NeurAxis, Inc. (NRXS) Q3 2026 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to the NeurAxis Third Quarter Fiscal Year 2026 Financial Results Conference Call. [Operator Instructions] Please also note today's event is being recorded. At this time, I'd like to turn the floor over to Ben Shamsian, Investor Relations. Please go ahead.

Thank you. Good morning, everyone, and thank you all for joining us for NeurAxis' Third Quarter 2026 Financial Results and Corporate Update Conference Call. Joining us on the call is Brian Carrico, CEO of NeurAxis; and Tim Henrichs, the CFO of NeurAxis. At the conclusion of today's prepared remarks, we will open the call to questions. Please follow the operator's instructions to ask questions. Today's event is being recorded and will be available for replay through the webcast information provided in the press release. Finally, I'd like to call your attention to the customary safe harbor disclosure regarding forward-looking information. The conference call today will contain certain forward-looking statements, including statements regarding the goals, strategies, beliefs, expectations and future potential operating results of NeurAxis. Although management believes these statements are reasonable based on estimates, assumptions and projections as of today, these statements are not guarantees of future performance. Time-sensitive information may no longer be accurate at the time of any telephonic or webcast replay. Actual results may differ materially as a result of risks, uncertainties and other factors, including, but not limited to, the factors set forth in the company's filings with the SEC. NeurAxis undertakes no obligation to update or revise any of these forward-looking statements. With that said, I would like to now turn the call over to Brian Carrico, Chief Executive Officer of NeurAxis. Brian, please proceed.

