NeurAxis - Last Call Before Full Commercialization Numbers Are Reported
NeurAxis (NRXS) is enjoying the inflection point we have been waiting for, unlocked by the Category I CPT code that became effective January 1, 2026. Providers can now bill with confidence. Payers now process claims with established fee schedules. The prior authorization machinery that the company has been building for two years is now being flooded with requests.
Before we get into the 10-K details released this morning, let’s focus on what CEO Brian Carrico said on this morning’s earnings call: prior authorization (PAs)requests in Q1 2026 are running approximately 10 times higher than Q1 2025. Q1 2025 revenue was approximately $896,000. This increase in PA volume does not translate 1:1 to revenue because there is a conversion lag of several weeks between pre-auth approval and device delivery, and billing and conversion rates also matter. But let’s do some basic math. Even at a 30% conversion rate on 10x the pre-auth volume, you’re looking at roughly 3x the revenue of Q1 2025. That puts Q1 2026 somewhere in the range of $2.5M to $4M for a single quarter against a full-year 2025 total of $3.6M.
NeurAxis continues to overcome every obstacle to full commercialization since we first began covering this company. The remaining hurdle is securing insurance coverage from all major carriers, which we expect to occur within the next 12 months. Let’s take a look at the whole picture:
The patient equity problem that coverage for some, but not all, has created.
The lessons learned in commercializing the IB-Stim.
What each added insurance carrier means for NeurAxis,
What the VA market means, what the 1040K actually says.
The Patient Equity Problem
The clinical evidence across more than a dozen peer-reviewed studies and 700+ published patients is unambiguous. Children with functional abdominal pain, IBS, and functional dyspepsia experience meaningful, sustained improvements in pain, disability, anxiety, and quality of life. In the largest real-world registry ever conducted for any drug or device in pediatric functional GI disorders, 92% of patients had already failed medication therapy when they arrived at IB-Stim. IB-Stim has proven effective.
The dilemma is that, for a child whose family has commercial insurance coverage from one of the 24 payers now covering PENFS, the coverage is accessible. For a child whose family does not, it largely is not. The company operates a Patient Assistance Program that offers discounted devices based on household income and size. The financial assistance program compressed gross margins in 2025, as the company subsidized access at the expense of profitability. But a 15-30% discount on a $4,780 course of therapy is still beyond reach for many uninsured families. The extent to which doctors are waiting for insurance coverage to become standard before prescribing IB-Stim is difficult to gauge, but it is certainly an important factor.
LESSONS LEARNED
A golden rule in investing in Microcap stocks is to trust the company’s leadership. Is the company achieving what they have forecast, and if not, are there reasonable explanations as to why not? We have been very impressed with CEO Brian Carrico and CFO Tim Henrichs. Brian and Tim have not deviated from the stated goals and have been extremely gracious with their time to answer shareholder questions. Most appreciated as an investor is the reluctance to spend money and dilute shareholders, where other managers would have. NeurAxis has been operating with a skeleton crew of about 25 people instead of bulking up once thresholds such as FDA approval were achieved.
During today’s call, Brian took a few minutes to share lessons learned and how they will be applied. No financial forward guidance was provided, as the commercialization effort with the reimbursement code in effect is just in the first inning, but this is good information as to how the company is being managed.
Lesson 1: Reimbursement is the product. The single most important insight Carrico has internalized is that a superior clinical device is necessary but not sufficient. IB-Stim had compelling data in 2019 when it got FDA clearance. It had compelling data in 2021 when it got a Category III CPT code. Revenue barely moved. The company spent years learning that insurance payers, not physicians, are the real customers, and that coverage policy, prior authorization infrastructure, and CPT code status are as important as clinical evidence.
Lesson 2: Cash management nearly killed the company. The 2024 convertible note structure, with multiple tranches at 8.5%, mandatory conversion provisions, and anti-dilution triggers, was expensive, complex, and ultimately dilutive. The fact that the 2024 net loss included $585,824 in Other Expense and $230,824 in Finance Charges from note settlements and shareholder disputes tells the story of a company scrambling for capital on unfavorable terms. In 2025, Brian and Tim cleaned house: resolved the Bhambhani litigation, cleanly terminated the Masimo NSS-2 Bridge license, unwound the advisory agreement that was issuing monthly warrants, and raised clean equity via a $5M institutional follow-on and the ATM. The balance sheet is essentially debt-free, with $7M in cash, and reflects a deliberate simplification. The lesson: get the balance sheet clean before the revenue inflection, or the inflection gets captured by debt holders, not shareholders.
