NeuroPace Inc Stock

Hello, everyone. Thank you for joining us, and welcome to the NeuroPace Q2 2026 Earnings Call. [Operator Instructions] I will now hand the conference over to Scott Schaper, Head of Investor Relations. Scott, please go ahead.

Thank you, operator, and welcome to NeuroPace's Second Quarter 2026 Earnings Conference Call. Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent performance and strategic progress. Followed by a detailed financial review and outlook from Patrick Williams, our Chief Financial Officer. Following our prepared remarks, we will open the call for questions.

Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our financial outlook for 2026, our commercial strategy, clinical and product development initiatives, regulatory matters, including our PMA supplement for expanded indication into idiopathic generalized epilepsy, or IGE, and our expectations regarding operating performance and profitability.

Forward-looking statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, except as required by law.

As of June 30, 2026, the company is now reporting its former distribution arrangement with DIXI Medical as discontinued operations. In accordance with U.S. GAAP and unless otherwise noted, the financial results discussed in this call reflect continuing operations. Prior period amounts have been recast to exclude the results from the distribution arrangement with DIXI Medical for the 2026 reporting periods and applicable comparable periods presented.

The accompanying financial statements for the GAAP presentation of continuing and discontinuing operations. In addition, we will discuss certain non-GAAP financial measures on today's call, including adjusted EBITDA. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which is available on the Investor Relations section of our website. With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker.

Thanks, Scott, and good afternoon, everyone. I will begin with an overview of our second quarter results and the continued execution of our commercial strategy. I will then provide updates on our ongoing IGE regulatory process and product development initiatives. After that, Patrick will walk through our financial results and updated outlook before we open the line for questions.

To start, our second quarter performance reflects continued momentum in the core RNS business and disciplined execution across the organization. Total revenue was $22.8 million, including RNS System revenue of $22.5 million, representing 21% RNS system growth compared with the prior year period. Throughout the first half of 2026, RNS revenue grew in excess of 20%, consistent with the underlying long-term growth framework we have established for our current indication.

During the quarter, we again reached new all-time highs in active prescribers, active accounts and our patient pipeline. We view these as important indicators of the breadth and durability of adoption across the business. The majority of our growth continues to be generated within Level 4 comprehensive epilepsy centers, driven by increased adoption and utilization among existing and new prescribers. At the same time, our community access initiatives continue to contribute by expanding referral pathways and helping more patients move toward appropriate evaluation and treatment.

Patrick will provide more details on the quarter and our full financial guidance, including our increased revenue guidance to $99.5 million to $101.5 million, with underlying RNS revenue growth still on track at 21% to 23% year-over-year. Additionally, we continue to demonstrate strong gross margin performance and disciplined allocation of resources and operating expense management.

Let me now turn to clinical development and our IgE PMA supplement. As we communicated on July 28, the FDA informed us that the PMA supplement was not approvable in its current form due to requests for additional information regarding the clinical evidence supporting the submission. Given how recently we held that call, I will not repeat every detail today. For a more detailed discussion, please refer to a replay of our IGE PMA supplement call, which is available on our website. However, I did want to highlight a few key points.

For clarity, this was not the outcome we expected, and we were disappointed not to receive an initial approval. At the same time, there are several important elements of the agency's communication and our subsequent interactions that inform our view that there is a path towards approval.

First and foremost, in our communications, the FDA made clear that the agency's response was not a disapproval, and the process has remained highly interactive. The agency strongly recommended that we use the submission issue request or SIR process, which we are now pursuing to align on the content of an amendment response.

The agency's additional questions are not related to safety. Rather, the FDA is seeking additional information and context around the clinical benefit observed across certain patient subgroups, including by baseline GTC seizure frequency as well as the clinical meaningfulness of reducing GTC seizures. Our planned amendment will present the totality of the evidence, including additional subgroup analysis, patient and physician-reported outcomes relevant published and real-world evidence and the 24-month data, which showed a 100% median reduction in GTC seizures among evaluable patients.

On timing, we continue to expect the amendment may be reviewed without resetting the full 180-day clock, though the agency has discretion. Preparation of our data analysis needed before requesting an SIR meeting with the FDA remains on track, and we expect to schedule the SIR meeting over the next few weeks. This meeting will allow us to discuss our planned approach with the agency before submitting our amendment response. Consistent with our previous commentary, we continue to see a path forward towards approval and we'll provide an update as we gain greater clarity on the regulatory time line and future interactions.

Moving now to product development. During the quarter, we launched [ ECOG Assistant ], the first AI algorithm-based tool in our planned suite of NeuroPace AI products. [ ECOG Assistant ] is the world's first AI algorithm-based tool in the neuromodulation space designed to help clinicians identify [ ECOGS ] of interest, review trends over time and assess circadian patterns. It is made possible by the RNS System's unique ability to continuously monitor, record and analyze each patient's intracranial [ EEG ] data over time, creating a capability unique to the RNS platform.

By applying AI developed from our proprietary physician label data set, [ ECOG Assistant ] is intended to make review more efficient while providing clearer, more accessible insights to support individualized treatment decisions. The early feedback from the field has been encouraging, both in terms of workflow efficiency and the clinical usefulness of the information. Physicians are already finding new ways to use these insights to inform treatment decisions, including medication timing, therapy adjustments and longer-term patient management.

At one epilepsy center, a physician used the circadian pattern data alongside the patient's clinical report to provide additional context for treatment planning. Prior to reviewing the information, the physician had been considering an increase in stimulation settings. The [ ECOG Assistant ] insights helped inform the physician's independent clinical decision-making and the physician ultimately chose to adjust the timing of the patient's medication instead.

We have also seen clinicians use event timing information to identify periods when medication coverage may be inadequate and adjust patients to longer-acting medication formulations. More broadly, clinicians are reporting that the updated tool simplifies review and provides meaningful time savings across a full RNS clinic. The launch is also giving our commercial team a new way to expand the scope of the discussions within existing accounts.

By demonstrating how [ ECOG Assistant ] can simplify data review and support clinical decision-making, the team is engaging a broader group of physicians and reinforcing the differentiated value of the long-term data generated by the RNS system. These early examples illustrate why ECOG Assistant is strategically important. Beyond delivering meaningful efficiency in routine patient review, ECOG Assistant demonstrates how our unique device capabilities and associated proprietary data assets can be translated into practical capabilities that support more informed treatment decisions and improve the experience of managing RNS patients with capabilities that uniquely differentiate the RNS system.

The remainder of our product development road map also continues to progress, including additional AI-enabled tools, development of our multimodal foundational model, remote care capabilities, automated detection and our next-generation system. During the quarter, related to our multimodal foundational model, we completed a key phase of model training and continued testing its ability to interpret increasingly complex patterns in intracranial EEG data.

Encouragingly, the model is learning clinically relevant patterns in brain activity, suggesting the potential to uncover individualized patterns and relationships that are difficult to detect using traditional approaches. We believe this is an important step toward generating new insights. And as the model continues to train and refine, see meaningful opportunity to further personalize therapy, optimize treatment and improve patient outcomes over time.

Importantly, all of this is made possible by NeuroPace's proprietary data asset. which now includes more than 27 million intracranial EEG recordings generated from recordings within the RNS system. We also continue to make strong development progress on remote care, which is designed to allow physicians to program RNS patients through telehealth and enable patients to prepare their device for an MRI without requiring the physician to be physically present.

By reducing the need for certain in-person visits, remote care has the potential to lessen the travel burden for patients, expand access for those who live farther from epilepsy centers and allow physicians to manage patients more efficiently. During the quarter, we further advanced usability testing and validation activities, and we expect to submit Remote care to the FDA by the end of 2026. We continue to allocate resources toward programs that can improve patient care, increase physician efficiency and expand the long-term value of the RNS platform.

With that, I will turn the call over to Patrick for a detailed review of the quarter's financials and outlook. Patrick?

Thank you, Joel. I will review our second quarter 2026 financial performance in more detail and then discuss our updated full year guidance. As Scott mentioned, beginning this quarter, results from our distribution agreement with DIXI Medical are being reported as discontinued operations. Accordingly, unless otherwise noted, the financial results discussed today reflect continuing operations and exclude the impact of DIXI Medical in both the current and applicable prior year periods.

As we have previously prepared, you can reference the additional tables in today's earnings release to help with modeling historical financials. In addition, gross margin and operating expenses are discussed on an adjusted non-GAAP basis, excluding stock-based compensation. Reconciliations to the most directly comparable GAAP measures are also included in today's press release.

Total revenue in the second quarter was $22.8 million, an increase of 17% compared with $19.5 million in the prior year period. Service revenue was $302,000 compared with $937,000 a year ago, representing an expected headwind of more than 300 basis points to total company revenue growth. Our net system revenue was $22.5 million, representing growth of 21.3% compared with $18.6 million in the second quarter of 2025. Growth was supported by continued adoption and utilization and favorable pricing compared to the prior year.

For the first half of 2026, RNS revenue was $44.2 million, representing growth of 20.4% compared to the first half of 2025. As we have previously discussed, we believe evaluation over 6-month periods provides an informative view of underlying performance in a procedure-based business. First half growth was consistent with our long-term framework for the current adult focal epilepsy indication. Adjusted gross margin was 83.4% in the second quarter compared with 84.0% in the prior year period. The slight year-over-year decline is driven by modestly higher material costs, partially offset by favorable pricing. GAAP gross margin was 82.8%.

Total adjusted operating expense was $21.9 million compared to $21.3 million in the second quarter of 2025. Operating expense increased approximately 3%, meaningfully below our revenue growth of 17%, reflecting continued operating leverage while we invest in the business. Adjusted sales and marketing expense was $11.5 million compared with $10.7 million in the prior year period. The increase was primarily related to sales and field support personnel and other sales-related expenses associated with the continued scaling of our commercial activities.

Adjusted research and development expense was $6.3 million compared with $6.0 million in the prior year period. The increase primarily reflects product development-related investments supporting our next-generation platform and AI-enabled tools. Adjusted general and administrative expense was $4.1 million compared with $4.6 million in the prior year period. The year-over-year decline primarily reflects onetime executive transition expenses incurred in the prior year quarter, partially offset by higher personnel-related expenses in the current period.

Adjusted loss from operations was $2.8 million compared with a loss of $5.0 million in the second quarter of 2025. Adjusted net loss was $3.9 million compared with a net loss of $6.8 million in the prior year period. Adjusted EBITDA loss was $2.8 million compared with an adjusted EBITDA loss of $4.9 million in the second quarter of 2025.

GAAP net loss from continuing operations was $6.2 million compared with a net loss of $10 million in the prior year period. We ended the quarter with $51.9 million in cash, cash equivalents, short-term investments and restricted cash compared with $54.8 million at the end of the first quarter 2026. Long-term borrowings totaled $59.0 million as of June 30, 2026.

Turning now to our outlook for 2026. We are increasing full year total revenue guidance to a range of $99.5 million to $101.5 million compared to our previous range of $99 million to $101 million. The increase in total revenue guidance reflects improved visibility into service revenue, which we now expect to be approximately $1 million for the full year, up from previous guidance of $500,000. Underlying RNS revenue outlook is unchanged at $98.5 million to $100.5 million or growth of 21% to 23% from our current adult focal indication.

We expect our third quarter RNS revenue growth to be similar to our first half RNS growth rate of approximately 20% year-over-year. Consistent with our prior guidance, the revenue range does not include any contribution from the expanded IgE indication. We are increasing full year adjusted gross margin to a guidance range of 82% to 83% compared to our previous range of 81.5% to 82.5%. The updated outlook reflects our first half performance, favorable pricing and continued management of manufacturing costs and product mix.

We continue to expect full year adjusted operating expenses to range from $90 million to $92 million as we continue to invest in our business to drive increased physician and patient adoption. This range excludes approximately $10 million of stock-based compensation, which is a noncash expense.

Within operating expenses, we continue to expect adjusted sales and marketing expense of $46 million to $48 million. These investments support targeted commercial expansion, market development, patient pathway resources and the continued scaling of our field organization. We continue to expect adjusted research and development expense of approximately $27 million.

Our R&D investment is focused on the next-generation RNS platform, the NeuroPace AI suite, remote care, clinical and regulatory programs and other capabilities that strengthen the long-term differentiation of the platform. We continue to expect adjusted general and administrative expense of approximately $17 million, reflecting the systems and infrastructure needed to support a growing organization while maintaining disciplined management of corporate overhead.

We now expect full year adjusted EBITDA loss to be between $7.5 million and $8.5 million, improved from our previous expectation of a loss between $8.5 million and $9.5 million. We remain focused on balancing investment in the company's long-term growth opportunities with continued financial discipline and progress towards sustainable profitability. With that, I will turn the call back to Joel.

Thank you, Patrick. To close, our second quarter results demonstrate continued execution in the areas that we control. The core RNS business delivered in excess of 20% growth during the first half, consistent with our long-term framework for the current adult focal epilepsy indication. We continue to expand adoption, increase utilization and build referral pathways, while maintaining strong financial discipline and investing in the long-term growth of the company.

We remain laser-focused on advancing the IgE opportunity and bringing this therapy to patients. At the same time, our other strategic initiatives remain on track. Our clinical evidence base continues to strengthen as demonstrated by the NAUTILUS study publication in epilepsia. Our product development process is working as evidenced by the launch of ECOG Assistant and the initial examples of its demonstration of unique device platform technology capability and its translation into value in clinical practice. And our broader product development programs continue to progress.

We remain focused on executing across the core business, advancing the IgE regulatory process and developing the differentiated capabilities that can expand the impact and value of the RNS platform over time. Thank you for your time and continued interest in NeuroPace. Operator, we will now open the line for questions.

[Operator Instructions] Your first question comes from the line of Anthony Petrone with Mizuho.

Maybe, Joel, to start here, you mentioned the submission issue request meeting, the SIR meeting. I think I may have missed it, but is the specific date set yet in September? And then what should we be thinking just after that meeting? How will it play out in terms of milestones? Is there a potential for some Q&A back and forth ahead of a formal submission? And do you still -- are you still in the camp that a resubmission could happen before the end of the year? And I'll have one quick follow-up.

Thank you, Anthony. Excellent questions. So a specific date for the SIR is not yet set. The specifics that I would offer to you there were in my prepared comments, which is that our -- the preparation of the analysis and development of the data that will go into the SIR request and be the basis for the majority for the discussion is on track. So we're in good shape there and things continue to progress.

We expect to be submitting for the SIR and having that meeting then over the next few weeks, as I think I had commented previously. And so again, things continue to move and develop in the direction that we had previously discussed and are on track as well. I'll just put in here, you didn't specifically ask it, but ongoing -- the periodic ongoing discussions with the agency and interactive engagement has also remained on track.

With regard to next steps, you should -- you laid it out there. But in general, you could think about it as we expect to have that meeting over the next few weeks based on our current understanding, as I had mentioned on the 28th of July when we first talked about it. Our expectation is that we would not require a full restarting of the 180-day clock.

Our current expectation based on the way that the agency has interacted with us when we have amended this submission a couple of other times during the review is to stay interactive. As you know and others know who are listening, it's within the agency's purview to go ahead and restart a clock and take the full 180 days. But with the way that they've been acting with us, we wouldn't think that would be the case.

So I'm going to leave you one thing a little bit on specific dates, Anthony, but you can think about it as we're on track for the SIR. We expect the SIR to be happening here over the next few weeks. The majority of what's going to go into the SIR, we expect to be what's going to go into the amendment. So we think that can happen relatively in a timely fashion following the SIR. And then we would expect the agency to work with us interactively and expeditiously following the submission of the amendment. They can take out to the 180 days, but we don't expect that they will.

Very helpful. And then the quick follow-up here is actually on the U.S. market push. And I think the plan here called for expansion into community centers beyond [ CECs ] to coincide with the IGE label expansion. But certainly, the core business on the focal side continues to outperform. So just wondering, would you make a push into community ahead of IGE label expansion? Or is it still let's get that label expansion and then make that broader push in terms of site expansion?

It's a really good question, Anthony. And the short answer is yes. We have the advantage here of having the adult focal indication, obviously, already today. And so that gives us the opportunity to be in the community, be talking with referring physicians as well as establishing relationships with community-based programs as well as Level 3 programs such that they can either refer to Level 4 centers, refer to Level 4 centers for implant, get the patients back and program themselves or in some cases, Level 3 and community centers have both the patient populations as well as the professional staff services and complementary infrastructure to be able to diagnose, manage and treat patients within those sites.

So we absolutely are and have been increasing our footprint from a community perspective, which has the advantage of laying a bunch of track, if you will, in anticipation of an indication expansion as well. But we can do that in support of our current business, and it's been beneficial with our current business while then also preparing for what we plan for in terms of indication expansion.

Your next question comes from the line of Lawrence Biegelsen with Wells Fargo.

This is Ralph Osborne on for Larry. So starting off, would you provide some color on how the clinical community reacted to the FDA letter regarding your application for IgE? Were physicians surprised, concern about your viability to get approval or understand the FDA's caution and wanting more data?

It's a great question, Ross. And we actually had conference call follow-ups not long after we talked with you on the week of the 28th there. And I personally as well as Dr. [ Moral ] spoke with a vast majority of the investigators that were there. I'd say there are really kind of 3 points of feedback.

One, thanks for letting us know and for keeping everybody up to date here real time. Two, just as we do, they remain very confident in the clinical data that was generated from the study. And three, let us know how we can help. And because people see the need that this patient population has today, as we all know, drug-resistant idiopathic generalized population doesn't have options with regard to neurostimulation, and they're not surgical candidates by the nature of the disease.

And so the clinical community really sees the nature of the unmet need and the gap in what's available to them today. They have been impressed with and only supported by the publication of the NAUTILUS data in epilepsy that came out. And in particular, the investigators that we're close to are obviously very close to what they saw in their own patient populations and again, remain confident in the data and want to know what they can do to help.

Okay. Great. And then your next-generation platform came up a couple of times in your prepared remarks. Could you provide a finer point on where you stand in the development time line and remind us of some of the improvements?

You bet. So the next-generation platform is our next -- to be specific, that's our next-generation hardware platform, our next-generation implantable device. And another -- there'll be a number of aspects about that. But it will expand the capability and capacity of the system from the management of the potential for additional lead configurations is one.

Bluetooth low-energy communication is another. And so you can imagine being able to have the device seamlessly communicate from a Bluetooth perspective is also something that would be particularly helpful. And then a number of other things the platform will do to position further product development that's further down our pipeline. We haven't fully talked about yet, but it will be the chassis that we need for that.

And so those are really the keys. We haven't provided specific time lines outside of the most -- the thing you could look at to give you the best feeling for timing and time line that we've communicated publicly would be the Investor Day materials that are on the website. And so you can get a feeling for that there. But development work is very active. We're not -- we're no longer in R. We're in D and the D is going to fit very nicely with everything that we're doing now from an AI and remote care perspective will just be buttressed by and further supported by that next-generation platform.

So we can do the things we're doing now on the [ 320 ] and then it will be just an opportunity for us to do even more of it and even better when we think about the next-generation hardware platform.

Think about it as faster processing, especially with the AI suite of tools that we'll begin to launch and obviously, with ECOG being the first one that we did. But it's -- we're looking forward to it.

Your next question comes from the line of Priya Sajdeva with UBS.

Maybe if we could just touch back on the SIR meeting. Joel, I know you mentioned that the current expectation is to stay interactive with the agency. So maybe you could help us frame what the potential outcomes could be and how equipped you are to handle any feedback or additional data that's requested? And then one follow-up.

It's a great question. We expect to go into the -- the purpose of the meeting is really to provide a forum for us to align with the agency on the specifics of what they're looking for and our plans for data and the reporting of that data with them. So we feel like we've got a good road map today based on the feedback that we've gotten from the agency, both by way of their letter as well as our interactions with them.

And so we think we're going to go into the meeting with a good direction and approach for what we believe they're looking for. And then, of course, the timing and the amount of additional analysis or work coming out of that will be based on how well, in fact, are we aligned and have we gotten the development correct and aligned with what they're interested in.

Again, we expect that we do have a pretty good line of sight on that. And so we'll work to turn those conversations and any updates and iteration from that into an amendment and then submit that amendment in as fast as possible time frame as we can coming out of the meeting. So a lot of the work is going on now, which is why I provided the update in my prepared comments, specifically that our data analysis and preparation remains on track, and we're getting ready to submit that SIR request, and we'll be prepared to go into the SIR meeting.

And so we -- to just specifically answer your question, we expect to be able to turn feedback, unless there's something that just comes that we haven't anticipated, we expect to be able to turn feedback in a pretty timely fashion after the SIR meeting.

Okay. That's super helpful. I guess maybe just one more. Really nice to hear the all-time high in active prescribers, accounts and the patient pipeline. So I would just love to maybe understand a little bit more what you saw on the ground as it relates to utilization amongst existing centers this quarter and how you're thinking about that when contemplating the guide?

Thank you, Priya. And I know you've been -- somebody who's followed this particularly closely. So we appreciate you paying attention to the operating parts of the business. It's fun for an operator to get to talk about that. So really, there's 2 pieces here that form the basis for the expansion in the business.

If you think about our field presence, we have a presence in the vast majority of the Level 4 centers today. We have a penetration rate into those centers. And so the way that we're really working on expanding our footprint is increasing adoption within those centers. So if you think about a Level 4 center on average, it will add something like 5 or 6 epileptologists. And there's maybe 1 or 2 or 3 epileptologists in the center that does the majority of the RNS work.

And so one step for us to expand the envelope is to increase adoption of additional epileptologists with RNS neurostimulation as a tool within their practice. Then within that adoption, we have what we call the modern RNS story to increase utilization. And in particular, we have talked about here on recent calls, number one, the advent of network stimulation where people are stimulating both focal regions of the brain as well as stimulating in the thalamus -- and that has really been an area of expansion for the RNS system as well as in hybrids to surgical therapy. Stand-alone surgical therapy volumes actually are going down vis-a-vis neuromodulation.

And one of the reasons why we think that's going down vis-a-vis neuromodulation is the expanded capability that neuromodulation can provide. And in particular, with RNS, you can monitor the brain's activity to inform where you might want to resect or if you know you have an area where you want to resect, but there's also areas you want to treat from a focal perspective that you can't resect, it can be used as a complement to that.

So when we think about expanding our footprint, we've got increasing adoption as well as increasing utilization within the Level 4 centers as our fundamental baseline. Then in addition to that, the question was asked earlier, Anthony asked earlier about expansion into the community and into the referral community, and that's been a big area of focus for us.

And the last thing I'd talk about here is just our increased both investment as well as sophistication in direct-to-consumer and direct-to-patient and direct-to-patient caregiver as well as direct-to-referral community, digital marketing and patient educational efforts are things that are beginning to contribute more and more for us. And so we feel like we've got multiple shots on goal here for developing the market, and that will become even more important as we work through indication expansion.

Your next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

At the risk of getting a little over our [indiscernible], I was hoping to ask about 2027. I think where consensus sits today is about 23% top line growth, and I've previously tagged the RNS business about 20% in line with you guys' commentary. Do you feel right now, maybe there's some inclusion of IgE that might not be included in 2027 at this point in time? Or do you think that, that $123 million is a reasonable estimation at this point in time?

Yes, it's a fair question. I think as we've talked about, we need to get further clarity on the timing of the [ IGE ] approval, which we, again, are very optimistic that it will happen. Clearly, we said that we were going to have approval by the middle of 2026. So what I would repeat is that we continue to stay consistent with our long-term plans of growing the business at 20% with the adult focal indication and give us a little bit of time. We haven't given out there '27 and '28 when the contribution of IGE is. But as we get clarity on that, we certainly will be ready to speak to it.

Okay. That's helpful. And then I wanted to ask a bigger picture question on some of the AI initiatives. How should we think about monetization? Is this really through increased unit volume within the core RNS business? Or is there eventually a pathway to more meaningful AI-specific revenue?

Thanks, Frank. It's a great question. And as a basis, the way people should think about it from a business model perspective is enabling unit volume associated with RNS. So the ability to both make more efficient the management of a patient as well as then improve outcomes, we think -- further improve outcomes are both salutory for the rate of uptake of the RNS system unit sales. I think there are other interesting opportunities that I won't get into a lot of the detail around here today.

But in particular, if you think about the diagnostic capability associated with the system, if you think about what those algorithms can do by way of helping us predict the appropriate detection and therapy settings and you think about things like some of the partnership work that we've done, we think there are other potential business models to help create -- recognize rather the value that the capability and underlying assets that we have are, but those are further downstream, and I'm going to hold off in talking about any of that.

For right now, what you should think about is the efficiency with which we can manage patients allows for individual clinicians to scale the number of patients in their RNS practice with more efficient and effective data management as well as detection and therapy parameter settings and the potential to even further increase what are today best-in-class effectiveness outcomes. And so all of those things read on increasing RNS unit volume, which is obviously the basis of our business.

