Good afternoon, ladies and gentlemen, and thank you for standing by. Welcome to the electroCore Second Quarter 2022 earnings call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. Should you require operator assistance during the conference, please press star zero to signal an operator. Please note this conference is being recorded. I will now turn the conference over to your host, Rich Cockrell, Investor Relations. Thank you. You may begin.
Thank you all for participating in today's electroCore earnings call. Joining me today are Dan Goldberger, Chief Executive Officer, Brian Posner, Chief Financial Officer, and Dr. Peter Staats, electroCore's Chief Medical Officer. Earlier today, electroCore released results for the second quarter ended June 30th, 2022. A copy of the press release is available on the company's website. Before we begin, I'd like to remind you that management will make statements during this call that include forward-looking statements within the meaning of the federal securities laws, which are made pursuant to the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements contained in this call that are not statements of historical facts should be deemed to be forward-looking statements.
Forward-looking statement, including without limitation, our limitation of operating trends and our future financial expectations, are based upon the company's current estimates and various assumptions. These statements involve material risk 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 of risks and uncertainties associated with the company's business, please see the company's filings with the Securities and Exchange Commission. electroCore 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. This conference call contains time-sensitive information that is accurate only as of the live broadcast today, August 4, 2022. With that, I'll turn the call over to Dan.
Thank you, Rich. Hello, everyone, and thank you for joining us on today's call. Our business performance continued to improve in the second quarter ended June 30th, 2022. Revenue for the second quarter of 2022 hit a record $2.2 million, increasing approximately 70% over the second quarter of 2021 and approximately 14% sequentially. Gross margins expanded to 83% and net cash used in operations was about $3.2 million for the quarter ended June 30th, 2022. We continue to invest in the U.S. commercial channels, especially cash pay business models, including physician dispense, comprised of gC Direct and gConcierge, and Direct-to-Consumer through our e-commerce platform. Our physician dispense program has grown to about 637 active prescribers across all cash pay programs.
We plan to continue investing in our consumer awareness campaigns, initially through paid search and social media, in an effort to drive headache patients to our various channels in the United States and United Kingdom. We also plan to expand our social media efforts in coming months. Net revenue from the U.S. commercial headache channel was $501,000 for the quarter ended June 30th, 2022, a 382% increase from $104,000 in the second quarter of 2021. Approximately $452,000 of our commercial revenue in the second quarter came from those cash pay programs.
Net sales from the Department of Veterans Affairs, or the VA, and Department of Defense, or DoD, were $1.2 million, an increase of 53% as compared to $779,000 in the second quarter of 2021. A total of 106 VA and DoD military treatment facilities have purchased gammaCore products through June 30th, 2022, as compared to 85 through the second quarter of 2021. Note that there are approximately 1,300 VA healthcare hospitals and clinics and over 400 military hospitals and medical clinics, so we still have plenty of potential growth ahead of us.
Revenues from channels outside the United States and exclusive of the Teijin license fee increased 8% to $419,000 in the second quarter of 2022, as compared to $387,000 for the second quarter of 2021. We look forward to continuing growth in this channel through the rest of 2022. That said, currency fluctuations continue to be a headwind to our international revenue. On April 5, 2022, we announced an exclusive license agreement with Teijin Limited for Japan. Teijin is a global conglomerate based in Japan, and they will be an outstanding commercialization partner for the long term. This license covers our proprietary non-invasive vagus nerve stimulation technology for headache and includes provisions to expand to additional indications and/or territories in the future.
Teijin will be responsible for working through the regulatory process in Japan at Teijin's expense, with support from electroCore and leveraging previously published pivotal data. The initial license fee will be recognized over the next four quarters, of which $48,000 was included in the quarter ended June 30th, 2022. The agreement provides for additional license payments tied to successful completion of regulatory and commercial milestones in the future. It also requires an annual license fee that'll come due every year starting in April 2023. In addition to the cash consideration, this license agreement further validates the long-term commercial opportunities for nVNS therapy around the world. On April 19, 2022, we announced that gammaCore non-invasive vagus nerve stimulation, or nVNS, has been selected for additional funding by the Department of Defense Biotech Optimized for Operational Solutions and Tactics, the BOOST program.
