Sorry, I'm only using the microphone for those people who are participating along in the webcast, so I apologize in advance. Good morning, everyone. Nothing like 105 degrees Fahrenheit weather to wake everyone up nicely in the morning. A little clammy out there. My name's Joshua Lev. I am the Interim President and CFO of electroCore. The most important thing you guys will hear today is the ticker ECOR, so please do remember that. Forward-looking statements, I'm sure you will all see many of these over the course of the next few hours. They all say the same thing. Who are we? electroCore is a bioelectronic health and wellness company. What does that really mean?
We have a suite of products, both FDA-cleared that are by prescription, as well as direct-to-consumer sold under the federal wellness guidelines that utilize stimulation products to go ahead and actually provide some form of health or therapeutic benefit to the marketplace. I joined the company in 2019 as part of a turnaround story. Myself, the former CEO, who retired in April, and the former CFO, who retired in 2024, got involved when the company was burning about $16.5 million per quarter of cash. The company itself had just come off of a very successful IPO with banks like JMP Securities, BTIG, Cantor Fitzgerald, and Evercore. They raised about $100 million, but they had a very hard time transitioning the business from what was then an R&D business, transitioning to a commercial stage business off of their first FDA clearance.
When we got involved, the first thing we do is focus on areas where we were reliably getting paid, which is namely the Veterans Affairs. That's really, really important because we've been able to grow the business at about 50% compounded annually over the course of the last five years. In full year 2025, we did $32 million worth of revenue, of which approximately 70% of that came from the VA. I'll talk a little bit more about that in a bit. Also important is we were able to grow the revenue at that compounded rate with also expanding our gross profit margins. When we started, the company was doing about mid-70s, low 70s gross profit. In the first quarter of 2026, we reported $9.6 million of top-line revenue, but we reported it with about 87% gross profit margin.
We have a very unique model. It's a variable sales model, which allows us to go ahead and actually scale our business over time. We are able to scale the business over time by utilizing a 1099 organization that only gets paid for what they kill, which means as time goes on and we're able to absorb all the costs, the fixed expenses within our business, we're able to start seeing some more operating leverage and ultimately get to the point where we can achieve cash flow breakeven. In April of 2026, our former CEO retired. His name was Dan Goldberger. At that time, he brought in a new Chief Operating Officer, the Chief Operating Officer comes to us with about 35 years of experience in commercializing medical device products.
More importantly, he spent the last 10 to 15 years of his career specifically focused on commercializing product within the federal marketplaces. As I mentioned before, from our point of view, our largest customer, the VA, it is really important for us to become an opportunity where we can leverage not just his experience within the VA, but also other areas such as federal workers comp, TRICARE, active duty military. If you think about our company as a whole, our commercialization strategy is how we're going to do two things. Number 1, accelerate our revenue growth, right? Primarily within the federal marketplaces, but also do it in such a way we're able to get operating leverage through our P&L. We have two main classes of products. We have prescription-based products, and we have direct-to-consumer general wellness products.
The products on the left side of our screen are our prescription-based products. They're sold primarily into the VA. There's also certain headache specialists that go ahead and acquire our products. The products in the middle are our general wellness products. They're called Truvaga. For those of you who can't see the screen, it is a general wellness product that's sold direct-to-consumer through our website, truvaga.com. Lastly, we have a B2B business model where we sell what's called TAC-STIM, which is short for tactical stimulation. T actical stimulation is a product that was developed in conjunction with the Air Force Research Labs for human performance and cognitive enhancements within our active duty military, our special forces units, our Air Force.
Different groups within the military that are utilizing our product to help with enhanced cognition and people that have very high cognitive loads. Our primary product or our flagship product is called gammaCore. gammaCore is FDA-cleared and FDA-authorized for different forms of primary headache. It's a handheld product which people use at home that is sold primarily into the VA for different forms of migraine, cluster headaches, hemicrania continua, paroxysmal hemicrania, which are different form of trigeminal autonomic cephalalgias, which again, is a very, very fancy way of saying really, really bad headaches. The reason why the VA is such an adamant user of our product is because these products are a non-opioid-based pain therapeutic, meaning when you look at the VA and you look at the cluster of patient population that we have.