I think the one thing I would add related to ECOG Assistant and IGE is as IGE comes out, and we've talked about the fact that there'll be more and more patients outside of Level 4 and in that community setting, creating a tool that's going to really help be more efficient and productive, like we said, in that community setting with ECOG Assistant. I think that's going to be very powerful for us and help with the adoption dynamics, which we view as very favorable when it comes to IgE.

Frank, you're going to ru asking the question. But the only other thing I'd mention, and I said it in my prepared comments is that I think sometimes the recognition of the importance of the unique capability of the RNS system to monitor, record and then analyze data -- and what that provides us on a macro basis of the 27 million archives that we can now use as a training data set for all of the algorithm work as well as then our ability to use the algorithms to then tailor an individualized therapy for patients is sometimes not as appreciated as I think it should be, one; two, nobody else can follow us in.

It is a unique aspect of the platform and something that I think positions us particularly well for the future of where epilepsy therapy is headed. We've seen it in other disease states as well. individualized patient-tailored personalized therapy wins. And the data and the configurable nature of the platform of the RNS system are unique, proprietary and have the potential to create a tremendous amount of value with a technology moat that is supported by a data moat that's only getting bigger and deeper.

Your next question comes from the line of Michael Kratky with Leerink Partners.

This is Sam on for Mike. Just wanted to go back to your comments on record accounts and pipeline. Can you maybe talk about how long it typically takes new accounts to become meaningful contributors of implant volume or reach kind of a peak level of utilization, how long it takes patients to move through your pipeline today and how that informs your outlook for the rest of the year? And then I have one follow-up.

Sam, thanks for joining. Those are great questions. I'll start with the center discussion, and then we'll talk a little bit more about patient pipeline. As I mentioned earlier, we have a presence in the vast majority of the Level 4 centers. And so for us, there's -- it's less of a dynamic in terms of getting a center up and going, although as we have expanded more into Level 3 and community centers, we have kind of reinvigorated that center start-up curve. And there, the centers are unique in a lot of ways.

Some centers, it's really just a contracting activity. They have the functional neurosurgery capacity. They have the necessary infrastructure. They have the patient population, and it's a pretty quick training exercise and they're ready to get up and running. Others, depending on the investments that they may need to make in terms of either surgical capacity and/or infrastructure, it can take them a little bit longer than that.

But for us, the training that it takes for us to bring somebody up the curve is really fairly straightforward. We have a very sophisticated field commercial organization who's done a lot of this work, and that's not our critical path. And so for us, a lot of it now is really working with individual physicians to expand their adoption. And as you might imagine, that is a faster process than trying to get an entire center to develop the infrastructure and have the referral pathways and everything else that they need. With regard to patients in the pipeline, the right way to think about it is based on indication.

So if you think about the steps in the process, a patient with a regional or focal disease will undergo an initial SEEG evaluation where scalp EEG rather, a scalp and video EEG is kind of a Phase I evaluation. Then they move from there to a Phase II evaluation, which is an inpatient procedure, where SEEG electrodes are used to localize the specific spot or spots of origination of the seizure. And then those patients are adjudicated to either resection or neurostimulation.

And so there's kind of 3 main steps with the evaluation of a focal patient. And that can take anywhere from 6 months to a year. And in some cases, sadly, in particular, if somebody has to get reworked up if they get referred in where there isn't a relationship if they had to get reworked up when they get to a Level 4 center, it can even take a little bit longer than that. It's one of the reasons why we're particularly enthusiastic about the indication expansion into the generalized population. That population, because it's a generalized disease that happens everywhere all at once, localization or that second step beyond just the video and scalp EEG doesn't need to happen.

And so you can imagine a yield loss of getting someone to be able to organize their lives in such a way to go in for a long-term monitoring as well as an additional invasive procedure with SEEG, you can have the likelihood of that being a challenging thing to get organized and then losing patients along the way. None of that exists with the AGE population. And so in some ways, if we think about adoption dynamics and patient pipeline friction, we've almost started with the hardest patient population.

Frankly, we think the adoption dynamics within the IgE population because they are otherwise developmentally normal people who don't require invasive monitoring, we think it can be a much less friction environment to get to neurostimulation therapy, one. And then two, the other major segment that we're working on here is pediatrics. And the adoption dynamics within pediatrics, we as well think lend themselves even more than the adult focal population.

So we really like our adult focal indication, and we're excited about what we're doing with that, obviously, growing the business 20% year-on-year with that indication, but we think the indication expansion to come can result in even faster patient pipeline and more smooth adoption dynamics.

Related to this year, what I would add is we saw accelerated growth in Q2 over Q1, 21% versus 19.5%. And our guidance on the RNS specifically for the full year would imply a higher growth rate in the second half. And there's a lot of focus as an organization, and I'll say myself personally on more analytics around that patient pipeline, and the field is doing a really good job of tracking that.

We have it down to the patient account level, et cetera. And there's more good analytics to come out of that, and we're beginning to really peel the onion back on there because clearly, that patient identified today and helping them through that journey and converting them quicker in the velocity will be an implant of the future.

Understood. And then just as a follow-up, on IGE, can you maybe just talk about your expectations around still kind of expecting a broad label in IgE versus maybe stricter labeling in certain subpopulations? And what ultimately gives you confidence the FDA won't have any material pushback on the labeling front?

Yes. It's a great question, Sam. And without trying to get into predicting how the discussions are going to go here because that's really the point of the discussions is to align on FDA's questions and where they have a need for additional information and context. Our focus is on providing that information and context and answering their questions on the entire enrolled patient population.

So we think there's benefit across populations. We think that the clinical meaningfulness and impact on individuals' lives by avoiding even AGTC is significant. And so again, that's really the purpose of the discussions here, but our focus is on providing information awareness, context, understanding for the entire population that was enrolled in the study.

Your next question comes from the line of Lily Lozada with JPMorgan Chase.

Maybe just a follow-up on guidance. The range is staying put for the core RNS business, which you mentioned implies a step-up in the back half of the year, I think, about 500 basis points by my math. So can you remind us the drivers of this acceleration and what you're seeing so far into the third quarter to give you the confidence in that step-up in the back half? And then I have a follow-up.

Yes, absolutely. I think maybe taking a step back, we do look at our business on what I call these 6-month buckets, and I think Joel has consistently said that ever since he's been here. And so look, there's a procedure-based business. And so you can have surgeries that can move out from month-to-month or quarter-to-quarter. What gives us confidence in the second half is what we've done historically. If you go back in time and look at even second half of last year, we grew 32% year-over-year.

So it's a really strong comp that we're coming up against. And so we expect that to happen again. It's everything we talked about, right? The sales team that we added, they're a little bit more tenured. I think we get smarter every day on analytics. We continue to drive deeper into accounts with utilization. We talked about all-time highs in subscribers, et cetera.

And so I think for us, you hit the point well is that the second half, depending on the range, you're anywhere from 20% on the low end of the guidance to 23% on the midpoint to 25%. And so those are all basically at the midpoint, a step-up from the 20% that we saw in the first half. So history and obviously, visibility in the business that we have now gives us that confidence.

Great. And then as a follow-up, you're on the cusp of sustainable adjusted EBITDA and free cash flow profitability. So I'm curious how you're thinking about balancing the top line growth with profitability, especially given you have big opportunities in front of you still with IGE and elsewhere. So should we expect to see more drop through to the bottom line moving forward? Or does this give you the opportunity to invest more aggressively behind growth?

Those are great questions, Lily. And what you should think about is that we're going to invest in the business to take advantage of the growth that is in front of us here, and we think that we have some significant opportunities. That has all been factored into our long-range planning where we've talked about -- and you're talking about EBITDA -- adjusted EBITDA here and not cash flow breakeven, but we've talked about cash flow breakeven exiting 2027.

And we are working to both demonstrate our ability to fund the opportunities on the top line of the business, and that's our first priority, and that's what we have been doing, while demonstrating good financial discipline through the middle part of the income statement, including expanding gross margin performance and a good prioritization of our spending. And so we are committed to having a disciplined income statement with a first priority of pursuing growth, and we think we have significant growth opportunities in front of us.

We think we can do both. But we're not going to let any of our growth opportunities go wanting in favor of trying to accelerate cash flow breakeven or adjusted EBITDA positive outcome here. But again, I think we've demonstrated here over the past number of years that we can have a good disciplined approach to the entire income statement. So I just said all that stuff with the CFO here sitting across from me, who spends all his time doing all that. And so maybe I should ask him to comment.

Really good answer. So I don't know what else to say. Look, we'll be good stewards of the shareholders' cash and capital -- as Joel said, we just have a huge untapped TAM right now with adult focal. It's only going to get bigger when we get the IGE expansion indication here. And so as Joel said, we have shown steady progress on cash flow, adjusted EBITDA, whatever profitability metric you want to look at.

You'll note in our guidance, we did increase our adjusted EBITDA. That was notably because of the increase in revenue guidance on the service side as well as the fact that we did bump up the gross margin by 50 basis points on the top and the bottom. So again, we believe that shareholder value will be created as we continue to grow our revenue with the strong gross margins that we have.

Your next question comes from the line of [ Heath Chen ] with H.C. Wainwright & Company.

Is Katie on for you. This may be something you're not quite ready to answer yet, but looking at your new AI assistant, is it priced or monetized separately from the RNS system or bundled into existing pricing? And as a quick follow-up, is that contributing to the 21% RNS growth you're already guiding to? Or is it purely an add-on retention tool at this point?

Katie, thanks for those questions. It is part of the RNS system and not monetized separately outside of the increased efficiency and potential for improved outcomes that we think can drive increased adoption. And everything that's going on in the business has been contemplated as part of the guide. So the launch of the ECOG Assistant product here in the middle of the year is also part of what we've contemplated when we put out the guidance that we have.

There are no further questions at this time. I will now turn the call back to Joel Becker for closing remarks.

Thank you, and thanks all of you for your ongoing interest in and support of NeuroPace. We are focused on leading in transforming the lives of people suffering from epilepsy by reducing or eliminating the recurrence and occurrence of debilitating seizures. And we're focused on executing from a commercial referral and direct-to-consumer perspective, expanding adoption and utilization within our current population.

Expanding indications to the drug-resistant idiopathic generalized population that has no device-based options available to them today and innovating and further differentiating the unique aspects of the RNS System to build on data, AI analysis tools and remote care. We believe that the ongoing execution and realization of these 3 market clinical and product development core elements of our strategy are and will help advance the standard of care for these patients and be valuable to all of the members of the NeuroPace community. Thank you. Operator?

This concludes today's call. Thank you for attending. You may now disconnect.

Greetings, and welcome to the NeuroPace IGE PMA Supplement Update Call. [Operator Instructions] Please note, this conference is being recorded.

I will now turn the call over to Scott Schaper, Head of Investor Relations. Please go ahead.

Good afternoon, and thank you for joining today's conference call. On the call, you will hear from Joel Becker, NeuroPace's President and Chief Executive Officer; and Dr. Martha Morrell, NeuroPace's Chief Medical Officer. Patrick Williams, NeuroPace's Chief Financial Officer, is also on the line.

Earlier today, NeuroPace issued a press release providing an update on the status of the company's PMA Supplement seeking to expand the indication for the RNS System to include patients with antiseizure medication-resistant idiopathic generalized epilepsy or IGE. A copy of the press release is available on the Investor Relations section of our website.

Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our expectations and beliefs with respect to regulatory matters, including FDA review of our PMA supplement through IGE, our submission issue request process, our intent to amend the submission of supplemental information, our ability to place the PMA Supplement in approvable form, potential labeling and post-approval study approaches, timing of future interactions with FDA, time lines for FDA review of PMA Supplement amendments, the potential approval of an expanded indication, the potential clinical and commercial opportunity in IGE and our expectations regarding operating performance and growth.

Forward-looking statements are based on management's current expectations and assumptions informed by the information that is known at the time the statements are made, and they are subject to risks and uncertainties that could cause actual results to differ materially. A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, except as required by law.

With that, I'll now turn the call over to Joel Becker. Joel?

Thank you, Scott, and good afternoon, everyone. As Scott mentioned, this afternoon, we issued a press release providing an update on the FDA review of our PMA Supplement seeking indication expansion for the RNS System into drug-resistant idiopathic generalized epilepsy or IGE.

Let me begin with the headline. We received communication from FDA on the status of our PMA Supplement indicating that our submission was not approvable in its current form due to additional information requested regarding the clinical evidence supporting the submission. Having reviewed FDA's written communications and had subsequent discussions with the agency, we believe there is a path for approval of the submission. Our interactions are now focused on providing the information needed to answer FDA's remaining questions. While we are disappointed with not receiving an initial approval, we were encouraged by our subsequent discussion with the agency and importantly, their interest in engaging interactively, their request for additional information to address certain questions and their willingness to work collaboratively to bring the RNS indication expansion for drug-resistant IGE patients to market.

We view our subsequent interactions with FDA as a constructive step in clarifying the path forward in the regulatory process. As I mentioned, following receipt of the communication and at the agency's invitation, we met with FDA to discuss their feedback. The review team and Office of Health and Technology Management, consistent with the letter indicated that providing additional data from the NAUTILUS trial and additional clinical context could help address the agency's remaining questions. Importantly, the submission not being approvable in its current form was not based on any new safety concern. The primary safety endpoint in NAUTILUS was met and the FDA communication did not identify any new safety signals with the RNS System.

From a forward process standpoint, based on the strong recommendation from the agency, we are in the process of submitting a Submission Issue Request or SIR to further discuss our planned approach. A Submission Issue Request is a process that allows the sponsor to engage with FDA on specific issues in an active application. We expect to meet with the agency over the next few weeks, and this meeting gives us an opportunity to discuss our planned approach with FDA before submitting an amendment. We believe that is the right next step because it can help us align with FDA on the content and structure.

Following alignment with the agency as part of these interactions, we intend to amend the submission with supplemental information, including additional data and analysis regarding the patient populations evaluated in NAUTILUS, real-world evidence and context with regard to the clinical meaningfulness of seizure reduction.

I want to emphasize that we continue to believe in the strength of the NAUTILUS data set and in the potential of the RNS System to address a significant unmet need for patients with drug-resistant IGE. These patients have no approved neuromodulation or surgical treatment options. For patients who continue to experience uncontrolled generalized tonic-clonic seizures, the status quo is not without significant clinical risk. And Dr. Morrell will walk through the clinical data in more detail.

To close, we are working with urgency and discipline to develop the supplemental package, align with FDA on appropriate data requests through the submission issue request process and move the application forward to approval.

I will now turn the call over to Dr. Morrell to discuss the clinical context and data. Marty?

Thank you, Joel, and thank you to everyone joining this afternoon. Let's begin with the patient population that is central to our conviction in this indication and our commitment to advancing a therapy for these patients who have a meaningful unmet clinical need. Patients with drug-resistant idiopathic generalized epilepsy who continue to experience generalized tonic clonic or GTC seizures face a substantial life burden and risk to safety. GTC seizures are among the most severe and dangerous seizure types. Each GTC seizure is a serious medical event that can involve sudden loss of consciousness, a fall and convulsive movements of arms and legs often leading to injury. Recovery may be prolonged and rescue medication is often required.

Additionally, patients with uncontrolled GTCs have the highest risk of sudden unexpected death in epilepsy or SUDEP. Reducing GTC seizures can meaningfully improve patient safety, independence and quality of life. For these patients, as Joel said, there are no approved neuromodulation or surgical treatment options available today. That is the unmet need that the NAUTILUS study was designed to address. I will not review the study design in detail, but I want to remind you of a few points. NAUTILUS is the first prospective multicenter, randomized, single-blind sham-stimulation controlled study evaluating responsive thalamic stimulation using the RNS System in patients with drug-resistant IGE.

Importantly, this study met its primary safety endpoint. While the primary effectiveness endpoint did not achieve statistical significance, the prespecified additional analyses, comparing seizure frequency during treatment with baseline seizure frequency, demonstrated statistically significant improvements. FDA has requested information to help them understand whether these improvements are clinically meaningful with a focus on certain patient subgroups. FDA wishes to consider this using the totality of evidence. This includes the entirety of the data from the NAUTILUS trial, including additional effectiveness data at 24 months, analysis of response according to patient baseline seizure frequency and detailed information on patient-reported outcomes. Additionally, published literature will be provided that supports the clinical meaningfulness of the response to RNS System treatment.

The clinical data generated in the NAUTILUS trial that was provided in the initial submission and what will be provided in the amendment consistently shows what we believe are meaningful and lasting improvements in outcomes that matter to patients and their physicians. The initial submission provided data to 18 months. At 18 months, patients treated with RNS System experienced a 77% median reduction in generalized tonic clonic seizures compared with baseline. 40% of patients experienced GTC seizure freedom at that time point. We also saw rapid and sustained reductions in other generalized seizure types, including absence and myoclonic seizures.

The 18-month data also showed benefits beyond seizure counts. More than 90% of patients reported improvement on the Patient Global Impression of Change and 80% of their physicians reported improvement on the Clinical Global Impression of Improvement. Responsive stimulation treatment was also associated with an approximate 30% reduction in seizure-related injury events and 44% lower odds of use of a benzodiazepine as a rescue medication for a generalized tonic clonic seizure. Those data are now peer-reviewed and recently published in Epilepsia, which is important both scientifically and clinically. The publication provides Level 1 evidence supporting responsive thalamic stimulation as a potential treatment approach for patients with drug-resistant IGE.

Since that 18-month analysis, the data set has continued to strengthen. At the request of the FDA during the review process, the company provided 24-month data, which showed patients continued to improve with stimulation. Among the evaluable patients who have completed 24-month post-implant follow-up, those who had received stimulation for 23 of 24 months post implant achieved a median percent reduction in GTC seizures of 100% compared to baseline. This continued improvement over time is entirely consistent with what we have observed with RNS therapy in focal epilepsy.

FDA is asking us to further support benefit in subpopulations of patients evaluated in NAUTILUS and to help characterize the clinical meaningfulness of benefit, including in patients with different baseline generalized tonic clonic seizure frequencies. NeuroPace will provide evidence from the NAUTILUS trial to illustrate the magnitude of the clinical benefit of RNS therapy in these various subpopulations and the meaningfulness of that benefit as reported by the patients and their physicians. This will be supplemented by the literature describing the potential consequences of each single GTC and the patient recognized benefits of reducing that seizure burden.

Another example of feedback from the agency was that there was limited representation to support an indication for individuals 12 to 18 years of age. NeuroPace will work to identify pathways to support an indication for use in this age group. We understand FDA's request for additional information and for the context they have requested to help to understand the clinical meaningfulness of RNS treatment. We appreciate the opportunity to interact proactively and are working to provide that information to FDA in a structured, comprehensive and expeditious manner.

I will now turn the call back to Joel.

Thank you, Marty. Let me close by describing where we go from here. Based on our interactions with FDA, we view this as a delay and a waypoint in the regulatory process and are working to address feedback on patient populations, real-world evidence and labeling as we continue pursuing approval of the RNS System for a drug-resistant IGE indication. We have already met with the FDA review team to discuss the agency's feedback. There have already been further interactions this week, and we are in the process of submitting a Submission Issue Request to further discuss our planned approach with the agency over the next few weeks.

We believe that this is the right next step because it gives us the opportunity to align with FDA on the content and structure of a supplemental package. If we are able to align with FDA on the clinical evidence package through the SIR process, we plan to submit an amendment shortly after the SIR meeting. FDA will determine the appropriate review classification for the amendment and the agency has the ability to treat an amendment as a major amendment and extend the review clock up to 180 days. Based on our breakthrough device designation, the interactive nature of our ongoing dialogue and the agency's handling of prior amendments during this review, our current expectation is that the amendment could be reviewed without requiring a restarting of the full 180-day review clock. We will provide more specific timing as we gain additional clarity following the SIR meeting.

As previously communicated, our full year 2026 guidance did not include any contribution from the expanded IGE indication, and we plan to provide full financial results and any updates to our full year outlook on our upcoming earnings conference call scheduled for August 11, 2026.

Stepping back, while disappointed by FDA's recent communication regarding our initial application, we are encouraged by the agency's continued engagement, their interactive collaboration and interest in working on a path for approval. We are focused on doing the work required to address FDA's feedback. We will do that with urgency, discipline and a clear focus on the patients and physicians who need new options for drug-resistant IGE. NeuroPace has consistently led the field by generating high-quality clinical evidence and advancing neuromodulation into patient populations that have historically had no device-based treatment options. And we remain committed to that leadership as we continue working toward an IGE indication approval.

This concludes our prepared remarks. I will now turn the call back to the operator to open the line for questions.

[Operator Instructions] Your first question comes from the line of Anthony Petrone with Mizuho Group.

So maybe we can start with the -- I guess, a little bit more detail on the clinical side from feedback in the initial conversations with FDA. And then again, you had the 18-month and then the supplemental 24-month follow-up data, which certainly showed a good median control seizure rate for generalized tonic clonic seizures. One option here was to get the GTC-only clearance. So a little bit more detail on what the feedback was on why the company and the data that's submitted did not get this over the goal line here for GTC only?

Thank you, Anthony, and it's obviously a very good question. Glad to have you here on the call. Wish we were under a little bit different circumstances and welcome you to the call for the first time, but thanks for being on, and thanks for your interest in NeuroPace. And you're exactly right, we had provided the 18-month data and some of the 24-month data. And Dr. Morrell Marty is very close to both the data that has been submitted as well as the data that we plan to submit the new data, the incremental information that we're looking at. So I'm going to ask her to say a little bit more about that, answer your question.

Yes. Thanks. So with our initial submission, we provided the 18-month data. FDA then came back and requested some of the newly completed 24-month data. But they asked for a subset of that data only, they were not provided the entire data set. What they've requested is to have that entire 24-month data set. And their intent is to look at the overall benefit as well as the response in certain subpopulations. They also have a great deal of interest in seeing more detail on the patient-reported outcomes. And they've asked us for the literature that comprises the real-world evidence for treatment of the RNS system as well as the literature establishing the clinical meaningfulness of a reduction in generalized tonic clonic seizures. They are obviously wanting to engage interactively and quite intensely with us to truly understand this patient population and what the RNS System brings.

I guess the only thing I'd add to that, Anthony, is that as their analysis has gone on, and remembering this is the first time the device group has ever reviewed a study for drug-resistant idiopathic generalized epilepsy patients, they have also come up with additional questions. And as their analysis has also continued, specific questions come up too. And so in addition to the things that Marty mentioned here, exactly the 24 months of subpopulations, the patient outcomes, et cetera, and the clinical meaningfulness of the generalized tonic clonic seizures, there's also a temporal element here where their knowledge of the study and the analysis also has continued to progress over time.

And I'll say that we internally have performed these analyses, and we see that in the subpopulations, there is consistency and the directional improvement and then the magnitude of improvement. So we believe that we'll be able to satisfy their questions and assist their understanding.

If I could sneak one quick one in. I know it's early here, but you have the submission issue request and there'll be another follow-up meeting with FDA. But just -- is there any way to just give a little bit more substance on timing? When do you think the initial meeting with FDA will be? And if you had to handicap what timing on a resubmission could look like, that would be helpful, and I'll get back in queue.

You bet. So we're in the process of preparing that SIR submission. And then once that goes in, the agency has a period of time in which to respond. In general, you could think about it as we expect to be having the SIR meeting with the agency over the next few weeks. Then coming out of that, there's obviously some different scenarios. Ideally, what we would see and what we're working to and most expeditiously is we would file an amendment following that if we have good alignment with the agency on what they're looking for and the answers to their questions, we would file an amendment.

And from there, then the agency has some further discretion. They could evaluate that information, and this is what we're working to. They could evaluate that information and move forward with a decision based on what has gone into that submission without -- based on our current understanding, our expectation is that would not require a full restarting of the 180-day clock. So they have discretion within that. They do have the right as a case here, too, to treat the submission as a major amendment, which could extend up to 180 days after submission. But again, based on the breakthrough device designation, the interactive nature of our ongoing dialogue, the way the agency has handled prior amendments during this review, our current expectation is that our amendment could be evaluated without requiring a restarting of the full 180-day clock. So hopefully, that gives you a little bit of extra color.

Your next question comes from the line of Michael Kratky with Leerink Partners.

Maybe just to follow up on that last one. But could you give a sense of what specifically within the current evidence package the FDA found insufficient? Any specific questions they asked in terms of the efficacy and what remains unresolved? And then maybe just to ask a follow-up upfront, but can you confirm how many patients completed that 24-month data that you mentioned in the press release?

You bet, Mike. Thanks for those questions. And I'll ask maybe, Marty, if you could just say a little bit more about the different categories of incremental information that we're planning on providing there as well as then to the specific question on patient completion of the 24-month time frame?

