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Neuropace, Inc. (NPCE)
:NPCE
US Market

NeuroPace (NPCE) AI Stock Analysis

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NeuroPace

(NASDAQ:NPCE)

Rating:50Neutral
Price Target:
$13.00
▼(-1.14%Downside)
NeuroPace's overall score reflects strong revenue growth and positive corporate events, yet is weighed down by significant financial risks and valuation challenges. The earnings call provided a positive outlook, but the company's high debt levels and negative cash flow remain critical concerns.
Positive Factors
Financial Performance
NPCE reaffirmed its 2025 financial guidance, increasing revenue guidance and maintaining gross margin and operating expense expectations.
Product Efficacy
Patients who have reached 2-year follow-up have already shown over 80% median seizure reduction, a level not seen until 3-year follow-up in the focal RCT which drove FDA approval within that patient population.
Regulatory Approval
NPCE has a solid case to support FDA approval in IGE based on the totality of the NAUTILUS data.
Negative Factors
Price Target Revision
Analyst decreases the price target for NPCE from $18 to $16.
Regulatory Risk
The NAUTILUS announcement creates additional near-term regulatory risk for the company.
Study Results
The study did not show statistical significance on its primary efficacy endpoint at 1-year follow-up.

NeuroPace (NPCE) vs. SPDR S&P 500 ETF (SPY)

NeuroPace Business Overview & Revenue Model

Company DescriptionNeuroPace, Inc. (NPCE) is a medical technology company that specializes in developing and manufacturing devices for the treatment of neurological disorders. The company's flagship product is the RNS® System, a responsive neurostimulation device designed to monitor and treat epileptic seizures. NeuroPace operates within the healthcare sector, focusing on neurology and neurotechnology, and is committed to improving the quality of life for patients suffering from epilepsy.
How the Company Makes MoneyNeuroPace generates revenue primarily through the sale of its RNS® System to hospitals and medical institutions. The company makes money by charging for the initial implantation of the device as well as through ongoing monitoring and management services associated with the device's use. Revenue is also derived from follow-up procedures and replacement parts or upgrades. NeuroPace works closely with healthcare providers and insurance companies to ensure its devices are accessible to patients, which can also influence its revenue streams. Additionally, strategic partnerships and collaborations within the medical technology industry may contribute to its financial performance.

NeuroPace Earnings Call Summary

Earnings Call Date:May 13, 2025
(Q1-2025)
|
% Change Since: 1.54%|
Next Earnings Date:Aug 07, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth driven by the RNS System and improvements in gross margin, alongside successful equity financing and positive clinical results. However, there were challenges with increased R&D expenses and the decision to terminate SEEG product distribution. Overall, the highlights significantly outweigh the lowlights, indicating a positive outlook.
Q1-2025 Updates
Positive Updates
Strong Revenue Growth
NeuroPace generated total revenue of $22.5 million in Q1 2025, an increase of 24% compared to $18.1 million in Q1 2024, primarily driven by strong growth in the core RNS business.
Record RNS System Sales
RNS sales increased by 26%, or 29% when excluding the impact of NAUTILUS study implants in Q1 2024, driven by sustained strength in RNS adoption at Level 4 centers and Project CARE activities.
Improved Gross Margin
Gross margin for Q1 2025 was 77%, up from 73.6% in Q1 2024, benefiting from improved manufacturing efficiency and higher RNS sales volume.
Successful Equity Financing
Completed a $75 million follow-on equity financing, adding high-quality shareholders and strengthening the balance sheet.
Positive Clinical Results
Presented three-year effectiveness data from the Post-Approval study of the RNS System showing an 82% median reduction in seizures and 42% of participants experiencing more than six months of seizure freedom.
Negative Updates
Increased R&D Expenses
R&D expense increased to $7.4 million in Q1 2025 from $5.8 million in Q1 2024, primarily due to increased personnel and program expenses.
Operating Loss
Loss from operations was $5.1 million in Q1 2025, although this was an improvement from a $7.5 million loss in Q1 2024.
Termination of SEEG Product Distribution
Announced the decision to terminate the distribution of SEEG products, which will conclude in Q1 2026, potentially impacting revenue streams from this product line.
Company Guidance
During NeuroPace's first quarter 2025 earnings call, the company provided optimistic guidance, projecting total revenue for the year to range between $93 million and $97 million, marking an increase of approximately 16% to 21% over 2024. This growth is expected to be primarily driven by a 26% year-over-year increase in RNS System sales, excluding NAUTILUS study implants from 2024, and a continued contribution from SEEG product sales. NeuroPace also anticipates a gross margin between 73% and 75% for 2025, supported by improved manufacturing efficiency that resulted in a 77% gross margin in Q1. Operating expenses are projected to be between $92 million and $95 million, with a focus on balancing revenue growth and cost management to achieve cash flow breakeven by the end of 2027. The company remains on track for a 20% plus CAGR through 2027, despite its decision to terminate SEEG product distribution by Q3 2025 due to shifting focus towards higher-margin RNS opportunities.