The VA in particular is looking for a way to solve pain for our veterans without having to give them any injectables, any ingestible, anything that'll go ahead and have an adverse effect with all the other elements that are going on. The device itself, as you could see, is held to the cervical region of the neck, right? By the neck. The reason why we do that is it is a vagus nerve stimulator. The vagus nerve, which is the 10th cranial nerve Largest nerve in the body, touches all the visceral organs. About 80%-90% of those fibers run up and down both sides of the neck. It touches the brain, it touches the spleen, the stomach, the heart, the lungs.
A lot of different therapeutic opportunities that we have available to us, and right now we are going after and we've been commercializing in primarily the headache space. You can understand why the VA likes it. Non-opioid-based pain therapeutic, we're also able to ship directly to the patients, we're able to train the patients. The VA likes that because the VA has certain KPIs around how long it takes for them to actually see a patient from the time a patient requests a consult. When you see the device, the device comes in different formats. They're all the same. They all look exactly the same. The cost of goods are all the same. Each of them can be loaded with different forms of therapy.
Just like any other prescription product that you would get, you would get it in one month, three month, a year, 36-month increments, all depending on what the prescriber will write for you. The way that we've been able to expand our margins is because when a VA first writes a prescription for our product, let's say for a new patient, they'll write it for three months of therapy. If that patient is a responder, they'll go back to their doctor and their doctor will say, "I don't need to see you for another year. I don't need to see you for another three years. Here's a three-year gammaCore." Why that's important is the cost of goods is the same.
The average sales price of a three-month product is $1,500 roughly, whereas the average sales price of a 36-month product or three-year product is $6,000. You could see how the product actually the margin expands over time because if people become more and more active users of our device, we are able to expand our margins through selling higher ASP product. It's not really a recurring revenue model because you get a device that may last for three years. However, you really are just pulling forward three years' worth of revenue. In full year 2025, as I mentioned, we did about $32 million of top-line revenue. This business did approximately $25 million through this product alone. In May 2025, we acquired a company called NeuroMetrix.
Many people in the room, if you're investors in the space, you may be familiar with the name NeuroMetrix. They had a very elegant TENS unit product. It's a sophisticated TENS unit. They were selling it direct to consumer, actually more specifically with a class 2 over-the-counter label. They were selling it for many years online. They did about $14 million worth of top-line revenue. The FTC came in, slapped them on the wrist and said, "Your claims are too broad." They charged them a $4 million fine. The former management decided they were going to go ahead and actually convert that class 2 over-the-counter label and get an FDA authorization for fibromyalgia. They did. They went to the FDA, the product got cleared for fibromyalgia.
At that point in time, the board and a version of activist shareholders came in and said, "You have a choice. You can either build a new medical device sales team that's going to go ahead and commercialize this product, or you can sell off the company. Which one do you want to do?" There was a right and a wrong answer, and the right answer was they were going to sell off the company. They did. We acquired the company in May 2025. We acquired this company with zero dilution to our electroCore shareholders. We did not raise any money. We did not give them any money, and we did not give them any stock.
What we did was is we took the cash that they had on their balance sheet, we took their liabilities, both known and unknown, we deducted that from the cash, and then we gave the shareholders all the cash back, and in return, we got all of the assets, and we got all of the inventory. The way we like to describe it is they paid us to take the company, right? We gave them no cash. They gave us $2.5 million worth of inventory at cost. We also gave them a royalty, capped at $500,000 over a two-year period. When we acquired this company, they were doing $50,000 a month in revenue in May 2025. In March of 2026, we reported that we did $400,000 of top-line revenue in this product alone.
We did in excess of $1 million of revenue in the first quarter of 2026. We've been able to take this product and basically 8x it over the course of less than 12 months. It's a very unique product, but it fits in very well to our bag because we're already selling it to pain doctors, we're already selling it to neurologists, we're already selling it to women's health within the VA. Roughly 11%-14%, or 8%-11%, depending on the dataset, of active duty military that come back from deployment actually come back with a form of fibromyalgia. Very big unmet need. No other products on the market. Very big for our own customer base. We have sold approximately one-third of our customers have actually adopted this product. It's taking us some time to actually roll it out.