Yes. I don't think that FDA had any issue with the data that was provided. They knew that we had 24-month data. And so wanted to see that and wanted some additional analyses performed that were not prespecified. The patients were all followed for 24 months post implant. But because of the way they were randomized early on, not every patient received that full 23 to 24 months of stimulation. Some received stimulation later and therefore, did not have the complete 24 months of treatment. So we're looking at everybody at every point that they were receiving stimulation, every month of stimulation, including those who completed with that 23 months. So that represents 41 of the patients in the trial for whom we have data to -- stimulation to 23 months and then 84 patients for whom there is data with some period of stimulation.

And then the first part of Mike's question was maybe you say a little bit more about the incremental data, the new information that we're going to be providing. You touched on that previously, but.

The new information is really more of what we had already provided. And so that would be the 18- to 24-month data. We also had provided patient-reported outcomes. They would like to see that in more detail. They're interested in the programming, how detection and stimulation were programmed during the study. Understandably, we obviously can provide that to them. And then we had not really spent much time providing literature to them about what it means to have a generalized tonic clonic seizure and what it means to be medically intractable and how much of the change is necessary to be clinically meaningful to a patient. So we're very happy to provide the extensive literature that describes the clinical need.

And Mike, just to emphasize a couple of those points there, and Marty mentioned it earlier, but I just want to make sure that it came through here as you listen to all the kind of the data coming at you here. An incremental piece of the analysis is going to -- that we had not provided and will be new is the subpopulation analysis. And just it will be supportive, I think, of looking at the indication and potential claims around seeing what we see is a consistent and directional effect across populations. It's not a subpopulation benefit. Marty, would you?

Yes. So these -- as I mentioned, these analyses were not prespecified. And FDA's question is this benefit -- substantial benefit being driven by a particular subpopulation. And so asked us to look at these subpopulations to see if they derive equivalent benefit. And we're very comfortable with the outcomes of those analyses.

The last thing I'd add here, Mike, is just that -- and you didn't ask it, but just as we talk about the incremental data that we'll be providing, et cetera. Our discussions with the agency have really focused on data from the NAUTILUS trial as well as published literature. We have not been discussing with them any data that would require a new trial. And so I just -- again, you weren't asking that specifically, but just to the point of as we think about buckets of data and in the discussion, everything has really been either around the trial, around additional real-world evidence and meta-analysis of publications for patients having been treated or publications around the clinical meaningfulness of GTCs, et cetera. Nothing that's been outside of the trial or current publications.

No, that's really helpful. So I appreciate the color there. And Joel, maybe just to follow up on that last point quickly. But did it seem like the FDA expressively greenlit this path that you guys are taking? Or did it seem like they maybe do want to see another study at some point? Like how explicit were they in terms of approving this path that you guys are pursuing now?

There was no discussion or mention of an additional study.

Yes.

It was really pulling additional information and performing post-hoc analyses on the data that exists. The literature is there. And so we will provide that to them. But there was no discussion about a new study.

And specifically, Mike, with regard to process. Both -- starting with their written communications, they strongly recommended that we follow this SIR path to really provide an opportunity to discuss. And I think we didn't really even have the letter almost open in our e-mail boxes when we got a follow-on e-mail that said, "Hey, as you would have noted, we think you should pursue this, and we'd like to get together to talk about it." And we met with them the next day to talk about it. And so they've been very interested in both the -- having us follow the SIR process as well as interactively quickly, expeditiously getting together to talk about it.

And I would also just being careful about interpretation of all language and that kind of thing. They were very clear about -- they specifically pointed to the fact that they did not issue a denial letter. This is not a disapproval, this is not a denial. We issued the letter that we did because we're interested in having ongoing discussions and being collaborative and interactive on the questions that we've got. So I think we got pretty clear signals here. And now we're just working on executing that path.

Your next question comes from the line of Lawrence Biegelsen with Wells Fargo.

This is Ross Osborn for Larry. So following up on the last question, your comments, you noted that FDA's questions were around clinical meaningfulness within specific patient populations. Can you walk through those populations that the agency has questions on outside of the adolescent group?

Yes. The populations they're particularly interested in are those with higher and lower baseline seizure frequencies. And they want to know, first of all, whether the median percent reduction is similar. And they also want to know what that reduction means. Is it as meaningful for somebody with many seizures to experience a 60% reduction as it is with somebody who has -- comes in and has a 60% reduction with a lower baseline seizure frequency?

That -- you point to the literature about what it means to have each single generalized clonic seizure, the risk of each one of those. But we also can point to the extensive patient-reported outcome data that we collected, which indicate that there are substantial improvements in quality of life overall and in many of the 14 domains that were tested. And also that 90% of patients indicated that they had experienced improvement at 18 months and 24 months, and their physicians endorsed their perception of improvement to 80%. So we do believe we have the support and the other is that we did not see any adverse events such as problems with sleep, any changes in mood, any changes in cognition. So the absence of those effects are also part of the patient experience.

Got it. And then lastly, do you feel the agency is now comfortable with median seizure reduction as the appropriate endpoint? Or is time to second GTC still a focus?

I believe that they're interested in both. Obviously, the time to second GTC was the prespecified endpoint, but the other endpoints were prespecified also. And those prespecified endpoints are rather -- they are very impressive. It's not possible to ignore a median percent reduction of 100% at 24 months and 75% at 18 months. So I think what we need to do is to answer their questions about whether these benefits apply only to a subpopulation or whether they are available to the patients across the board. So they really emphasize and said a number of times that they want to consider the totality of the evidence. They want to understand the entire picture. And as Joel mentioned, this is the first time that they have considered a study in this patient population, and they are sincerely trying to understand what life is like for them.

Your next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

I heard the comments on no need for additional clinical trials, but is there a scenario where the FDA might request for the data to mature for a longer period of time, for example, say, 36 months? Or were they really satisfied with the 24-month mark?

The study is complete. The final report will be provided to FDA in the next couple of months. However, there is an opportunity in the post-market environment to address any additional questions or perhaps to gather additional data on -- in areas of particular interest. So we have not discussed what a post-market study would look like in detail. We have provided some high-level suggestions. And of course, the specifics of a post-market study will evolve in the discussions that we're having now with FDA.

Okay. That's helpful. And then just one last one, another confirmatory one. It sounded like across the different interactions with the FDA, they were largely satisfied with the safety and adverse event-related profile. Is that a fair assumption? Or is there additional safety endpoints that they were also requesting?

No. They have not requested any additional safety endpoints and are very satisfied with the experience in the study.

Your next question comes from the line of Lily Lozada with JPMorgan.

To follow up on the question around the subgroup analyses. Based on what you know about the data across different subgroups, how are you feeling about the chance that you potentially get approved for a smaller indicated population than you initially intended? And what are the implications of that for the TAM?

Well, I believe the first step is to show them what those analyses looked like. And we'll be able to show them that the benefit is evident in both the patients with lower baseline seizure frequencies as well as the higher seizure frequencies. As I mentioned, we did not provide those sub-analyses to them before because they weren't prespecified in the statistical analysis plan. And so these are post hoc at their request. We've performed them, and we don't have any concern about what they show. The benefit is not specific to one group.

The other thing there, I might connect the dot here, Lily, around that line of analysis and discussion is also then in parallel with their interest in and our providing information around the clinical meaningfulness of each generalized tonic clonic seizure and the impact that has as well as the risk of things like Marty had mentioned in her prepared comments of injury and rescue medications. And we haven't really talked about SUDEP so much. Maybe Marty, I'd ask you to comment a little bit here on the SUDEP risk associated with poorly controlled GTC. But the subgroup analysis and the impact in different patient populations then is really paired with their interest and request to discuss further on clinical meaningfulness for what it means to control the GTC patient well.

Yes. So I'll just frame it with an example of a single patient. So a patient who came into our study with a baseline seizure frequency of 3 per month and who goes to no seizures a month just had a 15-fold reduction in their risk for SUDEP. We also know and the literature is very solid about this that every GTC carries a 20% chance of a serious injury. So subtract the numbers of seizures and that your injury rates going down. And then, of course, what the patients express changes in their life quality, which is quite compelling.

Your next question comes from the line of Michael Polark with Wolfe Research.

Just two for me. I'll ask them both upfront. Any medical device analogies you'd have us consider as we calibrate your path here, recent examples where FDA issued not approvable letter, subsequent engagement was constructive, an amendment was submitted and ultimately approved. If there's anything that comes to mind that we could go study, I'd love the suggestion. And then the second one is -- and this is a follow-up to your response to Mike Kratky. I think I know the answer, but I want to ask it anyways. If at this point in your regulatory journey, the FDA thought there wasn't a path, would they tell you no?

Thanks, Mike. The short answer is yes, they would. Our view is if they were intending on sending a denial and a disapproval, they would have, and they told us the same. They said we didn't send you a denial or a disapproval for a reason, and that's because they want to continue the discussion. And they've laid out a path for how we can address their questions, both in terms of content as well as process. So the answer is yes, and that's -- and they didn't do that.

With regard to predicates or other analogies, you'll have to forgive me, Mike, we have been very focused on us the past few days. As our knowledge perhaps broadens, I'd be happy to communicate it, but we're really focused on helping drug-resistant idiopathic generalized epilepsy patients and our plan to execute on it right now.

Your final question comes from the line of Yi Chen with H.C. Wainwright.

This is Katie on for Yi. I guess I'm just going to finish this off with what kind of incremental spend does this kind of add to your path forward? Does it change your cash runway or any financing plans? And also, does this change your appetite for or approach to additional indications and geographies for this platform?

I'll comment on the indications and geographies and then ask Patrick to speak to runway and cash, et cetera. It does not impact our interest in or focus on additional indications or other opportunities for growth within the business. We see a path. We're focused on that path, and we think it's a significant potential benefit for us.

Patrick, what would you say about current events and how that looks from a financial perspective?

Sure. At this time, we're not prepared to make any comments around that. But I would say that as a reminder, and as we said in the press release and in some of Joel's prepared comments that we have previously and consistently communicated that our '26 financial guidance did not have any contribution from IGE. And so perhaps a little bit of a slight delay here, but we remain on track, and we'll come back as we get more clarity on the time line as we move through '27 and '28.

That concludes our question-and-answer session. I will now turn the call back over to Joel Becker for closing remarks.

Thank you, and thanks, everybody, for getting on the line and for those of you listening. While we're disappointed in FDA's initial communication here, we believe that there is a path for approval of the submission. We appreciate FDA's expeditious and interactive engagement in their willingness to discuss their questions and the work that they've been willing to put into this review. And we also really appreciate their specific interest in patient experience and clinical meaningfulness that has been expressed at this point in the review as well.

We remain confident, as I mentioned, in the NAUTILUS clinical data, and we believe that this will be a waypoint on our approval journey and our leadership in developing and obtaining the first and only device indication in the drug-resistant epilepsy, idiopathic generalized epilepsy population. I look forward to updating you as activities progress. Thank you.

Ladies and gentlemen, that concludes today's call.

Ladies and gentlemen, thank you for standing by. My name is Abby, and I will be your conference operator today. At this time, I would like to welcome everyone to the NeuroPace first quarter earnings call. [Operator Instructions]

Thank you. And I would now like to turn the conference over to Scott Schaper, Head of Investor Relations. You may begin.

Thank you, operator, and welcome to NeuroPace's First Quarter 2026 Earnings Conference Call. Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent performance and strategic progress, followed by a detailed financial review and outlook from Patrick Williams, our Chief Financial Officer. Following our prepared remarks, we will open the call for questions.

Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our financial outlook for 2026, our commercial strategy, clinical and product development initiatives, regulatory matters, including our IGE PMA-Supplement and our expectations regarding operating performance and profitability.

Forward-looking statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, except as required by law.

In addition, we will discuss certain non-GAAP financial measures on today's call, including adjusted EBITDA. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which is available on the Investor Relations section of our website.

With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker. Joel?

Thanks, Scott, and good afternoon, everyone. I will start with an overview of our first quarter results and how the team is executing against our strategy, followed by updates on key clinical and product development initiatives. After that, Patrick will walk through the financials and our revised outlook before we open the line for Q&A.

The first quarter reflects continued execution against the priorities we outlined earlier this year. We delivered total revenue of $22.1 million in the quarter, and excluding DIXI Medical, we delivered $22 million in revenue, representing 8% year-over-year growth with RNS System revenue of $21.7 million. Importantly, the underlying fundamentals of the business remain solid as we reached new all-time highs in active prescribers, accounts and patient pipeline during the quarter. These are leading indicators we track closely and give us confidence in the durability of demand for the RNS System.

The majority of growth continues to be driven by Level 4 comprehensive epilepsy centers, which remain the core of our commercial focus. In addition, we continue to see encouraging trends in the front end of the patient funnel with the rate of new patients being added to the pipeline continuing to accelerate. While the majority of procedures remain concentrated within Level 4 comprehensive epilepsy centers, community relationships are increasingly serving as durable referral channels. We believe this is important not only for continued penetration of the adult focal population, but also for establishing referral pathways that will be relevant as we potentially expand into IGE.

Regarding guidance, we are raising our full year 2026 revenue guidance to a range of $99 million to $101 million, up from $98 million to $100 million previously. This reflects 21% to 23% underlying RNS growth from our existing adult focal indication and does not include any contribution from idiopathic generalized epilepsy indication expansion.

From a market development perspective, we continue to invest in the commercial organization. This includes targeted sales representative additions in key geographies, updates to our sales incentive structure to better align with growth objectives and additional resources dedicated to helping patients navigate the funnel from identification to implant. These investments are designed to reduce friction in the patient pathway and increase procedural consistency over time. We expect them to become increasingly productive throughout 2026.

Let me now turn to clinical development. During the quarter, we completed our FDA mid-cycle review meeting with the NAUTILUS PMA-Supplement, sometimes referred to as a day 100 meeting, which we viewed as a productive step in the overall regulatory pathway. As a reminder, the PMA-Supplement was submitted on December 15, and the 180-day review clock began upon acceptance of that submission. As part of the PMA-Supplement review process, the FDA has the ability to pause the 180-day review clock to request additional information or clarification.

During the quarter, the agency exercised that option to seek certain follow-up information in conjunction with our mid-cycle review meeting. We view this as a standard and constructive part of the review process, and we were pleased with how quickly the agency provided their questions, which allowed us to respond promptly and thoroughly with robust information during and following the meeting. At this time, we have responded to the agency's request and the dialogue continues to be productive. Importantly, based on our interactions to date, we continue to believe a midyear determination remains on track.

The breakthrough device designation continues to be meaningful in this process, allowing for more consistent interaction and timely feedback as the review progresses. The ongoing dialogue we are experiencing, including the ability to address clarifying questions in real time, is consistent with the intent of that program and reflects the collaborative nature of the review.

As a reminder, our 2026 revenue guidance does not include any contribution from IGE indication expansion. If approved on our current time line, contribution would begin in the second half of the year, and we would provide updated guidance at the appropriate time once we have greater visibility into timing and reimbursement dynamics.

From a data perspective, we remain confident in the totality of the NAUTILUS clinical results. As a reminder, 18-month data presented at the American Academy of Neurology Annual Meeting in April, demonstrated a 77% median reduction in generalized tonic-clonic seizures with sustained reductions over time, along with favorable safety outcomes in a highly refractory population. Additionally, reductions in absence and myoclonic seizures exceeded those observed for generalized tonic-clonic seizures. Injury events also declined by approximately 30% following treatment. And the use of benzodiazepines as rescue medication for generalized tonic-clonic seizures was 44% lower compared with baseline, with strong physician and patient-reported clinical improvement. These clinical findings are meaningful because they speak to the real-world impact beyond seizure counts, including fewer seizure-related injuries and reduced reliance on rescue interventions, both of which can translate into improved safety and quality of life.

In parallel, we continue to build our leadership position in clinical evidence. Our 3-year post-approval study results in drug-resistant focal epilepsy were published in the Journal of Neurology in late April, demonstrating an 82% median seizure reduction in study subjects. This publication reflects data from a rigorously conducted FDA-monitored prospective study, not retrospective registry data and reinforces the durability and strength of long-term outcomes with the RNS System.

Now turning to product development. The road map we outlined on our fourth quarter call remains on track. Our priorities continue to be our suite of NeuroPace AI tools, development of a multimodal foundational model, remote care and progress toward automated detection and next-generation system development. Our ECoG Assistant, previously known as Seizure ID, represents the first step in our NeuroPace AI suite. This is an AI-enabled tool designed to assist clinicians in analyzing patients' IEEG records of interest and efficiently identify likely electrographic seizure activity upon which to focus their clinical decision-making. This is a highly desired capability, addressing a real workflow challenge and supports clinicians in their ability to individualize care. We're encouraged by the early performance we are seeing in internal testing and validation work for this tool.

We believe this product can serve 2 important purposes. First, it lowers the barrier for new physicians adopting RNS by simplifying data review. Second, it deepens engagement among existing high utilizing centers by improving efficiency and allowing clinicians to manage more RNS patients within their practice. Importantly, the submission is paired with moving our clinician platform to the cloud, which improves scalability and supports faster deployment of software and data products over time. We expect ECoG Assistant approval in the second quarter of 2026.

We are also advancing the development of a multimodal foundational model, leveraging our proprietary intracranial EEG data set and the clinical experience derived from more than 8,000 patient implants across 35,000 patient years. The EEG component of this model is currently in training. And although we are approximately 1/3 of the way through the training process, early internal validation work has been encouraging. Even at this early stage, the model is outperforming prior internal algorithmic approaches we had been developing. We believe this reflects the power of scale in our data set and reinforces the strategic value of the more than 26 million intracranial EEG recordings we have accumulated.

Importantly, we are uniquely positioned here. No other neuromodulation platform has a comparable depth of longitudinal intracranial EEG data linked to therapy and outcomes and leadership in this area matters as the field moves toward a data-guided personalized neuromodulation approach. As the model continues to train and refine, we see meaningful opportunity to enhance treatment optimization, improve outcomes and further differentiate the RNS platform.

With that, I'll turn it over to Patrick for a review of the financials and outlook. Patrick?

Thank you, Joel. I will review our Q1 2026 performance in more detail and then discuss our updated 2026 guidance. Before I walk through the quarter, I want to clarify our reporting presentation. While we previously anticipated presenting DIXI Medical as discontinued operations beginning in the first quarter, we now expect the discontinued operations presentation to begin with our Q2 2026 results.

In the meantime, we are providing supplemental non-GAAP disclosures that exclude DIXI Medical in both current and prior periods to facilitate comparability. In addition, beginning this quarter, we are presenting gross margin and operating expenses on an adjusted non-GAAP basis, excluding stock-based compensation, consistent with full year guidance given on our fourth quarter call.

Reconciliations to the most directly comparable GAAP measures are included in today's press release. Excluding DIXI, total non-GAAP revenue in Q1 2026 was $22 million or 20.1% year-over-year compared with $18.3 million in the prior year quarter. Growth was primarily driven by increased sales of the RNS System, which grew 19.5% to $21.7 million versus $18.2 million in Q1 2025. As we previewed on our fourth quarter call, growth in the first half tends to moderate relative to the acceleration we see exiting the prior year, and that pattern held true again.

Service revenue tied to our data collaborations in the quarter, including a new partnership, totaled $314,000. Excluding DIXI, non-GAAP gross margin in Q1 2026 was 82.5% compared to 83.6% in the prior year quarter. The Q1 2025 gross margin included a onetime inventory revaluation benefit of approximately 120 basis points. Excluding that impact, underlying gross margin expanded year-over-year, driven primarily by favorable pricing conversion. Total non-GAAP operating expenses for Q1 2026 were $21.5 million compared with $19.4 million in the prior year quarter and came in better than expectations, driven by hiring cadence and other personnel-related expenses.

Non-GAAP operating expense growth of approximately 10% in the quarter remained meaningfully below our revenue growth of 20%, again, demonstrating underlying operating leverage as we scale. Non-GAAP sales and marketing expense was $11 million, up from $9.6 million in the prior year quarter, reflecting headcount growth and personnel-related expenses as we continue investing in the commercial team and other sales-related expenses. Non-GAAP research and development expense was $6.5 million compared to $6.6 million in the prior year quarter. The slight decline reflects lower clinical study spend compared to the prior year period, partially offset by personnel investments supporting our AI road map and next-generation platform.

Non-GAAP general and administrative expense was $4 million, up from $3.3 million in the prior year quarter, primarily reflecting increased personnel costs. Total stock-based compensation in the quarter was $2.3 million with $2.1 million included in operating expenses and the balance in cost of goods. Non-GAAP loss from operations for Q1 2026 was $3.3 million compared with a loss from operations of $4.1 million in the prior year quarter.

Adjusted EBITDA loss was $3.3 million in the first quarter, an improvement compared to a loss of $4.1 million in the prior year quarter. GAAP net loss was $6.7 million for Q1 2026 compared with net loss of $6.6 million in the prior year quarter, which included DIXI Medical in both periods.

We ended the quarter with $54.8 million in cash, cash equivalents, short-term investments and restricted cash compared to $61.2 million at year-end 2025. The sequential decrease reflects typical first quarter cash outflows, primarily driven by annual corporate bonus payments. Please note that as of March 31, 2026, we had approximately $700,000 of restricted cash related to DIXI Medical. Approximately $600,000 has since been converted to cash and cash equivalents, and we expect the balance will be converted by the end of Q2 2026.

Turning now to our outlook for 2026. As Joel mentioned, we are raising full year 2026 revenue guidance to $99 million to $101 million, up from previous guidance of $98 million to $100 million. The $1 million increase at the midpoint is driven by 2 factors. Approximately $500,000 reflects improved visibility into service revenue and approximately $500,000 reflects improved visibility into our core RNS outlook. Our increased guidance reflects underlying RNS revenue growth of 21% to 23% in our core business and continues to exclude any potential contribution from IGE indication expansion.

On service revenue specifically, last quarter, we noted that while we may generate modest service revenue during 2026, it was not included in our initial outlook given limited visibility at that time. As our planning has progressed and certain activities have become more predictable, we are now incorporating approximately $500,000 of service revenue into our updated 2026 guidance.

As we have previously stated, given the underlying dynamics of a procedure-based business, it can be more informative to evaluate RNS performance over 6-month periods. We remain confident in our ability to deliver 20% underlying RNS focal indication growth over time, and we expect the first half of 2026 to be consistent with that framework. Quarter-to-quarter fluctuations can occur, but our focus remains on sustained adoption and utilization trends across a broader time horizon.

We continue to expect full year non-GAAP or adjusted gross margin to be between 81.5% and 82.5%, reflecting continued leverage and favorable pricing. We continue to expect full year non-GAAP or adjusted operating expenses to remain in the range of $90 million to $92 million, excluding approximately $10 million in stock-based compensation, consistent with prior guidance. For the full year 2026, we continue to expect non-GAAP or adjusted sales and marketing expense to total between $46 million and $48 million.

Sales and marketing expense growth in 2026 reflects the continued commercial investment, and we expect productivity and leverage from these investments to increase meaningfully as we move through 2026 and into 2027. We continue to expect full year non-GAAP or adjusted research and development expense to total approximately $27 million. R&D expense growth in 2026 reflects continued investment in our next-generation platform and the development of the NeuroPace AI suite of tools designed to enhance physician workflow and drive further adoption. We remain focused on disciplined allocation of R&D capital to programs that strengthen the platform, enhance differentiation and support long-term growth.

We continue to expect full year non-GAAP or adjusted general and administrative expense to total approximately $17 million. G&A expense in 2026 primarily reflects the infrastructure required to support a growing commercial organization and corporate systems necessary to operate at scale. We remain disciplined in managing overhead as we drive operating leverage across the organization. We now expect more favorable full year adjusted EBITDA to be a loss in the range of $8.5 million to $9.5 million, improved from a loss of $9 million to $10 million.

And with that, I'll turn it back to Joel.

Thanks, Patrick. We are energized by the opportunity in front of us. We are executing and penetrating the adult focal market, progressing toward potential indication expansion into the IGE population and advancing a differentiated product road map anchored in unique proprietary data where we are developing first of its kind and unique assistive and foundational AI data analysis tools. We believe that we are uniquely positioned at the intersection of data, device and neuromodulation. We will continue to lead on product innovation and clinical evidence, and we remain focused on disciplined execution and thoughtful investment to drive durable long-term growth.

With that, operator, please open the line for questions.

[Operator Instructions] Our first question comes from the line of Mike Kratky with Leerink Partners.

Congrats on all the progress. So first, you had some really encouraging updates on achieving new all-time highs in active prescribers, accounts, patient pipeline. One of your epilepsy competitors also recently mentioned the strengthening of the patient funnel in the U.S. So can you just help us understand what factors seem to be most responsible for this dynamic? And where specifically are you seeing this materialize?

