Full Transcript: electroCore Q2 2026 Earnings Call

electroCore (NASDAQ: ECOR ) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below. This content is powered APIs. S.

prescription sales and direct-to-consumer sales. The company raised its 2026 revenue guidance to greater than 30% growth, attributing this to strategic changes in sales force structure and operational improvements. 1 million, while adjusted EBITDA improved by 26% year over year. 3 million in the second quarter.

The company is aiming for positive adjusted EBITDA by Q3 2027, supported by strategic investments in sales and marketing and operational efficiencies. Operational highlights include the restructuring of the sales team, doubling sales regions, and expanding into new markets like first responders and federal channels. Management expressed confidence in the company's trajectory and emphasized the importance of disciplined execution and strategic focus on non-pharmaceutical therapies. Full Transcript OPERATOR Greetings and welcome to the electroCore second quarter 2026 earnings conference call.

At this time, all participants have been placed in listen-only mode. Please make sure to mute yourself. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded.

Earlier today, electroCore published results for the second quarter ended June 30, 2026, and the press release is available on the Company's website. Before we begin, I would like to remind everyone that members on the call will make forward-looking statements within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements that are not historical facts should be deemed to be forward-looking, including, without limitation, any guidance, the Company's outlook on third quarter and full year performance, and its path to profitability.

These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated. For a list of risk factors, please see the Company's filings with the Securities and Exchange Commission. electroCore disclaims any obligation to update these statements except as required by law. This call contains time-sensitive information accurate only as of today, August 6, 2026.

Joining us on today's call from electroCore are Dr. JP Errico, one of the Company's founders, investor, and Independent Chairman of the Board of Directors; Joshua S. Lev, Interim President and Chief Financial Officer; and Michael Fox, Chief Operating Officer. It is now my pleasure to turn the call over to Dr.

JP Errico, electroCore's Founder and Independent Chairman, for opening remarks. Dr. Errico. JP Errico, Founder and Independent Chairman Thank you, operator.

Good afternoon, everyone, and thank you for joining electroCore's second quarter 2026 earnings call. It is a pleasure to have the opportunity to speak with you all again about the transformation and momentum underway at electroCore. As Chairman of the Board, I have been working closely with Josh Lev, Interim President, and Mike Fox, COO, for the entire quarter. Josh has kept the company focused and steady while skillfully managing investor relations, while Mike has moved quickly to make important operational changes, including a major transformation of our sales force.

Change is never easy, and managing change without disruption takes real skill. Today, I am proud to say that Josh and Mike have helped us make meaningful changes while keeping the organization moving forward. You are about to hear the results shortly, but we are entering a new phase of electroCore, one defined by accelerating revenue growth and improving operating leverage. Today we are raising our 2026 revenue guidance to greater than 30%.

7 million in the prior year and adjusted EBITDA improving 26% year over year and 25% sequentially. This improvement comes as we deliberately invested roughly 1 million this quarter in initiatives designed to accelerate future growth. We now believe that this trajectory puts us on a path to achieve positive EBITDA in 2027. To me, that is what disciplined execution looks like: investing in durable growth opportunities while staying disciplined and holding the line everywhere on spending.

The Board is extremely pleased with the competency, discipline, and leadership Josh and Mike have demonstrated in delivering this execution. Our strategy has not changed. What has changed is the pace and precision with which we are executing it, and that reflects the leadership Josh and Mike are providing across the company. With that, Josh will provide opening remarks, Mike will walk you through the operational specifics, and then Josh will take you through the quarter and where we go from here.

With that, I'd like to turn it over to Josh. Joshua S. Lev, Interim President and Chief Financial Officer Thank you, Tom. Good afternoon, everyone.

This quarter marked the beginning of a new era for our company as we implemented significant changes across our commercial organization to better position us for long-term success while also improving reported financial performance. That included expanding our sales regions, adding new representatives, and redesigning our incentive structure to improve accountability and cost efficiency over time. While these actions required investment and focus throughout the quarter, we believe they've strengthened our foundation, improved operating efficiency, and enhanced our ability to accelerate revenue growth.

