NeuroMetrix Revenue Skyrockets in Second Quarter

Profits are up at NeuroMetrix Inc.

The company’s second-quarter revenue surged 116 percent to $2.65 million and invoice value doubled to $2.53 million.

The company operates in two markets—wearable therapeutic technology and point-of-care diagnostic tests. Its two primary products are Quell and DPNCheck. Quell is an over-the-counter wearable neurostimulation device for treating chronic pain that was launched in Q2 2015. DPNCheck is a point-of-care diagnostic device that provides accurate and cost-effective screening, diagnosis and monitoring of peripheral neuropathies including diabetic peripheral neuropathy (DPN).

Second-quarter Quell shipments totaled 11,201 devices and 9,676 electrode reorder packages, an increase from 8,138 devices and 7,902 electrode reorder packages with a total invoiced value of $1.7 million in the first quarter of this year.

“We are pleased with our progress in Q2 2016. Our plans for penetration of the retail sector are on schedule and, largely due to increasing Quell shipments, total company revenue growth during the past four quarters has averaged 83 percent year-on-year. Our current marketing focus for Quell is on building widespread brand awareness through our TV and on-line promotion efforts, as well as developing retail channel experience,” said Shai N. Gozani, M.D., Ph.D., president and CEO of NeuroMetrix. “The next potential phase of retail expansion will occur in 2017 following several quarters of experience within the retail stores currently stocking Quell. Our DPNCheck efforts remain centered on building our Medicare Advantage business along with international expansion in partnership with local distributors.”

Gross margin for the second quarter (ended June 30) was 40.6 percent of total revenues, a decrease from 51.4 percent in the same period of 2015, reflecting a higher weighting of lower margin Quell devices as the company builds its installed base. Operating expenses increased to $5.25 million compared to $3.97 million in Q2 2015, reflecting Quell marketing and promotion. NeuroMetrix recorded a non-cash credit of $0.08 million at June 30 for the revaluation at fair value of outstanding common stock warrants compared to a $2.14 million revaluation credit at June 30, 2015. Net loss was $4.10 million or $5.37 per common share, including a deemed dividend charge to earnings per share of $4.45 resulting from the June equity offering. This compared to a net loss of $1.2 million or $2.07 per common share for the second quarter last year, also including a deemed dividend charge to earnings per share of $1.55 related to a May 2015 equity offering. NeuroMetrix reported Q2 2016 net cash usage of $4.20 million and ended the period with cash and cash equivalents of $11.3 million.
 
Total revenues skyrocketed 96 percent in the year’s first half to $4.92 million and net loss was $8.19 million or $6.56 per common share in 2016, including a $4.64 deemed dividend earnings per share charge related to an equity offering, compared to $3.27 million or $3.13 per common share in 2015, also including a deemed dividend charge to earnings per share of $1.63 related to an equity offering.

Other first half highlights include:

• Quell distribution expanded with initial orders for pilot programs at two major drug store chains. Quell is now available in more than 1,500 retail locations.
• Online and retail sales have been supported by a national television promotion campaign primarily utilizing high-impact cable channels.
• Quell technology advanced with the launch of an updated Android app providing support for the Quell Health Cloud and release of a Sport Electrode for situations of high humidity and perspiration.
• The company announced that a clinical study by the Scripps Translational Science Institute will assess the impact of Quell technology on opioid use and pain in cancer patients.
• A CE Marking application for Quell was submitted to allow marketing directly to European consumers.
• An at-the-money private placement of equity securities raised new funding of $7.5 million, before costs.

 
NeuroMetrix develops wearable digital health technology for consumers and point-of-care tests that help patients and physicians better manage chronic pain, nerve diseases, and sleep disorders. The company is located in Waltham, Mass., and was founded as a spinoff from the Harvard-MIT Division of Health Sciences and Technology in 1996.