Thanks, Mike and it's a great question. So for us, we're particularly pleased with the trends that we see with regard to patient pipeline. Our patient pipeline numbers are as strong as we've ever seen. And I think a lot of that comes -- well, a lot of that comes from both our work -- really 3 things. One, our work with our Level 4 center traditional customers to make sure that we're doing everything we can to collaborate with them, to have patients identified as they're moving through Level 4 centers.

Two, we've talked about in the past the work that we've been doing in the community and with the referral population, and that's beginning to contribute nicely to the patient pipeline as well. And then thirdly, the investments we've made in our commercial organization, both the breadth of that organization as well as the way the leadership team is executing and the disciplined systems and processes that we've put in place to make sure that we have good visibility to and are tracking well. The execution around that priority, I think, are all leading toward building and really as good as we've seen it, patient pipeline to date.

Yes. The only thing I would add to that, Mike, is we're starting to look a lot deeper into the patient pipeline in terms of analytics and tracking that differently with our commercial team. And we think about it as sort of the velocity of that patient, which we know has a long sales cycle, but better understanding where they're at within that healthcare continuum, we'll call it, until they actually go to neuromodulation device. So more to come on that, but I wanted to throw in there that leveraging predictive tools that are AI-based, et cetera, to get a little bit smarter in that area.

Understood. Very helpful. And maybe just as a follow-up, but can you share any specifics in terms of what information FDA was looking for specifically as part of its mid-cycle review?

You bet, Mike. We had a very productive and interactive meeting with the agency. A couple of things I'd punch up there. One, we were really pleased to get the questions that we got in such a timely fashion. So it made for a good opportunity to prepare and then a robust and again, interactive discussion with the agency.

I would characterize the nature of the questions that we received were really focused on both clarification of and context around various aspects of the data and the associated analyses that had gone into the PMA-Supplement. So it's clear that they're paying good and close attention to the data as we would expect. And the -- again, the questions were really around clarifying some of that data, how to best understand and interpret it and then where we had provided associated analysis, wanting to make sure that they had appropriate context for that analysis.

But again, I would -- in addition to those facts, I would emphasize that we thought that, one, we got real good questions. We got them in a timely fashion. It resulted in a good and engaged discussion. And we have since followed up and submitted our formal responses to those and all questions that we've received until now. So...

And our next question comes from the line of Priya Sachdeva with UBS.

Congrats on a strong start to the year. Maybe first, if I could just -- really encouraging to see the strong growth in RNS revenues. I would love to -- maybe if you could parse out how much of that was deeper market penetration, increasing utilization across your existing centers versus new physician capture? And if there was any pricing dynamics in the quarter, I think you did call out some increasing ASP? If you could maybe just help us level set contributions from each? And then one follow-up.

You bet. I'll start here, Priya, and then ask Patrick if he has anything he'd like to add. So as has been the case, the growth in the business really it has been centered around increasing adoption and utilization within our Level 4 centers. So adoption you can see by the ongoing increasing number of all-time high prescribers. And so we're -- we continue to be pleased with that, but then also continuing to work utilization and expansion of where the RNS system plays within those people's practices.

And then the second part would be, as I mentioned earlier, the increasing contribution of patients who are identified for and either implanted at or referred from community settings. So patients who are identified as good candidates for RNS in the community and either undergo the therapy there at a Level 3 or community hospital or are identified for RNS therapy and then referred in for surgical placement of an RNS device in a Level 4 center.

The third thing I'd identify here is our DTC, our direct-to-patient efforts as well as then in our Q4 call we made mention of investment in our Nurse Navigator team. And that's all designed to help fill the pipeline and then move patients with increasing velocity and decreasing friction through the pipeline. And so I think our Nurse Navigator team is beginning to have a nice impact there as well.

With regard to pricing, as you know, we have had consistent and good execution with regard to pricing. Pricing is somewhat of a tailwind for us here in the quarter, but the majority of the revenue is really associated with unit volume rather than a significant price effect, but a good tailwind.

Yes. The only thing I would add on pricing, Joel articulated that well is that we do plan to take pricing, as we have in prior years, going forward. So this is not a onetime event. And as we said, we will continue to take pricing each and every year that we can. And it will be -- you can expect kind of that low single-digit type pricing increases that we would look to get.

Okay. Got it. That was super helpful. And just one more for me. When we're thinking about IGE, and I know it's not baked into guidance for this year, but when approval does come online, how quickly could we see a contribution? And then maybe if you could just remind us what the pathway from a reimbursement perspective looks like and how quickly that could come online?

I'll maybe start us out here, and then I'll ask Patrick, who is very much involved with our reimbursement team and process here to comment on that as well. So first steps first, we're focused on getting the indication expansion, getting the approval from the agency. You know what that process looks like. I described it earlier here in my comments of working through that here now with the agency. In parallel with that, we are working with our internal team to make sure they are trained and well prepared for the launch and all of our launch plans, et cetera, are moving in parallel with that as well.

Once we do have approval, we will move into what is really a coverage expansion exercise. We have the device covered today. It will be the same codes for tomorrow. And our exercise then is really going to be working with the private payers to get coverage expansion. Obviously, we're going to be working to do that on an off-cycle basis. But certainly, we've got good visibility to contract cycles and ensuring that we're well prepared to be engaged with medical directors and health plans that at the very least, it's part of an on-cycle process, and we intend to make sure that there's a case-by-case submission associated with the coverage expansion.

Very important as part of that process will be the published manuscript of the NAUTILUS data. And I'm really pleased with the progress we've been making there. We're ahead of expectations in terms of the timing of the submission and review of the NAUTILUS manuscript and results. And so I'm encouraged by having that and the time line it's on and being able to show the results that it shows and the early review from the editorial reviewers was very light. It was a well-done manuscript and is on a good time line there.

So I think we've also been preparing from a reimbursement perspective. And here, I'll hand it over to Patrick, but we have been planning and doing our research around coverage expansion and have a number of outside experts as well that we're working with up to, including even having advisory board types of discussions for how people are going to be thinking about and reacting to the data and what will be particularly important to them, et cetera. So it's approval with internal training and market development in parallel, then all of the logistics mechanics and publication associated with extending coverage from the current -- focal indication for the current product with the private payers. Patrick, what would you add?

Yes. I think just some highlights. You asked the question just sort of cadence of when we can expect. And so we're still focused on midyear approval. Thank you for pointing out that we had a good quarter with RNS. We did raise guidance to not only include that beat in Q1, but raise guidance on top of that above the beat. We do not have IGE indication expansion in there, as we've said. So the cadence on that because of, what Joel just went through in detail in terms of the coverage policies with the private payers, which is close to 80%, we'll call it, when you include the advantage programs with Medicare, Medicaid, it's going to take a little bit of time to get on there.

So I would say it's definitely a back-end loaded if we think about the first 12 months, let's say, of launch. And so you're going to see more coverage policies come on board as we move into months 7, 9, 10, 11, 12 and so forth. And so at the appropriate time, we'll come back and give guidance to everyone. But I think the takeaway for you all is that it's the same exact DRG and CPT, as Joel said. We believe we're being very proactive and being very patient advocate, focused on making sure they get this approval. And so that's really the only thing that's going to hold us back in terms of the adoption from a reimbursement standpoint.

I would just wrap up there, Priya. When -- we've had discussions on the reimbursement side, I've been impressed as to hearing the feedback for how pleased people were with the clinical data and how attuned people were that there aren't approved options for these patients. And so it's just been encouraging to hear from that constituency, from that stakeholder group, the recognition of the value of the data and the recognition of the clinical gap that exists today.

And we're actually augmenting our internal reimbursement with some third-party, especially as we launch to ensure that on a case-by-case basis. We can continue to advocate for those patients. And we're feeling good about it. Again, we're kind of saying a couple of things. We're excited about it, but at the same time, we want to be thoughtful as we do get approval and find out what that revenue cadence will look like. But we think there's a really, really good opportunity here to move things along quicker than maybe what most people may think of.

Our next question comes from the line of Larry Biegelsen with Wells Fargo.

This is Ross Osborn on for Larry. So looking at your RNS volumes, [ so the system is a ] diagnostic or a companion to surgery contribute to growth during the quarter and how you see this evolving over time?

It's a great question. I think that as we think about both of those dynamics, one, the unique capability to provide the window into the brain to see what's really going on with these patients, has been increasingly recognized. And as we mentioned in our prepared comments, we really see the field moving more and more toward the ability to individualize and tailor therapy for patients. And it's really that unique diagnostic capability that allows us to do that to monitor, record and then analyze that data and subsequently then tailor therapy and it's, we think, part of why we see improving results over time. So yes, the diagnostic capabilities of the device absolutely are contributing to our growth.

And secondly, with regard to hybrid therapy or as a complement to resection therapy, we do hear that more and more, especially within centers that you might consider to be somewhat more in "classically trained to really look for resection first" in places where either they know they can't resect or to be able to inform surgical procedures. The use of the implantation of an RNS device prior to a surgical procedure to be able to best localize where they want to resect or to -- if they have a clear area for surgical intervention, but the disease is diffused enough and they know they can't resect some areas of eloquent cortex, for example, they'll use an RNS device in combination as part of a hybrid therapy.

So as we've talked about before, the -- really the modern RNS story, we're going from a particularly kind of niche application within a focal patient population to multifocal disease to network stimulation to adjacent to surgical procedures is really the progression that we see, and we do hear about adjacent to resection procedures more and more.

Great. And then apologies if I missed this in your prepared remarks. But would you walk through your latest advances and time lines for pediatric and LGS?

You did not miss it. We did not include it in our prepared comments, but I'll address both. With regard to pediatrics, as you know, we're working on a real-world evidence strategy here using retrospective data analysis, working with the agency itself as well as a number of external parties to really aggregate and analyze the published data that's out there. We've worked to try and prospectively enroll trials on the pediatric side. And as sometimes is the case where you have devices that are approved in the adult population, it's difficult to get people to -- for understandable reasons to get people to consent to enroll children in the trial.

We think that the real-world data approach is a particularly good one at this time in that if you look at the interest from the clinical and scientific community as well as the amount of data that has been gathered and published, it is increasingly gathering momentum. Since 2020, for example, so in a little over the last 5 or maybe 6 years, in 2020, there were about 8 peer-reviewed publications for pediatric use of the RNS system. Today, there are 29. And so there is an increasing amount of both interest as well as published data that really supports this kind of a real-world evidence analysis. So we're underway in that process.

I think as you've heard me explain before, it's a little bit inverted from a prospective trial. We're in a retrospective trial, you do a lot of the work on the data alignment and structure upfront. And then once you have that, the back end of the process you can go a little bit quicker, whereas on a prospective trial, you can go a little bit quicker on the front end and then you have to do all the work downstream. So we're in the middle of that hard work now. I'm not going to quote a time line for you, but I would want you to know that it remains a significant priority for us. And again, I think there's a lot of momentum and a lot of interest within the clinical and scientific community here.

On LGS, as folks may know, we have announced enrollment completion on our LGS trial, the first of its kind, in a collaborative effort with NIH to enroll a pilot group of 20 patients in a trial looking at both safety as well as efficacy endpoints, although in a pilot trial design. More to come on the results here with regard to LGS, but we're encouraged with what we see. We're in the process of developing our plans right now for how we will engage with the agency further. But encouraged with what we see from that early data and do plan on advancing our work in LGS. And again, stay tuned there. More to come in not too long. But LGS is absolutely on our minds, and we're encouraged with what we've seen.

Yes. I think the takeaway is that as we think about adoption dynamics in the clinical setting, not only IGE, but as well as pediatrics and LGS, as Joel went through, we think those adoption dynamics are very exciting for us and much more so than what we've seen with focal over time. And so just another thing to look for in the future as we think about our clinical development efforts.

Our next question comes from the line of Lily Lozada with JPMorgan.

Maybe just to go back to the quarter and guidance. Like you said, you raised by more than the beat, you beat by a couple of hundred thousand and you're raising guidance by $1 million. So can you talk through your thinking behind raising the guide this early in the year and more specifically that better visibility and incremental upside is coming from, especially on the RNS side of the business?

Absolutely, Lily. It's a great question. And I think both the performance in the quarter as well as then historically what we've seen in the business is really our basis for thinking about the business that way. If you go back over the past, I'll call it, the last 3 years, my direct involvement here, just to speak to it personally. If you look at '23, '24 and '25, we have seen more revenue in the second half of the year than the first half of the year. We've seen about a 500 basis point increase in growth rates in the second half of the year versus the first half of the year. And that's been very consistent across that time. And so that's what the calendarization looks like.

Additionally, we have a team that we are investing in commercially, both from a sales perspective and from a marketing perspective. And we expect those investments to ramp and become more productive over the year, both the people to become more productive and the programs to become more installed. And then finally, as I mentioned, the patient funnel is as strong as we've seen it. And so it's growing and robust really across the business. And so all of those factors are really dynamics within the business that put us in a position to be able to make the decision to raise the guide at this point.

And then finally, from a more of an internal perspective, as I mentioned, we continue to really strengthen the operating system around the business and in particular, the organization and the discipline around the leadership, the training, incentives, referral management, as Patrick mentioned. And so it's not that we can't, and I suspect we won't have quarter-to-quarter variability in some of the results. But with what we see in the business today as well as what we've seen in the business over time, those are the dynamics that we're working to reflect in the guidance.

Great. Very helpful. And then just a follow-up on generalized. You mentioned there's no generalized included in the guidance. I know the main gating factor from here after approval is really getting commercial reimbursement. So it sounds like that's more of a 2027 event for that to be felt more materially in the numbers. But to my understanding, you can go after that 20% of the population that's Medicaid right off the bat. So why not include some contribution from Medicaid? Is that just conservatism? Or is there some other reason that's not baked into the guidance for this year?

Yes. No, it's a fair question. And just to say again, a little bit more on that is that, again, we are anticipating a midyear approval. But to stick with how we've been doing this since back in late 2025, we have kept IGE indication expansion out of our guidance, and we will continue to do so until we get approval. Upon that time, you are correct, we would expect that on a case-by-case basis with that 20% Medicare and Medicaid, we can likely move pretty quickly on that. That's why we're augmenting with third-party reimbursement health, et cetera. And then we'll work with the other 80%, which is across private pay and the advantage program.

So I guess I would call it more than anything being thoughtful about waiting for an approval. That's a bit of a binary event. We feel very cautiously optimistic about when that's going to happen, and we said it, but we want to make sure we don't get ahead of ourselves. And at the point of approval, we will absolutely come back and let people know what they can expect in contribution. And I stated already that you should expect that it would be -- to your point, as we get those private payers on board, that it will be more of a month 7 to 12, we'll call it, impact when we cycle through all those coverage policies.

And our next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

I was hoping to start with one, and apologies if it already came up, I don't think it has, on the reimbursement changes for 2026, I think last year -- or last quarter, you spoke to the improvements in both OPPS and the physician fee schedule effective at the beginning of 2026. Any anecdotal feedback or direct feedback from the field on how that reimbursement has been received or impacted the business?

Yes. Frank, 2026 was -- it still is a good year for us from a reimbursement standpoint. A lot of the lab work that we did in '25 came to fruition in '26. So I would say, overall, when you don't hear news and pushback from your field team, that's a good thing. As we go into '27, we'll keep everyone posted on that. But at this point, we're in comment period, et cetera. We're not anticipating nor have we obviously given 2027 guidance yet. But rest assured, you can expect us to continue to push hard on making sure that we not only advocate for patients, but that the hospital accounts are being reimbursed appropriately to make sure that doesn't become an impediment to installing our neuromodulation device.

The only thing I'd add there, Frank, is that we did have a positive development from an OPPS perspective, as you mentioned. The replacement cycle for us is still a small amount of the business. But -- I know I don't need to emphasize for this group, that -- that's on its way. And so that's something that we believe will hold us in good stead here as those RNS-320 devices increasingly come back around for replacement. We'll be in a positive and improved reimbursement position with regard to outpatient device replacement as that cycle increases.

Got it. That's helpful. And then maybe just a bigger picture question on Project CARE. I think we're about 2 years into when that initiative was kicked off. Joel, maybe give us a review, I mean, puts and takes, what has surprised positively, maybe what's been proven to be more challenging in this setting? Anything on utilization, if that's what's been driving some improvement, if it's new site activations? Just any kind of big picture commentary that you've noticed over the last 2 years on that would be great.

Thank you, Frank. I think, things we've learned. We have learned, and you've heard me comment on some of this previously, is that there are a number of different segments that exist in the community or referral population. And having the flexibility to be able to address the needs of those different segments is important. One, we have some centers, community centers, Level 3 centers who really, it's -- they've got the patient population. They've got the epileptologists and neurologists there. They've got the functional neurosurgeons with capacity. The surgical capital equipment requirements are there, and maybe there's a software package that is required and contracting activity. But other than that, they're really ready to go, and we can turn them into an implanting center where they can self-sustain, and yes, that's great.

There are others that will eventually look like that. But since they hadn't had access to the technology, it wasn't something that they were planning for, and so it takes some time then to develop those centers. And as you know, capital cycles and trainings and everything else that goes on at the hospital level, that takes a little longer, but that's also a very important and viable segment for us, especially as we think about the idiopathic generalized population and not needing the Phase II monitoring that requires someone to be transferred to a Level 4 center for invasive EMU, SEEG monitoring that can aggregate the referral pathway timing.

The third segment has been interesting, and that is centers that have all of the patient population and the neurology and epileptology capability and management infrastructure, and they don't really want to have the patients implanted at their center, not that they don't want patients implanted at their centers, but they would like to prioritize management of the patients. And so they're happy to have a connection made and a referral relationship developed that puts them in a position where they feel like their patients are going to be taken care of. Remember, these are patients that have multiyear relationships with their clinicians as they proceed through medication management and their disease progression.

So to have a relationship developed where they can have somebody to hand it off and make sure they can get them back and then we can do the training and the support around programming those patients, that's a third segment that exists and really works out quite well. And so I think we had maybe thought going into it, it'd be a little more homogeneous than that. But that -- those have been some learnings. I think maybe not a negative, I guess, maybe I'd characterize it a little bit as a negative. There's just -- there's a lot of awareness building and development to do. And so on the one hand, that's work that needs to be done and is a little bit of a "negative surprise." You can't assume that people are aware of things.

On the other hand, we found it to be just a great opportunity and to be able to get out in the community the way we are now on an increasing basis and be able to make people aware of and understand recent developments in and the data associated with as well as referral opportunities for -- again, all associated with learning.

And why I think overall, to your point on big picture, from a big picture perspective, staging things the way that we have, where we got the PMA-Supplement to permit expansion beyond Level 4 centers with the focal indication and doing that work has allowed us to learn about that dynamic and the referral population even more. And then we think that will skate rather nicely into the work that we're doing for indication expansion with IGE and beyond.

A little bit of a long way around, but hopefully, that answers your question.

And our next question comes from the line of Anthony Petrone with Mizuho.

Congrats on the progress so far in '26. Maybe just come back to 2 reimbursement questions. One on the new APC mapping for Vagus Nerve Stimulators. It was a shift for new patient implants to APC 1580, that was a 48% increase for the category. And then end of service shifted from Level 4 to Level 5, and that was also roughly a 47%, 48% uplift. So it just seems like from the Medicare level on an outpatient basis, there's receptivity to good healthy levels of reimbursement for epilepsy. So is there any kind of read-through from what we've seen in vagus nerve kind of transferred over to the RNS System once we get there for generalized? And then I think I believe there's no WISER program exposure here, but just to confirm that, that the RNS System is not seeing any kind of prior authorization impact in those 6 states from the WISER program?

Thank you, Anthony. I'll start here and then Patrick can help me. The first point is with regard to end of service and moving from 4 to 5, we had the same improvement in what I mentioned earlier with regard to the replacement cycle and the OPPS increase in reimbursement. So that's absolutely the case.

There -- and I agree with your comments, 100% that when we saw those increases in reimbursement, we were encouraged not only because of the effect on RNS replacement reimbursement, obviously, but that overall and generally, the reimbursing bodies are seeing the value associated with neuromodulation and are open to making sure that there's good access for hospitals and clinicians to be able to access the technology. So one -- also fortify then improvement in OPPS. Two, I shared the view on -- it's good news when people are investing in neuromodulation broadly. And three, there is no impact with regard to WISER for us, and we're not included.

And our next question comes from the line of Michael Polark with Wolfe Research.

On the topic of generalized with the FDA, I'm curious just as you assess their interest in the data questions that you've received and answered, how much focus are -- how much focus have they placed on the primary endpoint in the NAUTILUS study, which did not meet significance versus all of the supplemental analysis? I'm just trying to envision in light of the kind of headline squish in the trial and all the constructive data underneath, how they may kind of -- are they wrestling with that? How they might conclude and what a label may or may not look like?

Thanks, Mike. As you might imagine -- and I won't speak on FDA's behalf, but I will give you my observations. My observations would be, as you might expect, they're focused on the totality of the data. They're looking at all of it. The primary safety which did meet, the primary efficacy, as you mentioned, which didn't, and the prespecified secondaries that, again, we think are particularly impactful and clinically relevant. And so I would say that they're taking a comprehensive and appropriate view of the totality of the evidence. With regard to label, it's our interest to pursue a label that is aligned with the study population and the inclusion/exclusion criteria in the study, and that's really been our approach.

I appreciate that, Joel. I have one other reimbursement question. I -- Conviction in this question is not sky high, but I believe the RNS first-time implant is on the so-called inpatient-only list maintained by Medicare. And I think over the years to come, it may come off and could trigger the creation of the Level 6 outpatient APC. Now it may be most of, if not all the cases would still be inpatient, but by virtue of Medicare cleaning up this inpatient-only list and you would -- they would have to provide a pathway for the RNS System and some other devices in the outpatient setting. And given the cost of the case is a lot higher, that would necessitate and maybe pull forward and finally make -- come to fruition this Level 6 creation.

I'm sorry for the long-winded ramp, but it's a very -- it's been a topic in [ Neurostim ] that's been discussed for a while. And I'm curious if you agree or disagree strongly with anything I just said there?

Mike, what I would tell you, and there are a lot of moving parts there associated with that is that we have been very engaged with regard to virtually all aspects of reimbursement from inpatient to outpatient to physician reimbursement, the move from 4 to 5, the maintenance of the DRG categorization change from the proposed rule to the final rule, the improvement in CPT rates really across all fronts. We've been both pleased with and highly engaged from a reimbursement perspective.

I think at this point to talk further about going from 5 to 6 and kind of a secondary dependency for what may or may not happen with the inpatient is a couple of degrees removed from where I feel like I could credibly comment. I would leave you with we're very engaged in, you can see from the results associated with, and are highly involved with reimbursement across all fronts. And again, back to the question that was asked earlier, I think it's encouraging for us to see the payers signaling a general openness to recognizing the value, both clinically as well as economically. So I can't answer the 5 to 6 potentialities specifically given where we sit today, but I like where general trends are headed from a reimbursement perspective around neuromodulation.

Yes. And I would just add because this is a -- I appreciate the question, but I want to be crystal clear with everyone. We feel very good about the reimbursement that we advocated for our patients through '25 that came into effect in '26. We feel good about the pricing that we have as we move forward. And as Joel said, we continue to see the payers advocate on behalf of these patients that need intervention in order to get their lives back and have some life-changing outcomes. And so we're not in the game of speculation. But rest assured, we are doing everything we can, including advocacy at the Hill, society advocacy, et cetera. And so this will not be a headwind for us in our minds. We will continue to advocate on behalf of patients on the reimbursement side.

And our final question comes from the line of Yi Chen with H.C. Wainwright.

This is Katie on for Yi. Just real quick to wrap this up. Could you give us an idea of how many implants were replacements versus new implants this quarter? And do you think that's kind of a typical mix of what we should expect going through the rest of 2026?

We -- I'll ask Patrick to comment here, but we did see an increase in replacements. It's still a small number, but we did see mild increase in replacements. Again, remember, the RNS-320s have got a nominal battery life of 11 years. And so we should be right at the kind of the front edge here of that replacement cycle, but still not seeing meaningful volume in the last quarter. Would you?

Yes, I agree. And what we talked about historically, we've said we're less than 5% of our revenue is replacement over time at this point, a little less than 10% as well on the unit side. And that's because when we do a replacement, we don't have to replace the leads. We just replaced the 320 device. So there's less of an ASP that we incur the accounts. So I think the point here for everyone is that we're excited about the replacement revenue that will become a bit of a recurring revenue stream as we go forward, but we're in the very early stages of that, but it will become more meaningful as we move throughout this year and certainly as we get into '27, '28 and beyond.

And ladies and gentlemen, that is all the time we have for questions today. I will now turn the conference back over to Mr. Joel Becker for closing remarks.

