NPCE Q2 Earnings Beat Estimates on RNS Growth, '26 Revenue View Up

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NPCE's Q2 Revenues Show Core Momentum

NeuroPace registered revenues of $22.8 million in the second quarter, up 17.1% year over year. Growth was led by the RNS System, while active prescribers, accounts and the patient pipeline reached record highs. The figure surpassed the Zacks Consensus Estimate by 0.6%.

RNS System revenues totaled $22.5 million, up 21.3% year over year. The increase primarily reflected more units sold, driven by a higher number of initial implants and replacement procedures.

Service revenues were $302,000, down from $937,000 a year ago. Following the DIXI Medical wind-down, NeuroPace now presents that business as discontinued operations.

NPCE’s Margin Analysis

In the quarter under review, NeuroPace’s adjusted gross profit increased 16.1% year over year to $19 million. Adjusted gross margin contracted 60 basis points (bps) to 83.4%, primarily due to slightly higher material costs, partly offset by favorable pricing.

Sales and marketing expenses increased 5.5% year over year to $12.1 million, while research and development expenses rose 0.8% to $6.9 million. General and administrative expenses decreased 17.2% year over year to $5.0 million.

Adjusted operating expenses of $21.9 million increased 2.5% year over year.

The adjusted operating loss narrowed to $2.8 million from $5 million in the prior-year quarter.

NPCE’s Financial Position

NeuroPace ended second-quarter 2026 with total cash, cash equivalents and short-term investments of $51.7 million, compared with $53.9 million at the end of first-quarter 2026.

Cumulative net cash used in operating activities at the end of second-quarter 2026 was $9.8 million compared with $9.6 million a year ago.

NeuroPace Raises 2026 Revenue Outlook

Management raised full-year 2026 revenue guidance to $99.5-$101.5 million from $99-$101 million. The increase reflects expected service revenues of about $1 million, up from roughly $500,000 previously, while the RNS revenue growth outlook remains 21%-23%. The Zacks Consensus Estimate is pegged at $99.9 million.

The adjusted gross margin is now expected to be 82%-83%, up from the previous guidance of 81.5%-82.5%.

Adjusted operating expenses are projected at $90 million-$92 million, unchanged from the prior outlook and excluding approximately $10 million in stock-based compensation.

The adjusted EBITDA loss is now expected in the range of $7.5 million-$8.5 million, an improvement from the previous guidance of a loss between $8.5 million and $9.5 million.

NeuroPace Advances AI and IGE Programs

NPCE exited the second quarter of 2026 with continued momentum in its core RNS business, supported by increased adoption within the existing focal epilepsy indication. The company reached record highs in active prescribers, accounts and patient pipeline, underscoring progress in its commercial expansion efforts.

Innovation remained a key focus during the quarter. NeuroPace launched ECoG Assistant, the first in its planned suite of AI-based clinical decision-support tools. The platform leverages the company’s proprietary dataset of more than 27 million intracranial EEG recordings and 35,000 patient implant years to simplify data review and support individualized therapy decisions.

NeuroPace continued to advance its idiopathic generalized epilepsy opportunity. It published 18-month NAUTILUS data showing a 77% median reduction in generalized tonic-clonic seizures and is preparing for a Submission Issue Request meeting with the FDA regarding its PMA supplement. The company also cited 24-month data showing a 100% median reduction in GTC seizures among evaluable patients.

Looking ahead, NeuroPace’s growth strategy centers on driving more than 20% growth in the core RNS business through prescriber expansion, higher utilization and commercial execution. Management also intends to deepen community penetration, advance AI-enabled personalized neuromodulation, prepare for potential indication expansion and maintain disciplined spending as it works toward cash flow breakeven.

NPCE’s Zacks Rank & Key Picks

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

Some better-ranked stocks from the broader medical space are Globus Medical GMED, West Pharmaceutical WST and The Cooper Companies COO.

Globus Medical, currently sporting a Zacks Rank #1 (Strong Buy), reported a second-quarter 2026 adjusted earnings per share (EPS) of $1.34, which surpassed the Zacks Consensus Estimate by 19.6%. Revenues of $789.6 million beat the Zacks Consensus Estimate by 0.4%. You can see the complete list of today’s Zacks #1 Rank stocks here.

GMED has an estimated long-term earnings growth rate of 12.4%. The company’s earnings beat estimates in each of the trailing four quarters, the average surprise being 27.9%.

West Pharmaceutical, carrying a Zacks Rank #2 (Buy) at present, reported second-quarter 2026 adjusted EPS of $2.37, which beat the Zacks Consensus Estimate by 13.9%. Revenues of $872.3 million surpassed the Zacks Consensus Estimate by 4.2%.

WST has an estimated long-term earnings growth rate of 16%. WST’s earnings surpassed estimates in the trailing four quarters, the average surprise being 17.4%.

The Cooper Companies, carrying a Zacks Rank #2 at present, reported a second-quarter fiscal 2026 adjusted EPS of $1.21, which beat the Zacks Consensus Estimate by 10.00%. Revenues of $1.08 billion beat the Zacks Consensus Estimate by 2.6%.

COO has an estimated long-term earnings growth rate of 8.3%. COO’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 5.8%.

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This article originally published on Zacks Investment Research (zacks.com).

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