NPCE earnings call transcript, November 12, 2026

Thanks for your question, Ross.

I think the short answer is yes. We remain enthusiastic about the market opportunity and the potential within- the indicated patient populations. We're making a number of changes and investments to both improve our current execution as well as expand and deepen coverage within the business. And- We do see a path back to that. We see that it's going to take us some time to round into form on that, and we've reflected that here. But absolutely, we remain convinced and convicted around the- the market potential for the current indications, and that's only supplemented and complemented by the other catalysts that we're working on.

We can, after a fashion. And what I'll tell you is that a meaningful amount of the disruption that we saw was in the larger accounts. And so there's a couple of dynamics, I think, worth noting there. One, obviously, with a customer concentration like we have, any disruption in those larger accounts has an outside defect. And so a lot of the disruption that we did see was present inside of those accounts. That covered up a couple of other favorable dynamics within our account analysis and sales execution during the quarter. One, we have expanded the number of what we call medium sized accounts that now are the group that we're focused on taking. From what we call good to great. And so we have a positive dynamic there where we have a group that had been kind of samplers and periodic users of the technology that we have moved up to the next tier of customers. And our focus, some of it driven by disruption at some of these larger accounts, has been to expand that group. And we saw good progress in that regard. We have also seen good progress in the ongoing community. Work that we've been doing and the number of patients that are coming from community centers and community referrals. And so both of those dynamics have been positive for us and have supported the business that we did see in Q3. But we're covered up by some of the disruption in the larger accounts. So we're really looking to try and do two things here. Have additional market development execution levers that we are delivering on from

referral to more patients within the community and level three centers as well as then more centers going from good to great. That has the advantage of diluting the customer concentration impact of any one of the large centers and acts as accomplished. Then to what we see as returning stability and good growth cadence in those larger centers. So we see those things working together. The we're seeing good recovery in the larger accounts. And again, it's not a dynamic. We don't see a dynamic here where people have turned off on RNS. That's not the case. We've got good support within those centers. It's more a stabilization and cadence of procedural volumes and some of the things I mentioned in my prepared comments around capacity and staffing, etc. In those larger accounts, then the recovery there complemented with the development of additional accounts and additional referrals. Thank you.

Thanks, Ross.

We began those changes at mid-year and really worked through them during the third quarter and there are a number of them here. That I'll review with you, but it's really both of those things. There were changes we needed to make to both position the business to scale for the future as well as execute at a higher level today. And it's had the benefit of really maturing the organization. It has provided us with closer contact with and better visibility into the daily field activity. More and better visibility into real-time pipeline status and a better alignment and ongoing integration with our planning functions. All of that, again, helps us with current execution and scaling going forward. There were really three key areas of changes that we made. One was with regard to our people. They focus on people, processes, and tools. Those are the areas that we focused on here as we look to raise our level on execution and position ourselves for scale. So one from a people perspective, we made changes and I believe are improvements to sales management. We do a number of sales territory leadership roles and changes to our field clinical organization. Let me tell you a little bit about each one of those. From a sales management perspective, we flattened the organization. And put in place a more direct reporting relationship from sales managers to senior sales leadership. Again, more clarity, direct visibility, and agility in terms of taking advantage of opportunities.

And reacting to initiatives. So that was one. Two, from a sales representative perspective, we made changes to a number of sales territory roles where we could see that we needed improved performance. And we wanted to get the profiles of the people in place, both so we could drive the business today, but also as our catalysts are realized, we're in position to more fully take advantage of those. And then third, with regard to the field clinical organization, we made changes that allowed us to centralize a number of functions that our field clinical organization was performing and provide both greater efficiency for those functions while also allowing us to reallocate former field clinical engineering technical support requirements into more sales-focused roles. So, as a result, as we... with regard to where we're at with that, the field clinical structural changes are complete, the territory representative changes, that group of changes that we made are also complete, and the sales leadership changes. are complete. We are planning additional investment in our commercial organization, and we're planning that investment in 2027, but those are really designed to add. Add to the organization and bring both a deeper level of account focus and broader coverage both within our traditional level four customers and the community referring and pipeline part of the of the commercial organization. So those are the reasons we.

Made them the changes that we made and where we're at in it. Does that answer your question, Mike?

Yeah, yeah, I mean, yeah, it's helpful. Maybe to take a step back. Yeah, you called out kind of a few reasons for for the revision in terms of your second half performance and how to think about growth for next year. So, you know, is there a way to kind of parse out between the different headwinds that you laid out with your own internal changes, some of the external? You know, how much of the disruption came from each of those different factors? Yeah, let me let me let me try and and say a little bit more about that. I think of the three key things that we laid out. The local market dynamics and factors in some of the big accounts, some of the Salesforce disruption and then the transition through the SEG timing. I'd say we're probably furthest through the transition with SEG. You know, that was that was something that, you know, it takes a little bit to work through that, but we've really seen those accounts now responding and performing much in line with the rest of the accounts. With regard to Salesforce disruption, I think I just kind of walked you through that.