Thank you. Thank you all for your time and attention today. 2026 is a year with transformational potential for NeuroPace. And we are well on our way to executing on this potential while building on the momentum in our current business. We look forward to keeping you up to date throughout the year as we continue to execute our strategy and progress toward these significant opportunities. And thanks again for your interest in and supporting NeuroPace.

And ladies and gentlemen, this concludes today's call, and we thank you for your participation. You may now disconnect.

Good afternoon, and welcome to NeuroPace Fourth Quarter 2025 Conference Call. As a reminder, this call is being recorded.

I would now like to turn the call over to Scott Schaper, Head of Investor Relations at NeuroPace for a few introductory comments.

Thank you, operator, and welcome to NeuroPace's fourth quarter and full year 2025 earnings conference call.

Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent performance and strategic progress, followed by a detailed financial review and outlook from Patrick Williams, our Chief Financial Officer. Following our prepared remarks, we will open the call for questions.

Before we begin, I would like to remind you that certain statements made on today's call may constitute forward-looking statements within the meaning of federal securities laws. These statements include, among others, comments regarding our financial outlook for 2026 and the first quarter of 2026, our commercial strategy, clinical and product development initiatives, regulatory matters, including our IGE PMA supplement and our expectations regarding operating performance and profitability.

Forward-looking statements are based on management's current expectations and assumptions and are subject to risks and uncertainties that could cause actual results to differ materially. A discussion of these risks and uncertainties can be found in today's press release and in our filings with the Securities and Exchange Commission, including our most recent Form 10-K and Form 10-Q. We undertake no obligation to update or revise any forward-looking statements, except as required by law.

In addition, we will discuss certain non-GAAP financial measures on today's call, including adjusted EBITDA. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are included in our earnings release, which is available on the Investor Relations section of our website.

With that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker. Joel?

Thanks, Scott, and good afternoon, everyone. I will start with an overview of our fourth quarter results and how the team is executing against our strategy. I will then provide updates on our key clinical and product development initiatives and close with a brief recap of why 2025 was such an important execution year and how it sets us up for what we believe could be a transformational 2026. After that, Patrick will walk through the financials and our outlook before we open the line for Q&A.

The fourth quarter capped off a strong year for NeuroPace. We delivered strong quarterly revenue of $26.6 million, representing 24% year-over-year growth. This performance was primarily driven by strength in our core RNS business with RNS System revenue of $22.4 million, up 26% year-over-year. These results reflect the execution of the initial parts of our strategy, deepening adoption and utilization within our current adult focal epilepsy indication and customer base while continuing to expand access to RNS therapy through community pathways and preparing for future indication expansion.

We again reached new highs in prescribers, accounts and in our patient pipeline, clear reflections of broad-based momentum across the business. Following RNS growth of more than 30% in the third quarter, our 26% growth in the fourth quarter reflects sustained broad-based momentum and continued commercial execution. Taken together, RNS growth in the second half of 2025 was 29%. The majority of our growth continues to come from Level 4 centers, driven by increased adoption and utilization.

At the same time, our community access efforts continue to contribute and scale as we expand referral pathways and site engagement. Stepping back, the message is consistent with what we said last quarter. Our results reflect the compounding effects of the recognition of the differentiated capabilities of the RNS System converging with ongoing best-in-class clinical data development, new tools for ease of use, improved commercial execution and better referral management, which together are driving higher procedural volumes and expanding the addressable patient funnel.

We remain confident in our long-term growth trajectory of growing a minimum of 20% in our core RNS business with our current adult focal epilepsy indication. Financial discipline and operating leverage remained important highlights again this quarter. Gross margin was greater than 77%, up roughly 200 basis points year-over-year, driven by mix and manufacturing efficiencies with RNS gross margin again greater than 80%.

We also delivered our second consecutive quarter of positive adjusted EBITDA, along with positive cash generation in the fourth quarter. These are important proof points that our operating model is scaling in a disciplined manner and that we are making meaningful progress towards sustainable profitability and cash flow breakeven. As we mentioned in our pre-announcement in early January, we are reiterating our full year 2026 revenue guidance of $98 million to $100 million.

This outlook assumes underlying core RNS growth of 20% to 22% within our current adult focal epilepsy indication and excludes any contribution from an idiopathic generalized epilepsy regulatory approval, service revenue or DIXI Medical. Patrick will walk through our guidance in more detail, including the investments we plan to make in 2026. Strategically, we are continuing to invest in the commercial organization, including targeted sales representative additions, updates to our incentive structure and additional nurse navigator resources dedicated to helping patients navigate the funnel from identification to evaluation to implant. We believe these investments will pay dividends as they mature and become productive.

Let me now turn to our clinical development initiatives, starting with NAUTILUS and our pursuit of an expanded indication in idiopathic generalized epilepsy or IGE. During the quarter, we submitted our PMA supplement to the FDA seeking an expanded indication for the RNS System in IGE. The submission was supported by clinically meaningful and statistically significant 18-month results from NAUTILUS, including a robust 77% reduction in median seizure rates and a favorable safety profile in a highly refractory patient population.

The data presented at the American Epilepsy Society meeting in December reinforced what physicians have increasingly come to recognize about RNS. It is a safe, durable and clinically impactful therapy for drug-resistant epilepsy, supported by rigorous evidence in a patient population that has long lacked meaningful treatment options. The PMA supplement was submitted on December 15, and the FDA accepted the submission, initiating the 180-day review clock.

Our dialogue with the agency remains productive, and we continue to prepare for a mid-cycle meeting. As a reminder, we have a Breakthrough Device Designation, which has supported a consistent and collaborative engagement process, enabling ongoing dialogue as the review progresses. Based on our interactions to date, we believe the process remains on track.

To be clear, our 2026 outlook reflects the strength of the core business and does not include any contribution from IGE. If approved on our current time line, we would incorporate that into guidance as we gain further visibility around specific potential approval timing.

Now turning to product development. Our focus is on continuing to advance the ease of use, efficiency and effectiveness of the RNS System, building a scalable data-driven neuromodulation platform. As part of our product pipeline, we are advancing a suite of NeuroPace AI tools designed to enhance physician workflow, improve patient outcomes and unlock the full value of the now more than 24 million intracranial EEG recordings. These initiatives span workflow automation, personalized treatment optimization, remote programming capabilities and long-term platform evolution.

The first example of this is Seizure ID. Seizure ID is an AI-enabled tool designed to analyze a patient's iEEG records, rapidly identify seizures and seizure trends and provide clinicians with the most clinically relevant data upon which to focus. Highly desired capability and addresses a real workflow challenge. Clinicians can, at times, spend a meaningful time reviewing data for RNS patients, and our goal is to reduce the time required while improving the ability to act on insights.

Importantly, the Seizure ID submission is paired with moving our clinician platform to the cloud, which improves scalability and supports faster deployment of software and data products over time. We expect Seizure ID approval in the first half of 2026. Second, we are advancing RNS remote care. This capability enables physicians to remotely detect events and adjust therapy settings during telehealth visits, eliminating the need for patients to travel to the clinic for programming. We believe remote care meaningfully improves access, particularly for patients who cannot routinely travel to comprehensive epilepsy centers and increases physician capacity by allowing clinicians to manage more patients more efficiently.

Third, we are also advancing the development of a foundation model, leveraging our proprietary intracranial EEG data set and clinical experience of now over 8,000 patient implants across 33,000 patient years. We believe this is a key strategic moat, and we also recognize that we are stewards of this data with the responsibility to translate it into meaningful improvements in care. The goal of this work is a multimodal model that integrates multiple data inputs, including iEEG patterns and other clinically relevant signals to help identify optimal treatment settings and improve seizure control with a focus on increasing median seizure reduction rates, increasing the rate of seizure freedom and expanding the proportion of patients who achieve meaningful clinical benefit.

We believe that there are meaningful opportunities to advance the current best-in-class outcomes, and this work also lays the foundation for a future customer-facing adaptive treatment tool that can help clinicians more efficiently deliver personalized neuromodulation at scale.

Finally, automated initial detection and therapy programming and our next-generation platform remain in development and progressing according to plans. We remain bullish on the R&D pipeline, and we believe we are building a product road map that expands the reach and impact of personalized closed-loop neuromodulation.

Let me close with a broader reflection on 2025. 2025 was a tremendous year for NeuroPace. We delivered 25% revenue growth to $100 million, improved gross margin to over 77% with RNS gross margin sustained above 80% and made significant progress toward cash flow breakeven. We also made significant progress on all 3 of our development levers, market development, clinical development and product development. We strengthened the leadership team and increased organizational execution muscle. We sharpened our strategic focus on our core RNS business and achieved multiple favorable reimbursement updates that improve the economic profile for hospitals and physicians.

Additionally, we advanced key clinical programs, including NAUTILUS from data generation to submission. We submitted Seizure ID and made significant progress on the development of our next-generation device platform. We also strengthened our balance sheet and financial flexibility through the refinancing completed earlier in the year. Taken together, 2025 was a strong year of execution that sets up 2026 to be a transformational year for NeuroPace with ongoing momentum in the market from which to build top line growth, the launch of Seizure ID designed to improve efficiency and ease of use, the potential for the first-of-its-kind indication expansion into the IGE population for the RNS System and the planned submission of remote patient care enabling remote patient programming.

With that, I'll turn it over to Patrick for a review of the financials and outlook. Patrick?

Thank you, Joel. I will review our fourth quarter and full year 2025 performance in more detail and then provide additional context around our full year 2026 guidance, which is consistent with our pre-announcement in early January. We will also be introducing a non-GAAP profitability metric of adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization and stock-based compensation. We believe this metric can serve as a proxy for current period cash generation as we move toward cash flow breakeven and have provided additional reference tables for both historical and go-forward reconciliations in today's press release. Please note that we have very little depreciation and no amortization. So essentially, stock-based compensation makes up nearly all of the adjusted portion of our adjusted EBITDA.

Total revenue in the fourth quarter of 2025 grew 24% to $26.6 million compared with $21.5 million in the prior year quarter. Growth was primarily driven by increased sales of the RNS System, which grew 26% to $22.4 million. Service revenue tied to our data collaborations in the quarter totaled approximately $890,000. Revenue from DIXI Medical was approximately $3 million, representing a decline of 4% compared to the fourth quarter of 2024 and ahead of the previously issued guidance as the team worked to sell existing inventory prior to the ending of our commercial partnership, which concluded on December 31, 2025.

As a reminder, the distribution agreement contractually allowed NeuroPace to sell back any remaining inventory at prior paid costs back to DIXI, which already has largely been completed in the first quarter of 2026. Gross margin for the fourth quarter was 77.4% compared with 75.4% in the fourth quarter of 2024 and 77.4% in the third quarter of 2025. The year-over-year improvement was primarily driven by increased revenue contribution from higher-margin RNS revenue, benefit from improved manufacturing efficiency and increasing RNS ASP as a result of strong pricing conversion.

RNS gross margin in the quarter was 80.5% compared with 80.1% in the fourth quarter of 2024. Total operating expenses in the fourth quarter were $22.3 million compared with $19.8 million in the prior year quarter and came in better than expectations in both general and administrative and sales and marketing, while research and development expense was in line with expectations. Operating expense growth of 13% in the quarter remained meaningfully below our revenue growth of 24%, again, demonstrating underlying operating leverage as we scale.

Before moving to the components of operating expense and down the rest of the income statement, I wanted to note that stock-based compensation, depreciation and amortization are included in our GAAP operating expenses for the fourth quarter and full year 2025. Beginning in Q1 2026, we will provide operating expense line items on a non-GAAP or adjusted basis, excluding these expenses, which I will cover in more detail when I discuss guidance.

In the fourth quarter, sales and marketing expense was $10.9 million compared with $10 million in the fourth quarter of 2024. The year-over-year increase was largely due to personnel-related expenses associated with ongoing scaling of commercial activities, investment in direct-to-consumer marketing and other sales-related expenses. Research and development expense in the fourth quarter was $7 million compared with $6.1 million in the fourth quarter of 2024.

The year-over-year increase was primarily driven by personnel-related expenses associated with the development of next-generation platform, AI-enabled tools and ongoing clinical trials. General and administrative expense in the fourth quarter was $4.4 million compared with $3.8 million in the fourth quarter of 2024. This increase was primarily due to an increase in personnel-related expenses. Loss from operations in the fourth quarter was $1.8 million compared with a loss from operations of $3.7 million in the prior year quarter.

Net loss was $2.7 million for the fourth quarter compared with net loss of $5.3 million in the prior year quarter. Adjusted EBITDA was a positive $900,000 in the fourth quarter, a $1.9 million improvement compared to the prior year quarter and our second consecutive quarter of positive adjusted EBITDA. Notably, we ended the quarter with cash, cash equivalents and short-term investments of $61.1 million, a $1.1 million increase compared with $60 million at the end of the prior quarter. This was driven by a positive operating cash flow of approximately $500,000, and we generated positive free cash flow of approximately $400,000, which demonstrates our disciplined financial approach of investing for growth and the underlying cash generation of our business model. Long-term borrowings totaled $58.9 million as of December 31, 2025.

For the full year, total revenue grew 25% to $100 million, driven primarily by increased RNS System sales, which grew 25% for the full year. Full year gross margin was 77.2% compared with 73.9% in 2024, primarily due to increasing contribution from higher-margin RNS revenue, improved manufacturing efficiency and favorable pricing. RNS gross margin was 81.9% for the full year compared to 78.4% in 2024.

Total operating expenses for the full year were $93.6 million compared with $80.8 million in 2024, representing growth of 16%. Excluding onetime items incurred in the second quarter related to executive transition, total operating expense growth for 2025 represented approximately 13% year-over-year on a normalized basis, consistent with our approach of showing leverage compared to our sales growth through disciplined expense management.

Stock-based compensation for the year included in operating expenses was approximately $10 million. Adjusted EBITDA for the full year was a loss of $5 million, a $6.2 million improvement compared to the prior year. As we disclosed, we expect to begin reporting our DIXI-related financial results as discontinued operations beginning in the first quarter of 2026.

On a continuing operations basis, our 2026 reporting and comparable periods presented will exclude the impact of DIXI. Again, today's press release has additional tables, which break out revenue, cost of goods and operating expenses for DIXI and should facilitate updating financial models on a historical basis as we move to continuing operations basis starting in the first quarter of 2026.

I would encourage everyone to review Tables 1 and 2 in today's press release. Table 1 provides the appropriate continuing operations baseline for 2025 and Table 2 represents our 2026 outlook on a comparable basis. Together, these tables provide the clearest framework for year-over-year analysis.

Turning to our outlook for 2026 on a continuing operations basis. As Joel said, we are reiterating full year 2026 revenue guidance of $98 million to $100 million, representing underlying RNS growth of 20% to 22% compared to full year 2025 and excludes any contribution from DIXI. Regarding service, we may generate modest service revenue throughout 2026. However, it is not included in our current guidance. If that revenue becomes more meaningful and predictable, we will begin incorporating it into our outlook starting with our first quarter earnings call.

For the first quarter of 2026, we still expect revenue to be in the range of $21 million to $22 million. Consistent with historical patterns, growth rates in the first half tend to moderate relative to the acceleration we see exiting the prior year. This reflects normal timing of procedural volumes and activity levels and provides a prudent starting point for the year as we continue to ramp new commercial investments and build momentum throughout the year. We provided first quarter revenue guidance to establish a clear starting point for 2026 as we transition to a continuing operations presentation. We do not anticipate providing quarterly revenue guidance on an ongoing basis.

Turning to operating expense guidance for 2026. We will be presenting these figures on a non-GAAP or adjusted basis, excluding stock-based compensation, depreciation and amortization for initial guidance as well as throughout 2026 reporting. This change is intended to provide greater transparency into the underlying operating performance of the business, enhance visibility of operating leverage and improve comparability across periods.

We expect non-GAAP or adjusted gross margin to be between 81.5% and 82.5% on a continuing operations basis, reflecting higher-margin RNS revenue and driven by continued manufacturing efficiency. This compares to our previously issued full year gross margin guidance of 81% to 82%, which included approximately $500,000 of stock-based compensation.

We expect full year non-GAAP or adjusted operating expense to be in the range of $90 million to $92 million, excluding approximately $10 million in stock-based compensation. For the full year 2026, we expect non-GAAP or adjusted sales and marketing expense to total between $46 million and $48 million, which excludes approximately $3 million of stock-based compensation. Sales and marketing expense growth in 2026 reflects the deliberate front-loading of commercial investment.

We expect productivity and leverage from these investments to increase meaningfully as we move through 2026 and into 2027. We expect non-GAAP or adjusted research and development expense to total approximately $27 million, which excludes approximately $3 million in stock-based compensation. R&D expense growth in 2026 reflects continued investment in our next-generation platform and the development of the NeuroPace AI suite of tools designed to enhance physician workflow and drive adoption.

With major clinical milestones executed in 2025, we expect the mix of R&D spend to shift away from large-scale trial execution and increasingly toward product development and platform innovation. We remain focused on disciplined allocation of R&D capital towards programs that strengthen the platform, enhance differentiation and support long-term growth. We expect non-GAAP or adjusted general and administrative expense to total approximately $17 million, which excludes approximately $4 million in stock-based compensation.

G&A expense in 2026 primarily reflects the infrastructure required to support a growing commercial organization and corporate systems necessary to operate at scale. We remain disciplined in managing overhead as we drive operating leverage across the organization. We expect full year adjusted EBITDA to be approximately a loss in the range of $9 million to $10 million. And with the removal of DIXI revenue and normal seasonality, we expect adjusted EBITDA will likely dip in the first half before improving again in the second half, consistent with historical patterns.

With that, I'll turn it back to Joel.

Thanks, Patrick. Let me briefly reconnect our results to the strategy. Our path to becoming the standard of care rests on 3 pillars: market development of our core RNS business, clinical development to expand RNS epilepsy indications and product development to advance our R&D road map, including the NeuroPace AI platform. Significant progress has been and continues to be made on all 3 pillars, and we are beginning to see the compounding effect of that progress.

As you can hear in today's results and outlook, we have been executing and have a lot of opportunity in front of us. The core business is performing at a high level. The strategy is working, and we are executing with increasing consistency and discipline. What makes this moment especially exciting is that the opportunity in front of NeuroPace is getting bigger on multiple fronts at the same time.

In the near term, we are still early in penetrating the adult focal epilepsy market, and we continue to see meaningful runway to drive adoption and utilization in Level 4 centers and expand access in the community. We are investing deliberately to scale our commercial engine and to optimize how patients move through the funnel from identification to evaluation to implant, translating strong product demand into durable procedural growth.

On the clinical front, we remain encouraged by the opportunity to bring RNS to the IGE population, which remains highly underserved. We continue to engage constructively with the FDA, and we will be thoughtful and disciplined as we prepare for what could be a meaningful new chapter in indication expansion. We have a unique installed base of customers, a unique data set, and we are investing to turn that advantage into practical tools designed to make RNS therapy even more efficient, effective and easy to use.

Seizure ID is a near-term example of how we can reduce physician burden and improve utilization. From there, our pipeline development projects are focused on activating our unique data and associated AI capabilities to create a step change in how personalized neuromodulation is delivered adaptively and further enabling RNS' potential to improve outcomes across the responder spectrum and expand the impact of therapy.

Looking ahead, we believe we have a durable growth engine in the core business. We are building leverage in the model as we scale, and we are investing in product and clinical programs that we believe can expand the reach of RNS and extend NeuroPace's leadership in personalized closed-loop neuromodulation. We are proud of what the team delivered in 2025, and we are energized by what is possible in 2026 and beyond.

Operator, we are now ready to take questions.

[Operator Instructions] Your first question comes from the line of Frank Takkinen with Lake Street Capital Markets.

Congrats again on a really solid finish to the year. I was hoping I could start with one on the generalized opportunity. I know we've talked about it a lot, but as we get closer and closer, just looking for additional detail. How should we think about how quickly you can translate from an approval into collecting revenue? And really what I'm getting at is what is left to be done once you do have that approval in hand before you can start shipping product? And then as a bigger picture question, do you think the generalized opportunity could eventually be a larger revenue generator for NeuroPace than the focal opportunity?

Those are great questions, Frank. Thank you. With regard to what's left to be done pending the potential approval, the first things that need to be done are to really extend coverage from -- in the private payer community. And so we have, as you know, a very well-established coverage for the RNS System today for the adult focal indications. And the generalized indication is expected to follow much in the same lines, but we do need to get that coverage extended.

As you might expect, we're not waiting for approval to make progress on that. We already have internal processes underway to prepare for and target the key payers to provide for that coverage extension, but that's really the key step. And then, of course, we have the initial introduction training and scaling activities that need to take place, in particular with referring physicians.

Our treating physicians are already quite familiar with generalized epilepsy, but a lot of what we see from the referral community and out in the community will take some time for us to bring the therapy and the information and the referral pathways to them. But we do see referral pathways are well established here. A lot of these generalized patients today do end up in Level 4 centers.

We have a well-understood technology and well-understood implant techniques. And so that teaching and training is already under our belt. We've got a sales force that we're going to be leveraging into common call points. And so they already understand how to bring the technology out to folks. And so it's really a matter of extending that into the referral community and expanding the coverage for the new indications. And those are things that we'll be looking to move into with some momentum here.

Yes. And Frank, maybe I'll go one layer deeper on some of the details related to reimbursement because I know there's a lot of people that are newer to our story. Number one, it is the exact same device that we'll be implanting, and I think that's important for everyone to understand. It's the same calling point. And from a reimbursement standpoint, it will be the same DRG as well as CPT codes that will be used. And then as Joel said, we will work on the private payers.

In terms of the grand scheme of things, Medicare and Medicaid probably makes up 20% to 25% right now of our overall payer mix. And then the rest of it is the private payers, and that will take a little bit of time to get on board. And then you did ask a question, which I know that we were at your conference recently, and we've been talking about this for quite some time. But we certainly believe that when we add this expanded indication that the proverbial 1 plus 1 might be greater than 2 at the end of the day. So obviously, we're excited about this, just came from the National Sales Meeting, a lot of momentum and excitement around IGE coming. And so we look forward to getting the approval and moving forward.

To that end, the underlying etiology here is really the largest overall segment is the adult focal population. And the generalized population breaks out then about 60% focal, about 40% generalized. The biggest of the generalized segments is the idiopathic generalized epilepsy segment, which is what NAUTILUS is focused on here and is about half of that generalized population is the IGE population. So a significant patient segment here that importantly does not have any other approved device indications today, one; two, has an abbreviated diagnostic pathway.

They don't require the specific localization of the seizure site through Phase II testing because it's a generalized seizure, and so they don't need that specific testing. And we know there are patients out there who today don't feel like they have any other options. And so when we think about the potential for adoption dynamics, there will be things, as you point out, at the start that we need to work our way through that will take a little bit of time.

But as we do so, we think the dynamics around the idiopathic generalized population, what we can bring to patients that they have nothing for today and the time line associated with being able to have patients go through the treatment and workup protocol can also be shorter than in the adult focal population today. So we like the adoption dynamics associated with IGE, and there'll be some upfront work for us to do. But we think as we work our way through that, this is a meaningful opportunity for us.

Got it. That's great color. I appreciate that. And then maybe just as a quick follow-up for Patrick. I heard the comment about less EBITDA in first half and that ramping really through the back half. Any other finer points you can put on that to kind of get us in the right spot for Q1 adjusted EBITDA?

No, I think we provided, obviously, a retrospective or historical view because we've got a couple of moving parts, right? Continuing operations that we anticipate will happen starting in Q1. So definitely look at Table 1 to update your models for 2025. And then for 2026, you can refer to Table 2. We did not break that out quarterly. There will be a little bit of front-end loading on some of the OpEx. If I kind of looked at it from a first half to second half, a little greater than 50% in the first half, which is why we're seeing adjusted EBITDA go more negative, we'll call it, in the first half, and then it will pick up in the second half.

But again, I think you see that we can demonstrate leverage here. We are making a deliberate decision to really lean into investments here, especially on our commercial programming, marketing, sales, headcount, et cetera. And so that's probably the best I can give you in terms of just direction and that should get the models in check pretty well.

Your next question comes from the line of Mike Kratky with Leerink Partners.

Congrats on all the progress and the FDA accepting your IGE filing for review. Maybe to start, can you provide -- can you add any additional color just on the magnitude of pricing impact on RNS growth in the fourth quarter? Is that similar to what you've seen historically? And how much of an impact are you expecting that to have on RNS growth for 2026?

It's a great question, Mike. And I would point to over the past several years, we have consistently taken mid-single-digit -- low to mid-single-digit pricing increases annually. And I think with the gross margin profile of the RNS platform, in particular, is now in the low 80%, and that's really been a combination of that disciplined pricing as well as then the volume of the increase in manufacturing. And so we're really pleased with the way with discipline we've been able to manage gross margin.

