Electrocore at 24th Annual Needham Virtual Healthcare Conference: Strategic Expansion Plans

On Thursday, 10 April 2025, Electrocore (NASDAQ: ECOR) presented its strategic vision at the 24th Annual Needham Virtual Healthcare Conference. The company highlighted its robust revenue growth, with a focus on expanding its bioelectronic medicine portfolio. Despite challenges like potential tariffs and budget cuts, Electrocore remains optimistic about its future.

Key Takeaways

• Electrocore reported $25 million in revenue for 2024, with $7 million in Q4, maintaining strong gross margins of 85-86%.
• The company is expanding its product range with the acquisition of Quell technology for fibromyalgia and distribution agreements for Relatex and Sparrow.
• Electrocore aims to achieve cash positivity in 2025, supported by strategic expansions and a focus on increasing payer coverage.

Financial Results

• 2024 Revenue: $25 million
• Q4 2024 Revenue: $7 million
• Gross Margins: Consistently at 85-86% over the past 8-9 quarters
• Cash on Hand (as of 12/31/2024): $12.2 million
• Cash Used in Operations (Q4 2024): $1.26 million
• Five-Year Compound Annual Growth Rate (CAGR): 60%
• Truvega Revenue (Q4 2024): Over $1 million
• Target: Achieve cash positivity during 2025

Operational Updates

• Flagship Product: gammaCore Sapphire, a noninvasive vagus nerve stimulator
• Key Markets: VA hospital system and National Health Services in the UK
• New Product Launch: Truvega, showing substantial growth since its 2023 launch
• Military Application: TaxSim, a tactical version of gammaCore, in pilot deployment
• Acquisition: Neurometrics' Quell technology for fibromyalgia treatment; closing expected in April/May
• Distribution Agreements: Prescription Relatex for nausea and Sparrow for opioid withdrawal symptoms
• PTSD: Breakthrough designation for treating PTSD symptoms
• Substance Abuse: Pivotal trial enrolling patients for opioid use disorder, financed by NIDA
• Manufacturing: Located in Rockaway, New Jersey, with minor Chinese component exposure
• Kaiser Permanente: gammaCore Sapphire placed on formulary, with increasing prescriber interest

Future Outlook

• Key Growth Driver: Expanding payer coverage, targeting Kaiser Permanente and CMS by 2026
• New Market Entry: Fibromyalgia treatment with Quell launch in VA hospital channel, a 2026 growth story
• Pipeline: Focus on obtaining explicit FDA label for PTSD treatment
• Revenue Growth: Continued growth expected in prescription headache business and Truvega
• Military: Potential for substantial revenue from TaxSim build-to-order sales, though no specific forecasts provided
• Cash Flow: Anticipate crossing over to cash positivity in 2025

Q&A Highlights

• Reimbursement: Saphyr covered by VA and some regional payers; Kaiser penetration a focus
• Quell: Initial VA hospital system launch, followed by broader payer opportunities
• Truvega Marketing: Direct-to-consumer via website and Amazon, expanding into affiliates and B2B2C channels
• Tariff Impact: Potential $5 increase in COGS due to Chinese components, with minor impact on gross margin
• VA Impact: Rebound in VA activity observed after earlier disruptions from budget cuts

For further details, please refer to the full transcript below.

Full transcript - 24th Annual Needham Virtual Healthcare Conference:

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Good afternoon. Thanks for joining us again at the twenty fourth Annual Meeting of Healthcare Conference. I'm Mike Patson. I'm lead the med tech and diagnostics equity research team here at Needham and Company. I'm pleased to introduce Electrocor.

Presenting from Electrocor, we have CEO, Dan Goldberger. He's gonna give a presentation on Electrocor, and then we'll open it up for some questions at the end. As usual, you can submit your questions through the conference website, or you can email them to me at mmatson@needomco.com, and I'll, do my best to fit them in. So with that, let me pass it over to Dan.

Dan Goldberger, CEO, Electrocor: Thank you, Mike, and and, you know, thank you to mister Matson and the the Needham team for for including us in in this episode. My name is Dan Goldberger. I'm the CEO of Electrocor. I've been here more than five years now. We are a commercial stage bioelectronic medicine and wellness company.

