NeurAxis (NRXS): Q2 2026 Earnings Review

Today, NeurAxis reported its Q2 2026 results.

This was the company’s second full quarter operating under the Category I CPT code environment, and in many ways, the underlying trends were a continuation of what we saw in Q1.

The stock reacted negatively, however. Revenue of $1.93M came in slightly below the $2M consensus estimate, which itself is based on just two analysts, and the market appears to have treated that modest miss as the headline.

I think that interpretation misses the bigger picture entirely, and I’ll explain why below.

Let’s dive in.

• Revenue of $1.93M vs. $2.00M est. (+116% YoY and +20% QoQ)

Growth accelerated from +80% YoY in Q1 to +116% in Q2.

The strongest quarterly revenue in the company’s history, as expected.

• IB-Stim unit deliveries +60% YoY (vs. +32% YoY in Q1)

Volume growth nearly doubled its pace from Q1, a clean sign that adoption is accelerating.

• IB-Stim ASP of $992 +28% YoY (from $778)

The mix shift away from discounted financial assistance volumes toward fully reimbursed payer-covered procedures continues to drive revenue quality.

One observation: ASP dipped slightly from Q1’s $1,017, which is likely quarter-to-quarter mix noise, but it’s worth watching. YTD ASP stands at $1,003 (up 30% from $772).

For context, the full list price is $1,195 per device (the natural ceiling for ASP as the mix continues to shift toward full reimbursement).

• Gross margin of 85.9% (+230 bps YoY from 83.6%)

H1 gross margin of 86.1% vs. 84% last year. Management expects the mix shift to keep pushing margins higher, still trending toward the >90% target.

• Operating expenses of $3.8M (+53% YoY and +21% QoQ)

Selling expenses of $862k (+61%), driven by higher sales commissions on increased volume, new sales hires, recruiting costs, and travel.

R&D of $274k (+138%) on the expanded clinical study activity.

G&A of $2.6M (+46%), reflecting increased clinical and market access headcount, advisory costs, the third year of a three-year equity vesting plan, and higher performance-based incentive compensation.

This is the deliberate spending acceleration management told us was coming.

• Operating loss of $2.1M (+24% YoY from $1.7M)

• Net loss of $2.1M, EPS of -$0.19 (improved from -$0.22)

For the first half, the operating loss of $3.9M was actually 4% lower than last year despite the stepped-up spending. Importantly, that figure includes non-cash expenses, so cash burn gives us a clearer view of the underlying picture.

• Cash burn: $1.0M (vs. $1.5M in Q2 2025)

The 2026 average quarterly burn of ~$1.1M compares to ~$1.5M in 2025.

Tim was upfront that cash burn will tick up in the second half as the new hires flow through the P&L, before returning to roughly the current run rate next year as the revenue generated by those hires begins to materialize.

• Cash on hand: $8.3M as of June 30

The company raised $2.5M during the quarter through the ATM facility and warrant redemptions, and notably hasn’t used the ATM since May.

• Internal Prior Authorization Approval Rate: 31% YTD vs. 12% in 2025

Essentially flat compared with Q1’s 32%, yet still nearly three times last year’s level.

Recall the framework from last quarter’s review: the gap between ~31% and Brian’s stated 80% target is a rough proxy for the latent demand already sitting in the funnel today. That gap alone, with no other changes to the business, represents most of the path to breakeven.

• Ordering Accounts: 88 YTD (+16% YoY from 76)

With 66 unique accounts having ordered in Q1, this implies that 22 accounts placed their first order of the year during Q2.

• Average Revenue per Ordering Account: $40k YTD (+68% YoY from $24K)

Depth is scaling much faster than breadth, which is exactly the account-level dynamic Brian has been describing since last quarter: accounts with coverage, a physician champion, and dedicated clinic time keep ramping.

Brian also said they’re working on penetration-rate metrics per children’s hospital, which may be added to the KPI framework in coming quarters.

• Total Covered Lives: >100M

No major new payer was added during the quarter, but this is where some of the most important progress actually happened. More on that below.

Balance Sheet and the Path to Breakeven

Cash of $8.3M, quarterly burn of $1M, and the ATM untouched since May.

