Earnings call transcript: ElectroCore Q4 2024 sees revenue rise, stock dips

ElectroCore (NASDAQ: ECOR) reported a significant revenue increase for the full year 2024, but its stock saw a decline in aftermarket trading. The company achieved a 57% year-over-year revenue growth, reaching $25.2 million, continuing its strong growth trajectory evidenced by a 74.1% revenue increase in the last twelve months. Despite this positive performance, the stock fell 3.85% in aftermarket trading, reflecting investor concerns over future guidance and strategic challenges. According to InvestingPro analysis, the company’s current market capitalization stands at $86.8 million.

Key Takeaways

• ElectroCore’s revenue grew by 57% year-over-year to $25.2 million.
• The gross margin improved to 85%, up from 83% in 2023.
• The company’s stock dropped 3.85% in aftermarket trading.
• The company launched the Truvega wellness product line and acquired NeuroMetrix.
• ElectroCore is expanding its presence in the U.S. chronic pain and wellness markets.

Company Performance

ElectroCore demonstrated robust growth in 2024 with a 57% increase in revenue and improvements in its gross margin, which rose to 85%. The company’s current gross margin stands at 83.32%, according to InvestingPro data, while maintaining a healthy current ratio of 2.12, indicating strong short-term liquidity. The company also reduced its net loss by 37% to $11.9 million, indicating better cost management and operational efficiency. This performance is noteworthy as it comes amid the company’s strategic initiatives, including the launch of new products and the acquisition of NeuroMetrix.

Financial Highlights

• Revenue: $25.2 million, a 57% increase from 2023.
• Gross Margin: 85%, up from 83% in 2023.
• Net Loss: $11.9 million, a 37% improvement from 2023.
• Cash and Equivalents: $12.2 million, up from $10.6 million in 2023.
• Cash Used in Operations: $7 million, a 53% reduction from 2023.

Market Reaction

Following the earnings announcement, ElectroCore’s stock fell by 3.85% in aftermarket trading. This decline suggests investor apprehension regarding the company’s future guidance and the integration of its recent acquisition. While the stock’s current price of $13 represents a remarkable 122% gain over the past six months, InvestingPro analysis indicates the stock may be undervalued based on its Fair Value calculations. The stock has shown significant volatility, with a 15% decline in the past week despite maintaining a strong 109% return over the last year.

Want deeper insights? InvestingPro subscribers have access to 10 additional exclusive ProTips and comprehensive financial analysis for ECOR.

Outlook & Guidance

ElectroCore did not provide specific guidance for 2025, largely due to the pending acquisition of NeuroMetrix. However, the company is optimistic about the continued growth of its prescription gammaCore sales and the potential expansion of the Truvega product line into international markets such as Canada and the UK. InvestingPro data shows analyst targets ranging from $20 to $29 per share, suggesting potential upside opportunities. Get exclusive access to detailed financial analysis and the comprehensive Pro Research Report covering ECOR and 1,400+ other US stocks through InvestingPro.

Executive Commentary

CEO Dan Goldberger expressed confidence in the company’s growth trajectory, stating, "We are building the infrastructure... we can build a very large business here around non-invasive nerve stimulation." He highlighted the company’s leadership in non-invasive vagus nerve stimulation and its strategic focus on the expanding wellness market.

Risks and Challenges

• Integration of NeuroMetrix: The successful integration of this acquisition is crucial for ElectroCore’s future growth.
• Market Competition: The company faces significant competition in the wellness and chronic pain markets.
• Regulatory Environment: Changes in healthcare regulations could impact product approval and market access.
• Economic Conditions: Economic downturns could affect consumer spending on wellness products.
• Dependency on U.S. Market: A significant portion of revenue is tied to the U.S., exposing the company to domestic market fluctuations.

Q&A

During the earnings call, analysts inquired about the strategy behind the NeuroMetrix acquisition and the slow progress in the Kaiser sales channel. Concerns were also raised about personnel reductions in the VA system, a key client for ElectroCore. The company addressed these issues by emphasizing its focus on expanding sales channels and exploring new product indications.

Full transcript - Electrocore LLC (ECOR) Q4 2024:

Recording Technician: Recording in progress.

Call Moderator: And welcome to the ElectriCore Fourth Quarter and Full Year twenty twenty four Earnings Conference Call. As part of our ongoing efforts to reduce costs and drive profitability, management has opted to host this earnings call on Zoom rather than using a more costly service provider. This will be our first time hosting the call independently, so we appreciate your patience as we work through any potential technical issues. At this time, all participants have been placed in a listen only mode. Please make sure to mute yourself.

A question and answer session will follow the formal presentation and instructions for participants that are logged in to the online webinar will be provided after management’s prepared remarks. As a reminder, this conference call is being recorded. It is now my pleasure to introduce your host, Dan Goldberger, ElectroCore’s Chief Executive Officer.

Dan Goldberger, Chief Executive Officer, ElectroCore: Thank you all for participating in today’s electroCore earnings call. Joining me today is Josh Lev, our Chief Financial Officer and our Investor Relations firm, FNKIR. Earlier today, ElectroCore published results for the fourth quarter and full year ended 12/31/2024. A copy of the press release is available on the Company’s website. I apologize for the late start this afternoon.

We are in Washington for meetings at the FDA this week. Before we begin, I’d like to remind you that management will make statements during the call that include forward looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward looking statements. All forward looking statements, including without limitation any guidance, outlook or future financial expectations or operational activities and performance, are based upon the company’s current estimates and various assumptions. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward looking statements.

