electroCore, Inc. (ECOR) Earnings Call Transcript & Summary

Good day, and welcome to the IAccess Alpha Virtual Best Ideas Summer Investment Conference 2026. Our next presenting company is electroCore Inc. [Operator Instructions]. I'd now like to turn the floor over to today's host, Joshua Lev, Interim President and CFO at ElectroCore Inc. Please go ahead.

Thank you, and thank you very much for participating in today's -- is Alpha Virtual Investor Conference. A special thank you to Wiley Johnson for hosting us today. My name is Josh alive, I'm the Interim President and CFO of electroCore. We are listed on NASDAQ with the ticker ECOR. ECOR. We are a bioelectronic medicine and wellness company with our main focus in providing health and wellness products that are noninvasive products, utilizing bioelectronic technologies for different therapeutic areas and for health and wellness. Our products ourselves -- themselves are comprised of 2 different categories: One, our prescription-based products, the other are health and wellness products, which are sold direct to consumer. Over the course of the last few years, we've been able to grow the revenue at a 5-year compounded annual growth rate of approximately 50%. And we've been able to do that while we have been increasing and expanding our gross profit margins from roughly 72% in 2019 to roughly 87% in the first quarter of 2026. Our sales model is variable in that we use a bifurcated sales organization that's comprised of both W2 employees as well as 1099s or commission-only-based sales executives, which allow us to go ahead and scale the business in a way where we can begin seeing operating leverage out of our P&L. The majority of our revenue comes from the VA, the Veterans Administration or Association utilizing our prescription-based product, gammaCore. But what's important to understand the note is in April of 2026. We have brought on a new commercial leader, a gentleman by the name of Mike Fox, who have spent the better part of the last decade in commercializing revenues in the federal markets. In terms of what that means for us, as we look to expand and grow our commercial adoption of our product base over the course of the next few quarters and years. We look to the new commercial leader in Michael Fox to help us expand the commercial adoption not only through the contact that is developed over the course of the last decade, but as well as utilizing some of the strategies and tactics that we believe can help us reduce our overall sales and marketing expense as a percentage of revenue and ultimately get us closer to cash flow breakeven. As of the first quarter of 2026, we reported $9.6 million of top line revenue and $8.8 million of cash on our balance sheet. From a guidance point of view, we have guided to -- the Street in excess of 30% of top line revenue growth year-over-year or ending full year 2026, roughly around $42 million of top line revenue. As mentioned earlier, we've got 2 main categories of products. We have our prescription-based products, which you could see on the left, and we have a category of general wellness products, which are sold utilizing the FDA's general wellness guidelines in the middle and on the right, and I'll go into each of those products in a little bit more detail. Our flagship product is called gammaCore. This is the product that's primarily sold into the VA, and it's FDA cleared for different forms of primary headache. That includes items such as cluster headache, migraine, both for use acutely as well as use preventatively and also in adults and adolescents. This product comprises roughly $25 million of our overall revenue that we see -- and the reason why the VA has been such a large adopter of this product is primarily because it is a nonopioid-based therapeutic that can be used and leveraged within the VA. The technology that it uses is called noninvasive vagal nerve stimulation. We're said differently, what we do is we stimulate the Vegas nerve noninvasively by utilizing a handheld device that can stimulate for 2 to 4 minutes over a duration of time. The reason why this has been so useful to the VA is not just that it's a non-pharmacological based therapeutic, but noninvasive vagal nerve stimulation is a systemic approach to therapy rather than a direct approach to therapy. What I mean by that is the Vegas nerve, which is also known as the tenth cranial nerve is the largest nerve in the body, and it connects to all the visceral organs. So when you stimulate the Vegas nerve, what you're actually doing is stimulating a nerve that is controlling not just the brain but also other areas of your body. Because of that, what we see is our noninvasive vagal nerve stimulation product works particularly well with patients that have a lot of things wrong with them. So when you look at the VA patient population and you think about how many of those patients have a lot of comorbidities, not just headache, but headache being a symptom of other issues, the reason why our product has been so affected in the VA and adopted so quickly in the VA is because people that have a lot of different things wrong with them. For example, inflammatory issues, issues with their