CeriBell, Inc. (CBLL) Q4 FY2025 Earnings Call Transcript & Summary

Hello, and welcome to the Ceribell Q4 2025 Earnings Call. [Operator Instructions] I will now turn the call over to Brian Johnston, Investor Relations. Brian, you may begin.

Good afternoon, and thank you all for participating in today's call. Joining me from Ceribell are Jane Chao, Co-Founder and Chief Executive Officer; and Scott Bloomberg, Chief Financial Officer. Earlier today, Ceribell issued a press release announcing financial results for the quarter and year ended December 31, 2025. A copy of the press release is available on the Investor Relations section of the company's website. Before we begin, I'd like to remind you that management will make remarks during this call that include forward-looking statements within the meaning of federal securities laws and that these are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that relate to expectations or predictions of future events, results or performance are forward-looking statements. These statements involve material risks and uncertainties that could cause actual results or events to materially differ from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a list and description of the risks and uncertainties associated with our business, please refer to the Risk Factors section of our public filings with the Securities and Exchange Commission, including our quarterly report on Form 10-Q filed with the SEC on November 4, 2025. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, February 24, 2026. Ceribell disclaims any intention or obligation, except as required by law, to update or revise any financial projections or forward-looking statements, whether because of new information, future events or otherwise. And with that, I'll turn the call over to Jane.