Accordingly, you should not place undue reliance on these statements. For a list of the risks and uncertainties associated with the company’s business, please see the company’s filings with the Securities and Exchange Commission. Ovelectra Court disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward looking statements, whether because of new information, future events or otherwise. This conference call contains time sensitive information that is accurate only as of the live broadcast today, 03/12/2025. For those of you who may be new to our company, ElectroCore was founded in 02/2005 to commercialize the use of our proprietary non invasive vagus nerve stimulation for medical and general wellness applications.

The vagus nerve is the longest cranial nerve in the body, bringing information from the visceral organs to the brain. Stimulating the vagus nerve affects many important autonomic functions in the brain and in the body, including neurotransmitter levels, inflammation levels and metabolism. Surgically implanted vagus nerve stimulators have been available from other companies for more than forty years for chronic conditions like epilepsy and depression. So a large and growing database confirms the safety and efficacy of the technique. Building on that science, electroCore pioneered non invasive vagus nerve stimulation and our products are now available by prescription for certain headache conditions and without a prescription for general wellness and human performance.

Our pipeline of possible indications and products continues to grow as clinicians, researchers and wellness advocates conduct investigator initiated trials to advance the benefits of non invasive vagus nerve stimulation. We demonstrated rapid growth for several years, resulting in a five year compound annual growth rate of approximately 60%. Revenue for 2024 was $25,200,000 up 57%. In the fourth quarter, we recorded revenue of $7,000,000 our ninth consecutive record revenue quarter and a 36% increase over the fourth quarter of the prior year. Total revenue excluding TaxDIM increased by 68% for the year and increased 44% in the fourth quarter.

Full year gross margins were 85% as compared to 83% last year and we narrowed our net loss by 37% for the year. We expect our gross margins to remain in the mid-80s in spite of the trade policies currently being implemented by the new administration. Our supply chain does not currently involve geographies subject to the recent tariff news and we continue to work on mitigating any impact on our supply chain. We’re making progress towards positive cash flow from operations and GAAP profitability as revenue increases, gross margins hold steady and we maintain discipline around operating Josh will discuss the financials in more detail later in the call. We launched our U.

S. Prescription headache business in 2017, selling primarily to specialty pharmacies. Since then, our prescription headache business has grown worldwide, including sales that are covered by national health systems such as the VA hospital system in The United States and the National Health Service or NHS in The United Kingdom, cash pay sales through prescriber professional channels and through certain managed care systems in The United States. We currently have about 30,000,000 covered lives in The U. S.

And we look forward to creating more access in the future. Cash pay patients can often use their HSA FSA accounts if they do not currently have insurance benefits. We launched two new non prescription general wellness product lines in 2023. Truvega is a direct to consumer health and wellness brand and TaxDym is directed towards human performance for active duty military personnel. The VA hospital system continues to be our largest customer.

GammaCore prescription therapy is free to patients covered by Veterans Administration benefits, representing about 9,100,000 covered lives across approximately 1,300 healthcare facilities. Sales in the VA channel grew 85% to $17,800,000 in the full year ended December 2024 from $9,600,000 in 2023. Sales in the VA channel grew 47% to 4,600,000 in the fourth quarter of twenty twenty four from $3,100,000 during the fourth quarter of twenty twenty three. ’1 hundred and ’70 VA facilities have purchased prescription gammaCore products through 12/31/2024, as compared to 147 through 12/31/2023. The VA Hospital Administration Headache Centers of Excellence estimates approximately six hundred thousand patients are being treated for headache in the VA hospital system, including approximately twenty four thousand cluster headache patients.

We continue to make our therapy available either through our federal supply schedule contract or via our distribution partnership with Lovell Government Services. Since 2022, we’ve dispensed gammaCore devices to approximately 8,500 veterans, leveraging these contracting mechanisms, representing approximately one point five percent of the total addressable headache market within the VA system. Truvega is positioned as a direct to consumer general wellness product for stress, relaxation, quality of sleep and mental acuity. For the year ended December 2024, Truvega net sales were $2,800,000 a 174% increase over 2023. In the fourth quarter of twenty twenty four, Truvega net sales were approximately $1,200,000 a 271% increase from the fourth quarter of twenty twenty three.

Our revenue return on advertising spend was approximately 2.7 for the full year 2024 and 02/1999 for the fourth quarter of twenty twenty four. In other words, during 2024, for every $1 we spent on media, we generated $2.7 of revenue. Our fourth quarter metric of $2.99 increased in part because of seasonal purchases associated with the holidays. Truvega return rates remain steady at approximately 11% to 12% of shipments for the full year and fourth quarter twenty twenty four. Since launching Truvega, we sold more than 11,500 handsets and customers have conducted approximately 500,000 sessions using the mobile app.

We believe that the Truvega business will continue to scale if we can maintain or improve these metrics. Most of our Truvega revenue comes through our e commerce platform, www.truvega.com. Following the successful launch of Truvega Plus in April 2024, we began exploring additional channels to reach consumers, including influencers, affiliates and resellers. Earlier this year, we launched on the PerksWork platform, which boasts 30,000,000 users globally across 90,000 companies, representing 70% of the Fortune 1,000. In February 2025, we launched Truvega Plus on Amazon.

