Good afternoon. Thanks for joining us again at the 24th Annual Needham Healthcare Conference. I'm Mike Matson, and I lead the MedTech and Diagnostics Equity Research team here at Needham & Company. I'm pleased to introduce electroCore. Presenting from electroCore, we have CEO Dan Goldberger. He's going to give a presentation on electroCore, and then we'll open it up for some questions at the end. As usual, you can submit your questions through the conference website, or you can email them to me at m.matson@needhamco.com, and I'll do my best to fit them in. With that, let me pass it over to Dan.
Thank you, Mike. Thank you to Mr. Matson and the Needham team for including us in this episode. My name is Dan Goldberger. I'm the CEO of electroCore. I've been here more than five years now. We are a commercial stage bioelectronic medicine and wellness company. The ticker, please remember, is ECOR, E Core. The materials that I'm presenting are available on our website, so this is all public information. The overview: electroCore was founded to commercialize our proprietary technology around non-invasive vagus nerve stimulation. Implanted vagus nerve stimulators were commercialized in the 1990s. LivaNova, a public company, now has a pretty significant business with implanted vagus nerve stimulators that require a small surgical procedure for treating epilepsy and depression. The founders of electroCore were looking for a percutaneous or less invasive way to do vagus nerve stimulation, found a way to do it completely non-invasively, transdermally.
Originally cleared in Europe for treating headache, and our first FDA De Novo clearance was in 2017. Most of our business is in prescription headache. We now have seven FDA clearances around acute treatment and prevention of migraine headache, cluster headache in adults and in adolescents. We are working on a pipeline of additional indications, which I'll talk about as we go through the materials. Revenues have been growing nicely, especially as we came out of the pandemic, and our field sales folks could get back into the clinic and detail doctors and nurses about our headache therapy. $25 million of revenue in 2024, $7 million of revenue in the fourth quarter of 2024, good momentum rolling into 2025 and beyond. Gross margins have been solid at 85%-86% for the last eight or nine quarters, and we don't see any reason for that to change.
Excited about a near future opportunity to extend to PTSD, post-traumatic stress disorder, rather. I am going to talk about some additional products that we have launched and that we are bringing in through distribution for the second half of this year. No debt, straight common equity, and $12.2 million of cash at December 31, 2024. This is our flagship product. We call it the gammaCore Sapphire. This is a non-invasive vagus nerve stimulator. It is a handheld personal use device with a rechargeable battery for acute treatment of headache. I take it out of my pocket. It is a two-minute dose of electrical energy delivered at the neck, as you can see in the picture. In most cases, I can very quickly reduce the discomfort associated with a headache, and in many cases, completely abort that headache. That is acute treatment. Prevention of headache is a little bit different protocol.
We ask people to use it twice a day, so think morning and evening, a couple of minutes of electrical energy. The pivotal data, the pivotal trials, rather, showed a statistically significant reduction in the number of headache days for patients who used it and stayed with that twice a day, were compliant, rather, with that twice-a-day protocol. This is a device. This is a nerve stimulator. It is not a pharmaceutical, so there are few, if any, side effects or contraindications, unlike the prescription drugs that are used to treat headache. We also have an adjunctive clearance, so this technology can be used in addition to pharmaceutical therapy, as well as as a standalone therapy. Our largest customer is the VA hospital system in the U.S., Patients in the VA system, it's free to patients, rather, in the VA hospital system. Doctor or nurse writes a prescription.
We get a PO from the hospital. We ship directly to the patient. Our customer service team, usually on a Zoom call, in-services or teaches the patient how to use it. We get paid directly by the hospital. Our second largest customer is the National Health Service in the United Kingdom, same business model. We are working on expanding into commercial insurance, where I'm sure many of you are familiar with the model that patients generally have a copay or a deductible or both. It is not quite free to patients in commercial healthcare, but it is very, very affordable. These are the various products and categories that we are currently selling. Prescription gammaCore is far and away the largest component of our revenue, but I'm going to talk to you a little bit about our general wellness product offerings.
We launched Truvaga in 2023, and we had solid sales growth of this product line in 2024. This is a consumer electronics health and wellness product. It is not explicitly regulated by the FDA, but there is an FDA guidance document that talks about health and wellness products that are promoted for reduced stress, quality of sleep, calm, cognitive enhancement, or clarity. You can go to our website, www.truvaga.com, and you can buy the Truvaga 350 as our entry-level product. The Truvaga Plus is our mobile app-enabled product offering. More than $1 million of revenue in the fourth quarter of 2024, so $1 million of our $7 million of revenue came from this product category. We are excited about the substantial growth that we are seeing in this product category and look forward to significant contribution in 2025 and beyond. TacStim has been a really interesting journey for us.