Thanks, Brian. Good afternoon, and thank you all for joining us on our fourth quarter and full year 2025 earnings call. 2025 was an outstanding year for Ceribell as we further penetrated our core seizure market while significantly expanding our total addressable market, which we believe has grown from $2 billion to over $3.5 billion. We accomplished this while delivering robust financial results, driving rapid revenue growth and maintaining a strong gross margin profile. I'm pleased to report that the revenue for the fourth quarter of 2025 was $24.8 million, reflecting 34% growth over the same period last year. For the full year, revenue totaled $89.1 million, representing 36% growth over 2024. Gross margins were 87% and 88% for the fourth quarter and full year, respectively. We finished the year with 647 active accounts as of December 31, which translates to 32 net new accounts added during the fourth quarter and 118 throughout 2025. The strong performance reflects the disciplined execution of our dedicated team and predictable recurring nature of our business model. Beyond driving rapid revenue growth and expanding our account base, we laid several critical cornerstones of the foundations for our vision. Our mission is clear: to make point-of-care EEG the standard of care for management of seizures in the acute care setting and to leverage our technology and footprint to establish EEG as a new vital sign. The milestones we achieved in 2025 bring this vision much closer to reality. Becoming the standard of care requires demonstrating clear superiority over the status quo. With over 140 peer-reviewed publications and abstracts, we believe we have firmly established that the Ceribell system is equipped to address the unmet needs in the acute care setting, but evidence alone is not enough. To achieve our ambitions, we must make our technology widely available. In 2025, we undertook several initiatives aimed at bringing the benefits of our system to all patients in need. First, we expanded our commercial infrastructure from 35 territories in the second half of 2024 to approximately 55 territories today. We are starting to see the signs that this investment is paying off with a very strong backlog of accounts interested in adopting our technology. Based on our experience, the timing of our investments will begin accelerating the rate of account acquisition in 2026 with further acceleration expected in 2027. Second, we demonstrated our ability to accelerate utilization rate through systematic departmental expansions, protocol development and other growth initiatives. Our playbook is well defined and with roughly 30% penetration within our installed base, we have plenty of room to drive deeper within our accounts. Third, we broadened access to additional sites of care by achieving FedRAMP high authorization, which unlocked access to all 170 hospitals within the VA system. After a comprehensive and highly successful pilot, the VA has committed to expanding within the system. The first accounts launched in the fourth quarter of 2025, and we're excited to launch even more throughout the first half of 2026. Finally, we expanded our core seizure market opportunity by approximately $400 million following the FDA clearance of our seizure detection products for neonate and pediatric patients. We expect this age range expansion to accelerate account acquisition and to drive deeper penetration into our existing installed base of over 600 hospitals. I'd like to spend a few minutes discussing the neonate market. Seizures are the most common neurological emergency in the NICU and guidelines are clear in supporting the use of EEG. Still, legacy practice falls short in managing these newborns given limited EEG capacity and the shortage of epileptologists. In this patient population, 90% of seizures are nonconvulsive and physicians who suspect seizure based on observation alone are incorrect more than 70% of the time. With that stake is profound. Evidence shows that a total seizure burden of approximately 1 hour is associated with a 15% decline in cognition and language development score, a difference that can shift a child from normal neurological function to lifelong impairment. Studies also demonstrate that for every hour delay in treatment, seizure duration can double. By identifying seizure earlier and initiating treatment sooner, clinicians can significantly reduce the total time the patient spends in seizure and fundamentally shift their development in a positive direction. In the recent case, a 2-week old infant presented brief abnormal movements after hours. The care team suspected seizure, but required EEG for accurate diagnosis. Our neonatal head cap was set up within 10 minutes and a few minutes later, seizure was confirmed. The infant was promptly sent for imaging, which identified cerebral venous sinus thrombosis, a stroke caused by a blood clot that can be devastating if not treated early. Empowered with this information, the care team was able to promptly and confidently treat the patient. I'm happy to share that the infant is doing well today. Following treatment, there has been near complete resolution of the clot and no recurrence of seizures. This story illustrates how Cereal system can change the trajectory of care in a matter of minutes, particularly in these vulnerable patients. This story is only one of many. This early clinical experience in addition to management recognition that neonatal patients are eligible for some of the highest value DRG payments have driven momentum during our ongoing commercial pilot. We believe that every NICU should have access to point-of-care EEG, and our goal is to enable this as soon as possible. We look forward to bringing this product to the market in Q2 when we anticipate moving from the pilot stage to a full commercial launch. With our expanded sales team, FedRAMP approval and FDA clearance for neonatal and pediatric patients, we have solidified the foundation of our core seizure market to set the stage for exciting 2026. We believe we are less than 4% penetrated within a $2.5 billion core seizure market and see significant growth opportunities ahead. Entering 2026, the path to achieving our vision of becoming the standard of care for seizure detection within the acute care setting has never been more clear. Moving now to the second horizon of our vision to make EEG a new vital sign. We believe that a single platform that can differentiate between the most common and significant neurological abnormalities impacting patients in the acute care setting could fundamentally change the treatment paradigm. Just as patients who have chest pain receive an EKG, we see a future where patients with any sign of altered mental status receive Ceribell as a matter of protocol. During the past 3 months, we achieved a breakthrough milestones that position us to deliver a comprehensive neuromonitoring platform for the acute care setting. In December 2025, we received FDA 510(k) clearance for our delirium algorithm, making the Ceribell system the first and only FDA-cleared delirium detection and continuous monitoring device. Shortly after, in January 2026, we announced the receipt of FDA breakthrough device designation for LVO stroke monitoring in the inpatient setting. We achieved both of these regulatory milestones ahead of schedule. Let me first focus on delirium, where the need for objective monitoring is clear. Sometimes called acute bin failure, delirium affects over 30% of patients in the ICU. Every day in ICU with delirium carries a 10% higher mortality risk and the risk of developing dementia is at least 60% higher if patients experience delirium in ICU. The current standard of care for diagnosing delirium is a behavior-based nursing protocol. It is subjective, burdensome and binary. The limitation of this diagnostic tool make accurate longitudinal tracking of delirium impossible. As a result, it can be difficult to assess the effectiveness of management tasks and adjust them in real time. We believe our continuous monitoring solution solves this major unmet need while also reducing nursing burden. Beyond the clear stand-alone need for delirium monitoring solution, we're excited by the synergistic value of this new technology with our existing platform. Seizures and delirium are highly interrelated. They can present similarly, but the treatment paths are biometrically opposed. The first-line medication for status epilepticus is one of the most delirium-inducing agents. Complicating the picture further, 48% of seizure patients later experience delirium and 42% delirious patients have seizure or seizure-like abnormalities. We believe that an integrated platform that can monitor for delirium coherently with seizure will not only provide access to new patients, but also drive broader adoption within our existing patient population. Looking ahead to 2026, we plan to initiate a pilot aimed at identifying patient populations, optimizing workflow, refining our commercial message and building clinical evidence. In parallel, we are pursuing a new technology add-on payment or NTAP to help support adoption. We are extremely excited to be the first entrant to what we believe is a $1 billion greenfield market where no other FDA-cleared monitoring device is commercially available. By leveraging our established installed base, and existing sales infrastructure, we expect to be able to bring this technology to market quickly and efficiently. This combined efforts will set the stage for an anticipated full commercial launch in the fourth quarter of 2026 or the first quarter of 2027. Finally, turning to stroke. We view our receipt of FDA breakthrough device designation as a clear indicator of the life-saving potential and the technical feasibility of our LVO stroke monitoring algorithm. For LVO patients, every minute saved can mean a week of disability-free life. Yet when strokes occur in patients who are already in the hospital, the signs can often go unnoticed for several hours. Because these patients have highly varied cognitive baseline and are often sedated, intubated or recovering from surgery, the symptoms are incredibly difficult to spot. As a result, hospitalized patients who have a stroke face 2 to 3x higher in hospital mortality compared to those who have stroke outside the hospital. Throughout 2026, our efforts will be focused on clinical data generation and advancing regulatory milestones for the LVL stroke detection. Seizure, delirium and stroke together form the core of our technology platform that we believe will be indispensable for the vast majority of neurological patients in the acute care setting. We look forward to sharing more details on the program in the quarters to come. In conclusion, I am extremely proud of the team's accomplishments in 2025 and enthusiastic about what's ahead. 2025 sets the product and regulatory foundations for our near- and long-term future growth. We expanded patient access through FedRAMP high approval and 510(k) clearances for pediatric and neonatal seizure detection. We also expanded our capabilities to include a new and highly related disease state with regulatory clearance of our delivery algorithm. We believe these accomplishments have nearly doubled the size of our total addressable market, which we now estimate at $3.5 billion. In 2026, we'll continue driving growth by adding new accounts and driving further adoption of our adult seizure product, which still delivers the majority of our revenue. We expect the upcoming full commercial launch of our pediatric and neonatal products to drive upside later in 2026 and throughout 2027. We aim to further drive upside in 2027 and beyond as we work to establish a comprehensive commercial plan for delirium in the coming quarters. We believe that our LVO stroke detection algorithm provides another exciting avenue for growth in the future. Collectively, these efforts position us to a fundamental transformation of our business as we penetrate our large market opportunity with a single highly integrated brain monitoring platform capable of revolutionizing care for neurological conditions. We are further along in accomplishing our mission to make EEG a new vital sign than ever before and are increasingly confident in the transformational nature of our platform, transformational for patients, transformational for providers, and ultimately transformational for Ceribell. With that, I will now turn the call to Scott Berenberg, our CFO, to provide a review of our fourth quarter results and 2026 guidance.

