NeuroPace Inc (NPCE) Q3 2025 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the Neuropace Q3 earnings call. All lines are placed on mute to prevent any background noise, and after the speaker's remarks, there will be a question and answer session. If you'd like to ask a question at that time, please press star, then the number one on your telephone keypad.

If you'd like to withdraw your question at any time, please press star one again. thank you i would now like to turn the call over to scott shaper head of investor of neurospace please go ahead thank you operator and welcome to neural pace's third quarter 2025 earnings conference call our agenda begins with joel becker neural pace's chief executive officer who will summarize our recent highlights and ongoing strategic initiatives followed by a financial review and outlook from patrick williams our chief financial officer following our prepared remarks we will open the call up for your questions at that time we asked the analyst to limit themselves to one question and one follow-up question each so we can provide an opportunity for everyone participating today let's quickly review our safe harbor statement some of the statements we will make on today's call may constitute four looking statements these statements reflect management's intentions beliefs and expectations about future events strategies, products, regulatory, and operating plans, and performance. All forward-looking statements included on this call are made as of the date hereof based on information currently available to Neuropace, are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements. The factors that could cause actual results to differ materially from those expressed or implied by any of these forward-looking statements are detailed in neuropace's annual report on form 10-k most recent quarterly report on form 10-q and other filings with the securities and exchange commission except as required by law we assume no obligation to update any such forward-looking statements after the date of this call or to conform these forward-looking statements to actual results and with that i will now turn the call over to neuropace's chief executive officer Joel Becker.

