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Neuropace, Inc. (NPCE)
NASDAQ:NPCE
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NeuroPace
(NASDAQ:NPCE)
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Rating:47Neutral
Price Target:
$13.50
▼(-4.19% Downside)
Action:ReiteratedDate:03/04/26
The score is held down primarily by weak financial quality (ongoing losses, persistent negative free cash flow, and elevated leverage), with technicals also negative as the stock trades below key moving averages. The latest earnings call was a clear positive (raised guidance and first positive adjusted EBITDA), but it is not yet enough to outweigh the current cash-flow and balance-sheet risk; valuation support is limited due to negative earnings and no dividend.
Positive Factors
Revenue growth trajectory
NeuroPace has scaled revenue materially (Q3 2025: $27.4M, 30% YoY; RNS $22.6M), reflecting expanding adoption of the RNS system and broader geographic/program penetration. Sustained mid-20%+ growth supports durable market share gains and deeper clinical integration over months.
High product-level gross margins
RNS product economics are strong (system gross margin >80%, corporate guidance ~76%–77%), implying durable unit profitability and attractive scalability. High gross margins allow incremental revenue to flow to operating leverage, helping improve operating results as scale continues.
Medicare reimbursement tailwind
CMS materially increased physician and hospital payments for initial implants and replacements, a structural change boosting procedure economics. Higher reimbursement supports broader neurosurgeon adoption, increases replacement revenue over time and underpins sustainable commercialization.
Negative Factors
Elevated leverage and equity volatility
Leverage has been a persistent constraint: debt stayed in the low-$70M range while equity was volatile, peaking D/E near 9.2x in 2024. Even after 2025 improvement, elevated leverage reduces financial flexibility, increasing refinancing and covenant risk if cash generation falters.
Persistent negative cash flow
Operating and free cash flow remain negative despite narrowing losses in 2025 (~-$11M), meaning the business still consumes cash. Continued cash burn increases the likelihood of external financing or dilution and limits ability to fund growth investments without raising capital.
Profitability not yet durable
Although adjusted EBITDA turned positive once, underlying accounting EBITDA/EBIT remain negative (2025 EBITDA margin ~-16%). Persistent net losses indicate profitability has not yet become durable, leaving the company reliant on operational improvements to sustain long-term self-funding.
NeuroPace (NPCE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$442.05M
Dividend YieldN/A
Average Volume (3M)198.32K
Price to Earnings (P/E)―
Beta (1Y)0.42
Revenue Growth24.08%
EPS Growth24.08%
CountryUS
Employees184
SectorHealthcare
Sector Strength45
IndustryMedical - Devices
Share Statistics
EPS (TTM)-0.08
Shares Outstanding33,666,946
10 Day Avg. Volume290,966
30 Day Avg. Volume198,321
Financial Highlights & Ratios
PEG Ratio0.81
Price to Book (P/B)26.55
Price to Sales (P/S)5.05
P/FCF Ratio-44.56
Enterprise Value/Market Cap1.11
Enterprise Value/Revenue4.91
Enterprise Value/Gross Profit6.36
Enterprise Value/Ebitda-35.60
Forecast
1Y Price Target
$19.33Price Target Upside37.19% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering3
EPS Forecast (FY)-0.62
Revenue Forecast (FY)$99.09M
NeuroPace Business Overview & Revenue Model
Company DescriptionNeuroPace, Inc. operates as a medical device company in the United States. It develops and sells RNS system, a brain-responsive neuromodulation system for treating medically refractory focal epilepsy by delivering personalized real-time treatment at the seizure source. The company's RNS system also records continuous brain activity data; and enables clinicians to monitor patients in person and remotely. It sells its products to hospital facilities for initial RNS system implant procedures and for replacement procedures. The company was incorporated in 1997 and is headquartered in Mountain View, California.
How the Company Makes MoneyNeuroPace generates revenue primarily through the sale of its RNS System and its associated services. The company sells its devices to hospitals, clinics, and healthcare providers, who then implant them into eligible patients. Key revenue streams include the initial sale of the RNS System, which comprises the implantable device and the external components, as well as ongoing revenues from patient monitoring services and device maintenance. Partnerships with healthcare institutions and neurologists play a significant role in driving adoption of the RNS System, while reimbursement from insurance providers for the device and its implantation also contributes to the company’s earnings. Additionally, NeuroPace may benefit from research collaborations and clinical studies that validate the effectiveness of its technology, further enhancing its market position.
NeuroPace Earnings Call Summary
Earnings Call Date:Nov 04, 2025
(Q3-2025)
| % Change Since: |
Next Earnings Date:May 07, 2026
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue growth, positive adjusted EBITDA, and increased guidance. There were challenges, including the winding down of the DIXI product line and extended timelines for pediatric indication, but these were outweighed by positive developments and strategic progress.Q3-2025 Updates
Positive Updates
Record Revenue and Growth
NeuroPace achieved a total revenue of $27.4 million in Q3 2025, marking a 30% year-over-year growth compared to $21.1 million in the prior year quarter. This was driven by RNS initial implants, with RNS revenue at $22.6 million, representing a 31% year-over-year growth.
Positive Adjusted EBITDA
NeuroPace generated positive adjusted EBITDA for the first time in its history, reflecting strong scalability and disciplined expense management.
Increased Revenue and Gross Margin Guidance
Full year revenue guidance was raised to $97 million to $98 million, up from $94 million to $98 million, reflecting a 21% to 23% year-over-year growth. Gross margin guidance was also increased to 76% to 77%, up from 75% to 76%.
FDA Submission Progress
Progress was made with the NAUTILUS study and the pediatric indication. The PMA supplement for NAUTILUS is on track to be submitted before year-end.
Strong RNS System Performance
RNS System gross margin remained above 80%, benefiting from improved manufacturing efficiency and favorable pricing.
