Ceribell's Q3 2025 Earnings Call: Key Contradictions in Utilization Growth, Sales Strategy, and Gross Margin Projections

Date of Call: November 4, 2025

Financials Results

• Revenue: $22.6M (Q3 2025), up 31% YOY vs $17.2M in Q3 2024; Product $17.0M (+28% YOY), Subscription $5.6M (+44% YOY). Raised FY2025 revenue guidance to $87M-$89M (midpoint ~34% YOY; range implies +33% to +36% vs 2024).
• EPS: Net loss of $13.5M, loss of $0.37 per diluted share in Q3 2025, vs net loss $10.4M, loss of $1.85 per share in Q3 2024.
• Gross Margin: 88% in Q3 2025, compared to 87% in prior year period; company expects to maintain gross margins in the mid-80% range in Q4 2025 and target mid-80% for full-year 2026 assuming no tariff changes.

Guidance:

• Raised full-year 2025 revenue guidance to $87M–$89M (range implies ~33%–36% growth vs 2024; midpoint ~34%).
• Expect Q4 2025 gross margin in the mid-80% range; on track for mid-80% gross margins in full-year 2026 assuming no tariff changes.
• Will continue deferring new account launches in late December to preserve high-quality onboarding.
• No current intention to raise capital; cash, cash equivalents and marketable securities $168.5M and committed to achieving cash-flow break-even.

Business Commentary:

• Revenue Growth and Market Penetration:
• Ceribell reported total revenue of $22.6 million for Q3 2025, reflecting a 31% growth over the same period last year and marking their 30th consecutive quarter of sequential revenue growth.

• The growth is attributed to the predictable recurring nature of their business model and continued excellence in commercial execution, including new account launches and increased usage.

• Account Expansion and Utilization Increase:

• As of September 30th, Ceribell had 615 active accounts, marking an increase of 31 accounts over the prior quarter, the largest sequential increase since becoming a public company.
• This expansion was supported by efforts to expand patient access, broaden reach to additional sites of care, and drive usage through internal execution and protocolization.

• Product Pipeline and Market Opportunities:
• Ceribell received 510(k) clearance for Clarity in the pediatric population, which is expected to expand the addressable market opportunity by approximately $400 million.

• The company is also investing in neonatal populations, with a neonatal application of Clarity anticipated in 2026, further enhancing market potential.

• Operational and Financial Performance:

• Product revenue increased by 28%, and subscription revenue rose by 44%, highlighting strong growth in both segments.
• Despite a significant increase in operating expenses due to investments in the commercial organization, the company expects to maintain gross margins in the mid-80% range for 2026.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management raised FY2025 revenue guidance and reported $22.6M revenue in Q3 (+31% YOY) and '30th consecutive quarter of sequential revenue growth.' Executives repeatedly stated confidence in commercial momentum, expanded account base (615 active accounts), and product pipeline progress (pediatric/neonatal/novel algorithms).

Q&A:

• Question from Travis Steed (Bank of America): Any early thoughts on 2026 for account adds, utilization and pricing, especially with the end cap expiring?
  Response: No 2026 guidance provided; fundamentals unchanged—new account adds and utilization remain primary growth drivers; pricing stable with Clarity ASP rising as recorders are added.

• Question from Travis Steed (Bank of America): How will the neonatal launch look in 2026—new accounts or deeper penetration of existing accounts?
  Response: Launch will pursue both departmental expansion within ~200 NICUs already in the installed base and new account acquisition (children’s hospitals and community NICUs); full commercial launch planned in 2026.

• Question from Robby Marcus (JPMorgan): How is progress on penetrating accounts and educating hospital stakeholders—are recent initiatives driving consistent ramp?
  Response: Yes—initiatives (adding recorders to existing sites, protocolization with physicians, ongoing provider education and CAM-led engagement) are driving deeper utilization and departmental expansion.

• Question from Robby Marcus (JPMorgan): How should we think about revenue versus OpEx growth and progress toward cash-flow break-even?
  Response: OpEx rose due to front-loaded commercial investments from IPO proceeds; management expects those investments to drive results into 2026, retains flexibility to adjust spend and aims to reach cash-flow break-even without raising capital.

• Question from Brandon Vasquez (William Blair): Are more tenured accounts continuing to grow in utilization and is that a reliable signal for new-account ramp?
  Response: Yes—tenured accounts continue to grow driven by guideline adoption, departmental expansion and ongoing training; these same drivers are expected to support growth in newer accounts.

• Question from Brandon Vasquez (William Blair): What are the friction points for expanding into new wings/departments and details on the recent 510(k) headcap clearance?
  Response: Primary friction is execution/resource constraints on the hospital side (competing priorities); the new neonatal headcap is cleared for preterm and term neonates, addressing clinician concerns and enabling commercialization when neonatal Clarity is cleared.

• Question from Josh Jennings (TD Cowen): Where does the new-customer pipeline/funnel sit relative to the beginning of the year and how is Ceribell positioned with IDNs?
  Response: Funnel is growing; company is building hospital-system (IDN) sales capability to pursue top-down rollouts in addition to bottom-up hospital sales, accelerating system-level opportunities.