The liquidity picture is the healthiest it has been in the company’s public life, and this quarter’s improvement came from lower operating outflows alongside the $2.5M raised earlier in the quarter.

Again, Tim was transparent about the trajectory from here: cash burn will increase in the second half as the Q2 and Q3 hires hit the P&L ahead of the revenue they’re expected to generate, with the expectation of returning to the current run rate next year. This is the same tradeoff I endorsed last quarter, and I still think it’s the right one. Protecting a lower burn number at the expense of slower adoption would be the actual mistake, especially with the CPT code demonstrably working in covered markets.

On breakeven itself, Tim reiterated that cash flow breakeven depends on the continuation of the growth trajectory, and both he and Brian tied the timeline explicitly to the next payer wins: one or two large payers would provide the “slingshot run at profitability.”

“Do I want to be profitable? Of course, yesterday. But I don’t want to be profitable more than I want to drive revenue, and the revenue opportunity in the states where we have insurance policy coverage significantly outweighs the desire to be profitable.”

– Brian Carrico, CEO

Two housekeeping items worth flagging:

First, the preferred share dividends were paid in common stock rather than cash in both Q1 and Q2. The Q3 and Q4 decisions rest with the board, but there’s a clear trend of preserving cash.

Second, in my Q1 review I flagged Tim’s guidance for a one-time, non-cash stock compensation charge in excess of $4M expected in Q2, tied to the cancellation of legacy stock options and their re-issuance as RSUs. That charge isn’t in the Q2 numbers, but it hasn’t gone away, it simply slipped into Q3. The exchange was executed on July 24, and the company now estimates $3.4M of incremental stock compensation expense to be recorded upon execution, slightly below the original guidance.

Importantly, the filing also discloses ~$3M of cash taxes to be paid related to the net share settlement of those RSUs.

So set your expectations for the Q3 report accordingly: GAAP results will carry a large one-time non-cash charge, and there’s a real ~$3M cash outflow attached, which is material against the $8.3M cash balance and will make the Q3 burn look far worse than the underlying business. None of this changes the operating picture, and cleaning up a legacy 2017 option plan is reasonable housekeeping, but I’d rather flag it now than have anyone surprised in November.

Practically, this means I expect the company to tap the ATM again in the future. My guess on timing would be around the announcement of major payer wins, since those tend to create high-volume trading days that make it easier for the market to absorb new shares. That’s essentially what happened last December, when the Anthem news provided enough liquidity for the company to sell shares into strength, and I wouldn’t be surprised to see the same playbook used again on the next major wins. I also don’t expect it to have much impact on price action, since any ATM usage likely wouldn’t come with a separate press release and we would only find out after the fact through the quarterly filings.

This is also consistent with what Brian told me back in April: the idea is to use the ATM opportunistically on strong-volume days while keeping dilution to a minimum. If you remember from my Deep Dive on the company, my valuation model already included some dilution, so none of this comes as a surprise. There’s still plenty of room before reaching the share count I modeled.

To me, this was the most important update of the quarter.

Brian reported significant improvements with two large key commercial payers. As always, he wouldn’t give names or dates, but the company recently gained improved access to medical directors and decision-makers at two of the largest remaining payers without existing medical policy coverage, and management is now “cautiously optimistic“ that these efforts result in additional coverage in the second half of 2026 or early 2027.

When Craig-Hallum pressed him on where the confidence comes from, his answer was specific:

“My confidence comes from the fact that we’ve had direct conversations. I wouldn’t be confident if we didn’t have direct conversations with a payer who made comments or alluded to the fact that they also believe this should be a covered service, and these are direct firsthand conversations.”

Later, answering Sergio Heiber (whose coverage of the stock I continue to recommend), he went further:

“The one additional large payer, let alone two additional large payers, will unlock significant revenue and give us a slingshot run at profitability, if not get us to profitability... I know dates and I understand when things are happening, but I’m not going to talk about that today.”

This is the strongest language we’ve heard on the payer front to date. It echoes everything from my previous updates: the barrier was never clinical opposition, it was access to the right decision-makers. Those conversations are now clearly happening.