The ticker, please remember, is e c o r e core. The materials that I'm presenting are available on our website. So this is all public inform information. The overview, electroCore was founded to commercialize our proprietary technology around noninvasive vagus nerve stimulation, Implanted vagus nerve stimulation implanted vagus nerve stimulators were commercialized in the nineteen nineties. LivaNova public company now has a a pretty significant business with implanted vagus nerve stimulators that require a small surgical procedure for treating epilepsy and depression.

The founders of electroCore were looking for a percutaneous or less invasive way to do vagus nerve stimulation, found a way to do it completely non invasively transdermally, original originally cleared in Europe for treating headache, and our our first FDA de novo clearance was in 02/2017. Most of our business is in prescription headache. We now have seven FDA clearances around acute treatment and prevention of migraine headache, cluster headache in adults and in adolescents, and we are working on a pipeline of additional indications, which I'll talk about as we go through the materials. Revenues have been growing nicely, especially as we came out of the pandemic and our field sales folks could get back into the clinic and detail doctors and nurses about our headache therapy. Twenty five million dollars of revenue in 2024, '7 million of revenue in the fourth quarter of twenty twenty four.

So good momentum rolling into 2025 and beyond. Gross margins have been solid at 85, 80 six percent for the last eight or nine quarters, and and we don't see any reason for that to change. Excited about a near future opportunity to extend to PTSD, post traumatic stress disorder rather. And I'm gonna talk about some additional products that we have launched and that we're bringing in through distribution for the second half of this year. No debt, straight common equity, and $12,200,000 of cash at 12/31/2024.

This is our flagship product. We call it the gammaCore sapphire. This is a noninvasive vagus nerve stimulator. It is a handheld personal use device with a rechargeable battery. For acute treatment of headache, I take it out of my pocket.

It's a two minute dose of electrical energy delivered at the neck, as you can see in the picture. And in most cases, I can very quickly reduce the discomfort associated with a headache, and many cases completely abort that headache. So that's acute treatment. Prevention of headache is a little bit different protocol. We ask people to use it twice a day.

So think morning and evening, a couple minutes of electrical energy. The pivotal data the pivotal trials rather showed a statistically significant reduction in the number of headache days for patients who used it and and stayed with that twice a day were compliant, rather, with that twice a day protocol. This is a device. This is a nerve stimulator. It is not a pharmaceutical, so there are few, if any, side effects or contraindications unlike the prescription drugs that are used to treat headache.

And we also have an adjunctive clearance, so this technology can be used in addition to pharmaceutical therapy as well as as a standalone therapy. Our largest customer is the VA hospital system in The US, patients in the VA system. It's it's free to patients rather in in the VA hospital system. Doctor or nurse writes a prescription. We get a PO from the hospital.

We ship directly to the patient. Our customer service team, usually on a Zoom call in services or teaches the patient how to use it, and then we get paid directly by the hospital. Our second largest customer is the National Health Services in The United Kingdom, same business model. We are working on expanding into commercial insurance where I'm sure many of you are familiar with the model that patients generally have a co pay or a deductible or both. And so it's not quite free to patients in commercial health care, but it is very, very affordable.

These are the various products and categories that we are currently selling. Prescription gammaCore is far and away the largest component of our revenue, but I'm gonna talk to you a little bit about our general wellness product offerings. We launched Truvega in 2023, and we had solid sales growth of this product line in 2024. This is a consumer electronics health and wellness product. It is not explicitly regulated by the FDA, but there is an FDA guidance document that talks about health and wellness products that are promoted for reduced stress, quality of sleep, calm, cognitive enhancement, or clarity.

You can go to our website, triplewtruvega.com, and you can buy the TRUVEGA three fifty as our entry level product. The TRUVEGA Plus is our mobile app enabled product offering. More than a million dollars of revenue in the fourth quarter of twenty twenty four, so a million dollars or $7,000,000 of revenue came from this product category, and, we're excited about the, substantial growth, that we're seeing in this product category and and look forward to significant contribution in 2025 and beyond. TaxSim has been a really interesting journey for us. It turns out that the Air Force Research Laboratories has been working with neurostimulation for human performance.

That's human performance with a capital h and a capital p for a long time. Five years ago, they started working with our prescription technology. Three years ago, AFRL approached us and said they liked how our technology works, but they gave us some r and d money to take the hardware in our prescription device and put it into this hardened black tactical mil spec housing. This product is now available for active duty military. It's in pilot deployment with some air force special forces units, some army special forces units with air mobility command, which are the the crews that fly the huge cargo planes halfway around the world.

