NeurAxis (NRXS): Investment Thesis Explained
Last month, I initiated a new position in what I believe could be a multibagger opportunity.
I’ve intentionally kept a low profile since then. The company has a market cap of under $100M and the stock is relatively illiquid, meaning increased attention can move the price quickly. I wanted my paid subscribers to have time to research the opportunity properly before discussing it publicly.
Earlier this week, I also had the opportunity to meet with the CEO to clarify several questions while preparing this Deep Dive. If anything, that conversation made me even more confident in the thesis.
It has been years since I’ve been this excited about a microcap opportunity. In my view, the risk-reward here is extremely compelling, particularly now that several key milestones have been achieved, significantly reducing the uncertainty surrounding the story.
In this article, I’ll walk through the entire investment thesis.
The article will initially be behind a paywall so that paid subscribers can read the full research first. But since the company is reporting earnings next Thursday, I plan to remove the paywall next week.
UPDATE: PAYWALL REMOVED
Let’s dive in.
Origins
NeurAxis is developing the first FDA-cleared device designed to treat chronic stomach pain in children by targeting the brain-gut axis.
It was founded in the early 2010s in Carmel, Indiana, originally under the name Innovative Health Solutions. The company later rebranded to NeurAxis in March 2022 and went public on the NYSE American in August 2023 under the ticker NRXS.
But the company didn’t begin with a focus on children’s stomach pain.
The story actually starts with Dr. Christopher Brown, a dentist who specialized in treating head, neck, and facial pain. Over years of clinical practice, Dr. Brown became fascinated by the complex network of nerves connecting the head to the brain, particularly the trigeminal nerve and the vagus nerve, which play major roles in how the body processes pain signals.
While studying the scientific literature around neuromodulation, he noticed that a range of therapies, from acupuncture and electroacupuncture to vagus nerve stimulation and deep brain stimulation, all shared a similar principle: carefully applied electrical stimulation could alter how the nervous system processes pain.
Dr. Brown began experimenting with the idea of delivering specific electrical frequencies through cranial nerves as a way to treat chronic pain conditions. His initial vision was broad. The technology could potentially be used for head and facial pain, fibromyalgia, and other chronic pain disorders. At that stage, the company’s focus was simply on exploring neuromodulation as a new way to treat pain.
In 2012, he assembled the early team, bringing in Dr. Thomas Carrico, an autonomic nervous system specialist, as Chief Regulatory Officer, and Brian Carrico (no family relation) as Vice President of Sales.
Brian had previously spent several years selling medical devices in operating rooms and cardiac catheterization labs at companies like Bard Medical and St. Jude Medical. That experience gave him a practical understanding of how hospitals adopt new technologies, how reimbursement decisions are made, and why many promising devices fail to reach widespread clinical use.
That commercial perspective proved valuable alongside the company’s scientific foundation. Brian would eventually rise through the organization, becoming CEO on January 1, 2018, a role he still holds today.
But everything changed when Dr. Adrian Miranda entered the picture.
Dr. Miranda, currently Chief Medical Officer at the company, is a pediatric gastroenterologist who specializes in digestive disorders in children. He came across the technology and reached out to the team with a specific hypothesis: he believed the device being developed could be influencing a region of the brain known as the amygdala, which plays a key role in regulating the brain-gut axis, the complex communication system connecting the digestive system to the central nervous system.
If that was true, the implications were enormous.
Many pediatric gastrointestinal disorders, including functional abdominal pain and irritable bowel syndrome (IBS), aren’t caused by structural problems in the digestive system. Instead, they arise from dysregulated signaling between the brain and the gut, which amplifies pain perception even when no visible disease is present. Dr. Miranda proposed that the neuromodulation approach Dr. Brown was developing could potentially be able to interrupt those pain signals at the brain level, rather than trying to treat symptoms in the gut itself.
To test the idea, Dr. Miranda conducted mechanistic studies in animal models at the Medical College of Wisconsin, which confirmed that the therapy influenced both the amygdala and spinal cord neurons, two key components involved in processing pain signals.
Encouraged by those results, the team moved into human trials.
A randomized, double-blind, placebo-controlled clinical study was conducted at Children’s Hospital of Wisconsin, with Dr. Miranda serving as the principal investigator. The trial demonstrated meaningful reductions in abdominal pain in adolescents with IBS and was later published in The Lancet, one of the most respected medical journals in the world. Those results paved the way for a major milestone.