The machinery behind this effort has also broadened considerably.

Payer outreach now runs through multiple parallel channels: direct engagement with commercial payers and their medical policy teams, physician and KOL advocacy, engagement with both pediatric and adult academic societies, navigation and messaging guidance from former payer executives and medical directors, and continued expansion of the internal prior authorization team to improve administrative efficiency for providers.

Tim added color on this in the Q&A: the company sought out third-party payer experts during Q2, and part of the increased G&A was precisely the cost of getting in front of the right people at these two large payers, a path they had never gone down before, now being converted into a full-time internal hire. The pitch itself is unchanged: IB-Stim addresses a large unmet need in pediatric functional abdominal pain, offers a favorable safety profile, provides an evidence-based alternative to off-label medication use (including drugs carrying FDA black box warnings), and is becoming the standard of care in children’s hospitals nationally.

Two important points worth noting.

First, when asked directly whether investors should expect NeurAxis to exceed 200M covered lives in 2027, Brian said he would be “highly disappointed” if the company were not above that level by then. To me, this was one of the highlights of the call. Reaching 200M covered lives would essentially put NeurAxis across the entire serviceable market, meaning the company would have the reimbursement coverage in place to ramp revenue at full speed.

Second, he reiterated the coverage threshold that unlocks more aggressive hospital adoption: hospitals generally want to see roughly 70% of their patient population covered. Each additional large payer can therefore push an entire group of hospitals over that threshold at once, effectively converting existing demand into revenue-generating patients.

That’s essentially what’s holding the company back from growing even faster today. With only about half of the market currently covered by insurance, reaching that 70% threshold remains difficult for many hospitals. As coverage expands and that picture changes, I expect growth to accelerate further.

I’ve been saying for a long time that new agreements with major insurers represent the company’s next major catalyst, and I don’t think those deals have ever been closer.

To attack this upstream, NeurAxis is also adding a full-time VP of Healthcare Economics and Policy dedicated solely to payer advocacy, economic evidence generation, and health technology strategy, someone with a track record of bringing a procedure to market and winning medical policy coverage. The existing VP of Market Access and Reimbursement shifts fully downstream to execution: access pathways, reimbursement pull-through, and procedure economics.

About That “Miss”

With that context in place, the $2.00M estimate NeurAxis “missed” becomes much easier to interpret. The quarter-to-quarter revenue number is largely a function of how many hospitals have crossed the 70% coverage threshold, and that variable moves in steps, with payer wins.

Beyond that, this is a microcap covered by only two analysts. A $70k delta on a $1.93M quarter is well within the noise of prior authorization timing, hospital scheduling, and summer seasonality. Brian mentioned that monthly revenue may fluctuate, and payer coverage timing remains difficult to predict, but the underlying demand is more than clear.

What actually matters, in my view: even with still limited coverage, revenue grew 20% sequentially, unit growth accelerated from +32% to +60% YoY, gross margin expanded again, and the KPIs that track the mechanics of adoption all moved in the right direction. The commercial hires made in Q2 take, by Brian’s own estimate, 90 to 120 days to translate into revenue. He framed Q3 as “to be determined” and expects more visible sequential growth by Q4.

And then there was this exchange, which I think perfectly captures where this company is in its lifecycle. Asked about growth, Brian said:

“I’m not happy with these numbers. Nobody’s thrilled with these numbers. Yes, we grew 116%, but the number of patients not being treated... we’re basically treating no one.”

That’s not a CEO making excuses for a soft quarter. That’s a CEO pointing out that even at record revenue, the penetration of the addressable patient population is still minimal, and the constraint remains insurance policy coverage, not demand.

Medicaid

Many states have yet to include CPT code 64567 on their 2026 fee schedule updates. This hinders medically necessary coverage through the EPSDT provision, delays program launches, and impacts account activation.

Importantly, Brian was explicit that these are implementation issues rather than clinical adoption issues. In markets where medical policy coverage and fee schedule inclusion are both in place, the CPT code is having exactly the intended effect. The company is actively working state by state to get the code loaded.

