NeurAxis, Inc. (AMEX:NRXS) Q1 2026 Earnings Call Transcript

NeurAxis, Inc. (AMEX:NRXS) Q1 2026 Earnings Call Transcript May 12, 2026

NeurAxis, Inc. beats earnings expectations. Reported EPS is $-0.18, expectations were $-0.19.

Operator: Good day, and welcome to the NeurAxis First Quarter Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] Please note this event is being recorded. I would now like to turn the conference over to Ben Shamsian, Investor Relations.

Behnam Shamsian: Thank you, and good morning, everyone. Thank you for joining us for NeurAxis’ First Quarter 2026 Financial Results and Corporate Update Conference Call. Joining us on today’s call is Brian Carrico, CEO of Henrichs; 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 questions. Today’s event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I’d also 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 financial operational results for 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 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 turn the event over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Brian Carrico: Thank you, Ben. Good morning to everyone joining us. Good to talk to everyone again. Quarter 1, 2026 was an important quarter for NeurAxis. I talked a little bit about this on the last earnings call six or seven weeks ago. It was our first full quarter of operating with the Category 1 CPT code for PENFS, and it gave us the clearest view to date of what drives adoption, what continues to limit broader utilization and where we need to focus our resources. I will structure my remarks today around six key areas, number one, revenue and first quarter highlights; number two, insurance coverage status and payer progress; number three, key performance indicators or KPIs. Number four, commercialization, including our current structure, new hires and upcoming changes.

Number five, the VA opportunity; and number six, a summary of our focused next steps. Following my remarks, Tim Henrichs, our CFO, will review our financial results for the first quarter 2026. For the first quarter 2026, revenue was $1.6 million compared with $896,000 in Q1 ’25, representing an 80% year-over-year revenue growth. The quarter modestly exceeded our expectations, but the more important point is what we learned from the quarter. Quarter 1 confirmed proof of concept and the demand is strong where access barriers are reduced and health care providers with the right combination of payer coverage, physician engagement and operational capacity performed extremely well. We also saw strong improvement in average selling price during the quarter, 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. Some key first quarter highlights include, as we’ve discussed, the Category 1 CPT code for PENFS became effective on January 1st, creating a more standard framework for procedure billing and reimbursement for children’s hospitals and RVUs for physicians. We continue to operate with more than 100 million covered lives, including the major national health insurer policy announced in December, representing approximately 45 million health plan members. Patients treated increased meaningfully following the CPT code launch, particularly at children’s hospitals with strong policy coverage. We confirm that written medical policy coverage remains essential.

Payers generally do not provide reliable and consistent coverage based solely on the CPT code. We gained clear insight into the three factors that drive account level success, written medical policy coverage, physician champions and dedicated IB-Stim clinic time. We identified the remaining gaps we need to close, including payer coverage, clinical reinforcement, market level execution, C-suite administrator education and consistent communication with each institution. In short, the quarter moved us from theory to evidence where proof of concept continue to succeed. The barriers that historically limited IB-Stim adoption are now much better defined and that gives us a far more actionable road map. So now I want to talk about insurance status.

Insurance policy coverage remains the single most important driver of scalable growth. Quarter 1 confirmed that a single substantial medical policy, while extremely valuable, is not sufficient by itself. Providers need confidence that coverage exists across a meaningful portion of their payer mix before they fully activate programs and allocate consistent clinic time. This is why our payer strategy remains our highest priority. We’re focused on expanding written medical policy coverage while also improving the practical infrastructure that allows hospitals and providers to treat patients efficiently once coverage exists. Our payer outreach now includes multiple parallel channels, continued direct engagement with the payers and their medical policy teams, implementation of the CPT code 64567 on fee schedules across state Medicaid programs where new codes are not yet fully loaded.

