NeuroPace Earnings Call Highlights RNS Growth Momentum

Neuropace, Inc. ((NPCE)) has held its Q1 earnings call. Read on for the main highlights of the call.

NeuroPace’s latest earnings call struck an upbeat tone, with management underscoring strong commercial traction and improving profitability metrics despite some clinical and reimbursement uncertainties. Executives framed the quarter as evidence that disciplined spending, robust RNS system demand, and a deepening clinical and AI pipeline are creating operating leverage that outweighs near-term risks.

Q1 revenue acceleration and RNS system growth

NeuroPace reported Q1 2026 revenue of $22.1 million, or $22.0 million excluding DIXI, fueled by $21.7 million from its RNS system. That represented roughly 20% year-over-year non-GAAP revenue growth and about 19.5% RNS system growth, signaling sustained demand for its core neuromodulation platform.

Full-year guidance raised on stronger core visibility

Management lifted 2026 revenue guidance to a range of $99 million to $101 million, up from $98 million to $100 million previously. The midpoint increase of about $1 million reflects better visibility into roughly $0.5 million of service revenue and a similar uplift from core RNS demand, while still excluding any contribution from potential new indications.

Adjusted losses narrow as profitability trends improve

Non-GAAP loss from operations improved to $3.3 million in Q1 2026 from $4.1 million a year earlier, with adjusted EBITDA loss narrowing by the same amount. For the full year, the company now projects an adjusted EBITDA loss of $8.5 million to $9.5 million, better than its prior outlook and suggesting the path toward break-even is becoming clearer.

Operating leverage emerges as revenue outpaces opex

Non-GAAP operating expenses rose to $21.5 million from $19.4 million, roughly a 10% increase year over year. Because revenue grew about twice as fast, executives highlighted tangible operating leverage as sales, marketing, and commercial infrastructure scale relative to the expanding revenue base.

Gross margins remain high with pricing tailwinds

First-quarter non-GAAP gross margin came in at 82.5% versus 83.6% a year ago, with the prior period benefiting from a one-time inventory adjustment. Management noted that underlying margins are actually expanding on the back of favorable pricing and expects full-year adjusted gross margin to land between 81.5% and 82.5%.

NAUTILUS data bolster clinical case despite endpoint nuance

The company spotlighted 18-month NAUTILUS trial results showing a 77% median reduction in generalized tonic-clonic seizures and even larger reductions in other seizure types, along with fewer injuries and emergency rescue use. Management acknowledged that the primary endpoint did not reach statistical significance, but argued the totality of the data remains compelling as regulators weigh their decision.

Long-term focal epilepsy outcomes reinforce durability

A three-year post-approval study in drug-resistant focal epilepsy, published in Neurology, reported an 82% median seizure reduction. This long-term, prospective, FDA-monitored data set supports the durability of RNS therapy outcomes and strengthens the company’s evidence base with clinicians and payers.

AI and product roadmap advances take shape

NeuroPace reported encouraging internal validation for its ECOG Assistant, an AI-enabled seizure identification tool to be paired with a cloud-based clinician platform, with approval expected in 2026. The firm is also training a multimodal foundational AI model on more than 26 million intracranial recordings and roughly 8,000 patient implants, with early internal performance tracking ahead of existing algorithms.

Commercial traction and service revenue build

The company reached record levels of active prescribers, accounts, and patient pipeline, with management citing accelerating additions and deeper penetration into Level 4 epilepsy centers. Community referral channels are expanding, targeted sales hires and incentives aim to speed funnel conversion, and service revenue reached $314,000 from growing data collaborations.

IGE pathway carries clinical and uptake uncertainty

Analysts pressed on the idiopathic generalized epilepsy opportunity, given NAUTILUS’s primary endpoint miss and its potential impact on labeling and adoption. While management stressed that regulators will consider the full data package, they conceded that review outcomes and the pace of IGE commercial uptake remain key variables for investors.

IGE revenue excluded from near-term forecasts

Reflecting that uncertainty, NeuroPace continues to exclude any IGE-related revenue from its 2026 guidance and expects any contribution to be back-end weighted if approval and coverage come through. Management noted that payer policy changes, especially among private insurers, will drive the timing and magnitude of revenue from this new indication.

GAAP losses steady and cash dips on seasonal outflows

GAAP net loss was $6.7 million in Q1 2026, essentially flat versus $6.6 million a year earlier, indicating that accounting charges still weigh on the bottom line even as operating metrics improve. Cash and short-term investments fell to $54.8 million from $61.2 million at year-end, with management attributing the decline largely to normal first-quarter items such as annual bonus payments.

Procedural timing and business mix add volatility

Management reiterated that the procedure-based nature of its business can produce quarter-to-quarter swings in revenue, as hospital cycles and coverage decisions influence implant timing. They suggested investors focus on six-month periods to better gauge underlying adoption trends, including both new implants and replacement procedures.

DIXI presentation and restricted cash affect comparability

NeuroPace is shifting the timing of how it reports DIXI Medical discontinued operations, with changes expected to take effect starting in Q2 2026. The company also flagged about $700,000 of restricted cash linked to DIXI as of March 31, most of which has since converted, creating minor short-term noise for reported figures.

Reimbursement progress still requires heavy lifting

While management pointed to generally constructive reimbursement moves, they emphasized that meaningful work remains to expand coverage in new segments such as IGE, pediatric patients, and Lennox-Gastaut syndrome. Broader private payer adoption is expected to roll out gradually and will likely require case-by-case efforts supported by focused reimbursement advocacy.

Guidance underscores confidence in core growth and margins

For 2026, NeuroPace now targets $99 million to $101 million in revenue, anchored by 21% to 23% underlying RNS system growth and about $0.5 million of service revenue, while any IGE upside will be added only after greater visibility. The company also projects adjusted gross margin of 81.5% to 82.5%, non-GAAP operating expenses of $90 million to $92 million, and an improved adjusted EBITDA loss of $8.5 million to $9.5 million.

NeuroPace’s earnings call painted a picture of a company steadily scaling its core epilepsy franchise while laying groundwork in AI and new indications, all underpinned by strong margins and improving operating leverage. Investors will be watching how the IGE regulatory outcome and payer coverage evolve, but for now the core RNS business and financial trajectory appear to be moving in the right direction.