Lesson 3: Don’t try to be everything at once. Early in the company’s history, NeurAxis was pursuing multiple indications, managing the Masimo NSS-2 Bridge license, and simultaneously trying to commercialize the original NeuroStim device. The 10-K reflects a disciplined narrowing: the NSS-2 Bridge license was terminated and the IP recaptured, the EAD is reserved for research only, and commercial energy is focused on IB-Stim with a clear two-channel strategy, pediatric hospitals first, adult GI and VA second. The pipeline clinical programs are structured as externally conducted RCTs at academic institutions, not internal resource drains. This focus was not always evident in prior years.
Lesson 4: The VA is a channel, not an afterthought. Carrico has talked about the VA opportunity for years. What is different in 2026 is that the FSS contract makes it real. The decision to pursue and obtain a Federal Supply Schedule listing, a bureaucratic process that takes months and requires specific regulatory and compliance infrastructure, reflects a deliberate choice to invest ahead of the revenue. The fact that the fibromyalgia RCT is being conducted at Emory and a VA Medical Center simultaneously is not coincidental. Clinical evidence and the commercial channel are being built in parallel.
Lesson 5: The prior authorization team is a strategic asset. When NeurAxis launched its internal PA function in 2023, it was widely viewed as an operational necessity, a way to reduce friction for hospital partners navigating a cumbersome insurance approval process. In retrospect, it was a strategic investment that is now the primary bottleneck between demand and revenue. Management’s willingness to invest in this non-glamorous function while the company was burning cash at $6M+ per year reflects a clear-eyed understanding of where value would be created. The 10x PA surge in Q1 2026 is, in part, a return on that investment.
How these lessons are being applied in 2026:
expanding medical policy coverage
scaling the PA team
deploying VA sales resources
INSURANCE COVERAGE: WHAT EACH WIN ACTUALLY MEANS IN REVENUE
The company now has 24 commercial health insurers with formal medical policy coverage for PENFS, approaching 100 million covered lives as of January 2026.
To frame the revenue impact of each additional coverage win, consider the following model:
Assumptions: average patient revenue of $4,780 (4 devices at $1,195 each)
eligible patient prevalence of approximately 2-3% of covered pediatric lives
year-1 utilization rate of 0.01-0.05% of covered lives in the first 12 months post-policy.
Illustrative revenue impact per 10 million covered lives added:
Utilization Rate | Annual Revenue
1% (conservative) | $4.78M
2.5% (base case) | $11.95M
5% (bull case) | $23.90M
At 100 million covered lives, the current coverage, and 0.01% utilization, the mathematical revenue ceiling is $47.8M annually. At 0.025% utilization, you get to nearly $120M. These are very modest utilization numbers. The company currently does $3.6M in revenue. We are at the very beginning of the utilization curve.
The 1,000% pre-auth surge in Q1 2026 suggests utilization is beginning to inflect. Prior authorizations are the leading indicator. Revenue follows approvals by 4-8 weeks. The company’s prior authorization team, which has been quietly scaling since 2023, is now a critical infrastructure asset, and management explicitly cited expanding that team as a priority for 2026.
Each new insurer win should be modeled not just on covered lives but on the company’s prior-auth capacity and provider network depth. A win with a 10M-life insurer means nothing without the sales reps and PA specialists to shepherd claims through. The company is investing accordingly.
VA REVENUE: THE MISSING VARIABLE
The Craig-Hallum $8 price target, the only active sell-side coverage, does not appear to incorporate meaningful VA revenue. CEO Brian stated on today’s call that progress is outpacing expectations, with several orders already submitted by the VA.
VA facilities can purchase IB-Stim without going through the commercial insurance prior authorization process. This removes the primary friction point that has slowed adoption in civilian settings.
VA Revenue Scenarios (annual):
VA Patients Treated | Annual Revenue
500 — near-term ramp | $2.4M
1,000 | $4.8M
2,500 | $11.95M
5,000 | $23.9M
Even 1,000 VA patients annually represents $4.8M in incremental revenue, a 133% increase over full-year 2025.
ANNUAL REVENUE RUN RATE SCENARIOS
Combining the key variables, commercial payer utilization, VA ramp, and the Q1 2026 pre-auth signal, I frame the forward revenue picture:
Base Case — Commercial: 100M lives at 0.012% utilization = approximately $5.7M
VA: 1,000 patients = $4.8M
Annual run rate: approximately $10.5M
Bull Case — Commercial: 125M lives at 0.04% utilization = approximately $23.9M
VA: 5,000 patients = $23.9M
Adult GI incremental: $5M
Annual run rate: approximately $53M
To clarify, I am not a professional analyst. The CH analyst who provides coverage has much lower revenue projections, so we should treat those projections as the base case. I expect we will see a revised and updated report from CH shortly.
