible for interim reviews with those. Regarding the RVUs and reimbursement, we're very happy with those. The RVU came in at 1.46. I won't get into the weeds on what that means from a time standpoint, but I will tell you that for an IB-Stim placement versus an endoscopy or a new patient or a follow-up visit, it's very good. We were going to be pleased with anything over 1. So to get 1.46 is very good. And then the reimbursement values, the actual financial dollar amounts, I will just say that the Medicare, Medicaid rate came in in the Site 11 office higher than the cost of the device. That's very good news. Obviously, that's very good news. The children's hospitals are and we believe will continue to be very pleased with that number. So again, everything -- and I would say if we weren't thrilled with it, but we are.

Okay. We have a question for you, Tim. Can you talk about the G&A line this quarter, but also in general expenses and leverage going forward?

Yes, of course. In the second quarter of 2025, and I commented on this a bit in my prepared remarks, we have demonstrated our ability not only to grow the top line but achieve operating expense leverage at the same time. Post IPO, as a company, we were engaged with certain third-party service providers that contributed to a higher cost structure. And then what we did is we hired dedicated employees to deliver those services better and at a cheaper cost. In addition, we also successfully negotiated with some of our existing vendors and providers to reduce costs for similar or even better services in some cases that roll up within our SG&A. And I do expect similar operating expense leverage in the second half of 2025 as we continue to analyze -- or sorry, annualize our cost savings efforts. However, I will emphasize that we will continue to increase spending in certain areas to support growth. For example, sales headcount, as Chase mentioned earlier, advertising and research and development because we expect to get a return on that spend, and we will continue to grow those dollars while we focus on other general and administrative costs that will not impact the time line just to facilitate our ability to maneuver to profitability and cash flow breakeven. So we're not going to do anything to sacrifice top line growth, and we will spend in certain categories, continue to spend to make sure that we grow the business.

Okay. Great. We have a question for Brian. Can you speak about your second indication, functional dyspepsia? How will you leverage the investments you have already made for IBS to go to market on the new indication?

Yes. Part of as I mentioned earlier, this is nearly doubles our market opportunity. There are drugs that have shown some benefit, albeit off-label and harmful to children for functional abdominal pain for functional dyspepsia and nausea symptoms, there really is not much of anything. So we're thrilled that these patients are -- I would almost say they're more in need than the functional abdominal pain patients, if that's possible. Same sales force, same children's hospital call point, same PGI call point, the same physicians that are seeing the FAP patients are seeing these functional dyspepsia patients. And -- so no, we're very happy with this. Same sales force, and it's the same CPT code. And it's -- the functional dyspepsia is already listed, I believe, in all of our -- the policies that we have that are positive. I believe all 17. Don't quote me, but I think, if not all 17, 15 or 16 of those have functional dyspepsia as a covered benefit within those policies. So this is wind in the sales.

Got it. And our last question is for you, Tim. Can you speak about your current cash balance? And where do you see that taking you?

Sure. Again, in my prepared remarks, I talked about this a little bit, but just to expand on it, in the second quarter here, we actually were able to take advantage of investor sentiment support our long-term growth prospects as the FDA approved our IB-Stim device for treatment of periodic functional abdominal pain associated with functional dyspepsia, which significantly expanded our total addressable market. And so in May, as a result of that, we were able to raise $5 million through a registered direct offering via our shelf registration statement to existing and new institutional investors. And we were also able to raise another $1 million through the exercise of common stock warrants. Our current cash position at June 30 was $6 million, which gives us enough liquidity into the first half of 2026 based on our current cash burn rate. However, better expected coverage by insurance carriers as we move over the next 6 to 12 months based on our Category I CPT code going effective on January 1 and continued operating expense leverage could positively extend our liquidity position later into 2026. But we were able and pleased to be able to take advantage of a liquidity opportunity here in the second quarter, and we believe that we're pretty short up for the next [ quarter ].

And at this point, there is no more questions in the queue. I would like to turn the call over to Brian Carrico for closing remarks.

Thank you. I don't have anything else. I hope everyone had a nice summer. Has a nice fall, and I look forward to anyone that has additional questions, reaching out through Ben Shamsian to set up a call. And otherwise, we'll talk to everyone in about 90 days. Thank you.

And with that, ladies and gentlemen, we conclude our program for today. Thank you all for participating, and you may now disconnect.