We have I've been fascinated by the anecdotes and the feedback we get, but it's impossible for us to forecast this business. So this is a a build to order business model against purchase orders that we get from the army and air force. Has meaningful revenue in 2024, but because I can't predict it, we're not forecasting anything. And if and when we do get a substantial purchase order, as I mentioned, it'll be build to order, and it'll be accretive to the top and bottom line. Further out, back to our prescription business, very, very exciting pipeline of additional indications that we're working on.

We have breakthrough designation to treat the symptoms of post traumatic stress disorder. Most of that data was collected in the VA hospital system, and we're already getting off label prescriptions for that indication from the VA hospital system, working with the FDA on the pathway to getting an explicit label for treating PTSD. We have a pivotal trial enrolling patients in substance abuse, opioid use disorder. That trial is financed by NIDA, National Institute on Drug Abuse, so it's not affecting our operating expense. It's enrolling patients right now and probably will read out in early twenty twenty six.

Last month, there was a publication around the use of gammaCore in treating traumatic brain injury and concussion. There is data from small cohorts, in Europe, that we're expecting a readout later this year in Parkinson's disease and in acute stroke and lots of additional opportunities clinically in the future. Switching subjects here a little bit, late December, we announced the acquisition of the Quell technology from publicly traded Neurometrics. That transaction is on track to close towards the April or early May. That gives us access to Quell prescription Quell for treating fibromyalgia, which we think is a very interesting indication.

Again, this is a noninvasive neuromodulation, neurostimulation technology, so it has a lot of synergy with our technology and with our call point. We intend to launch in the VA hospital channel where we already have a sales team and relationships shortly after we close the deal. There'll be some start up revenue in the second half of this year, but really this is gonna be a 2026 growth story. We've also announced distribution opportunities for prescription Relatex, which is a, again, a neurostimulation technology for treating nausea. It's on label for treating post anesthesia nausea and, nausea secondary to chemotherapy.

And more recently, we announced a distribution opportunity for the Sparrow system, which is a vagus nerve stimulator that attaches to the ear and is on label for treating the symptoms of withdrawal from substance abuse and specifically opioids. Lots of intellectual property barriers to protect our de novo products. A little bit about the financials. As I mentioned earlier, $25,000,000 in revenue in 2024. Very proud of the accelerating revenue, as we came out of the pandemic and the sixty percent five year, CAGR.

Looking at, quarterly numbers, I think I already mentioned 7,000,000 in revenue in the fourth quarter and $12,200,000 of cash on the balance sheet. We used, I don't like to say burned, 1,260,000 in the fourth quarter on a $7,000,000 revenue line. As revenue increases, we maintain discipline around fixed OpEx, and we're gonna continue to narrow that cash used in operating activities. And we believe that we're gonna cross over to be cash positive as we go through 2025, and that revenue line continues to increase. There's no debt, clean, straight common cap table.

I do need to do like to point out that we have two large institutional investors who own 10% each of the common shares outright, and then in addition to that 10% participated in these prefunded warrants. And so the right way to think about our issued and outstanding capitalization is the combination of these two categories or a little bit more than 8,000,000 common shares. So that's the summary. We're starting to build revenue momentum. We're narrowing our cash uses, and and we're gonna cross over into being cash positive.

A lot of opportunities to grow the total total addressable market within headache through additional additional payers and and picking up additional covered lives, opportunity to increase the total addressable market through additional indications like post traumatic stress disorder. We're adding Quell for fibromyalgia that's gonna kick in in the back half of this year, but it'll really be a 2026 story. Other in licensed or distribution products. So I continue to be very confident and very excited about the growth opportunities for our little company. And if I didn't mention it, the ticker is ECOR.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Thanks, Dan. Appreciate your time. I guess, first, you know, Saphyr, I can apologize if you addressed this, but just the the where do things stand with reimbursement there? Is this something that's covered now, or is it more out of pocket for patients in The US?

Dan Goldberger, CEO, Electrocor: Yeah. So it's it's covered by the VA hospital system. We have about which is nine and a half million covered lives. We have about seven and a half million covered lives through some of the the regional payers like Highmark in Pennsylvania. It's Blue Shield, Blue Cross of in in the Dakotas.

