10-K: Neuraxis Reports Revenue Growth Amidst Persistent Losses

Neuraxis, Inc. reported increased net sales for 2025, driven by product adoption, but continues to face substantial operating losses and going concern doubts.

Summary

• Neuraxis, Inc. is a medical technology company focused on neuromodulation therapies for chronic gastrointestinal conditions, primarily with its IB-Stim and RED devices.
• Net sales increased by 32.9% to $3,569,282 in 2025 from $2,685,925 in 2024, primarily due to volume growth and the launch of the RED product.
• The company incurred a net loss of $7,800,555 in 2025, a slight decrease from $8,241,501 in 2024, but still reflecting substantial operating losses.
• Auditors have expressed substantial doubt about the company's ability to continue as a going concern, with existing cash projected to meet operating needs only until the end of 2026.
• IB-Stim, a Percutaneous Electrical Nerve Field Stimulation (PENFS) technology, is FDA-cleared for functional abdominal pain associated with IBS, functional dyspepsia (FD), and associated FD nausea symptoms in patients 8 years and older.
• The RED (Rectal Expulsion Device) was launched in 2025 and is indicated for evaluating neuromuscular function and rectal hypersensitivity in adults with chronic constipation.
• The North American Society of Pediatric Gastroenterology, Hepatology, and Nutrition (NASPGHAN) recommended PENFS as the only FDA-approved or FDA-cleared treatment in its functional abdominal pain guidelines in May 2025.
• A Category I CPT code (64567) for PENFS procedures was confirmed by the AMA in 2024, taking effect on January 1, 2026, which is expected to streamline reporting and improve reimbursement.
• Neuraxis was awarded a Federal Supply Schedule (FSS) contract in December 2025 for IB-Stim sales to the U.S. government.
• The company terminated its NSS-2 Bridge license with Masimo Corporation on July 1, 2025, recapturing intellectual property rights in exchange for $200,000, payable in two installments.

Sentiment

Score: 4

Explanation: StockSavvy.ai views this filing with cautious optimism. While strong revenue growth, key regulatory milestones (CPT code, FSS contract), and positive clinical data are encouraging, the persistent substantial operating losses, the auditors' going concern warning, and unremediated material weaknesses in internal controls present significant financial risks.

Positives

• Net sales increased by 32.9% to $3,569,282 in 2025, demonstrating strong product adoption and market penetration.
• Gross profit increased by 29.4% to $3,006,366 in 2025, driven by higher sales volume.
• IB-Stim is the only FDA-approved or FDA-cleared treatment recommended by NASPGHAN for functional abdominal pain in children, providing a significant competitive advantage.
• The AMA confirmed a Category I CPT code (64567) for PENFS procedures, effective January 1, 2026, which is expected to enhance reimbursement and market access.
• Secured a Federal Supply Schedule (FSS) contract in December 2025, allowing sales of IB-Stim to the U.S. government.
• Successful launch of the RED (Rectal Expulsion Device) in 2025, expanding the product portfolio and addressing unmet needs in adult constipation.
• Recaptured intellectual property rights for the NSS-2 Bridge device and two patent applications from Masimo Corporation, enhancing the company's IP portfolio.
• Strong clinical data supports the safety and efficacy of IB-Stim, with over 700 published patients and significant improvements in pain, disability, and global symptoms.
• The company has a robust pipeline with additional clinical trials underway for post-concussion syndrome, cyclic vomiting syndrome, post-operative pain, and fibromyalgia in adults.