As you can see, if only a third of our prescribing facilities are already writing this, you could see how the opportunity here can actually be pretty big as you move forward. Truvaga is a direct-to-consumer product. It is sold under the general wellness guidelines, which effectively says if it is safe and if you are not making a medical claim treating a diagnosis. For example, I could say it works to help your sleep, but I cannot make the claim that it works for insomnia because insomnia is a diagnosis. If you say that the product itself is safe, and you're not curing or giving a therapeutic benefit for a specific medical diagnosis, you could sell it under a general wellness label. We sell this product direct-to-consumer.
In 2024, we did about two and a half million dollars worth of top-line revenue in this business. In 2025, we did $5 million of revenue in this business. We're able to grow it at a very accelerated rate. The challenge that we ran into as we were growing this business is this is a very, very, very expensive business to run. The operating margins here are low single digits, even negative sometimes. The reason why is this is a consumer electronic product, right? Huge addressable market. The health and wellness business and market is tremendous. I think $33 billion was the last number I saw. I've seen $5 trillion, depending on what you categorize as health and wellness.
That being said, I would rather now, and strategically what we have decided to do, is we'd rather grow this business at 30%-50% year-over-year and lose less money and make it more efficient than grow it at triple digits every year and continue to lose money. That's what we've said to the public, that we're going to guide to growing this business somewhere to between 30%-50% year-over-year, but do it at a rate that actually loses less money to the organization. TAC-STIM, which is another form of a general wellness product, t hat's important because if you are active duty military, you do not want to have to get a prescription every time you want to deploy this product, which is why we went under the federal wellness guideline.
It w as developed in conjunction with the Air Force Research Laboratory Boost Program. There were two studies that were happening roughly around the same time of each other. The first was a drone pilot commander came to us and said, "I've got a problem. Right here in Vegas, we have a drone pilot command center. We take an old truck trailer, we black it out. We outfit it with all of the drone pilot video games that you have so that you can fly a drone pilot in Iran and Iraq and Afghanistan. I've got my soldiers doing 12-14-hour shifts. They take uppers during the day. They take downers at night to help them with that cognitive load. They drive home, they get into car accidents, and they die.
They are very expensive assets to replace. We need to find a solution to help better modulate their sleep." They used our device, and what they were able to show was not only did the sleep improve, their mood improved, their attention improved, their focus improved, probably all related to the fact that when you get better sleep, you get better cortisol, so you're able to think clearer. The end result is they were also able to identify targets more accurately over a longer duration. Around the same time, the Defense Language Institute, which is another government agency that we here have, it's where we send our special operative forces and units to go learn a second and third language. For those of you Jack Ryan fans in the room, right?
There you go, you know how he speaks multiple languages. The way that it works is they actually send them to this place called the Defense Language Institute, and they teach them a second and third language. What they were able to show was people who utilized our products were able to learn a second and third language quicker and retain it longer than those that didn't. They tested it using Farsi and Cantonese. When you took those two studies together, the Air Force Research Laboratory came to us and said, "We want to put together a product that we can utilize and deploy to our active duty military." That's exactly what this is. This is a military-spec version, mil-spec version of our Truvaga product. It is hard.
It needed to be hard enough that if they, quote, "run out of bullets, we want to smash someone on the head with it." You can run over it with a tank. There is a neat little metal belt clip on the back, and it is super simple. There are only three buttons: up, down, and off, right? This product has been deployed across different special forces units, Army Special Forces, Navy Special Forces, Air Force Research Laboratory, as we have mentioned, but this is a very lumpy business. We talk about government spending and government cuts, this is the product that gets affected the most. Because if you are a special forces unit and you have $1 extra to spend when your group is being deployed.
