CG MEDTECH, DIAGNOSTICS AND DIGITAL HEALTH & SERVICES FORUM - CERIBELL INC

Financial Performance:

• Reported 30% year-over-year growth for the quarter, maintaining a consistent trend of beating and raising guidance since the IPO.
• Achieved record same-store utilization growth in the double-digits; specifically, Q3 marked the first quarter of double-digit growth following positive momentum in Q2.
• Added 35 net new accounts, a record number, while average headbands per active account rose 7% YoY to 50.4 (normalized usage growth estimated slightly higher).
• Cash position stands at approximately $117–118 million; the company retains debt capacity but aims to achieve cash flow break-even solely using current cash on hand.
• Revenue is primarily driven by headband sales (75% of revenue), with recorders acting as the conduit for recurring usage revenue.
• No specific guidance provided for gross margin or operating margin impact regarding the new Omni product launch at this time.

Guidance and Future Outlook:

• Management expects new account additions to accelerate in the next fiscal year as the sales force matures (entering year two of the IPO investment cycle) and the Strategic Account Management (SAM) function scales.
• Anticipated to expand into more departments in 2026 than were added across all of 2025, indicating an acceleration in penetration within existing hospitals.
• Committed to providing quantitative estimates of the Delirium TAM impact in 2027, acknowledging current pilot data shows consistent usage increases but requires scale validation.
• Federal VA purchase order for Fiscal Year 2026 secured in September, expecting a rollout pattern similar to FY25 with peak activity in Q1.
• Management targets a "land and expand" model where initial hospital contracts target ICU and ED departments broadly from day one.

Business Segments and Product Lines:

• Seizure Detection: Core business remains the standard of care for seizure detection, evolving into a broader critical care brain monitoring platform.
• Delirium: Launched as a free software add-on in exchange for program commitments (training/workflow design) rather than upfront revenue, aiming to reduce barriers to adoption and drive headband utilization.
• Omni: A new multimodal brain monitoring device currently in an innovation pilot; designed to serve conventional EEG markets and comprehensive monitoring with extended battery life and video capabilities.
• Sepsis: Identified as a key prioritized patient population where the platform addresses high risks for both seizure and delirium, leveraging awareness of delirium to drive seizure monitoring adoption.
• NTAP Program: The "No True Alternative to Pain" (NTAP) status for Medicare patients provides an insurance policy mechanism; early feedback suggests it aids adoption without creating significant friction.

Market and Competitive Landscape:

• Competition: Positions itself as non-directly competitive by replacing antiquated standards of care (century-old conventional EEG for seizures and manual CAM-ICU surveys for delirium) rather than competing with novel tools.
• Market Penetration: Currently present in 747 hospitals out of an estimated 6,000 target facilities (ICU/ED) in the US, representing roughly 12–13% of the total hospital base.
• TAM Estimation: Management estimates approximately 4% of the total addressable market (combining facility penetration and patient utilization rates) is currently active, leaving significant runway for growth.
• Innovation: Omni device aims to capture the conventional EEG market segment, bridging the gap for neurologists accustomed to traditional methods.

Risks and Challenges:

• Commercial Scaling: While Strategic Account Management (SAM) aims to close larger multi-hospital system deals, there is a acknowledged risk of longer sales cycles compared to individual hospital acquisitions.
• Compliance and Adoption: Delirium rollout relies on voluntary program commitments; management notes the need to verify that these commitments translate to actual usage when scaled across dozens of field reps.
• Cost Structure: The Omni product will have higher COGS than the current recorder, though management does not expect a material negative impact on the company's overall gross margin profile (currently ~96-97%).
• Regulatory: Ongoing litigation mentioned, though no specific financial leverage or P&L impact detailed.

Management Commentary and Tone:

• Tone is highly confident and optimistic, describing the current period as a "land grab" phase with no direct technological competition for their specific offerings.
• Management emphasizes a shift from single-department sales to broader system-wide adoption via the new SAM team.
• CFO expressed high confidence in reaching cash flow break-even with existing liquidity, though declined to provide a specific timeline until budget planning is finalized.
• Rejection of "punishment" in stock performance; leadership views recent market valuation as a correction following strong operational execution.

Analyst Questions and Answers:

• Q: Why was utilization growth double-digit while headband purchases per account only grew 7%?
  • A: Purchasing patterns (stockpiling) differ from actual usage; management confirms usage growth is double-digit, with the 7% figure reflecting temporary purchasing lulls in Q3.
• Q: Will the strategic account focus slow down new account additions?
  • A: No; SAM is layered on top of existing rep efforts, and while individual system deals are larger, the aggregate volume of new accounts is expected to accelerate.
• Q: How will the Delirium free-software model affect revenue?
  • A: Designed to capture market share faster by removing contracting friction; pilot data shows material, durable increases in headband usage following training commitments.
• Q: What is the impact of Omni on margins and timing?
  • A: Omni launches with an innovation pilot at AES in December; margin impact is expected to be minimal as recorders are currently bundled, but exact pricing and COGS scaling are not yet finalized.

Other Key Points:

• The company is transitioning from a seizure detection tool to a comprehensive critical care brain monitoring platform.
• The sales force is now entering a "year two" productivity peak following IPO investments.
• NTAP status serves as a valuable communication tool for hospitals dealing with negative Medicare charges, acting as an insurance policy rather than a direct revenue driver.
• The "Omni" device includes features for video monitoring and integration with other vital signs like EKG, targeting the conventional EEG market.