In 2019, the FDA granted De Novo clearance for IB-Stim, the device built around this neuromodulation technology, as a treatment for adolescents suffering from functional abdominal pain associated with IBS. A De Novo is the FDA’s way of formally recognizing a genuinely new category of medical device, one with no prior equivalent. There was no approved drug, no competing device, no established standard of care. NeurAxis has built something that simply didn’t exist before.
IB-Stim itself is a small, wearable device placed behind the ear. Four tiny electrodes are positioned on the outer ear and deliver gentle electrical pulses to cranial nerve branches beneath the skin. The stimulation runs continuously while the device is worn, typically for five consecutive days per week over a four-week treatment cycle. There is no surgery, no implant, and no medication involved. Instead, the therapy works by modulating the nervous system’s own processing of pain signals.
After securing FDA clearance, the company entered the long second phase of building a viable medical technology business: generating the clinical evidence needed for insurance reimbursement.
This is where most medical device companies stall. FDA clearance is permission to exist, it’s not permission to operate at scale. For that, you need insurance companies to formally agree to cover the treatment, and insurers are deeply skeptical by default. They want peer-reviewed studies from multiple independent research groups, conducted at prestigious institutions, before they add a new treatment to their coverage policies.
Over the following years, researchers at leading children’s hospitals, including Boston Children’s, Children’s Hospital of Wisconsin, and seven other major academic medical centers, conducted more than a dozen additional investigator-initiated studies. None of them was sponsored by NeurAxis, which adds credibility. The company took all comers, with no restrictive eligibility criteria designed to make results look better than they were. Sixteen published studies later, the data was consistent and compelling enough to speak for itself.
That evidence eventually helped the therapy reach a critical milestone: CPT Category I status, the permanent, standardized billing code used across the U.S. healthcare system, which came into effect in January 2026. It was the culmination of a six-to-eight-year process, and it dramatically changed the commercial equation for physicians, for hospitals, and for insurers simultaneously. We’ll cover this milestone in detail later, because it deserves it.
The insurance coverage build-out that followed was equally dramatic. Covered lives grew from roughly 4M in early 2024 to over 100M by December 2025, when Anthem, one of the largest insurers in the country, added ~45M members in a single policy decision.
Two additional FDA clearances arrived along the way: one in November 2024 expanding the eligible age range from 11-18 to 8-21 years old, and another in May 2025 for Functional Dyspepsia, making NeurAxis the first company ever to receive any FDA clearance for that pediatric condition.
More than a decade after the first experiments, NeurAxis now sits at the intersection of several major milestones and catalysts coming together at once. What began as an exploration of neuromodulation for general pain has evolved into something far more focused: a first-of-its-kind therapy targeting the brain-gut axis in pediatric gastrointestinal disease, with the regulatory, clinical, and reimbursement infrastructure now substantially in place for the first time.
NeurAxis is now approaching what could be its first real commercial inflection point within a multi-billion-dollar unmet medical need.
Business Model
To understand how NeurAxis makes money, it helps to first understand the specific problem it solves.
There are roughly 6M children in the U.S. suffering from functional abdominal pain associated with IBS. About 10% of them (~600k) are considered debilitated by the condition. Debilitated, in the clinical definition used here, means missing at least three days of school per month, withdrawing from sports and social activities, and typically cycling through multiple medications that either fail to work or carry serious side effects. These families are showing up at children’s hospitals looking for answers, and until recently, physicians had very little to offer them.
That’s the unmet need, and it’s the foundation of the entire business model.
What NeurAxis Sells
NeurAxis sells one core product: the IB-Stim device. Each device is a small, wearable unit placed behind the ear, with four tiny electrodes that rest on the outer ear and deliver low-level electrical stimulation to nearby cranial nerve branches.
It costs ~$100 to manufacture and carries a list price of $1,195.
The treatment protocol is four devices over four weeks. One device is placed at the beginning of the week, worn continuously for five days, then removed and discarded by the patient at home. A second device is placed the following week, and so on, for four total devices across four consecutive weeks. There is no surgery, no implant, and no ongoing medication. Once the treatment course is complete, the therapy has done its work.