NeuroPace Financial Statement Overview

Summary
NeuroPace shows strong revenue growth of 22% year-over-year, but faces profitability challenges with negative EBIT and net income margins. The high debt-to-equity ratio and negative free cash flow highlight financial risks and cash constraints. Despite a strong gross profit margin, the overall financial position is strained, requiring improved operational efficiencies and financial management.
Income Statement
45
Neutral
NeuroPace shows a positive revenue growth trend with a 22% increase from the previous year. However, the company is facing challenges with profitability as reflected in negative EBIT and net income margins. The gross profit margin remains strong at 74%, but the net profit margin remains at 0%, indicating operational challenges.
Balance Sheet
35
Negative
The company's balance sheet shows a high debt-to-equity ratio due to substantial debt levels, indicating potential financial risk. Equity has significantly decreased, impacting financial stability. The equity ratio is low at about 8%, highlighting reliance on debt financing.
Cash Flow
40
Negative
NeuroPace's free cash flow remains negative, indicating cash constraints. The free cash flow growth shows a slight improvement but remains negative, and the operating cash flow to net income ratio is unfavorable, reflecting cash generation issues relative to reported earnings.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
79.91M65.42M45.52M45.18M41.14M
Gross Profit
59.09M48.12M32.49M33.44M30.27M
EBIT
-21.67M-27.17M-40.79M-23.74M-13.05M
EBITDA
-16.57M-22.83M-36.57M-28.37M-12.48M
Net Income Common Stockholders
-27.14M-32.96M-53.37M-38.11M-35.98M
Balance SheetCash, Cash Equivalents and Short-Term Investments
52.76M66.45M77.41M115.58M38.08M
Total Assets
94.65M107.65M114.11M133.56M55.95M
Total Debt
73.34M72.39M69.77M49.85M52.86M
Net Debt
59.91M54.34M63.16M30.66M26.47M
Total Liabilities
86.63M87.00M79.33M60.06M203.78M
Stockholders Equity
8.01M20.65M34.78M73.50M-147.83M
Cash FlowFree Cash Flow
-17.95M-19.87M-37.47M-24.96M-21.67M
Operating Cash Flow
-17.95M-19.70M-36.87M-24.58M-21.61M
Investing Cash Flow
8.99M23.03M23.80M-85.40M-10.77M
Financing Cash Flow
4.33M8.13M490.00K102.53M55.01M

NeuroPace Technical Analysis

Technical Analysis Sentiment
Neutral
Last Price13.15
Price Trends
50DMA
12.88
Positive
100DMA
12.75
Positive
200DMA
10.63
Positive
Market Momentum
MACD
0.03
Positive
RSI
45.95
Neutral
STOCH
43.09
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NPCE, the sentiment is Neutral. The current price of 13.15 is below the 20-day moving average (MA) of 14.78, above the 50-day MA of 12.88, and above the 200-day MA of 10.63, indicating a neutral trend. The MACD of 0.03 indicates Positive momentum. The RSI at 45.95 is Neutral, neither overbought nor oversold. The STOCH value of 43.09 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral sentiment for NPCE.