Thank you, Ben, and good morning to everyone joining us. Q3 '26 was an important quarter for NeurAxis, and I look forward to delivering several key updates today. NeurAxis generated third quarter revenue of $2 million, an increase of roughly 150% over the third quarter of 2025. Our results reflect continued progress converting insurance coverage and physician demand into reimbursed IB-Stim treatments. We also continue to expand covered lives and market access. With the addition of 2 large payers over the past 45 days, our coverage footprint now includes approximately 147 million covered lives. We are now aligning our commercial investment with that broader opportunity by strengthening our commercial footprint, including leadership, marketing and sales presence in markets with favorable reimbursement. Our priorities are to secure additional payer coverage and increase utilization in markets where coverage is already in place. Those priorities guide our hiring, account selection and capital allocation. Q3 was our third full quarter operating with the Category I CPT code for Percutaneous Electrical Nerve Field Stimulation or PENFS. Our experience continues to show that utilization is strongest when payer coverage, physician engagement and the clinical capacity are aligned. We are applying those lessons as we expand the commercial organization. Average selling prices remained strong as the mix continued to shift towards reimbursed treatments and away from discounted financial assistance programs. That shift supports higher revenue per device and gross margin potential. Tim Henrichs, our CFO, will discuss the financial results in more detail. During the call, I will discuss certain areas we view as most important to the success of NeurAxis. I will begin with insurance coverage and our operating metrics, then discuss commercial execution, the VA opportunity and our priorities for the coming quarters. Insurance policy coverage remains the single most important driver of scalable growth, and therefore, I was pleased to announce the addition of 2 large payers, as mentioned earlier, in the last 45 days, bringing our total lives to 147 million. The recent payer additions expand access across several markets and increase the proportion of covered lives within many individual states. We expect these policies to contribute to growth in the fourth quarter with a more meaningful impact in 2027 as providers implement coverage and our expanded field organization gains traction. Coverage across a meaningful share of a hospital's payer mix gives physicians and administrators greater confidence to establish an IB-Stim program and dedicate clinic capacity. We continued the elevated intensity of our market access strategy, including a national search and hire who I believe is the strongest MedTech-specific market access executive in the country. Mistie has only been here 60 days, and we are already seeing the direct results of her experience and relationships with commercial insurers, Medicaid and managed Medicaid organizations. We continue to engage directly with payer decision-makers supported by physician and academic society advocacy, published clinical evidence, treatment guidelines and existing coverage decisions. We are encouraged by our progress with the additional large and smaller payers, although the timing of new policies continues to remain difficult to predict. We are also working to translate coverage decisions into usable reimbursement. This includes supporting the addition of CPT 64567 to state Medicaid fee schedules and expanding internal prior authorization support to reduce the administrative burden on providers. One example of a short-term hurdle is in states where Medicaid fee schedule implementation remains incomplete. We see account activation and program expansion. A second example of a short-term hurdle is one of our newest major payers was authorizing 1 device rather than the full 4-device treatment course. That issue remained unsolved more than 30 days into the fourth quarter, which temporarily limiting utilization under the new policy, but we do expect it to be corrected in the coming days. These implementation steps help explain why a coverage announcement and the resulting revenue contribution do not occur at the same time. Our market access and commercial teams are focused on closing that gap while continuing to pursue additional coverage. Furthermore, we continue to make significant progress with many of the remaining large and smaller payers. We are cautiously optimistic that these efforts will result in additional coverage in the coming months. KPIs. We will continue to provide meaningful KPIs each quarter. Our operating metrics help investors evaluate whether broader coverage is translating into more treatments and stronger account productivity. Alongside revenue and average selling price, we track ordering accounts, revenue per account, prior authorization approvals and reimbursement availability. From a IB-Stim revenue standpoint, $5.5 million in 2026 versus $2.6 million in 2025, up 112%. IB-Stim average selling price, $1,018 in 2026 versus $773 in 2025, up 32%. Total covered lives, 147 million. Year-to-date internal prior auth approval percentage. I have 3 numbers for you here. As you remember, 12% was the number through 2025. As of 9/30, we were at 32%. As of 10/30, just over a week ago, we went to 38%. Year-to-date number of ordering accounts. 