Thank you, Jane, and good afternoon, everyone. As Jane highlighted, total revenue for the fourth quarter of 2025 was $24.8 million, which is a 34% increase from $18.5 million in the fourth quarter of 2024. The increase was primarily driven by increased adoption of the Ceribell system across new and existing accounts. Product revenue for the fourth quarter of 2025 was $18.8 million, representing an increase of 33% from $14.1 million in the fourth quarter of 2024. Subscription revenue for the fourth quarter of 2025 was $6.0 million, representing an increase of 37% from $4.4 million in the fourth quarter of 2024. Overall, we were pleased with the continued growth in active accounts and headcount purchasing trends in Q4. We ended 2025 with an active account base of 647 hospitals, an increase of 32 accounts in Q4. This was achieved despite our strategy to avoid launches in the final weeks of the year. Included in our Q4 launches were a small number of accounts associated with our previously announced expansion within the VA system. We anticipate the launch of additional VA accounts in the coming quarters. We also saw an increase in account utilization in Q4, which we believe reflects both the efforts of our clinical account management team and the typical seasonal patterns in which we see increased usage in the winter months when IT census is elevated. For the full year 2025, total revenue was $89.1 million, representing 36% growth over 2024. Product revenue for the full year 2025 was $67.3 million, an increase of 34% over 2024 and subscription revenue was $21.7 million, an increase of 41% over 2024. Gross margin for the fourth quarter of 2025 was 87% compared to 88% in the prior year period. For the full year, gross margin was 88% compared to 87% in 2024. The decrease in Q4 reflects partial quarter impact of our transition to utilizing inventory acquired after the implementation of increased tariffs on products originating in China. As a result of our efforts to mitigate the current tariff environment, including our fully operational manufacturing line in Vietnam and initiatives aimed at reducing manufacturing costs, we expect to deliver margins in the mid-80% range throughout 2026. This assumption does not include any impact from Friday's Supreme Court decision or future changes in policy. Total operating expenses for the fourth quarter of 2025 were $36.2 million, an increase of 24% compared to $29.1 million in the fourth quarter of 2024. Noncash stock-based compensation expense was $3.3 million in the fourth quarter of 2025. Total operating expenses in the full year 2025 were $136.7 million compared to $96.5 million in the full year of 2024, representing an increase of 42% Full year 2025 operating expenses included $12.2 million in noncash stock-based compensation. The increase in fourth quarter and full year 2025 operating expenses was primarily attributable to investments in our commercial organization, increased headcount to support the growth of the business, legal expenses and expenses related to operating as a public company. Net loss was $13.5 million in the fourth quarter of 2025 or a loss of $0.36 per share compared to a loss of $12.6 million or a loss of $0.40 per share in the fourth quarter of 2024. An average weighted share count of 37.2 million shares was used to determine loss per share for the fourth quarter of 2025. Net loss for the full year 2025 was $53.4 million or a loss of $1.46 per share compared to a loss of $40.5 million or a loss of $3.39 per share in 2024. Our cash, cash equivalents and marketable securities as of December 31, 2025, were $159.3 million. Turning now to our outlook for 2026. We expect full year 2026 total revenue to be in the range of $111 million to $115 million, representing annual growth of 25% to 29% over 2025. As Jane mentioned, we currently expect to proceed with the full launch of our neonate and pediatric products in Q2 of this year. While we do anticipate the sales cycle may be shorter within hospitals that are already using the Ceribell system for adult patients, we believe in most cases, we will still be subject to a multi-month sales process, including contracting, workflow design and training. We expect to establish commercial traction across a number of hospitals by the end of the year, but given launch timing and expected sales cycles, the impact on 2022 revenue will likely be modest. Our goal is to establish the pediatric and neonate products as meaningful revenue contributors in 2027 and beyond. Finally, our cash position remains strong with cash, cash equivalents and marketable securities of $159 million as of December 31. We plan to selectively deploy capital in incremental R&D and commercial infrastructure investments to capture our untapped market opportunity and maintain rapid long-term revenue growth. That said, we remain committed to our objective to achieve cash flow breakeven with cash on hand. With our gross margin profile, recurring revenue model and high customer retention rates, we remain confident in our ability to do so. With that, I will turn the call back to Jane.

