Mobia Medical, Inc. (MOBI) Earnings Call Transcript

Thank you. Good afternoon and welcome to the [ Mobile Medical ] Second Quarter 2026 Earnings Conference Call. [Operator Instructions] Please note that today's conference is being recorded. I would like to turn the call over to [ Lisa Smith ] of the Gilmartin Group Investor Relations for [ Mobile Medical ]. [ Lisa ], please go ahead.

Good afternoon, and thank you for being on today's call. Joining me from [ Mobia Medical ] are Richard Foust, President and Chief Executive Officer, and Bunker Kearns, Chief Financial Officer. Earlier today, [ Mobia Medical ] issued a press release announcing financial results for the quarter ended June 30, 2026. A copy of the press release is available on the investor relations section of the company's website. Before we begin, I would like to remind you that management will make remarks during this call that constitute forward-looking statements within the meaning of the federal securities laws and that are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Many statements made during this call that relate to expectations or predictions of future events, results, or performance, including our full year 2026 revenue guidance, are forward-looking statements. These statements involve material risks and uncertainties that could cause actual results or events to differ materially from those anticipated or implied by these forward-looking statements. Accordingly, you should not place undue reliance on these statements. For a full list and description of the risks and uncertainties associated with our business, please refer to the sections captioned Risk Factors and Management's Discussion and Analysis of Financial Condition and Results of Operations in our filings with the Securities and Exchange Commission. This conference call contains time-sensitive information and is accurate only as of the live broadcast today, August 11, 2026. [ Wobbe Medical ] disclaims any intention or obligation, except as required by law, to update or revise any forward-looking statements, whether because of new information, future events, or otherwise. With that, I will now turn the call over to Richard.