For the full year ended 12/31/2024, we recorded $1,200,000 of TaxSim sales as compared to $1,700,000 during the same period last year. TaxSim for human performance is being sold to selected Air Force and Army Special Forces units for accelerated training, sustained attention, reduced fatigue and improved mood as defined by the Air Force Research Laboratory or AFRL. We have a growing sales funnel for TaxSim, but the DoD acquisition process is okay and lengthy. Revenue from this product line will be hard to predict as active duty units purchase in bulk for pilot deployment. Our U.

S. Prescription gammaCore channel recorded revenue of $1,500,000 during the full year 2024, down 15% from 2023. There were 2,600 cumulative revenue generating cash paid prescribers as of 12/31/2024, up from $18.40 on 12/31/2023. As expected, some of these customers have migrated to the Truvega brand as awareness grows and we continue modeling flat revenue from this category for the time being. ’92 new Truvega Plus Partners, including 32 GammaCord customers, have added the Truvega product line to their accounts.

Last year, we announced a distribution agreement with Jerns Healthcare LLC that gives us access to a certain managed care health system. Approximately 30 prescribers have written gammaCore in this channel and we are now processing one or two prescriptions per month. I remain optimistic that we are slowly gaining awareness and traction and adoption will come over time. Revenue from channels outside The United States of $1,900,000 for the full year ended 12/31/2024, were flat as compared to $1,800,000 for the full year ended 12/31/2023. Most of our OUS revenue continues to be generated by The United Kingdom, by prescription gammaCore sales funded by NHS and we modeled flat revenue from this category for the time being.

Now, I’ll turn to our business development activities. In December 2024, we announced that ElectroCore has entered into definitive agreement to acquire NeuroMetrix, giving us access to the Quell platform and accelerating our mission to become the clear leader in the bioelectronic health and wellness sector. The markets we are pursuing are massive. U. S.

Consumers spend nearly $20,000,000,000 annually out of pocket for chronic pain treatments. It’s estimated that approximately six percent of U. S. Adults suffer from fibromyalgia and there are few credible treatment options available today. The acquisition is on track to close in the second quarter of twenty twenty five.

NeuroMetrix is a publicly traded company on NASDAQ under the ticker NURO. Neuro is a commercial stage non invasive bioelectronic health and wellness company with two product categories: Quell, a wearable app and cloud enabled neuromodulation platform that is indicated for the treatment of fibromyalgia symptoms known as Quell fibromyalgia and lower extremity chronic pain, Quell two point zero and separately the DPN check, a point of care screening test for peripheral neuropathy. Our focus for this transaction is to accelerate the commercialization of the prescription Quell fibromyalgia product through our existing sales channels, especially the VA hospital system in The United States. In addition, we believe there are future opportunities to leverage and expand the Quell mobile application and Health Cloud platform for existing and future electroCore products. The combination of gammaCore and Quell fibromyalgia creates a diversified advanced portfolio of prescription products for non invasive and non pharmaceutical treatment treatment of chronic pain.

In the future, QLL two point zero for lower extremity pain may be added to our non prescription direct to consumer brands. This acquisition may enhance our ability to become the clear leader in the bioelectronic health and wellness sector. Qual Fibromyalgia is a prescription non invasive neurostimulation device similar approach to electroCore’s product suite. Qual Fibromyalgia is FDA authorized, covered by 27 issued U. S.

Utility patents and NeuroMetrix invested more than ten years and tens of millions of dollars in clinical work and product development. Core Fibromyalgia provides flexible, precise, high power neurostimulation in a form factor the size of a credit card. We’re excited about the acquisition of Neurometrics and are confident that we can leverage our established distribution channels, especially the VA hospital system to accelerate adoption of the Quell Fibromyalgia solution. More information about NeuroMetrix can be found at www.neurometrix.com. On 02/27/2025 and subsequent to the end of the fourth quarter, we we announced the distribution agreement with Spark Biomedical giving us access to the Spero Ascent product line, an FDA cleared non invasive transcutaneous auricular neuromodulation device available by prescription for the treatment of opioid withdrawal symptoms.

We plan to offer Spero in a limited number of VA hospital sites beginning in the second quarter of twenty twenty five. If successful, we hope to expand distribution later this year. We believe the total addressable market in The United States for Spero is $2,400,000,000 associated with opioid detox and another $3,700,000,000 in relapse prevention. More information on Spark Biomedical can be found at www.sparkbiomedical.com. Before I hand the call over to Josh for a review of our financials, I’d like to take this opportunity to thank Doctor.

Charles Theophilus for his long time support of Electrocorp. On 02/28/2025, we announced the resignation of Doctor. Theophilus from our Board of Directors. As a founder and patient investor of Electricor, we deeply appreciate his support for the company and wish him all the best. Now, I’ll turn the call over to Josh for a review of our financials.

Josh? Thank you, Dan. Net sales for the year ended twenty twenty four were $25,200,000 an increase of 57% as compared to $16,000,000 for the full year ended 2023. The increase of $9,200,000 is due to an increase in net sales across our prescription gammaCore medical devices sold to the VA and revenue from the sales of our non prescription general wellness Truvega brand. Gross profit for the full year of 2024 was $21,400,000 as compared to $13,200,000 for the full year of 2023.

The increase in gross profit was primarily driven by the increase in net sales. Gross margin was 85% for the full year of 2024 as compared to 83% in the full year of 2023. Total operating expenses in the full year of 2024 were approximately $33,600,000 as compared to $32,500,000 in the full year of 2023. Research and development expense in the full year of 2024 was $2,400,000 as compared to $5,300,000 in the full year of 2023. This decrease was primarily due to a significant reduction in investments associated with the development of Truvega Plus.