Thank you, Scott, and thank you all for your time today. In conclusion, we are very pleased with our 2025 performance and believe it positions us well for the continued growth in 2026 and beyond. I'd like to take a moment to thank the entire Ceribell team for the continued dedication to our mission of making EEG a new vital sign. I'll now turn the call over to the operator for any Q&A. Operator?

[Operator Instructions] Our first question comes from the line of Travis Steed with Bank of America.

Congrats on the quarter and all the progress in the pipeline. Maybe I'd start with the 2026 guidance. You're looking at -- if you look at just dollar growth, about $24 million in dollar growth, roughly about the same we did in 2025, but your TAM has doubled. You're adding accelerating center adds in the back half of the year, utilization is increasing. So just kind of wanted to understand some of the moving parts and assumptions on 2026.

Travis, first, I want to state that our guidance philosophy hasn't changed. As we've said all along, we really appreciate the number to deliver -- the need to deliver on the numbers that we put forth. And so we've baked in an appropriate level of conservatism into the model. As it relates to the sequential growth, I think it's important to appreciate that the guide last year was consistent with the guide this year. And since the philosophy hasn't changed, we think there's potential for upside if we operate within the principles that we expect to with the investments we've made. As far as the pipeline goes, as we mentioned, we really expect that to start kicking in towards the end of this year and more into 2027. So some neonate is baked into Q4, but it's fairly modest. But we think as we set out for 2027, that could be a contributor next year.