lungs they see a lot of benefit utilizing our noninvasive approach versus using just a traditional pharmaceutical product, which is directed specifically to take care of just that headache. In May of 2025, we acquired a company called NeuroMetrix. NeuroMetrix had a unique platform that they biblical Quell. And the Quell technology had previously been utilized and adopted and sold through a Class I medical designation of over-the-counter. A few years back, NeuroMetrix ran into some issues. -- and they began to go down the pathway of getting a Class II medical clearance for fibromyalgia. When we acquired this business in May of 2025, they had just launched their Quell fibromyalgia product into the VA and they were selling approximately $50,000 a month worth of revenue. We acquired the business with no dilution to the electroCore shareholders. We did not pay any cash. We did not raise any cash. and we also did not dilute the shareholders by providing the NeuroMetrix shareholders with any of electroCore stock. We provided those Neurometrix shareholders with the cash that was already on the NeuroMetrix balance sheet as well as a CVR based off of a royalty payment that's capped at $500,000 over the course of 2 years. As I mentioned before, when they -- when we acquired this business, it was doing approximately $50,000 a month in revenue. In March of 2026, less than a year later, we reported that we get $400,000 of revenue in this individual product -- in the first quarter of 2026, we did an excess of $1 million of revenue through this product line. What was unique about this product and why it made so much sense to us is -- this is another version of a non-opioid-based pain therapeutic that we're very easily able to add directly to our sales bag. And when we're able to add more products to the back of our sales organization, which we've already seen to establish as a commercial channel that is working for us, specifically for these noninvasive non-opioid-based pain therapeutics, we were able to see high adoption. Moreover, utilizing this product is particular of interest to us because roughly 8% to 11% of active duty military come back from deployment with some form of fibromyalgia. So we believe that this is a very large total addressable market that hasn't been tapped yet, and it already fits in very well to our bag where we're getting some sales leverage without actually having to incur any additional cost in order to do so. We sell our noninvasive vagal nerve stimulation products, direct-to-consumer utilizing the general wellness product guideline, which effectively says if your product is safe and your product does not cure medical condition, you are allowed to sell it as a general wellness product. The best example that we can get for that is we could say that our product is used to improve your sleep, but we cannot say that is used for Insomnia, Insomnia is a medical diagnosis. And what we do is utilized our noninvasive vagal nerve stimulation technology and offer it up to the consumer marketplace as a device to help them reduce stress, improve sleep and help with stress over the course of a normal day. There's a massive market when you think about the total addressable market for health and wellness products and the way that we look at this market is, it is in its infancy, and when you look at all the additional products that exist in the market, for example, you have your root bands, you have your ore rings, you have your hum bands. All of those different products, what they do is they tell somebody from a health and wellness point of view, that their biometrics are telling them that something isn't necessarily right or something isn't necessarily working. What's different about our product is our product actually does something. It stimulates the Vegas nerve. It helps control the parasympathetic and sympathetic neuro system. And what that does is it helps correct many of the things that those devices such as [ orderings and Roop ] and Apple Watches are giving you measurements around. We offer 2 different versions of this product direct-to-consumer, both of which are available through our website, truevaga.com. And the perversion on the left, the truevega our app-enabled noninvasive vehicle nerve stimulation product. And why that's important is as we look to the future, and when I talk about the future catalysts, One of the items that we're looking to do is how do you take this app-enabled product that we have and create future generations of product that you can deploy a recurring revenue model or some form of subscription-based model which will allow the company to increase its lifetime value of this product. The reason why that's so important is as a consumer electronic device, the TruVega product line is a very expensive product to run. Similar to all other consumer electronic devices and marketplaces, there is a high marketing cost associated with these products, particularly when you don't have any scale and you don't have any mass adoption or mass adoption or mass knowledge of the brand itself. So fundamentally speaking, what we have said over the course of the last few earnings calls, is while we've been able to grow this business at