Selling, general and administrative expense in the full year of 2024 was $31,200,000 as compared to $27,200,000 in the full year of 2023. This increase was primarily due to greater variable sales and marketing expenses consistent with an increase in sales. In 2025, we plan on continuing to make targeted investments in sales and marketing to support our commercial efforts, supporting all major U. S. Channels.

GAAP net loss in the full year of 2024 was $11,900,000 compared to $18,800,000 in the full year of 2023. This significant improvement was primarily due to the increase in net sales of $9,200,000 for the full year of 2024 as compared to the same time period in 2023. Net loss per share for the full year of 2024 was $1.59 as compared to $3.42 net loss per share in the full year of 2023. Adjusted EBITDA net loss in the full year of 2024 was $9,000,000 as compared to adjusted EBITDA net loss of $15,400,000 in the full year of 2023. These improved results are also primarily due to increase in 2024 net sales and gross profits as compared to the same period in 2023.

A reconciliation of GAAP net loss to non GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today’s press release. Cash, cash equivalents, marketable securities and restricted cash at 12/31/2024, totaled approximately $12,200,000 as compared to approximately $10,600,000 as of 12/31/2023. Net cash used in operating activities for the full year 2024 were $7,000,000 a 53% reduction from $14,700,000 for the full year of 2023. And now, I’ll turn the call back to Dan. Thank you, Josh.

I’m excited about the opportunities ahead. Our revenue continues to grow in our core business lines, including prescription products sold to the VA and health and wellness products sold to consumers. Our operating metrics show continued leverage and I’m optimistic about the company’s long term prospects, both for the brands we developed and those that align with our prescription gammaCore therapy in the VA channel continues to grow based on clinical performance and our increased presence in the field. Our FSS contract has been extended to 06/14/2025, and we continue working with our VA contract specialist to secure a new follow on contract. We rely on our field sales organization to drive revenue growth in the VA hospital and other prescription and B2B channels.

Revenue growth scales with additional headcount in that sales function. As of January 2025, we have 48 active ten ninety nine entities representing about 80 sales agents including sub reps. That team is managed by eight territory business managers who are salaried employees. Our ten ninety nine team grew rapidly from 34 groups in January 2024 to 48 groups in July 2024, but the total number of active groups has remained constant since then. Revenue growth rate has slowed somewhat since the number of ten ninety nine groups leveled off.

We expect the size of our team to grow in the second half of twenty twenty five as we balance investments in future growth with the path to profitability. The VA healthcare system is the nation’s largest healthcare system with an annual budget of $68,000,000,000 and employing more than 371,000 healthcare professionals, many of whom have been affected by macro forces. We are aware of ongoing disruptions at many of our VA hospital customers secondary to those macro forces. We have not seen any direct effect on the cadence of our business, but the distractions cannot be ignored. That said, it’s important to note that our gammaCore therapy continues to provide therapeutic benefits at a much lower cost compared to other migraine products available through the VA.

In addition, we do not burden the VA or other providers with significant administrative requirements as our solution is not a drug. Accordingly, we’re confident that gammaCore represents a fiscally attractive solution for the VA that is well aligned with their overall cost cutting goals. Truvega Plus has been favorably received by the market since its April 2024 launch. The brand continues to show tons of potential as a direct to consumer general wellness offering. We sell Truvega products direct to consumer through our e commerce site, www.truvega.com and amazon.com.

Truvega is also available through a small but growing number of business to business consumer initiatives such as Perks at Work and through a handful of resellers. We continue exploring the expansion of the Truvega proposition through new product offerings and new channel. The pipeline of interest from different branches of our active duty military continues to develop for our TaxDIM products. Tacxin revenue will continue to be hard to predict as active duty units evaluate and purchase in bulk for pilot deployment. Longer term, we believe that there may be civilian crossover as first responders, elite athletes, transportation workers, traders and e gamers become aware of the human performance benefits published so far.

Last week, the Vagus Nerve Society hosted a webinar entitled VNS as a Tool to Improve Focus, Energy and Readiness in Today’s Warfighter. It was presented by Richard McKinley, PhD of the seven hundred and eleventh Human Performance Wing of the Air Force Research Laboratory. If you missed it, our recording is available at the Vagus Nerve Society’s website, www.vnsociety.org. For the full year 2024, our sales and marketing expense increased by approximately $3,100,000 while sales grew by $9,200,000 In 2024, we began to see most of the top line revenue growth dropping to the bottom line as our net loss declined during the same period by 6,900,000 demonstrating increasing leverage in the P and L. Further out, we’re working towards adding new products to our established sales channels.

The acquisition of NeuroMetrix and the distribution agreement with Spark Biomedical will provide patients and prescribers with more non invasive therapies for chronic pain and opioid withdrawal issues respectively. These products along with the gammaCore and Relatex products that we currently sell into the prescription via channel allow our field sales team to offer a growing suite of bioelectronic self administered therapies for certain debilitating conditions. As we continue to build out our strategy of adding products to our established channels, we will also continue working towards additional indications for prescription gammaCore to treat post traumatic stress disorder and other clinical opportunities. We had $12,200,000 of cash to equivalents at 12/31/2024, and we will maintain discipline around fixed operating expenses. We expect that commissions and media spend will continue to scale with revenues and remodel approximately 30% of related sales on a blended basis.