Okay. And maybe can you elaborate a little more on the commercial plan for delirium and just trying to understand like how you build that up? Will you start to see some potential benefits in account adds and account penetration from that? Or is there kind of a different sales approach on the commercial plan for delirium?

Yes. We are in the middle of the discussion with some accounts already for the commercial pilot. And majority of these accounts are more existing accounts with some of the new accounts as well. So for the commercial pilot, we really are focused on the real-world validation of our clinical impact. So this discussion will be focused on with the accounts on what are the best target patient population, the workflow, how to measure the impact and also generate case studies and clinical evidence. And therefore, this portion, as I mentioned earlier, is largely driven by existing accounts. we also see that will be reflected at least in the near term where delirium can drive financial and commercial impact as well. It will be more expanding deeper utilization in our existing accounts. And in that, we see 2 drivers. One is delirium itself, we introduced new patient population. That's not seizure. And the other driver we see is there's a big synergistic interaction between delirium and seizure, as I mentioned in the earnings call. So we could see this driver deeper into seizure population as we introduce delirium as well.

And your next question comes from the line of Robbie Marcus with JPMorgan.

This is Lilly on for Robbie. As we think about 2026, can you talk through what you see as the main levers of growth that you're pulling this year? I know you talked about accelerating account adds. So how are you thinking about balancing that with driving continued utilization? And what do you see that has the most potential for upside this year in terms of levers in the model?

I can touch on the levers mechanically and maybe, Jane, you can comment on the drivers. The 2 core drivers of our adult user market remain unchanged, which is the rate of account adds and the same-store growth. On the account adds, we expect to add more accounts in 2026 than we added in 2025, and that's a result of the strategy we've laid out last year, including expansion of the sales team, FedRAMP approval and the acceleration from the buzz around neonate and pediatric. On the opportunity within the accounts, we're roughly 30% penetrated within our account base, and we've got a number of strategies aimed at driving that, including training more physicians, expanding to new departments and implementing protocols. We built out a robust campaign to drive those efforts, and we've got a lot of opportunity to continue to push that forward.

Yes. And to add to what Scott has said, we have a well-defined playbook in both adding accounts as well as driving utilization. Maybe I'll emphasize a couple of maybe new levers in 2026. On the account acquisition front, we are adding a new focus on driving hospital system level acquisition. So this more focused on both large system as well as small, medium-sized system. Instead of historically, the territory manager focused on closing 1 or 2 accounts, how can we accelerate the process of closing the entire system, say, 10 hospital size system. So we could see that in the near and long term as more growth leverage. On the utilization front, we started more systematic departmental expansion in 2025, and we have seen consistent impact from that departmental expansion. It could be expanding to the emergency department to additional ICU or even sometimes to the floor. So we expect to further expand what we have established in 2025 and expect to see the impact on the departmental expansion on driving utilization as well.

Great. That's really helpful. And then as a follow-up, how should we be thinking about spend ahead of launches in all these new indications? It's a pretty big expansion in terms of TAM when you layer on pediatric, delirium, LVO stroke. So is there a lot of investment that needs to be made ahead of this in terms of the sales force and commercial infrastructure? Or do you think you can largely leverage what you've already built out?

We intend to largely leverage our commercial infrastructure. The beauty of our platform is that it's the same call point. It's the same platform. It's really just training the reps on the new indications and delivering that message to the customers. There, of course, will be some upfront investment related to a product launch in terms of marketing and market development. But in terms of the core infrastructure, we expect to have fairly modest investments there.

And your next question comes from the line of Brandon Vazquez with William Blair.

I wanted to focus first on the commentary around the neonate launch. Maybe spend a little bit more time on the commercial launch here and digging into it. I think as we've talked in the past, I think there are some accounts that you're already in that now you can kind of open that neonate or the NICU. And I think just to say a little bluntly, starting to see benefits not until like late in Q4 seems a little late in that. So maybe walk us through just why it takes a couple of quarters to start to see some of those in accounts that you're already in to make sure we're all level set on when you'll start to see those benefits more meaningfully ramp.

