Good afternoon. I'm Josh Jennings from the TD Cowen Medical Devices Research Team. We are in the afternoon track of day 2 of the 46th annual TD Cowen Healthcare Conference. We have some West Coasters traveled out East, we appreciate that, to join in our conference this year again, from executives from Ceribell. We have Co-Founder and CEO, Jane Chao, and CFO, Scott Blumberg. Thank you, Jane and Scott, for participating again this year. I think last year when you participated, may have been your first fireside chat as a public company.
Exactly.
Glad we didn't deter you from making a return appearance. We appreciate. Great to see you guys in person. Love to, love to start off and, I mean, one, congratulations on strong performances each quarter, as a public company from the IPO in late 2024 all the way through 2025, and now we're into 2026. You guys have been consistently, you know, setting targets and beating them and the consensus numbers are grinding higher. It's been a great run, and it sounds like there's more of the same in play for 2026. You guys provided your the outlook and some guidance targets, on a top line 25%-29% growth. That's very strong, very compelling.
I think you guys have been relatively clear that there's a, you know, some conservatism baked in. We've gotten some feedback from investors that maybe there's it's too conservative, even though that is a, a very healthy growth trajectory. Maybe to start, maybe just talk about guidance philosophy and, you know, what can get you to the lower end of that 25%-29%, and what can take you up through that or to the top end or through.
Yeah. I think there's nothing in our long road to becoming a public company that was communicated to us more than the importance of putting out targets and meeting them. As you've mentioned, we've done quite well on that in our first full year as a public company in 2025. That philosophy still stands as we go into this year, we bake in, I think, a healthy but reasonable amount of conservatism into our numbers. I think there's reasons to believe, a lot of them. First and foremost, we've really reduced to practice the sales playbook. We're only in about 11% of the hospitals in the country. Within those hospitals, we're roughly 30% penetrated. We've also repeated the exercise of account acquisition 647 times.
I think as a staging ground, it's really just executing more on what we've done in the past. As far as accelerators go, I think there's some new things happening in 2026. First and foremost, we invested in a sales force expansion on the account acquisition side. Over the course of the second half of 2024 into the first three quarters of 2025, we took that team from around 35 territories to around 55. With our sales cycle, training and time to close and time to launch, it takes roughly one year before new hires on average on the account acquisition side generate new adds.
With that investment starting in the back half of 2024, we're now just starting to get to the point where those folks are starting to turn on. As we get into 2026, more and more of them will age into productivity. We think that's an accelerator, and we've communicated that we're likely to close more accounts in 2026 than we did in 2025. Second VA, we got a clearance for FedRAMP High, which gives us access to the VA system, and we received a commitment into the first cohort of those customers last year, and many of those will be launching in the first two quarters of this year.
As we get towards the back of the year, on the acquisition side, we are launching neonate and pediatric. Some degree of impact from those are baked into our guidance, but we think there's upside across all those levers.
Excellent. Thanks for reviewing that and the additional intel. It does look like a favorable setup here for 2026. You have generated significant momentum in the initial seizure indication. You've talked about the addition of pediatric and neonate monitoring with the VA hospital system expansion there, and that greater productivity for your sales reps. Just to start on pediatric and neonate monitoring, any more details? Just I know you guys are gonna be launching fully later in the year, what are the steps to get to that full launch? What are the learnings and any just help thinking through just the utilization at pediatric and neonatal, either children's hospitals or within a larger hospital?
Yeah. We estimated the neonate and pediatric in the U.S. alone would expand our TAM roughly by about $400 million. That's about 20% increase compared to the adult. If we focus on the neonate, which is probably majority is higher than pediatric, in this $400 million, we target the higher acuity neonate NICU, and that is about 800 in the country. Out of the 800, 200 of NICUs are in our existing accounts already. So in terms of account acquisition, it's still gonna take a couple of months to go through the back committee because we charge for Clarity for neonate. The neonate head cap is also a different device, a different, yeah, it's a different device compared to the headband.