We're largely done with that. The people are in place. It's now a matter of really, again, kind of rounding that all into form and then continuing to add to and invest to further accelerate. The business. With regard to the local market factors, that's probably the trailing edge of it for now. And we're seeing stabilization and in Q4, a good return to growth from procedural volumes. But we're, as we mentioned in our... Prepare comments. We're taking a prudent look at Q4 and wanting to make sure that that cadence is consistent and that we're seeing the momentum that we're looking for in those local market factors. So that kind of... It'd be the one, two, three that I'd give you. Patrick, would you have anything to add to that? Well, I think obviously these are fair questions after we put up a quarter that was, you know, disappointing, certainly internally for us. And, you know, we... We've been thinking about making these changes on the sales infrastructure, and it really comes down to being able to scale. And as we took a step back and thought about what was on the horizon for us, like IGE coming in 27, pediatrics on the heels of... We've got some really good products, obviously, with ECOG assistance that's out there and then remote monitoring. We wanted to make sure that we had the sales force in place and ready to go. And so, clearly, it was more disruptive than we thought. We saw a big disruption in the major accounts.

We already talked about that we're a little over indexed in terms of our top accounts that drive a big part of our revenue. And so, we learned a lot during the quarter. We started dissecting, obviously, as we started moving towards the last month of Q3. We continue to look at it on a daily basis, as you can imagine. And so, there's a lot of eyes on this, but what we saw was a need, as we said in our prepared comments, to invest more in quota-carrying reps. And what we're going to do is, in terms of some of these large... ... accounts, you can imagine we're going to have more of a focus on that, so we can go deeper within those, bring them back up to where they were historically. We're doing well in the smaller mid-accounts, we'll call it, and so we're going to make a meaningful investment... on the sales team in order to correct this. And as I said, I think those decisions are never easy to do, but we believe this is the right move for us as we scale forward, especially what's on the horizon with IGE and pediatrics.

Okay. Thanks.

Thank you, Anthony.

half 15 to 20% in the second half of 27 do not include any contribution from IGE. There's a little bit of service revenue that we also did not include in there. So again, you know, we feel like we're in a good spot still, but we're working through and wanted to be and about how we were setting expectations, especially after coming off of what was a very disappointing Q3.

...of engagement on my side of the world. And so I would just say that the numbers we put out there, we're feeling good about those, and we've taken that all into account.

All right, great. And then just my second question, you know, the... Aurora real world evidence study that, you know, you talked about today. So it seems like you're indicating that the data submission will be collected by early 27 around the real world patients. And just curious, you know, how collaborative, you know, this process has been with the FDA and trying to understand if, you know, leaning on a real world study, you know, and submitting the data will be enough to realistically get that expanded indication for patients in that 12 to seven. range.

Thank you so much.

It's a great question.

Thank you, Brett.

The process has been very collaborative. The agency has a whole group of people looking at real world evidence and how that evidence can be used, different potential patient indications. We're looking at a variety of different ways to use that with regard to submission now, but we've been pleased with, and we'll see how those work out, but we've been pleased with the level of collaboration and engagement, and we're excited about Aurora and the progress we've made here since starting enrollment. So more to come on that, but it's been a good collaborative process thus far. Yeah, and I think we noted it in there that the difference between this and sort of a standard clinical trial is that you do a lot of the work up front, which allows for potentially a quicker approval process at the end of review process with the FDA. So that's why we talked about potentially 2027 approval for the 12 to 17-year-old age group or in early 2028.

Thank you so much.

Thanks for the question, Lily.

I think, again, if you go back and look at these factors, number one, the local market factors discussion really is it's a really an offshoot of customer concentration. And so when you have, you know, a group of accounts that have a high percentage of the volume. When you see any kind of a change in the cadence and run rate within those accounts during the same time period, it can have a significant effect. Again, we, we don't. I think we do think those are transient types of issues. And it's, and there were not consistent issues between the large accounts. So it's not like any individual account kind of metastasized in effect any. But there were just local, that's why we chose the terms local factors that impacted a customer concentration and the cadence within the period. And it's not more complex than that. The second, the sales force disruption during the period of time where those local market. factors were happening. We also made changes and so those are coincident. We made changes that we both felt like we needed to perform at a higher level today and we are now in a much stronger position from a commercial execution perspective but that occurred at the same time we were seeing those impacts and then by virtue of exiting the SCEG business at the beginning of the year it takes a period of time for that case flow to work its way through the diagnostic process and it kind of lands at the end of Q2 and into Q3 and so we don't see a broader dynamic of