The BOOST research program, which will be conducted under the leadership of the 711th Human Performance Wing Performance Optimization Branch of the United States Air Force, seeks to optimize and validate the efficacy of nVNS in accelerated training, sustained attention, reduced fatigue, and improved mood among Air Force personnel. Should the BOOST program confirm previous findings, the project schedule calls for electroCore to supply field-ready devices to the Air Force in the second half of 2023. We are optimistic that the solution we will ultimately provide to the Air Force will also find favor among other branches of the active duty military in the United States and abroad in the future. Now, turning to our clinical progress. We continue to advance nVNS across several trials.
We participated in a pre-submission meeting with the FDA on May second of 2022, where we discussed our plans in post-traumatic stress disorder, or PTSD, mild traumatic brain injury or concussion, nVNS as a bridge therapy for inpatient substance abuse programs, and acute stroke, among other topics. We believe our presentation was well received, and we have several follow-up items to pursue. On July 7th, 2022, we announced that Mayo Clinic launched an investigator-initiated study to assess the efficacy of gammaCore Sapphire in patients with post-COVID syndrome. Post-COVID syndrome, also known as long COVID, is a collection of symptoms that persist more than 28 days after the initial onset of symptoms of infection. Symptoms such as headache, brain fog, fatigue, and gastric distress can bear a striking resemblance to the central sensitization syndromes, a group that includes fibromyalgia, chronic fatigue syndrome, and postural orthostatic tachycardia, or POTS.
The study, entitled Outcomes of Treatment with Non-Invasive Vagus Nerve Stimulation in Post-COVID Syndrome: A Pilot Study, is a randomized, single-center controlled trial enrolling up to 20 subjects recruited from the post-COVID care clinic at Mayo Clinic in Rochester, Minnesota. Now, I'd like to turn the call over to Brian for a review of our financials and other guidance items. Brian.
Thank you, Dan. For the second quarter ended June 30th, 2022, electroCore reported net sales of $2.2 million as compared to $1.3 million during the same period of 2021. This represents a 70% revenue increase over the same period last year. Gross profit for the second quarter of 2022 was $1.8 million as compared to $895,000 for the second quarter of 2021. Gross margin was 83% and 71% for the periods ended June 30th, 2022 and 2021, respectively. Our evolving commercial strategy has resulted in the launch of cash payment models under which we license certain starter devices.
The cost of the licensed starter device is being recognized as cost of goods sold over the estimated useful life of the starter device versus expensing the cost of goods at the time of sale. Moreover, in recent quarters, we have sold an increasing amount of longer duration therapy, resulting in a higher average selling price. These factors, including patient license revenue with no associated cost of goods and favorable absorption of labor and overhead costs due to an increase in the number of units sold, contributed to the increase in gross margin. Total operating expenses in the second quarter of 2022 were approximately $7.6 million, an increase of approximately $1.5 million from $6.1 million in the second quarter of 2021.
Research and development expense in the second quarter of 2022 was $1.3 million as compared to $825,000 for the same period in 2021. R&D expense for the quarter include investment for our next generation product currently under development. Selling, general, and administrative expense in the second quarter of 2022 was $6.3 million as compared to $5.3 million for the same period in 2021. Total SG&A expenses for the second quarter of 2022 included increased investment in our sales and marketing efforts to support our cash pay initiatives. GAAP net loss for the second quarter of 2022 was $5.3 million as compared to a GAAP net loss of $2.9 million for the same quarter of 2021.
Adjusted EBITDA net loss in the second quarter of 2022 was $4.9 million as compared to a loss of $4.1 million during the second quarter of 2021. A reconciliation of GAAP net loss to non-GAAP adjusted EBITDA net loss has been provided in the financial statement tables included in today's press release. Net cash used in operating activities during the quarter ended June 30th, 2022 was approximately $3.2 million as compared to $1.7 million in the second quarter of 2021. Cash proceeds from the sale of our New Jersey NOL carryforwards are included in both the second quarter 2022 and 2021 results. Cash, cash equivalents and restricted cash at June 30th, 2022 totaled approximately $26.6 million.
That's compared to approximately $34.7 million at December 31st, 2021. Looking ahead, for the third quarter of 2022, we expect net revenue to approximate Q2 2022 levels and net cash usage to be between $4.5 million and $5 million. Now I'll turn the call back over to Dan.
Thank you, Brian. I'm very excited about our operating results this quarter, and we continue to be in a strong financial position. Longer term, clinical indications beyond primary headaches, supported by the ongoing clinical developments discussed earlier, could greatly expand the nVNS therapy market. Patent license we announced in April brings in some non-dilutive cash and is a huge validation of the commercial appeal of nVNS therapy around the world. The BOOST project being financed by the Air Force could accelerate the adoption of nVNS for a variety of indications among our active duty military. We continue to build our intellectual property portfolio, and we're developing a very exciting next generation product platform to leverage it. Our VA/DoD channel and our Direct-to-Consumer initiatives are showing positive results.