Physician and KOL-driven advocacy to reinforce the clinical need and the published evidence, engagement with both pediatric and adult academic medical societies, guidance from former payer executives and medical directors to refine our message to access the right decision-makers and continued expansion of our internal prior authorization team to enhance administrative efficiency for providers and improve reimbursement confidence. We continue to make progress with large national payers. I will not disclose specific payer discussions today, but we recently gained improved access to medical directors and other decision-makers at several of the largest remaining payers without existing policy coverage. Those conversations reinforce 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 and provides an alternative to off-label medication use, including drugs with FDA black box warnings. The clinical evidence, published treatment guidelines, broad academic society and KOL support, the Category 1 CPT code and existing payer precedent together create a strong foundation for additional policy coverage. That said, as we clearly know at this point, payer coverage adoption does not happen overnight. We expect policy updates and prior authorization improvements to unfold gradually. In parallel to pursuing those remaining payers, our goal is to execute aggressively in markets where policy coverage exist and prepare the commercial infrastructure to scale as additional coverage comes online.

We have also seen that some state Medicaid programs have yet to load CPT code 64567 on their fee schedules. This can delay program launches and affect hospital activation due to health equity considerations. Importantly, these are implementation issues rather than clinical adoption issues. In markets where policy covers and fee schedule inclusion are in place, the CPT code is having the intended effect. Now I want to talk about KPIs. We will now provide set and meaningful KPIs each quarter going forward under the new CPT code environment. This section includes the metrics that best explain both current performance and future growth potential. The purpose of this KPI framework is not only to report historical performance, it is to help investors understand the mechanics of adoption, where coverage exists whether providers have operational capacity, how patient submissions convert to treatments and how reimbursed utilization affects revenue quality and margin potential.

The first KPI I’ll discuss is revenue. $1.6 million in quarter 1, ’26 versus $896,000 in quarter 1 ’25. This is the top line performance in the first quarter with Category 1 CPT code in effect. IB-Stim average selling price, ASP is the second KPI. We’re at $1,017 versus $766 in Q1 of ’25, up 33%. This shows reimbursement mix shift and revenue quality. Total covered lives remained steady at $101 million. Quarter 1 internal prior authorization approval percentage. This one is important. This measures percentage of full price approval submissions. Now remember, we do prior authorizations for a certain number of children’s hospitals that we have access to these numbers. We don’t have access to children’s hospitals across the country that do their own prior authorizations.

But for the children’s hospitals that we do prior authorizations for, we had a 32% approval rate in quarter 1 compared to a 12% approval rate throughout the year of 2025. Quarter 1 number of ordering accounts. We had 66 accounts order IB-Stim in the first quarter compared to 56 accounts in quarter 1 of 2025, so up 18%. That shows the breadth of adoption and concentration risk. The final KPI I’ll share, and Tim will talk about some of the financial KPIs. But the last commercial KPI I’ll share is quarter 1 revenue per ordering IB-Stim account. You could back into this number, but I’ll give it to you. $24,000 per account on average that ordered in quarter 1 versus $16,000 per account in quarter 1 2025, up 53%. Now I want to talk about the commercialization.

Commercialization and commercial execution is now the primary driver of growth. We have moved from an access creation phase into an execution phase, and our commercial structure is being aligned around the markets and accounts where coverage, demand and utilization potential are strongest. Our primary commercial focus remains on children’s hospitals. This is where we have the strongest evidence base, the clearest coverage momentum and the most immediate opportunity to scale utilization. We have prioritized accounts based on their utilization potential, reimbursement environment and ability to dedicate IB-Stim clinic capacity. During the first quarter, we continued direct engagement with the children’s hospitals that have previously treated with IB-Stim.

Our team has been working with physicians, division chiefs, administrators and financial stakeholders to communicate the clinical data, the reimbursement pathway, the procedural economics and the operational requirements needed to consistently treat patients. The most successful accounts share three common characteristics, strong medical policy coverage across a meaningful portion of the hospital’s payer mix. at least one engaged physician champion who understands the clinical data and dedicated clinic time or a consistent workflow to identify, authorize and treat eligible patients. Where one of those elements is missing, utilization is constrained. Our commercial model is therefore being built to identify the missing element at each account and address it directly, whether that means payer support, clinical reinforcement, operational workflow support or economic education for administrators.

We are also being disciplined about how we deploy resources. We are not expanding broadly into markets that lack sufficient payer coverage. Instead, we are focusing on depth in select markets where coverage demand are already favorable with the expectation that this approach will generate higher returns and more predictable growth. Within commercialization, I’m going to talk about the new hires and upcoming commercial changes. Based on what we learned in Q1, we are making several changes to align the organization for scale. First, we are strengthening commercial leadership and coordination. The sales organization is being aligned under a full-time Vice President of Sales role, while marketing is being elevated under a full-time Vice President of Marketing role.