Yes. Thank you, Brandon. So let's maybe focus on the neon NICU expansion for existing accounts. I think that's where you're focusing on. So we have about 200 Level 3, Level 4 NICU in our existing accounts. If you think about the time line, we plan to launch in Q2. Even we are already in this hospital to expand to a new department, hospital need to acquire additional recorder as well as the clarity that's dedicated to neonatal seizure detection. So that often require go through committee and additional committee. We expect that sales cycle to be shorter than your brand-new account acquisition, but that still take several months. And even after that account departmental expansion, there will be workflow and patient population discussion. And based on our experience, that often would take a couple of months as well. So if you start to think through the time line, that's why a Q2 launch would lead to financial or commercial impact in Q4.

Okay. And then maybe I'll tie this back to a couple of model questions for Scott. As we think about additional recorders and some of that stuff, just reset us and level set us on how we should be modeling some of that? How should we be thinking about where will this be reflected in the model like ASPs, things like that? And then maybe if I can also tag one modeling one here from the prior question. How should we think about -- I'll ask more poignantly on the OpEx line. How should we think about '26? Is it a point of leverage? Or does OpEx have to grow at a higher clip than your total sales growth?

Sure. On the commercial front for neonate, our model is that we are charging additional subscription cost for adoption of the neonate product. The cost of adopting neonate if you're already an adult customer is not double, but it's higher than just being an adult customer. And we would expect the headbands, which are similar pricing model, but slightly higher price to also be included. The way it will reflect itself in the top line would be not necessarily a change in the number of accounts with the exception of children's hospitals that adopt specifically for neonate, but increase in both product and subscription revenue through our installed base. As it relates to OpEx, while we don't provide specific guidance, I'd be happy to give a little color kind of going through the different functions in order to help you with your modeling. On sales and marketing, we believe we largely have the commercial infrastructure in place to deliver on our 2026 guidance. We will be selectively investing in opportunities to drive growth in 2027 and beyond throughout the year. That includes the previously discussed regional system function as well as expansions within the CAM work to support the growing account base. And then as I mentioned earlier, there may be some additional investments associated with market development activities related to the launch of our new products. But with our platform and our existing infrastructure, we don't expect to materially increase the size of the sales or to support those functions. On R&D, we see a lot of opportunity ahead of us, and so we're going to continue to invest in R&D. We expect a decrease in the growth rate in R&D spend this year, but we do expect R&D growth to be outsized compared to the rest of the department given what we have ahead of us. And then on G&A, our infrastructure on G&A is largely in place. So we expect to see material leverage there. However, I think it is worth noting that with the cadence of our patent infringement case against Natus, the IP litigation expenses are heavily concentrated in the first half of this year. So I'd expect to see a little bit of elevation in G&A over the coming 2 quarters or so. Final note on OpEx is in line with what you see out of our peers. We expect an increase in noncash stock-based compensation expense throughout the year as we continue to transition to public company compensation practices. So hopefully, that's helpful. I do expect overall that our OpEx is going to moderate in 2026. You started to see some of that in Q4 with the lowest year-over-year growth rate in OpEx that we've seen. We don't want -- we do want to strategically deploy our capital to drive long-term growth of the business. But as we make investment decisions, we've always got our eye towards our North Star, which is to achieve breakeven with cash on hand, and we have very high confidence that we can do that.

Our next question comes from the line of Josh Jennings with TD Cowen.

This is Brian here for Josh. On the revenue guidance, how is the VA expansion accounted for in your sales projections for the year, if at all? And can you review the specific tariff assumptions that go into the mid-80s gross margin guidance for the year?

Yes. So the VA is incorporated into our guide in terms of the expansion that's been committed to last year, but further expansion is not incorporated into the guide. And we'll be pursuing that with the government budgeting cycle that's likely to come up for discussion towards Q3 for late '26 and 2027 impact above our guide potentially. As far as the tariff assumptions go, obviously, there's been a lot of change over the last couple of days in terms of what our policies are. Our guide does not contemplate any of those changes. So what our guide includes is the move from the prior tariff rates since 2018 in China of roughly 25% to the pre-Friday tariff rates, which were in aggregate around 55% in China, mitigated by our move in part to Vietnam with lower tariff rates as well as some reductions that we've done over the past couple of years on our product manufacturing costs. And without any benefit from potential impact of Friday's Q4 decision, we have confidence that we'll maintain margins in the mid-80% range throughout the year.