you know has somebody really gotten a leg up from a technology perspective or has there been some data that's come out or anything else in fact you know we feel really good about where we're at from a data perspective we feel really good about where the pipeline is as we look toward 27 and with regard to indication expansion so we we don't think that you know we do think these things are transient we don't think there's anything that's as consistent other than when you have disruptions like this, it can open the opportunity for others to come in and pick off cases around the edges. And so there there can be some competitive activity during periods of disruption like that from in particular from an internal organizational perspective that we expect to tighten up here as as people are in role and and we're more in place with the organization now as we as we execute. Q3 and into Q4. yeah the only thing I would add is and we talked about it but I know there's a lot to digest here is the large accounts also where some of our highest SCEG or the old Dixie business and so Joel just walked through that and so as we moved some folks around and restructured clearly that had probably an over impact for us in Q3. One of the reasons why again that we talked about that we are investing more into field sales people is to make sure that we've got good coverage in these large accounts to make sure we're there on a more present day in and day out basis and so again we have a solution to address this and that is the solution and it's a contemplated in certainly our Q4 and our first half 27 where you don't see us getting all the way back up

to that 20% on the current focal indication. Great that's all very helpful and then just as a follow up on 2027 can you unpack some of the assumptions underpinning this preliminary outlook. With R&S growth of about 5% in the fourth quarter of this year, what drives the step up next year and what gives you the confidence in that acceleration this early on, especially as you face tougher costs in the first half of the year?

Thanks so much.

Yeah, and we're going to get this question a lot and ultimately we have to perform and get back to that high say-do ratio as we like to say. So what I can tell you is we took a step back and made sure we understood. what we believed we could do. We do have all of the changes in place related to the restructuring. People are clear about their roles and responsibilities as we move things around. We've changed the sales management again. We will be onboarding quite a few sales. Those people, quota-carrying folks here as we exit the year into 27 and so all of those things give us the benefit and the confidence that we'll start getting back to where we're at. But again, I think we try to take a prudent approach. to this. We're not talking about getting back up to 20% on January 1st. We wanted to make sure that we're being thoughtful about how we do this, but we appreciate we will continue to get these questions until we start proving out and show growth again as soon. Q4.

Thanks, Mike.

My follow-up topic is on Dixie. If I go back to the decision to exit, one of the mentions was just it required a lot of rep time to solve the problem. And, and tonight I heard, you know, amongst the mentions was, you know, we're not getting those neurosurgeon touch points without Dixie and maybe some of the upstream visibility is reduced. I'm not asking you to cry over spilled milk. It's water under bridge, but could you get Dixie back? Is that a course that could make sense? Thank you. Let me maybe start with the neurosurgeon access point. And I think as you rightly know, we noted at the time of the exit of that business that we felt like, well, it was helpful that we had developed relationships there. And that we would continue to have access to those call points. And we feel like we do. And we feel like that has been transitioned well. I think what we've learned here is that the presence of the distribution of the product line gave a more routine presence and engagement structurally. And we just we needed to make the point here and make the commercial organization more present to take advantage of the relationships that were built in the call points that are there for us. And it was more of a of an attention to the fact. That having the ongoing presence there can allow you to either pick up or not a case or two around the edges. And so that's really the corrective action that was taken, which has resulted in the normalization of the performance.

And those accounts that we mentioned. And so, again, we think it was one of the transient aspects of we transitioned the customers well, customers were happy with the transition, etc. That all went according to plan. A nuance was the picking up. or not of cases as a result of being there on a more ongoing basis. And now, because we do have the call point in the relationships and we are, we have fixed that level of attention from a sales behavior perspective, we feel like we're in good spot there. So we don't need to be. In the SCEG business. That's not a comment on whether we wouldn't want to be in the SCEG business or whether we think that is a potential force or not going forward. I, the calculus remains that. The sales rep time here is going to be getting more and more valuable as we think about indication expansion coming. And with some of the delays here with IGE, that's been a little bit forestalled. But that remains the case as well as with our own product development pipeline here now beginning to put products out with ECOG Assistant and now with remote care coming in 2027 as well. We've got plenty that's coming that are going to be both good catalysts for the business as well as things for our folks to continue to take advantage of with regard to new products and indications and working up the new referral stream too. We've addressed the SEG topic. That's not to say never, you know, never say never, but it's not something that we need to have.