Thanks, Scott, and good afternoon, everyone. I will start with an overview of our third quarter results and how the team is executing against our strategy. I will then provide updates on our key clinical and product development initiatives. After that, Patrick will walk through the financials and updated guidance before opening the line for Q&A. The third quarter was one of record results for NeuroPace and demonstration of the effectiveness of our strategy and its execution. Total revenue in the quarter was $27.4 million, delivering 30% year-over-year growth compared to $21.1 million in the prior year quarter. This record revenue was primarily driven by RNS initial implants, resulting in RNS revenue of $22.6 million and representing growth of 31% year-over-year. RNS growth in the quarter was broad-based across geographies, customers, and programs. All sales regions exceeded planned sales for the quarter with the number of prescribers, accounts, and utilization nationally reaching all-time highs. These results demonstrate the compounding effects of the recognition of the differentiated capabilities of the RNS system, enhanced commercial leadership and execution, and improved referral management, driving higher procedural volumes. The majority of our growth came from Level 4 centers with increased adoption and utilization. Project CARE also contributed meaningfully and again improved sequentially and year-on-year. We also saw increased contribution from our direct-to-consumer efforts as well. We remain confident in our long-term growth trajectory of growing a minimum of 20% in our core R&S business with our current adult focal epilepsy indication. Importantly, gross margin and operating leverage were also strong and continued to be highlights as we scaled growth in a disciplined manner. Additionally, during the quarter, Neuropace generated positive adjusted EBITDA, a significant milestone for the company and the first time in our history. This important accomplishment reflects the scalability of our model and the progress we are making with disciplined expense management, consistent mix improvement, and increasing efficiency in both commercial and manufacturing operations. We are proud of this achievement, and while this metric may vary quarter to quarter, we remain committed to driving towards sustainable profitability and cash flow break-even. Given the performance in the quarter, we are raising both our full-year revenue and gross margin guidance ranges. For revenue, we now expect a range of $97 million to $98 million, or 21 to 23 percent year-over-year growth, an increase from previous guidance of $94 to $98 million. Let me now turn to our key clinical and product development initiatives, starting with Nautilus and our recent meeting with the FDA. As expected, we completed our pre-submission meeting with the FDA in September, which we believe was a productive and engaged discussion of the study. We reviewed the totality of the evidence, safety, the primary effectiveness endpoint, and the pre-specified secondary endpoints, as well as additional analysis. We continue to believe the safety and effectiveness profile of the Nautilus data supports a favorable benefit-risk assessment for this highly underserved population, and our PMA supplement will incorporate the discussion points from our meeting. We appreciate the opportunity to meet with and the dialogue was consistent with our expectations. Development of our PMA supplement application is underway, and our timeline and plans remain on track to submit the PMA supplement for Nautilus before your end. Moving on to our pediatric indication. We continue to work closely with the FDA and our collaboration partner, NEST, as we finalize the real-world evidence and protocol for our pediatric indication. We are working to ensure that the data set and protocol are both as strong as possible. As we continue this process, it has taken more time to align on that protocol and data set than we had initially built into our timeline. We remain confident about the approach of leveraging real-world evidence to gain this much-needed indication expansion in a pediatric patient population. As we finalize, the real-world evidence and protocol timing for submission will extend beyond 2025. We are not providing a revised submission date today, but will provide updates as milestones are met. We are appreciative of the quality of the interactions with FDA and NAST and the ongoing collaboration as we pursue this unique opportunity. We look forward to advancing this syndication expansion pathway and remain committed to bringing RNS therapy to the pediatric population. I also want to highlight the growing recognition that RNS and our unique closed-loop stimulation is receiving across the field. The September issue of the Journal of Clinical Neurophysiology was entirely dedicated to the use of data and feedback for personalizing intracranial neuromodulation, and several articles featured R&S at the center of that conversation. This journal is one of the most widely respected peer-reviewed publications in the field of epilepsy and brain modulation. It is the official journal of the American Clinical Neurophysiology Society and a key forum where leading researchers and clinicians publish data that shape standards of care. The editors described a critical shift underway in epilepsy therapy, away from one-size-fits-all stimulation and toward data-guided patient-specific neuromodulation. Driving that shift is the convergence of long-term intracranial EEG, advanced neuroimaging, and artificial intelligence, and the critical importance of developing individualized treatments in clinical settings. For years, the RNS system has generated data and outcomes that define what personalized closed-loop therapy could be. Now, as AI and computational tools mature, the importance of the RNS system's unique ability to monitor and record data and then tailor individual therapies for specific patients through its differentiated closed-loop capabilities is coming further into focus. We believe the broader scientific community is recognizing that the RNS system platform is best positioned to capitalize on this new era of innovation that is beginning to shape the future of epilepsy neuromodulation and brain-computer interface development. We are now seeing a number of factors we've been working on deliberately for years start to come together at the same time. The clinical maturity of closed-loop neuromodulation, the scale and quality of our long-term intracranial EEG data set, and the computational tools to act on that data in real time. And critically, we now have the tenure, domain knowledge, and execution muscle on the team to capture this opportunity. This convergence is creating an environment for the potential of accelerated adoption of closed-loop personalized neuromodulation. We believe the RNS system is uniquely positioned to capitalize on this new era of data-guided epilepsy care and longer term on the direction the field is heading in neuromodulation and brain-computer interface, or BCI. Now to an update on product development. Our RNS development pipeline is focused on extending the platform advantages just mentioned with greater on-device analytics capabilities, streamlined programming workflows, and enhanced connectivity to further improve both the quality and time to improved outcomes, as well as enhanced efficiency and ease of use to support wider adoption. We recently submitted to the FDA our SeizureID AI software tool, the first of a suite of planned Neuropace AI applications, which utilizes our proprietary IEEG data and AI development efforts and is designed to improve clinical outcomes. With that, I'll turn it over to our Chief Financial Officer, Patrick Williams, to review the financials and our outlook.