We've held back on going after more of the traditional or or national payers until we get more penetration at Kaiser. We we were placed gammaCore Sapphire was put on formulary in the Kaiser system, which is 12 and a half, 13,000,000 covered lives last year at this time. That's a business model where the members of Kaiser have deductibles and co pays. We have about 30 prescribers now within the Kaiser system, so it's taken us longer than I had hoped to generate interest among the prescribers, but it's starting to happen. And and we think that's the back half of this year, but really a 2026 story.

So strategically, we wanna demonstrate that the health care economics work for Kaiser and then take that story to CMS, Medicare, and the and the the large national players in 2026.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Okay. And then so, Quell, can you maybe for fibromyalgia, similar question there, is that reimbursed or is that out of pocket? And, you know, where do things stand with getting that covered?

Dan Goldberger, CEO, Electrocor: Very early days. So it's the there's a small cash pay business right now that goes through a telehealth provider. We're working to get Quell for fibromyalgia on contract in the VA hospital system, and that's where we're gonna start. And then once we have some success with our our launch customer at the VA hospital, we'll start to take a look at the broader payer opportunities.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Okay. And then it's just finally the so then you have your own kind of the true Vega. That's the true, like, out of pocket consumer product that you sell. Is that right? Or

Dan Goldberger, CEO, Electrocor: Yeah. It's a it's a direct to consumer business model. It's technically it's a general it's a health and wellness product, not a medical device.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Yeah. And so how what's your marketing strategy there? I mean, how do you which is just through the website or social media? I mean, I don't think Yeah. So maybe our commercials.

But

Dan Goldberger, CEO, Electrocor: Yeah. So good question. So in 2024, it was exclusively available through our ecommerce website, trivega.com. In February, we launched on Amazon. We are now increasingly working and recruiting affiliates and influencers, and we're starting to get some interest in in more of a b to b to c channel, which would be, you know, stocking distributors that that are gonna start to offer it, you know, through their health and wellness initiatives.

So, you know, 2025, I think our ecommerce business with the addition of Amazon is gonna maintain those growth rates, and we've got upside from some of these more traditional retail models with with stocking distributors and affiliates.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Okay. And then just in terms of where are you making your products and, you know, what about tariff exposure? I know it's changing day to day, but, you know, is it made in The US, made in Mexico or China or elsewhere?

Dan Goldberger, CEO, Electrocor: Yeah. It's it it's we our manufacturing is in Rockaway, New Jersey. We we do get roughly $5 of our cost of goods, our electronic components, most specifically batteries that come from China. You know? So I expect you know, we have quite a bit of in process inventory, so it's not gonna be immediate, but that, you know, sort of that $5 could double to $10 on our COGS line, which we're blessed with very high gross margins.

And so that additional incremental $5 won't be more than a point or two of gross margin. About 10% of our business goes to The UK. Haven't heard if The UK is is gonna institute any reciprocal tariffs. If they do, we would probably have to absorb any tariffs under our contract with the National Health Service there, and we'll cross that bridge if and when it happens.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Okay. Got it. And then just since since you are since the VA is a big customer. Mhmm. You know, there's a lot been a lot of headlines around all the dose cuts and everything.

And, I mean, I don't you know, I know they maybe fired some people at the at the VA, but I I don't know to what degree they're they're kind of cutting the VA's broader budget. Have you seen any kind of impact there? Are you worried about any kind of impact there?

Dan Goldberger, CEO, Electrocor: So the doctors and my our my observations from being in the hospitals and my sales guys, you know, that are that are in there every day, the doctors and nurses never stopped working, never missed a beat. The supply chain folks are just the opposite. There was a tremendous amount of disruption and distraction in December and in January, folks trying to figure out if they should take the early retirement packages that were offered, folks looking over their shoulder about is there gonna be another layoff. That all, you know, knocking on wood here, but that really dissipated in February. And in March, it feels like we got we had a lift from some pent up demand from the slowdown in December and January.

So I am you know, everything changes on a dime in this world, but but I'm optimistic that it's whatever the new normal is in the in the VA hospital supply chain folks that we're working with.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Perfect. Alright. Well, I I don't see any questions from the viewers and Mhmm. Out of my own questions. I think we're gonna have to wrap up But thank you for the conference.

Dan Goldberger, CEO, Electrocor: I have some good news. Yep. It's been great for us. Really appreciate the opportunity. I know we're on the small side for Needham.

So, you know, very appreciative that you opened the door for us. Have a great day, Mike.

Mike Patson, Lead, med tech and diagnostics equity research team, Needham and Company: Of course. No problem.

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