Neuraxis, Inc. 2026 Q2 Earnings Call

Sir, please go ahead. Thank you, and good morning, everyone.

Thank you for joining us for NeurAxis' second quarter 2026 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. Please follow the operator's instructions to ask a question. 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 operating 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 risk 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, I would like to now turn over the event to Brian Carrico, Chief Executive Officer of NeurAxis.

Brian, please proceed. Thank you, Ben, and good morning to everyone joining us.

Q2 was an important quarter for NeurAxis, and I look forward to delivering several key progress updates today. It was our second full quarter of operating with a Category I CPT code for PENFS, which confirmed what we learned in the first quarter regarding what drives adoption and where we need to focus our commercial resources. This allowed us to stick to the plan and taking what we learned in Q1 to make disciplined strategic decisions in Q2 that will certainly play out in Q3 and Q4. Our strategy is centered on two priorities. Number one, securing the remaining insurance coverage, which I have meaningful updates to report today. Number two, maximizing execution in covered markets while positioning the organization to scale rapidly as new coverage comes online.

I will structure my remarks today around six areas: revenue and second quarter highlights; insurance coverage status and payer progress; key performance indicators or KPIs; commercialization, including our current structure, new hires, and upcoming changes; the opportunity within U.S. Department of Veterans Affairs medical centers; and a summary of our focus and next steps. Following my remarks, Tim Henrichs, our CFO, will review our financial results for the second quarter of 2026. For the second quarter of 2026, revenue was $1.928 million, compared with $894,000 in Q2 2025, representing 116% year-over-year revenue growth. The quarter was successful on many fronts, especially looking at the strategic changes we made commercially and the progress we made with payers. Q2 continued to confirm proof of concept with physician and patient demand continuing to build, but utilization is strong where healthcare providers with the right combination of payer coverage, physician engagement, and operational capacity are in place.

Therefore, we have accelerated commercial hiring in markets where PENFS has strong insurance coverage and the greatest near-term growth potential, which I will discuss later in the call. In Q2, we continue to see a strong improvement in average selling price, driven by the continued mix shift toward covered and reimbursed procedures and away from discounted financial assistance channels. That mix shift is important because it supports stronger revenue quality, margin potential, and long-term scalability. Tim will discuss this in more detail. Some second quarter highlights include, based on the Q1 experience, which was confirmed again in Q2, we increased headcount with our commercial sales, marketing, and medical affairs support teams.

Number two, we continue to operate with more than 100 million covered lives, but most importantly, I am happy to report we had significant gains with two large key commercial payers, again, taking what we learned in Q1 and aggressively adding to our strategy to optimize coverage policy. Number three, we took steps to address the remaining gaps we need to close, including payer coverage, clinical reinforcement, market level execution, C-suite and administrator financial education, and consistent face-to-face communication with each institution. Number four, we gained more consistent market feedback around hospital economics. The patients in some of our best accounts are waiting for multiple months for care due to capacity issues, which should not be the case. We expect this strategy and message to be meaningful, especially as we gain more policy coverage and move into 2027.

In short, the quarter moved us from theory to evidence where proof of concept continued to succeed. The barriers that historically limited IB-Stim adoption continue to be better defined, and that gives us a crystal clear roadmap. We are assertively addressing with disciplined actions beginning in Q2 and into Q3. All right, now let's talk about insurance status. Insurance policy coverage remains the single most important driver of scalable growth. Q1 confirmed that a single substantial medical policy, while extremely valuable, is not sufficient by itself, and Q2 is no different. We are still treating only a fraction of the patients who could benefit from PENFS. Even within markets where coverage is already in place, we have barely begun to penetrate the available patient population.

Providers continue to need confidence that coverage exists across a meaningful portion of their payer mix before they fully activate programs and allocate consistent clinic time. Based on these learnings, we elevated our market access strategy and pulled several additional levers, resulting in significant progress with two large payers. We are cautiously optimistic that these efforts will result in additional coverage in the second half of 2026 or early 2027. Furthermore, we are applying these same advanced strategies to all payers. Our payer outreach now includes multiple parallel channels, direct engagement with commercial payers and their medical policy teams, inclusion in the addition of the Category I CPT code to state Medicaid fee schedules where new codes for 2026 are not yet fully loaded. Physician and KOL advocacy to reinforce the clinical need and the published evidence. Advocacy engagement with both the pediatric and multiple adult academic medical societies.

Navigation and messaging guidance from former payer executives and medical directors to refine our approach with the appropriate decision-makers. Continued expansion of our internal prior authorization team to enhance administrative efficiency for providers and improve reimbursement confidence. As we look at the specific success with the two payers mentioned, I want to highlight the implementation of additional strategies resulting in the progress we saw is consistent with the previous success where I have repeatedly said, "Getting in front of the right people is the key." It's far from easy, but it's the key. As usual, I will not disclose specific payer names or details of the discussions, but we recently gained improved access to medical directors and other decision-makers at two of the largest remaining payers without existing medical policy coverage.

Those conversations reinforced our belief that the challenge has often been access to the right decision-makers rather than fundamental opposition to the therapy. Our message to payers remains consistent. IB-Stim addresses a large unmet need in pediatric functional abdominal pain and related disorders, offers a favorable safety profile, provides an evidence-based alternative to off-label medication use, including drugs with FDA black box warnings, and is becoming the standard of care in children's hospitals nationally. The clinical evidence, published treatment guidelines, broad academic society and KOL support, Category I CPT code, and existing payer precedent together create a strong foundation for additional policy coverage. In parallel to pursuing those remaining payers, our goal is to execute aggressively in markets where policy coverage exists and prepare the commercial infrastructure to scale as additional coverage comes online.

As we manage Medicaid beneficiary access to PENFS, many states, as I mentioned, have yet to include CPT code 64567 on their 2026 fee schedule updates. This hinders medically necessary coverage through EPSDT special provision due to lack of payment methodology. It also delays program launches and impacts account activation due to health equity considerations, not to mention the inability to have a full-scale IB-Stim program with this payer void in those specific states. Importantly, these are implementation issues rather than clinical adoption issues. In markets where medical policy coverage and fee schedule inclusion are in place, the CPT code is having the intended effect. Following our successful CPT code milestone and expanded age indication for PENFS, the insurance policy operation has become incredibly intense with multiple layers of ongoing strategy with several payers simultaneously.