This will create tighter coordination across field execution, messaging, account support, digital awareness and market development from a comprehensive standpoint. Our payer access work will also continue to receive dedicated leadership focus, including commercial payers, Medicaid and managed Medicaid opportunities. Second, we are testing a more targeted regional coverage model. frequency of visit matters. When we are in person, we are much more successful. To drive clinical buy-in and utilization, our team needs to be in front of clinicians and hospital support teams more consistently. We are piloting territories that allow our representative to cover both children’s hospitals and VA accounts within targeted geographies where coverage, demand and strategic fit justify the investment.

This model will be tested and expanded as coverage improves. Third, we are increasing the rigor of our sales training. This includes internal and external training focused not only on product knowledge and clinical data, but payer dynamics, provider economics and execution discipline. As additional policy coverage comes online, we need the team to be prepared to convert coverage into predictable utilization. Fourth, we are launching a focused initiative around integrative health programs within pediatric GI. Many of our most important referral sources already operate within this model, which emphasizes multidisciplinary care and reduced reliance on medication. We view these programs as an important entry point for broader and earlier IB-Stim adoption.

To support this effort that we see as the future, we are adding a clinical adoption and patient access role with behavioral health expertise. This role will be relationship-driven and patient-focused, helping institutions expand access, integrate IB-Stim earlier in the treatment pathway and operationalize program growth. We will also continue to work with the academic medical societies and other external stakeholders to support a broader integrated care framework. Fifth, we are actively pursuing additional talent in areas that can accelerate adoption, including medical science liaisons to ensure the clinical evidence is well understood and most importantly, top of mind, a market development specialist to communicate the economic and operational value of IB-Stim to administrators and hospital stakeholders, which has been very favorable based on Q1 feedback, digital marketing leadership to improve physician and patient awareness in targeted covered markets, sales professionals in markets with adequate payer coverage and clear utilization potential and personnel with direct VA experience who can help accelerate adoption inside the federal system.

Finally, we are preparing what we refer to internally as a strategic market initiative for selected regions. This concept is to coordinate payer access, field execution, clinical education, market development, prior authorization support, digital awareness and patient-facing messaging in the same targeted markets. The objective is to create local intensity. The overall principle is simple. Coverage unlocks the opportunity, but execution determines the level of growth. As you can see, we’ve turned — as we said we would do, we’ve turned to a commercial focus and very much so a comprehensive commercial focus. Okay. Last, I want to spend a few minutes on the VA opportunity. As previously announced, we were awarded a federal supply schedule contract, enabling commercial access to the U.S. Department of Veterans Affairs.

The VA health care system serves nearly 7 million active patients annually and functional dyspepsia is estimated to affect approximately 3% of that population. Given typical VA adoption timelines, we did not expect meaningful Q1 orders. However, we are already seeing multiple VA facilities placing orders and many more moving through the activation process, more than we thought would be the case. That early activity is encouraging and reinforces our belief that the VA can become a meaningful channel over time. The pediatric commercial market remains our primary focus, but the VA represents a complementary opportunity with several attractive characteristics with a large patient population with a significant unmet need, centralized federal purchasing infrastructure, a pathway that is not dependent on commercial payer coverage in the same way as the broader non-VA adult market, strong alignment with non-drug approaches for chronic functional GI conditions and the potential to leverage experienced VA-focused personnel and clinical education resources.

We are actively dedicating commercial resources to this channel and evaluating hires with proven VA commercialization experience. As utilization data and clinic adoption develop, we expect to expand our footprint in a disciplined way. More broadly, for the adult IB-Stim opportunity outside the VA, we continue to believe that broad medical policy coverage will likely require a large randomized controlled trial. We have executed an agreement with the Cleveland Clinic and Stanford University to conduct a randomized controlled trial evaluating IB-Stim in adult patients with functional dyspepsia. That study is designed to generate the evidence needed to support future adult medical policy coverage, while our near-term commercial focus remains children’s hospitals in the VA.

