NRXS

Neuraxis, Inc. (NRXS) - Q2 2026 10-Q Summary

Business Context and Reporting Period

This summary covers the quarterly period ended June 30, 2026. Neuraxis, Inc. is a growth-stage medical device company specializing in neuromodulation therapies. Its primary revenue-generating product is the IB-STIM device, indicated for functional abdominal pain in patients aged 8 and older. The company also markets the RED device for rectal expulsion evaluation. The company is classified as a non-accelerated filer, smaller reporting company, and emerging growth company.

Key Financial Metrics

Material Changes vs. Prior Period

• Revenue Growth: Net sales increased 115.7% quarter-over-quarter and 97.6% year-to-date. This growth is attributed to the effective date of the IB-STIM Category I CPT code on January 1, 2026, driving broader insurance coverage and higher unit volumes.
• Margin Expansion: Gross margin improved to 85.9% (Q2 2026) from 83.6% (Q2 2025), driven by a higher mix of fully reimbursed insurance sales versus discounted self-pay patients.
• Expense Increases:
  • Selling Expenses: Increased 61.3% QoQ due to commissions, additional sales personnel, and travel costs associated with market expansion.
  • R&D Expenses: Increased 138.2% QoQ due to expanded clinical research studies for new indications.
  • G&A Expenses: Increased 45.6% QoQ, primarily due to incremental stock-based compensation, market access advisory costs, and recruiting fees.
• Operating Loss: Operating loss increased 23.7% QoQ due to higher operating expenses, though the YTD operating loss decreased 3.7% compared to the prior year due to the absence of a one-time litigation settlement charge in 2025.

Outlook, Risks, and Unusual Items

• Going Concern: Management has expressed substantial doubt about the company's ability to continue as a going concern for one year from the filing date. While the company holds $8.3 million in cash, it has incurred losses since inception and relies on future financing or revenue growth to sustain operations.
• Capital Raising: The company raised approximately $5.06 million in gross proceeds from an "At The Market" offering and $0.94 million from warrant exercises during the first six months of 2026.
• Stock Compensation Modification: In July 2026 (subsequent to period end), the company cancelled 1.32 million stock options and granted equivalent RSUs. This modification is expected to result in an estimated $3.4 million incremental stock compensation expense and $3.0 million in cash taxes.
• Litigation:
  • Settled: A 2022 lawsuit was settled for $750,000; $375,000 remains payable as of June 30, 2026.
  • Pending: Dr. Arturo Taca has asserted a claim for approximately $2 million regarding patent ownership. The company disputes this and has not recorded a liability.
• Internal Controls: The company disclosed material weaknesses in internal controls over financial reporting, including ineffective approval processes and segregation of duties, which continued to exist as of June 30, 2026.

Investor Verification Checklist

• Cash Burn Rate: Verify the sustainability of the $8.3M cash balance against the projected $3.4M stock comp charge and ongoing operating losses.
• Insurance Coverage: Confirm the extent of commercial insurance carrier adoption for the IB-STIM Category I CPT code to validate revenue growth sustainability.
• Stock Compensation Impact: Assess the dilution and expense impact of the July 2026 option-to-RSU modification ($3.4M expense).
• Internal Controls: Review the progress of remediation efforts for the disclosed material weaknesses in financial reporting.
• Litigation Exposure: Monitor the status of the Dr. Taca patent dispute and the remaining $375k litigation settlement payments.