That means the total revenue per patient, every time a full treatment course is completed and reimbursed by insurance, is ~$4,800. That’s a per-device margin of 92-93%, among the highest in the medical device industry.
What protects those margins over time isn’t only the cost structure and the fact that this is an unmet need, but also the IP behind the technology. NeurAxis holds 13 issued patents and 9 pending patents covering both the device itself and the method of treatment. The U.S. IP portfolio runs through 2039, and the company is actively working to extend it further. Dr. Christopher Brown, the company’s founder, remains directly involved in designing the next generation of the device, which is expected within one year and will carry the same economic profile as the current version. International IP filings are also in process, though international commercialization is not a near-term focus given the reimbursement complexities outside the U.S.
Importantly, a freedom-to-operate analysis has already been completed, confirming that NeurAxis can commercialize its technology without infringing on third-party patents.
How Revenue Flows, and Who the Customer Is
NeurAxis doesn’t sell directly to consumers or physicians. Instead, it sells its devices to the 260 children’s hospitals across the United States.
These hospitals act as both the distribution channel and the point of care. Pediatric gastroenterologists practicing within them identify eligible patients, place the devices, manage the treatment, and submit for reimbursement. NeurAxis sells the devices to the hospitals and supports them through a small direct commercial team that focuses on education, clinical support, and ensuring that the appropriate staff and processes are in place to treat patients consistently.
Importantly, patients pay nothing out of pocket.
Removing financial friction at the patient level is a meaningful driver of adoption. Unlike many medical devices that require patients to share costs, IB-Stim is fully covered for insured patients. This means families aren’t weighing the cost of treatment against other household priorities. When insurance coverage is in place, the primary barriers to adoption become physician awareness and operational readiness, rather than affordability.
Currently, roughly 75 to 80 of the 260 children’s hospitals have placed at least one order. Of those, ~80% of 2025 revenue came from just 10 accounts.
The hospitals performing best share a recognizable profile: they have written insurance policy coverage for the majority of their patient population, they have a physician champion who actively supports the therapy, and they have dedicated clinic time set aside each week specifically for IB-Stim treatments.
Since the Category I CPT code became effective in January, these high-performing hospitals have been performing even better than management expected, something the CEO indicated will be discussed in more detail during May’s earnings call.
While this revenue concentration introduces some risk, it also serves as a clear proof of concept. The hospitals that already have the right conditions in place are seeing a meaningful increase in patient volume, demonstrating how the model can scale once the necessary infrastructure is established.
To support that expansion, the company is now working to increase its commercial footprint, including expanding digital marketing efforts, strengthening its clinical education teams, and adding Medical Science Liaisons (MSLs) who engage directly with physicians and help move the therapy closer to a frontline treatment.
Management has deliberately avoided hiring a large sales force too early. Without broad insurance coverage in place, scaling the commercial team aggressively would primarily increase costs without meaningfully accelerating adoption. Instead, the company is taking a measured approach, expanding its commercial presence as payer coverage grows and as hospitals become operationally ready to treat patients at scale.
The Category I CPT Code: Why It Changed Everything
To understand why NeurAxis’s Category I CPT code is such a pivotal moment for the company, you first need to understand a simple but frustrating reality about how healthcare in the U.S. actually works.
Getting FDA clearance for a medical device doesn’t mean doctors will use it. It doesn’t mean hospitals will offer it. And it certainly doesn’t mean anyone will get paid for it. FDA clearance is permission to exist. It’s not permission to operate at scale. For that, you need the reimbursement infrastructure, and the most critical piece of that infrastructure is a CPT code.
CPT stands for Current Procedural Terminology. It’s a standardized numerical system, maintained by the American Medical Association, that assigns a unique code to every medical procedure performed in the U.S. When a doctor treats a patient, their clinic submits a claim to the patient’s insurer identifying exactly what was done using that code. The insurer looks up the code, checks whether it’s covered under the patient’s plan, and processes payment accordingly.
Every CPT code falls into one of three categories, and the distinction matters enormously.
A Category III code, which is what IB-Stim had until January 2026, is a temporary, tracking code assigned to emerging technologies. It signals to the healthcare system: this procedure exists, but it’s new and not yet widely adopted. Many insurers refuse to reimburse procedures under Category III codes at all or handle them on a case-by-case basis with no predictable outcome. For hospitals and physicians operating under a Category III code, prescribing a treatment is essentially a gamble. They might treat a patient and get paid. They might treat a patient and spend months fighting the insurer over a claim. Many simply choose not to bother.