97 IB-Stim accounts have ordered year-to-date versus 77 at the same point last year, up 26%. Year-to-date revenue per ordering IB-Stim account, [ $57 ] in 2026 versus $33,000 in 2025, up 73%. States with the 64567 on the fee schedule as of today, 27 -- 27 of the 50 states. Our state coverage profile also helps guide commercial investment. The current breakdown of our commercial insurance policy includes 4 states with coverage of 70% to 76%, 4 states with 60% to 69% coverage, 5 states with 50% to 59% coverage, and 7 states with 40% to 49% coverage. We are using this geographic concentration to prioritize field resources where access can support greater utilization. Our commercial strategy is to increase treatment volume in markets where favorable coverage and patient demand are already in place. We are prioritizing hospitals based on reimbursement, patient opportunity and their ability to dedicate clinical capacity to IB-Stim. The strongest accounts share 3 characteristics: meaningful payer coverage, an engaged physician champion, and a consistent process for identifying, authorizing and treating eligible patients. Our field teams work with each institution to address the gaps that limit utilization, whether those involve reimbursement, clinical education, referral development or clinic workflow. Our recent experience in more concentrated territories supports the value of frequent in-person engagement. A smaller geographic territory allows the salespeople to spend more time with clinicians and hospital teams, resolve reimbursement and operational questions and support a more consistent treatment process. We are applying that approach as we expand our direct sales presence. We are well into the process of adding at least 5 additional full-time sales territories in markets with established insurance coverage. These investments are intended to deepen utilization within existing accounts and support new account development where we see a clear opportunity for patient access and treatment growth. The Chief Commercial Officer and Vice President of Market Access we added in Q3 provide dedicated leadership for this expansion. Our Chief Commercial Officer brings experience building medical technology businesses and sales organizations, including experience at Guidant, Boston Scientific and NICO. His focus is on field execution, sales team development and accountability. Our market access leader is focused on securing additional coverage and resolving reimbursement barriers. We have also strengthened clinical education and account development. Our senior medical science liaison supports physician education through grand rounds, divisional presentations and other clinical programs. Our Strategic Clinical Adoption Director works with institution and referral networks to support the integration of IB-Stim into the treatment pathway. Our new marketing manager is strengthening sales training and helping the field organization communicate the clinical reimbursement and economic value of IB-Stim. In October, we also launched a targeted digital campaign directed at patients and health care providers in markets with favorable coverage. It's early, and we expect to begin evaluating the initial response in the coming weeks. We are coordinating these resources -- these resources within selected regions so that payer support, clinical education, field sales and targeted marketing reinforce one another to help hospitals treat more eligible patients and make better use of the coverage already in place. Clinic capacity, referral awareness and hospital economics remain important constraints. Clinical support must be matched by available appointment time, workable authorization processes and a clear economic case for administrators to commit resources. Our expanded commercial team is focused on those practical requirements. This investment will increase near-term expenses. We believe the broader reimbursement opportunity supports the expansion, and we remain focused on deploying capital where it can improve utilization and support sustained revenue growth. Tim will address the financial implications in his remarks. The pediatric commercial market remains our primary focus, but I now want to spend a few minutes on the Veterans Administration opportunity. The VA provides an additional growth opportunity through our Federal Supply Schedule contract, which enables commercial access to the U.S. Department of Veterans Affairs. As previously announced, we were awarded a Federal Supply Schedule contract, enabling commercial access to the U.S. Department of Veterans Affairs. We continue to see orders and reorders from multiple VA facilities with additional facilities moving through activation. That early activity supports our view that the VA can become a meaningful channel over time. Its federal purchasing structure provides an access pathway that is not dependent on commercial insurance policies. We began developing an independent sales representative model focused on VA hospitals with an initial plan for 10 representatives covering 1 to 3 hospitals each. The initial rollout in September will give us a clearer view of facility adoption, representative productivity and the revenue opportunity as we move to year-end. Those results will inform potential expansion in early 2027. For the broader adult market, we believe a large randomized controlled trial will be important to support future medical policy coverage for functional dyspepsia. To that end, we are close to beginning enrollment in a 6-center 300-plus patient multisite study that is intended to evaluate IB-Stim in adult patients and build that evidence base. These adult opportunities can broaden the business over time, while our near-term commercial resources remain focused on children's hospitals. In summary, we were up 150% year-over-year, landed 2 large payers, hired a VP of Market Access, hired a highly successful Chief Commercial Officer, initiated the material expansion of our commercial team, made meaningful progress with additional payers and much more for a very productive quarter. Our priorities continue to be securing additional payer coverage, resolving reimbursement implementation issues and increased utilization within covered markets. We are expanding the commercial team to support that work, and we'll continue to track account adoption, treatment activity and reimbursement mix. The 150% revenue growth in Q3, broader coverage footprint and expanded commercial leadership provide a stronger base from which to pursue growth. We expect the benefit of recent coverage additions and commercial investments to develop over the coming quarter, and we will continue to focus on translating these opportunities into sustained revenue growth. I will now turn the call over to Tim Henrichs to review our third quarter financial results and liquidity. Tim, please proceed.