Patrick? Thank you, Joel. Before getting into our results, I wanted to take a moment to reflect on my first full quarter with the company. The strength of the product, the commitment of the team, and the sheer scale of opportunity still ahead is now much clearer to me and makes me even more optimistic. The execution improvements being undertaken and feedback from physicians I have met with have reinforced that this is a company with a differentiated technology and with a long growth runway. In today's press release, we have provided a financial supplement which breaks out our historical R&S, Dixie, and service revenue by quarter from Q1 2024 through today's Q3 2025 results. We believe this additional detail will allow investors and analysts to more easily reconcile our historical performance with our go-forward reporting structure as we move into 2026, where we will be substantially done with distributing any further Dixie product. Let me now walk you through our third quarter financial results. Our third quarter revenue growth is driven primarily by continued strength in our R&S system sales, totaling $22.6 million, representing growth of 31% compared to the prior year period, supported by higher procedural volumes, broad-based increased utilization within existing centers, and growing contributions from Level 3 and community centers as our investment and focus in these areas scale. Additionally, we generated approximately $770,000 of research service revenue in the quarter, tied to our ongoing data collaborations. Dixie sales grew 8%, coming in at approximately $4 million in the quarter as the distribution agreement officially ended on September 30th, and the entire company begins to focus more on R&S in line with our strategic rationale. As a reminder, the distribution agreement with Dixie provides for a six-month wind-down period which lasts until the end of Q1-2026. At the end of this wind-down period, the distribution agreement contractually allows NeuroPace to sell back any remaining inventory at prior paid costs back to Dixie. Thus, there is minimal to no inventory excess or obsolescence exposure related to this termination. Finally, although the distribution agreement allows for a wind-down period through Q1-2026, We currently believe we will be substantially done with Dixie sales by the end of 2025. We do not expect any material sales in Q1 2026 as our organization and notably our commercial team strategically shifts its focus solely on our core R&S business and the potential upcoming FDA approval of expanded indications. We are raising our full year revenue guidance to a range of $97 million to $98 million up from our previous guidance range of $94 million to $98 million. This updated guidance reflects an increase of approximately 21% to 23% over our reported total revenue for 2024. Our increased revenue guidance is primarily driven by our R&S system, which we expect to be in the range of $20 million to $21 million in the fourth quarter. At the midpoint of this range, R&S revenue growth for the second half of 2025 would be approximately 23%, an acceleration over our R&S first-half revenue growth results of 21%. This revised total company guidance incorporates a lower contribution from Dixie products of approximately $3 million in the fourth quarter due to the aforementioned strategic shift and wind down of the Dixie product line. And with regard to service revenue, we expect approximately $750,000 in the fourth quarter, similar to our third quarter results, and is based on our current projections of achieving certain milestone triggers outlined in these service contracts. Turning to gross margin, total company gross margin for the third quarter 2025 was 77.4% compared to 73.2% in the prior year quarter and 77.1% in the second quarter 2025. RNS system gross margin remained very strong at above 80%, benefiting from improved manufacturing efficiency, favorable pricing, and continued leverage as we scale. This strength was partially offset by the lower-margin Dixie products, which carry gross margins slightly below 50 percent, and were again impacted by incremental tariffs. Based on our strong year-to-date gross margins and increasing revenue contribution from our higher-margin R&S product, we are raising our full-year gross margin guidance to a range of 76 percent to 77 percent, up from our previous guidance range of 75% to 76%. As we move into 2026 and substantially exit the Dixie product line, our revenue and gross margin will essentially only be the R&S system, which we believe will carry a gross margin greater than 80%. Total operating expenses were $23.8 million in the third quarter of 2025, compared with $19.7 million in the prior quarter, in line with expectations with better-than-expected general and administrative expense and areas of research and development expense, offset by higher-than-anticipated selling expenses due to an overperformance in sales, as well as higher variable compensation approvals across the organization. Operating expense growth of 21% in the quarter remain meaningfully below our revenue growth of 30%. Stock-based compensation in the quarter totaled $2.6 million. dollars. As Joel mentioned, we continue to demonstrate underlying operating leverage, resulting from our focus on driving revenue growth, while also effectively managing our operating expenses and gross margins. We plan to continue to focus on balancing these objectives as we drive towards cash flow break-even. We now expect total operating expenses for 2025 to range between $94 million and $95 million, a slight increase at the lower end from our previous guidance range of 92 million to 95 million dollars to reflect the increased expense in the third quarter related to sales over performance and increasing variable compensation related to expenses we expect to incur by year end this range reflects 16 to 18 percent operating expense growth on a year-over-year basis and is well below our revenue growth rate included in our total full-year expense is approximately 11 million dollars in stock-based compensation a non-cash expense as we started last quarter and as part of an ongoing effort and commitment to provide increased transparency and support the ability to model our business we will again break out and provide commentary on sales and marketing research and development and general and administrative components rather than referring to sdna as a single line item sales and marketing expense was 12.6 million dollars in the third quarter of 2025, up from $9.9 million in the prior year quarter, and slightly up from $12 million in the second quarter of 2025. The year-over-year increase was largely due to personnel-related expenses associated with ongoing scaling of our commercial activities, investment in direct-to-consumer marketing, and other sales-related expenses. The slight sequential increase was primarily due to higher variable incentive compensation related to sales over performance. We now expect sales and marketing expense to total between $47 million to $48 million for the full year 2025, slightly up from our previous guidance range, primarily driven by the aforementioned increase in variable compensation related to higher sales performance. R&D expense was $6.6 million in the third quarter of 2025, up from $5.8 million in the prior year quarter and slightly down compared to $6.8 million in the second quarter of 2025. The year-over-year increase was primarily driven by personnel-related expenses associated with the development of a next-generation platform, AI-enabled tools, and ongoing clinical trials. We now expect R&D expense to total approximately $28 million for the full year 2025 or at the higher end of the range of our prior guidance as investment in next-generation products continues, including final preparation of our IGE PMA supplement, which is still on track for submission by the end of this year. G&A expense was $4.6 million in the third quarter of 2025, an increase when compared to $4 million in the prior year quarter, and down sequentially from $6.1 million in the second quarter of 2025. The year-over-year increase was primarily driven by personnel-related expenses. The larger sequential decrease was driven by non-returning costs associated with an executive transition in the second quarter. We now expect G&A expense to be at the lower end of our previously guided range and to come in at approximately $19 million for the full year 2025. Loss from operations was $2.6 million compared to a loss from operations of $4.2 million in the prior year and a loss of operations of $6.8 million in the second quarter of 2025. We recorded $1.6 million in interest expense compared to $2.2 million in the prior year quarter, reflecting the benefits of our debt refinancing earlier this year at more favorable terms. We continue to expect interest expense of approximately $8 million for the full year 2025. Regarding interest income, we expect approximately $2.5 million in income for the full year 2025. Net loss for the quarter was $3.5 million compared to a net loss of $5.5 million in the prior year period and a net loss of $8.7 million in the second quarter of 2025. Our free cash flow defined as operating cash flow, less capital expenditures, was negative $2 million in the third quarter of 2025 compared to negative $1.8 million in the third quarter of 2024. The year-over-year change primarily reflects higher revenue and gross margins, are partially offset by an increase in inventory as we place final orders for the Dixie product line. Lastly, as Joel mentioned previously, adjusted EBITDA, defined as EBITDA, excluding stock-based compensation, was a positive $0.1 million in the quarter compared to a negative $1.6 million in the third quarter of 2024 and negative $3.5 million in the second quarter of 2025.

