NeuroPace (NASDAQ:NPCE) reported second-quarter revenue growth driven by continued adoption of its RNS System for adult focal epilepsy, while raising its full-year revenue and adjusted EBITDA outlook. The company also said it is pursuing additional discussions with the U.S. Food and Drug Administration regarding its application to expand the RNS System’s indication into idiopathic generalized epilepsy, or IGE.
Total revenue for the second quarter was $22.8 million, up 17% from $19.5 million a year earlier. RNS System revenue rose 21.3% to $22.5 million, compared with $18.6 million in the prior-year period. Service revenue declined to $302,000 from $937,000, creating what Chief Financial Officer Patrick Williams described as an expected headwind of more than 300 basis points to companywide revenue growth.
Guidance Raised as RNS Growth Outlook Holds
NeuroPace increased its 2026 total revenue guidance to $99.5 million to $101.5 million, from a prior range of $99 million to $101 million. The change reflects improved expectations for service revenue, now projected at about $1 million for the year versus previous guidance of $500,000.
The company maintained its RNS revenue outlook of $98.5 million to $100.5 million, representing annual growth of 21% to 23% from its current adult focal epilepsy indication. The guidance does not include any revenue contribution from a potential IGE indication expansion.
Williams said NeuroPace expects third-quarter RNS growth to be similar to the approximately 20% growth rate reported during the first half. The full-year outlook implies stronger growth in the second half, which management attributed to expanded commercial capacity, deeper account utilization and improving analytics around the patient pipeline.
- Adjusted gross margin was 83.4%, compared with 84.0% a year earlier.
- Adjusted operating expenses rose about 3% to $21.9 million, below the company’s 17% revenue-growth rate.
- Adjusted EBITDA loss narrowed to $2.8 million from $4.9 million a year earlier.
- GAAP net loss from continuing operations was $6.2 million, compared with $10 million in the prior-year quarter.
- Cash equivalents, short-term investments and restricted cash totaled $51.9 million at June 30, while long-term borrowings were $59 million.
The company lifted its adjusted gross-margin outlook to 82% to 83%, from 81.5% to 82.5%, citing first-half performance, pricing and management of manufacturing costs and product mix. NeuroPace maintained its forecast for $90 million to $92 million in full-year adjusted operating expenses and improved its adjusted EBITDA loss outlook to $7.5 million to $8.5 million, from a prior expected loss of $8.5 million to $9.5 million.
FDA Seeks More IGE Clinical Context
Becker said the FDA informed NeuroPace on July 28 that its PMA supplement for IGE was not approvable in its current form because the agency requested additional information supporting the clinical evidence. He said the agency’s response was not a disapproval and that the review has remained interactive.
The FDA’s questions were not related to safety, according to Becker. Instead, the agency requested more data and context on clinical benefit across patient subgroups, including baseline generalized tonic-clonic, or GTC, seizure frequency, and on the clinical significance of reducing GTC seizures.
NeuroPace plans to use the FDA’s submission issue request, or SIR, process to align on an amendment. Becker said the company expects to request and hold an SIR meeting in the coming weeks. Its planned amendment is expected to include subgroup analyses, patient- and physician-reported outcomes, published and real-world evidence, and 24-month data showing a 100% median reduction in GTC seizures among evaluable patients.
Management said it continues to believe there is a path to approval, although the FDA retains discretion to reset the full 180-day review period. Becker said the company does not currently expect a full clock reset based on its interactions with the agency, but did not provide a specific resubmission date.
AI and Remote-Care Development Advances
During the quarter, NeuroPace launched ECoG Assistant, an artificial intelligence algorithm-based tool designed to help physicians identify electrocortricography recordings of interest, review trends and assess circadian patterns. Becker said the tool uses the RNS System’s intracranial EEG data and NeuroPace’s physician-labeled dataset to make patient-data review more efficient and support individualized treatment decisions.
The company said early physician feedback has pointed to workflow efficiencies and uses in medication timing, therapy adjustments and longer-term patient management. ECoG Assistant is included as part of the RNS System rather than separately monetized, Becker said.
NeuroPace also said it completed a key phase of training for its multimodal foundational model, which is being tested for its ability to interpret more complex intracranial EEG patterns. The company said its proprietary dataset now includes more than 27 million intracranial EEG recordings.
Separately, NeuroPace continued usability testing and validation for remote-care capabilities intended to let physicians program RNS patients through telehealth and allow patients to prepare devices for MRI without a physician being physically present. The company expects to submit remote care to the FDA by the end of 2026.
Becker said the company is also progressing development of its next-generation implantable hardware platform, which is expected to support expanded lead configurations, Bluetooth Low Energy communication and faster processing for AI-enabled tools.
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.