A Category I code is the gold standard. It’s the permanent, universally recognized classification used by Medicare, Medicaid, and commercial insurers as the basis for coverage and reimbursement decisions. It signals that a procedure has achieved broad clinical acceptance, is supported by robust evidence, and is in widespread use. Crucially, it’s recognized automatically by hospital billing systems, insurance processing software, and every administrative layer in between. When a hospital submits a claim under a Category I code, it goes through the same standardized pathway as any routine procedure. No arguments, no ambiguity, no administrative friction.
Earning a Category I code is extraordinarily difficult. The AMA’s CPT panel requires, at minimum, five peer-reviewed publications from five different research groups. It requires at least 300 trained providers already actively using the technology in clinical practice. And it requires convincing a panel of experts that the procedure represents something genuinely novel, with no adequate equivalent already in the system.
The cruel irony is that you have to meet all of those requirements before you get the code, but without the code, getting providers to adopt the technology in the first place is much harder. As Brian Carrico has put it, it’s almost like the car before the horse. You have to get 300 trained providers using a technology for which they receive no billing credit, in a healthcare system where physician time is measured and compensated down to the individual procedure.
NeurAxis began this process roughly six to eight years before the code took effect. The Category I application was submitted in mid-2023. The code was approved in October 2024 and became effective January 8, 2026. From idea to implementation: almost a decade.
But once earned, it cannot be taken away.
The RVU problem
Under the Category III code, placing an IB-Stim device generated zero RVUs for the treating physician.
RVU stands for Relative Value Unit. It’s the metric by which the vast majority of hospital-employed physicians, including essentially every pediatric gastroenterologist at a children’s hospital, are evaluated, compensated, and bonused. Every procedure in medicine is assigned to an RVU value. An office visit might be worth one RVU. A colonoscopy might be worth four or five. At the end of the year, a physician is expected to have accumulated a certain total. If they fall short, they may not receive their bonus. If they consistently fall short, it affects their standing.
Under the Category III code, a physician who placed an IB-Stim device was, in Brian Carrico’s words, basically volunteering their time. They were spending 15 minutes placing a device, taking on the administrative burden of managing the claim, and receiving absolutely nothing in return from their employer’s perspective. It’s not that these physicians didn’t believe in the technology. Many did and used it anyway. But the system was structurally penalizing them for doing so.
With the Category I code, every IB-Stim placement generates 1.5 RVUs. That may sound modest, but consider the math: two new patients per week equals roughly 600 RVUs per year. For a pediatric gastroenterologist, that’s a meaningful contribution to their annual target. The financial incentive has flipped from negative to positive.
All in all, the Category I CPT code represents one of the final pieces of infrastructure NeurAxis spent more than a decade building, and potentially the hardest one to obtain. It doesn’t guarantee commercial success, but it removes the largest structural obstacle that had been limiting adoption since the device first received FDA clearance. Physicians are now incentivized rather than penalized for using the therapy, hospitals can process claims through standard billing systems, and insurers are evaluating the treatment within the framework used for established medical procedures rather than experimental technologies. For the first time, the regulatory approval, clinical evidence, reimbursement infrastructure, and commercial strategy are aligned. What remains now is execution: expanding payer coverage, increasing physician awareness, and scaling the commercial footprint to support broader adoption.
The Importance of Covered Lives
When a child arrives at a children’s hospital and the physician decides that IB-Stim is clinically appropriate, the hospital submits a prior authorization request to the patient’s insurer.
If that insurer has a written coverage policy in place, approval is typically granted and the hospital proceeds with treatment, with reimbursement levels that management has described as outstanding.
If the insurer doesn’t have a written policy, the request is almost always denied, regardless of the physician’s judgment, the patient’s symptoms, or the clinical evidence supporting the therapy. The physician has no real recourse. The hospital receives no reimbursement. The patient goes home without treatment.
But the impact goes beyond the individual patient.
Brian Carrico has emphasized that physicians are often reluctant to offer a therapy selectively to only a portion of their patient population. Pediatric gastroenterologists typically want to treat all or most of eligible patients, not just the subset whose insurance happens to cover the therapy. If a physician sees five patients in a week who would benefit from IB-Stim but only one of them has a plan that covers it, many physicians simply choose not to introduce the therapy at all rather than create an inequitable situation for the other families.