To summarize, Q1 was successful for two reasons. First, performance modestly exceeded our expectations and demonstrated strong demand where access barriers are reduced. I should clarify, the strong demand is across the board, the results — the strong results where access barriers are reduced. Second and more importantly, the quarter gave us a clear understanding of the drivers and constraints of adoption. The most important conclusions are written medical policy coverage is essential to national scale and broad adoption that we all expect. The strongest accounts of payer coverage of physician champion and dedicated IB-Stim clinic time. A CPT code alone does not create coverage, but it is a critical piece of the reimbursement infrastructure.

Commercial execution must be concentrated in markets where coverage and demand already exists. Clinical reinforcement, administrator education, prior authorization support and digital awareness are all necessary to convert access into utilization. The VA is emerging as a meaningful opportunity alongside our primary pediatric commercial focus. And at this stage, success is straightforward in concept, though complex in execution, expand payer coverage and execute with intensity in the markets where strong coverage. We are moving decisively on both fronts. We have never been better positioned operationally, commercially or strategically. While monthly revenue may fluctuate and payer coverage timing remains difficult to predict, the underlying demand is becoming increasingly clear.

We believe the progress underway in 2026 represents the beginning of a multiyear growth cycle for NeurAxis. With that, I’ll now turn the call over to Tim Henrichs, Chief Financial Officer, to discuss the financial results in more detail. Tim, please proceed.

Timothy Henrichs: Thank you, Brian, and appreciate everyone joining us on this call today. These financial results were included within our press release, which was issued earlier this morning and were also provided in more detail within our 10-Q also filed this morning. Similar to prior calls, I will dive into key areas such as our financial results, liquidity position and elements of an outlook given the momentum we saw here in the first quarter of 2026. We continued our growth streak as the first quarter of 2026 marks the seventh straight quarter of double-digit revenue growth year-over-year. Fiscal year 2025 milestones, including the Category 1 CPT code that became effective January 1, FDA indication expansion into more clinical treatments in the adult population, federal supply schedule, opening the Veterans Affair health system to IB-Stim, PENFS and significantly more medical payer coverage set us up well for a 2026 growth story of not only revenue but gross margin expansion and operating expense leverage.

We believe we are positioned very well to deliver on our commitments to both our patients and investors. So let’s dive into the financial highlights in more detail. Our revenue in the first quarter of 2026 of $1.6 million was up 80% compared to $896,000 in the first quarter of 2025. In fact, the first quarter of ’26 marked the strongest quarterly revenue performance in the company’s history. IB-Stim unit deliveries for the first quarter of ’26 increased 32% compared to prior year due to volume growth from patients with full reimbursement coverage, a continuation of what we saw in the fourth quarter of ’25 and a market shift from our historical mix of the company’s discounted financial assistance program outpacing the growth of higher-margin full reimbursement payers in the past.

As a direct result of that payer mix shift, our IB-Stim average selling price increased 33%, as Brian mentioned previously, from $766 per device in the first quarter of ’25 to $1,017 per device in the first quarter of ’26. Our largest insurance payer, which we picked up in the fourth quarter of ’25 was a key contributor in the lift of the ASP in addition to broader acceptance of the IB-Stim device as a result of the Category 1 CPT code. And given the Category 1 CPT code has been effective only since January 1, we expect the positive mix shift on revenue and gross margins that I will discuss next to continue. Gross margin in the first quarter of ’26 was 86.4% compared to 84.4% in the first quarter of ’25. The 200-basis point expansion is a direct result of the adoption of the category 1 CPT code and increased payer coverage as our unit growth shifted from discounted financial assistance to full reimbursement payers.

Although our current market strategy is targeting all payers, our efforts to achieve more insurance coverage are particularly focused on the largest payers. We expect that success in that venture will continue to push our gross margins higher in the future quarters due to the adoption trend we experienced here in the first quarter of ’26. Total operating expenses in the first quarter of ’26 were $3.1 million, an increase of 3% compared to $3 million in the first quarter of ’25. We measure, manage or present our operating expenses along three functions, selling, research and development and general and administrative. Consistent with the second half of ’25, we reclassified $366,000 and $57,000 from general and administrative expenses into selling and research and development costs, respectively, in the first quarter of ’26 to conform to the current period and more transparent presentation as these costs are leading indicators of our future success.