Thank you, [ Lisa ]. Good afternoon, everyone, and thank you for joining us today. We are pleased to welcome you to [ Mobian Medical ]'s first earnings call as a public company. In May, we successfully completed our initial public offering, raising $134 million in net proceeds with strong support from top-tier investors who share our vision for the future of stroke care. This successful IPO marks an important milestone for [ Mobia Medical ] by strengthening our balance sheet and providing the capital needed to accelerate commercialization, patient access, and support the next phase of our growth. At [ MOBIA ], we put patients first. So before we move to our quarterly remarks, and as will be our precedence going forward, we are going to start with a patient story that brings to light the why that drives our team every day. I would like to introduce you to Tess, who suffered a stroke 10 years ago and had accepted that she would never regain meaningful use of her dominant hand. Her greatest hope was simply to care for her children more independently, and more importantly, but seemingly out of reach, she would love to hold her children in her arms. After completing Vivistim therapy, Tess reached and achieved something she never thought possible. She picked up her young son with both arms for the first time since her stroke. It was an amazing moment for her. Today, she continues to reach new milestones, serves as a Vivistim ambassador, and inspires other stroke survivors with a simple message. I wish I could show you just how different it will be. For [ MOBIA ], Tess's accomplishments are a living testimony of our mission to help stroke survivors regain independence and reclaim parts of their lives they thought were lost forever. This is our why. We mobilize breakthrough possibilities for chronic stroke survivors. Now that you have some context for the amazing things we are doing for patients, let's move to our quarterly results. We delivered a strong second quarter with financial performance reflecting continued commercial adoption of our Vivistim paired VNS therapy for upper extremity impairment in chronic ischemic stroke survivors. Revenue totaled $13.5 million, representing a 102% growth over the prior year, and gross margin for the second quarter was 83.2%. We are pleased with our execution in the first half of the year and encouraged by the momentum entering the second half of the year. We are initiating revenue guidance of $54.0 million to $56.0 million for the full year 2026, which represents a growth of 69% to 75% over the prior year. Bunker will cover the financial details later in our prepared remarks, but first I'd like to provide an overview of [ Mobia Medical ] for those of you who may be newer to our story. [ Mobia Medical ] is focused on redefining stroke recovery. Over the past few decades, stroke care has largely been focused on acute survival. There have been many meaningful advancements in acute stroke protocols and interventions, such as tPA and thrombectomy. And as a result, millions more people are surviving their strokes. But that has created a large and underserved population of chronic stroke survivors. There are approximately 9 million ischemic stroke survivors in the United States today, a large portion of whom are living with chronic life-altering motor impairments, particularly in their arm and hand. Most of these patients undergo physical or occupational therapy in the first months following their stroke, but many will experience a plateau in improvement after the first 3 to 6 months. After that, there have historically been very few options to improve their upper limb function, and they are left to live with impairment for the rest of their lives. Our mission is to change that paradigm. Vivistim therapy is the first and only FDA-approved, clinically validated solution for chronic ischemic stroke survivors with moderate to severe upper limb impairment. The Vivistim system includes an implanted pulse generator and lead that delivers stimulation to the vagus nerve when activated during upper limb exercises. This paired VNS therapy boosts neuroplasticity and enables the brain to create new neural connections and remodel motor pathways that were damaged by the stroke. The meaningful and durable benefits of Vivistim therapy were proven in our VNS-REHAB pivotal study. This was a randomized, triple-blinded, sham-controlled trial originally published in The Lancet in 2021, demonstrating that patients who received active Vivistim therapy had 2x to 3x greater improvement in upper limb function compared to patients who underwent sham therapy with results out to 2 years. Importantly, this study included patients who are 9 months to 10 years post-stroke, demonstrating that the results of Vivistim therapy are independent of time post-stroke. With Vivistim, there is no expiration date on recovery, and we have effectively raised the ceiling of possibility on a stroke survivor's recovery journey. Commercially, we have even successfully treated survivors up to 45 years post-stroke. Across our clinical studies and commercial experience, the increase in motor improvement enabled by Vivistim therapy has translated to meaningful functional benefits for patients. Some patients have regained the ability to get dressed independently, feed themselves, drive a car, or even return to work. Vivistim therapy has been life-altering for many stroke survivors. We have continued to further the evidence associated with Vivistim therapy. In July, we announced the publication of 2-year follow-up data from our pivotal trial in Neurology, the official peer-reviewed journal of the American Academy of Neurology, demonstrating the durability of improvement achieved with Vivistim therapy. Participants maintained statistically significant and clinically meaningful gains for at least 2 years after treatment. A subset of patients who had been followed out to 3 years all demonstrated similarly durable outcomes, underscoring the lasting impact of our therapy. The study also captured data indicating that upper limb motor improvements translated into impactful real-world changes in the daily lives of stroke survivors, as reflected across several patient-reported measures of quality of life. Additionally, a separate subset of participants demonstrated further improvement between 1 to 2 years, suggesting recovery can continue over time with ongoing self-directed Vivistim therapy. Because Vivistim can be effective no matter the time elapsed since stroke, we are able to serve the immense existing prevalence population as well as hundreds of thousands of people who suffer an ischemic stroke each year. Stroke is one of the leading causes of long-term disability in the United States, and we estimate that our serviceable market in the United States alone is worth over $30 billion. This figure is representative of patients who are on-label and strong candidates for Vivistim therapy. Given the significant opportunity within our current approved indication, we are focused on expanding access to this large market that we have approval for today. Our commercial model is purpose-built around the unique dynamics of the stroke market. We are targeting stroke centers because they have a strategic focus on delivering high-quality stroke care, and they have the expertise and infrastructure to lead the way in defining new standards of stroke recovery care. There are approximately 1,500 primary and comprehensive stroke centers in the United States, which is a concentrated and specialized group. In addition, the surrounding infrastructure network of these stroke hospitals provides access to both acute stroke patients entering the care pathway, as well as the larger population of stroke survivors already in ongoing recovery. To date, we have seen sustained interest from leading stroke centers across the country, while healthcare providers are championing our technology for patients. Our field team is split into territories, each consisting of a territory manager and at least one therapy development specialist. Territory managers are responsible for hospital logistics, healthcare professional relationships, and the support and creation of the Vivistim program infrastructure. The therapy development specialist, who's typically a licensed occupational or physical therapist, manages education and relationships within the ecosystem of stroke therapists, therapy sites, and is responsible for establishing a community support structure that drives awareness and identification of Vivistim therapy candidates. These two roles are complementary by design to support the full patient journey from identification through therapy. We are excited about the progress that this sales unit has shown in effectively initiating and growing territories. As we build the stroke recovery market, our growth and commercial success will be driven by several interconnected priorities, all oriented around broadening access and awareness for Vivistim therapy. The first is expansion into new territories and the launch of Vivistim programs at new stroke hospitals, which establishes a pathway for survivors to access treatment and ensures geographic coverage across the country. The second is increasing utilization within existing territories, supported by a robust patient funnel, resulting from more efficient identification, evaluation, and treatment. And the third is building awareness through education and engagement for all stakeholders. Healthcare professionals need both the awareness that Vivistim therapy is an option in chronic stroke recovery and confidence in the beneficial patient outcomes it delivers. We take a methodical approach to launching new Vivistim programs at each site. Educating physicians, therapists, and patients is central to generating stakeholder buy-in and establishing a strong patient referral pathway at each institution. Over time, as programs mature and awareness grows, we envision Vivistim therapy becoming embedded in the continuum of care at stroke centers across the country, with survivors routinely screened and evaluated for Vivistim therapy upon discharge. This creates an increasingly self-sustaining patient flow at each program, further enabling scalability in our business model. As we build our position in the stroke recovery market, our success will be driven by our commercial team's ability to expand access to Vivistim. Success will be measured by growing the number of active territories and the number of units sold for the respective territories. We define an active territory as one that has had a territory manager enrolled for at least 9 months. In the second quarter, we expanded our geographic footprint to 35.5 average active territories, an increase of 92% over the 18.5 active territories in the same period last year. We sold approximately 367 units in the quarter, driven by increasing utilization in existing territories and continued expansion into new territories and new hospital programs. On the reimbursement front, Vivistim has a Category I CPT code, and in 2026, CMS assigned this CPT code to a New Technology APC 1580 under the Hospital Outpatient Prospective Payment System with Medicare reimbursement of approximately $45,000. We also continue to make progress supporting patient access across Medicare and commercial payers. The completion of our initial public offering represents a meaningful milestone for [ Mobia Medical ]. The proceeds give us the resources to accelerate growth for our commercial organization, expand our geographic footprint, and invest in activities that will improve broader awareness of and access to the Vivistim. This is a market that remains significantly underserved, and we believe the opportunity ahead of us is substantial. The patients we serve are getting better, and for many, Vivistim therapy has truly changed their lives. The future is bright for stroke survivors, and the future is bright for the patients from [ Movia Medical ]. With that, I will turn the call over to Bunker to review our second quarter financial results and provide our full year 2026 guidance. Bunker?