It turns out that the Air Force Research Laboratory has been working with neurostimulation for human performance. That's human performance with a capital H and a capital P for a long time. Five years ago, they started working with our prescription technology. Three years ago, AFRL approached us and said they liked how our technology works, but they gave us some R&D money to take the hardware in our prescription device and put it into this hardened black tactical mill-spec housing. This product is now available for active duty military. It's in pilot deployment with some Air Force Special Forces units, some Army Special Forces units with Air Mobility Command, which are the crews that fly the huge cargo planes halfway around the world. I've been fascinated by the anecdotes and the feedback we get, but it's impossible for us to forecast this business.
This is a build-to-order business model against purchase orders that we get from the Army and Air Force. It had meaningful revenue in 2024, but because I can't predict it, we're not forecasting anything. If and when we do get a substantial purchase order, as I mentioned, it'll be build-to-order, and it'll be accretive to the top and bottom line. Further out, back to our prescription business, very, very exciting pipeline of additional indications that we're working on. We have breakthrough designation to treat the symptoms of post-traumatic stress disorder. Most of that data was collected in the VA hospital system, and we're already getting off-label prescriptions for that indication from the VA hospital system, working with the FDA on the pathway to getting an explicit label for treating PTSD. We have a pivotal trial enrolling patients in substance abuse, opioid use disorder.
That trial is financed by NIDA, National Institute on Drug Abuse, so it's not affecting our operating expense. It's enrolling patients right now and probably will read out in early 2026. Last month, there was a publication around the use of gammaCore in treating traumatic brain injury and concussion. There is data from small cohorts in Europe that we're expecting a readout later this year in Parkinson's disease and in acute stroke, and lots of additional opportunities clinically in the future. Switching subjects here a little bit. Late December, we announced the acquisition of the Quell technology from publicly traded NeuroMetrix. That transaction is on track to close towards the end of April or early May. That gives us access to Quell, prescription Quell for treating fibromyalgia, which we think is a very interesting indication.
Again, this is a non-invasive neuromodulation, neurostimulation technology, so it has a lot of synergy with our technology and with our call point. We intend to launch in the VA hospital channel, where we already have a sales team and relationships. Shortly after we close the deal, there'll be some startup revenue in the second half of this year, but really, this is going to be a 2026 growth story. We've also announced distribution opportunities for prescription Relatex, which is, again, a neurostimulation technology for treating nausea. It's on label for treating post-anesthesia nausea and nausea secondary to chemotherapy. More recently, we announced a distribution opportunity for the Sparrow system, which is a vagus nerve stimulator that attaches to the ear and is on label for treating the symptoms of withdrawal from substance abuse and specifically opioids. Lots of intellectual property barriers to protect our De Novo products.
A little bit about the financials. As I mentioned earlier, $25 million in revenue in 2024. Very proud of the accelerating revenue, especially as we came out of the pandemic and the 60% five-year CAGR. Looking at quarterly numbers, I think I already mentioned $7 million in revenue in the fourth quarter and $12.2 million of cash on the balance sheet. We used, I do not like to say burned, $1.26 million in the fourth quarter on a $7 million revenue line. As revenue increases, we maintain discipline around fixed OpEx, and we are going to continue to narrow that cash used in operating activities. We believe that we are going to cross over to be cash positive as we go through 2025, and that revenue line continues to increase. There is no debt, clean, straight common cap table.
I do like to point out that we have two large institutional investors who own 10% each of the common shares outright. In addition to that 10%, participated in these pre-funded warrants. The right way to think about our issued and outstanding capitalization is the combination of these two categories or a little bit more than 8 million common shares. That's the summary. We're starting to build revenue momentum. We're narrowing our cash uses, and we're going to cross over into being cash positive. A lot of opportunities to grow the total addressable market within headache through additional payers and picking up additional covered lives. Opportunity to increase the total addressable market through additional indications like post-traumatic stress disorder. We're adding Quell for fibromyalgia. That's going to kick in in the back half of this year, but it'll really be a 2026 story.