Therefore, we expect that our cash used in operations and adjusted EBITDA loss will continue to decline sequentially as revenue increases. Our business is growing nicely, but we are refraining from providing guidance for 2025 pending the close of the previously announced acquisition of Neurometrics. In summary, I believe the business is demonstrating operating leverage and we will have a variety of strategic levers to pull to continue growing the business. At this time, I’ll turn the call over to the operator. Operator, please open the line for questions.

Call Moderator: Thank you, Dan. We’re now going to open up the Q and A session. To ask a question, online participants can click the raise your hand icon, which you will find at the bottom of your Zoom screen. Raising your hand will alert us that you want to be called on to ask a live question. You’ll be placed into queue and called on.

Just note, you’ll be on mute until you are called on, so just wait for your prompt before speaking. The second way to participate in Q and A is to use the Q and A widget, which will allow you to type in and text the question in. We will take questions from there as well, but just note if we run into a time constraint, someone from the IR team will get back to you if your question is not asked on today’s call. With that, we will now begin and pause for a moment to build the queue. The first question will come from Anthony Vendetti.

Anthony, we’re just working to unmute your line.

Anthony Vendetti, Analyst: Okay. Can you hear me now?

Call Moderator: We can hear you.

Anthony Vendetti, Analyst: Okay. Excellent. So Dan, just on the NeuroMetrix acquisition, once that’s complete, how do you intend to sell the Quell product? Are you going to put it into your existing sales channels? Do you have a plan on how you’re going to price it, sell it?

Maybe just give us a broad outline of the plans going forward.

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. Thanks, Anthony. Good question. So we got to close the transaction and then take a hard look. But Quell fibromyalgia is currently available in, I believe, roughly 20 VA hospitals through open market access.

It’s not on contract. And so step one after the closing the acquisition is to add the product to our FSS contract and through our relationship with Level Government Services to add it to the ECAT and a variety of other contracting mechanisms that will help streamline the process. We did a preliminary training of our sales team last month, but we’ll do a more in-depth training of our sales team and in parallel of our customer service team and our medical affairs teams shortly after closing and then cut them loose to go call on the 150, one hundred and 60 VA hospitals, which are currently customers. It will take a little bit longer for us to get on contract. So, I’m very optimistic that the second quarter, depending on the timing of closing, is hard to predict.

But as we get into the second half of the year, that sales channel for the VA hospitals is going to work smoothly like it does for gammaCore. Longer term, bringing QoFibromyalgia to our Jern’s relationship with Kaiser, bringing it to some of our commercial accounts, getting on contract with other third party payers is all very exciting. And in parallel, in 2026, we want to look at taking the over the counter indication for lower extremity pain into some of our e commerce channels. But, that’s more of a 2026

Call Moderator: opportunity. Our next question will come from RK from H. C. Wainwright.

Dan Goldberger, Chief Executive Officer, ElectroCore: RK, it looks like you might be muted on your end. There you go. Guess we’re having technical difficulties with RK.

Call Moderator: Well, we’ll come back to you, RK. But this time, I’ll go to Tyler Busan of Brookline Capital. Can you guys hear me?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes.

Call Moderator: Testing one, two. Okay. I think I see that I’m talking. Dan and Josh, hey, congrats on the great year. Looks like everything is going forward smoothly.

My primary question resolves around kind of the Jerns element for electroCore and that kind of segment in general seems like it maybe has taken off a little bit slower than we would have thought about this time last year. Can you talk a little bit about Jerns in a little more detail kind of what’s going on and what are your plans in that space for 2025?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. So, it has taken much longer. It’s been much more of a grind than we had hoped a year ago. But, the wheel is starting to

Call Moderator: I can’t hear you.

Dan Goldberger, Chief Executive Officer, ElectroCore: Testing one, two, three. Can others hear you?

Call Moderator: There you go. I switched on my end now. Can you repeat that? Sorry, Dan. Yes.

Dan Goldberger, Chief Executive Officer, ElectroCore: So, Tyler, we agree with your observation. It’s taken much longer to get traction in that channel with Jearns and ultimately Kaiser. That said, we’re starting to see some green shoots. We’ve got more than 30 repeating prescribers now, mostly in Southern California, some in the Northern California region. We’re processing one or two prescriptions per month, not nearly enough to be meaningful revenue, but the wheel is starting to turn, the prescribers are starting to understand how to enter it into their system, and success breeds success.

So, I’m very optimistic. It’s going to be slow. And at some point, we will reach a tipping point. And I continue to be optimistic it will be sooner rather than later.

Call Moderator: Great. Thank you very much. I’ll get back in the queue. Okay. Our next question will come from Mark Gomes.

Mark, we’re going to enable you to ask a question and just unmute yourself when you see it.

Mark Gomes, Analyst: Am I unmuted?

Call Moderator: Yes, you are.

Recording Technician: All right. There we go. Hey, guys. Great work. So looking at the Kaiser channel, how would you contrast the start there to the start that you had in the VA system?

Is there similarities there and therefore some parallels we can draw with regard to how that can ramp up over time?

Dan Goldberger, Chief Executive Officer, ElectroCore: That’s very perceptive, Mark. You’re absolutely right. When we started selling in the VA hospital system in 2018, it was onesies, twosies, a lot of head scratching and it takes a while to get the flywheel turning. So, Kaiser is taking longer candidly than our original initiatives in the VA hospital system. The Kaiser facilities are much more locked down.

By that, I mean they’re very careful about letting sales reps, for example, into the facilities to talk to clinicians. It’s a very methodical, very constrained process, but we are starting to get through there. So, I don’t know how much longer it’s going to take, but we’re not giving up by any stretch.