Thank you, Brian, and appreciate everyone joining us on the call today. These financial results were included within our press release, which was issued earlier this morning and were also provided in more detail within our 10-Q. My comments will cover our financial results and liquidity position in more detail, including a bit of an outlook given the continued momentum we saw in the third quarter of 2026. The third quarter of '26 marks the ninth straight quarter of double-digit revenue growth year-over-year. In fact, we've seen an acceleration of that trend with the last 2 consecutive quarters up over 100% due to the Category I CPT code, increased payer and reimbursement coverage and a Federal Supply Schedule. And our gross margin continues to expand while continuing to improve our operating leverage as we remain well positioned to deliver on our commitments, financial, clinical and otherwise, to both our patients and investors. So let's take a closer look at our financial highlights. Revenue in the third quarter of '26 was $2 million, up 150% compared to $811,000 in the third quarter of 2025, while revenue for the 9 months ended September 30, 2026, of $5.6 million increased 114% compared to $2.6 million for the 9 months ended September 30, 2025. It is worth mentioning that the third quarter of 2026 yet again marked the company's strongest quarterly revenue performance in our history. IB-Stim unit deliveries increased 92% and 60% for the 3 and 9 months ended September 30, 2026, respectively, compared to prior periods due to a continuance of what we saw in the first 2 quarters of '26, driven by the full reimbursement health insurance payer coverage we were awarded in the fourth quarter of [ '26 ] and the IB-Stim Category I CPT code that became effective at the beginning of this year. In the third quarter of 2025, we were selling more units through our discounted financial assistance program than full reimbursement insurance coverage. That patient mix has since reversed itself in all 3 quarters of 2026, significantly in favor of higher-margin full reimbursement payers. And as a direct result of that payer mix shift, our IB-Stim average selling price increased 35% from $775 per device in the third quarter of 2025 to $1,045 per device in the third quarter of 2026 and increased 32% from $773 in the 9 months ended September 30, 2025, to $1,018 in the 9 months ended September 30, 2026. Given the broad acceptance and operating momentum since the IB-Stim Category I CPT code became effective on January 1, in addition to the recent additions of tumor medical policies that will expand access to an additional 44 million covered lives, we expect the positive mix shift impact on revenue and gross margin to continue. Gross margin increased 330 basis points to 86.6% in the third quarter of 2026 compared to 83.3% in the third quarter of 2025 and increased 250 basis points to 86.3% during the 9 months ended September 30, 2026, from 83.8% during the 9 months ended September 30, 2025. The gross margin expansion is a direct result of the adoption of the Category I CPT code and increased payer coverage as our unit growth shifted from discounted financial assistance to full reimbursement payers. Although our current market access strategy is targeting all payers, our efforts to achieve more insurance coverage are particularly focused on the largest payers as evidenced by the 2 policies we were recently awarded with 44 million covered lives. As a result, our expected success, we'll continue to push our gross margins higher in future quarters due to the adoption trend we've experienced in the first 3 quarters of 2026. Total operating expenses in the third quarter of 2026 were $8.3 million, an increase of 200% compared to $2.8 million in the third quarter of 2025. Excluding onetime nonrecurring stock compensation charges totaling $4.3 million related to the issuance of restricted stock units with immediate vesting in exchange for canceled stock options in 2026, total operating expenses in the third quarter of 2026 would have been $4 million, a 45% increase compared to $2.8 million in the third quarter of 2025. Total operating expenses for the 9 months ended September 30, 2026, were $15.2 million, an 84% increase compared to $8.3 million for the 9 months ended September 30, 2026. Excluding onetime nonrecurring stock compensation charges totaling $4.6 million related to the issuance of restricted stock units with immediate vesting in exchange for canceled stock options in 2026 and a onetime nonrecurring legal settlement charge totaling $631,000 in 2025, total operating expenses for the 9 months ended September 30, 2026, would have been $10.6 million, a 39% increase compared to $7.7 million for the 9 months ended September 30, 2025. We measure, manage and present our operating expenses along 3 functions: selling, research and development and general and administrative as these costs are leading indicators of our future success. Selling expenses in the third quarter of 2026 were $1 million, a 31% increase compared to $763,000 in the third quarter of 2025. Selling expenses for the 9 months ended September 30, 2026, were $2.7 million, a 59% increase compared to $1.7 million for the 9 months ended September 30, 2025. The increases were due to commissions that are directly related to higher sales volume and additional sales reps and marketing personnel, including recruiting costs and higher travel expenses to drive growth attributable to the IB-Stim Category I CPT code and increased payer coverage as we go deeper into our existing accounts and expand into new ones. Research and development expenses in the third quarter of 2026 were $289,000, an increase of 121% compared to $131,000 in the third quarter of 2025. Research and development expenses for the 9 months ended September 30, 2026, were $645,000, an increase of 86% compared to $347,000 for the 9 months ended September 30, 2025. The increases are reflective of the additional clinical research studies in 2026 as we continue to expand our IB-Stim FDA indications, including into adults, partially offset by proceeds received in '26 for devices used in these clinical research studies and nonrecurring RED device development costs in 2025. General and administrative expenses of $7 million in the third quarter of 2026 increased 