roughly triple digits from 2024 of $2.4 million to approximately $5 million in 2025, we believe from a strategic point of view, that is better to grow this business at roughly 30% to 50% year-over-year and improve our operating metrics and our operating margins rather than continue to grow this at triple digits to the detriment of our operating margins. The next product line that we offer is called Paxton, which assured for tactical stimulation. This product was developed in conjunction with the Air Force Research Labs human performance wing. And the reason this is a general wellness product. And the reason why that's important is if you wanted to actually sell this product into the active duty military and deploy it across certain units, they do not want to have the extra red tape associated with having a prescription associated with this product. This product was created coming off of the back of 2 different studies that were done. The first was being done by a Drone Pilot Commander, who saw that is drone pilots. We're having issues working large shifts, 12 to 14 hour shifts, they're taking uppers and downers and they were trying to modulate their sleep, and they were getting into car accidents on the way home and dying. And what that commander said to us is these are very expensive units to replace these drone pilots are very expensive assets to replace. So they utilized our product and what they were able to determine is not only was their sleep improved and their mood improved probably due to better sleep improves your mood, improves your focus. It also improves your cortisol levels, but they were able to identify targets more accurately over a longer duration. And that's very important when you have a cognitive load, specifically when every little dot that you see on that screen is a drone pilot could be a life or death situation. Around the same time, the Defense Language Institute, which is a government entity that we utilize to train our soldiers on learning second and third languages. Did a study that showed that people utilizing our product were actually able to learn a second and third language quicker and retain it longer than those that were. The reason why that's important is utilizing these 2 different pieces of data -- the Air Force weather slabs came to us and developed a military spec version of this product, which is currently purchased by different government units, Special Forces units from the Army Special Forces units from the Navy, Air Force that are currently buying this product and deploying it across different members of their units for specifically human performance and mental cognition. We have large total addressable markets. As mentioned before, we just brought on a new Chief Operating Officer, Mike Fox, who brings us more than a decade's worth of experience selling specifically into the federal marketplaces. But specifically, when we look into the VA, there's approximately 1,300 facilities that can actually write a prescription. We have sold into approximately 200 of those facilities. Of those 1,300, approximately 170 of them have the opportunity to actually dispense a product or have their own budget, and we sold into approximately 150 of those. The reason why we think that this is important is there's a tremendous amount of upside that we still have within the VA. And as we look to accelerate our adoption within the federal marketplaces, not only do we see it coming from different areas such as federal workers' comp, TRICARE and active duty military, but we believe our core customer, which is currently the VA, has more than enough opportunity within its own right, there's approximately 600,000 headache patients in the VA. Of those 600,000 patients, we've only sold to approximately 2.5% of that. In addition, on the commercial side, in 2025, we got on formulary and on contract with Kaiser Permanente. Kaiser Permanente, just by way of total size and scale has 12.5 million covered lives within their organization prior to the acquisition of Geisinger, the VA has 9.5 million covered lives. So it's actually a larger managed care system larger than the VA. So we believe that if we could start showing some adoption within Kaiser, other commercial insurers will follow suit, because when commercial insurers look at our patient population, they say VA patients are different and don't really look like our commercial patients. However, the commercial patients within other commercial organizations do look very similar to the advertiser. So the Kaiser strategy is our beachhead strategy in order to help adoption with further growing our commercial efforts in the commercial insurer space. In terms of our technology, I think it's misunderstood that eletroCore is a single product, single customer company. Our technology itself, because it touches all the visceral organs is actually more of a platform technology. We have more than 30 investigator-initiated trials currently ongoing, studying the use of noninvasive vehicle nerve technology in other functional therapeutic areas, such as PTSD, long covid, stroke, gastroparesis, and others. The reason why this is important is as we continue down the pathway of who it is we're looking