electroCore, Inc. Common Stock 2026 Q2 Earnings Call

Good afternoon, everyone, thank you for joining electroCore's second quarter 2026 earnings call. It is a pleasure to have the opportunity to speak with you all again about the transformation and momentum underway at electroCore. As Chairman of the Board, I have been working closely with Josh Lev, Interim President, and Mike Fox, COO, for the entire quarter. Josh has kept the company focused and steady while skillfully managing investor relations. Mike has moved quickly to make important operational changes, including a major transformation of our sales force. Change is never easy, and managing change without disruption takes real skill. Today, I am proud to say that Josh and Mike have helped us make meaningful changes while keeping the organization moving forward.

You are about to hear the results shortly. We are entering a new phase at electroCore, one defined by accelerating revenue growth and improving operating leverage. Today, we are raising our 2026 revenue guidance to greater than 30%. We are doing so while showing improvement in profitability with GAAP net loss in the quarter improving by 17% to $3.1 million from $3.7 million in the prior year. Adjusted EBITDA improving 26% year-over-year and 25% sequentially. This improvement comes as we deliberately invested roughly $1 million this quarter in initiatives designed to accelerate future growth. We now believe that this trajectory puts us on a path to achieve positive EBITDA in 2027. To me, that is what disciplined execution looks like, investing in durable growth opportunities while staying disciplined and holding the line everywhere on spending.

The board is extremely pleased with the competency, discipline, and leadership Josh and Mike have demonstrated in delivering this execution. Our strategy has not changed. What has changed is the pace and precision with which we are executing it, and that reflects the leadership Josh and Mike are providing across the company. With that, Josh will provide opening remarks, Mike will walk you through the operational specifics, and then Josh will take you through the quarter and where we go from here. With that, I'd like to turn it over to Josh.

Thank you, Tom. Good afternoon, everyone. This quarter marked the beginning of a new era for our company as we implemented significant changes across our commercial organization to better position us for long-term success while also improving reported financial performance. That included expanding our sales regions, adding new representatives, and redesigning our incentive structure to improve accountability and cost efficiency over time. While these actions required investment and focus throughout the quarter, we believe they've strengthened our foundation, improved operating efficiency, and enhanced our ability to accelerate revenue growth. I'll let Mike walk you through the execution in more detail in a moment. Now to our results for the quarter. We reported quarterly revenue of $9.5 million, an increase of approximately 28% year-over-year, driven by continued growth in the U.S. prescription sales in the VA and in direct-to-consumer Truvaga sales.

We restructured this quarter, making the results especially encouraging given the magnitude of the organizational changes. While revenue was flat sequentially, we expect revenue growth to accelerate throughout the year, underpinned by orders already received but not yet impacting revenue, as Mike will explain later on in the call. Importantly, we showed continued operating leverage, as illustrated by our continued improvement in adjusted EBITDA, up 26% year-over-year and 25% quarter-over-quarter. We view this performance as a meaningful win, demonstrating the resilience of our business and our ability to execute while positioning the company for long-term profitable growth. The changes implemented during the second quarter are already showing promise, and given the momentum we are seeing across the business, we are raising our full year 2026 revenue guidance to greater than 30% growth over full year 2025 revenue.

As Dr. Errico mentioned, we believe the operating improvements described today position us to execute our plan of achieving positive adjusted EBITDA in the third quarter of 2027. Turning to the portfolio. The VA continued to be our largest growth driver in the quarter. Prescription gammaCore revenue grew approximately 11% year-over-year and approximately 16,400 VA patients have now received the gammaCore device, representing approximately 2.7% penetration of the estimated addressable VA headache market. When we acquired NeuroMetrix last year, we added 2 Class 2 medical devices to our portfolio. The first, Quell Fibromyalgia, is currently marketed as a prescription therapy through the VA. The second, Quell 2.0, is an FDA-cleared, over-the-counter device for lower extremity pain. It is not currently in production or for sale, and we may rebrand and relaunch it direct to consumer in the future.

At the time of the acquisition, we saw the opportunity to bring a different technology than gammaCore, sold through the same VA relationships, the same reps, the same call points, just a new product to sell. Since making the acquisition, Quell has become a bright spot in our product portfolio. Sales of the Quell product line were $1.3 million in the second quarter, growing approximately 700% year-over-year and roughly 30% over the first quarter of 2026. Cumulative Quell revenue is approximately $4 million since our acquisition of NeuroMetrix in May 2025, of which $3.8 million of Quell Fibromyalgia has been sold into the VA.

We believe Quell Fibromyalgia continues to be a significant opportunity for the company, where according to an article in Rheumatology Advisor, the prevalence of fibromyalgia among male and female U.S. service members rose from 2.2% and 2% before deployment to 8% and 11.1% after deployment, respectively. The consistency we're seeing, particularly in fibromyalgia, reinforces our thesis of providing non-invasive bioelectronic therapeutics for patients in need of non-pharmaceutical options. Truvaga, our over-the-counter wellness brand, grew approximately 27% year-over-year to $1.3 million. Media costs expanded as competition in the health and wellness space increased, driving up the cost to acquire customers and reducing our media efficiency ratio to 1.91. In the first half of 2025, five competitors bid on Truvaga's own branded search terms.

Through the first half of 2026, that grew to eight, a 60% increase in the number of advertisements showing up on the exact terms that should be Truvaga's most defensible territory. As a result, the direct cost per click of acquiring a customer increased by roughly 30%. In response to the increased cost of advertising in the space, we reduced our media spend by 2% in the quarter, allowing us to spend less while still driving to achieve year-over-year Truvaga growth. In our first quarter of 2026 10-Q, we announced that on May 6th, 2026, FDA personnel visited our facility in Rockaway, New Jersey, to inspect matters relating to a follow-up 2017 inquiry on our wholly-owned subsidiary, NeuroMetrix.

On May 27th, 2026, the FDA concluded their inspection and issued the company a preliminary 483 letter, citing four observations and two discussion points around how the company addresses and documents patient complaints. Since receiving the letter, we have responded to the preliminary 483 letter with corrective actions to address the observations and discussion points. These corrective actions will delay the potential rebrand and relaunch of Quell 2.0 direct to consumer in the near term, but ultimately, we believe the changes will result in a stronger product and brand, positioning us to update our claims over time to better reflect the broader benefits of a newly branded product. Now, I'd like to turn the call over to Mike to cover some of the specific changes that were implemented during the quarter.