We need to also go back to contracting team. After the acquisition process, we will spend a couple more months to, you know, train the NICU and then launch the product. That's probably the lower hanging fruit to the 200 NICUs in our existing accounts. There are 600 NICUs in the accounts that we're not in, and that can impact our business positively in 2 dimensions. One is, you always have accounts that kind of slow down or stuck in the pipeline. Now our TM, Territory Managers, have opportunity to engage another very influential stakeholders in the hospital. That's the medical director of NICU. They are closing this account, and now they can add 1 more department, so they have a bigger close. Those will be significantly, opportunity.
For pediatric, we see the bigger opportunity is less in the ICU setting, but more in the emergency department. Again, that's about 20% what happened in our existing accounts already. That doesn't even have much acquisition barrier. We look at that more as a patient population expansion. If we're already in the emergency department, we'll go to the ED and say, "Hey, now we have Clarity for the pediatric. Would you like to expand?" The seizure is the number one reason for pediatric patient visit ED. Number one neurological reason for pediatric patient visiting ED. Right now, hospitals have no EEGs for pediatric in the ED. That will solve a big unmet needs. Overall, we are pretty excited about both of the opportunities.
Absolutely. I think you've talked about this historically, but, I mean, just the opportunity in some of those pediatric divisions within hospitals where NICUs within hospitals where you don't have a presence. I mean, that could be a door opener for your seizure detection point-of-care EEG technology and getting into more accounts there, clearly. Maybe just build on that and any help thinking through that door opener with this pediatric and NICU indication.
Yeah. On the door opener front, I would say it's probably even more likely to have the NICU as a door opener. We plan to launch NICU fully in Q2 pediatric and NICU, right, this year. If I compare this year when we launch neonatal, the initial feedback, versus when we launch adult eight years ago, I would say the clinical support is even stronger for a couple of reasons. One is the physicians and nursing in NICU care even more about the neurological outcome here. Not surprising when they care about a 85-year-old patient surviving cardiac arrest. The other is a 32-week newborn has their life ahead of them. Second, the recent clinical evidence really further kind of elevated the concern here.
Seizure is the number 1 neuro abnormality in the NICU, 'cause babies don't really have stroke or TBI often. A big publication came out a couple of years ago showing that if you look at a language score that's very similar to IQ score, from 100, which is a normal baby, to 85 with developmental delay, all it takes is one-hour seizure in the NICU, and the patient's entire life will be changed. Very different than adult, the physicians, not only 90% seizures in NICU are non-convulsive. The physicians, based on clinical observation when they try to identify seizure, 70% of the time they're wrong. Guideline really require EEG.
If you walk to, in Boston, the top teaching centers in the NICU, many of the patients are on the guideline are now being monitored by EEG because there's not enough tech, there's not enough device, there's not enough neurologists to read. This is where we get really excited, and so we think there is a potential real possibility that NICU can open the doors for the hospital for us because of the reasons we talked about.
Just to go back to your comment, Scott, that neonatal and pediatric indications aren't, you know, big contributors, at least to the guide that's in play right now. We should be thinking that clearly momentum is gonna build in terms of account openings and utilization starts and by 2027, the pediatric and neonatal indications will be a bigger driver.
Yeah, that's right.
It's pretty straightforward.
Yeah.
Sorry, just to maybe just build on that.
Yeah, I think that's right. I think, our goal is to, have this ready to be a big contributor in 2027. To the extent some of that gets pulled forward to the back half of the year, that's a possibility that's not contemplated in our guidance. As we move into 2027 with kind of moving customers into the late stage sales cycle and likely closing our first few customers, with our recurring revenue model, that sets it up for full year impact, for the next year. We, we do expect it to be, much more meaningful in 2027 than this year.
Great. You talked about earlier just the access to the VA hospital system and I think initial account openings there. How does that progress? What are some of the challenges that are different from non-VA hospitals and could we see, you know, stronger adoption trends than are anticipated? What would drive those?
Yeah. I assume you are potentially talking about both the account acquisition in VA process as well as the utilization front.
Yes. Sorry.
Right.
Thank you for clarifying.