Finally, ending with our balance sheet, our cash and short-term investments balance as of September 30 2025 with 60 million dollars we continue to believe this gives us sufficient capital to fund operations through cash flow break even and with that i would now like to turn the call back over to joel for closing remarks thank you patrick the third quarter was a record quarter for neuropace and was driven by execution of our strategy and demonstrated strength across the business We delivered record revenue, continued gross margin strength, and operating leverage, all of which demonstrate how our strategy and its execution are translating into results. At the same time, the broader field is recognizing what we've known for years, that responsive, data-driven neuromodulation represents the future of epilepsy care. We believe there is a growing view that the RNS system will serve as the foundation of the future standard in individualized brain neuromodulation. Multiple factors are beginning to converge the position RNS and NeuroPACE to build on our current momentum. We have world-class opportunities, world-class technology, world-class data, and a world-class team to deliver on them. These foundational factors position us to establish R&S as the standard of care in epilepsy neuromodulation. Thank you for your time today and for your continued interest in NeuroPACE. Operator, we'll now open the line for questions.

Thank you. We will now begin the question and answer session. we ask that you please limit yourself to one question and one follow-up. If you would like to ask a question at this time, please press star then the number one on your telephone keypad to raise your hand and enter the queue. If you would like to withdraw your question at any time, simply press star one again. Thank you. Your first question comes from Rohan Patel with JP Morgan. Your line is open.