274% compared to $1.9 million in the third quarter of '25. Excluding onetime nonrecurring stock compensation charges of $4.3 million related to the issuance of restricted stock units in exchange for canceled stock options in '26, general and administrative expenses in the third quarter of '26 would have been $2.7 million, a 46% increase compared to $1.9 million in the third quarter of '25. That increase was due to higher advisory costs and additional head count, including recruiting fees to educate and promote broader market access to payers and hospitals, incremental stock compensation expense from the third year of a 3-year vesting plan, higher benefit costs and higher estimated incentive plan costs due to current performance. General and administrative expenses of $11.9 million for the 9 months ended September 30, 2026, increased 91% compared to $6.3 million for the 9 months ended September 30, 2025. Excluding onetime nonrecurring stock compensation charges totaling $4.6 million related to the restricted stock units in exchange for canceled stock options here in '26 and a onetime nonrecurring legal settlement of $631,000 in '25, general and administrative expenses for the 9 months ended September 30, '26 would have been $7.3 million, a 30% increase compared to $5.6 million for the 9 months ended September 30, '25. The increase was due to additional headcount, including recruiting fees, market access, stock compensation, benefits and incentive costs that I just mentioned. Excluding those onetime nonrecurring charges, we continue to demonstrate our ability to deliver operating expense leverage and achieve cash flow breakeven in the future as our revenue growth for the 3 and 9 months ended September 30, 2026, was 150% and 114%, respectively, compared to the same periods in 2025 and continues to outpace our operating expense growth by approximately 3x. Our operating loss in the third quarter of '26 was $6.6 million, 213% higher compared to $2.1 million operating loss in the third quarter of '25, and our net loss in the third quarter of '26 of $6.5 million was 208% higher compared to $2.1 million in the third quarter of '25. Excluding the onetime nonrecurring $4.3 million stock compensation charges I already mentioned, our operating loss in the third quarter would have been $2.3 million, 9% higher compared to $2.1 million in the third quarter of '25, and our net loss in the third quarter of '26 would have been $2.2 million, only 6% higher compared to $2.1 million in the third quarter of '25. Our higher selling expenses were directly attributable to the higher volume, higher R&D costs as we continue to pursue additional IB-Stim FDA indications and higher G&A costs due to the higher headcount, compensation and market advisory spend, which were partly offset by higher gross profit from our increased quarterly sales year-over-year. Our operating loss for the 9 months ended September 30, '26 was $10.4 million, 71% higher compared to $6.1 million for the 9 months ended September 30, '25. And our net loss for the 9 months ended September 30, '26 of $10.4 million was 71% higher compared to $6.1 million for the 9 months ended September 30, '25. Excluding the onetime nonrecurring $4.6 million stock compensation charge in '26 and the onetime nonrecurring $631,000 legal settlement charge in '25 I previously mentioned, our operating loss for the 9 months ended September 30, '26 would have been $5.8 million, 7% higher compared to $5.5 million for the 9 months ended September 30, '25. And our net loss for the 9 months ended September 30, '26 would have been $5.8 million, 6% higher compared to $5.5 million for the 9 months ended September 30, '25. Our higher operating expenses from R&D, incremental headcount, compensation and market access advisory costs were partly offset by higher gross profit from our increased medical device deliveries. Cash on hand as of September 30, '26 was $4.5 million. Our free cash outflow was $2.3 million and $4.5 million for the 3 and 9 months ended September 30, 2026. Our 2026 year-to-date average quarterly burn rate of approximately $1.5 million is flat to '25, but higher than the first and second quarters of 2026 as the company recently hired key personnel that Brian mentioned, including recruiting costs and engaged market access advisers to facilitate our growth, which is paying off given our 150% sales growth year-over-year for the quarter. It is worth noting the decrease in the third quarter of our cash balance from $8.3 million as of June 30, 2026, which was due to the payment of employee withholding payroll taxes related to the net settlement of restricted stock units issued upon the exchange of canceled stock options. We remain optimistic regarding the liquidity profile of our ATM facility and raised nearly $1.7 million since quarter end. We also remain confident that we will achieve cash flow breakeven in the future. But again, that goal is dependent on the continuation of our growth trajectory and operating leverage to reduce our current cash burn as we grow the business. I mentioned last quarter that our cash burn in the second half of the year was going to increase as we invested in areas to accelerate growth and both materialized. We learned in the first quarter that our proof-of-concept with the Cat I code and the major payer policy coverage made decisions in the second quarter and executed in the third quarter. Our success in the third quarter proves the blueprint we laid out in the first half of the year. I, therefore, expect us to continue to make decisions in the fourth quarter and beyond to accelerate our growth. To accomplish that, our recent hirings of sales, marketing and clinical personnel, additional research and development expenditures and market access advisers will increase our SG&A and cash burn in the short term. Sales personnel will grow our existing and new accounts. Marketing personnel and market access advisers will secure additional patient, hospital and payer coverage. Clinical personnel will establish deeper connections with our customers to expand treatment. Research and development expenditures will allow us to secure additional FDA indications, including expansion into the adult population, short-term expenditures to secure future growth. And with that, let me turn the call back over to Brian.

