NeuroMetrix Reports Q1 2024 Business Highlights

Rhea-AI Summary

NeuroMetrix (Nasdaq: NURO) reported its Q1 2024 financial results. The company focuses on reducing neurological disorders and pain syndromes through non-invasive medical devices. Recent efforts include expanding the Board of Directors, reducing equity fundraising, and lowering operating expenses with a smaller workforce.

Quell® Fibromyalgia showed sequential revenue growth, with significant gains in unique prescribers and prescriptions. However, DPNCheck® faced a revenue decline due to Medicare Advantage market challenges.

Q1 2024 revenue was $1.1 million, down 37% from Q1 2023. Gross margin fell to 47%, and operating expenses rose to $3.8 million, resulting in a net loss of $3.0 million.

Positive

• Quell® Fibromyalgia has shown sequential revenue growth since its launch in late 2022.
• Unique prescribers in the commercial channel increased by 11% in Q1 2024.
• A 54% increase in total prescriptions for Quell® Fibromyalgia in Q1 2024 compared to Q4 2023.
• The company has reduced operating expenses and is working with a smaller workforce.
• The Veterans Administration (VA) channel has been recently entered, adding another sales avenue for Quell® Fibromyalgia.

Negative

• Revenue decreased by 37% to $1.1 million in Q1 2024 compared to Q1 2023.
• Gross margin dropped to 47% from 69% in the previous year due to reduced DPNCheck® sales.
• Operating expenses increased by $0.9 million, totaling $3.8 million in Q1 2024.
• Net loss increased to $3.0 million in Q1 2024, up from $1.6 million in Q1 2023.
• DPNCheck® revenue continues to decline due to Medicare Advantage market challenges.

Insights

Financial Analyst

The financial results of NeuroMetrix for Q1 2024 reveal some concerning trends for investors. The revenue decline of $0.6 million or 37% from Q1 2023 is significant, primarily driven by reduced sales volume for DPNCheck and lower gross margins. The drop in gross margin from 69% to 47% indicates that the company is facing challenges in maintaining profitability, largely due to lower sales of higher-margin products and increased indirect manufacturing costs. Additionally, operating expenses have risen to $3.8 million, up by $0.9 million compared to Q1 2023. This increase includes costs associated with a reduction in workforce and professional services fees related to a strategic review process. Consequently, the net loss widened to $3.0 million ($1.67 per share) from $1.6 million ($1.64 per share) in Q1 2023. This financial strain suggests that the company is burning through cash at a faster rate, raising concerns about its ability to sustain operations without further dilution or additional funding rounds. Investors should closely monitor how the firm plans to address these financial challenges and consider the long-term viability of its business model.

Medical Research Analyst

From a medical technology perspective, the expansion of the Quell® Fibromyalgia device into the Veterans Administration (VA) is a positive development. The sequential revenue growth since its launch in late 2022 indicates market acceptance and potential scalability. Moreover, the recent study validating the DPNCheck technology for detecting diabetic peripheral neuropathy is promising, as it could bolster clinical confidence and drive future adoption. However, the overall revenue erosion of DPNCheck due to CMS's phase-out of compensation for patient screening is a significant headwind. The value-based care opportunities outside the Medicare Advantage market may offer new paths for revenue, but these efforts are still in exploratory stages. The company’s focus on reducing operating expenses and curtailing equity fundraising reflects a strategic shift towards sustainable growth, but it will be important to see tangible results from these initiatives before substantial investor confidence can be restored.

Market Research Analyst

The market dynamics that NeuroMetrix is navigating are complex. The increase in unique prescribers and prescriptions for Quell® Fibromyalgia suggests solid traction in the commercial channel. However, the near-term outlook is tempered by the backdrop of declining revenue from DPNCheck, affected by regulatory changes. This duality highlights a transition phase where the company is attempting to offset losses in one segment with gains in another. The strategic decision to reduce the workforce and limit equity fundraising suggests a pivot towards leaner operations, potentially preserving cash and focusing on high-growth areas. Investors should assess the company’s ability to capitalize on these new markets while managing the risks presented by the changing regulatory environment. Recognizing the potential of Quell® Fibromyalgia is key, but so is the need for vigilance regarding regulatory impacts on revenue streams like DPNCheck.

WOBURN, Mass., May 15, 2024 (GLOBE NEWSWIRE) -- NeuroMetrix, Inc. (Nasdaq: NURO) today reported financial and business highlights for the quarter ended March 31, 2024. The Company's mission is to reduce the impact of neurological disorders and pain syndromes through innovative non-invasive medical devices.

“We are focused on maximizing shareholder value,” said Shai N. Gozani, M.D., Ph.D., Chief Executive Officer of NeuroMetrix. “Shareholders have recently provided valuable insights in addition to those of our financial advisor, Lucid Capital Markets (formerly Ladenburg Thalmann & Co.). Our process to evaluate strategic options has led to the expansion of our Board of Directors, and a decision to curtail equity fundraising. In addition, we decided to reduce operating expenses with a smaller workforce.”

Dr. Gozani continued, "Quell^® Fibromyalgia has posted sequential revenue growth in each quarter since launch in late 2022. We have two primary sales channels; commercial health care providers which is cash pay and the Veterans Administration (VA) which is reimbursed. Most of our sales in the current quarter came from the commercial channel, as we just entered the VA in the first quarter. Revenue in the current quarter also benefited from higher electrode refill pricing.”

“Our DPNCheck^® business continues to reflect revenue erosion as the Medicare Advantage (MA) market enters the second year of the Centers for Medicare and Medicaid Services (CMS) three-year phase-out of compensation for patient screening for a number of conditions, including peripheral neuropathy. The environment is challenging; however, we continue to support our existing accounts and explore value-based care opportunities outside MA.”