Hey, thanks for taking the question and congrats on a good quarter year and strong R&S revenue growth. My first question is just on 2026 and your outlook. Trends seem to be progressing well on all fronts as we close out the year. So just as we look ahead, can you help us understand the preliminary thoughts on the growth outlook and specifically how you're thinking about R&S growth given Dixie revenues will be coming off and what are some of the key assumptions embedded in the outlook for new indication launches and and some of these ai applications driving utilization and also project care in the community setting and thank you for your comments this is joel guiding formally for 26 but we do

think that we've been clear the core of our focal epilepsy indicated business we're doing that and and that really serves as the foundation for the business and then we see the things that we're talking about key development initiative as well as pediatrics and then the ease of use and efficiency in generating improvement a lot of those things are add on to the top of that core we're really pleased with q3 uh we think that we're really well positioned we've got a lot of stuff converging and coming together here and we'll talk more about 26 when we talk about 26 but we I think that gives us a strong foundation to build on that 20% plus.

Patrick, would you have anything you'd want to add there? Yeah, I just wanted to add, and I really appreciate the question, and what we did was we did provide a financial supplement so that the analysts, the entire street, will get very clear and transparent message in terms of what our historical revenue has been between Dixie and R&S. And I think what you're talking about is very key because we want to make sure that people understand that right now there's still some dixie revenue sitting in some people's 2026 numbers and it's important that we really look at this on a rns to rna basis so that was the basis of us giving that extra disclosure and we would certainly expect that models will start reflecting that and show that likely 20 percent at a minimum growth for rns yeah and so important point patrick and i know you're you're up on it rohan but with our prepared comments here just emphasizing for folks that substantially all the Dixie revenue will be complete here at the end of 2025.

And so, 2026 will be R&S. And the R&S basis and the R&S growth should really be the focus.

Great. Thanks. And then I had a follow-up. This is a bit of a longer-term development for you, but in your prepared remarks, you discussed the confluence of all your efforts to date in data, neuromodulation, and the hardware improvements that you've made or plan to make over time. And you have these partnerships in drug development, such as the Rapport Collaboration, which leverage this extensive EDG database and some of the AI capabilities to support partners in drug development and biomarker identification. So I know it's early days, but is there any preliminary feedback you can provide from your partners on how you see the platform supporting drug discovery or personalized medicine in any way? And given this is starting to ramp, I know you called out about $700,000 in revenue, but early days starting to ramp, are there any milestones or proof points that investors should be watching for over the next year or so, either from more recurring revenue or other data points?

It's a great question, and thank you for the topic. We do perspective. I think you can go back and look at some of the public disclosures from Rapport that the ability to, which we do, both for our development partner, we're able to target therapy for individualized patients in terms of the journal, personalized, individualized regulation. The ability to integrate that, the delivered therapy, is something that the RNS system is really uniquely well positioned to take advantage of. So we think both with regard to partnerships, you know, more on the way there. I won't get into the specific mentioned UCB in addition to Rapport. And we are working on others as well from a partnership perspective. And then, again, just that ability to use our unique algorithms and to be able to. We're particularly encouraged about both the near-term results in the business as well as where the hardware, software, and data perspective as we see that confluence of factors.

Great. Thanks so much.

Thank you.

Your next question comes from Prya Sachtiva from UBS Financial. Your line is open.

Congrats on a great quarter. I think first for me, would just love to parse out, you know, the implied growth for 4Q. The full year midpoint kind of implies a pretty steep step down despite, you know, pretty strong double digit growth year to date and seems to us like no slowing in momentum. So we'd just love to understand, you know, what you're seeing on the ground to help us give some context around that implied growth for 4K and then just a follow-up after.

Thank you, Priya. Good to hear from you. And thank you. And we increased utilization. And especially when you get new customers, then you're over rhythm. And so we appreciate the risk. And one, two, we saw really good consistency execution across that team, which is an enhanced team. We've made some changes and some investments there over the recent time to see that execution across. And then CARE and DTC both contributed nicely as well. So when we think about what are we seeing on the ground today, that's where I'd start seeing really strong execution. When you think about Q4, that is one that I would point out, you know, Dixie is forecast to be down. We expect some of that just given the wind down of this net impact and why, you know, we're kind of seeing some of the Q4 dynamics. But I'd tell you, we look at R&S for Q4. I'm not guiding outside of what we've guided, but our business in Q4 in October and in the quarter is off to a solid start, both with regard to execution as well as to our patient pipeline. And so we feel real good about all that with some uncertainty and some downside offsetting that a little bit with Dixie. And I'll maybe ask Patrick to comment a little bit more on some of the levers.