to become and what it is you want the Street to see we're really trying to change that narrative around electroCore and why it's an exciting time today to be an investor in electroCore. We are not a single product, single customer company. We are a platform technology company that has the ability to commercialize its technology, not necessarily in different forms of different indications, but also we have it become more widely adopted throughout our commercial channels, both existing and future to come. As we look at the strategic catalysts that we want investors to follow us on and track over the course of the next few quarters and years, we're really pushing to show that we can increase the number of indications that we currently have utilizing noninvasive Vegal nerve stimulation as well as maybe some of the technology that we've deployed with our Quell product. We want to be able to show that we could come out with different products and different form factors that will be utilized on the commercial side. So it's not necessarily from an R&D perspective, just about increasing the number of indications, but the form factors that exist that we can then utilize in different forms of indications. An example of that, not something that we are currently going after today, but an example of that could be, for example, a patch-based deployment method, which can be utilized in acute treatment of -- from a commercial point of view, Mike Fox, has the experience has deployed strategies and tactics in order to help grow his previous company from approximately $20 million of revenue to $80 million of revenue within the VA over an 18-month period. And we're looking for them to utilize some of those strength tactics and strategies within our own organization. But it's not just about growing the VA. It's also about going to places like federal workers comp, TRICARE and active duty military, where we are currently very much on contract, but have never actually focused on having our technology be utilized in those different functional commercial areas. Our goal over the course of the next few quarters is to start showing the street that we are going to have more adoption in different areas, not just the VA but hopefully opening up new accounts and new types of customers so that we can diversify our revenue set across a portfolio of different federal systems as well as commercial systems. And last but not least, and maybe the most important is operational, which is we have guided to approximately a 30% year-over-year revenue growth, but we want to be able to continue showing above-market returns relative to our comp set. If you look at a comparable set of electroCore or versus some other companies, that we look at and we look at it as comp sets, our revenue and our gross margin both outpaced those competitive sets. But what we want to continue to do is continue to show that above-market return in terms of growth and in terms ultimately getting to the point, where we can do it in a way that shows operating leverage in our P&L and ultimately gets us to the point of cash flow breakeven. We believe that our sales and marketing expense as a percentage of overall revenue will be a leading indicator. And 1 of the main areas of focus that we are looking at specifically starting in this quarter, Q2 and as we look into future quarters, as we bring down that sales and marketing expense as a percentage of revenue from its current roughly 60% range to market standard of around 40% range. Our revenue growth over the course of the last 5 years, as I mentioned earlier, been growing at greater than 50% compounded annually over the course of the last 5-year period, as indicated by the chart, and we've been able to grow our business very effectively. And even on a financing point of view, we've been able to do it in a way that has kept a very clean cap table for shareholders of electroCore. We have no variable rate securities within our cap table. We have no ratchet provisions, no anti dilutes. We have a very clean cash table that's comprised primarily of shareholders board members and insiders and long-term equity incentive for our employees. As mentioned earlier, our leadership team has changed in April of 2021, our former CEO, Dan Goldberger, retired. I took over as the Interim President and Chief Financial Officer at the time. My prior role with the organization was Chief Financial Officer and before that, I was the Chief Strategy Officer. We brought on a new Chief Operating Officer by the name of Michael Fox, who comes with 35 years of experience in commercializing medical devices, the last 10 of which or a decade of which has been really focused in the federal marketplace. And we also have Dr. Tom Erico and Dr. Peter Stuats, who are founders, investors and investors in this company who have been along with the company since it went public roughly in 2018. Actually, they've been around with the company since 2005 when the company was founded. So with that, our company is traded on NASDAQ. The ticker is ECOR, ECOR. And I'm going to turn over to the Q&A session or a portion of the conversation and take any questions that may pop up in the Q&A section of the presentation.

