NeuroMetrix Reports 48.6% Revenue Decline, Enters Merger Agreement with electroCore

NeuroMetrix, Inc. reported a significant decline in its financial performance for the fiscal year ending December 31, 2024, with revenues totaling $3.03 million, a decrease of 48.6% from $5.90 million in 2023. The drop in revenue was primarily driven by a 55% decline in sales from its DPNCheck product, attributed to adverse changes in Medicare reimbursement policies that reduced patient screenings for peripheral neuropathy. In contrast, revenue from the Quell product, a wearable device for chronic pain management, increased by 21.1%, contributing 23.5% of total revenue for the year.

The company's gross profit also fell sharply, decreasing by 57.4% to $1.68 million, reflecting a contraction in gross margin from 66.9% to 55.4%. This decline was linked to reduced production efficiency and a less favorable revenue mix due to the significant drop in DPNCheck sales. Operating expenses were reduced by 5.7% to $10.46 million, as the company implemented cost-cutting measures, including a 50% reduction in workforce and the termination of its legacy ADVANCE business, which had ceased to contribute positively to cash flow.

In terms of strategic developments, NeuroMetrix entered into a merger agreement with electroCore, Inc. on December 17, 2024, which is expected to close in early Q2 2025. This merger aims to enhance shareholder value and consolidate resources for better operational efficiency. Additionally, the company has agreed to sell its DPNCheck business in Japan to Fukuda Denshi Co., Ltd. for an upfront payment of $400,000 and potential milestone payments totaling $1.5 million, which could provide a much-needed cash influx.

As of December 31, 2024, NeuroMetrix had a cash position of $13.1 million and a current ratio of 14.8, indicating adequate liquidity to meet its short-term obligations. However, the company has faced challenges in maintaining its market share, particularly in the Medicare Advantage sector, where changes in reimbursement policies have adversely affected sales. The company anticipates that it will continue to incur operating losses as it works to grow sales of its products and navigate the evolving healthcare landscape.

Looking ahead, NeuroMetrix's management remains focused on the successful commercialization of its Quell and DPNCheck products, with plans to file for regulatory approval for new indications of Quell. However, the company acknowledges the uncertainties surrounding market acceptance and reimbursement, which could significantly impact future revenues and profitability. The outcome of the proposed merger and the strategic decisions made in the coming months will be critical in shaping the company's trajectory.