Ceribell, Inc. (CBLL) May 13, 2026 Conference Transcript

Okay. I am Stephanie Algazi. I cover medical devices at Bank of America. And next up, as part of our healthcare conference, we have Sarah Bell. We have Jane Chow, CEO, and Scott Blumberg, CFO. So thank you both for being here today. Thank you for having us. Maybe we can start with Q1 since you just reported the other day, you know, revenue came in a little better than the street and it was your largest quarter of net new ads and record usage per account. So maybe you can just give some background on the commercial progress you've been making on both fronts to get to these record levels in Q1.

Sure, Stephanie, as you alluded, there's really two core drivers for our core seizure market. and I'm sure we'll get into the pipeline soon, but one is accounts added, two is usage per account. On the account ads front, we added 33 accounts in Q1, which brings us up to 680 total. It was our largest number of new ads since we've become a public company. That continues to grow, and we see growth drivers there, accelerators in the maturation of the sales force, as well as initiatives we have like our extension of the DA system. And then on the other side of the house, that's usage per account. We don't disclose that specifically, but we do disclose product revenue per account. So I know the street's tracking very closely on that. We had our record number of uses per account in Q1. We still are in the early innings there. We're roughly, we believe, around 30% penetrated within our active account base. and we continue to march forward and driving growth through department expansion and provider education and workflow expansion.

Great. And then the revenue guidance for the year was raised by 1 million, which was a little bit more than the beat in Q1. So maybe you can just talk about your confidence in the outlook for the year and some of those core building blocks that you touched on and the visibility there.

Yeah, now we have about a six-quarter track record of being a public company, and we've consistently had very accurate forecasting and beat our numbers. We have a philosophy, which hasn't changed over the last year and a half, to provide guidance that we have very high confidence in the ability to achieve, and that's grounded in a really projectable business model. We, on the acquisition fronts, you know, of course, we track the leading indicators, but one underappreciated fact is that we tend to get purchase orders about three to four months before we turn an account live. So we've got very, very good near-term visibility in terms of the accounts that are launching in the coming quarter or two. So on the usage per account front, we've got a very low customer attrition rates are relative to other capital type devices. Companies, for example, we're selling a whole lot of a product at a lower price point. And so we're less subject, I think, to shocks to the system. So, you know, we have very good visibility in the business, and I think that's reflected itself in our performance to date.

And then on the seasonality and Q2 and Q3, you mentioned you typically see sequential moderation. Again, just given seasonality and utilization, do you expect that to be to a similar extent this year as what you've seen in the past? Or do some of the incremental opportunities you've been making progress on change that in any way?

I think we only have about a three or so year track record of having sufficient usage to make an assessment. And we've seen the same trend for three years. So that's why we talk about it, which is that we tend to see higher usage in Q4 and Q1 relative to Q2 and Q3. And there was really, really strong reporting of ICU and ED census during COVID. for obvious reasons, and so we have overlaid that with our patterns, and there's a very direct relationship between ICU and ED census and our usage, and so we strongly believe that that's the cause. That said, we're implementing a number of strategies to drive up into the right. Whether one driver is more powerful than the other, I think that's something that We, you know, with a three-year track record, don't have quite enough data to suggest except for to, you know, appreciate that some of the great seasonality is a part of our business.

Makes sense. And then I wanted to follow up on the account side of things for a bit. You, I guess, recently talked about a new account acquisition strategy that's more focused at the hospital system level. So maybe you can just start with why you decided to build out this strategy in addition to what you were doing before and some of the ways that it's different.

Yeah. So previously, we have the territory managers. They cover more individual accounts. And then we have a hospital system team, but they more cover big national accounts like the HCAs and the Common Spirits. And there's a very big portion of the customers there we call the regional hospital systems. They are somewhere between only 10 to 30 hospitals. And these often start to become between the crack, right, the TNs and the system. We did this model because we saw a strong signal last year. Our best TMs, they closed significantly higher than national average because they were able to close the smaller systems. They can close 10 hospitals at once, right? And then we noticed what they do is they not only just call individual hospitals, they actually cover the system level administrators and CMOs and CMOs. They also do a better job coordinating across territory because I might only own eight of the hospital. You own the other two. They partner with the TM. They also partner better with the CAM. The CAM are our sales that cover existing accounts because out of the 10 hospitals, two might be already cerebral users. But then historically, we don't have a dedicated team to make sure all this can get done systematically. So that's the reason behind building the team. So this team can partner with the TNs and the camps, call on the system level stakeholders and also coordinate across different territories, different teams, make sure we have a well designed, strategic, comprehensive strategy.

And I think you mentioned you hired a small team to drive this strategy. Is it all new hires or did you move over some of those TMs that had good success doing this in the past?

It's both.