• Question from Bill Palchak (Canaccord Genuity): Why is the FY2025 guidance range broad and what drives the low vs high end?
  Response: Range reflects a conservative, de-risked guidance philosophy accounting for seasonality and remaining uncertainties; bottom end uses conservative assumptions to ensure high confidence in delivery.

• Question from Bill Palchak (Canaccord Genuity): What’s the competitive landscape and any update on the ITC litigation timeline?
  Response: Competitive activity increased earlier in the year but has not meaningfully impacted results; ITC timelines were expected in late 2026/early 2027 but may be delayed due to the government shutdown and will be updated when government reopens.

• Question from Jeffrey Cohen (Ladenburg Thalmann): Can you expand on the VA channel and the implication for near-term growth?
  Response: VA pilots have been successful; VA intends to expand usage and the company expects a larger cohort rollout in the next few quarters—representing one of the largest top-down deployments to date.

• Question from Jason Bedford (Raymond James) / Elaine: How much would utilization have grown excluding the Q3 2024 stocking impact and did you see usual seasonality; which departments are driving utilization?
  Response: Q3 2024 stocking distorted comparisons—excluding that, utilization growth would align with Q1/Q2; seasonality remains (Q1 strongest, Q2/Q3 softer); growth is broad with ED outpacing ICU given lower prior penetration.

Contradiction Point 1

Utilization Growth Expectations

It involves differing expectations and explanations of utilization growth, which is a key performance indicator for the company's revenue and market penetration.

What was utilization growth excluding the stocking impact, and what was the seasonality impact this quarter? - Jason Bedford (Raymond James)

2025Q3: Excluding stocking, utilization growth would have been similar to Q1 and Q2. - Jane Chao(CEO)

What's the current status of business momentum, account adds, Ceribell awareness, utilization growth, and the impact of new reps/territory managers? - Travis Steed (Bank of America)

2025Q2: Growth is coming from new account adds and increased utilization from existing account base. And given the seasonality, we're in a decent position. - Xingjuan Chao

Contradiction Point 2

Sales Strategy and Market Penetration

It involves differing strategies and expectations regarding the company's sales tactics and market penetration, which are critical for future growth and revenue.

In pursuing the neonatal opportunity, will the focus be on new accounts or deepening penetration in existing accounts? - Travis Steed (Bank of America)

2025Q3: Out of 850 level three and four NICUs, we already represent about 200. These will see departmental expansion, while we'll target children's hospitals and specialty hospitals for new account acquisition. - Jane Chao(CEO)

Can you update us on business momentum, account adds, Ceribell awareness, utilization growth, and new reps/territory managers' impact? - Travis Steed (Bank of America)

2025Q2: We're focusing on a mix of larger facilities as well as smaller targeted specialty hospitals. - Xingjuan Chao(CEO)

Contradiction Point 3

Account Acquisition and Usage Growth Strategy

It reflects differing perspectives on the primary drivers of account acquisition and usage growth, which are crucial for the company's expansion and revenue generation.

How are you progressing in penetrating accounts and educating hospital departments? - Robby Marcus (JPMorgan)

2025Q3: We're successfully driving account acquisition and usage growth. Initiatives include bringing more recorders to existing accounts and partnering with physicians to protocolize patient populations, leading to strong correlation in growth. - Jane Chao(CEO)

What's driving the increase in the full-year guidance beyond expectations and what factors have improved compared to your previous expectations? - Stephanie Piazzola (Bank of America)

2025Q1: Our strategies are working, giving us conviction to raise expectations. Greater confidence comes from strategies working in account acquisition and account management. - Scott Blumberg(CFO)

Contradiction Point 4

Impact of Seasonality on Account Usage

It highlights differing explanations for the impact of seasonality on account usage, which affects revenue projections and growth expectations.

What was utilization growth excluding stocking impact, and how did seasonality affect results this quarter? - Jason Bedford (Raymond James)

2025Q3: Seasonality showed a strong Q1 and less activity in Q2 and Q3. - Jane Chao(CEO)

Was Q1 growth driven by seasonality, and will utilization rates decline? - Margaret Andrew (William Blair)

2025Q1: Yes, seasonality matters with higher ICU census in winter. We saw higher usage in Q1 and expect declines in the near-term due to seasonality. - Scott Blumberg(CFO)

Contradiction Point 5

Gross Margin Expectations

It involves changes in financial forecasts, specifically regarding gross margin expectations, which are critical indicators for investors.

What drives the lower end versus the higher end of your 2025 guidance range? - Bill Palchak(Canaccord Genuity)

2025Q3: We expect the gross margin for 2025 to be in the range of 83% to 85%. - Scott Blumberg(CFO)

How do you view gross margins and OpEx spend for 2025? - Robert Marcus(JPMorgan Chase & Co.)

2024Q4: Mid- to high-80% gross margins account for the 35% tariff on materials sourced from China. - Scott Blumberg(CFO)