Selling expenses in the first quarter of ’26 were $824,000, a 65% increase compared to $500,000 in the first quarter of ’25. The increase is due to sales commissions that are directly related to our higher sales volume and additional sales reps and marketing personnel to leverage the IB-Stim category 1 CPT code and increased payer coverage. Research and development expenses in the first quarter of ’26 were $100,000, a decrease of 16% compared to $118,000 in the first quarter of ’25. The decrease is reflective of proceeds received for devices used in 2026 clinical research studies. Excluding those proceeds, year-over-year R&D expenses would have increased 45%. General and administrative expenses of $2.2 million in the first quarter of ’26 declined 9% compared to $2.4 million in the first quarter of ’25.

The decrease was due to the absence of a onetime nonrecurring legal settlement charge in the first quarter of ’25 partially offset by incremental stock compensation expense from the third year of a three-year vesting plan, higher benefit costs and consulting fees related to the federal supply schedule agreement allowing us to sell to the U.S. Department of Veteran Affairs. Our operating loss in the first quarter of ’26 was $1.7 million, 24% lower compared to a $2.3 million loss in the first quarter of ’25. And our net loss in the first quarter of ’26 was $1.8 million, 23% lower compared to $2.3 million in the first quarter of ’25. Our higher gross profit from increased quarterly sales year-over-year and the absence in ’26 of a one-time non-recurring legal settlement charge incurred in ’25 was partially offset by higher selling expenses directly attributable to the higher volume in the first quarter of ’26.

As for liquidity, cash on hand as of March 31, ’26, was $7.1 million. Our free cash outflow in the first quarter of 2026 was $1.2 million, $391,000 better than our quarterly burn rate of $1.6 million in the first quarter of ’25 due to a lower operating loss, primarily a result of the growth due to the Category 1 CPT code and increased payer coverage as well as more efficient working capital utilization. Since then, we have continued to improve our liquidity position into the second quarter of ’26 by raising an incremental $2.1 million through our at-the-market equity facility and the continued exercise of warrants from investors. As our current cash balance is approximately $8 million, our balance sheet provides us with sufficient capital to execute on our growth plans with no near-term need for additional financing at this time.

We do believe we will achieve cash flow breakeven in the future, but that goal is dependent on the continuation of our growth trajectory to reduce our current cash burn. Our current burn in the first, second and third quarters of 2025 was approximately $1.5 million with the fourth quarter of ’25 increasing to $2 million as we appropriately built working capital, such as inventory in anticipation of the January 1, 2026, effective date for the PENFS Category 1 CPT code. That compares to our current cash burn of $1.2 million in the first quarter of ’26 as evidence of our progress toward that goal. And with that, I’ll turn the call back over to Brian.

Brian Carrico: Thank you, Tim. With that, operator, we’ll be happy to take any questions.

Q&A Session

Operator: [Operator Instructions] The first question today comes from Chase Knickerbocker with Craig-Hallum.

Chase Knickerbocker: Maybe I just want to start on breadth versus depth and kind of how you’re seeing that trend, Brian, not only since the last update, but if you could maybe give us your thoughts as things have started to materialize now four or five months into the year, kind of how you expect 2026 to play out from a depth with kind of your best customers and then how that’s trending and then how you expect kind of to expand accounts maybe based on the pipeline of kind of those accounts that are starting to establish IB-Stim clinic days.

Brian Carrico: Let’s talk breadth first. I’ll give you an example. We had — I think our record in 2025 was something like 39 or 37 accounts, the most are ordered in one-month, different accounts. And in Q1, it was something like 44. And we’ve seen that expand. I’m not going to get into Q2, but we’ve seen that expand. So, we’re seeing more account. I think our average in 2025 was something like 30 accounts, and I believe Q1, the average was high 30s. So that’s up 25% to 30%. So, we’re seeing more accounts order, and that’s a combination of was primarily directly related to the Category 1 CPT code and the issues that came along with that being able to bill. So, we’re seeing more accounts order. And I would just say that’s expanded into quarter 2 without getting into any details of quarter 2.