Other in-licensed or distribution products. I continue to be very confident and very excited about the growth opportunities for our little company. If I did not mention it, the ticker is ECOR.
Thanks, Dan. Appreciate your interview. I guess first, Sapphire, I can apologize if you addressed this, but just where do things stand with reimbursement there? Is this something that is covered now, or is it more out of pocket for patients in the U.S.?
Yeah, it is covered by the VA hospital system, which is 9.5 million covered lives. We have about 7.5 million covered lives through some of the regional payers like Highmark in Pennsylvania, Blue Cross Blue Shield in the Dakotas. We have held back on going after more of the traditional or national payers until we get more penetration at Kaiser.
We were placed, gammaCore Sapphire was put on formulary in the Kaiser system, which is 12.5-13 million covered lives last year at this time. That's a business model where the members of Kaiser have deductibles and copays. We have about 30 prescribers now within the Kaiser system, so it's taken us longer than I had hoped to generate interest among the prescribers, but it's starting to happen. We think that's the back half of this year, but really a 2026 story. Strategically, we want to demonstrate that the healthcare economics work for Kaiser and then take that story to CMS, Medicare, and the large national players in 2026.
Okay. Quell, can you maybe for fibromyalgia, similar question there, is that reimbursed or is it out of pocket? Where do things stand with getting that covered?
Very early days. There's a small cash pay business right now that goes through a telehealth provider. We're working to get Quell for fibromyalgia on contract in the VA hospital system. That's where we're going to start. Once we have some success with our launch customer at the VA hospital, we'll start to take a look at the broader payer opportunities.
Okay. All right. I guess just finally, you have your own kind of the Truvaga, that's the true out-of-pocket consumer product that you sell, is that right? Or?
Yeah. It's a direct-to-consumer business model. Technically, it's a health and wellness product, not a medical device.
Yeah. What's your marketing strategy there? I mean, how do you, just through the website or social media? I mean, I don't think you're basically for commercials, but.
Yeah. Good question. In 2024, it was exclusively available through our e-commerce website, Truvaga.com. In February, we launched on Amazon. We are now increasingly working and recruiting affiliates and influencers. We are starting to get some interest in more of a B2B2C channel, which would be stocking distributors that are going to start to offer it through their health and wellness initiatives. In 2025, I think our e-commerce business with the addition of Amazon is going to maintain those growth rates, and we have upside from some of these more traditional retail models with stocking distributors and affiliates.
Okay. Just in terms of where are you making your products and what about tariff exposure? I know it is changing day to day, but is it made in the U.S.? Is it made in Mexico or China or elsewhere?
Yeah. Our manufacturing is in Rockaway, New Jersey. We do get roughly $5 of our cost of goods, our electronic components, most specifically batteries, that come from China. I expect we have quite a bit of in-process inventory, so it is not going to be immediate, but sort of that $5 could double to $10 on our COGS line, which we are blessed with very high gross margins. That additional incremental $5 will not be more than a point or two of gross margin. About 10% of our business goes to the U.K. I have not heard if the U.K. is going to institute any reciprocal tariffs. If they do, we would probably have to absorb any tariffs under our contract with the National Health Service there, and we will cross that bridge if and when it happens.
Okay. Got it. Since the VA is a big customer, there's been a lot of headlines around all the DOGE cuts and everything. I mean, I know they've maybe fired some people at the VA, but I don't know to what degree they're kind of cutting the VA's broader budget. Have you seen any kind of impact there? Are you worried about any kind of impact there?
The doctors and nurses, my observations from being in the hospitals and my sales guys that are in there every day, the doctors and nurses never stopped working, never missed a beat. The supply chain folks are just the opposite. There was a tremendous amount of disruption and distraction in December.
In January, folks trying to figure out if they should take the early retirement packages that were offered, folks looking over their shoulder about is there going to be another layoff. That all, knocking on wood here, but that really dissipated in February. In March, it feels like we had a lift from some pent-up demand from the slowdown in December and January. Everything changes on a dime in this world, but I'm optimistic that it's whatever the new normal is in the VA hospital supply chain folks that we're working with.
All right. I don't see any questions from the viewers and out of my own questions. I think we're going to have to wrap up here. Thank you for the conference. Hopefully, I have some good news. Thanks.
Yep. It's been great for us. Really appreciate the opportunity. I know we're on the small side for Needham, so very appreciative that you opened the door for us. Have a great day, Mike.
Of course. No problem.