ECOR: 2Q:23 Revenues Impress
NASDAQ:ECOR
READ THE FULL ECOR RESEARCH REPORT
Second Quarter 2023 Financial and Operational Results
For the quarter ending June 30, 2023, electroCore Inc. (NASDAQ:ECOR) posted revenues of $3.6 million vs. $2.2 million in the prior year quarter. This represents growth of nearly 65%, driven by increases in the VA/DOD segment and commercial revenues augmented by electroCore’s cash pay initiatives. Since electroCore’s previous quarterly update in early May, the company has participated in several scientific and investor conferences, been selected for a concussion study funded by the National Football League (NFL) and a cognitive performance study funded by the Air Force Research Laboratories. Other announcements include a distribution agreement with Reliefband Technologies, the issuance of a patent and publication of an article showing that nVNS improves memory in patients with post-traumatic stress disorder (PTSD).
Second quarter 2023 financial and operational results were provided in a press release and Form 10-Q filed with the SEC on August 9th. A conference call with investors and analysts was held immediately following the release. 2Q:23 revenues of $3.6 million were ahead of our initial estimates and matched revised company guidance. Net loss per share was ($1.03). Management reiterated its outlook of revenues between $14.0 and $15.0 million in 2023.
Operational and scientific highlights for 2Q:23 and to date include:
➢ Import license granted for Indonesia, Malaysia and South Africa – April 2023
➢ Teijin license fee remitted – April 2023
➢ Three patent issue notifications received – April 2023
➢ AAN Foreign Language Learning study and presentation – April 2023
➢ National Institutes of Health Grant Award – April 2023
➢ Tac-Stim selected for Air Force Research Laboratories project – June 2023
➢ gammaCore selected for NFL concussion study – July 2023
➢ Reliefband distribution agreement – July 2023
➢ Registered direct offering – July 2023
2Q:23 revenues were $3.5 million, a 65% increase over the $1.9 million generated in 2Q:22. Net loss was ($4.9) million in 2Q:23, which was ahead of our ($5.2) million estimate. This equated to a loss of ($1.03) on a per share basis.
For the three-month period ending June 30, 2023 and versus the same period a year prior:
➢ Net sales were $3.6 million, up 65% primarily due to increases in the VA and DOD channel of 75% and growth in cash pay channels. Contributions from the launch of Truvaga and TAC-STIM added to the revenue line. Sales in the UK and ex-US were weak due to currency effects and difficult comparisons;
➢ Gross margin was 83.5%, up 10 basis points helped by product mix tilted towards longer duration therapy and a greater number of refills;
➢ Research & development expenses totaled $1.2 million, falling 14% on lower compensation and cost cutting measures offset by targeted measures to support the next generation nVNS platform;
➢ Selling, general & administrative expenses of $6.8 million were up 8% from $6.3 million as sales related expenses grew with revenues and were partially offset by decreases in insurance and stock-based compensation;
➢ Net loss was ($4.9) million versus ($5.3) million with loss per share ($1.03) and ($1.13), respectively.1
As of June 30, 2023, cash, equivalents and marketable securities on the balance sheet totaled $8.4 million. Cash burn was ($3.4) million in the quarter. No financing cash flows were recognized in the second quarter. In July, electroCore raised a net $7.5 million from a share offering which, along with existing balances, provides sufficient cash to make it through 2024. Management has reiterated its 2023 revenue guidance of $14 to $15 million. We anticipate operating expenses rising mid-single digits net of expense reductions in 2023 with increases tied to sales-related variable costs. R&D activities will be driven by new product development but are expected to decline in coming quarters.
Since the first quarter update in early May, electroCore Inc. (NASDAQ:ECOR) has continued to expand its research efforts and build its stable of partners with the Reliefband distribution agreement. The company also announced better than expected revenues in the second quarter driven by its new initiatives in Truvaga and Tac-Stim. Other news was also promulgated including attendance at multiple conferences and the departure of founder and former CEO of electroCore, JP Errico, from the Board of Directors.
Registered Direct Offering
electroCore announced the sale of 1.7 million units which include a share of common stock and one-half warrant at $4.4125 per unit in a July 31st press release. Warrants are exercisable at $4.35 per share with a five-year duration. An additional 170,000 units are being sold to company officers and directors with the same structure and terms. In total, gross proceeds from the transaction were $8.145 million and net proceeds were approximately $7.5 million.
New Relationships and Activities
Reliefband Technologies
electroCore announced a distribution and billing agreement with Reliefband Technologies to provide their prescription Reletex product to the DoD and other Federal Supply Schedule entities. The product is an FDA cleared non-invasive neuromodulation device for nausea and vomiting. The product has a number of applications including seasickness, morning sickness, chemotherapy related nausea, anxiety, migraines and other. While the future impact on the bottom line has not been quantified, it does provide a new product for electroCore to offer and potentially expands call points for the gammaCore product.
National Football League and National Football League Players Association Study
The National Football League (NFL) and the National Football League Players Association (NFLPL) awarded a grant to independent medical researchers to examine the benefit of non-invasive vagus nerve stimulation (nVNS) and cannabidiol (CBD) on headache. The award will fund investigations into new alternative pain treatments that could benefit NFL players and a broader audience. The primary indication is Post-Traumatic Headache which will be evaluated using gammaCore and CBD in a pilot study “Assessing Non-Invasive Treatment of Refractory Post-Concussion Headache Pain.” Dr. Erika Petersen, researchers at the American Society of Pain and Neuroscience (ASPN), and Emory University have been awarded the grant.
New Tac-Stim Study in Cognitive Performance
The Air Force Research Laboratories has selected the Tac-Stim device to evaluate in context of assessing and augmenting cognitive performance in extreme environments. The five-year project will be led by the Florida Institute for Human and Machine Cognition (IHMC). The goal of the program awarding the grant is to build a wearable system to sense, assess and augment cognitive performance in operational environments. Electrophysiological and biomarker sensors will assess stress and fatigue in extreme environments for servicemembers. The goal of the program is to identify devices that can improve performance in multi-day transoceanic operational and logistic flights as well as long duration remotely piloted aircraft missions. A further goal is to improve the long term-health of individuals in these environments. According to a representative from the Air Force, Tac-Stim was selected for this project based on its demonstrated ability to mitigate fatigue and improve performance in several relevant environments.
SUBSCRIBE TO ZACKS SMALL CAP RESEARCH to receive our articles and reports emailed directly to you each morning. Please visit our website for additional information on Zacks SCR.
DISCLOSURE: Zacks SCR has received compensation from the issuer directly, from an investment manager, or from an investor relations consulting firm, engaged by the issuer, for providing research coverage for a period of no less than one year. Research articles, as seen here, are part of the service Zacks SCR provides and Zacks SCR receives quarterly payments totaling a maximum fee of up to $40,000 annually for these services provided to or regarding the issuer. Full Disclaimer HERE.
________________________
1. Note that our earnings per share actuals use updated share counts in previous periods to reflect the February 2023 reverse stock split.
2. Source: electroCore Corporate Presentation July 2023
3. Source: electroCore Corporate Presentation July 2023