Negatives

• The company incurred a substantial net loss of $7,800,555 in 2025 and has a history of significant operating losses since inception.
• Auditors have expressed substantial doubt about the company's ability to continue as a going concern, indicating significant financial challenges.
• Material weaknesses in internal control over financial reporting were identified for both 2025 and 2024, and remain unremediated as of December 31, 2025, posing risks to financial reporting accuracy.
• Gross margin decreased from 86.5% in 2024 to 84.2% in 2025, primarily due to higher discounting in financial assistance programs and expired RED inventory.
• Selling expenses increased by 55.2% to $2,279,974 in 2025, driven by higher commissions, temporary commission structures, increased headcount, and advertising costs.
• General and administrative expenses increased by 6.4% to $8,062,689 in 2025, including a $630,568 one-time charge to settle a lawsuit.
• The company's existing cash is projected to be sufficient only until the end of 2026, necessitating additional funding.
• Two demand notes receivable from founding shareholders, totaling $1,012,800, have been fully reserved due to repayment uncertainty.

Risks

• The business and prospects are entirely dependent on current products, IB-Stim and RED, and their ongoing regulatory review and commercialization.
• Inability to maintain regulatory clearance or significant delays/limitations in commercialization efforts could materially harm the business.
• Continued substantial operating losses and the need for significant capital to fund operations, with no guarantee of future profitability.
• Clinical studies could be delayed or adversely affected by difficulties in patient enrollment, negative or inconclusive results, or adverse events.
• Inability to develop an adequate sales and marketing organization or contract with third parties could hinder successful commercialization.
• Success is dependent on the actions of collaborative partners, who may not perform as expected or may terminate agreements.
• Failure to achieve market acceptance of products by healthcare professionals, patients, and third-party payers could significantly reduce revenue.
• Inadequate coverage and reimbursement from third-party payers could adversely affect product acceptance and revenues.
• Inability to maintain reimbursement codes necessary for accurate and timely billing for products or physician services.
• Dependence on single-source suppliers for some components, with the loss of a supplier potentially delaying shipments or clinical studies.
• Quality control problems with third-party suppliers could harm reputation, clinical studies, or commercialization.
• Reliance on contract manufacturers for production, with disruptions to their operations or facilities posing risks.
• Unforeseen events during clinical testing could delay or prevent further commercialization, including adverse side effects or insufficient data.
• Difficulties managing growth as the company expands, straining management, operational, and financial resources.
• The estimated size and expected growth of the available market may be smaller than anticipated, impacting revenue generation.
• Termination of relationships with key employees, consultants, and advisors could prevent successful business operations.
• Customer or third-party complaints, negative reviews, or publicity could harm the company's reputation and brand.
• Adverse global economic conditions, including recessions, inflation, or credit market tightening, could negatively impact the business.
• A pandemic could materially adversely impact business and clinical studies, causing delays, reduced prescriptions, and supply chain disruptions.
• Failure to adapt technology to user requirements or emerging treatment standards, as neuromodulation therapies are not yet standard of care for IBS.
• Intense competition from other medical device, pharmaceutical, and life sciences companies with greater resources.
• Failure to select or capitalize on the most scientifically, clinically, or commercially promising indications due to limited financial resources.
• Product liability suits due to alleged defective devices or misuse could result in expensive litigation and substantial damages.
• Subject to consumer protection laws, with non-compliance potentially leading to enforcement actions, fines, and reputational harm.
• Increasing dependence on information technology systems and vulnerability to cybersecurity breaches and data leakage.
• Ongoing regulatory review and extensive post-marketing regulations by the FDA and other authorities, with non-compliance leading to sanctions.
• Modifications to products may require new regulatory approvals, which could cause delays or require product recalls.
• Failure to comply with federal, state, local, and foreign healthcare fraud and abuse laws could result in substantial penalties.
• Intellectual property litigation and infringement claims could incur significant expenses or prevent product sales.
• Changes in U.S. patent law could diminish the value of patents, impairing the ability to protect devices.
• Reliance on third parties for clinical trials, with their non-compliance potentially hindering regulatory approval.
• Inability to maintain listing of common stock on NYSE American if financial and liquidity criteria are not met.
• Future issuances of common stock or debt securities could dilute existing shareholder holdings and adversely affect returns.
• If common stock price falls below $5.00, it could become subject to penny stock rules, making trading more difficult.
• As a smaller reporting company and emerging growth company, less rigorous public reporting requirements may result in stockholders receiving less information.