Recording Technician: Would it be fair to say then that once you get in, it’s hard to get kicked out and therefore because of the competitive advantage of being there and tougher for others to get in, that ends up being an advantage once you do?

Dan Goldberger, Chief Executive Officer, ElectroCore: Exactly right. The Kaiser system is well known to be very sticky business that it’s hard to break in. But once you do and if you’re providing a clinically meaningful benefit at a fair price, Those contracts are very sticky. Very good.

Recording Technician: Great. You made mention of seeking to become a leader in bioelectric devices. That’s a much broader category than just vagus nerve stimulation or just the acquisition and partnership that you recently made. Your last organization, you grew to, if I remember right, $100,000,000 in revenue. Do you think that’s a fair number for what you could grow this business to or you think you can grow less or more?

Dan Goldberger, Chief Executive Officer, ElectroCore: So, absolutely. Look, Mark, we are building the infrastructure on the sales side between our field sales team, our customer service function, our supply chain management and more and more leveraging e commerce opportunities. We’ve got a great pipeline of organic products, but we’re now demonstrating with NeuroMetrix and Spark the opportunity to bring in new products, either through distribution or outright acquisition, that go into and leverage the same distribution channels. So, I think $100,000,000 will be a signpost along the way. I think we can build a very large business here around non invasive nerve stimulation for a variety of health and wellness and medical indications.

Recording Technician: Okay. And then, there was a recent webinar that had a military personnel kind of extolling the virtues of the VEGAS nerve stimulation and in particular singled out your device. During the Q and A, he stated that he thought that there were thousands of enlisted personnel that benefit from the device based on the research that he had done. Does that put with what you’re seeing? And like, I guess, if you could give us a little bit of a flavor of the process that it might take to start penetrating that as opposed to the trial units that have been sold to this point?

I wish I could.

Dan Goldberger, Chief Executive Officer, ElectroCore: The supply chain, the purchasing process with Department of Defense is really obscure. We have quotations out for a few thousand handsets and some of them have been publicly disclosed on sam.gov, that’s one of the contracting platforms that DoD uses. So, you can see how many requests for quotes we’ve gotten through that platform. And then it goes into a black hole, right? We have a colonel or Lieutenant General who’s very excited and who’s acting as our champion for each of these quotes, and they can’t tell us where it’s gotten lost in the DoD acquisition process.

But, not unlike the Kaiser system, the goal ultimately is to become a contract of record with Department of Defense. And I’m told that that will take three or four years, and then the purchasing process is much more streamlined. So, we will keep doing it. Some of the civilian crossover opportunities might actually overtake what’s going on with active duty military. Okay.

Thanks.

Recording Technician: Final question and then I’ll leave you. The channel, Truvega channel exploded quarter over quarter by my math. That averaged a quarter over quarter number on the sales growth there. That was even before you announced getting into the Amazon channel. So we’d love to hear a little bit of color on what happened in that channel this quarter and what you expect going forward to all the team

Call Moderator: guys are not giving guidance?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. So you’re absolutely right. December was especially big for Truvega, and we attribute that to the holiday season gift giving. It has normalized in the first quarter, it has normalized a little bit. We’re not quite as not the same run rate that we were in, in December, but we’re seeing nice sequential growth month to month and quarter to quarter.

Call Moderator: Our next question is from Matt Shores. Matt, you want to unmute your line?

Matt Shores, Analyst: Yes. Can you hear me?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. We can hear you.

Matt Shores, Analyst: Great. I appreciate you taking my questions. I just had a few. The first is, I think you guys put an ATM in place not long ago. Can you comment on whether you used any of it and how much?

Dan Goldberger, Chief Executive Officer, ElectroCore: I’m not sure that that’s public yet. So I’m going to deduct the question because we’re not talking about that publicly at this point in time. I mean, we do have an ATM facility, yes.

Matt Shores, Analyst: Okay. I figured it I saw the cash actually go up versus the cash flow from ops. So I figured you perhaps use it, but

Dan Goldberger, Chief Executive Officer, ElectroCore: We had some warrant exercises. Okay. So I stand corrected. It is in the 10 ks. We used it just for a few days to make sure that we understand how to use it, about $200,000 worth

Matt Shores, Analyst: in

Dan Goldberger, Chief Executive Officer, ElectroCore: February, beginning of March. But there were also some warrant exercises post the quarter close that add to the cash.

Matt Shores, Analyst: Secondly, could you comment about I think if I heard you correctly, you guys are still working on the VA contract. Is there any more color around that? I’m not super well versed on how these negotiations work or when your last one expired and such?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. We’ve been in this the contracting office is slow. They’ve been giving us extensions. I think the current extension goes into June of this year. We’ve had conversations in the last month with the contracting officer, dotting i’s and crossing t’s and working on payment terms.

But I suspect that we’re going to continue to be in this sort of three or four month extensions at a time. In parallel, we also sell our products with level government services and our products are on the Lovell contracts as well. So, we have sort of a backup. I want to say 40% of our business went through the Lovell contracts instead of our own contract. And actually, we make a little bit more money through Level because Level absorbs the credit card processing fees that we have to absorb, so the 2.5%, three %.

So, we’re agnostic which contracting mechanism that we go through, but we like having both.

Matt Shores, Analyst: Okay, got it. Okay. And then lastly, am I right that the business that you’re acquiring, NeuroMetrix, the product sales associated with that wasn’t their total sales number, right? It’s just a portion of it?