Our U.K. business has recovered from a slow start, but currency exchange continues to be a headwind to all of our international efforts. I see many potential growth drivers through 2022 and 2023, including continued penetration of our VA/ DoD channel in the United States, continued penetration of the United Kingdom market, growth in our U.S. commercial channel driven by cash pay business models and direct to consumer advertising while we continue our efforts to gain commercial insurance coverage. Finally, expansion of our international business through our distributor network and added traction within the U.K. e-commerce store. Longer term, we believe there are real opportunities for label extensions into PTSD, opioid use disorder, and mild traumatic brain injury. The Air Force BOOST program could lead to incremental product sales to the active duty military as soon as next year.
Lastly, we are exploring growth opportunities to enhance and leverage distribution channels through acquisitions. We're focused on revenue stage targets that might enhance top line growth and offer other synergies. At this time, I'll turn the call over to the operator. Operator, please open the line for questions.
Thank you. At this time, we will be conducting a question and answer session. If you would like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. If at any time you wish to remove your question from the queue, please press star two. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. Our first question is from Jeffrey Cohen with Ladenburg Thalmann. Please proceed with your question.
Hi, this is Destiny on for Jeff. Thank you for taking my questions. Perhaps I'll just start with kind of a question to your last piece of commentary there. How is the M&A landscape looking for you now versus maybe at the beginning of the year? Not necessarily like what are you looking at, because I understand it'd be something that is synergistic and, you know, revenue generating, but more so, what are you seeing as you're looking at some of these targets, potential targets?
Yeah. Hi, Destiny. It's a very good question, but I'm sorry, but I'm gonna have to beg off because our M&A activities are relatively long-term, and we really have to maintain confidentiality about the status and cadence of those activities. There's nothing imminent if that's what you're asking.
Okay, got it. No top secret information. That's good. Thank you. Could you discuss how you're optimizing your strategies and your messaging to ensure you're targeting the best individuals in terms of your social strategies, specifically as it relates to, you know, your paid efforts?
Yeah. We started at the beginning of the year very carefully, starting by just purchasing search terms related to migraine and cluster headache. We've been dabbling with Facebook and Instagram. We're looking at expanding into other social media channels. There's a small group but growing group of influencers in the various social media channels that are starting to talk about gammaCore therapy. But we're being very careful about that spend as we improve the efficiency of that spend and learn, you know, for example, which ads or which posts are resonating more closely with the consumer audience. It's a very exciting time for us and we're looking forward to really accelerating growth as we go through the year and really into next year.
Got it. It sounds like you're being careful but becoming more confident and investing more resources there. That's great. I'm just curious.
You said it better than I did. Thank you.
OUS, you said you were expecting some additional growth drivers. Could you just, you know, go into a little more detail there?
Yeah, you know, the vast majority of our international business comes from the United Kingdom, where the National Health Service will pay for gammaCore therapy. The U.K. in the first part of the year was impacted by COVID, but even more so just by staffing shortages throughout their healthcare system. While that has eased somewhat, there's a lot of room for improvement as folks use up their vacation time and return to a more normal clinical services cadence. We're optimistic that the sheer number of patients is gonna increase throughout the year. Just being, you know, recognizing that the currency exchanges are going against us and there are sort of the mid-teens headwinds to the work that we're doing in the United Kingdom.
All of that in over time is gonna even out. We expect, you know, solid low teens to mid-teens growth in our NHS business, certainly on a unit volume basis. Ultimately that'll translate as currency comes back to normal on a dollar value basis as well. Our European distributors, you know, again, are dealing with the disruptions caused by the war. I guess they're settling into a new normal, and our relationship with Teijin has ignited more interest around the Pacific Rim that, you know, hopefully we can make some additional announcements as we get into the back half of the year.
Okay, great. Maybe just on that same trend, with Teijin, I appreciate you giving us an overview and a reminder of the original agreement. I'm curious, do you have any idea of timing or are they keeping everything kind of closed?
It's early days. They are planning an initial conversation with the Ministry of Health to work out their regulatory approval process. The key decision point is around the pivotal data that has already been collected to support FDA clearances in the United States and the CE mark in Europe, whether that existing dataset will be adequate or whether the Ministry of Health is gonna require additional data. Until they have that meeting and digest the response from the Ministry of Health, we're really not in a position to speculate about timing.