And to your question specifically in Q4, there wasn't anything outstanding there that's different than what we've seen over time with pricing. And we really see the vast preponderance of the growth that we're experiencing associated with initial implants of the RNS System and primarily in our Level 4 centers.

So the pricing approach has been a good one. It's been a collaborative one with our customers and largely in line with their increases in reimbursement and costs as well. And so we've been in good lockstep with our customers in that regard and been positive on gross margin along with the volume increases that we've seen as the demand and access to RNS therapy has grown. But there wasn't anything specific or different in Q4 that contributed in an outsized fashion to the growth.

Got it. Very helpful. And maybe just a follow-up. But in terms of what you've seen from Project CARE recently, can you help frame generally how much that's contributing in terms of prescribers or factoring into some of the record numbers that you're seeing recently?

It's a great question. And I think, again, what we're seeing is increasing numbers of prescribers and implanters and active centers. And that's coming from a combination of our Level 4 center growth as well as then more and more growth in the referral community. The CARE program is a part of the growth of what we're seeing in the referral community, but we're also investing further both in our DTC as well as then in our commercial organization expansion in more of an upstream referral focus that isn't necessarily tied to CARE implanting centers as well.

And so we really have, I think, 3 engines for growth here as we work to develop the market and prescribers in particular. One is the ongoing growth that we see in adoption utilization in the Level 4 centers. Two, it's the CARE-specific program centers where there'll be either Level 3 or community centers that both will do implants as well as refer and then a broadening in the community for more prescribing and referring in what we'll call programming centers.

And so referral more broadly with CARE and the referring physicians is a nice additive component to what we're also seeing as continued good growth in adoption and utilization within the Level 4 centers. So we're really getting it from multiple spots.

Your next question comes from the line of Priya Sachdeva with UBS.

Congrats on a great quarter and a strong end to the year. Maybe the first question that I have would be just maybe if you could give us a State of the Union on capacity dynamics across implanting centers. What are current backlog dynamics look like? I mean a few of the checks that we've done suggest there could be a bottleneck from a referring physician perspective. So I would love just to hear your thoughts on that and the market more broadly. And then one follow-up.

Thank you, Priya. It's a real good question. And we pay close attention to that as well. And I think I've commented previously, I'll stay in line with that, that generally, when it comes to neurosurgeon capacity, when we ask what our customers tell us is that they have capacity to handle increasing volume of device cases. And remember, for a functional neurosurgeon, the implantation of the RNS device is very well within their training and skill set.

And so they can execute these procedures as part of their daily work very well. What we will see on occasion is some centers that will be booking out further within their surgical time line, but that's really the exception rather than the rule. And I think the impression I'd leave you with is there's plenty of capacity in the channel, both for prescribers to refer for epileptologists to then work patients up and take them into case conference and then generally with regard to patients being able to move then into surgery.

And one thing I would emphasize here is just that whole flow, that flow of patients is something that we are very much focused on here and are working together with our centers. And that's something that -- you'll hear us refer to nurse navigators. And our nurse navigator team is something that we are investing in meaningfully. In fact, we're doubling that group of people.

And what they do is work to help handhold patients through the referral process and the diagnostic process and the evaluation for surgery process that allows for efficient management and scheduling of everything that needs to happen. And so as you know, part of -- when you think about a pipeline and you think about constraints, part of it is balancing demand and part of it is making sure things are flowing well through a pipeline. And our nurse navigator teams working closely with our field representatives and the allied health personnel in the different centers do a lot of that and are going to be doing even more of that here as we've identified that as something that can help, we believe, meaningfully move patients through that pipeline.

And if I could piggyback on the nurse navigators. It's a really important concept. We're starting to talk about it more. And as Joel said, we are leaning into that one. In fact, some of these nurse navigators actually came from Level 4 CECs where they help navigate patients on that side. So that's really a key point of getting them through the channel. And then that's why we also wanted to make sure that they were all on board coming into it at the beginning of this year in anticipation of IGE coming as we move through the year and making sure that they're in place, and we've got the ability to move patients as quickly as possible.

Okay. Great. That was super helpful. Would just love to touch on the Seizure IDE (sic) [ ID ] opportunity and kind of the logistics behind it. Is it a platform that physicians will have to pay a subscription for? Is it something automatically implemented into their in-house softwares? And what, if anything, from a clinic efficiency perspective is baked into the guidance today?

That's a great question, Priya. And the Seizure ID capability, the ability to access that product is something that will come along with people's use and implantation of the RNS System. It's a software capability that will be part of what we provide to customers. And our interest here is really with regard to efficiency and ease of use that allows clinicians to manage the RNS patients that they have in their practice even more effectively and as time efficiently as possible.

So what Seizure ID does is it identifies the highly likely seizure activity and then presents that efficiently so that clinicians don't have to spend as much time reviewing all of the data that's available and can spend more time focused on the data that's most likely to result in an action.

And so our interest here is in being able to show people how they can have more and more patients as -- RNS patients as part of their practices because they can get a significant amount of data, but they're only -- they only need to review and interact with the most important parts of that data and the data that's going to result in opportunities for them to treat patients better. And so our interest is to make that available by way of then encouraging more and more patients to be able to be treated with RNS Systems and RNS implantation. Does that answer your question, Priya?

Yes.

Your next question comes from the line of Yi Chen with H.C. Wainwright.

This is Eduardo on for Yi. I was hoping if I could -- maybe I'll follow up briefly on the IGE. I'm curious if there's any significant biological differences in the iEEG readings compared to focal epilepsy that can make continuous improvements more challenging. I know that's something really promising about the technology is how you see that year-over-year physicians continuously improve, recognizing and hopefully, all these software improvements will improve that. I'm curious if there's a meaningful difference in the abilities -- the capabilities to improve for IGE versus focal.

It's a great question. And of course, the underlying electrophysiology is different. So with a focal patient, you have a focal region of bad actor activity that then either causes seizures to propagate or multiple sites that cause seizures to propagate from that original nidus of seizure activity.

With regard to generalized seizures, they are such as the name indicates, seizures that happen everywhere all at once and are rapidly propagating all over the brain. And so the ability to recognize those seizures and then tailor both implantation techniques as well as detection parameters and therapy parameters are different.

What we have found, and this is what -- it was important in NAUTILUS to learn is that we can, in fact, implant our electrodes in the network, the thalamus, the specific anatomic locations in the thalamus. We can, in fact, detect the seizures. We can, in fact, safely deliver the therapy. And so sometimes people will immediately go to the efficacy results associated with a new indication. That's appropriate.

We're also very interested in those things. But one of the things that I think we've shown here with the safety and therapy profile is that you can safely and reproducibly treat idiopathic generalized epilepsy patients with the RNS System. And then one of the other unique aspects of the system is our ability to individually tailor therapy. So we know that we can detect and record and analyze idiopathic generalized epilepsy seizures similarly to the way that we do with focal patients.

And then we have the ability to, again, update, adapt and tailor both detection as well as therapy in these patients. And so we expect -- we'll learn about it because our data only goes out as far as our data goes so far. But what we've seen in the 12- and 18-month data and what we've seen in the early 24-month data, we'll see what more we learn. And of course, we would plan to follow these patients longer term in a post-approval environment as well is that we expect that both the tailoring of therapy over time for individualized patients will result in their individual improvement.

When they see that improvement, the neuroplasticity and kind of the reverse remodeling of seizure activity would occur similarly in patients' brains who have generalized seizure activity. And then the longer that they're in that state, the more and more they improve. So long way around towards saying we think the fundamental underlying parameters of the therapy and the technology apply to treating idiopathic patients and the improvements that we would expect to see, even though the underlying electrophysiology is different.

Yes. I would encourage everyone to answer that question, if you want to see some data on our website, we posted the latest Investor Relations deck. And Slide 12, 13 and 14 get into some discrete details. And as Joel said, you'll see there in our post-approval study for adult focal epilepsy, the progress we've made in years 1, 2 and 3, and we're showing a 77% median seizure reduction at 18 months with our NAUTILUS for IGE, and that is certainly well above the original adult and then pretty far above the adult focal PAS. So again, look at Slides 12, 13 and 14 and see the real-world data that's out there -- real-world clinical data, sorry, that's out there.

Got it. That's really helpful. And then curious about any updates on the pediatrics NEST collaboration, if we should expect anything in 2026 activity in that space?

We have -- thank you for that question, Eduardo. We are very interested in and focused on the expansion of indications into the pediatric space as well. Now you'll remember that the NAUTILUS study does include pediatric indication age range as well. But what we're really focused on here then when you talk about the NEST interaction is the focal pediatric population.

And in that population, the approach that we've taken is we're working with NEST and -- which is an FDA adjacent organization, FDA and then people who have generated real-world evidence for focal pediatric patients to use that real-world evidence to develop a data set that can be submitted on a meta-analysis basis to the agency. We've been doing a lot of work with FDA and NEST and investigators.

That work does take some extra time, as you might imagine. When you're doing all of the protocol agreement and data analysis upfront in a retrospective analysis, it takes more time to get that organized and then the actual analysis and review process can go more quickly on the back end versus in a prospective study, you start with the protocol and then you have to actually go do the whole study. And so we're not calling a specific submission time here today.

But what I'd tell you is that there's a lot of activity going on there. We're really pleased with the level of engagement. The agency has indicated an interest in working in real-world data scenarios, and we'll keep you updated as that develops.

Got it. And congrats again on the quarter and the year.

Thank you, Eduardo.

[Operator Instructions] There's no further questions. I will turn the call back over to Joel Becker, CEO, for closing remarks.

Thank you all for your time and attention today, and thank you to the team here at NeuroPace. We're really pleased with the results in Q4 and in 2025. We're excited about 2026 and all that is to come in what has the potential to be a transformational year for NeuroPace. Thank you very much.

Ladies and gentlemen, that concludes today's call. Thank you all for joining. You may now disconnect.

Hi, everyone. Welcome to the NeuroPace presentation. My name is Rohin Patel, medical device analyst at JPMorgan. Just to start off, it's my pleasure to welcome CEO, Joel Becker, up to the stage for a presentation.

Thank you, Rohan, and thanks to you and to JPMorgan for having us here today. As Rohan mentioned, my name is Joel Becker, and I'm pleased to be here representing NeuroPace and the team at NeuroPace. These slides are also up on our website at neuropace.com, so you can find them there. As you do, please recognize the disclaimer, and thanks to all of you for being here today. I'm going to start as I'd like to start any discussion of NeuroPace with our most important slide. Our most important slide is the one that contains the mission of the business.

And it's important that you all see it and read it because it's really what catalyzes the activity that we engage in every day and guides our decision-making as well as energizes our efforts. And that's the mission of transforming the lives of people suffering from epilepsy by reducing or eliminating the occurrence of debilitating seizures. And we have a strong feeling and stewardship toward these patients and the clinicians that care for them. And that's why we do what we do and have developed what we have here at NeuroPace.

The company and the business is led by an extraordinary team of people, some of whom are here today, and you'll hear from as well. But then also a tremendous team here based in Mountain View, California and spread across the United States that comes from a tremendous background and a blend of both people who have been here for some time as well as people who bring new and additional skills to the team as we grow and develop the business. As you think about NeuroPace, there are some highlights that I'd like to communicate to you.

First of all, we're very well positioned strategically and have a set of strong fundamentals that position us for growth, both in the near term as well as over the next number of years. and I'll spend the rest of today's presentation talking to you about those near-term results as well as our strategy and plans for advancing the mission and growing and developing the business. Some of the elements of NeuroPace include: Number one, best-in-class differentiated outcomes that improve over time. What you'll hear about today is best-in-class data, best-in-class technology as well as a best-in-class team that has been developed and put in position to take advantage of those opportunities. And that really is built on the RNS System itself, and I'll spend some time talking about that, but it is a unique cranial implant that allows us to continuously monitor record, analyze and then tailor therapy based on iEEG data where we can individualize detection and stimulation parameters to treat the tailored needs for therapy that are different among each individual epilepsy patient. As a result, we end up with a unique data set that is also an important part of what we do, and I'll spend more time around. But in addition to best-in-class technology and best-in-class data, we also have what we consider to be a significant and best-in-class market opportunity in front of us.

We're in the early innings with single penetration rate share in this space and penetration rate of neurostimulation in the epilepsy -- drug-resistant epilepsy patient population. So we have a significant amount of room to run as well. We just recently achieved -- we announced yesterday morning, we achieved $100 million in revenue for the first time, so a significant milestone for the company. Over the past number of years, we've treated approximately 8,000 patients.

We're committed to a 20% top line revenue growth rate with our current indications and more indications to come. And all of that is focused on a tremendous opportunity of helping a significantly underserved drug-resistant epilepsy population with a market potential in excess of $3 billion. As I mentioned, we announced our preliminary results for the fourth quarter of 2025 and full year 2025 yesterday morning. In addition to the $100 million and 25% year-on-year growth for 2025.

We also posted almost $82 million, $81.7 million in revenue for our core technology, the RNS system at 25% growth as well. And that growth was delivered in a disciplined fashion, both from an overall spending perspective as well as from a gross margin perspective with 77.2% gross margins. And it was a strong quarter that capped off that year, 26.6% revenue growth, 24% year-on-year growth for the quarter as well and 26% RNS revenue growth in the quarter. So accelerating revenue growth for our core franchise in the fourth quarter as well and again, a strong gross margin profile.

To put some color around our 2025 performance, as I mentioned, robust revenue growth. So top line of $100 million and 25% year-on-year growth, really driven by our core RNS franchise and momentum built throughout the year. We accelerated from the first half to the second half of the year and delivered a particularly strong Q3 followed by the fourth quarter I just told you about. And that's really built on the commercial execution of the team. We have a team that has achieved all-time highs with regard to prescribers as well implanters. The utilization amongst those prescribers and implanters also continues to climb, which is hard to do. It's hard to expand the number of prescribers and implanters as well as utilization at the same time, and the team achieved that in the quarter.

We also experienced increased contributions outside of our core customer group, our Level 4 comprehensive epilepsy centers by expanding into the community. And the team that executed this is one that we've been investing in, have been developing and feel particularly strong about our sales leadership and the pipeline management that they've demonstrated. All of that contributed to the strong Q4 in 2025, but we also advanced a number of very important strategic initiatives that portend well for the longer term for the company as well, including submitting the PMA supplement to the FDA for our indication expansion for idiopathic generalized epilepsy patients. I'll talk a little bit more about that as well as then advanced the programs for indication expansion into pediatrics and Lennox-Gastaut patients.

Long term, our goal is to have the instructions for use for the RNS system to read for drug-resistant epilepsy patients. Today, we're delivering -- we've built the business and we're delivering the business that we have on the adult focal population, but we have plans in place to expand indications through our research pipeline and leverage both our prospectively developed as well as real-world data as a key leg of our long-term growth strategy. And then finally, the third leg in that stool is the product development platforms that we're developing that leverage our unique data set, what that unique data set affords us in terms of AI opportunities to improve effectiveness as well as efficiency and then roll that all into both annual software releases as well as a next-generation hardware platform. So near-term execution, strong growth and advancing of both medium-term and longer-term indication expansion and product development initiatives, a strong 2025.

So looking toward 2026, we are guiding to revenue of $98 million to $100 million, RNS revenue growth of $20 million to $22 million and gross margin of between 81% and 82%. This is really focused on growth of the RNS platform, continuing to expand adoption and utilization within our core Level 4 centers and continuing to expand into the community while also advancing our clinical and product development initiatives. We're doing all this, as I mentioned, into a market that has significant opportunity.

Take a step back and talk about epilepsy in the United States, approximately 3.4 million people in the United States have up epilepsy, about 1/3 of those are drug-resistant. So about 1.2 million patients in the United States have drug-resistant epilepsy. Those are the patients that we're focused on helping. And we do so with what I had mentioned is a unique technology platform, RNS or a responsive neuromodulation system that allows us to tailor the therapy to each patient here. What you can see on this slide is -- are the 3 key steps of how we individualize that therapy.

One, we continuously monitor brain activity; two, we can recognize and then respond to indicators of seizure activity; and three, we record all of that information so that we can analyze and then tailor therapy on an ongoing basis for the individual disease pattern of that patient. That affords us the opportunity to target significant populations of patients, both those that have targeted discrete onsets, which is what we're indicated for today, focal discrete onsets in the adult focal population with a number of subpopulations there, but then also network stimulations for patients who may need focal as well as stimulation of anatomic targets for rapidly propagating disease. And then therapy combination where the classic treatment for drug-resistant epilepsy would be resection -- surgical resection.

In some cases, surgical resection may still be appropriate, but it may not be everything that's needed, and you can use the RNS system in combination as well as to inform surgery by recording the patient's brain pattern and showing physicians where resection should more accurately take place. So we have a unique technology and a significant opportunity with identified market segments for us to grow and move into.

That's supported by, as I had mentioned, best-in-class data. And here, you can see that data. And a couple of things I'd point out. The dark blue histogram bars are the data from our original FDA study and long-term treatment trial, A couple of things to point out here. You can see as you move up and to the right, the data continues to improve. And what you see there is that individualized and tailoring of the data based -- or tailoring of the therapy based on that data. So we continue to be able to individualize therapy and improve patient outcomes over time, up to 75% at year 9 in the original patient population. We recently then published in April of 2025, our long-term post-approval study data, which are the light blue bars here. A couple of things I'd call your attention to here one, we started at a much higher rate in the post-approval study, which is because we learned a lot as to how to program these patients; two, we increased at a greater rate. And we end up, number three, at a higher median seizure reduction rate as well. So you can see we've learned things over time, and we've learned how to suggest therapy protocols and manage individual patients up to now and including an 82% median seizure reduction rate at 3 years, which is best-in-class data to go along with the best-in-class technology offering patients a meaningful improvement in seizure reduction.

That's then complemented by the preliminary results that we've released in our Nautilus trial in idiopathic generalized epilepsy patients. Where in that trial, we showed at 18 months, a 77% median seizure reduction rates in these patients. These patients, many of whom are suffering from generalized tonic-clonic seizures, the most severe and significant and injury-causing seizures showing best-in-class data in this category as well. And on the right side of the slide, you can see both physician as well as the patient-reported outcomes on quality of life improvement undergoing therapy here, auguring well for the application of the technology in this patient population.

So to give you a summary here of the RNS system itself, what we really have is, as I mentioned, that world-class technology, coupled with data and now markets as well that put us in a position to continue to expand the patients that we can treat and the ways we can treat them. To expand a little bit on another aspect of what we're doing and an emerging topic strategically for us is the power of the data that the system allows us to collect.

We have an unmatched data set. And when I say unmatched, I mean unmatched. There's no place else on earth, no other organization that has the data set that we have of EEG recordings of epilepsy seizure patients. More than 24 million, at least at the time the slide was made, more than 24 million individualized EEGs. What that allows us to do is enable real-time therapy for these patients and longer term, support the product development work that we're doing to build AI algorithms that can look at that database and then tailor and recommend therapy protocols for individual patients.

So not only do we get the benefit of continuing to increase the amount of data that we have. But we are also working on deploying that data into future proprietary software tools, the first of which we'll be launching this year has been submitted to the agency. And I'll talk a little bit more about that.

All of that leads to the building of a proprietary AI data ecosystem for the business. That unique set of data that then as I had mentioned, is incorporated into an AI set of tools. And finally, is intended to result in a device that can both use the data to suggest optimal detection, optimal therapy and then be an automatically adaptive device inside of therapy parameters that the physician would set. So we see this both as a way to further improve efficacy as well as efficiency in the therapy and to continue to build a moat around the differentiation of the technology and the assets, both the devices and the data itself, which has the potential to open up significant advantages, both within the adult focal, generalized and pediatric focal populations, all of which are significant indication expansion opportunities for us.

As we think about expansion into those opportunities, we have multiple initiatives underway to really take advantage of and address these opportunities. The first, I'll start with our clinical development. You've heard me mention the post-approval study here for our adult focal population that was recently presented and will be published in the upcoming year. We just completed the NAUTILUS study in idiopathic generalized epilepsy patients, and that has been submitted in December to the agency, and we're engaged with them now in the review of that submittal. A pediatric focal effort as well in the focal population were indicated for adult patients and are moving into a retrospective data analysis for pediatric patients.

And then importantly, while the smaller segment patients that have significant and severe disease that we believe we can help the Lennox-Gastaut or LGS patient population. So stage 1 of the strategy that you're seeing delivered the Q4 and the 2025 that we did is execution of the current business model in the current indications. Stage 2 of the strategy is indication expansion clinically. Stage 3 of the strategy is our product development strategy with the NeuroPace AI suite of tools, the first of which is seizure detection all the way to adaptability or adaptivity rather. The second piece is remote programming. So patients won't have to come to clinics to get the device programmed.

And then finally, a next-generation hardware platform. Finally, then market development work, which we have been investing in over time that allows us to both have the sales force capacity that we need today to take advantage of these indication expansions, move into the community as well as expand our direct-to-patient marketing and professional education. So we're lined up with both execution on the current business as well as business expansion and execution initiatives going forward. I will take just a minute here to talk a little bit more about the product development pipeline.

We have 4 key initiatives underway that we think are going to be helpful to the expansion and access of RNS, both with regard to efficiency, effectiveness and ease of use. The first is a redesign of the architecture for our data interface increasing the efficiency and ease of use. The second I mentioned is now submitted to the FDA our NeuroPace AI first product, seizure ID, which simplifies review of the data. The third then is proposal detection settings as well as therapy settings and then fourthly, remote programming. So a fundamental reorientation of the interface with the device, the data and the programming underway over the next 2 to 3 years.

Finally, then, we do have development underway on our next-generation hardware platform. This next-generation hardware platform will feature automated data transfer as well as support expanded capability for the underlying hardware. Finally, I'd just pictorially like to show you here the layers to the overall strategy that we're executing on today. expansion across both Level 4 centers, expansion into the community and expansion of our clinical indications.

I'll leave you with, we're delivering today on the 20% plus growth in our current business that we've committed to. We're doing so in a disciplined fashion, leveraging operating expense investment with growth on the top line. And we're doing all that into world-class markets, data, technology and a team that's been assembled. Thanks for the opportunity to be here and talk to you about NeuroPace today.

Thanks so much, Joel, for that. Great presentation. I think just to start off and just because it's top of mind with the preannouncement and guide, we have a lot to discuss, but I just wanted to kick things off with the 4Q results -- actually going to grab my questions from over there, but the 4Q results. You guys preannounced $26 million in the quarter. It was significantly above kind of expectations. -- good gross margin performance as well. So maybe if you could talk a little bit about utilization, what you're seeing as far as new center adds as well as utilization at some of your top-performing centers and maybe help quantify that a bit just to start off.

You bet. Thank you. It's a great question. It was a strong quarter, capping off a strong year. What really drove the growth was an increase in adoption as well as utilization inside our core Level 4 centers. So the comprehensive epilepsy centers that are the tertiary referrals and treat these complex epilepsy patients we've been working and have been setting new highs with regard to both prescribers as well as implanters. And then, as I mentioned, increasing utilization among those prescribers and implanters as well, which leads to good efficient growth for us. A couple of things I'd point out there, too, is I think in addition to that, we've got some things coming -- now really coming into focus for us that we've been investing in over time, which is our focus on DTC, our focus on expansion into community centers and our focus on growing and developing our commercial organization as well.

So -- while the individual driver is the adoption and utilization rates in those core customers, I think what we're really starting to see is the strategy that we've had in place over the past 2 or 3 years, and we're now starting to really yield the results that we've been looking for.

Great. And you also guided to $98 million to $100 million in revenues for 2026. I know that you're winding down the DIXI business a bit sooner than you had initially expected as well. You guided to core RNS growth of 20% to 22%. So maybe just if you could walk through some of the kind of components of the guide for 2026. What's assumed as far as DIXI? What's assumed as far as I know services revenue, core RNS growth, obviously? And maybe if you could talk a little bit about how you're thinking about new patients versus replacements as well. I think that would be helpful.

Great. Yes. So we guided to the 20% to 22% growth. The growth there is all RNS, and that's our core focus here. We did wind down the distribution relationship with DIXI Medical at the end of the third quarter of -- the relationship officially ended at end of the third quarter in 2024, and then we had a 6-month wind-down period. We chose to have that be a 3-month wind-down period and largely because we can see the benefits of the focus in the RNS business. And we prefer to have our focus there as we get into 2026, both from the core business as well as then as we think about indication expansion. And so that's really the purpose of that.

Got it. And so essentially, if you were to get kind of generalized approval sometime in the second half as well as pediatric that would just be incremental to kind of the guidance that you have...

Yes. The guide that we've given here is for our core focal RNS business. It does not assume any revenue from DIXI or from service or from IgE indication approval. So this is with the core business we've got today is the guide.