FY2025 10-K: WHAT THE FILING ACTUALLY SAYS
I’ll be brief in this section because the full commercial rollout was effective Jan. 1.
Full-year 2025 revenue came in at $3,569,282, up 33% from $2,685,925 in 2024. Q4 2025 revenue of $968,000 was up 27% year-over-year and represents a sequential acceleration, setting up what could be a dramatic Q1 2026.
Unit sales grew approximately 44% for the full year, outpacing revenue growth — reflecting the company’s financial assistance program providing discounted devices to patients without full insurance coverage. As the payer mix shifts toward fully reimbursed sales in 2026, revenue per unit should improve.
CAPITAL STRUCTURE: SHARES, WARRANTS, AND ATM
Balance Sheet: Cash at December 31, 2025: $4,965,072 with negligible debt.
Post-year-end capital activity per Note 20 of the 10-K:
- ATM: 405,969 shares issued January through March 2026 for $2,312,443
— Warrant exercises: 136,126 shares in February 2026 for $323,980
— Total post-year-end cash raised: $2,636,423
Estimated current cash: approximately $7.2M, before Q1 2026 operating activity.
At FY2025’s burn rate of $6.4M, that’s roughly 14 months of runway on a static basis. But the revenue trajectory will reduce the cash burn picture in the back half of 2026.
Shares Outstanding
Date | Common Shares
December 31, 2024 | 6,990,227
December 31, 2025 | 10,652,812
March 12, 2026 (10-K cover) | 11,187,639
The year-over-year increase of 3,662,585 shares reflects the May 2025 follow-on offering (1,538,461 shares at $3.25), the October 2025 ATM draw (623,184 shares), warrant exercises (946,525 shares), Series B Preferred conversions (484,032 shares), and smaller issuances for RSU vesting, board compensation, and settlement shares.
Warrants Outstanding as of December 31, 2025
Tranche | Shares | Strike | Expiration
Investor Warrant | 12,852 | $8.76 | September 18, 2028
2022 Convertible Notes | 227,098 | $2.38 | Various 2027
2023 Convertible Notes | 971,916 | $2.38 | Various 2028
Underwriter Warrants | 91,146 | $2.38 | August 8, 2028
Advisory Agreement Warrants | 76,512 | $2.38 | Various 2029
Total | 1,379,524 | wtd avg $2.44 | wtd avg 2.26 yrs
The 289,779 pre-funded warrants with a $0.0001 strike price that existed at year-end 2024 were fully exercised during 2025 and are now gone. The $8.76 investor warrants are out of the money at current prices. The 1,366,672 warrants at $2.38 are deeply in the money at $6.99.
ATM Program Status
Total ATM capacity (upsized Oct 23, 2025): $6,270,000
Drawn Oct 27, 2025 — 623,184 shares at avg $4.37: ($2,728,424)
Drawn Jan through Mar 2026 — 405,969 shares at avg $5.70: ($2,312,443)
Remaining capacity: $1,229,133
The ATM is essentially exhausted. At current prices around $7, the remaining $1.23M represents roughly 175,000 additional shares. Management will need to file a new shelf or ATM agreement in the near term if they intend to continue using this mechanism. Given the Q1 revenue trajectory, they may not need to.
Fully Diluted Share Count (Treasury Stock Method at $7)
Component | Shares
Common shares outstanding | 10,652,812
Options — 1,319,394 at $6.94, TSM incremental | 9,438
$2.38 Warrants — 1,366,672, TSM incremental | 901,339
$8.76 Investor Warrants — out of money, excluded | —
Series B Preferred Stock — 3,796,907 at 1:1 | 3,796,907
Total fully diluted | 15,360,496
Note: 831,346 unvested RSUs are excluded from the diluted count but represent real future dilution. The January 22, 2026, grant of 437,431 RSUs vests annually pro rata over three years. The September 2027 and January 2028 cliff-vesting tranches, combined, will vest in those periods.
Forward outlook
All eyes are on the Q1 report, which will give us an idea of how quickly the company can scale. Added insurance payer coverage could come at any time, as could increases in Craig-Hallum price and/or revenue projections as coverage is added and VA revenue begins to materialize.
Microcap Opportunities maintains a long position in NRXS. All figures sourced directly from the NeurAxis FY2025 Form 10-K filed March 19, 2026, and management commentary from the Q4 2025 earnings call. This publication is for informational purposes only and does not constitute investment advice. Always do your own due diligence.