Shares of NeurAxis, Inc. (NRXS Quick QuoteNRXS - Free Report) have gained 13.3% since the company reported its earnings for the quarter ended March 31, 2025. This compares to the S&P 500 Index’s 4.3% growth over the same time frame. Over the past month, the stock gained 39.9% compared with the S&P 500’s 11.6% rise.

Revenue and Earnings Performance

In the first quarter of 2025, NeurAxis posted revenues of $0.9 million, a 38.5% increase from $0.6 million in the prior-year period. Unit sales grew 46% year over year, largely driven by higher patient volumes with full insurance reimbursement and those receiving financial assistance.

Despite this top-line growth, NRXS reported a net loss of $2.3 million, wider than the $2.1 million loss in the first quarter of 2024. On a per-share basis, NeurAxis posted a loss of $0.33 compared with a $0.32 loss per share a year ago. Gross margin declined to 84.4% from 88.4% a year ago due to a higher proportion of discounted sales under the financial assistance program and increased manufacturing and shipping costs. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

Other Key Business Metrics

Operating expenses rose 26.9% to $3.1 million in first-quarter 2025 from $2.4 million in the same quarter last year. However, excluding a one-time legal settlement, operating expenses remained relatively flat, signaling prudent cost controls. Notably, research and development expenses surged to $60,556 from $5,570, reflecting investment in the rectal expulsion device (RED) and new medical studies.

Selling expenses also increased 67.4% year over year to $133,954 from $80,030, correlating with a temporary commission structure and increased sales activity. As of March 31, 2025, NeurAxis’ cash and cash equivalents were $2 million compared with $3.7 million as of Dec. 31, 2024, and reported no long-term debt. Net cash used in operations for the first quarter of 2025 was $1.6 million compared with $1.3 million a year ago.

Management Commentary

CEO Brian Carrico emphasized that first-quarter 2025 marked the third consecutive quarter of robust revenue growth, following 40% and 43% increases in the two preceding quarters. He attributed this momentum to improved billing and coding comfort among providers and expanding insurance coverage. NRXS treated 300 patients through its purchase order or patient assistance programs in the first quarter, an annualized rate of 1,200 patients, just 0.2% of the estimated 600,000 U.S. children affected by IBS who could benefit from NeurAxis’ IB-Stim therapy.

CFO Tim Henrichs added that while operating expenses may increase in the near term due to sales and marketing expansions, they are expected to decrease as a percentage of sales. He reiterated that NeurAxis is positioning itself toward achieving cash flow breakeven through disciplined execution, expanded reimbursement, and product commercialization.

Factors Influencing the Headline Numbers

NeurAxis’ revenue growth was supported by the rising adoption of its proprietary Percutaneous Electrical Nerve Field Stimulation (PENFS) technology and broader awareness of its high evidence grade in clinical guidelines. However, pricing pressure from financial assistance patients, who typically pay about 65% below list price, constrained gross margin expansion. The temporary imbalance between full reimbursement and discounted sales continues to weigh on profitability.

The company also incurred a one-time legal settlement, finalized for $750,000, which impacted first-quarter operating and net losses. Without this charge, net loss would have improved 22% year over year, and operating loss would have narrowed 9%.

Guidance and Outlook

While NeurAxis did not issue formal financial guidance, management is optimistic that revenue will accelerate in subsequent quarters. Two key catalysts underpin this view — the publication of academic society guidelines expected by the end of May 2025 and the implementation of a permanent Category I CPT code for IB-Stim, effective Jan. 1, 2026. The CPT code is expected to simplify billing, enhance physician compensation through RVUs (Relative Value Unit) and drive broader insurance adoption.

Additionally, FDA clearance is pending for expanding IB-Stim’s indication to pediatric functional dyspepsia, which would effectively double the addressable market. As of March 2025, NeurAxis’ treatment is covered for approximately 51 million lives, a significant increase from 4 million at the end of 2023. Management expects further payer additions following the publication of the NASPGHAN (North American Society for Pediatric Gastroenterology, Hepatology, and Nutrition) guidelines, which rate PENFS with the highest level of certainty and magnitude of effect. Management anticipates publication in May 2025, which could trigger additional coverage decisions within a 90–120 day window.

Other Developments

During the quarter, NeurAxis achieved several notable regulatory milestones. These include a broadened FDA label for IB-Stim to cover patients aged eight to 21 (previously 11 to 18), and 510(k) clearance for its RED product, a point-of-care device for identifying pelvic floor dysfunction. RED, already equipped with a Category I CPT code and national reimbursement, is currently in a soft launch phase. Early feedback has been positive, though adoption in large adult GI practices has been slower than expected due to administrative delays. Management remains bullish on its commercial potential.

Additionally, NRXS settled a legacy lawsuit from 2019 for $750,000, payable over 12 months beginning in January 2026.