Business Highlights:

• Quell Fibromyalgia operating metrics in Q1 2024 demonstrated continuing growth. In the successive quarters of Q1 2024 versus Q4 2023, unique prescribers in our commercial channel were up to 221 (11% increase) and a total of 895 (54% increase) prescriptions were written. A total of 454 (28% increase) devices were shipped between the commercial and VA channels, The total number of electrode refills increased to 666 months (26% increase).

• In March, the Company reported that over 2,000 patients with fibromyalgia have been prescribed Quell Fibromyalgia since its strategic commercial launch in December 2022. 

• The Company noted the recent publication of a large study by Professor Kamiya and his colleagues (Hayashi and colleagues) demonstrating that DPNCheck combined with standard EKG or DPNCheck alone accurately detects diabetic peripheral neuropathy. This study adds to the already sizeable body of clinical validation for the DPNCheck technology.

Financial Results:

Revenue in Q1 2024 of $1.1 million was lower by $0.6 million or 37% from Q1, 2023 primarily due to reduced sales volume for DPNCheck. The gross margin rate of 47% in Q1 2024 declined from 69% in Q1 2023 reflecting the reduction in high-margin DPNCheck revenue, reduced absorption of indirect manufacturing costs, and inventory reserve charges primarily for excess parts. Operating expenses were $3.8 million in Q1 2024, an increase of $0.9 million from the comparable period in 2023. This increase included costs related to the reduction in employee headcount of $0.6 million. In addition, professional services costs, primarily related to the strategic review process, increased by $0.3 million from Q1 2023. The Q1 2024 net loss was $3.0 million ($1.67 per share) versus a net loss of $1.6 million ($1.64 per share) in Q1 2023.

About NeuroMetrix

NeuroMetrix is a commercial stage healthcare company that develops and commercializes neurotechnology devices to address unmet needs in the chronic pain and diabetes markets. The Company's products are wearable or hand-held medical devices enabled by proprietary consumables and software solutions that include mobile apps, enterprise software and cloud-based systems. The Company has two commercial brands. Quell^® is a wearable neuromodulation platform. DPNCheck^® is a point-of-care screening test for peripheral neuropathy. For more information, visit www.neurometrix.com.

Safe Harbor Statement

The statements contained in this press release include forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, including, without limitation, statements regarding the company’s or management’s expectations regarding the business, as well as events that could have a meaningful impact on the company’s revenues and cash resources. While the company believes the forward-looking statements contained in this press release are accurate, there are a number of factors that could cause actual events or results to differ materially from those indicated by such forward-looking statements, including, without limitation, estimates of future performance, and the ability to successfully develop, receive regulatory clearance, commercialize and achieve market acceptance for any products. There can be no assurance that future developments will be those that the company has anticipated. Such forward-looking statements involve known and unknown risks, uncertainties and other factors including those risks, uncertainties and factors referred to in the company’s most recent Annual Report on Form 10-K, Quarterly Reports on Form 10-Q, as well as other documents that may be filed from time to time with the Securities and Exchange Commission or otherwise made public. The company is providing the information in this press release only as of the date hereof, and expressly disclaims any intent or obligation to update the information included in this press release or revise any forward-looking statements.

Source: NeuroMetrix, Inc.

Thomas T. Higgins
SVP and Chief Financial Officer
neurometrix.ir@neurometrix.com

NeuroMetrix, Inc. Statements of Operations (Unaudited)
	Quarters Ended March 31,
	2024				2023
Revenues	$	1,093,556			$	1,724,771
Cost of revenues		576,539				526,372
Gross profit		517,017				1,198,399
Operating expenses:
Research and development		943,552				699,425
Sales and marketing		1,061,729				815,872
General and administrative		1,765,727				1,393,171
Total operating expenses		3,771,008				2,908,468
Loss from operations		(3,253,991	)			(1,710,069	)
Other income		224,417				135,895
Net loss	$	(3,029,574	)		$	(1,574,174	)

NeuroMetrix, Inc. Condensed Balance Sheets (Unaudited)
	March 31, 2024				December 31, 2023
Cash, cash equivalents and securities	$	17,599,110			$	17,997,151
Other current assets		2,552,823				2,857,291
Noncurrent assets		512,195				569,999
Total assets	$	20,664,128			$	21,424,441
Current liabilities	$	1,847,170			$	1,240,639
Lease obligation, net of current portion		60,946				92,485
Stockholders’ equity		18,756,012				20,091,317
Total liabilities and stockholders’ equity	$	20,664,128			$	21,424,441

FAQ

What was NeuroMetrix's revenue for Q1 2024?

NeuroMetrix reported a revenue of $1.1 million for Q1 2024.

How did Quell Fibromyalgia perform in Q1 2024?

Quell Fibromyalgia showed sequential revenue growth with an 11% increase in unique prescribers and a 54% increase in total prescriptions.

Why did NeuroMetrix's gross margin decrease in Q1 2024?

The gross margin decreased to 47% due to reduced sales of high-margin DPNCheck® products.

What were the operating expenses for NeuroMetrix in Q1 2024?

NeuroMetrix's operating expenses increased to $3.8 million in Q1 2024.

How did the revenue from DPNCheck® perform in Q1 2024?

DPNCheck® revenue continued to decline due to challenges in the Medicare Advantage market.

What was NeuroMetrix’s net loss for Q1 2024?

NeuroMetrix reported a net loss of $3.0 million for Q1 2024.