Got it. And maybe just if you could discuss a little bit about the cadence as well. I know this has been something that shifted over the years just as you've kind of grown as a company. 4Q kind of RNS revenue was roughly flat to slightly down versus third Q on a dollar basis. So maybe if you could just help us frame that for '26. How should we think about cadence and progression throughout the year?

Yes. I think you should think about '26 based on what you've seen in 2024 and 2025. And as we've talked about, I find it helpful to look at the business in 6-month increments. And if you look at the business in those 6-month increments, what you'd see is a business that consistently grows in those periods north of 20% and is growing in those periods accelerating from the first half of the year to the second half of the year. And so we expect those dynamics to continue. And it's what we have seen in '23, '24 and '25.

Got it. Historically, and I want to take a step back, I know this is a pretty -- obviously, an invasive surgery, if you really think broadly about the RNS kind of procedure. But you've done a fantastic job of streamlining that for patients over the years. And I know you faced several challenges during the COVID era, but it seems as though the company has really emerged from that period much stronger. So I really want to understand some of the pain points in the patient journey for NeuroPace and how you're leveraging AI and some of the technologies that you've discussed to really just make that easier for patients to get them through the funnel quicker and ultimately, obviously, improve outcomes, improve the therapy for them over time.

It's a great question. It really starts with, as in all things, safety. And so what the team has been able to do and what the clinicians who care for these patients have been able to deliver is an extremely safe procedure that has very low complication rates. And so any patient clinician discussion is going to start with doctor this is safe for me? And we have a safe procedure and a safe device. From a patient flow then -- I think for us, it really starts with 3 things: One, the customers, the epileptologists and the functional neurosurgeons that we work with. RNS and neurostimulation and the responsive nature of neurostimulation is well understood for many of them. And so the work that we do with them to utilize and implement RNS is very much within the skill sets and capabilities of those customers and what they do. The third thing is we have a team of extraordinary people from a training and education perspective as well as commercial organization that supports and provides insight to both the functionality of the device as well as then the data that is being generated by patients and supporting the ongoing programming.

And then the final thing I would say is that we've been working hard to expand access to RNS, both where patients can have the procedure performed as well as then the ease of use and efficiency with which physicians can use the technology so that they can have more patients in their practices and efficiently use the data to treat them better. So it's multifactorial, starting with safety, working through the ease-of-use efficiency, training and education and then support from our organization.

Got it. I think that's a good segue into the next question about the community setting and Project CARE. It's been a good growth driver for you over the past year as you've rolled it out. Maybe if you could just comment a little bit about the impact of Project CARE in fourth quarter, how you're thinking about it in 2026? And then also just some of the logistics around actually kind of onboarding those community centers. I know that it gets a lot of airtime during the earnings calls, and I think it would be helpful for people to really understand and appreciate what you're actually doing within those centers to kind of onboard physicians, raise awareness and get them prepared for the procedure.

Absolutely. So for those maybe not quite as familiar with it, Project CARE is our effort to expand access to RNS to community and Level 3 epilepsy centers in addition to the Level 4 comprehensive epilepsy centers for patients who either couldn't or wouldn't be referred to a Level 4 center otherwise. And the good news is the training and education work that we do in our core Level 4 centers is very similar to then what's needed to bring the Level 3 centers on board. And what we've been focused on then is being able to have increasing numbers of epileptologists, referring neurologists and functional neurosurgeons be able to implant patients who can appropriately be treated in those centers.

And then secondly, the further development of a referral network for patients who should be referred into Level 4 centers to then also go there for the Phase II testing and more complex procedures that are done in those locations. So it's been an important aspect of both increasing access and capacity for patients in those communities as well as then further establishing referral networks. That's been the case up until now. The part of the planning associated with Project CARE as well is that as we expand into the idiopathic generalized population, that population doesn't need the Phase II testing that can only be done in comprehensive epilepsy centers. And the reason for that is Phase II testing is done to localize the focal point of seizure activation in patients.

And when you have generalized seizures everywhere all at once, there's nothing to localize. And so doing the Phase II testing isn't necessary and these patients can be treated at expanded centers, both Level 3 centers and in the community. And so we've been doing that work in advance to both expand capacity for [ today's ] patients as well as prepare for indication expansion. And we think both of those things are both helpful today as well as prepare the market and customers. And then further finally, advance what will become -- what CARE will move to is a part of our broader referral, patient flow and access efforts.

And one of the things that I didn't mention when I was talking about the recent results that I think have contributed significantly. And now as we talk about referral and moving more access or moving the technology closer to patients and more access is we've really done a nice job. The commercial team has really -- and the education team have really done a nice job of increasing and strengthening our patient funnel. So funnel development and management of patients is something that we've really raised our level on. We can see it impact the business, and we see that being important going forward as well.

Got it. That's helpful. And maybe just to touch on generalized. This is a massive opportunity. If approved and successful, it almost doubles your current TAM. The data was good as well. I know that the initial kind of endpoint wasn't what you might have quite hoped for when designing the trial, but it seems as though you managed to kind of successfully file the supplement and are hopeful for an approval hopefully later this year, I believe, at the earliest. So I guess maybe if you could talk a little bit about the generalized opportunity, what you're seeing as far as competition here? I know that there is a bit more competition potentially in generalized just as some of the competitor devices might be more suitable here versus in the focal population. So how you're thinking about positioning relative to the competitors when you enter -- or when and if you enter this market?

Great question. When we think about the opportunity, we really start with -- and I'll talk about the TAM and the total number of patients available, but it really starts on an individual patient basis. And today, there are no FDA-approved devices indicated for the treatment of drug-resistant idiopathic generalized epilepsy patients. And so patients today and clinicians today are looking for solutions, and they're looking for options in being able to treat these patients. So the numbers of patients out there that need this therapy and innovation. If we step back for a second, you'll remember, I talked about the 1.2 million drug-resistant epilepsy patients in the United States. About 60% of those patients are focal, about 40% are generalized.

Within the generalized population, the most significant group is the idiopathic generalized population. So about 20% of the entire market. So 40% of the 1.2 million is about 480,000 patients. About half of that is about 0.25 million idiopathic generalized epilepsy patients that are out there today. So even if you think about just the population that is currently in comprehensive epilepsy centers and then start to consider those that aren't going to comprehensive epilepsy centers because there aren't device-based solutions to provide them, you're exactly right. This has a significant TAM expansion opportunity that is in the face of a significant unmet clinical need for which the data that the NAUTILUS trial has generated, again, it is best-in-class.

And maybe I know it's quite small for you guys. The partnership revenue is something new. You've had some small partnership revenue over the past couple of years, I believe, and it's something that you've talked about as well. So maybe if you could just kind of explain to us, I guess, what exactly are these partnerships? How are you thinking about them strategically for NeuroPace over the long run? Like what's the benefit of kind of entering into them now? And how do they kind of fit strategically within the RNS business?

It's a great question, and I know you've been focused on this and kind of picked up on this the first time we talked about it. So I'm not surprised to get the question. And you're right, it is a unique strategic opportunity for us. So what's being referred to are strategic relationships that we've developed with pharma and biotech companies where we can use the diagnostic and monitoring capability to record data for patients that are in trials for these different compounds, so patients who have RNS devices and we can monitor the biomarker responses to the administration of these compounds. As you might imagine in today's world, both in the drug studies as well as then just out each day, epilepsy patients seizure activity is tracked qualitatively by a seizure diary writing down when did they have a seizure, how long was the seizure? What did it feel like? In fact, patients many times can't even remember if they've had a seizure and they can't remember the frequency or the severity.

And so we're able to provide quantitative biomarker-based evidence in these trials as to what is the effect with the presence and absence of compounds. So it's a natural thing for us to do, and I think speaks to the value of the data that I talked about and how it is really a strategic advantage for us to provide a window in the brain of patients through our monitoring capabilities and then a unique asset generating value that we think from an AI perspective will be important in optimizing efficacy in our devices going forward as well.

It's a small revenue number so far today, but I think really speaks to the value that the device and the recording of that information can provide.

Great. And I do want to ask a question to you, Patrick as well, just on margins and profitability. You've guided to 81% to 82% gross margin for 2026. I know that, that incorporates essentially almost all RNS revenue, which is higher gross margin than DIXI. So maybe if you could talk about kind of the puts and takes on margin in 2026, what you think is a steady-state gross margin for the RNS, I guess, an essentially 100% RNS business over time? And what if -- or have there been any changes, I guess, to your outlook on free cash flow breakeven? I believe you said at the last Analyst Day, 2027, you'd expect to achieve that.

Yes, I appreciate the question. And so maybe taking a little step back, we did report the results. And as we talked about, we're discontinuing a portion of our business. And so we were able to get an accounting treatment, which we anticipate to happen in our Q1 '26 results. And so for the screening on an apples-to-apples, we'll be able to show a pure RNS business on a year-over-year basis, which I think is helpful from just the optics of it. With that said, the RNS business has a very robust gross margin. And so we've broken out a P&L and you can look at the financial supplement, but we should be hitting 81% to 82%, maybe even some upside on that. We continue to make great strides on our manufacturing process as well as the fact that we continue to take ASP increases within the community.

With that said, I'll hit the service real quick. We did not include any service revenue in our guidance. That's a very robust gross margin. You're probably looking at 90% plus gross margin on that. And so we've got a lot of tailwinds here that are coming up. In terms of our results in Q4, for the first time in the company's history, we actually increased our cash balance from $60 million in Q3 to $61 million in Q4. Hot off the presses after looking at it and getting the cash flow statement. That was from operations. And so on an adjusted EBITDA basis, we're going to see another positive result in Q4. That's our second quarter in a row. And so we're very confident in our ability to generate cash flow to generate profitability.

We gave a long-term plan back in January of 2025, not too long ago, about a year ago, and we talked about exiting '27 at cash flow breakeven. I think at this point, nothing keeps us from maintaining that, but the profile is a little bit different. We had anticipated DIXI then and maybe some expanded indication. But the last thing I would leave you with is the fact that upon getting what we believe will be the IgE expanded indication, we've got all the infrastructure in place. So that additional revenue is going to translate very, very well through our P&L.

Got it. Thank you. And with 30 seconds, Joel, I'll leave it to you for closing remarks.

Again, thank you. We've got a business that is delivering on its core business and core indication in excess of the 20% annual growth rate that we've talked about for our current indication, one. Two, we have indication expansion in front of us that is planned to start in 2026 with IGE followed by pediatrics, followed by further work in LGS. And then the third layer of our growth strategy are the product development initiatives that we have to leverage fundamentally in a unique position with regard to data monitoring and what that can mean from an ease of use and efficacy perspective. So we're excited about world-class markets, world-class data, world-class technology and a world-class team and looking forward to delivering on 2026.

Great. Thanks so much, both of you.

Thank you.

Ladies and gentlemen, thank you for standing by. My name is Colby, and I'll be your conference operator today. At this time, I would like to welcome you to the NeuroPace Q3 earnings call. [Operator Instructions]

I would now like to turn the call over to Scott Scaper, Head of Investor of NeuroPace. Please go ahead.

Thank you, operator, and welcome to NeuroPace's Third Quarter 2025 Earnings Conference Call. Our agenda begins with Joel Becker, NeuroPace's Chief Executive Officer, who will summarize our recent highlights and ongoing strategic initiatives, followed by a financial review and outlook from Patrick Williams, our Chief Financial Officer.

Following our prepared remarks, we will open this call up for your questions. At that time we ask the analyst to limit themselves to one question and one follow-up question each, so we can provide an opportunity for everyone participating today.

Let's quickly review our safe harbor statement. Some of the statements we will make on today's call may constitute forward-looking statements. These statements reflect management's intentions, beliefs, and expectations about future events, strategies, products, regulatory, and operating plans and performance. All forward-looking statements included on this call are made as of the date hereof based on information currently available to NeuroPace are subject to various risks and uncertainties, and actual results could differ materially from those anticipated in the forward-looking statements.

The factors that could cause actual results to differ materially from those expressed or implied by any of these forward-looking statements are detailed in NeuroPace's annual report on Form 10-K, most recent quarterly report on Form 10-Q and other filings with the Securities and Exchange Commission. Except as required by law, we assume no obligation to update any such forward-looking statements after the date of this call or to conform these forward-looking statements to actual results.

And with that, I will now turn the call over to NeuroPace's Chief Executive Officer, Joel Becker. Joel?

Thanks, Scott, and good afternoon, everyone. I will start with an overview of our third quarter results and how the team is executing against our strategy. I will then provide updates on our key clinical and product development initiatives. After that, Patrick will walk through the financials and updated guidance before opening the line for Q&A.

The third quarter was one of record results for NeuroPace and demonstration of the effectiveness of our strategy and its execution. Total revenue in the quarter was $27.4 million, delivering 30% year-over-year growth compared to $21.1 million in the prior year quarter. This record revenue was primarily driven by RNS initial implants, resulting in RNS revenue of $22.6 million and representing growth of 31% year-over-year.

RNS growth in the quarter was broad-based across geographies, customers, and programs. All sales regions exceeded planned sales for the quarter with the number of prescribers, accounts, and utilization nationally reaching all-time highs. These results demonstrate the compounding effects of the recognition of the differentiated capabilities of the RNS System, enhanced commercial leadership and execution, and improved referral management, driving higher procedural volumes. The majority of our growth came from Level 4 centers with increased adoption and utilization. Project CARE also contributed meaningfully and again improved sequentially and year-on-year.

We also saw increased contribution from our direct-to-consumer efforts as well. We remain confident in our long-term growth trajectory of growing a minimum of 20% in our core RNS business with our current adult focal epilepsy indication. Importantly, gross margin and operating leverage were also strong and continue to be highlights as we scaled growth in a disciplined manner.

Additionally, during the quarter, NeuroPace generated positive adjusted EBITDA, a significant milestone for the company and the first time in our history. This important accomplishment reflects the scalability of our model and the progress we are making with disciplined expense management, consistent mix improvement, and increasing efficiency in both commercial and manufacturing operations. We are proud of this achievement. And while this metric may vary quarter-to-quarter, we remain committed to driving towards sustainable profitability and cash flow breakeven.

Given the performance in the quarter, we are raising both our full year revenue and gross margin guidance ranges. For revenue, we now expect a range of $97 million to $98 million or 21% to 23% year-over-year growth, an increase from previous guidance of $94 million to $98 million.

Let me now turn to our key clinical and product development initiatives, starting with NAUTILUS and our recent meeting with the FDA. As expected, we completed our pre-submission meeting with the FDA in September, which we believe was a productive and engaged discussion of the study. We reviewed the totality of the evidence, safety, the primary effectiveness endpoint and the prespecified secondary endpoints as well as additional analysis. We continue to believe the safety and effectiveness profile of the NAUTILUS data supports a favorable benefit risk assessment for this highly underserved population, and our PMA supplement will incorporate the discussion points from our meeting.

We appreciate the opportunity to meet with FDA and the dialogue was consistent with our expectations. Development of our PMA supplement application is underway, and our timeline and plans remain on track to submit the PMA supplement for NAUTILUS before year-end.

Moving on to our pediatric indication. We continue to work closely with the FDA and our collaboration partner, NEST, as we finalize the real-world evidence and protocol for our pediatric indication.

We are working to ensure that the data set and protocol are both as strong as possible. As we continue this process, it has taken more time to align on that protocol and data set than we had initially built into our timeline. We remain confident about the approach of leveraging real-world evidence to gain this much-needed indication expansion in a pediatric patient population. As we finalize the real-world evidence and protocol timing for submission will extend beyond 2025. We are not providing a revised submission date today, but we will provide updates as milestones are met.

We are appreciative of the quality of the interactions with FDA and NEST and the ongoing collaboration as we pursue this unique opportunity. We look forward to advancing this indication expansion pathway and remain committed to bringing RNS therapy to the pediatric population.

I also want to highlight the growing recognition that RNS and our unique closed-loop stimulation is receiving across the field. The September issue of the Journal of Clinical Neurophysiology was entirely dedicated to the use of data and feedback for personalizing intracranial neuromodulation and several articles featured RNS at the center of that conversation.

This journal is one of the most widely respected peer-reviewed publications in the field of epilepsy and brain modulation. It is the official journal of the American Clinical Neurophysiology Society and a key forum where leading researchers and clinicians publish data that shape standards of care. The editors described a critical shift underway in epilepsy therapy, away from one-size-fits-all stimulation and toward data-guided patient-specific neuromodulation.

Driving that shift is the convergence of long-term intracranial EEG, advanced neuroimaging, and artificial intelligence, and the critical importance of developing individualized treatments in clinical settings. For years, the RNS System has generated data and outcomes that define what personalized closed-loop therapy could be. Now as AI and computational tools mature, the importance of the RNS System's unique ability to monitor and record data and then tailor individual therapies for specific patients through its differentiated closed-loop capabilities is coming further into focus.

We believe the broader scientific community is recognizing that the RNS System platform is best positioned to capitalize on this new era of innovation that is beginning to shape the future of epilepsy neuromodulation and brain computer interface development. We are now seeing a number of factors we have been working on deliberately for years start to come together at the same time. The clinical maturity of closed-loop neuromodulation, the scale and quality of our long-term intracranial EEG data set, and the computational tools to act on that data in real time.

And critically, we now have the tenured domain knowledge and execution muscle on the team to capture this opportunity. This convergence is creating an environment for the potential of accelerated adoption of closed-loop personalized neuromodulation. We believe the RNS System is uniquely positioned to capitalize on this new era of data-guided epilepsy care and longer term on the direction the field is heading in neuromodulation and brain computer interface or BCI.

Now to an update on product development. Our RNS development pipeline is focused on extending the platform advantages just mentioned with greater on-device analytics capabilities, streamlined programming workflows, and enhanced connectivity to further improve both the quality and time to improved outcomes as well as enhance efficiency and ease of use to support wider adoption.

We recently submitted to the FDA our seizure iEEG AI software tool, the first of a suite of planned NeuroPace AI applications, which utilizes our proprietary iEEG data and AI development efforts and is designed to improve clinical outcomes.

With that, I'll turn it over to our Chief Financial Officer, Patrick Williams, to review the financials and our outlook. Patrick?

Thank you, Joel. Before getting into our results, I wanted to take a moment to reflect on my first full quarter with the company. The strength of the product, the commitment of the team and the sheer scale of opportunity still ahead is now much clearer to me and makes me even more optimistic. The execution improvements being undertaken and feedback from physicians I have met with have reinforced that this is a company with a differentiated technology and with a long growth runway.

In today's press release, we have provided a financial supplement, which breaks out our historical RNS, DIXI, and service revenue by quarter from Q1 2024 through today's Q3 2025 results. We believe this additional detail will allow investors and analysts to more easily reconcile our historical performance with our go-forward reporting structure as we move into 2026, where we will be substantially done with distributing any further DIXI product.

Let me now walk you through our third quarter financial results. Our third quarter revenue growth was driven primarily by continued strength in our RNS system sales, totaling $22.6 million, representing growth of 31% compared to the prior year period, supported by higher procedural volumes, broad-based increased utilization within existing centers, and growing contributions from Level 3 and community centers as our investment and focus in these areas scale. Additionally, we generated approximately $770,000 of research service revenue in the quarter tied to our ongoing data collaborations.

DIXI sales grew 8%, coming in at approximately $4 million in the quarter as the distribution agreement officially ended on September 30, and the entire company begins to focus more on RNS in line with our strategic rationale. As a reminder, the distribution agreement with DIXI provides for a 6-month wind-down period, which lasts until the end of Q1 2026. At the end of this wind-down period, the distribution agreement contractually allows NeuroPace to sell back any remaining inventory at prior paid costs back to DIXI. Thus, there is minimal to no inventory excess or obsolescence exposure related to this termination.

Finally, although the distribution agreement allows for a wind-down period through Q1 2026, we currently believe we will be substantially done with DIXI sales by the end of 2025. We do not expect any material sales in Q1 2026 as our organization and notably, our commercial team strategically shifts its focus solely on our core RNS business and the potential upcoming FDA approval of expanded indications. We are raising our full year revenue guidance to a range of $97 million to $98 million, up from our previous guidance range of $94 million to $98 million.

This updated guidance reflects an increase of approximately 21% to 23% over our reported total revenue for 2024. Our increased revenue guidance is primarily driven by our RNS System, which we expect to be in the range of $20 million to $21 million in the fourth quarter. At the midpoint of this range, RNS revenue growth for the second half of 2025 would be approximately 23%, an acceleration over our RNS first half revenue growth results of 21%.

This revised total company guidance incorporates a lower contribution from DIXI products of approximately $3 million in the fourth quarter due to the aforementioned strategic shift and wind down of the DIXI product line. And with regard to service revenue, we expect approximately $750,000 in the fourth quarter, similar to our third quarter results and is based on our current projections of achieving certain milestone triggers outlined in these service contracts.

Turning to gross margin. Total company gross margin for the third quarter 2025 was 77.4% compared to 73.2% in the prior year quarter and 77.1% in the second quarter 2025. RNS System gross margin remained very strong at above 80%, benefiting from improved manufacturing efficiency, favorable pricing, and continued leverage as we scale. This strength was partially offset by the lower-margin DIXI products, which carry gross margins slightly below 50% and were again impacted by incremental tariffs.

Based on our strong year-to-date gross margins and increasing revenue contribution from our higher-margin RNS product, we are raising our full year gross margin guidance to a range of 76% to 77%, up from our previous guidance range of 75% to 76%. As we move into 2026 and substantially exit the DIXI product line, our revenue and gross margin will essentially only be the RNS system, which we believe will carry a gross margin greater than 80%.

Total operating expenses were $23.8 million in the third quarter of 2025 compared with $19.7 million in the prior year quarter, in line with expectations with better-than-expected general and administrative expense and areas of research and development expense, offset by higher-than-anticipated selling expenses due to an overperformance in sales as well as higher variable compensation accruals across the organization. Operating expense growth of 21% in the quarter remained meaningfully below our revenue growth of 30%. Stock-based compensation in the quarter totaled $2.6 million.

As Joel mentioned, we continue to demonstrate underlying operating leverage resulting from our focus on driving revenue growth while also effectively managing our operating expenses and gross margin. We plan to continue to focus on balancing these objectives as we drive towards cash flow breakeven. We now expect total operating expenses for 2025 to range between $94 million and $95 million, a slight increase at the lower end from our previous guidance range of $92 million to $95 million to reflect the increased expense in the third quarter related to sales overperformance and increasing variable compensation related to expenses we expect to incur by year-end.

This range reflects 16% to 18% operating expense growth on a year-over-year basis and is well below our revenue growth rate. Included in our total full year expense is approximately $11 million in stock-based compensation, a non-cash expense. As we started last quarter and as part of an ongoing effort and commitment to provide increased transparency and support the ability to model our business, we will again break out and provide commentary on sales and marketing, research and development, and general and administrative components rather than referring to SG&A as a single line item.

Sales and marketing expense was $12.6 million in the third quarter of 2025, up from $9.9 million in the prior year quarter and slightly up from $12 million in the second quarter of 2025. The year-over-year increase was largely due to personnel-related expenses associated with ongoing scaling of our commercial activities, investment in direct-to-consumer marketing and other sales-related expenses. The slight sequential increase was primarily due to higher variable incentive compensation related to sales over performance.

We now expect sales and marketing expense to total between $47 million to $48 million for the full year 2025, slightly up from our previous guidance range, primarily driven by the aforementioned increase in variable compensation related to higher sales performance.

R&D expense was $6.6 million in the third quarter of 2025, up from $5.8 million in the prior year quarter and slightly down compared to $6.8 million in the second quarter of 2025. The year-over-year increase was primarily driven by personnel-related expenses associated with the development of a next-generation platform, AI-enabled tools, and ongoing clinical trials.

We now expect R&D expense to total approximately $28 million for the full year 2025 or at the higher end of the range of our prior guidance as investment in next-generation products continues, including final preparation of our IGE PMA supplement, which is still on track for submission by the end of this year. G&A expense was $4.6 million in the third quarter of 2025, an increase when compared to $4 million in the prior year quarter and down sequentially from $6.1 million in the second quarter of 2025.

The year-over-year increase was primarily driven by personnel-related expenses. The larger sequential decrease was driven by nonrecurring costs associated with an executive transition in the second quarter. We now expect G&A expense to be at the lower end of our previously guided range and to come in at approximately $19 million for the full year 2025. Loss from operations was $2.6 million compared to a loss from operations of $4.2 million in the prior year and a loss of operations of $6.8 million in the second quarter of 2025.