Okay. And then one follow-up, if I could. On the NTAP for delirium, are you saying you're positioned to file for the NTAP or NTAP that becomes potentially effective this October? Or is this likely to be a 2027 decision for you?

Yes. So we submitted NTAP late last year. If we receive it, it will be effective this October in 2026. And the preliminary decision would be released by CMS in April, so in a couple of months.

And your next question comes from the line of Bill Plovanic with Canaccord Genuity.

Just for clarity's sake, your operating losses have decreased quarter-over-quarter in the past 2 quarters. It seems like from the detailed guidance you provided, excluding any IP litigation expenses that, that trend would continue throughout 2026. And then we -- I think we're modeling for you to get to adjusted EBITDA positive in the fourth quarter of '26. Just any thoughts on any of those statements?

I don't want to go beyond the guide to give specific comments. I will say that the investment -- the infrastructure we have in place right now is sufficient to carry us forward through 2026, but we're always thinking 2, 3, 4 years ahead. And so as we see the impact of the investments in terms of translating into accelerated growth, we do have a desire to invest more to drive outsized growth in the outer years of the model. We always pay very close attention to what that means for our overall cash position. We don't pay as much attention to time to breakeven, but we want to ensure that we're maximizing growth while not putting our ability to breakeven at risk.

Okay. And then on delirium, is that more you just see more utilization? Or I know you're trying to get the add-on, but do you think you can actually charge more? And then what does implementation of that look like with the new algorithm? I mean, is that just a download over the cloud? Or do you have to get out in the field and upload the new algorithm? I mean how do you implement that?

Yes. Thank you, Bill. On the pricing of delirium, it's a little bit too early for us to comment, and that's part of the commercial pilot for us to learn, better adapt the market dynamic. We could certainly charge for both algorithm as well as the head been, but those are the decisions we would like to make later down the road. In terms of how do we put the algorithm into implement the algorithm, it's rather straightforward in that we can remotely update both the firmware on the recorder as well as the portal so we can turn on delirium for our existing users and existing recorder remotely rather quickly.

And then are there any incremental expenses from an internal staffing and reviewing the data and the reports or anything of that nature?

As Scott mentioned, on commercialization front, we leverage existing sales team. On the R&D and ops front, there will be some marginal investment we need to add in because the portal and device gets more complex. but it's not significant. We will also invest in marketing and market development and clinical evidence generation. But there's no major significant OpEx increase related to implementing the algorithm.

And your next question comes from the line of Marie Thibault with BTIG.

Nice to see the new account adds tick higher again sequentially this quarter. And I heard your commentary on acceleration of account adds in '26 and '27. I suppose some of this goes hand-in-hand with the newer rep productivity that's coming online now. But I wanted to sort of understand the acceleration comment? Is that an acceleration from the low 30s where we are today or from the mid-20s where we were earlier in 2025? And is that something we should expect to continue building throughout the year given the timing of some of these newer reps that you hired maybe 12, 18 months ago?

At face value, the comment was specific to the full year. So I believe we added 118 in 2025, and so we expect to add more than 118 in 2026. There will be some lumpiness quarter-to-quarter. It's not entirely linear, especially with the new health system strategy where we expect purchase orders to come in, in boluses. So I wouldn't expect it to be totally linear. That said, the reps do get progressive. What we've seen historically is the reps do get progressively more and more productive between year 1 when they start to contribute in year 2 when they reach kind of their peak productivity. And so with more reps aging into greater productivity throughout the year, we expect a general trend of acceleration.

All right. That's really helpful, Scott. And you touched on something I want to ask about, too, which is the process of trying to sell into the entire health care system, maybe sort of an enterprise-wide approach. Tell us a little bit more about what's behind the scenes there. Are we starting to see that in accounts already? Or is that all to come? I think I'm a little ignorant of how recently this was brought online.

Yes. So we saw a couple of senior territory managers last year and had a very significant success in selling to this small, midsized hospital system. And so the success drivers there are, a, often these senior TMs would work closely with the regional director and even sales regional VP because often these systems are across different territories or different regions. So we can form a coherent system level strategy, not just focus on 1 or 2 hospitals. And also, they start to engage at the key stakeholders, especially administrators at system level and fine-tune the value proposition at system level instead of a single ICU or single ED. Because of the success last year, we are expanding that model this year. So we are relatively confident that we can further expand the success we saw.