Future Outlook

Neuraxis expects to continue incurring significant expenses and operating losses for the foreseeable future as it pursues widespread insurance coverage for its IB-Stim and RED devices and seeks FDA clearance for additional indications. The company's existing cash is anticipated to be sufficient only until the end of 2026, indicating a need for further funding. Transition to profitability is dependent on achieving sufficient revenue to support its cost structure, which is not assured.

Management Comments

• Management believes in the viability of its strategy to further implement its business plan and generate sufficient revenues.
• Management plans to raise additional funds by way of a public or private offering of debt or equity securities, though no assurance can be given on terms or availability.
• Management will spend additional time on policies and procedures to ensure compliance with various regulatory requirements, especially Section 404 of the Sarbanes-Oxley Act, which may delay anticipated growth plans.

Industry Context

StockSavvy.ai notes that Neuraxis operates in the rapidly evolving neuromodulation therapy market, targeting chronic gastrointestinal conditions where drug-free alternatives are highly sought after. The company's IB-Stim device holds a unique 'first-to-market' position with FDA clearance and academic society endorsement (NASPGHAN) for pediatric functional abdominal pain, differentiating it from off-label drug use and other neurostimulation devices (e.g., gammaCore, TMS, Roo System) that lack specific FDA clearance or supporting data for functional bowel disorders via auricular nerves. The new Category I CPT code for PENFS is a significant development, potentially accelerating market adoption and reimbursement compared to competitors relying on less established coding. The RED device positions Neuraxis to address a large unmet need in chronic constipation diagnostics, a segment where current testing methods are often impractical.

Comparison to Industry Standards

• IB-Stim is the only FDA-approved or FDA-cleared treatment recommended by the North American Society of Pediatric Gastroenterology, Hepatology, and Nutrition (NASPGHAN) for functional abdominal pain, setting a high standard compared to off-label pharmacological treatments like amitriptyline and citalopram, which have failed to beat placebo in clinical trials and carry significant side effect risks.
• The company's method patents protect access to the brain, particularly the limbic systems through branches of cranial nerves in the ear, providing a competitive barrier against other neurostimulation devices like gammaCore (cleared for cluster and migraine headaches) or Transcranial Magnetic Stimulation devices (cleared for major depressive disorder), which do not target IBS through auricular nerves.
• The RED device offers an easy-to-use, office-based point-of-care test for chronic constipation, addressing a gap where only about 2% of patients currently undergo anorectal testing at specialized motility centers, making it more accessible than elaborate volumetric testing equipment used by competitors.
• Clinical studies for IB-Stim have demonstrated long-term benefits in functional disability, psychological co-morbidities, and pain, with 95% of adolescents recommending the treatment, indicating strong patient satisfaction and efficacy compared to the compliance issues often seen with non-pharmacological psychological approaches like CBT (8-12 weeks of treatment).

Management Changes

Corporate Governance

Legal Proceedings

• A lawsuit initiated by Ritu Bhambhani, M.D. in 2019, alleging fraudulent misrepresentation regarding NeuroStim device billing, was dismissed by the Court in June 2022, and the plaintiffs' appeal was denied by the Fourth Circuit in June 2024.
• A related lawsuit initiated by Ritu Bhambhani, LLC et al. in 2022, with similar allegations, reached a tentative $750,000 settlement on April 25, 2025, with payments beginning in January 2026. The company recorded a $630,568 charge for this settlement in 2025.
• An unresolved dispute with Dr. Arturo Taca, who asserted a $2,000,000 interest in U.S. Patent No. 10,413,719 in January 2024, based on his work in neurostimulation. The company denies the claims and intends to defend vigorously.