Are you going to spend it on the extra bulletproof vest, or are you going to spend it on one of these? We have a large, robust pipeline here of interest, but in terms of the timing and the cadence of those revenues, it is very lumpy. We forecast and we tell the world that we should look at this at approximately $100,000 a quarter, but in 2024, we did $1.2 million-$1.3 million in this business line. In 2025, we did about $400,000, right? Very lumpy. Interest is there. Procurement cycles are very different, but this is the business entity that probably gets affected the most when we talk about government cuts and government spending. Why are we in this business?
Well, at the end of the day, we are in this business because their total addressable markets are really, really big. Frankly speaking, I do not think you are going to hear any company today tell you that they are in any business if they think it is a small total addressable market. The VA, our largest customer base, 9.5 million covered lives. There are about 1,300 prescribing facilities within the VA. We have sold into about 200 of them. There are about 170 dispensing facilities in the VA. We have sold into about 150 of them. When I said to you earlier, of the facilities that we are in for the total 150 facil ities, right, we have only sold into about 50 of them for our fibromyalgia product. That is where we could see that business scaling nicely.
But we have only sold to about 2.5% of the total headache population within the VA, which is about 600,000 patients. There is a lot of upside still here. But what is really interesting is in 2025, we got on formulary and on contract with Kaiser Permanente. Kaiser Permanente is the largest managed care facility, managed care system, I should say, in the country. By way of size, they have 12.5 million lives compared to the VA's 9.5 million covered lives. And that does not include the Geisinger acquisition that they made a year plus ago. Why it's important is when we go to other commercial insurers, they look at us and they say, "Your patient population is different than mine because you've got a lot of stuff going on with you."
That's good for us because the vagus nerve, as I mentioned earlier, touches all the visceral organs, which means we have a systemic benefit, therapeutic benefit. When you take a pharmaceutical pill, it's going to do something very specific. It's going to turn on a gene. It's going to turn off a gene. It's a sniper shot, staying within the military analogies, right? We are a buckshot. We work best with patients that have a lot of things wrong with them because it touches all the visceral organs. I'll get to your question. Oh, no question. Okay. Again, it's really important for us to open up other commercial insurers and leading with Kaiser Permanente is the way that we believe we're going to be able to do that, because Kaiser Permanente looks very similar to other commercial insurers.
Of all of the different commercial insurers that the VA looks most like, it looks most like Kaiser. Health and wellness, I mentioned before, the $33 billion TAM. Again, that all depends on what are you including, right? We've seen $5 trillion. It grows at 5% compounded annually, but that could include everything from health and wellness fitness centers. It could include your WHOOP band. It could include your Oura Rings. It all depends on what do you include in that number. Our product is a systemic approach, and what that means is it is a platform technology. We have very much, very specifically been focused on the ability to go ahead and sell into primary headache.
There's more than 30 investigator-initiated trials that are utilizing vagus nerve stimulation in different types of studies for things like PTSD, long COVID, stroke, gastroparesis, our CIPN or chemotherapy-induced peripheral neuropathy for our Quell product. We are a platform technology. We have just chosen to go into headache to start, but as part of the narrative that we're getting into, what I'm trying to do, and the reason why I'm here really is to change that narrative. People see us as a single product, single customer company. As an investor catalyst that we've really pointed to since April is changing the narrative for people to understand that there are actual real milestones that we're going to point to show how VNS can be viewed as a platform technology.
Not only in terms of the different indications that we could potentially open up, but also in terms of the products and features that can come out of it because, as you saw, it's a handheld device and it could take on many different form factors. You could see how one day you could take your Truvaga device, which you're using as a general wellness product, connect it with your Apple Watch so that you can see, hey, when I stimulated an hour before I went to bed, my sleep was better. Ultimately, you're going to get a ping on your phone saying, "Hey, it's an hour before you go to sleep, maybe you want to stimulate." From a commercial point of view, I mentioned we brought on Michael Fox, our new Chief Operating Officer, comes with federal marketplace expansion.
