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    NPCE
    Earnings call· Jun 2026(Q2 FY26)

    NeuroPace Q2 FY26 earnings call NPCE

    Aug 11, 2026 Source

    Executive summary

    NeuroPace Q2 FY26 — Strong Core RNS Growth Amidst IGE Regulatory Setback

    NeuroPace delivered robust Q2 FY26 results, driven by strong 21% growth in its core RNS System business, consistent with its long-term framework. While the IGE PMA supplement faced a setback, management expressed confidence in a path towards approval through the SIR process. The company continues to invest in product development, including the launch of ECOG Assistant and remote care capabilities, while maintaining financial discipline and improving its full-year adjusted EBITDA outlook.

    Highlights

    5

    • Total revenue increased 17% to $22.8 million.

    • RNS System revenue grew 21.3% to $22.5 million compared to Q2 2025.

    • Achieved new all-time highs in active prescribers, active accounts, and patient pipeline.

    • Adjusted gross margin remained strong at 83.4%.

    • Full-year adjusted EBITDA loss guidance improved to $7.5 million - $8.5 million from $8.5 million - $9.5 million.

    Concerns

    3

    • PMA supplement for idiopathic generalized epilepsy (IGE) was not approvable in its current form due to requests for additional clinical evidence.

    • Service revenue decreased significantly to $302,000 from $937,000 a year ago, representing an expected headwind of over 300 basis points to total revenue growth.

    • Adjusted loss from operations was $2.8 million in Q2 FY26.

    Guidance & targets

    13
    CategoryTargetConfidence
    Full-year total revenue
    $99.5M - $101.5M
    high materiality
    High
    Full-year service revenue
    approximately $1M
    medium materiality
    High
    Full-year RNS revenue
    $98.5M - $100.5M
    high materiality
    High
    Full-year RNS revenue growth (adult focal indication)
    21% to 23%
    high materiality
    High
    Q3 RNS revenue growth
    approximately 20%
    medium materiality
    High
    Full-year adjusted gross margin
    82% to 83%
    high materiality
    High
    Full-year adjusted operating expenses
    $90M - $92M
    high materiality
    High
    Full-year adjusted sales and marketing expense
    $46M - $48M
    medium materiality
    High
    Full-year adjusted research and development expense
    approximately $27M
    medium materiality
    High
    Full-year adjusted general and administrative expense
    approximately $17M
    medium materiality
    High
    Full-year adjusted EBITDA loss
    $7.5M - $8.5M
    high materiality
    High
    Remote care FDA submission
    by the end of 2026
    medium materiality
    High
    Cash flow breakeven
    exiting 2027
    high materiality
    Medium

    Segment performance

    2
    SegmentRevenueYoYQoQMargin
    RNS System
    Growth supported by continued adoption and utilization and favorable pricing compared to the prior year. First half RNS revenue was $44.2 million, representing 20.4% growth.
    		$22.5M21.3%——
    Service Revenue
    Expected headwind of more than 300 basis points to total company revenue growth.
    		$302,000-67.8%——

    Operational metrics

    14
    Total revenue
    $22.8M17% increase YoY
    Q2 FY26

    Reflects continuing operations.

    Adjusted gross margin
    83.4%down 60 bps YoY
    Q2 FY26

    Compared with 84.0% in Q2 FY25.

    GAAP gross margin
    82.8%
    Q2 FY26

    Reported GAAP gross margin.

    Adjusted operating expense
    $21.9Mup 3% YoY
    Q2 FY26

    Compared to $21.3 million in Q2 FY25, reflecting continued operating leverage.

    Adjusted sales and marketing expense
    $11.5Mup from $10.7M YoY
    Q2 FY26

    Primarily related to sales and field support personnel and other sales-related expenses.

    Adjusted research and development expense
    $6.3Mup from $6.0M YoY
    Q2 FY26

    Primarily reflects product development-related investments supporting next-generation platform and AI-enabled tools.

    Adjusted general and administrative expense
    $4.1Mdown from $4.6M YoY
    Q2 FY26

    Year-over-year decline primarily reflects one-time executive transition expenses in prior year, partially offset by higher personnel-related expenses.

    Adjusted loss from operations
    $2.8Mimproved from $5.0M loss YoY
    Q2 FY26

    Compared with a loss of $5.0 million in Q2 FY25.

    Adjusted net loss
    $3.9Mimproved from $6.8M loss YoY
    Q2 FY26

    Compared with a net loss of $6.8 million in Q2 FY25.

    Adjusted EBITDA loss
    $2.8Mimproved from $4.9M loss YoY
    Q2 FY26

    Compared with an adjusted EBITDA loss of $4.9 million in Q2 FY25.

    GAAP net loss from continuing operations
    $6.2Mimproved from $10M loss YoY
    Q2 FY26

    Compared with a net loss of $10 million in Q2 FY25.

    Cash, cash equivalents, short-term investments and restricted cash
    $51.9Mdown from $54.8M QoQ
    Q2 FY26

    Compared with $54.8 million at the end of Q1 FY26.

    Long-term borrowings
    $59.0M
    Q2 FY26

    Total long-term borrowings.

    Intracranial EEG recordings
    27M+
    cumulative

    Proprietary data asset generated from RNS system recordings, used for AI training.