Thank you, Tim. With that, operator, we'll be happy to take any questions.

[Operator Instructions] Our first question today comes from Chase Knickerbocker from Craig-Hallum.

Just a couple for me. So I mean, I guess just first, how should we be thinking about the impact from the Cigna and Aetna wins that occurred over the last couple of months? Have you seen any impact so far in the fourth quarter? Or kind of when do you think we should noticeably see the inflection in results?

Yes. So one of those payers is one I mentioned that we have not seen any impact because there was a miscommunication between in the policy and their prior authorization. They do use a third party for their prior authorizations. There was a misinterpretation of the policy, and they were only doing prior authorizations for one. Number two, yes, we are seeing an impact. And we can go back -- as you know, we do prior authorizations for a certain number, maybe not quite half of our -- maybe half of our children's hospital accounts. And those children's hospitals that we do prior authorizations for, we have visibility to how many of each payer. So we know exactly how many, call it, Aetna, Cigna, Anthem, UnitedHealthcare, you name the payer, small, large Medicaid, managed Medicaid, we know. So we know what that impact would have been to us this year. And so yes, we've already seen an impact from one of those payers, and we expect to see that in Q4, but I also expect this other issue to be resolved this week. If it's not, it may be already resolved. If so, that would be excellent because there's a material impact from both these payers, and I believe we'll start to see that in Q4 and especially in 2027. I believe there's a significant windfall there because of these 2 payers, not to mention the peer -- the peer size of them and other payers and how that could be recognized. But yes, we'll see that in Q4 a little bit, but certainly in Q1, especially if this is resolved -- this one issue is resolved as I expect it is.

And then maybe just to dovetail on that. How have these 2 most recent wins impacted your conversations with other large national payers? Have you seen any change as far as the kind of momentum in those conversations?

The larger the payer, the more they keep -- the closer they keep it to their vest. So I wouldn't tell you there's any material change, but I wouldn't tell you there's not either. I think that these conversations are oftentimes one-sided. Sometimes you get some clues, sometimes you don't. So I think -- I don't think it's what I always say you can't unsee it. And I think that there is, without question, material influence from these 2 payers on not just large payers, but especially mid-payers, small payers around the country. I don't see any way around that.

Helpful. I'm sorry if I missed the specific details here, but can you just mention where you expect to be from a rep number perspective by the end of the year? And I understand these adds are preferential to states that already have good coverage. Can you maybe just kind of share with us your expectations around time to contribution to growth for these new reps and then time to profitability, if you would as well?

Yes, we're not going to talk about profitability today. I think that's in the first half of '27. I think we have a much clearer picture, especially with these new payers. But we will talk about the reps that are in place right now. So on the -- just on the sales side, by the end of the year, we expect to have 10 or 11 salespeople in place. That does not include the senior MSL and the strategic market directors. So then you're talking about 12 or 13 that also does not include marketing or market access. So 11 to 13 depending on -- and then if you add marketing, it's 16. But just direct sales, you're talking about 10 or 11. And I would -- senior MSL and a strategic market access director, you can put those in the category you'd like. So you're talking more around 12 or 13 by year-end.

Got it. And I was just -- I just meant profitability on a specific rep basis, Brian, sorry, if there's any confusion there.

I see. No, sorry. Well, I think from a materiality standpoint, I think that we're going to see, I think, within 90 days or so, we should have a rep if they start -- I'm going to use the term January 1. If they start January 1, I think we should see in 3 or 4 months, I think we should see their effect in place.

Helpful. And then just last for me on -- Medicaid is a pretty important payer for you guys. Can you just give us an update kind of where you are at the various state Medicaids and what's left to do from your side to kind of further that build-out?