Peer Recognition
The RNS System was featured in the Journal of Clinical Neurophysiology, highlighting its unique closed-loop stimulation capabilities.
Negative Updates
DIXI Product Line Wind Down
DIXI sales, which amounted to approximately $4 million in the quarter, are ending with the distribution agreement officially concluded on September 30. The wind-down period lasts until the end of Q1 2026.
Extended Timeline for Pediatric Indication
The timeline for the pediatric indication submission has been extended beyond 2025 due to the time taken to align the protocol and data set.
Net Loss
Net loss for the quarter was $3.5 million, compared to a net loss of $5.5 million in the prior year period.
Company Guidance
During the Q3 2025 earnings call, NeuroPace provided updated financial guidance, highlighting record quarterly revenue of $27.4 million, a 30% year-over-year growth driven primarily by RNS initial implants. The RNS revenue reached $22.6 million, marking a 31% increase from the previous year, with broad-based growth across geographies and programs. The company improved its full-year revenue guidance to $97-$98 million, anticipating a 21%-23% annual growth. Gross margins were also strong at 77.4%, up from 73.2% the previous year, with expectations for full-year margins to be between 76% and 77%. Notably, NeuroPace achieved positive adjusted EBITDA for the first time, attributed to disciplined expense management and operational efficiency. The company remains committed to a long-term growth trajectory, targeting a minimum of 20% growth in its core RNS business.NeuroPace Financial Statement Overview
Summary
Revenue has scaled materially over time and gross margins are consistently strong (~71%–77%), but the company remains unprofitable with negative EBITDA/EBIT and persistent cash burn. Balance-sheet risk is elevated due to high leverage and volatile equity (despite improvement in 2025), limiting financial flexibility.Income Statement
Revenue growth is solid over time (up from ~$41.1M in 2020 to ~$100.0M in 2025), and gross margin is consistently strong (~71%–77%), suggesting healthy product-level economics. However, the company remains unprofitable, with negative EBITDA and EBIT every year and still meaningfully negative in 2025 (EBITDA margin about -16%). Net income improved materially versus prior years, but profitability is not yet durable, keeping the score below average.44
Neutral
Balance Sheet
Leverage is a key constraint: debt is high relative to equity in recent years, with debt-to-equity peaking in 2024 (~9.2x) and improving in 2025 (~3.7x) as equity recovered. Total debt has stayed roughly in the low-$70M range while equity has been volatile (including negative equity in 2020), which increases financial risk. While the 2025 balance sheet shows improvement versus 2024, overall leverage and equity volatility weigh on the score.36
Negative
Cash Flow
Cash generation remains a major weakness: operating cash flow and free cash flow are negative across all periods shown. There is improvement in 2025 (operating/free cash flow loss narrowed to about -$11.0M from roughly -$17.9M/-$18.3M in 2024), but free cash flow growth turned sharply negative in 2025 and the business is still consuming cash to operate. The persistent cash burn limits flexibility and increases funding risk.28
Negative
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 99.99M | 79.91M | 65.42M | 45.52M | 45.18M |
| Gross Profit | 77.22M | 59.09M | 48.12M | 32.49M | 33.44M |
| EBITDA | -14.39M | -16.57M | -22.83M | -36.57M | -28.37M |
| Net Income | -21.46M | -27.14M | -32.96M | -47.08M | -36.08M |
Balance Sheet | |||||
| Total Assets | 105.56M | 94.65M | 107.65M | 114.11M | 133.56M |
| Cash, Cash Equivalents and Short-Term Investments | 61.06M | 52.76M | 66.45M | 77.41M | 115.58M |
| Total Debt | 70.84M | 73.34M | 72.39M | 69.77M | 49.85M |
| Total Liabilities | 86.53M | 86.63M | 87.00M | 79.33M | 60.06M |
| Stockholders Equity | 19.03M | 8.01M | 20.65M | 34.78M | 73.50M |
Cash Flow | |||||
| Free Cash Flow | -11.34M | -18.25M | -19.87M | -37.47M | -24.96M |
| Operating Cash Flow | -11.01M | -17.95M | -19.70M | -36.87M | -24.58M |
| Investing Cash Flow | -332.00K | 8.99M | 23.03M | 23.80M | -85.40M |
| Financing Cash Flow | 19.60M | 4.33M | 8.13M | 490.00K | 102.53M |
NeuroPace Technical Analysis
Negative
14.09
Price Trends
15.30
Negative
14.81
Negative
12.44
Positive
Market Momentum
-0.36
Negative
37.88
Neutral
44.02
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For NPCE, the sentiment is Negative. The current price of 14.09 is below the 20-day moving average (MA) of 14.22, below the 50-day MA of 15.30, and above the 200-day MA of 12.44, indicating a neutral trend. The MACD of -0.36 indicates Negative momentum. The RSI at 37.88 is Neutral, neither overbought nor oversold. The STOCH value of 44.02 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for NPCE.
NeuroPace Risk Analysis
NeuroPace disclosed 78 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 0 New Risks
NeuroPace Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
62 Neutral | $615.85M | 15.27 | 9.26% | ― | 9.28% | 21.00% | |
61 Neutral | $324.53M | 134.00 | 2.63% | ― | 251.54% | ― | |
52 Neutral | $716.31M | -15.08 | -31.77% | ― | ― | ― | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% | |
51 Neutral | $266.08M | -3.33 | -104.17% | ― | 31.94% | 36.59% | |
49 Neutral | $278.14M | -11.02 | -14.05% | ― | 10.75% | -7.15% | |
47 Neutral | $442.05M | -23.54 | -105.67% | ― | 24.08% | 24.08% |
* Healthcare Sector Average
NPCE
NeuroPace
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12.80%
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Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.