Yeah. Okay.

And I guess do you anticipate building this team out further or needing incremental investments to support this strategy? we usually we we hired a meaningful a few number single digit usually we try for a few quarters and we are pretty confident we'll see the signal so we might for the extent but this by nature is not going to be a big team it's going to be a relatively small team because what I talked about is a lot of coordination and working at the system level so it shouldn't have a big impact to the cost side.

Okay. And then just thinking about maybe impact on the model and if this changes sort of the pace of active account ads in the future or, you know, if it may affect headband orders and trends in the future.

I think on the rate of account ads, I think there's reason to believe it will. That's our thesis in doing it. The nature of these system-level sales is that they come in chunks, right? You work hard and then you get, you know, seven or 10. It's probably going to be a few quarters before it can fully materialize into output. We're tracking it closely, but we're making the investment because we believe it can accelerate account acquisition. Maybe less clear on the utilization side. I think there's probably an argument that spreading best practices, but we view it more, at least initially, as an acquisition play.

Makes sense. And then, you know, the VA system represents a 170 hospital opportunity that you're in the early stages of. So anything you can share from your early experience there and the progress they're making on account ads?

We don't disclose specific VA system because EndUp is one of the many hospital systems, right? So, of course, one of the biggest ones. However, the way VA works is it more has this well-designed annual budget cycle. So what we did is we closed a meaningful portion of the VA hospitals Q3 last year. So the last two quarters, we've been launching majority of these accounts. And this year, of course, we'll continue to launch the rest of the VA as well as work with the VA to see whether or not we can close even more accounts. And that will start launching later this year or next year.

Okay, makes sense. And then maybe shifting to utilization a little bit. You've said that your top accounts use three times more than the average account. So what are the drivers that can help move an average account up that utilization curve?

Yeah, the pattern we see in the top accounts are a few. One is they use on almost all the departments, all the ICUs, emergency departments, sometimes even step-down units and the floor. Our average account often are not in all the departments yet. So the departmental expansion is a very reliable path. The second feature we see in these top accounts is they have a very coherent workflow. Because when you think about these are different departments, but the patient actually flows through ED to the ICU or to the floor and goes through neurology. And so we see average accounts, sometimes their workflow can't have room for improvement. The third thing we see is we train better these hospitals. Sometimes we have better access to it. We have better internal team. So they train all the physicians. They make sure the new physicians are trained. The overnight shifts are trained. The fourth thing we see is they have more well-formed protocol for specific patient population. For example, post cardiac arrest patients have clear guidelines from AHA to have prompt seizure monitoring seizure, prompt EEG monitoring seizure. Many of these top hospitals would have point of care EEG or cerebral in their cardiac arrest protocol. Not in all the patient population yet, even in the top accounts, but those are the four patterns we see. And you can see how we translate this to our overall strategy, departmental expansion, protocolization, and physician engagement and workflow optimization.

And when thinking about utilization at the top accounts and some of the additional indications that you've been making progress on, are there any constraints to consider from a hospital perspective for utilization going higher in those top accounts? Or is there still room in those accounts as well?

There are definitely rooms in the top account. So even without new indication like delirium and neonate, we see our top accounts growing year over year. And top accounts are even easier for us to expand to new indications because all the stakeholders are strong cerebral believers. So it's much easier to a strong account say, can you introduce me to the medical director of NICU or pediatric epileptologist? And same for Delirium. A lot of our commercial pilot sites are our strong existing accounts.

And then just thinking about the account ads accelerating this year and, you know, utilization ramp for a new account versus utilization in an existing account. Maybe you can just remind us what that looks like and if there's any impact on overall utilization from new account ads.

The adoption pattern of new accounts, I think, is a little bit different than what I think from observation most investors infer. It's not like a try before you buy. They don't use 5 and 10 and 15 and 20. They can establish really good practices on the front end. And what we see is that the practices that are established are very sticky. So that's why we invest a lot of resources in high-quality launches. So, to that end, adding a lot of counts doesn't have a significant dilutive effect to usage, but they do come in slightly below our average, so there is some dilutive effect. But we work really hard to establish those best practices to make sure that they hit the ground running.

Okay, maybe we can shift to some of the new indications. You're now in the commercial launch of pediatric and Neonate products, so maybe you can just talk about early traction and feedback you're getting there and if it's consistent with the pilots.

