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MOUNTAIN VIEW, Calif. - NeuroPace, Inc. (NASDAQ:NPCE), a medical device company specializing in epilepsy treatment whose stock has surged nearly 90% over the past six months according to InvestingPro data, announced today its decision to terminate its distribution agreement for Stereo EEG (SEEG) products by the fourth quarter of 2025. This strategic move is to refocus resources on the RNS System, its core product designed to treat drug-resistant epilepsy.
The company’s CEO, Joel Becker, emphasized the importance of concentrating on the RNS System, which represents a unique opportunity for growth and is expected to become the standard care for drug-resistant epilepsy patients. Becker stated that the decision aligns with the company’s evolved core growth strategy and will enable more efficient development and execution of opportunities.
Despite the planned wind-down of the SEEG distribution, NeuroPace will maintain its 2025 revenue guidance and expects to achieve a cash flow breakeven by the end of 2027, with a continued 20%+ compound annual growth rate (CAGR). The company’s strong financial position is evidenced by its healthy current ratio of 5.37 and impressive gross margin of 73.94%, according to recent financial data from InvestingPro. The company anticipates increased gross margins as the RNS System carries a higher margin compared to SEEG products.
In 2026, NeuroPace foresees significant growth opportunities, including the expansion of Project CARE, potential indication expansion into drug-resistant idiopathic generalized epilepsy and pediatric focal epilepsy, and the launch of AI-enabled software products. These initiatives are not dependent on SEEG products, which cater to a different patient population.
The SEEG market features comparable offerings from various companies, and NeuroPace expressed confidence that customer needs would continue to be met post-distribution agreement termination.
This shift in strategy is part of a broader plan that includes clinical, product, and market development initiatives centered around the RNS System. The company’s statement, based on a press release, assures stakeholders that the operational changes are designed to streamline focus and bolster long-term growth, without altering the previously stated financial projections for 2025. With analyst price targets ranging from $14 to $20 per share and a "Strong Buy" consensus, investors seeking deeper insights can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.
In other recent news, NeuroPace Inc. reported its fourth-quarter 2024 earnings, showcasing a revenue increase of 19% year-over-year, reaching $21.5 million. This figure surpassed both the FactSet consensus of $20.7 million and the company’s own expectations. The revenue growth was driven by strong sales of NeuroPace’s RNS System and DIXI Medical products. Cantor Fitzgerald maintained its Overweight rating on NeuroPace, reaffirming a $20.00 price target, reflecting confidence in the company’s financial health and growth potential.
NeuroPace also announced a successful capital raise during its Investor Day, which will fund a share buyback program aimed at benefiting shareholders and supporting the company’s journey towards positive cash flow. The company confirmed its revenue guidance for fiscal year 2025, projecting a growth rate of 15-20%. Analysts from Stifel and Cantor Fitzgerald anticipate further growth, driven by increased adoption of the RNS System and the potential expansion of Project CARE.
Additionally, NeuroPace is progressing with its NAUTILUS trial, aiming to expand the indication for its RNS System to treat generalized epilepsy. This trial’s successful outcome could open a market opportunity estimated at approximately $900 million. As a U.S.-based business, NeuroPace benefits from reduced exposure to international tariff and supply chain risks, adding a layer of stability to its operations.
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