Dan Goldberger, Chief Executive Officer, ElectroCore: Correct. You’re referring to neurometrics. The product line that we’re going to continue with is called Quell for pain management. Their DPNCheck product line for diabetes is going through a separate asset sale process. And I’m not sure how much of that they’ve made public at this point.

Matt Shores, Analyst: I see. Yes, and just the last piece of that is I’m trying to I heard you say you may give guidance in the future once you have a better sense of the revenue contribution from the acquisition. Is that right?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. So we’re expecting to close the acquisition in the second quarter. And at that point, we’ll have a much better feel for what the pro form a combined company financials are going to look like for 2025. So rather than speculate it’s so close, we’re going to try and do it right.

Matt Shores, Analyst: If you had to highlight, I know you’ve been putting out some great growth and I think consensus obviously has you growing quite a bit in 2025. If you had to highlight just at a high level without getting into the numbers where you think the best growth opportunity is in 2025?

Dan Goldberger, Chief Executive Officer, ElectroCore: What would you Yes. So, look, we’ve got great momentum in our prescription gammaCore sales for headache. I think that’s going to continue to grow. I think the percentage is going to it’s not going to grow at the same percentages because we’re dealing with larger dollar amounts, but it’s going to continue to grow well above market. Our direct to consumer continues to surprise us at how well that business is doing.

That’s off of a smaller base, but I think that’s going to continue to be an upside surprise for us. We’re working on additional indications. We may get a lift from additional indications in the back half of the year. And then, of course, the one acquisition product from Neurometrics and the Spark Biomedical for substance abuse are upsides for the back half of 2025 and certainly for 2026.

Call Moderator: Thanks, Matt. RK from HCW. Let’s try again. I know we had some technical issues the last time. Okay.

While we wait, maybe we could take some of the questions that have been submitted. A couple of questions about the availability of Truvega plots in The UK without a prescription and sales in The UK. Do you want to spend a minute there?

Dan Goldberger, Chief Executive Officer, ElectroCore: So, we have not launched Truvega outside of The U. S. We wanted to make sure that we understood the product quality first and return rates first and foremost, as well as the sale to cash cycle. We are looking at launching Truvega three fifty in Canada and The UK later this year. Truvega Plus is mobile app enabled.

That’s a little bit more complicated to launch outside The U. S. Because every country has their own data management and personal data protection rules that we’re not in a position to do the detailed engineering around all of that. But we are going to explore launching Truvega three fifty in The UK and in Canada in the second half of this year.

Call Moderator: Great. I do have RK’s questions via email, so I’m going to read on his behalf. Is there an impact from the VA personnel reductions that have occurred that could impact the gammaCore business?

Dan Goldberger, Chief Executive Officer, ElectroCore: So nothing material yet, but we are watching the situation. There was a memo about a reduction in force, a significant reduction in force in the VA that came out at the March. Prior to that, there was a lot of distraction around the early retirement offers that were made. And so, we’re not seeing any explicit issues, but a lot of the people that we work with on the supply chain side are distracted, trying to figure out if they should take the early retirement buyout, worried about whether they’re going to be affected by the RIF. On the clinical side, among the doctors and nurses and that staff, we really do not see any disruption.

But on the supply chain side, we are seeing some distraction.

Call Moderator: Okay. Thank you. This one also comes from Mark A. What is your confidence on achieving a mid-80s gross margin in 2025? And in the long term, what are the gross margins investors should expect?

Dan Goldberger, Chief Executive Officer, ElectroCore: So, great question. We’ve got plenty of track record now with our prescription gammaCore and now with our direct to consumer Truvega product line. So, there’s a little bit of give and take with product mix. But for 2025, most of our revenue is going to come from our legacy product lines and we know what that gross margin profile looks like. As we get into the back half of the year, as I mentioned earlier, we think there’s upside in the Neurometrics Quell product and in the Spark Sparrow product.

Those gross margins are probably a little bit lower. And so as that product mix, if one or both of those products become material revenue, then that product mix might pull down gross margin. But I really think that’s more of a 2026 conversation than 2025. ’20 ’20 ’5 revenue is going to be dominated by our existing products.

Call Moderator: Great. I’m going to take a question here that was submitted by Jeff Kohn of Ladenburg. Could you talk about the gammaCore U. S. Commercial channel a little more?

What are the 2526 plans there to fuel awareness and growth?

Dan Goldberger, Chief Executive Officer, ElectroCore: Great question. So Jerns and Kaiser is the huge opportunity for us on the commercial channel. Our cash pay channels, when we launched Truvega, we anticipated that a significant portion of our cash pay channel would migrate to the lower price point of Truvega, and we’re not surprised that some of that has happened. In 2026, assuming that we finally do get traction with Jarens this year, in 2026, we’re going to look towards getting on contract with other indemnity insurance third party payers. And I think that’s really what’s going to be necessary to drive growth in the prescription commercial channel.

Call Moderator: Great. We have two questions that came in from Larry Linton. The first one is, in the next three to five years, what do you think the percentage revenue mix would be between your existing portfolio of products and the acquired or the assets that you’re in the process of acquiring?

Dan Goldberger, Chief Executive Officer, ElectroCore: That’s a great question. My crystal ball is very fuzzy. I think our prescription gammaCore business is going to continue to grow above market. The wild card is how much are we willing to invest in consumer wellness products and therefore how quickly that product line will grow. I can see scenarios where our health and wellness initiative overwhelms our more traditional prescription medical device business.