NeuroPace Risk Analysis

NeuroPace disclosed 76 risk factors in its most recent earnings report. NeuroPace reported the most risks in the “Tech & Innovation” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
Our growth prospects may be harmed if we are unable to successfully use our unique data asset and analysis capabilities, either internally or through collaboration, or if our expectations with respect to our ability to leverage our unique data asset prove to be incorrect. Q4, 2024
2.
If our distribution agreement with DIXI Medical is not renewed, it may have an adverse effect on our financial condition. Q4, 2024
3.
We currently rely on our RNS System, which can only be marketed in the United States for use in adults with drug-resistant focal epilepsy, as our primary source of revenue. If we fail to successfully market and sell our RNS System cost effectively and maintain and expand our market share, our sales, business, financial condition and results of operations will be negatively affected. Q4, 2024

NeuroPace Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
65
Neutral
$80.91M44.773.46%24.75%-61.29%
61
Neutral
$393.73M-76.21%23.22%9.54%
54
Neutral
$5.31B3.29-45.39%2.79%16.77%-0.07%
52
Neutral
$171.04M-76.01%25.62%11.86%
50
Neutral
$431.30M-128.49%22.05%29.86%
49
Neutral
$397.44M-161.19%1.64%16.02%
46
Neutral
$352.60M-30.11%15.32%15.73%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
NPCE
NeuroPace
13.15
6.72
104.51%
CLPT
ClearPoint Neuro
13.93
8.19
142.68%
SRTS
Sensus Healthcare
4.92
-0.56
-10.22%
SENS
Senseonics Holdings
0.53
0.13
32.50%
NNOX
Nano-X Imaging
5.53
-1.95
-26.07%
CVRX
CVRx
6.56
-2.57
-28.15%

NeuroPace Corporate Events

Private Placements and FinancingBusiness Operations and Strategy
NeuroPace Secures $75 Million Credit Facility with MidCap
Positive
Jun 4, 2025

On June 4, 2025, NeuroPace, Inc. entered into a $75 million credit facility with MidCap Financial, comprising a $60 million term loan and a $15 million revolving credit facility. This new financing arrangement allowed NeuroPace to repay its existing loan with CRG Partners IV, L.P., and the revolving credit will support working capital and corporate purposes. The favorable terms of the new credit facility are expected to reduce cash interest expenses and support NeuroPace’s growth initiatives, including expanding access to the RNS System and investing in new product developments.

The most recent analyst rating on (NPCE) stock is a Buy with a $13.00 price target. To see the full list of analyst forecasts on NeuroPace stock, see the NPCE Stock Forecast page.

Product-Related AnnouncementsBusiness Operations and Strategy
NeuroPace Announces Promising NAUTILUS Study Results
Positive
May 27, 2025

On May 27, 2025, NeuroPace announced the preliminary one-year results of its NAUTILUS study, which evaluates the safety and effectiveness of the RNS System for treating drug-resistant idiopathic generalized epilepsy. The study met its primary safety endpoint and showed significant seizure reduction in a key patient subgroup, suggesting potential benefits for a substantial portion of patients. NeuroPace plans to engage with the FDA regarding regulatory pathways and is confident in its long-term growth strategy, reaffirming its 2025 financial guidance.

The most recent analyst rating on (NPCE) stock is a Buy with a $20.00 price target. To see the full list of analyst forecasts on NeuroPace stock, see the NPCE Stock Forecast page.

Business Operations and StrategyFinancial Disclosures
NeuroPace Expects Minimal Impact from Trade Tariffs
Neutral
Apr 14, 2025

On April 14, 2025, NeuroPace announced that it expects minimal impact from international trade tariffs on its operations and financial results, reaffirming its gross margin guidance for 2025. The company, which primarily manufactures and sells its devices in the U.S., anticipates no significant effect on its gross margin despite terminating its SEEG distribution agreement with DIXI Medical effective October 1, 2025. NeuroPace will report its first quarter 2025 financial results on May 13, 2025, with a conference call scheduled for the same day.

Product-Related AnnouncementsBusiness Operations and Strategy
NeuroPace Shifts Focus to Core RNS System
Neutral
Apr 2, 2025

On April 2, 2025, NeuroPace, Inc. announced a strategic shift in its product portfolio, focusing on its core RNS System and ending its distribution agreement with DIXI Medical USA Corp. for SEEG products by September 30, 2025. This move is part of a broader plan to concentrate resources on expanding opportunities for the RNS System, including new indications and AI-enabled software, while maintaining 2025 revenue guidance and aiming for cash flow breakeven by 2027.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.