And then from a depth standpoint, we were pretty top heavy. We were more top heavy in quarter 1 with our top 10 or top 15 or top 20 accounts than we were in 2025. But that makes sense because the top 10, 15, 20 accounts were already had IB-Stim clinic time, they were bought in and the category 1 code allowed them, combined with the big payers that came through, allowed them to get more approval. So, they were already active. And then when you have newer accounts coming on, they always start slowly, treat whenever a patient a month or two patients a month and then they begin to grow. So, I would just say that as Q1 went on, we saw more accounts ordering. We saw the accounts at the top continuing to order more and more as they got more comfortable with the Category I code and the insurance coverage that’s in place.

And I would just say that’s expanded into Q2. And we continue to see both new accounts ordering. We see the newer accounts ordering more, and we see the more mature accounts ordering — everyone across the board continues to order more as they get comfortable with the category code. So, both the breadth and the depth is increasing, but I’m not — we’re not trying to go sell to 260 children’s hospitals tomorrow. We’re trying to be laser-focused in areas where we have good insurance policy coverage and a champion in place in IB-Stim clinic time because we know the opportunity there is significant, and they’re comfortable with the billing and the reimbursement. So that’s our real focus is the depth. Of course, we’re adding new accounts, and you’ll see that in the KPIs as we move throughout the year.

But we’re really focused on — when I talk about this comprehensive model of involving the new hires and the economic side of this and meeting with the stakeholders and getting the physicians, the chiefs, the chairs, the Chief Revenue Officers, the CFOs, when I talk about getting everyone in a room, that’s generally at the top 10, 15, 20 accounts where we know the revenue opportunity is significant. They’re seeing the benefit of the strong reimbursement where there’s policy coverage, and we’re trying to grow deep and wide as quickly as possible in those accounts. And then simultaneously, in parallel, we’re opening new accounts and beginning to have those conversations. But there are multiple levels of the new accounts. They become a new account and then they become — as time goes on and they see the reimbursement, they get more comfortable with the placements in the IB-Stim clinic time, then they begin to expand the program.

So — and that’s really what we learned in quarter 1. We suspected it, but now we’ve learned more detail around that, and that’s why we’re adding specific people to carry out specific roles to grow depth because the opportunity in one average size children’s hospital is immense, not to mention the bigger programs.

Chase Knickerbocker: And so if we think about — you’ve kind of mentioned around some of the payer dynamics in the quarter and what it might take to kind of get broad swaths of volume from specific accounts. Do you have a kind of sense of what that kind of toppling over of the domino level of coverage has to be in an account before that account is one of your kind of top 10 from a depth perspective, like what it takes for them to really kind of adopt as standard of care IB-Stim?

Brian Carrico: Well, to be more — let’s just assume the policy is strong, to be more front line, it’s got to be a minimum 50%, closer to 60% or 70%. Now the good news, Chase, is that we’re seeing significant approvals and coverage and payment for Medicaid now that the most state Medicaid don’t write policy coverage. But now that the CPT code 64567 has — is on the fee schedule in most — in many states, I wouldn’t even say most at this point, the delay is the delay. But that helps significantly because that can be anywhere from 20% to 30% to 40% of an account depending on the geography in the country. Now we know historically that from our internal prior authorizations in 2025, 19% of the patients we received in 2025 to our prior authorization team were Medicaid, 81% were commercial.

So just because the hospital is 40% Medicaid doesn’t mean this particular patient population is 40% Medicaid. It’s generally in the 20% range. So to answer your question, it’s a long-winded way of saying it’s got to be at least 50%. It’s got — it really needs to be closer to 60% or 70% for them to be able to offer this across the board because that significantly eliminates and lowers the number of patients that aren’t covered and are being sent to patient assistance program.

Chase Knickerbocker: Understood. And then maybe just one last one for me. Tim, can you maybe give us some thoughts, kind of an updated view on how you see SG&A trending just with some of the incremental hires that we kind of discussed on the call?

Timothy Henrichs: Yes. On the SG&A front, so in the first quarter, Chase, I recall the same question. And at that time, it was more of a holding pattern throughout the year as we waited to see what was going to happen with the Cat 1 CPT code. Now that we know that, that growth is there, as Brian pointed out in his comments, — we are — we have in a few cases and then we will hire on the sales and marketing front so that we can continue to drive the top line. And so as we look through the rest of the year, I do expect the selling and marketing expenses to tick up, which is different from our viewpoint in the first quarter, like I said, until we saw the Cat 1 code take effect. And then the second thing to call out is that in the second quarter, we do expect to have a charge, a stock compensation charge as we disclosed in the subsequent event section of our financial statements, which has been put forth to the shareholders, which we’ll know on June 10, and it’s the cancellation of stock options and then the exchange/issuance of restricted stock units.