Thank you, Richard, and good afternoon, everyone. I'll walk through our second quarter 2026 financial results and then provide our full year 2026 revenue guidance, which we are initiating today. I'd start by first reiterating the story about Tess's why and what she's able to do now. She and the other Vivistim patients' improvements can be life-changing, and it's why we do what we do. Total revenue for the second quarter of 2026 was $13.5 million, representing year-over-year growth of 102% compared to $6.7 million in the second quarter of 2025. The increase was driven by the broader adoption of the Vivistim system at both new and existing programs, driving higher unit sales. Our patient funnel continues to create consistent, predictable revenues for our business. And with a massive TAM still ahead of us, we're excited about the trajectory going forward. The gross margin was 83.2% for the second quarter of 2026 compared to 82.3% in the second quarter of 2025, reflecting that per-unit product costs remained relatively consistent as expected. The increase was primarily due to freight and tariff costs recognized in cost of goods sold during the period, partially offset by other changes in product costs. Moving forward, we expect gross margin to remain in the low 80s. Selling, general, and administrative expenses were $26.9 million in the second quarter of 2026, an increase of 85% compared to $14.5 million in the second quarter of 2025. The increase was primarily driven by increased headcount in our commercial organization and higher commissions associated with our revenue growth, as well as increased audit, legal, and professional service fees associated with our IPO, and marketing and clinical initiatives. Research and development expenses were $2.3 million in the second quarter of 2026, an increase of 61% compared to $1.4 million in the second quarter of 2025, driven primarily by increased headcount. Net loss was $21.0 million, or $1.10 per share, in the second quarter of 2026, compared to a net loss of $10.5 million, or $12.44 per share, in the second quarter of 2025. The year-over-year decrease in net loss per share primarily reflects the significant increase in common shares outstanding following the company's IPO and the conversion of outstanding convertible preferred stock and convertible notes into common stock. Turning to the balance sheet, cash and cash equivalents as of June 30, 2026, were $177.1 million. This includes the net proceeds of approximately $134.0 million from our initial public offering, which closed in May. One modeling note before I turn to guidance. Approximately $3.5 million of IPO-related expenses have been accrued in Q2 but paid in Q3. This is timing associated with the completion of our offering, not a change in our underlying spend trajectory for OpEx or cash balance expectations. Turning to our outlook for the full year 2026, we expect total revenue to be in the range of $54.0 million to $56.0 million, representing growth of approximately 69% to 75% over the full year 2025. This outlook reflects our consistent commercial execution and is grounded in our commitment to the.

