NeurAxis: Treating Virtually No One Within Its Addressable Market Is About To Change

NeurAxis - Our flagship position

We have published several articles on NeurAxis (NRXS). The more we learn about this company, the more bullish we become. We most recently named this stock our flagship position. What is driving our enthusiasm is that the management has met significant established goals, such as inclusion of the IB-Stim device in the pediatric guidelines and securing a category one reimbursement code.

The stock price hasn't changed much in the year since we initiated coverage. Why is the market missing what this company has accomplished, and what is the significance of its forward potential? CEO Brian Carrico answered these questions at the beginning of the 2025 Q2 earnings call:

While our revenue growth has accelerated in recent quarters, the facts remain that we are still treating virtually no one within the addressable market because national policy coverage and the Category I CPT code have yet to be put in place.

The reimbursement code establishes a specific reimbursement payment of almost $4 K per IB-Stim treatment, consisting of four devices over four weeks. The code goes into effect January 1, 2026. Individual insurance companies establish their own reimbursement rates but tend to follow rates established by category one codes.

To reiterate, our investment thesis is that NeurAxis has everything in place to capture a significant market opportunity. The company has established four consecutive quarters of double-digit revenue growth while establishing insurance reimbursement for about 51 million covered lives. Establishing national insurance reimbursement will scale the growth rate into triple digits.

Market Opportunity

We have provided detailed information on previous articles on the size of the market opportunity, and the company presents its version of the market size on its investment deck. The opportunity is presented because NeurAxis offers the only FDA-approved or cleared treatment option for the treatment of functional abdominal pain from irritable bowel syndrome ("IBS") and for associated nausea. The market size exceeds $5 billion for pediatric patients, for whom NeurAxis's IB-Stim device has been approved to treat. The company expects to be cleared to treat adult patients in the next few months, expanding the TAM to over $10 billion.

Explosive Growth Rate Potential

Neuraxis has reported four consecutive quarters of revenue growth at or exceeding 39%. This growth has occurred despite a lack of widespread insurance reimbursement coverage. Our recent article illustrated that had insurance reimbursement been available for the patients treated in the last reported quarter, the quarterly revenue would have exceeded $4 million instead of the reported $894 K. The same article also pointed out that there is a pent-up demand, as 70% of claims were denied. It is not difficult to see a ramp up to $25 million revenue per quarter very quickly as the category one code kicks in on January 1, 2026, guaranteeing a set reimbursement rate.

Commercial Rollout

It was revealed on the 2025 Q2 earnings call that the IB-Stim had been assigned a Relative Value Unit ("RVU") of 1.46 this month. Prior to the establishment of this code, doctors had worked on IB-Stim procedures without reimbursement. The establishment of the RVU code will be instrumental in incentivizing doctors to increase the usage of the IB-Stim procedures.

We discussed in a previous article how NeurAxis has established IB-Stim Centers of Excellence at key pediatric hospitals. This is critical to the commercial rollout of the device because treatment requires one device per week for four consecutive weeks. Pediatric Centers must allot time slots for the follow-up devices to ensure proper treatment.

Management is not out at investor conferences right now and will not be for the next three months. All hands are on deck to establish the adaptation of the IB-Stim device as a standard procedure in pediatric hospitals. Boston Children's Hospital has put out videos on and lists IB-Stim treatment in its services offered, but the center has not yet been recognized as an IB-Stim Center of Excellence. Why not? We do not know the exact criteria that NeurAxis is using, but we understand that management wants to make sure that each clinic is ready to meet the demand before it associates its brand with the clinic. CEO Carrico explained at the recent earnings call:

Treating one or two patients per day or per week is much different than treating multiple patients per day or 10 patients per week. So it's not just getting the IB-Stim into the program from a marketing standpoint, but it's making sure that these children's hospitals in these programs have what we can look to be called disorders of the gut-brain interaction or DGBI clinic days or IB-Stim clinic days.

The most successful programs in the country have IB-Stim clinic mornings or days, whereas they have 8 or 10 or 12 or 16 slots per day, and they know the week before that when a patient comes in, they have those slots that can be filled with patients in need. And I say that's important because if we have policy coverage and we don't have slots available, we know there are significant wait times in children's hospitals. So that would present a capacity issue.

A critical piece of establishing sales that many companies fail to execute on is marketing. CEO Carrico has both an educational background and work experience in marketing, as does Board of Directors member Bradley Mitch Watkins. The management team recently hired Trisha Baumgardt, formerly Product Marketing Director at Nico Corp., as Marketing Director. The marketing program, as described by CEO Carrico in the recent earnings call:

Our focus between now and January 1 and ongoing, more so than ever before is a 4- or 5-pronged approach from a newly hired and very talented marketing director that came from the med tech space from a company that was acquired by Stryker. And she's implementing again this 4- or 5-pronged approach that includes many avenues, including key opinion leaders speaking around the country at division meetings, at dinners to bring physicians completely up to speed, not just the physicians that see these patients every day, but the entire division.

Management has reached out to the major insurance carriers to request a review of providing reimbursement coverage for the IB-Stim device. During the recent earnings call, it was reported that no insurance company has turned down coverage or requested additional information. Adding covered lives is critical for the success of IB-Stim and the key ingredient that investors are waiting for. Any positive developments in this will result in share price appreciation.

Cash Burn

The company reported $6 million in cash as of the end of Q2. This is sufficient to fund operations for almost another 12 months. Management guided the company to achieve cash flow positive results within the following year. The company will likely do a capital raise to fund expanding the sales force, should the commercial launch be successful. Management plans to use the same ratio of sales staff to covered lives as is currently in place.

Technical

The stock price is stuck in a trading range, ignoring all of the progress that the company has made over the past year and not recognizing the potential for price acceleration as insurance coverage is established and pediatric hospitals establish the IB-Stim device as standard of care.

Sideways price movements are typically followed by explosive price appreciation or decline. The longer the sideways movement, the more pronounced the price movement. We are optimistic that an explosive upside is developing here.

Conclusion

NeurAxis is seeking to provide a solution for an unmet need in a multi-billion-dollar market opportunity. FDA approval and a category one reimbursement code have been established. The company is all out in securing widespread insurance coverage and in prepping pediatric centers to develop the IB-Stim device as standard treatment. Management is not attending investor conferences and attempting to raise investor awareness. They are out in the field pursuing insurance coverage and preparing clinics to meet the demand. Successful execution in these two areas will result in triple-digit growth as early as next year, and the stock price will appreciate accordingly.