And so that will be a charge in excess of $4 million, I expect. And the reason I don’t know that for sure is it’s a fair value measurement per GAAP, and we won’t know that exactly until June 10, but that’s the range. So there will be that charge in the second quarter. But again, that will be onetime non-recurring and a fair amount of that will be non-cash. So I expect G&A to hold at the trend that we have. I expect the selling and marketing expenses to ramp up, and then we have a onetime charge coming here in the second quarter when we report next in the August time frame.

Operator: We now have a few questions that were sent in. First, will you provide VA revenue separately in the future? What is your projected burn rate and the revenue to reach profitability?

Brian Carrico: Yes. So I’ll start with the VA conversation. Likely, at some point in the future, we’ll break down VA versus the pediatric children’s hospitals. We might do that. I don’t know when. Yes, at some point, we’ll likely break that down. We are putting some commercial focus, both marketing, sales, medical centers liaisons, bringing some people in that have some relationships or strong relationships in that area. So yes, at some point, possibly. As far as cash flow breakeven, that’s a Tim question. I think that’s — there are two questions there. Investors when I have conversations often care about the cash flow breakeven versus the P&L breakeven. So I would need clarification or Tim would need clarification on which number. And then the second — what was the second question? I’m sorry.

Operator: The second question was what is your projected burn rate?

Brian Carrico: Tim can answer those two.

Timothy Henrichs: Yes. So, in the first quarter, as I mentioned, we — burn rate came down to $1.2 million. And based on what we saw here in the first quarter, I expect that to continue to decline through the rest of the year and into 2026. And so, from a guidance perspective, on a quarterly basis, we’ll be looking at $1 million or less, I think, for the rest of the year. And then the way to think about the cash flow breakeven, if you just take our first quarter and trend that out, so the operating loss for the quarter was $1.7 million, right? So that’s what we need to cover for profitability, and it’s going to be a little bit less for cash. Our variable margin rate is approximately 75%. So, if you take that $1.7 million, divide it by 75%, that’s going to give you about $2.2 million or so, and that’s just for the quarter.

So, if you trend that out for the full year, that’s about $9 million of incremental revenue that we would need above the current pace in the first quarter. And so, our first quarter, right, we came in at $1.6 million, which is about $6.4 million and then you add $9 million on that. And so, assuming no incremental increase in fixed costs and that 75% variable margin rate, and we saw a really nice expansion in the first quarter of 200 basis points on gross margin. So, we’ve got opportunity to even increase that. But you take the $6 million current run rate on revenue and the $9 million on the incremental piece to get the cash flow breakeven, you’re looking at about $15 million in revenue is probably the current trajectory based on our SG&A and our variable margin rate.

Operator: The next question is referring to the KPIs. What is the target pre-authorization rate?

Brian Carrico: The target is, of course, 100% but no any product or drug has 100% coverage, but we need to get — we need to get up in the 80% range. And there are four or five key payers that get us — that promptly get us there. So, I can’t tell you the amount of time, energy and effort, resources, connections, ex-medical directors, ex-executives that are involved in this. And again, in the last few months, we’ve learned more than ever that this is not — no one is saying no to us. These payers have think about the market effect of something like a GLP-1. There are things that are taking significant resources and time within payers. And then you think about this technology, and it’s a matter of getting the attention of the right people to sit down and have the conversation. So, I would just tell you we’re making significant progress. I’m extremely confident in where we are. And I wish I could give you a date as much as anyone, but that’s where we are right now.

Operator: [Operator Instructions] At this point, there are no more questions in the queue. Therefore, I would like to turn the call over to Brian Carrico for closing remarks.

Brian Carrico: No, I appreciate everyone joining. If you have additional thoughts or questions, please schedule time through Ben Shamsian or myself. Happy to have conversations around the talking points we had today. Everyone, have a great rest of your day and rest of your week. Thank you.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.