Related Party Transactions

• Two demand notes receivable from founding shareholders, each with an initial balance of $506,400, totaling $1,012,800. No payments have been received, and the entire balance, including accrued interest of $228,759, has been fully reserved as of December 31, 2025.
• An exclusive, worldwide, non-transferable, royalty-free license agreement with TKBMN, LLC (managed by the Chief Regulatory Officer, with the CEO and National Sales Director as members) for certain auricular patent rights. The company covers maintenance, prosecution, and continuation patent filing costs, which were $4,412 in 2025 and $4,973 in 2024.
• Sales of NeuroStim devices at cost to a member of the Board of Directors for research and development activities, totaling $9,380 in 2025 and $3,522 in 2024, pre-approved by the Board up to $16,000 annually.
• Accounting and tax services provided by a third-party public accounting firm, where the company's former Chief Financial Officer was the managing partner and majority shareholder. Services totaled $44,365 in 2025 and $207,103 in 2024. The company owed $2,578 and $4,173 to the firm as of December 31, 2025 and 2024, respectively.
• Issuance of 20,000 common shares with a fair value of $55,600 to the former Chief Financial Officer on June 28, 2024, for services rendered during the IPO process.

Stakeholder Impact

• Shareholders face dilution risk from future capital raises and potential negative impact on stock price due to ongoing losses, going concern doubt, and unremediated internal control weaknesses.
• Employees benefit from the 2025 Employee Stock Purchase Plan (ESPP) and various stock-based compensation plans, but the company's financial instability could impact job security or future compensation.
• Customers (hospitals and clinics) benefit from FDA-cleared, drug-free neuromodulation therapies (IB-Stim, RED) addressing unmet medical needs, with improved access expected from the new CPT code and FSS contract.
• Patients, particularly children with DGBIs and adults with chronic constipation, gain access to innovative, evidence-based treatment options, with financial assistance programs available for those without insurance.
• Creditors face increased risk due to the company's substantial operating losses and the auditors' going concern warning, which may affect the company's ability to meet its debt obligations.

Next Steps

• Continue to pursue widespread insurance coverage for IB-Stim and RED devices nationally.
• Seek FDA clearance for IB-Stim for additional pipeline indications, including post-concussion syndrome, cyclic vomiting syndrome, post-operative pain, and fibromyalgia pain.
• Conduct formal assessment and testing of Information Technology General Controls (ITGCs) during fiscal year 2026.
• Management will continue efforts to remediate identified material weaknesses in internal control over financial reporting.
• Enroll patients in ongoing clinical trials for post-concussion syndrome, post-operative pain, and fibromyalgia in adults.
• Anticipate beginning enrollment for a new randomized, placebo-controlled trial for Auricular Neurostimulation for Children with Cyclic Vomiting Syndrome early in 2026.
• Pay the second $100,000 installment to Masimo Corporation by June 30, 2026, as part of the NSS-2 Bridge license termination agreement.
• Make 12 equal monthly installments for the $750,000 lawsuit settlement, beginning in January 2026.

Key Dates

Recommendation

Neuraxis presents a mixed financial picture. While the company achieved significant revenue growth in 2025 and secured crucial regulatory and market access milestones (Category I CPT code, FSS contract, NASPGHAN endorsement), the persistent substantial operating losses and the auditors' 'going concern' warning are major red flags. The unremediated material weaknesses in internal controls further add to the risk profile. The potential for future growth in neuromodulation therapies for GI disorders is strong, and the company's pipeline is promising. However, until there is clear evidence of a path to profitability, remediation of internal control issues, and a stronger financial position that alleviates going concern doubts, a 'hold' recommendation is appropriate. Investors should monitor the company's progress on these critical financial and operational fronts before considering further investment.

Keywords

Neuromodulation, IB-Stim, RED device, Functional Abdominal Pain, Irritable Bowel Syndrome, Functional Dyspepsia, Pediatric GI, Medical Technology, FDA Clearance, CPT Code, SEC Filing, 10-K, Healthcare, Medical Devices, Chronic Constipation, Pain Management, Clinical Trials, Corporate Governance, Financial Reporting, Risk Factors