NeurAxis reports Q4 and fiscal year 2023 financial results

NeurAxis, Inc. announced results for the fourth quarter and fiscal year 2023 for the period ended December 31, 2023.

Management commentary
Brian Carrico, Chief Executive Officer of NeurAxis, commented, “I am excited and pleased with the progress we have made throughout the last year executing our philosophy that the publication of strong data will result in strong insurance medical policy coverage, which will drive strong future revenue growth. Recently, we expanded our portfolio of publications on our proprietary neuromodulation therapies, which have led to early insurance medical policy coverage from major insurance plans nationally. To date, PENFS is covered for more than 16 million lives in the U.S. by multiple health insurers, an improvement from just 4 million lives a year ago. I believe we are on track to achieve our stated goal of having medical policy coverage for at least 50 million lives by the end of 2024, which will set the stage for a significant revenue ramp for our initial pediatric indication for FAP/IBS.”

“Beyond driving adoption of our IB-Stim technology for FAP/IBS, we remain on track to expand the number of indications for IB-Stim in the years to come with further pediatric and adult clinical studies in place with expected FDA submissions over the next three years. Furthermore, we remain excited about the commercial opportunity for our recently licensed innovative rectal expulsion device, or RED, a self-inflating balloon expulsion test that allows for point-of-care testing to effectively identify patients with an evacuation disorder, such as constipation. We expect the device, which has the potential to be a significant near-term revenue driver for the company, to become commercialized in 2024,” Carrico continued.

Dr Adrian Miranda, Chief Medical Officer of NeurAxis, commented, “I am proud of the depth and breadth of the 14 studies that we have published, which include 10 different types of research such as placebo, long-term data, health-economic data, quality of life data, and real-world registry data. In recent months, we have announced results for multiple studies, including our retrospective comparative study led by the University of Cincinnati and investigators at Children’s Hospital of Orange County. We are pleased with the outcomes of our studies, which have been conducted by renowned institutions, and remain steadfast in leveraging our research publications to expand written policy coverage.”

Carrico concluded, “I am excited about the opportunities we have in 2024 to further commercialize our lead pediatric indication for IB-Stim, while advancing our development pipeline for a number of new indications leveraging our unique neuromodulation therapy. I anticipate growth in 2024 to be driven by our expanding insurance coverage, and the commercialization of RED. With a strengthened balance sheet through a key investment from Inspire Health Alliance and long-term investors who understand the medical space well, I believe we are well positioned to execute our business plan in 2024.”

Fourth quarter and fiscal year 2023 financial results
Revenue in fiscal year 2023 of $2.5 million was down 8.4% compared to $2.7 million in fiscal year 2022. The decrease was primarily due to fewer shipments to certain customers as they manage through the insurance reimbursement process. While we have made great strides in recent months in gaining coverage, note that there is a lag between insurance coverage and order placement due to billing and coding implementation processes unique to each of our customers. Given our recent success with new payor coverage, we expect our revenue to increase in late 2024 and into 2025.

Fourth quarter revenue in 2023 of $531.5 thousand was down 13.3% compared to $613.1 thousand for the same period in 2022. While revenue was down in the quarter, we had more account accounts ordering from us and we had more patients coming to us via our Guidance and Patient Services (GPS) assistance program.

Gross profit margin in fiscal year 2023 was 87.7%, compared to 88.9% in fiscal year 2022. The change in gross margin was primarily due to growth in our patient assistance program that provides discounts to patients without insurance coverage. Gross profit margin in the fourth quarter of 2023 was 86.4%, compared to 87.7% for the same period in 2022.

Selling expenses for fiscal year 2023 were $323.6 thousand, a decrease of 21.3% compared to $410.9 thousand for fiscal year 2022. The decrease was primarily due to lower commission costs, with the commission rate being lowered at the beginning of 2023, and lower revenue. Selling expenses for the fourth quarter of 2023 were $72.6 thousand, an increase of 10.1% compared to $66.0 thousand for the fourth quarter of 2022.

Research and development (R&D) costs for fiscal year 2023 were $169.3 thousand, a decrease of 25.0% compared to $225.6 thousand for fiscal year 2022. The decrease was primarily due to the initiation, payment and expense of more patient trials in fiscal year 2022 as the Company prepared for more FDA submissions. These trials continued into fiscal year 2023.

General and administrative (G&A) costs for fiscal year 2023 were $8.3 million, an increase of 62.6% compared to $5.1 million for fiscal year 2022. Increased costs were primarily due to incremental headcount to build out market access and patient assistance teams including recruiting costs, as well as higher insurance, investor relations and board of director costs post-IPO, one-time advisory costs and higher advertising costs in order to expand market awareness. G&A costs for the fourth quarter of 2023 were $2.0 million, an increase of 46.1%, compared to $1.4 million for the fourth quarter of 2022. The increase was primarily due to higher wages, higher public company expenses such as insurance and board fees post-IPO and professional services as the Company obtains market access.

The net loss in fiscal year 2023 expanded to $14.6 million, versus $4.8 million in fiscal year 2022 primarily due to non-cash charges taken on debt conversion upon the IPO, including $4.9 million in amortization of the debt discount and deferred issuance costs and a $3.6 million charge taken on the extinguishment of debt, and higher G&A costs. The net loss in the fourth quarter of 2023 was $5.3 million due to higher G&A costs, significantly lower non-cash changes in the fair value of warrants and derivative financial instruments as they were either exercised or converted upon the IPO and the extinguishment of debt.

Cash on hand at December 31, 2023 was $78.6 thousand. Cash used by operations of $6.7 million was substantially less than our net loss of $14.6 million for the same period primarily due to the $4.9 million non-cash debt discount charge upon conversion at the IPO and the $3.6 million non-cash debt extinguishment charge. Although the Company had no long-term debt as of December 31, 2023, $6.1 million in convertible note financing has been secured with $1.5 million funded as of March 31, 2023.

Restatement of third quarter 2023 financial results
The Company filed a Current Report on Form 8-K today regarding a restatement of the Company’s financial statements as of and for the three and nine month periods ended September 30, 2023 that will be included in the Company’s Annual Report on Form 10-K as of and for the year ended December 31, 2023. The restatement will result, among other items, in a $3.7 million increase to the Company’s net loss and a $3.7 million increase to additional paid in capital as of and for the three and nine month periods ended September 30, 2023 and is unrelated to revenues or cash expenses. The Company’s cash position as of September 30, 2023 did not change.
MB Bureau