I think for the account acquisition front, we finished a very successful pilot with VA last year. The way VA works is they have the annual budget. Every year, essentially in 2025 budget, they used their budget, committed a pretty significant cohort of VA accounts. We're in the process of launching those accounts. Majority of it will be launched in the first half of this year. As we move to 2026 VA budget, we are working with them closely to see when and how much they can commit to the second cohort. Some of them might launch later this year, and I imagine majority will be similar. They will launch, you know, first half of next year. That's kind of on the account acquisition front.
On the utilization front, since the numbers, the duration is relatively low or short and the number is relatively small, it's too early to comment. From the pure market dynamic, there are two kind of drivers that drive utilization of VA to different directions compared to a typical civilian hospital. One is probably a negative driver on utilization, which is, this current VA launch, we're only launching the ICU, and we're not launching the ED yet. VA usually have lower volume and lower acuity in the ED, because if a veteran have a true emergency, it's gonna be sent to the closest ED, not necessarily to the VA ED, right? That would suggest potential lower volume. There's another driver. VA in general have much worse conventional EEG capability compared to the civilian hospitals for different reasons.
that we could potentially have a bigger opportunity. We're still in the early learning phase about the impact of the VA.
Appreciate that, Danielle Antalffy, too. Maybe to just talk about margins and your team kind of de-risked and optimized the supply chain last year in response to tariffs, and the tariff musical chairs are still moving to a degree. Maybe talk about the margin impact of the changes that you guys have implemented and whether there's more work planned on the manufacturing supply chain front. You already issued, I think, gross margin guidance for 2026. Maybe talk about some of the puts and takes there.
We had been running about an 88% gross margin throughout the year, and as we got into Q4, that declined to 87%, which is still incredibly healthy for our space. That was partial quarter impact of the tariffs prior to the Supreme Court decision. All my comments are copy edited by this. It's all prior to the decision that represents upside. We guided that next year will remain in the mid 80% range throughout the year. That's driven by the de-risking we did. We really did two things last year. One is we stood up very quickly a manufacturing facility in Vietnam, which under the, you know, pre-Supreme Court tariff structure was materially lower than China.
Not only does that allow us to move manufacturing and calibrate manufacturing towards lower cost jurisdiction, but it also creates geographic diversity to the extent that the facts change as they have in the past. Secondly, just as a matter of practice, but perhaps accelerated by the introduction of tariffs, we made a number of permanent costs to our manufacturing efficiency that reduced the overall cost. You get a double benefit there. You get the lower cost basis, the tariff applies to a lower number, you actually get a larger than 1x benefit on that. Those have led to us maintaining margins in the mid 80% range.
Of course, any any kind of permanence of the Supreme Court decision or policies that end up less punitive than the prior tariffs are all upside to us.
I have to agree. Mid-80s gross margins and or higher is very, very healthy. You detailed some of the fruit of the labor of building out the sales force, or that sales the expansion initiative last year. It's coming into play this year. Just review the, if you would, the plans to expand this the sales force further from here, in 2026 and in 2027.
Yeah. We think about the different components of the sales org a little differently. The two core components, the Territory Managers, which is the account acquisition arm, and the Clinical Account Managers, which is the utilization arm. On the Territory Manager front, we have grown to 55 quite rapidly. We are letting those folks mature. We're evaluating the leading indicators of success, and they all look quite good. We'll take it one quarter at a time, balancing the puts and takes of investing in more folks, and taking on the costs associated with that, but then securing more people to run sales processes, which could accelerate account adoption, you know, 1.5-2 years out.
In the meantime, on that side of the house, while we're looking at the signals there and digesting the big expansion, we're building out a regional health system function, which supplements our bottom-up sales process with the ground level Territory Managers with engagement with hospital system leadership. We now have a foot in the door in a pretty meaningful number of the health systems in the country. Pointing to the success they've had in 1, 2, 3 accounts and say, "Hey, wouldn't you like that to spread to your other 5, 6, 10 accounts?" we think can bear significant fruit. On the clinical account management side, they split their time largely on growth initiatives.