Yeah, thanks, Joel. And I think Joel hit the nail on the head there. Look, we had a very strong quarter, and we really do try to look at this business in six-month increments, and Joel's been very consistent prior to me coming here. And if you look at even at the midpoint, as I said in my prepared comments, once again, Dixie is the reason why the overall number didn't go up as much as it did, and we talked about why that is. Let's focus on R&S. R&S in the first half of the year grew 21%, and at the midpoint of our implied guidance of Q4 for R&S of $20 to $21 million. dollars, we're going to grow 23% in the second half of the year at that midpoint. And so we feel very comfortable with the durability of this business and where we're moving as we go forward. And Joel already hit it. You know, we're off to a good start in Q4 with October, but that's really the components So strong quarter overall.

Okay, got it. That makes a ton of sense. And thank you for all that great color. I mean, just to follow up, great to hear the news on the PMA submission. And, you know, now that we have some increased clarity on the potential expansion, could just to remind us on the plan of attack into potential approval and how quickly we could see some incremental growth contribution. Thanks again and congrats on a great quarter.

Thank you. So our plan is PMA, in here in particular, I'm referencing Nautilus in the idiopathic generalized epilepsy submittal of the PMA supplement and submittal here in before.

Your next question comes from the line of Mike Kratke with Lee Rink Partners. Your line is open.

Hey, everyone. Thanks for taking my questions, and congrats on a great quarter. To start, let me just say I'm immensely grateful for all the additional disclosures you're providing moving forward, so massively appreciate that. Really impressive R&S growth this quarter. I guess to follow up on a prior question, it looks like the implied 4Q guidance for gross margin you know, might also be implying a bit of a step down. So especially if Dixie might be a little bit lighter than anticipated, how should we reconcile, you know, some of your commentary just on the RNS strength with the implied step down in gross margin? I would have probably thought that would have been a little bit higher as RNS ticks up as a percent of revenue.

Yeah, so it is Patrick here. Fair question, Mike, and good to have you back on the calls. Look, I would say that, as we said in our prepared comments, we continue to believe that RNS will be north of 80%. 80% is a minimum bar for us, and I would just chalk it up as us not wanting to get ahead of ourselves. There is some movement in Dixie. We did say approximately $3 million. Is there a chance we sell more than $3 million as we're exiting the business, potentially? And that could obviously have a drag on the overall gross margin. So I would really just view it as more of a mix issue related to Dixie as opposed to anything else. I will be very clear again, as I said in my prepared comments, as we move into 2026 and we are an R&S business, you should be modeling a gross margin that's 80% at a minimum. And we'll provide additional color when we officially guide 2026. And then we had a good question on service revenue, so I might as well hit that real quick. Look, service revenue has very good margins for us, and I think the key there for everyone is we will come back to you when we see additional potential service revenue streams that we have. But rest assured, we will be looking to optimize and maximize as best we can the monetization of our really good data and how we can support some of these pharma collaborations.

Understood. Super helpful. And maybe just one follow-up. I really appreciate the color on seizure ID. Can you just talk about how that fits into your broader portfolio, and is that something that you expect to generate revenue or will be more of a support tool moving forward?

Thanks for that, Mike. Yeah, we're excited about SeizureID, and as I mentioned, it's the first in what we expect to be a suite of tools that we'll be leveraging. Our proprietary EEG data and then AI-based algorithms that we've developed. So what we expect from seizure ID is to make it more efficient and easy for you to be able to identify therapy to continue to improve. For some patients, these site EEG information occur over a long enough period of time that regardless, and we have tremendously talented and dedicated customers, a human can't pick them up. Sometimes weeks or when seizure ID looks at that information, it can vary efficiently and effective EEG patterns. and make it easier for them to identify the areas of interest and then tailor. So, again, efficiency and ease of use leading to improvement. The way we see that adding value in the business, access to and improved therapy, causing us to both be able to compete with other treatment approaches as well as make, you know, RNS more easily accessible for people to have more RNS patients in their practice. So it's really all about making RNS more accessible, more accessible, and that's how everybody will see value from seizure ID.

Got it. Thanks, Joel, and congrats again. Thank you, Mike.

Your next question comes from the line of Vic Chopra with Wells Fargo. Your line is open.