I'm just giving it a moment for questions to come in. First question that came in is, what are the main drivers behind your confidence in achieving 30% growth in 2026? So great question. We believe that we could have achieved a 30% growth even before we brought in a commercial leader. The way that our system CRMs and products work is that we actually track things like new patient starts as well as refills. And based off of our overall cadence of business and utilizing percentages, we believe that, that 30% revenue growth is actually something that's very achievable. Now with that being said, that 30% growth is what we believed we could do prior to making changes in our commercial organization. I could tell you that Mike Fox started in April of 2026 earlier this quarter, he has brought on a team of people, including and other commercial sales executives that he has worked with in the past that has provided him -- that have generated for him revenue in other areas. So while our current guidance is 30%, I believe that historical prescriptions and refills justify that, that 30% is achievable and it's typically back loaded in the half of the year. Moreover, as we get better and smarter about the way that we sell and the way that we grow our sales organization, I believe that 30% has the ability to grow further. Q1 revenue grew 43%. What drove the strength across the prescription device and consumer wellness business. Great question. I think overall, the 43% growth, a lot of it has to do with those new patient starts that we had, as I mentioned to you in prior years and prior quarters. The company does have a robust inside sales and customer experience organization where what we're able to do is provide White Club service to all of our customers and patients that come in to ensure that they're staying on compliance and using the device correctly. Really, the more you use it, the better it works. And therefore and therefore, the pipeline of refills can become a repeatable business. The VA remains your largest channel, but penetration is still only around 2.5%. What are the biggest opportunities? I think the biggest opportunity right now is changing the makeup of our sales organization. It's 1 of the things that's currently being done currently, by our new Chief Operating Officer. And what I mean by that is a few things. #1, the way that our territories are currently carved up allows for ample opportunity for people -- salespeople specifically to generate revenue. However, they've got large batches of territories. The best example I can give for the moment is we've got 1 territory business manager that has Southern Florida as part of his territory. Keep us very, very well in Fort Lauderdale. He does very, very well in Miami BAs, but there's areas such as Gainesville, which is about a 5.5-hour drive from where he currently resides, that doesn't do as well as those 2. If we're able to carve up the territories in a different manner such that we actually have the ability to have someone in that Gainesville BA more frequently. I believe that, that will be an area where we can go ahead and actually grow or to continue to grow our revenue base in a more repeatable fashion. The other way that we look at this as well is you have to show up in the VA. So 1 of the things -- and what I mean by that is even though the VA is our largest customer, there is this false premise that we are a single customer product. The way that it actually works is of those VAs, we actually have 150 separate and unique customers. And just like any other business, 80% of our revenue is coming from approximately 20% of our customers. What we need to do is we need to go better in terms of depth of our customer base rather than the breadth of our customer base. How meaningful could Quell become in the VA? I believe Quell over the course of the next 3 to 5 years may have the ability to surpass gammaCore as it relates to its overall opportunity. The reason why I say that is roughly 8% to 10% of overall active duty military that come back from deployment, come back with some form of fibromyalgia. Fibromyalgia is very interesting. It's not necessarily something that has historically been identified as ubiquitously accepted as a diagnosis. There is inflammation, people are in pain. People don't really know why. Now fiber biology is becoming more and more better adopted as a diagnosis. But more importantly than that, when you look at companies like products like gammaCore, there are a large number of pharmaceutical-based products to monetize based products that are used for treating headache, items such as triptan, sumatriptan, even Adville and Thailand all fiber myosin doesn't have that. We are the only device that's currently available to treat fibromas -- so I actually see that as being a larger opportunity for us in the future. How do you think about the long-term opportunity for TruVega as a general wellness product versus Camacor and Quell? I think the Truvega opportunity itself has a much larger total addressable market. So if you think about the context of all the products that exist within the health and wellness space, which fell -- which I'm sorry, Truvega fits into I'd say that market is a lot higher, but the operating margins on that business are a lot smaller. And it takes a lot of money to get to critical mass. So the way that we're thinking about it now is we