And your next question comes from the line of Jeffrey Cohen with Ladenburg Thalmann.

Two from our end. Could you talk about any update with regard to the patent case with Natus as far as where you're at and ramifications on any expenses for '26?

I can talk about the processes. We are in the discovery phase and the preliminary decision point would be November 19. And before that, there will be a whole series event and all that milestones and time line is publicly available on the ITC website.

Yes, on expenses, since we kicked this off in Q3 or so of last year, we've seen relatively linear costs. We expect, given the nature of kind of litigation that it won't be linear. And what we're seeing is that in the depths of the kind of core of the case, which is happening right now into Q2, we'd expect expenses to increase and then potentially moderate in Q3 and Q4 as we reach kind of the late stages at least of the first half here with the ITC.

Okay. Got it. And then secondly, first, can you talk about the LVO indication potentially and the call point there beyond ICU also thinking about or looking into neuro and/or cardiac as well?

Yes. So the LVO monitoring would focus on the inpatient. And many of these patients actually still in the ICU. Therefore, again, it's the same call point. That being said, our initial finding is that there is a significant portion of patients have stroke outside the ICU in, say, on the floor or even in the telemetry monitoring units. And they have even less or poor training on the bedside nursing on identifying stroke. So we expect that this would be a very synergistic add-on to both seizure as well as delirium. I don't fully understand your comments on neuro versus cardiac. Can you reframe that?

If the majority of patients in the ICU is the neurologists involved in the patient care and the equipment being used?

Yes. For LVO, neurologists would definitely be involved, except this will be more stroke neurologists than epileptologists. But usually, the current standard of care is if nursing identify any stroke, potential symptoms that would cause stroke and then the stroke team would rush to the bedside. So there's definitely at least a general neurologist often a stroke neurologist.

And our last question comes from the line of Jason Bedford with Raymond James.

This is Elaine on for Jason. For delirium, I was wondering, have you started the pilot launch or started any early discussions with hospitals? And if so, could you please share a little progress -- or sorry, a little color on the early progress and learnings?

Yes. So we started discussions with quite some accounts already in the context of the commercial pilot. And we do not expect any commercial pilot to go live until Q2 as we are also in the process to make sure all the different algorithm software are all fully integrated. In terms of adding color, the initial feedback was very positive. Majority of the intensivists have high awareness of delirium and the potential harm delirium would cause and often are quite frustrated with lack of objective and continuous biomarkers for delirium. And another strong signal is that they recognize a certain population have a very strong prevalence for both delirium and seizure. So the earlier hypothesis validated by the physicians, our device could potentially help them to detect delirium earlier because not all the nurses are well trained and the algorithm could potentially help them to give them feedback to know whether or not they are on the right path. and also to really help them to differentiate seizure and delirium under the same population. So one example, if sepsis patient have altered mental status, 20%, 30% of them could have seizure and then 40% could have delirium, while the symptom is very similar in this patient, it looks very confused. So we are very encouraged by the early feedback from the physicians and the nursing team as well as the administrators.

I appreciate the color. And for my follow-up, would you be able to share your expectations on tech band pricing this year? I know you've talked a little bit about the neonate pricing, but for overall headband, do you expect to pass on a price increase this year?

This is in general or related to the delirium product?

Sorry, this is just in general.

We have maintained really strong pricing discipline and consistent ASPs over the years. I think there's a lot of unknown about the macro environment, both some headwinds and some tailwinds as it relates to tariffs and people's understanding of tariffs and how companies react to that as well as some of the pressures on hospitals. We're evaluating it case by case. But in any regard, we expect to maintain very tight pricing discipline.

That concludes our question-and-answer session. I will now turn the call back over to our Co-Founder and Chief Executive Officer, Jane Chao, for closing remarks. Jane?

Well, thank you all for joining the call. Again, we are very proud of what we have accomplished of 2025 and cannot be more excited about 2026. Thank you all.

That concludes today's call. You may now disconnect.