Hi, this is Simran on for Vic. Thanks for taking the questions here. maybe just to start off on the margin commentary very helpful color I guess I just want to clarify should we be thinking about 80% gross margin as a baseline for 2026 and are there any additional like puts and takes that we should consider on the margin line going forward 80 is a fair number to model.

RNS has been running ahead of that. The only caveat I would put is if there's some trickling Dixie revenue that happens in Q1, but again, as I said, the wind down period does officially end Q1 of 2026, but we plan to be substantially done with sales. But again, I think modeling an 80% would be very fair.

Okay, great. That's very helpful. And then maybe just on Nautilus, I appreciate, you know, your reiteration of the timelines there, but when can we expect to see the full data set from Nautilus publicly?

So, there are a couple of different opportunities for us to get the data out with Nautilus. We do expect to have a poster abstract presented at presentation at AAN next spring as well. People about the updated data.

Okay, great.

Thanks for taking the question. your next question comes from the line of frank to kinnon with lake street capital markets your line is open great thanks taking the questions congrats on a great quarter uh was curious if we could maybe talk a little bit more about the nautilus data and your sense of industry awareness around that data and i know it's something you you can't market for and you won't talk directly to but i think the concept of of off-label use um is something we've discovered in our conversations with physicians, just curious if that had maybe contributed some in the quarter, in the practice, in accordance with the practice of medicine, if doctors are using that a little bit more off the label and that they have some clinical data to support that.

So, we saw positive to the safety data as well as regard to the pre-spec, and so we were pleased to hear that from the investigator community, but nothing unusual in the quarter Yeah, I would echo that.

And remember, we have a little bit of a long clinical sales cycle here, right? It takes a little bit of time for a patient once they get into a level four and then that journey that they go through, right? So I think the most exciting thing that we're looking forward to is that when we submit and potentially get that IGE, the ability to put the entire organization behind that and be able to speak openly to the doctors, obviously, and talk through that and being able to do both focal and ige in the adult population is going to be a huge win for us and you know some people would say one plus one may equal more than two when this is all done so i think that awareness and our ability to support it is going to be a a key tailwind as we move through 2026 and beyond got it that's helpful and then just a big picture question clearly you've

We've been outpacing, I think, where some of your competitors have been growing. If you were to speculate, do you think more of your growth is coming from market expansion or market share taking?

And we're seeing a unique technology that allows them to differently than they can with other therapies. The focal patient stimulation with a network stimulation approach from a hybrid perspective, in addition to resection and surgical candidates, opens up populations of people that can be treated according to the unique capabilities of R&S. And then I do think as well, you know, with the data in particular, the post-approval study data that has come out of the device appropriate patients because of the data and because of the technology. Different places in my prepared converging here, the data, the unique capability of the technology, the future potential that people see with the technology, and whether that's for future indications or for the future ability, kind of future-proof your patient, here's how we can access today a unique platform that is positioned well for tomorrow, and the way things are shaping up, I think we're advancing on both fronts.

Got it. That's helpful. Thanks for taking the questions.

Your next question comes from the line of Ross Osborne with Cantor Fitzgerald. Your line is open.

Hey, guys. Congrats on the strong quarter, and thanks for taking our questions. Starting off, is there any color you can provide on where you think the label will shake out for IGE based upon your most recent interactions?

I think as we've discussed previously for the entire study.

Okay, great. And then sitting with extended indications, what level or type of data generation do you think you'll need to develop for the pediatric space to support approval?

Well, I think with the pediatric space, it's not so much data that would need to be developed. And that's really our approach here is the use of real world evidence mission for this indication. agency, with NEST, with the clinical providers of the data, of aligning, and so that's really where our focus is. Great additional data. It's a little of engagement and the work that's been done there, but as you might expect, when you're doing a real-world evidence study, a lot of the work goes on on the front end versus a prospective study where a lot of the work goes in on the back end and so we're spending the time to make sure we've got that well aligned now at the end there which is because of the uniqueness of this pathway that we're looking at and the retrospective of

using real world data there potentially is opportunity to make up time on the back end as opposed to your more classical like a nautilus a clinical trial that we're doing and so we'll give everyone updates obviously on this as we move through it but that would be a bit the silver lining, I would have people understand.

Okay, got it. Thanks again. Thank you very much. Thank you, Ross.