Recall from Q1 the reason this matters: Medicaid is typically 20-30% of patient volume at most hospitals, so fee schedule inclusion materially raises an account’s covered share and helps push borderline accounts over the adoption threshold.

Q1 was the learning quarter. Q2 was the quarter where the organization was rebuilt around those learnings, and the changes are now concrete.

The sales organization was aligned under a full-time VP of Sales effective May 1, with marketing elevated under a VP of Marketing at the same time. In Q2, the company added a digital marketing expert to bring real SEO focus to patients and physicians in the best-covered states, a medical science liaison (MSL) delivering science-based talks at grand rounds and educational dinners, and a doctorate-level psychologist as director of clinical adoption and strategic accounts, focused on expanding referral sources and integrating IB-Stim earlier in the patient’s treatment pathway through integrative health programs.

Brian noted that only six weeks in, all three hires are already showing direct results.

The strategy remains disciplined and concentrated: NeurAxis isn’t expanding broadly into markets that lack payer coverage. Instead, it’s aggressively saturating the six to eight states with decent-to-good coverage through what management calls a strategic market initiative, coordinating payer access, field execution, clinical education, prior authorization support, KOL division talks, MSL support, and patient-facing digital awareness in the same targeted markets to create local intensity.

A more targeted regional rep coverage model is live in key covered states, sales training rigor has been increased, and several more commercial hires are planned for Q3. Beyond the payer-facing VP role mentioned above, the company is also actively pursuing a VP of Provider Economics-type hire, dedicated to communicating the economic and operational value of IB-Stim to administrators and hospital stakeholders, with the explicit goal of winning exponentially more dedicated IB-Stim clinic time.

Brian’s summary of the philosophy: coverage unlocks the opportunity, but execution determines the level of growth.

One more signal buried in the call that I want to highlight: on some of the best accounts, patients are now waiting multiple months for care due to hospital capacity constraints. Management intends to use this, along with the message that PENFS is among the most profitable pediatric GI procedures performed in the office setting, to push hospitals to expand dedicated clinic capacity. Demand isn’t the problem.

The VA opportunity took a major step forward this quarter.

Despite launching in only three small territories with reps who were splitting time with children’s hospitals, the company is already seeing multiple VA facilities placing orders, reorders coming in, and many more facilities moving through the activation process.

Based on that early signal, management made the decision in Q2 to aggressively expand: 10 commission-only territory reps, each calling on one to three VA hospitals. Positions were offered in the last week of July, and the expectation is that all 10 are trained and selling in the field by September 15. This is a catalyst for Q4 numbers.

The commission-only model means essentially no fixed cost: as Brian confirmed, these reps aren’t paid unless they sell, and this model has decades of precedent in medtech within the VA, attracting experienced reps with 15-20 years of existing relationships. The effort is led by the VP of Market Access and Reimbursement, who spent most of his career at Zimmer.

The goal is to have a strong read on the VA revenue opportunity by year-end, then expand significantly across the remaining VA hospitals in early 2027. Brian said they have clear internal expectations per rep but wouldn’t disclose them yet, committing instead to start breaking out VA expectations, and possibly revenue, on upcoming calls.

For framing: the VA serves nearly 7M active patients annually, with functional dyspepsia affecting roughly 3% of that population, a ~210K-patient addressable market (~$1B at full pricing) with centralized federal purchasing and no dependence on commercial payer policy.

I remind you that I excluded this channel entirely from my original market penetration estimates, so all of it remains incremental upside to the thesis.

The clinical pipeline continues to advance quietly in the background, with minimal spend. The multi-site adult functional dyspepsia RCT is investigator-initiated across six centers, with NeurAxis covering only devices and partial research coordinator costs.

Brian was emphatic that these aren’t CRO-scale dollars (a CRO, or contract research organization, is the kind of outsourced firm that runs trials for sponsors, typically at $5M+).

The pediatric Cyclic Vomiting Syndrome RCT is progressing, notably sharing the same call point as the current pediatric GI indication, and there’s an NIH-funded adult study underway with Emory University and Atlanta VA.

Brian clarified that they’re spending “virtually zero time and virtually zero resources“ on these. The focus is maximizing the indications they already have.