I'll let Mike walk you through the execution in more detail in a moment. Now to our results for the quarter. S. prescription sales, in the VA, and in direct-to-consumer Truvega sales.

We restructured this quarter, making the results especially encouraging given the magnitude of the organizational changes. While revenue was flat sequentially, we expect revenue growth to accelerate throughout the year, underpinned by orders already received but not yet impacting revenue, as Mike will explain later on in the call. Importantly, we showed continued operating leverage, as illustrated by our continued improvement in adjusted EBITDA, up 26% year over year and 25% quarter over quarter.

We view this performance as a meaningful win, demonstrating the resilience of our business and our ability to execute while positioning the company for long-term profitable growth. The changes implemented during the second quarter are already showing promise, and given the momentum we are seeing across the business, we are raising our full year 2026 revenue guidance to greater than 30% growth over full year 2025 revenue. As Dr. Errico mentioned, we believe the operating improvements described today position us to execute our plan of achieving positive adjusted EBITDA in the third quarter of 2027.

Turning to the portfolio, the VA continued to be our largest growth driver in the quarter. 7% penetration of the estimated addressable VA headache market. When we acquired NeuroMetrix last year, we added two Class II medical devices to our portfolio. The first, Quell Fibromyalgia, is currently marketed as a prescription therapy through the VA.

0, is an FDA-cleared over-the-counter device for lower extremity pain. It is not currently in production or for sale, and we may rebrand and relaunch it to direct-to-consumer in the future. At the time of the acquisition, we saw the opportunity to bring a different technology than gammaCore, sold through the same VA relationships, the same reps, the same call points—just a new product to sell. Since making the acquisition, Quell has become a bright spot in our product portfolio.

3 million in the second quarter, growing approximately 700% year over year and roughly 30% over the first quarter of 2026. 8 million of Quell Fibromyalgia has been sold into the VA. S. 1% after deployment, respectively.

The consistency we're seeing, particularly in fibromyalgia, reinforces our thesis of providing noninvasive bioelectronic therapeutics for patients in need of nonpharmaceutical options. 3 million. 91 in the first half of 2025. Five competitors bid on Truvega's own branded search terms through the first half of 2026; that grew to eight, a 60% increase in the number of advertisers showing up on the exact terms that should be Truvega's most defensible territory.

As a result, the direct cost per click of acquiring a customer increased by roughly 30%. In response to the increased cost of advertising in the space, we reduced our media spend by 2% in the quarter, allowing us to spend less while still driving to achieve year-over-year Truvega growth. In our first quarter 2026 10-Q, we announced that on May 5, 2026, FDA personnel visited our facility in Rockaway, New Jersey, to inspect matters relating to a follow-up 2017 inquiry on our wholly owned subsidiary NeuroMetrix.

On May 27, 2026, the FDA concluded their inspection and issued the Company a preliminary 483 letter citing four observations and two discussion points around how the Company addresses and documents patient complaints. Since receiving the letter, we have responded to the preliminary 483 letter with corrective actions to address the observations and discussion points. 0 direct to consumer in the near term, but ultimately we believe the changes will result in a stronger product and brand, positioning us to update our claims over time to better reflect the broader benefits of a newly branded product.

And now I'd like to turn the call over to Mike to cover some of the specific changes that were implemented during the quarter. Mike. Michael Fox, Chief Operating Officer Thanks, Josh. Good afternoon, everyone.

At the time of our last earnings call, I was three weeks into my new position. With nearly four months under my belt, I have never been more confident that electroCore is positioned to drive accelerating revenue growth with greater predictability and enhanced profitability. My belief is underpinned by progress on three core priorities which I shared on my first earnings call: expanding VA medical center breadth; increased depth of product utilization within each VA; building out the broader federal channel; and driving operating discipline as we scale. I want to walk you through where each of those stands as of today.

First, within our sales organization, we evaluated how our team was structured against the size of the opportunity in front of us and the conclusion was very clear. We needed to execute a clear plan to expand coverage and assign clear accountability within the sales team. We doubled the number of sales regions and realigned our regional sales directors against that new structure, providing enhanced focus and stronger leadership over smaller geographical areas, allowing our RSDs to coach, lead, and expand advocacy within their assigned regions.