They do have some component of their job being maintenance in terms of training new reps and keeping new physicians and keeping front of mind. That grows to some extent by necessity. We have, of course, latitude in terms of the span of control and how much we wanna calibrate between growth and cost there. As a heuristic, I would suggest that we plan to for now grow that in alignment with the rate of growth of the account base.
Okay. I think you answered my next question partially with that, your last answer. Just you've relayed that about 30% penetration within your account base, 4% penetration within the U.S. hospital opportunity. A lot of room to run both in your current customer base and the overall U.S. market. What steps are you taking to increase penetration both, you know, with greater utilization and new account acquisition? Maybe to start, I just have one follow-up. I think you already described some of that, Scott, but any other details to add, Jane?
Yeah. I think maybe one thing to add to what Scott already laid out is the specific initiatives on driving utilization. When we look at our top, say, 10% of accounts, in top 10 usage, after you calibrate the hospital size, we often see Two ways for hospital to get there. One is year-over-year growth, right? That's not surprising. That's the playbook we are trying to replicate here, That's often driven by departmental expansion. Often we enter in 1 ICU, After a few years, we are owning all the 3 ICUs in the step-down units on the floor, as well as in the ER. We have always historically done this, Last year is the first year we start systematically tracking it, managing departmental expansion as if it's a pipeline process like account acquisition.
We really see very strong signal there and start to build best practice, and this year we're further expanding on the best practice there. We're very excited about what that can drive. The second part is even the departments we're in because of all the attrition internally as well as externally, that we find often many physicians are not trained. We are also re-emphasizing this year goal we call the bread and butter is really engage the physicians, make sure they're actually trained, especially during the after-hours, the mid-levels. There are many other things we're trying and piloting, but these are the two main focus. Because we've done this before, we've seen impact, and so we feel confident we can do that.
I want to emphasize the other pathway, which is, probably tell the unique dynamic of our growth as well, is, some of our 10 top users, they actually become a top user as soon as we launch the account. We're getting so much better at launching accounts when we launch it, and the sales are heavily compensated on the quality of the launch, so they make sure they get into all the departments, they make sure all the workflow is there. That's when hospitals are open for physician engagement, so we make sure we train everyone. You can see in the get-go, they can be using three times more than national average. Those are some interesting dynamics there.
They're very interesting. Wanted to dive into the pipeline that's also bearing fruit or continues to. We've already talked about pediatric and neonate, but delirium is a more recent approval, very large opportunity, $1+ billion, significant overlap with your current footprint for the seizure indication. Maybe just talk about just the pathway with the pilot as you move through 2026. You've got an NTAP decision on board and then moving into full launch in 2027. You know, how do you see the ramp here? Is the adoption of the seizure indication or status epilepticus a precedent or could delirium ramp faster because you have this installed base, you have these customer accounts already?
It seems like there's a-- you already have a nice entry point.
As you mentioned, delirium, the $1+ billion is U.S. only and in addition to the seizure patient in the ICU alone, right? That's why we see probably in the short or midterm, the biggest opportunity for delirium is to increase the utilization in the existing accounts, right? We're gonna learn a lot 'cause we're gonna do the commercial pilot in Q2 and potentially launch in Q4 this year or Q1 next year. Doing that learning process, it depends on how we decide pricing. It could be very low adoption barrier because you're in the ICU, you are the medical director, you already... It's the same hardware, right? If we can just turn on the algorithm, they can literally use it tomorrow on the patient.
Or of course, we can charge for Clarity, because now Clarity detect delirium, then they have to go to the VAC Committee . There are different paths to capture the value, so that's what we are learning. In the Q2 commercial pilot, we already started a lot of conversation with a limited cohort 'cause it's a pilot, and the initial reaction is very strong. Clinical buy-in is very strong. Of course, you could argue there's a positive selection bias there 'cause we reached out to account who's interested in delirium, but this is what we're hearing. One, quite many large patient population are subject to both delirium and seizure. Often you see sepsis patient have altered mental status, post cardiac surgery, especially elderly patients, right?
