NeuroPace, Inc. NPCE reported a second-quarter 2024 loss of 26 cents per share compared with the year-ago quarter’s reported loss of 36 cents. The figure was also narrower than the Zacks Consensus Estimate of a loss of 29 cents per share.

Q2 Revenues

Revenues totaled $19.3 million, up 16.9% year over year. The figure topped the Zacks Consensus Estimate by 2.9%. The revenue growth was driven by increased sales of the RNS System.

Margins

The gross profit in the reported quarter was $14.1 million, up 18.1% year over year. The gross margin expanded 89 basis points (bps) to 73.4% despite a 12.9% rise in the cost of sales.

SG&A expenses declined 1.3% to $14.3 million. R&D expenses rose 13.5% to $6.1 million.

The company registered an adjusted operating loss of $6.2 million in the second quarter compared with a loss of $7.9 million in the year-ago period.

Financial Position

NeuroPace exited the reported quarter with cash and cash equivalents of $12.8 million compared with $12.9 million at the end of the first quarter of 2024.

Updated 2024 Guidance

The company raised its revenue outlook for 2024.

For the full year, revenues are estimated to be in the range of $76-$78 million (earlier $73-$77 million), representing growth of 16-19% over 2023. The Zacks Consensus Estimate for full-year revenues is pegged at $77.3 million.

Our Take

NeuroPace’s second-quarter earnings and revenues surpassed estimates. The strong performance was fueled by increased sales of the RNS System and DIXI Medica products. Moreover, the expansion of the gross margin amid rising costs is encouraging.

NeuroPace, Inc. Price, Consensus and EPS Surprise

NeuroPace, Inc. price-consensus-eps-surprise-chart | NeuroPace, Inc. Quote

During the second quarter, the company met an agreement milestone in its strategic biotechnology company collaboration to leverage the RNS System’s unique data monitoring and analysis capabilities. Along with this, NeurPace expanded its Project CARE pilot program activities to target clinicians outside Level 4 comprehensive epilepsy centers to increase access to the RNS System for drug-resistant epilepsy patients.

Also, the raised revenue outlook for the full year bodes well for the stock. However, the company’s reported loss for the quarter is concerning.

Zacks Rank and Key Picks

NeurPace currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, TransMedics Group TMDX and Quest Diagnostics DGX.

Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.