Neuraxis, INC Q4 FY2024 earnings call

• Commercialization progress: IB-Stim saw strong growth in Q3 and Q4 with 40% and 43% growth respectively, and new insurance policy coverage beginning. The Category 1 CPT code for IB-Stim will be effective January 1, 2026, and IB-Stim's age expansion to 8 - 21 years nearly doubled the market opportunity. • RED update: Has FDA clearance for soft launch, is a point-of-care device for identifying chronic constipation patients, with a Category 1 CPT code and strong reimbursement. • Financial focus: The company is working towards cash flow breakeven and profitability, with efforts on building strong data and academic society support, and growing the prior authorization team. Fiscal results for Q4 2024 and fiscal year 2024 were discussed, with revenues up but SG&A expenses affected by hiring and other factors.

For the IB-Stim segment, there was significant growth with 40% growth in Q3 and 43% growth in Q4. In terms of financials, fourth quarter 2024 revenues were $761,000, a 43% increase from the fourth quarter of 2023. Gross margin in the fourth quarter of 2024 was 86.4%, same as the prior year. Fiscal year 2024 revenues were $2.7 million, an increase of 9% compared to fiscal year 2023. Gross margin in fiscal year 2024 was 86.5%, down from 87.7% in fiscal year 2023 due to growth in discounted financial assistance units. The RED segment has FDA clearance and is being soft launched, with potential to drive revenues in the coming quarters.

• Revenue growth is expected to accelerate as insurance coverage expands and the Category 1 CPT code takes effect. • The commercialization of RED is anticipated to contribute significantly to revenues in the coming quarters. • The company aims for cash flow breakeven, with catalysts including insurance coverage, Category 1 CPT code, and RED commercialization.

• Uncertainty in the pace of achieving full insurance policy coverage as it doesn't progress as quickly as desired. • Reliance on peer-reviewed publications and society support for successful insurance coverage from companies. • Potential impact of tariffs on manufacturing, though currently minimal to none as most manufacturing is in the US with one component from a tariff-free country.

Q: Please explain the significance of receiving the Category 1 code and 510(k) extensions.\nA: Brian Carrico stated the Category 1 code is crucial as it provides RVUs to physicians, who previously didn't get recognition for their time with IB-Stim procedures. It streamlines prior authorizations and is better than the Category 3 code. The 510(k) extension for IB-Stim to 8 - 21 years greatly expanded the market opportunity.\nQ: Discuss the variability of gross margins and future outlook for them.\nA: Tim Henrichs mentioned reported gross margins are in the mid - high 80s. Higher margins exist for insured patients, but lower due to the financial assistance program. As the Cat 1 CPT code comes into effect, covered lives and insurance coverage will rise, leading to higher full reimbursement and increased gross margins in 2026 and beyond.\nQ: What are the early learnings from RED in the commercial mode?\nA: Brian Carrico said RED had positive market feedback before licensing, has a Category 1 CPT code and Medicare reimbursement. Feedback from physicians has been favorable with higher - than - expected usage expectations.\nQ: What revenue level is needed for breakeven given the cost structure?\nA: Tim Henrichs said at the current run rate, with a cash burn of about $6 million annually, breakeven revenues will be in the $10 million to $12 million range.\nQ: Where are products manufactured and what is exposure to tariffs?\nA: Brian Carrico said 95% of technology is manufactured in the US, with one component from a country with no tariffs, and there is minimal to no exposure to tariffs currently.\nQ: Talk about the development timeline and differences for a second - generation IB - Stim device.\nA: Brian Carrico said work is ongoing on Generation 2, expecting it in 2026. It will have a different look, possibly with infrared light blinking to show it's working, and other improvements related to patient outcomes and response prediction.\nQ: What is the response after IB - Stim treatment and percentage of patients needing additional courses?\nA: Brian Carrico said there is good data at 6 and 12 months, with roughly 70% of patients having significant long - term relief, and results are sustained so patients don't typically need additional treatment courses soon after