    Industry KPIs

    10
    MetricValueDetails
    System utilization—
    Pricing realized price—
    New product launch rampECOG Assistant
    Procedure volume growth—
    FCF conversion leverage guidance—
    Installed base system placementsNew all-time highs
    Segment franchise organic growth21.3%%
    Sales force commercial capacity build—
    Indicated addressable patient population—
    Pivotal trial clinical evidence milestonesNAUTILUS study publication

    Product announcements

    1
    ProductTypeDetails
    ECOG Assistantlaunch

    Deals & partnerships

    1
    DIXI MedicalDistribution arrangement

    As of June 30, 2026, the company is reporting its former distribution arrangement with DIXI Medical as discontinued operations. Financial results discussed reflect continuing operations, excluding DIXI Medical.

    Risks & headwinds

    3
    IGE PMA supplement 'not approvable' statusNear-term (next few weeks for SIR meeting, then amendment submission)

    FDA requested additional information regarding clinical evidence, not related to safety.

    Mitigation: Pursuing Submission Issue Request (SIR) process to align with FDA, preparing additional subgroup analysis, patient/physician-reported outcomes, and 24-month data. Expecting interactive review without full 180-day clock reset.

    Service revenue declineQ2 FY26, expected to be $1M for full year FY26 (up from $500k previous guidance)

    $302,000 in Q2 FY26, down from $937,000 in Q2 FY25 (67.8% decrease YoY). Expected headwind of over 300 bps to total revenue growth.

    Mitigation: Improved visibility into service revenue for full year guidance, but still a significant decline from prior year.

    Potential for FDA to reset 180-day clock for IGE amendment reviewFollowing IGE amendment submission

    Not quantified, but could delay approval timeline.

    Mitigation: Management expects an interactive review without a full reset, based on prior interactions, but acknowledges FDA discretion.

    What to watch in Q3 FY26

    4

    IGE SIR meeting and amendment submission

    Next few weeks / Q3 FY26
    CurrentPreparation on track for SIR meeting in next few weeks.
    TargetSIR meeting held, amendment submitted to FDA.

    Why it matters

    Resolution of the IGE PMA supplement is a major catalyst for future growth and market expansion.

    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.

    Q&A highlights

    6

    When is the specific date for the SIR meeting, what are the next steps, and is a resubmission still expected before year-end without a full 180-day clock reset?

    The specific SIR meeting date is not yet set, but preparation is on track for the next few weeks. Management expects to submit the amendment timely after the SIR meeting and anticipates an interactive review without a full 180-day clock reset, based on prior FDA interactions.

    “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.”

    asked by Anthony Petrone · answered by Joel Becker

    2 min read6 chapters

    Detailed Narrative

    01

    IGE Regulatory Process Update

    NeuroPace's PMA supplement for idiopathic generalized epilepsy (IGE) was deemed 'not approvable' by the FDA, requesting additional clinical evidence. The company is pursuing a Submission Issue Request (SIR) process to align with the FDA on an amendment, which is expected to include additional subgroup analysis, patient/physician-reported outcomes, and 24-month data. Management anticipates the amendment may be reviewed without resetting the full 180-day clock, and preparation for the SIR meeting is on track for the next few weeks.

    02

    ECOG Assistant Launch and AI Strategy

    NeuroPace launched ECOG Assistant, its first AI algorithm-based tool designed to help clinicians identify ECOGs of interest, review trends, and assess circadian patterns. This tool leverages the RNS System's unique ability to continuously monitor intracranial EEG data and is intended to improve workflow efficiency and clinical decision-making. The company's broader AI roadmap includes additional AI-enabled tools, a multimodal foundational model, and automated detection, all powered by over 27 million proprietary intracranial EEG recordings.

    03

    Remote Care Development Progress

    Development of remote care capabilities, allowing physicians to program RNS patients via telehealth and enabling patients to prepare their device for MRI without physical presence, is progressing. Usability testing and validation activities were advanced during the quarter. NeuroPace expects to submit Remote care to the FDA by the end of 2026, aiming to reduce patient travel burden, expand access, and improve physician efficiency.

    04

    Core RNS Business Performance and Growth Drivers

    The core RNS business demonstrated strong momentum, with RNS System revenue growing 21.3% year-over-year in Q2 FY26 and over 20% in the first half of 2026. This growth is attributed to increased adoption and utilization within Level 4 comprehensive epilepsy centers, expansion of referral pathways through community access initiatives, and favorable pricing. The company achieved new all-time highs in active prescribers, active accounts, and its patient pipeline, indicating broad and durable adoption.

    05

    Next-Generation Platform and Long-Term Vision

    NeuroPace is actively developing its next-generation hardware platform, which will expand system capabilities, including potential for additional lead configurations and Bluetooth low-energy communication. This platform is designed to buttress and further support the company's AI and remote care initiatives, positioning it for future product development. Management emphasized the unique, proprietary nature of the RNS platform's data collection and AI analysis as a key differentiator for personalized therapy.

    06

    Financial Discipline and Profitability Path

    The company continues to demonstrate strong financial discipline, with adjusted gross margin at 83.4% and operating expense growth significantly below revenue growth. Adjusted operating expenses increased approximately 3% year-over-year. NeuroPace is balancing investment in long-term growth opportunities with progress towards sustainable profitability, improving its full-year adjusted EBITDA loss guidance. The company remains committed to its long-range plan of achieving cash flow breakeven by exiting 2027.

    AI-generated summary of the company’s earnings call. Not investment advice.