confidence and the durability of our patient funnel and the momentum from hospitals implementing Vivistim programs. With that, I'll turn the call back to Richard. I want to reiterate how excited we are about the opportunity in front of us. We have a clinically validated group therapy that is addressing an enormous unmet need and meaningfully improving the lives of stroke survivors. We have a commercial organization that's being consistently and scaling with efficiency. And with the completion of the request who support us, and most importantly, the patients who are at the heart of our milestone is a testament to what we can accomplish together. We look forward to keeping you updated on progress in the quarters ahead. With that, I will turn the call over to the operator for Q&A.

Thank you ladies and gentlemen. [Operator Instructions] Our first question comes from Travis Steed with Bank of America.

Maybe talk a little bit about the strong Q2 revenues, beat by $1.3 million, raise the guide. Just kind of what you're seeing as you scale a market about how it guides.

And we have high confidence in this range. We have a disciplined and thoughtful approach to how we do it. And we want to make sure that our growth is significant moving forward using the stable, predictable commercial model that we have. So we feel really confident in that comprehensive approach and how that translates to the range.

Okay. And then, that's helpful. I wanted to ask about the New Technology APC that came through recently. If I give a Level 6 APC code and then and maybe a nitpicky question, but there was a movement on value converts on the P&L. Just wanted to make sure that was clear to everybody, you know, the OpEx movement and the P&L movements on the EPS line this quarter if you could just help explain up.

Absolutely, I'll take the first question and let Bunker take the second question on the EPS. In terms of Level 6, and I would just say New Technology APC 1580, today it's a proposal by CMS. I mean, I think we're confident in that process, but it is a proposal. It's not done until it's done. We'll all find out in November when the final rule comes. But I think that is a very positive trend for us, obviously being put in it for 2026 and have it be part of the proposed rule for 2027. So that gives us a lot of stability and predictability associated with payment.

And Travis, this is Bunker. On the net loss figure that you're referencing, that would be the net income of approximately negative $21.0 million. That included a $4 million charge related to marking the convertible notes to fair market value immediately prior to the conversion. So this is a non-cash item related to a one-time conversion of those notes. And so thank you for calling that out. That was one of the notes that we wanted to make sure that people got when they were updating their models.

Thank you. One moment for our next question. Our next question comes from Robbie Marcus for JPMorgan.

Maybe I could start on an update on reimbursement or more commercial coverage and coverage. Okay. You know, where do you stand? Any big wins in the quarter and any big wins on the horizon for second half of the year?

Yes, thank you, Robbie. So I would start by saying, you know, based on our stable, predictable commercial model that we have, you know, reimbursement is about this coding, payment, and coverage. Coding, we're in a really good spot with a Category I CPT code now in a New Technology APC. Payment is something that comes in a very predictable way. And coverage is in development. So I would say today, you know, have a number of insurance providers across the United States that are paying claims. And then we also have, you know, development of real-world evidence and extension of our VNS-REHAB studies. And those will play an important role for coverage development over time. And I see that happening over a period of years, not necessarily, you know, from one quarter to the next.

Great. Not sure who this question is most appropriate for, but with the IPO proceeds, maybe speak to some of the investments and programs you're able to now initiate with the added funds and how you're spending it.

Yes, thank you, Robbie. I'll take part of it and let Bunker add some comments at the end. I would say majority, as we think about the deployment of resources, first of all, we're following the plan that we laid out with our, you know, IPO thesis. And it really is, this is an execution story and most of our proceeds are going towards building and developing our commercial model. And that's hiring TMs, TDSs, and building awareness, you know, across the United States. And so really the deployment of our OpEx is highly focused on the commercial model build. There is obviously some part of it that is around clinical development as well, as we need to build evidence and confidence in our technology and our outcomes over time in the real-world setting. Bunker, would you like to add anything else to that?