This improved focus provides an immense opportunity for us for increased customer value, stronger patient advocacy, and higher return on investment for the efforts of our sales team. Alongside that, we recruited, contracted, and trained 17 new 1099 sales representatives who are now covering 29 VA medical centers. This is approximately 20% of the national VAMC network. Let me stress this group of new 1099s are not new to the VA market or new to medical device sales.

These are some of the most talented and high-performing sales professionals available within the US market. I personally work with every one of these new colleagues and can assure you they have all built legacies within their accounts and with their customers due to the many years of dedicated top-level customer service resulting in top-tier performance. Their addition reflects the highest number of sales colleagues added to our team in any given quarter and illustrates that not only that we are dedicated to adding strength to every position and process within electroCore, but it showcases that the best are wanting to join in on our mission in a short amount of time.

With these newly added 1099s we have opened new VA accounts and expanded the number of new prescribers, representing tangible expansion of our footprint within the VA and Department of Defense accounts. The exact federal channel where we said the opportunity is largest and requires greater penetration. These additions will help diversify our revenue across more facilities. We're currently our top 15 accounts produce 54% of our Q2 VA revenue.

This diversification is important in mitigating concentration risks where a few, albeit large, facilities drive a significant portion of revenue. To that end, in Q2 2026, one of our facilities had a staffing issue in their prosthetics department, creating a backlog of approximately 30 orders from being fulfilled. These orders, while prescribed in the second quarter 2026, were filled and fulfilled in July, pushing roughly $145,000 in revenue to Q3 2026.

The backlog did not eliminate the revenue; we booked it in the current quarter, but it does illustrate the need to expand the breadth of our facilities selling and fulfilling our prescription products so that no one facility can drastically affect our metrics. We're also being disciplined to how we measure and impact that expansion. We've updated our KPIs to focus on performance dashboards so we can see new patients and refill rates at the individual VA account level, allowing us to build a pipeline of future scripts and focus on increasing our refill rate by 30% in every region by the end of 2026.

To make sure this newly expanded team performs, we also revised our sales incentive compensation plan to raise the bar on expectations and accountability. We brought on a new dedicated recruiter whose sole job is filling vacant or underperforming VA territories with proven sales talent. This, in combination with those talented sales professionals who are contacting us directly requesting to join our team, will continue to strengthen our team and results. These changes are also structured to improve our cost efficiency over time.

Redesigning our incentive plan around sustained account-level growth rather than end-of-quarter volume is intended to reduce the sales and marketing expense associated with each dollar of revenue as it takes hold, and the realignment of territories is aimed at eliminating overlapping, inefficient coverage that added costs without building sustainable accounts.

Based on the elimination of paying commission to overlapping sales colleagues, we expect to see a reduction in incentive compensation variable expense from approximately 35% of prescription revenue to approximately 27% by the end of 2027, and reduction of overall sales and marketing expense to approximately 54% by the end of 2027 under the new cost structure and territory alignment. Beyond the VA, we made two targeted federal hires this quarter as well.

We contracted a 1099 representative with a specific mandate to grow our presence within Kaiser outside of the California market, and we hired a W-2 employee to bring dedicated focus and expertise to Department of Defense and federal workers’ compensation, two channels we've talked about in the past as underdeveloped relative to their potential. One of the more structurally important moves this quarter was on the contracting side. Moving forward, Lovell Government Services will be the sole Federal Supply Schedule contract holder across all electroCore products in both the VA and Department of Defense markets.

That simplifies how our products move through the federal procurement process and positions us to scale federal growth more efficiently. It will also cut roughly 3% of our general administrative expenses and transaction fees associated with direct sales. This transition for all federal orders processed through Lovell will be completed before the end of this month, August 2026. We also have consultants identified with contracts being finalized to build advocacy and revenue specifically within opportunities identified within first responders, Department of Defense, and Department of Women's Health within the VA.

One of our own board members has been directly engaged in the Women's Health Initiative and we're encouraged by the early alignment there.