NeuroPace (NASDAQ:NPCE) reported fourth-quarter and full-year 2025 results that management said reflected sustained momentum in its core RNS business, improving margins, and continued progress toward profitability, while also advancing regulatory and product-development initiatives aimed at expanding the company’s addressable market.
Fourth-quarter growth led by RNS System sales
For the fourth quarter, NeuroPace posted total revenue of $26.6 million, up 24% year-over-year, driven primarily by RNS System revenue of $22.4 million, which increased 26% from the prior year period. CEO Joel Becker said the results showed “broad-based momentum,” including new highs in prescribers, accounts, and the patient pipeline. He noted that after RNS growth of more than 30% in the third quarter, the company delivered 26% growth in the fourth quarter, with second-half 2025 RNS growth of 29%.
CFO Patrick Williams said service revenue from data collaborations totaled approximately $890,000 in the quarter. Revenue from DIXI Medical was approximately $3 million, down 4% year-over-year, though it came in ahead of prior guidance as NeuroPace worked to sell existing inventory ahead of the end of its commercial partnership, which concluded on December 31, 2025.
Margins improve; adjusted EBITDA positive for a second straight quarter
NeuroPace’s fourth-quarter gross margin was 77.4%, compared with 75.4% in the prior year quarter. Williams said the year-over-year improvement was driven by a higher contribution from higher-margin RNS revenue, improved manufacturing efficiency, and increasing RNS average selling price tied to pricing conversion. RNS gross margin was 80.5% in the quarter.
Operating expenses in the fourth quarter were $22.3 million, up from $19.8 million a year ago. Williams said operating expense growth of 13% remained below revenue growth, reflecting operating leverage as the business scales. By line item, sales and marketing expense was $10.9 million, research and development was $7.0 million, and general and administrative expense was $4.4 million.
Loss from operations narrowed to $1.8 million from $3.7 million a year earlier, and net loss improved to $2.7 million from $5.3 million. Adjusted EBITDA was positive $900,000, which Williams said marked the company’s second consecutive quarter of positive adjusted EBITDA.
NeuroPace ended the quarter with $61.1 million in cash, cash equivalents, and short-term investments, up $1.1 million sequentially. Williams said the company generated approximately $500,000 of positive operating cash flow and approximately $400,000 of positive free cash flow in the quarter. Long-term borrowings totaled $58.9 million as of December 31, 2025.
Full-year 2025 results and upcoming reporting changes
For full-year 2025, NeuroPace reported total revenue of $100 million, up 25% year-over-year, with RNS System sales also up 25% for the year. Full-year gross margin improved to 77.2% from 72.9% in 2024, and full-year RNS gross margin increased to 81.9% from 78.4%.
Total operating expenses for the year were $93.6 million, compared with $80.8 million in 2024. Williams said that excluding one-time items related to an executive transition in the second quarter, normalized operating expense growth was approximately 13% year-over-year. Stock-based compensation included in operating expenses was approximately $10 million for the year. Full-year adjusted EBITDA was a loss of $5 million, a $6.2 million improvement compared with the prior year.
Looking ahead, Williams said the company expects to begin reporting DIXI-related financial results as discontinued operations beginning in the first quarter of 2026, presenting 2026 results on a continuing operations basis that excludes DIXI.
2026 outlook reiterates revenue guidance; adjusted expense presentation to begin
Management reiterated full-year 2026 revenue guidance of $98 million to $100 million on a continuing operations basis, which Williams said implies underlying RNS growth of 20% to 22% compared with 2025 and excludes any contribution from DIXI. Becker noted that the outlook also excludes any contribution from a potential idiopathic generalized epilepsy (IGE) approval, service revenue, or DIXI Medical.
For the first quarter of 2026, NeuroPace expects revenue of $21 million to $22 million. Williams said growth rates in the first half typically moderate relative to the acceleration exiting the prior year due to normal procedural timing and seasonality, and he said the company does not anticipate providing quarterly revenue guidance on an ongoing basis.
NeuroPace also said it will present 2026 operating expense guidance on a non-GAAP or adjusted basis, excluding stock-based compensation, depreciation, and amortization. Williams outlined the following expectations for 2026 on a continuing operations basis:
- Adjusted gross margin: 81.5% to 82.5%
- Adjusted operating expense: $90 million to $92 million (excluding approximately $10 million of stock-based compensation)
- Adjusted sales and marketing expense: $46 million to $48 million
- Adjusted research and development expense: approximately $27 million
- Adjusted general and administrative expense: approximately $17 million
- Adjusted EBITDA: a loss of approximately $9 million to $10 million
Williams said the company expects adjusted EBITDA to dip in the first half of 2026 before improving in the second half, reflecting both the removal of DIXI revenue and typical seasonality. In response to an analyst question, he added that operating expenses will be “front-end loaded,” with “a little greater than 50%” in the first half, as NeuroPace leans into commercial investments.
Regulatory and product pipeline: IGE filing accepted; SeizureID and remote care initiatives
Becker highlighted progress on NAUTILUS and the company’s effort to expand the RNS System indication into IGE. NeuroPace submitted a PMA supplement to the FDA on December 15, supported by what management described as clinically meaningful and statistically significant 18-month results, including a 77% reduction in median seizure rates and a favorable safety profile in a refractory patient population. The FDA accepted the submission and initiated a 180-day review clock, and Becker said the company’s dialogue with the agency remains productive as it prepares for a mid-cycle meeting. NeuroPace has a Breakthrough Device designation for the program.
In Q&A, management said that after any potential IGE approval, key steps to translate approval into revenue would include extending private payer coverage and scaling training and referral pathways, particularly among referring physicians. Williams noted that Medicare and Medicaid represent roughly 20% to 25% of the current payer mix, with the remainder from private payers. Management also emphasized that the device, DRG, and CPT codes would be the same as those used today for adult focal epilepsy.
On product development, Becker described an R&D roadmap focused on ease of use, efficiency, and effectiveness, including a suite of NeuroPace AI tools leveraging more than 24 million iEEG recordings. The company’s first near-term example is SeizureID, an AI-enabled tool designed to identify seizures and trends within a patient’s iEEG data and present clinicians with the most relevant information. Becker said the SeizureID submission is paired with moving the clinician platform to the cloud and that the company expects SeizureID approval in the first half of 2026. In Q&A, management said SeizureID would be made available as part of customer use of the RNS System, with the goal of improving clinician efficiency and capacity.
NeuroPace also discussed advancing RNS remote care, which would allow physicians to detect events and adjust therapy settings during telehealth visits, and said it is developing a foundation model using its proprietary iEEG dataset and experience from more than 8,000 patient implants across 33,000 patient years. Becker said automated initial detection and therapy programming and a next-generation platform remain in development.
Separately, management said it remains interested in pediatric indication expansion. Becker described ongoing work with NEST and the FDA to use real-world evidence for pediatric focal epilepsy in a retrospective meta-analysis approach, though the company did not provide a specific submission timeline.
About NeuroPace (NASDAQ:NPCE)
NeuroPace, Inc is a medical device company based in Mountain View, California, that develops innovative neuromodulation systems for the treatment of neurological disorders. Founded in the late 1990s out of research at Stanford University, the company’s mission centers on delivering closed-loop, “smart” therapies that monitor and respond to electrical activity in the brain. In 2020, NeuroPace completed its initial public offering and now trades on the NASDAQ under the ticker NPCE.
The company’s flagship product, the RNS® System, is an implantable device designed for adults with medically refractory focal epilepsy.