We recorded $1.6 million in interest expense compared to $2.2 million in the prior year quarter, reflecting the benefits of our debt refinancing earlier this year at more favorable terms. We continue to expect interest expense of approximately $8 million for the full year 2025. Regarding interest income, we expect approximately $2.5 million in income for the full year 2025. Net loss for the quarter was $3.5 million compared to a net loss of $5.5 million in the prior year period and a net loss of $8.7 million in the second quarter of 2025.

Our free cash flow, defined as operating cash flow less capital expenditures, was negative $2 million in the third quarter of 2025 compared to negative $1.8 million in the third quarter of 2024. The year-over-year change primarily reflects higher revenue and gross margins, are partially offset by an increase in inventory as we place final orders for the DIXI product line.

Lastly, as Joel mentioned previously, adjusted EBITDA, defined as EBITDA, excluding stock-based compensation, was a positive $0.1 million in the quarter compared to a negative $1.6 million in the third quarter of 2024 and negative $3.5 million in the second quarter of 2025.

Finally, ending with our balance sheet, our cash and short-term investments balance as of September 30, 2025, was $60 million. We continue to believe this gives us sufficient capital to fund operations through cash flow breakeven.

And with that, I would now like to turn the call back over to Joel for closing remarks.

Thank you, Patrick. The third quarter was a record quarter for NeuroPace and was driven by execution of our strategy and demonstrated strength across the business. We delivered record revenue, continued gross margin strength, and operating leverage, all of which demonstrate how our strategy and its execution are translating into results. At the same time, the broader field is recognizing what we've known for years, that responsive, data-driven neuromodulation represents the future of epilepsy care.

We believe there is a growing view that the RNS system will serve as the foundation of the future standard in individualized brain neuromodulation. Multiple factors are beginning to converge that position RNS and NeuroPace to build on our current momentum. We have world-class opportunities, world-class technology, world-class data, and a world-class team to deliver on them. These foundational factors position us to establish RNS as the standard of care in epilepsy neuromodulation.

Thank you for your time today and for your continued interest in NeuroPace. Operator, we'll now open the line for questions.

[Operator Instructions] Your first question comes from Rohin Patel with JPMorgan.

Congrats on a good quarter here and strong RNS revenue growth. My first question is just on 2026 and your outlook. Trends seem to be progressing well on all fronts as we close out the year. So just as we look ahead, can you help us understand the preliminary thoughts on the growth outlook and specifically how you're thinking about RNS growth given DIXI revenues will be coming off? And what are some of the key assumptions embedded in the outlook for new indication launches and some of these AI applications driving utilization and also Project CARE in the community setting?

Hello, Rohin, thank you for your comments, and thanks for the question. This is Joel. So as we look forward to 2026, I think we're guiding here for '25 and for the quarter of Q4. So I'm not guiding formally for '26, but we do think that a lot of the fundamental factors that are in place position us really well for the upcoming year. We've been clear when we think and talk about our longer-range planning, the core of our focal epilepsy indicated business, the RNS driver for that focal epilepsy indicated business is a business we're confident in growing at 20% plus. We're doing that, and that really serves as the foundation for the business.

And then we see the things that we're talking about here with regard to the key development initiatives, both our clinical development initiatives with IGE as well as pediatrics and then the positive effects that the R&D pipeline as well with regard to ease of use and efficiency in generating improved clinical outcomes. A lot of those things are coming together to add on to the top of that core of the 20% plus growth in the currently indicated business.

So we're really pleased with Q3. We think that we're really well positioned. We've got a lot of stuff converging and coming together here. And we'll talk more about '26 when we talk about '26, but we think that gives us a strong foundation to build on that 20% plus. Patrick, would you have anything you want to add there?

Yes. I just wanted to add, and I really appreciate the question. And what we did was we did provide a financial supplement so that the analysts, the entire street will get very clear and transparent message in terms of what our historical revenue has been between DIXI and RNS. And I think what you're talking about is very key because we want to make sure that people understand that right now, there's still some DIXI revenue sitting in some people's 2026 numbers, and it's important that we really look at this on an RNS to RNS basis. So that was the basis of us giving that extra disclosure. And we would certainly expect that models will start reflecting that and show that likely 20% at a minimum growth for RNS.

Yes. So important point, Patrick, and I know you're up on it, Rohin. But with our prepared comments here, just emphasizing for folks that substantially all of the DIXI revenue will be complete here at the end of 2025. And so 2026 will be RNS and the RNS basis and the RNS growth should really be the focus of the model.

And then I had a follow-up. I mean this is a bit of a longer-term development for you. But in your prepared remarks, you discussed the confluence of all your efforts to date in data, neuromodulation, and the hardware improvements that you've made or plan to make over time. And you have these partnerships in drug development, such as the Rapport collaboration, which leverage this extensive EEG database and some of the AI capabilities to support partners in drug development and biomarker identification.

So I know it's early days, but is there any preliminary feedback you can provide from your partners on how you see the platform supporting drug discovery or personalized medicine in any way? And given this is starting to ramp, I know you called out about $700,000 in revenue, but early days, but starting to ramp. Is there any -- are there any milestones or proof points that investors should be watching for over the next year or so, either from more recurring revenue or other data points?

It's a great question, and thank you for emphasizing the topic. We do see that there are a number of things here that are really converging. And we are, we think, at a point of confluence here with regard to the data, the nature of some of the fields that are developing around us in terms of data science and then software as well as hardware development, as you mentioned.

So I'll comment in a couple of different areas that you mentioned. One, from a partnerships perspective, I think you can go back and look at some of the public disclosures from Rapport that the ability to really provide that window into the brain and which we do both for our development partners within clinical study partnerships provide a tremendous amount of value as well as to clinicians every day in managing patients out there, which is why we're able to tailor and target therapy for individualized patients and demonstrate best-in-class results.

That ability to uniquely monitor, record, analyze, and then tailor therapy is really at the foundation of both those partnerships as well as then what I was mentioning in terms of the journal focus where personalized, individualized targeted neuromodulation shows a tremendous amount of potential. And the ability to integrate that data and then tailor the delivered therapy is something that the RNS system is really uniquely well positioned to take advantage of.

So we think both with regard to partnerships, more on the way there. I won't get into the specifics of it. But I think on the last call, we had mentioned UCB in addition to Rapport and we are working on others as well from a partnership perspective. And then, again, just that ability to use data, some of which is data analysis that humans just aren't able to see the patterns in our unique set of tools, algorithms and AI software is going to put us in a position to be able to leverage the unique nature of the RNS platform.

So we're particularly encouraged about both the near-term results in the business as well as where the platform is positioned from a hardware, software, and data perspective as we see that confluence of factors.

Your next question comes from Priya Sachdeva from UBS Financial.

Congrats on a great quarter. I think first for me, would just love to parse out the implied growth for 4Q. The full year midpoint kind of implies a pretty steep step down despite pretty strong double-digit growth year-to-date and it seems to us like no slowing in momentum. So would just love to understand what you're seeing on the ground to help us give some context around that implied growth for 4Q? And then just a follow-up after.

Thank you. Priya, good to hear from you, and thanks for the question. I'll maybe start with where you ended there. What are we seeing on the ground? And I mentioned it in our prepared comments, but we really saw good execution and performance in a broad-based fashion across the business. So the core of the growth came out of the adoption and utilization in our Level 4 centers, which is great to see. It's where the vast majority of our business is built today.

And we -- so we increased -- just to break that down a little bit. We increased prescribers again to an all-time high. We increased accounts again to an all-time high. And we increased utilization to an all-time high at the same time. And it's probably obvious, but those 3 things are difficult to do together. And especially when you get new customers starting, new clinicians and accounts starting, many times, they'll start a little bit slower than your customers who are more of a rhythm. And so we really appreciate the utilization -- the adoption utilization and number of prescribers and accounts all headed the right direction up and to the right at the same time. One.

Two, we saw really good execution across our commercial organization. Again, I mentioned it in my comments, but all of our sales regions executed above their planned sales level. And so the consistency of execution across that team, which is an enhanced team. We've made some changes and some investments there over the recent time, and it's really great to see that execution across the business. And then care and DTC both contributed nicely as well. So when we think about what are we seeing on the ground today, that's where I'd start. Seeing really strong execution.

When you think about Q4 then, just to get to your question, I think -- so there's a couple of components here. One is RNS, and we'll talk about RNS here in a minute. But DIXI in particular, is one that I would point out. DIXI is forecast to be down. And we expect some of that just given the wind down of the business. And that's the biggest net impact versus our previous expectations and why we're kind of seeing some of the Q4 dynamics that we're expecting. But I'd tell you, RNS here, as we look at RNS for Q4, I'm not guiding outside of what we've guided, but I will offer that the RNS business in Q4 in October and in the quarter is off to a solid start, both with regard to execution as well as to our patient pipeline.

And so we feel real good about all that with some uncertainty and some downside offsetting that a little bit with DIXI. And I'll maybe ask Patrick to comment a little bit more on some of the levers.

Yes. Thanks, Joel. And I think Joel hit the nail on the head there. Look, we had a very strong quarter, and we really do try to look at this business in 6-month increments, and Joel has been very consistent prior to me coming here. And if you look at even at the midpoint, as I said in my prepared comments, once again, DIXI is the reason why the overall number didn't go up as much as it did, and we talked about why that is.

Let's focus on RNS. RNS in the first half of the year grew 21%. And at the midpoint of our implied guidance of Q4 for RNS of $20 million to $21 million, we're going to grow 23% in the second half of the year at that midpoint. And so we feel very comfortable with the durability of this business and where we're moving as we go forward, and Joel already hit it. We're off to a good start in Q4 with October, but that's really the components of it. So a strong quarter overall.

I mean just a follow-up, great to hear the news on the PMA submission. And now that we have some increased clarity on the potential expansion, could you just remind us on the plan of attack into potential approval and how quickly we could see some incremental growth contribution? Congrats on a great quarter.

Thank you. So our plan is -- in here, in particular, I'm referencing NAUTILUS in the idiopathic generalized epilepsy population. The plan is for submittal of the PMA supplement here before year-end 2025 and thinking about a 180-day clock there on a normal basis for a PMA supplement that would put us in mid-2026. And so that's what we've talked about. We're on track for that. Of course, they can each take on their personality and the time will take -- the time that it takes, but we're on track for submittal here in -- before the end of the year and getting the clock started for midyear '26.

Your next question comes from the line of Mike Kratky with Leerink Partners.

Congrats on a great quarter. To start, let me just say I'm immensely grateful for all the additional disclosures you're providing moving forward. So massively appreciate that. Really impressive RNS growth this quarter. I guess to follow-up on a prior question, it looks like the implied 4Q guidance for gross margin might also be implying a bit of a step down. So especially if DIXI might be a little bit lighter than anticipated, how should we reconcile some of your commentary just on the RNS strength with the implied step down in gross margin? I would have probably thought that would have been a little bit higher as RNS ticks up as a percent of revenue.

Yes. This is Patrick here. Fair question, Mike, and good to have you back on the call. Look, I would say that, as we said in our prepared comments, we continue to believe that RNS will be north of 80%. 80% is a minimum bar for us. And I would just chalk it up as us not wanting to get ahead of ourselves. There is some movement in DIXI. We did say approximately $3 million. Is there a chance we sell more than $3 million as we're exiting the business? Potentially, and that could obviously have a drag on the overall gross margin. So I would really just view it as more of a mix issue related to DIXI as opposed to anything else.

I will be very clear again, as I said in my prepared comments, as we move into 2026 and we are an RNS business, you should be modeling a gross margin that's 80% at a minimum, and we'll provide additional color when we officially guide 2026. And then we had a good question on service revenue, so I might as well hit that real quick. Look, service revenue has very good margins for us. And I think the key there for everyone is we will come back to you when we see additional potential service revenue streams that we have. But rest assured, we will be looking to optimize and maximize as best we can the monetization of our really good data and how we can support some of these pharma collaborations.

And maybe just one follow-up. I really appreciate the color on Seizure ID. Can you just talk about how that fits into your broader portfolio? And is that something that you expect to generate revenue or will be more of a support tool moving forward?

Thanks for that, Mike. Yes, we're excited about Seizure ID. And as I mentioned, it's the first in what we expect to be a suite of tools that we'll be leveraging our proprietary EEG data and then AI-based algorithms that we've developed internally as well. So what we expect from Seizure ID is to make it more efficient and easy for clinicians to be able to identify episodes that are long episodes and the areas that they want to look at most closely for therapy and for changes in therapy to continue to improve outcomes.

So the reason that matters is that for some patients, these cycles of particularly important EEG information are complex enough or occur over a long enough period of time that regardless, and we have tremendously talented and dedicated customers, a human can't pick them out if those cycles are coming over sometimes weeks or months of a period of time. And so when they look at that information and when Seizure ID looks at that information, it can very efficiently and effectively pick out those hallmark EEG patterns and make it easier for them to identify the areas of interest and then tailor therapy along with that.

And so again, efficiency and ease of use leading to improved clinical outcomes is the focus of that particular tool. And the way we see that adding value in the business is through increased numbers of patients having access to an improved therapy causing us to both be able to compete with other treatment approaches as well as make RNS more easily accessible for people to have more RNS patients in their practice. So it's really all about making RNS more accessible and the improvements associated with it more accessible. And that's how everybody will see value from Seizure ID.

Your next question comes from the line of Vik Chopra with Wells Fargo.

This is Simran on for Vik. Maybe just to start off on the margin commentary, very helpful color. I guess I just want to clarify, should we be thinking about 80% gross margin as a baseline for 2026? And are there any additional like puts and takes that we should consider on the margin line going forward?

Eighty percent is a fair number to model. RNS has been running ahead of that. The only caveat I would put is if there's some trickling DIXI revenue that happens in Q1. But again, as I said, the wind-down period does officially end Q1 of 2026, but we plan to be substantially done with sales. But again, I think modeling an 80% would be very fair from that standpoint going forward.

And then maybe just on NAUTILUS. I appreciate your reiteration of the timelines there. But when can we expect to see the full data set from NAUTILUS publicly?

So there are a couple of different opportunities for us to get the data out with NAUTILUS. We do expect to have a poster abstract presented at AES, and we are also planning on submitting for a presentation at AAN next spring as well. So a couple of different opportunities there, and we're looking forward to talking to people about the updated data.

Your next question comes from the line of Frank Takkinen with Lake Street Capital Markets.

Congrats on a great quarter. I was curious if we could maybe talk a little bit more about the NAUTILUS data and your sense of industry awareness around that data. And I know it's something you can't market for and you won't talk directly to, but I think the concept of off-label use is something we've discovered in our conversations with physicians. Just curious if that had maybe contributed some in the quarter in the practice -- in accordance with the practice of medicine, if doctors are using that a little bit more off-label and that they have some clinical data to support that.

So I think in the past, Frank, we have talked about that investigators are really the only people who are aware of the detail around the data outside of what's been presented publicly. And the business performance in the quarter, it doesn't come to mind for me that any -- there's nothing unusual in the quarter and nothing with regard to the practice of medicine variation that would have been impacted by the NAUTILUS results or any of the IGE data.

I think as had been mentioned previously, we saw positive reactions from the investigator discussions with regard to the safety data as well as regard to the prespecified secondary endpoints. And so we were pleased to hear that from the investigator community, but nothing unusual in the quarter otherwise.

Yes. I would echo that. And remember, we have a little bit of a long, let's call it, "clinical sales cycle" here, right? It takes a little bit of time for a patient once they get into a Level 4 and then that journey that they go through, right?

So I think the most exciting thing that we're looking forward to is that when we submit and potentially get that IGE approval, the ability to put the entire organization behind that and be able to speak openly to doctors, obviously, and talk through that and being able to do both focal and IGE in the adult population is going to be a huge win for us. And some people would say 1 plus 1 may equal more than 2 when this is all done. So I think that awareness and our ability to support it is going to be a key tailwind as we move through 2026 and beyond.

And then maybe just a big picture question. Clearly, you've been outpacing, I think, where some of your competitors have been growing. If you were to speculate, do you think more of your growth is coming from market expansion or market share taking?

I think that it's really a combination, Frank. And I think if we go back to the drivers here, we're seeing an expanded adoption of RNS and we're seeing expanded utilization as well. So people are expanding the use of RNS within their practices, and we think RNS is a unique technology that allows them to treat patients uniquely and differently than they can with other therapies.

And so I think whether it's specific focal patients or corticothalamic stimulation with a network stimulation approach or the things they can do from a hybrid perspective in addition to resection and surgical candidates, RNS opens up populations of people that can be treated according to the unique capabilities of RNS. And then I do think as well, with the data, in particular, the post-approval study data that has come out, we're winning more than our fair share of the device appropriate patients because of the data and because of the technology.

So as I mentioned in a couple of different places in my prepared comments, I think there's a number of different factors that are converging here. The data, the unique capability of the technology, the future potential that people see with the technology and whether that's for future indications or for the future ability kind of future-proof your patient. Here's how we can access today a unique platform that is positioned well for tomorrow and the way things are shaping up, I think we're advancing on both fronts.

Your next question comes from the line of Ross Osborn with Cantor Fitzgerald.

Congrats on the strong quarter. Starting off, is there any color you can provide on where you think the label will shake out for IGE based upon your most recent interactions?

Well, I think as we've discussed previously, we have -- we plan to submit for the entire study population in NAUTILUS. And so I think you can get a pretty good idea for where the label will shake out based on the study patient population.

Okay. Great. And then sticking with expanded indications, what level or type of data generation do you think you'll need to develop for the pediatric space to support approval?

Well, I think with the pediatric space, it's not so much data that would need to be developed. And that's really our approach here is the use of real-world evidence to support a retrospective submission for this indication. And I feel like we've made a lot of really good progress with the agency, with NEST, with the clinical providers of the data. And so we think the data is there. It's a matter of aligning the fit-for-purpose protocol and indices and endpoints with the real-world data that exists and what the agency is looking for. And so that's really where our focus is.

So I don't think that we need to generate additional data. It's a matter of really matching up a high-quality data set with a trial design that is going to meet those needs. And I'm really -- I'm pleased with the level of engagement and the work that's been done there. But as you might expect, when you're doing a real-world evidence study, a lot of the work goes on, on the front end versus a prospective study where a lot of the work goes in on the back end. And so we're spending the time to make sure we've got that well aligned now. And again, we were very confident in the strategy, and that's what we're working on.

I think that's the key point that Joel just hit at the end there, which is because of the uniqueness of this pathway that we're looking at and the retrospective of using real-world data, there potentially is opportunity to make up time on the back end as opposed to your more classical like a NAUTILUS clinical trial that we're doing. And so we'll give everyone updates, obviously, on this as we move through it, but that would be a bit of the silver lining I would have people understand.

Your next question comes from Yi Chen with H.C. Wainwright.

This is Eduardo on for Yi. Congrats on the great quarter. Just I guess, a question regarding Project CARE. There were some question earlier about it and how you're seeing growth in Level 4 centers versus in kind of these other practitioners and especially in light of the potential IGE expansion, do you see Level 4 centers still being the primary places of growth? Or do you think having this different patient population involved could change the way you go about your sales tactics?

The short answer is yes. And I'm not trying to be cheeky, Eduardo. We see the Level 4 centers being a key and primary source and focus of growth for us. That's where we've built our business today. That's where the growth is coming from today, and we see a significant runway to access and treat patients in the Level 4 centers. We see the care centers and indication expansion as complementary to that.

It allows us to reach out for patients that either couldn't have or wouldn't have been referred into Level 4 centers that can be appropriately treated out in the community, and we see that. And then it also positions us for indication expansion into the IGE population potentially, where if patients don't need to be referred into a Level 4 center for an SEEG study, it can allow them to be treated closer to home. So we really view the 2 approaches as complementary. And I think we saw that complementary effect here in Q3.

The vast majority of our growth came out of the Level 4 centers, but we also saw sequential as well as year-on-year growth within the care centers. And so I think it's a both and rather than an either/or, and that's where we're focused.

Thank you so much for the detail and the extra color there. I also wanted to follow-up if there's any update. You guys had mentioned other investigator-initiated trials surrounding a variety of other indications: Depression, eating disorders, PTSD, and cognitive dysfunction. I'm curious any update there? Anything that we should be looking forward to or exciting developments in that space?

I think it's an exciting development, and we did talk about it at the Investor Day. So thank you for bringing that back up. I think one of the exciting developments is the things that we've talked about here in terms of tailored therapy, individualized and personalized therapy and what data and data science is doing to develop around us lend themselves very much toward alternative disease applications similarly to the way that they do with epilepsy.

So I'm not going to get out too far ahead of that. But I would say that we think that a lot of the things that we're excited about converging here converge in a way that allow us to level -- my gosh, leverage the platform and that's true in epilepsy. It's also true in alternative disease applications. And so we think that further points to how well the RNS system is positioned both for today as well as for tomorrow.

And more to come on some of that when we do more formal investor updates, but I think you're cluing in on something that we think is important and one that can be leveraged with RNS down the road even further.

And with our last question, the question comes from Paige Chamberlain with Wolfe Research.

I'm hoping to get some quantification around your market expansion efforts through Project CARE. I see a couple of goals you guys have laid out around this initiative. I want to ask you guys on 2. So first, I see the target of expanding your reach to an additional 1,800 epileptologists. I'm just wondering, benchmark how many of those have you reached so far and maybe just a general timeline and vision for that.

The second one I see is to more than double the number of implants and referrals coming from CARE accounts in 2025. Curious the starting point for that going into 2025 and perhaps now sitting in November, are you on track to double?

So thanks for the question -- the questions. With regard to doubling in 2025, it's really using 2024 as our baseline, and we're really pleased with the progress that we're making here in 2025. And our plans for CARE for this year are very much on track to answer your question.

With regard to the 1,800 epileptologists that are out there, that's absolutely the right number. And there are a number of different ways that we can look to reach that group of epileptologists starting with the first one is a very targeted approach. So we've identified centers, both Level 3 centers as well as community centers that have what I'll call the complementary assets in place, which are the functional neurosurgeon capability, the patient population, the internal assets from an equipment and software perspective as well as administrative support and patient populations that we think make up good targets for us.

And that's the group that we're looking to penetrate first. And we're still in the early days of the penetration of that group. We're pleased with what we're seeing, but we've got a long way to run in terms of that total group of 1,800 as well as a good forward-looking trajectory even in our initial targets. So again, early days with CARE, but we like both the sequential as well as year-on-year progress that we're seeing and plans for '25 are on track, and we think that CARE can be an important strategy for us longer term, both for the current patient populations as well as, as we expand into IGE. And we track all those metrics internally.

We haven't discussed them quite on a quarterly basis externally, but we'll certainly take that into consideration. But I think the key quantitative/qualitative is that we saw increase in prescribers in the quarter as well as an increase in utilization at that prescriber level. And so we're very, very happy with the penetration that's happening. CARE is clearly a part of that. And again, as we think going forward to kind of wrap this up with some of the other questions, as we get that additional indication, we think that we'll hugely benefit from that.

But with that said, we've got a huge runway with our adult focal epilepsy, which is why we've been very consistent on saying we believe we can grow at a minimum of 20% on the RNS platform for the foreseeable future.

I'll sneak in one more, if I may. I echo the appreciation for the additional disclosure around DIXI and service revenue lines. I guess I'll test my luck to see if we can get the same incremental detail around replacement. I know you guys obviously don't break that out. But the trough sort of for this revenue line has been described as this year, earlier this year, we're all doing our best to stab at this number. I'm just wondering if, directionally, you can nudge me should we be thinking about replacement revenue going north from here?

Yes. Directionally, what we try to focus on is clearly our initial implants. At some point, it'll start seeing a larger contribution from replacement as some of the competitive neuromodulation devices have a huge majority of their revenue is based on replacements. Ours is a very, very small percentage at the end of the day. So we call it less than 10%. And depending on the quarter, it's kind of in that even mid-single digits. So more to come on that.

We are -- obviously have models that say when do we think replacements will come, but we're still a little bit aways from having a significant cycle, especially with meaningful units being placed over the last, call it, 2 or 3 years. So we look forward to that time. But for now, I think modeling initial implants is probably fair, and we'll provide more color as it becomes larger.

Thank you. And with no further questions in queue, I'd like to turn the conference back over to Joel Becker for any closing remarks.

Thank you very much. We're pleased with the performance in the quarter and the direction and trajectory of the business. And as I mentioned in my prepared comments, we believe that there are multiple factors that are beginning to converge here, both with the results that we see as well as the way RNS is positioned and NeuroPace is positioned to build on that momentum. We have world-class opportunities, world-class technology, world-class data, and we've got a world-class team in place to deliver on them.

And these foundational factors are exciting for us and position RNS and NeuroPace in a position to really establish ourselves as the standard of care in epilepsy neuromodulation. I'd like to thank all of the members of the NeuroPace team for their ongoing tireless efforts to advance our mission. And thank you all for your time today and for your continued interest in NeuroPace.

This concludes today's conference call. You may now disconnect.