Yeah. The feedback from Neonate is very positive, which is why we announced the full commercialization this quarter. It's towards more the optimistic scenario for our internal timeline. If I compare neonate launch to adult seizure launch we had about six, seven years ago, a few things that's actually more positive. One, from neurology perspective, when we launch adult, we have to explain to neurologists why partial montage is sufficient for ICU compared to the full montage. That's probably the number one question from any neurologist. Now, of course, we have a lot of data. Neurologists finally say, yes, partial montage is good. But that was not day one. For neonate, we actually have full montage recommended by American Epilepsy Society. And so that's the one question that we do not have to explain. And the reason we did full montage is because babies actually often have seizures in parasympathetic domain. Number two, we see it's even a different level of care of neurological outcome for this population. Of course, we all care about patient's outcome, physicians all do, and the neurological outcome. But sadly, when, not sadly, but just like it's human nature, right? When you take care of a patient that you are trying to save patient heart, patient lung, and it's just harder to think about the brain when patients are 80, 90-year-old post-cardiac arrest. But when you have this newborn, seizure is the number one most common neurological abnormality in NICU. They don't have usually stroke. They have a very small population. They don't have TBI usually. And then data also show one hour of seizure can change the IQ from 100 to 85. And neonatologists really recognize that. So because of the clinical impact, we really see a very strong desire to adopt. Now, on the health economics side, many of these Level 3 NICUs, so the highest NICU is Level 4. They are top teaching centers. The next high level is Level 3. They are already very sophisticated. They often have to transfer patients out because they cannot get an EEG. the DRG code for this patient is much higher than adult because you know they stay in ICU for much longer so we can keep the hospital keeping these patients in and so that alone is a very strong health economics as well as pride for the hospital to keep their family keep the mom and the baby in the same hospital so all these are very positive from the initial pilot that's why we decided we are very much ready for the full launch.

You have said there's 200 NICUs in your existing install base. Are they aware of this offering? Had you been messaging the broader launch with them while you were in the pilot phase?

I know you mentioned it's still a multi-month sales process, but just curious how to think about the pace at which you can sort of start the process with your existing install base yeah uh the commercial pilot phase no we did not messaging to the 200 neqs or any neqs we only focused on a small number because we want to make sure we do things right now with the full commercial launch that our cam team is targeting these 200 neqs so that just started okay and then on delirium you launched the first pilots in april and anticipate the full launch later this year or early next year.

What have those conversations been like for setting up the pilots and any early learnings that you can share?

Yeah, it's also very positive. The number one question we get from investors, so what do I do if patients have delirium, you don't really have a drug? If you talk to intensivists, many of them actually don't ask that question because there's a clear guideline from Society of Critical Care Medicine that what do physicians need to do? They look at medication, sedatives, or antibiotics, or some pain meds can cause delirium. They look at other underlying conditions. So we thought that's the case based on our market research. It was the case as we start to do the commercial pilot. The second learning we have is doctors are very, just most of them agree, say, okay, I really feel the current standard of care is subjective. I only have a binary result. I only have twice a day, and I'm not sure our new nurse work trained properly. Having an objective continuous trend resonates very much with them. The third learning is actually a little bit a surprise, but it's in a very positive way. They really see it's not delirium alone. it's delirium and seizure together because so many of these patients are having delirium and seizure together and the symptom is the same the treatment can be opposite they don't have a tool they have to guess so a lot of the first few sites of commercial pilot focus on what are the populations we can we can we can target how do we tailor the workflow when algorithms say it's positive or negative and also think about down the road what are the potential clinical outcome or health economic outcome we should be measuring.

And what is the biggest benefit of having the delirium indication to you? Is it capturing incremental patients and improving utilization or is it on the subscription side? Yeah maybe just how you're thinking about that.

Yeah I mean the good news is it could be all above. We can decide it. We can decide, do we want to charge more or do we see such a strong patient expansion? We don't want to charge more because if you charge more, you cannot slow down the adoption. And those are the questions we will be very much focusing on, getting insight, getting data during the next couple of quarters. So by the time we have full launch, we really think through our pricing strategy.

And on the earnings call, you mentioned a study with Vanderbilt Medical Center to examine the overlap between seizure and delirium. Any more detail on the study that you can share or what you're hoping to learn from it?

Yeah, as I mentioned but in the earnings call, Vanderbilt is where delirium standard of care CHAM-ICU developed. And the standard of management AF bundle is also developed at Vanderbilt. It's really probably one of the most influential medical centers related to delirium. Actually, it started with we showed the algorithm, and then we showed some literature. It triggered their interest about they wonder how many of their delirium patients are actually having seizure because they don't have the best EEG capability. So that's really the premise of it, is to show how seizure and delirium together can potentially improve care. So the first phase will just, the protocol is public, so we'll look at all the delirium suspicion patients and put cerebral on and see how many seizures they can see and, or in other words, how many seizures they would miss with their current standard of care. And I think even that alone can drive significant adoption because you don't need to show a doctor treating seizure is important. Doctors know that. You just need to show they are missing it. And down the road, of course, we can potentially expand that partnership, more thinking about what study we need to do to integrate this and influence the guideline.