Your next question comes from Yi Chen with HC Wainwright. Your line is open.

Hi, this is Eduardo. I'm for Yi. Congrats on the great quarter. Just to guess a question regarding project care. There was some question earlier about it and how you're seeing growth in level four centers versus in kind of these other practitioners and especially in light of the potential IGE expansion. Do you see level four centers still being the primary places of growth or do you think, you know, having this different patient population involved could change the way you go about your sales tactics?

Runway to access and treat patients straight to that full four centers that can be appropriately treated out in the community and expansion into the IgE population, potentially don't need to be really viewed. The two approaches is complementary, and I think we saw that complementary effect. We also saw care centers, and so I think it's a...

Got it. Thanks so much for the detail and the extra color there. I also wanted to follow up if there's any update. You guys have mentioned other investigator-initiated trials surrounding a variety of other indications, depression, eating disorders, PTSD, some cognitive dysfunction. I'm curious, any update there, Anything that we should be looking forward to or exciting developments in that space?

Development. And we did talk about it at the Investor Day, so thank you. I think one of the exciting developments is the things that we've talked about, tailored therapy, individual and what applications, epilepsy, that we think that verge in a way that allow us to level leverage when we do more formal investor updates.

Got it. Thanks so much for answering the questions and congrats again on the quarter.

And with our last question, the question comes from Paige Chamberlain with Wolf Research. Your line is open.

Good afternoon. Thank you for taking the question. I'm hoping to get some quantification around, you know, your market expansion effort through Project Care. I see a couple goals you guys have laid out around this initiative. I want to ask you guys on two. So first, I see the target of expanding your reach to an additional 1,800 epileptologists. I'm just wondering, you know, benchmark, how many of those have you reached so far, and maybe just a general timeline and vision for that? The second one I see is to more than double the number of implants and referrals coming from care accounts in 2025. Carey is a starting point for that going into 2025 and perhaps now sitting in November. Are you on track to double?

So thanks for the question. That's absolutely the right number. and they're in that group of epileptologists starting with, the first one is a very targeted approach. Three centers as well as have what I'll call the early days of the penetration what we're seeing, but we've got a long way to, again, early days with care, but we like both 25 are on track, both for the current patient populations as well as as we expand into IgE.

We track all those metrics internally. We haven't discussed basis externally, but we'll certainly take that into consideration. But I think the key quantitative slash qualitative is that we saw increase in prescribers in the quarter as well as an increase in utilization at that prescriber level. And so we're very, very happy with the penetration that's happening. Care is clearly a part of that. And again, as we think going forward to kind of wrap this up with some of the other questions, as we get that additional indication, we think that we'll hugely benefit from that.

But with that said, we've got a huge runway with our adult focal epilepsy, which is why we've been very consistent on saying you know we believe we can grow at a minimum of 20 percent on the rns platform for the foreseeable future thank you so much for all of that detail that was great um i'll sneak in one more if i may i echo the appreciation for the additional disclosure around um dixie and and service revenue lines i guess i'll i'll test my luck to see if we can uh get the same incremental detail around replacement um i know you guys obviously don't break that out. But, you know, the trough sort of for this revenue line has been described as, you know, this year, earlier this year, we're all doing our best to stab at this number. I'm just wondering if directionally you can nudge me, should we be thinking about replacement revenue, you know, as going north from here? Thank you so much.

Yeah, directionally what we try to focus on is clearly our initial implants. At some point it will start seeing a larger contribution from replacement as some of the competitive neuromodulation devices have a huge majority of their revenue is based on replacements. Ours is a very, very small percentage. We call it less than kind of in that even mid single digit. So more to come on that. We are obviously have models that say when do we think replacements will come, but we're still a little bit away from having a significant cycle, especially with meaningful units being placed over the last let's call it two or three years. So we look forward to that time. But for now, I think modeling initial implants is probably fair and will provide more color.

Thank you. And with no further questions in queue, I'd like to turn the conference back over to Joel Becker for any closing remarks.

Thank you very much. We're pleased in the direction and trajectory of the business. And we believe that there are multiple factors we see as well as the way we have world-class opportunities, world-class technology, world-class data, and thank you all for your time today and for your continued interest in NeuroPACE.

This concludes today's conference call. You may now disconnect.