Yes. Well, 2 things. I'd have to ask Mistie and Eric, but I believe we have 2 or 3 state Medicaid policies. And I don't expect us to have Medicaid policy as a general rule. We're not -- a lot of states aren't going to write policy on this CPT code. But what we do see is we now have 27 states with it on the fee schedule, and we're seeing great success with the EPSDT program, which is the federal mandate, and you can look that up if the investors would like to. But that is material from an equality and equity standpoint. Last year, I think I've talked about the fact that we -- of the children's hospitals, we do prior authorizations for, there are roughly 19% or 20% of the patients that came to us for prior auth were Medicaid patients. And I don't -- I would assume that extrapolates out to other children's hospitals. So it's not by any means half of our business or half of the opportunity, but it is material, 20% is material, first of all. And second of all, from an equity standpoint and starting a program of many children's hospitals, that needs to be in place. So the next question is how do we get the remaining 23. And I think D.C. and Puerto Rico were in there, so call it 52. How do we gain the last 25? And I'll tell you, it's just hand-to-hand combat. There's no rhyme or reason why they have or have not added this. It's just a matter of getting to the state Medicaid director or the state Medicaid personnel with the children's hospitals in that state and requesting this be added to the fee schedule, and that's really the process we're in right now. And I'll circle back to another one of your questions, Chase. I think the biggest -- the biggest item I've noticed in the last 3 to 6 months is we have specifically 1 or 2 reps that have had the ability that don't have a wide geographic range from a territory standpoint. And we have 1 or 2 that are really in their territory, and the visibility and the increase in revenue where there's insurance policy coverage, and we're able to get to those children's hospitals on a weekly, biweekly basis has been more than significant. And I'm expecting with the increase in W-2 salespeople in their territories where they're within a couple of hour driving distance of their accounts to see a real change in 2027 from a visibility standpoint that we blacked previously from having such a broad brush, which was on purpose because we didn't have broad insurance coverage, and it wouldn't have made sense to build out that commercial force, which we've discussed at nauseam. So I hope that's helpful.

It is. Congrats on the progress.

Our next question comes from [ Lindsay Leeds ] from Micro Cap.

I was wondering about the 52 states and territories. How long do you see that taking to get to, say, 90% of those getting on their Medicaid fee structure?

I'd like to believe -- you know what, this is -- it's an educated guess based on progress since we've been going -- since we've been more direct. I'd like to believe by spring of 2027, we're in the 90% range. I think it could be as late as July 1. I think it could be as early as in Q1. I think somewhere in there is more -- is likely.

Excellent. Also wanted to ask about the 32% to 38%, the increase in approval -- preapproval rates, maybe misquoting that. Can you talk a little bit more about that and what impact it has on the business?

Yes. So as you know, we've gained 2 significant payers in the last 45 days. I mentioned that one of those has not been able to give us approvals, prior authorizations because of the internal miscommunication, which is, I believe, fixed or will be fixed this week. So to go from 32% on a year-to-date basis to 38% on a year-to-date basis in 30 days means that, that 30-day window had to be materially higher than 38% to bring that average up. So you're starting to see the comprehensive nature of more -- or I should say, of comprehensive coverage in certain areas. So look, the number speaks for itself. We're pleased, and now we'll see what this second payer does as we get this issue resolved, and I expect it to be better and continue to improve. We need to get that number ultimately to double where it is today as soon as possible. And we believe we have the right payers and having the right conversations to get us there. And then again, Lindsay, those are just the children's hospitals that we do prior authorizations for, but you'd like to believe that, that extrapolation is parallel to the market, especially in areas where we have good insurance policy coverage. And I purposely for you and Sergio's and all investors' purpose, started to release some information on the metrics around what states have how much insurance policy covered and you start to understand although we have some good payers, there's still a significant number of payers in most states that are not -- don't have a strong percentage of coverage. But we're making significant progress, and that's why we started to release those KPIs. I think they're material. That's information an investor could find on their own if they really wanted to, but we're trying to make this a little easier for everybody.

One additional -- last additional question from me. And that is, when you get, say, a Cigna, are there any hospitals that are able to go back for, say, the last 90 days where you got denials because, hey, coverage wasn't available yet, so now you can kind of go back through past history and see which patients might benefit from the coverage?

Absolutely. If you have a patient still interested, absolutely. And you can imagine we've been all over that.

And with that, ladies and gentlemen, we'll be ending today's question-and-answer session. I'd like to turn the floor back over to Brian for closing remarks.

Look, I appreciate everyone's time. I'm always available, as you all know to -- for individual calls and meetings. Happy to discuss the business in more detail. But I believe we -- Tim and I delivered the most important aspects today and look forward to the coming weeks and months. And everyone have a nice holiday season, and we'll talk soon. Thank you.

And with that, we'll conclude today's conference call and presentation. We thank you for joining. You may now disconnect your lines.