really want to grow the medical side of the business, which has much higher operating margins, be able to utilize that as a function to basically underwrite, if you will, the future growth of Truvega rather than having to go to the market every year, every other year to raise additional capital to grow Truvega. We believe that we can do it with the high operating margin business that we currently have within the medical side of the business. And our focus is going to be is focus on the high medical side without depleting or getting rid of completely the TruVega side of the business. The Department of Defense appears to be underdeveloped opportunity how does the sales cycle comp to VA? It's a great question. I can't answer that question yet because I don't really have the answer to that question. We're just starting now on the Department of Defense side. but we hope to provide additional information in future quarters. Gross margin remained at 87%. How sustainable is that? We guide all of our analysts at mid-80s is where we believe our margins are going to fall. There'll be some quarters where they're lower than 85%, some that are higher than 85%. So we guided at a roughly 85% gross profit. potential label extension for PTSB MPI, which pipeline opportunities are the most important strategically? I think that's a great question. PTSB from a strategic point of view, probably makes the most sense because it's the lowest hanging fruit. What I mean by that is our largest customer is in the VA. They have a large number of PTSD patients as you can imagine. There's a very high comorbidity between PTSD patients as well as headache patients. The challenge with that is going to be the data that currently exists. And even though that, that is a large opportunity for us, we also know that our product is being sold off label already for PPSD. Other areas like mild traumatic brain injury also exist as a large commercial opportunity. There's other areas of opportunity that we have, for example, CIPN, which is chemotherapy-induced peripheral neuropathy, which is something that we inherited as part of the acquisition for NeuroMetrix. There may actually be a lower hanging fruit than all the other gammaCore related. For investors new to electroCore, what do you believe is most underappreciated about the company's growth platform today? That's a great question. I really think the answer to that is we are a platform technology business with the opportunity to expand on the commercial opportunities rather than just a single product, single customer company. We are on the precipice of commercial adoption in areas both accelerating within the VA, but within other areas of the federal marketplaces. And we believe that our P&L is starting to actually show operating leverage. As revenues continue to scale, we ultimately do see the pathway to profitability. We just need to continue the trajectory of revenue growth to ensure that we can cover all of the fit's expenses and now get to the point where we are truly seeing the operating leverage out of the P&L. And then the last question I have here is how important is your broad IP portfolio I would say we believe that the technology portfolio is an important part of the assets that we have in the organization. I briefly skimmed over the slide before because of time limits, but fundamentally speaking, we have more than 300 patents and patents pending, both in the United States and globally. I think noninvasive vagal nerve stimulation in the cervical area of the neck -- primarily in the neck area is going to be very important because vegas nerve simulation as a product or as a therapeutic has been around for many, many years. Most of the vagal nerve stimulation products that currently exist in the marketplace that have ubiquitous adoption are implantables. They're implanted utilizing a surgery where you open somebody up, you wrap a stimulator around the Vegas nerve and then you close them up. Those are currently being deployed by companies like LivaNova, Setpoint, Cyberonics are all companies that have utilized these products in different areas, functional areas. -- such as epilepsy and depression. What I think makes us unique is how do you stimulate the Vegas nerve noninvasively for all those people that don't want to have a surgery because I believe or we believe as an organization, that from an adoption standpoint, vagal nerve stimulation is something that could be ubigutously adopted for different reasons, which is great. Invasive exists currently. But since the Vegas nerve runs up and down in the cervical region of the neck, it also touches the aricular area of the year. Well, when you look at the Vegas fiber, roughly 80% to 90% of the vagal fibers run in the cervical region, where roughly 2% to 14% run within the arricular area or the year. So if you're going to use noninvasive vagal nerve stimulation, utilizing it in the neck area is going to be more efficacious doesn't mean that irricular won't work, but you'll probably be able to do it in a more effective and more timely manner than utilizing arricular-based modalities to stimulate the nerve. So with that, I appreciate everybody's participation in today's meeting. And again, the ticker is ECOR. Happy to schedule any additional meetings if there is interest. Thank you.

Thank you. That concludes electroCore Inc.'s presentation. You may now disconnect.