I’m very optimistic about the Quell product, both on the prescription side and on the health and wellness side. And the substance abuse product from Spark has tremendous upside. As you know, substance abuse and managing it is a crisis in this country. So I can’t handicap what it’s going to look like in three years, but it’s going to be big.

Call Moderator: Okay. We have two more questions over the tech spots and then one more live question. Can you talk about your capital adequacy? What funding do you anticipate needing over the near to midterm?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes, that’s a great question. It’s something that the Board and management look at very, very frequently. We finished the year with more than $12,000,000 of cash in the fourth quarter. We used less than $1,000,000 of cash. So, we’ve got plenty of runway to keep growing the revenue line and get to that cash positive inflection.

That said, there are places where we believe we could be growing faster if we were willing to make bigger investments, for example, to grow our field sales force and hire additional territory business managers or on the consumer side to get more aggressive about our marketing and branding activities. And so, those are things that we look at on a regular basis. At this point in time though, we feel like we’ve got plenty of cash to execute the plan and we have no plans to raise any capital.

Call Moderator: Great. We have another question here about your strategy on how to drive sales of Truvaga through the website, but also on Amazon. And second part of that was, can you help this investor better understand the differentiating factors of Truvaga Plus to competing products that are out there and sold?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. So, until now, most of our spending on Truvega has been on search. And increasingly, we’re spending money on social media to create awareness. We’ve started to kind of move up the value chain with influencers and affiliates, and there’s a huge ecosystem out there of especially biohacker influencers and increasingly affiliates. Amazon is a big step for us, right?

Amazon, we’re all consumers. Most of us prefer to buy something on Amazon if it’s available there. It’s just a much more seamless process. Amazon, of course, takes a fee and so that affects our contribution margin. And so, we’re going to be monitoring that closely as we get more experience with Amazon.

And then resellers longer term, that’s chunky business, right, because with a reseller, you sell a significant number of product, maybe they get a discount, but then again, I don’t have to spend the money on advertising. And so, that could all work very nicely. So, we see it, I guess, you call it an omni channel distribution and sales investment. And we’re very pleased with our metrics so far and the numbers keep getting bigger and bigger.

Call Moderator: I’m going to combine two questions here. On the Rx gammaCore side, VA and DOD business has been running in a range for the past three quarters now. Do you need to grow the sales force again to reaccelerate this business? And can you just talk about how many salespeople you have today versus where you were six months ago?

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. We talked about that in our prepared remarks. We have roughly 80 sales reps out there now that are straight commission, they get paid on a $10.99. Many of them carry additional product lines besides ours. We have eight W-two employees that are managing that group of 80 field sales reps.

Those numbers have been constant since July, August of ’20 ’20 ’4. I want to get through closing the Neurometrics transaction and assuming things are going smoothly, we’re going to look at investing in growing that field sales function again as we get into the second half of the year. But absolutely, our prescription gammaCore sales and our I expect our prescription fibromyalgia sales will ultimately scale with feet on the street and our ability to get the word out and educate clinical staff, doctors and nurses.

Call Moderator: Great. Thank you. And we’re going to take our last live question from Kenneth Steinhauser. Ken, we’re going to elevate you. You’re just going to need to unmute.

Mark Gomes, Analyst: Hi, Dan. Thank you for taking the question. I’m a retired pharmacist. I actually purchased

Dan Goldberger, Chief Executive Officer, ElectroCore: two

Mark Gomes, Analyst: Truvega Plus units.

Call Moderator: Thank you.

Mark Gomes, Analyst: Yes. And thank you for the 15% discount, by the way. I appreciate it. You haven’t mentioned that.

Dan Goldberger, Chief Executive Officer, ElectroCore: I’m saying about that too much, but I’m sure.

Mark Gomes, Analyst: If anybody wants to know about a 15% discount, I’m on Yahoo, and you can reach you there. But I have two family members well, three family members that are using Truvega plus one for GI symptoms, it’s worked very well, the other one for sleep. Now the one for sleep is also doing very well, but he likes to share things with his, his significant other.

Recording Technician: There’s so many here.

Mark Gomes, Analyst: And I I have a problem with the app because the app will only let one person in a household use a use the unit. Are you guys going to change that app so more than one person can use the unit? Or is it something that’s going to

Dan Goldberger, Chief Executive Officer, ElectroCore: Yes. So we have a whole development pathway for the mobile app feature set. I have to balance that with our R and D spend and we’re trying to stay disciplined around operating expenses, but that functionality is definitely on the pathway. One of the things we’re really looking forward to is going live on Apple Health, and so making it interoperable with Apple Health so that people can track not just their vagus nerve stimulation, but also the impact on various heart rate, heart rate variability, quality of sleep through the Apple Health functionality. So we’ve got great experience and we’re also going to be picking up some infrastructure from NeuroMetrix.

They have a far more sophisticated mobile app and back infrastructure around the mobile app for the portal. We’re just not there yet and I have to juggle that against the investment required.

Mark Gomes, Analyst: Okay. Well, thank you very much for taking my question. I appreciate

Dan Goldberger, Chief Executive Officer, ElectroCore: it. Absolutely.

Call Moderator: Dan, you want to go into your closing statement?

Dan Goldberger, Chief Executive Officer, ElectroCore: Absolutely. So thank you all. Love the more interactive call. Sorry, we had a little bit of technical difficulties. And as usual, I also want to thank our customers, the doctors and nurses that are acting as our champions increasingly, the biohackers out there that are picking up on Truvega and certainly our employees and our Board of Directors for their patience and support with us.

So, everybody, have a

Matt Shores, Analyst: good day.

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