Okay, understood. Then lastly for me, it's exciting to hear that, you know, the Mayo Clinic is starting their own investigator-initiated trial. I'm curious, is that an indication that you as electroCore would pursue at some point, or you'd rather wait and kind of see the data and then make a decision from there? Is that, I guess, bigger picture, is that even an area you'd think to pursue?
Well, we already have an emergency use authorization to treat known or suspected COVID-19 patients who are having respiratory trouble. One way to think about it is that we already have a clearance. Technically I shouldn't use the word clearance. It's an emergency use authorization to promote the therapy in COVID-19. You know, we've been relatively unsuccessful in our efforts to commercialize around a COVID-19 therapy and having a very credible institution like the Mayo Clinic, you know, recruit patients and ultimately publish a trial, publish a study, you know, that could cause us to reevaluate our commercialization efforts for COVID-19.
All right. Got it. Thank you for taking my questions.
Oh, absolutely. Appreciate your time, Destiny.
Ladies and gentlemen, as a reminder, to ask a question, please press star one. Our next question is from John Vandermosten with Zacks.
Good afternoon, guys. Thank you for taking my question. I noticed the pickup in R&D, and obviously that's great because you guys have a lot of opportunities out there. I heard you say, Brian, that it's going to be allocated towards your next gen product. I was wondering how does that next gen product differ from what you have now with Sapphire?
Yeah, I'll take that one, John. You know, we've published quite a bit of intellectual property around a non-invasive vagus nerve stimulator that communicates with a mobile device. Much of today's consumer electronics is app enabled. It would be reasonable to connect those dots and say that we're working on a next generation platform that'll communicate with a smartphone, and allow us to leverage all of that digital health capability inherent in a mobile platform.
Okay. Very good. Continuing on the R&D theme, I remember that PTSD was a priority for you. Should we expect any R&D expenditures for the second half of this year and perhaps into next year being allocated in that direction?
Yeah, absolutely. We're continuing to support all of the clinical work around PTSD, around opioid use disorder, Parkinson's, mild traumatic brain injury. All of those clinical activities are proceeding. We're very, very fortunate in that, our out-of-pocket investment in those clinical trials is relatively low. The most of those clinical trials are being supported by government money, either in the U.S. or abroad. We had a meeting with the FDA around our technology, our clinical progress in June. We're gonna have a pre-sub meeting around opioid use disorder that's being co-sponsored by NIDA, the National Institute on Drug Abuse. After we do that, we're expecting to schedule a similar meeting to talk about the pathway for PTSD.
We should have quite a bit to report in our November call when we talk about our September 30th results.
Okay, great. Yeah, looking forward to that. Regarding the National Spine & Pain Centers' relationship, are the units. Couple questions on that. Are the units gonna be there on site, and are they gonna be pre-prescribed by physicians there? Is that how that's gonna work?
Yeah. That is structured along the lines of our gConcierge program. The various clinics, you know, we have sort of a master agreement with National Spine & Pain Centers, and then each individual clinic will have a certain number of our devices in inventory. They can be demonstrated and prescribed by the healthcare professionals in that clinic and ultimately dispensed to patients who are customers of that clinic. It's a very exciting national account aspect to our gConcierge program.
Yeah. Yeah, exactly. Yeah, I looked at the map, and they're pretty focused, I think, on the East Coast and kinda coming down to Texas. Yeah. Are there any other opportunities in that corporate account type area in the United States?
Absolutely. We look forward to a cadence of reporting more and more of those national accounts kinds of deals.
Great. Well, I'll leave it there for now. Thank you for taking the questions.
Absolutely. Appreciate your time.
Ladies and gentlemen, we have reached the end of the question and answer session. I would like to turn the call back to Dan Goldberger for closing remarks.
Thank you, operator, and to all of you who participated today. We appreciate your making time to join today's call. I'd like to give a special thanks to all of our employees who've been working tirelessly to deliver these amazing results, both financially but even more so delivering our therapy to patients. Their hard work and commitment in trying times have helped set the stage for the growth we've demonstrated so far during 2022, and of course, we're looking forward to 2023. I'd also like to thank the healthcare professionals and their patients for their loyal support of gammaCore therapy. We've made so much progress, and it couldn't have been done without your unwavering support. Thanks, everybody.
This concludes today's conference. electroCore thanks you for your participation. You may disconnect your lines at this time.