They have 10%-20% having seizure and then 30%, 40% having delirium. The symptom is the same, patient's altered, patient is confused, but the treatment pathway is completely different. If patient have seizure is, you know, first line is benzo. If patient have delirium, you want to completely keep patient out of benzo. Right now, doctors are shooting in the dark. We're quite excited about what can come out of it. It's a bit too early to talk about, like, quantitatively, of course, about the financial impact. We could see the adoption of delirium shouldn't, compared to the adoption curve we had the past eight years for seizure should be faster because of the install base we already have and because we're using the same hardware.
With the caveat, of course, during the past eight years, we developed so much clinical evidence, showed clinical impact, health economic impact. That we still need to do, so you still have that adoption curve.
Right. It's, it's my understanding that the algorithm can get stronger and stronger, sensitivity and specificity can increase as you add more EEGs of delirium patients into that big database. I mean, I think the sensitivity and specificity results from the, was it a De Novo 510(k), or your 510(k)?
It's a 510(k), yeah.
was, you know, low 80s, but that could track significantly higher over time. Maybe just talk about the pathway there and how long, you know, when would we see the potential improvement in sensitivity and specificity? It doesn't seem to be essential at all.
Yeah.
during these early days of launch, but maybe creating a moat in the future for any competitors that wanna get in this space, but also maybe drive stronger adoption as you commercialize the delirium indication.
Absolutely. For seizure, as we launched the seizure detection algorithm about six, seven years ago, every six months, we'll collect as much as we can, the false positive, false negative from the users, and essentially it's labeling the data, right? We'll retrain the algorithm. We'll find it performed well on certain patient population, not so well on other patient population because they have a different neurophysiology. That's how we were able to continuously improve seizure detection algorithm. We could see the same path for delirium. That being said, though, delirium is very different than seizure because it's the value proposition is early detection, continuous monitoring, right? Like, neurologists are used to 90, high 90s sensitivity, specificity. On delirium, currently, there's no objective diagnosis.
The gold standard is already not accurate. Right now it's spot check, it's a binary result. We not only give objective result, we give a continuous result with trend lines. We haven't heard initial discussion, at least, the low 80% is actually for physicians. They often feel, "Oh, that's good enough for my practice." That being said, to your point, we're gonna continuously improve that.
Great. Thinking about 2026 again, and the competitive landscape has evolved to a degree over the past 12, 24 months. I think your team has been clear that the competition has not slowed the momentum. You can see that in the results and you don't expect it to in 2026. Anything on your radar, just from new competitive technologies, entering the market, and are you seeing any kinda head-to-head competition, any new accounts in the field?
There's not really anything new majorly from competitive dynamic perspective. To your point, we've proven through the past year's performance that, you know, the competition is not impacting our business in a meaningful way. In 2026, when we have FDA clearance on neonatal, we're the first and only seizure detection algorithm for preterm all the way to adult, and that's a major differentiation with the current competition. As we add delirium, we're again the first and only device that can monitor delirium, and that add another differentiation. One more thing to call out is, delirium algorithm is even much harder to develop compared to seizure. We have to run a clinical trial prospectively for five years to get the proper highly accurate labeled data to train the algorithm and validate the algorithm.
Our two main competition has no in-house AI team 'cause they kind of licensed in their seizure algorithm. Even if someone decide to copy, they have to run the trial, and that's 4, 5 years down the road if they can develop the algorithm successfully. I'll say we further elevated our advantage over our competition.
another mechanism of defense that's in play is the USITC and patent litigation. I think we've learned that the USITC analysis should reach an initial decision later this year. Can you just update us on any new thoughts about the process versus the your forecasts last year and how you view the likelihood of getting a favorable decision from the USITC stance today?
Yeah. That's a topic I can say very little about.
Okay.
The deadline, the preliminary result would come on November nineteenth. The final decision would be around March. If there's any further government shutdown, that timeline can change.
Understood. Well, great. Well, Jane, Scott, thank you guys for participating. Appreciate this discussion. Good luck in the rest of your meetings over the course of the afternoon, and hopefully we'll convince you to come back again next year.
Sounds great. Thank you, Josh.
Thanks for having us, Josh.