And then I wanted to ask about pricing from some of these new indications. since there's puts and takes for both headbands and subscriptions, potentially. You mentioned the Neonate having the higher headband and subscription. You also got Delirium NTAP in the CMS proposal, but NTAP for the core system, I think, is expiring this year. So maybe you can just help us think about the different puts and takes on pricing from a headband and subscription perspective.

I think as you lose, there's still decisions to be made, especially on the delirium side. But our core headband price has remained relatively consistent over the past year or so. We expect to maintain price going forward. We've seen an increase in, even without NEON-A, we've seen an increase in the clarity price, and that's been driven by hospitals acquiring more recorders. We typically charge about $500 more per month for every additional loan recorder. The demand of hospitals and department expansions has driven that higher. And in the near term, we have made a decision on NEON-A, which is that's sold as a separate subscription. and there's economies of scale to the customer to acquiring both adult and neonate such that having both is cheaper than one plus one and the head cap is also higher priced than the headband. Beyond that, as Jane mentioned, there's a wide range of choices we can make around future indications and we haven't made those yet because we're awaiting information from our ongoing pilots and research.

Makes sense. Okay, maybe we can switch over to the P&L. Gross margin of 87% in Q1 was about 300 basis points better than the street. And you expect the rest of the year to be in the high 80% range versus the prior mid 80%. So what's driving that gross margin strength and improved outlook?

Yeah, so we were operating around 88% over the past year and change. And we were manufacturing the headband, barring except for final inspection assembly in China. And of course, tariffs went up materially there. over the core. We've undertook a number of mitigation strategies. What you're seeing right now is just us managing costs, reducing expenditures, volume-based discounting, manufacturing efficiency, et cetera. And that's something we were working on in general before tariffs, but of course accelerated and put additional focus on as tariffs came on board. and that offset the elevation of tariffs from China. And so those have kind of moved through our P&L at the same time that we kind of turned on the higher inventories from China. So this quarter, Q1, we were entirely dependent on inventory from China because our accounting is first in, first out. Separately from that, we very quickly over the course of a quarter and changed stood up a second manufacturing line in Vietnam We think there's value in supply chain diversity in general, but when tariffs were astronomically high for a brief period in China, we stood that up quickly so that we could move manufacturing or move part of manufacturing over there. That's fully operational, and we've received inventory from Vietnam. It hasn't yet flown through the P&L. So the way I would think about it is what you're seeing right now, that move from 88 to 87 has been a reflection of the increasing tariffs in China. But going forward, in addition to continuing to capture the cost reduction initiatives, as well as others we have underway, as Vietnam starts to move through the P&L, there's some opportunity for upside there.

Okay. And then on OPEX, in Q1, it was a little above what the street was expecting. And I know you don't guide to OPEX necessarily, but with some of the new indications and opportunities that you're working on, has your, I guess, expectation for OPEX for the year changed in any way?

I don't think so. I think that, you know, the OPEX in Q1 really had two buckets. One was investments in growth, which is sales and marketing and R&D. And sales and marketing investment was, in a large part, the natural expansion of the CAM team, which has to grow at the rate of growth, the account base, barring a change of span of control, and then the addition of the strategic account function. And those are investments that, of course, we believe we're going to drive downstream growth. And then on R&D, it was investments made in our pipeline, as well as improving our products so those are things we made open-eyed we evaluate our our cash position regularly we've made a commitment which we stand by to which we break even with cash on hand and their investments that we feel will drive long-term value and growth and don't sacrifice that the other which was less ongoing is the expenses related to our ongoing litigation was higher in q1 than it had been in the prior three or four quarters since we started that action. The nature of litigation is that it's non-linear and the first half of 2026 is the most time-intensive and thus most expensive part of the lawsuit. So that was elevated and will likely remain elevated in Q2, but we expect that to subside as we get through the most intensive parts of the trial.

And then I think as of Q1, you started to report adjusted EBITDA. So maybe you can just talk about your decision to do that now.

Yeah, I think we've tracked closely and I think we were, frankly, the outlier in not doing it until now. Most of our peers of our stage do have some form of adjusted EBITDA. I think there are two exclusions from EBITDA to adjust EBITDA is non-cash stock-based comp and the litigation expense related to that specific action. And as a general matter, companies going public, the non-cap-stopic comp tends to increase the first few years as you make that transition from on the books really inexpensive stock options to, from a GAAP perspective, more expensive RSUs. And so I think making sure that that's appreciated and not a reflection of differential investments we're making, the infrastructure is important to call out. And then as it relates to the litigation with Natus, again, we view that as transient in nature and thought it was important to specifically identify that.

Makes sense. I think with that, we're out of time. So thank you both for joining us.

Thank you.