We're going to actively go into federal marketplaces such as federal workers comp, active duty military. All that VA revenue I said before was just that. It's just VA. We have not gone into gammaCore, brought in gammaCore into active duty military, and there are plenty of different potential patients within the active duty military that could benefit from our therapy. Lastly, the reason why we do it more than anything is to have accelerated operating results. We're starting to see operating leverage out of our P&L. One of the things that we're going to be able to show over the course of time is going to be a reduction in our sales and marketing expense as a percentage of overall revenue. Industry standard's about 40%, we're at about 60%.
If we can do that, we'll ultimately get to the point where we can show cash flow breakeven and adjusted EBITDA positive. This is what 50% compounded annually looks like. For those of you on Zoom or webcast, it starts from the bottom of the chart to the left, and it goes up to the top of the right. That's what you want your charts to look like. We have a very clean cap table. We have no toxicity. We have no anti-dilutes. We've got no ratchets. We've got no Black-Scholes. We've got no price resets. Our pre-funded warrants are held by our largest investor who wanted to participate and own more stock, but he has a 9.9% blocker.
Our options are held by our long-term incentive to employees, and our warrants are all held by insiders, board members, and people that participated in our last two equity deals, which were done in 2023 and 2024. No bank, unit deal, share, half warrant at the market. This is when deals were getting done at 30% discount with 200% warrant coverage, right? We were able to do it at the market with investors and insiders, and that's who owns the warrants. Management team. Most importantly, Dr. Thomas Errico, Dr. Peter Staats are founders, inventors of this company. They're still actively involved and very dedicated to its success. Sorry I rushed a little bit towards the end, but I got that five-minute signal. Happy to answer any questions anybody has on electroCore, ECOR.
Wow. Shy crowd.
Hi, Josh.
Hey.
Can you talk about fibromyalgia DTC market?
Into the DTC market? Great question. Fibromyalgia itself can't go into the right DTC market because it itself needs a Rx prescription. We do have the ability to sell the over-the-counter class 2 device, which is over the counter, doesn't require a prescription for lower extremity pain. What we're doing now is the FDA was just in our offices. We've compiled sort of their feedback about some of the things that they want to see in terms of how you have to label that. Once we do that, we're going to be able to go ahead and launch that direct to consumer. Great question. It's good to see you in person finally.
Are the headache patients finding other benefits?
The answer is yes and yes. The background of the technology was actually the founders were looking for a solution to respiratory distress associated with a peanut allergy in his child. What happened was, is they started vagus nerve stimulation. The rat model showed that it worked. They went into humans. The human model showed that it worked. The patients in the trial were like, "Hey, our headaches are going away, too." At the time, Merck was our large investor. They were on the board. They said, "Great, you're going into the headache market." That's important is because when COVID happened, we were one of the only companies that received what's called an EUA, an emergency use authorization, which is kind of like a temporary FDA approval in a time of crisis.
That was for respiratory distress associated with COVID. While we do not promote our product, we cannot sell the product for things like PTSD, we know it is being written for PTSD off-label within the VA. Part of the reason why the VA likes it is because it works best with people that have a lot of things going on with them, because it's systemic, it's not that sniper approach. The short answer to your question is yes, but we do not actively promote it for things that are off-label because we're not allowed to. We have a very robust medical affairs team.
If you look at the publications that we have on our site that talk about all the benefits of vagus nerve stimulation, if you look at something called the Vagus Nerve Society, you could see there's different clinical guidelines that talk about how you could use non-invasive vagus nerve stimulation for other therapeutic areas. Yes.
What's the progress to get to breakeven? How long do you think it'll take to get there? Because I think you have $9 million in cash from that.
All great questions. I'm going to kick that question to earnings, and the reason why is because we said publicly on our last earnings statement that we're going to answer that question on this coming earnings. When we brought in our new commercial officer, Chief Commercial Officer, we basically said, "We're pulling back our guidance around getting to cash flow breakeven until he tells us, 'This is what I think you could do, these are the resources I need to do it, and this is the timing it's going to take.'" He joined April 13th of this quarter, and when we come out with our guidance this upcoming quarter, our expectation is to provide more detailed guidance other than what's out there right now, which just says we expect to grow 30% year-over-year. Good question. Stay tuned.
Guess you're going to have to follow this story. All right. I'm getting the you're done fist.