In practice, this means that a single large insurer refusing to issue a written policy can suppress adoption for an entire clinic, not just for the patients on that particular plan. It’s one of the main reasons the company is now laser-focused on expanding insurance coverage across large national payers.
As of early 2026, NeurAxis has ~100M covered lives across around 20 insurance policies. Brian Carrico has noted that roughly 70-80M of those lives fall under genuinely permissive policies, meaning physicians have broad discretion to treat eligible patients without burdensome clinical requirements. The remaining 20-30M lives are technically covered but subject to restrictive criteria, such as requiring the patient to have experienced symptoms for nine months and to have already failed multiple medications before approval is granted. Most patients ultimately meet those criteria anyway, but the administrative burden and the signal those policies send can still slow adoption. Improving those restrictive policies is therefore another active priority alongside winning entirely new payers.
Medicaid coverage follows a different path.
Through the federal EPSDT mandate (Early and Periodic Screening, Diagnostic, and Treatment), Medicaid programs are generally required to cover treatments with a Category I CPT code when there is demonstrated medical necessity. As a result, Medicaid already covers IB-Stim in most states, although the pediatric population treated so far has skewed heavily toward commercially insured families, which represent roughly 80-85% of current patients.
That leaves the commercial insurers as the main remaining bottleneck.
Management estimates that ten to twelve additional payers stand between the current position and 200M covered lives, which would effectively unlock the majority of the pediatric market. These remaining payers include United Healthcare, Aetna, Cigna, Centene, HCSC (which covers Illinois through Oklahoma and Texas), Blue Cross North Carolina, Blue Cross Alabama, and several regional Blue Cross plans.
The CEO has been clear that the company is already in active communication with nearly all of these payers, either directly or through academic medical societies advocating on behalf of the therapy. The exact timing of each decision remains outside the company’s control, but the strategic position is very different from what it was only a year ago. He obviously couldn’t share any non-public details with me, but from his tone, I could tell he’s highly confident about new announcements over the coming months or quarters.
This reimbursement expansion represents the final major step before the business reaches its true mass scale phase. Once the remaining payers issue policies, the revenue opportunity that’s currently already visible only at a handful of high-coverage accounts becomes accessible across the entire hospital network simultaneously.
“I think the biggest misconception about our company is how big this opportunity really is, and how close we are to reaching mass scale.”
Serviceable Addressable Market
The opportunity NeurAxis is currently pursuing is already substantial before considering any pipeline expansion.
As mentioned before, in the U.S. alone, roughly 6M children suffer from functional abdominal pain associated with IBS. About 600k of them meet the clinical threshold of debilitation. At ~$4,800 per treatment course, that population alone represents a $3B addressable market for the IB-Stim therapy.
NeurAxis has also received FDA clearance for Functional Dyspepsia in pediatric patients, which adds ~400k additional debilitated children in the U.S. Applying the same treatment economics brings another $2B of addressable market.
Taken together, the pediatric indications currently being targeted represent a $5B serviceable addressable market in the U.S. alone. Importantly, this is the opportunity the company is actively pursuing today. Everything beyond that represents upside rather than a requirement for the investment case to work.
Additional pediatric indications such as Cyclic Vomiting Syndrome and post-concussion syndrome are still in earlier stages of research but could eventually expand the pediatric opportunity meaningfully. Beyond pediatrics, the adult indications for functional abdominal pain and functional dyspepsia represent an even larger opportunity, estimated at ~$14B, although access to that market will require the completion of dedicated adult clinical trials.
In other words, the $5B pediatric market alone is already large enough to support a meaningfully larger business, especially considering the company’s market cap.
Additional Optionality
The Veterans Administration:
In December 2025, NeurAxis secured a Federal Supply Schedule contract with the U.S. Department of Veterans Affairs and launched its VA commercial effort in January 2026.
The VA operates 180 hospitals across 23 regional networks, and unlike commercial insurance, it does not require payer-by-payer coverage decisions. Once a product is approved within the system, adoption depends primarily on physician education and hospital value analysis committees rather than insurer approval.
Early feedback from the first weeks of activity has exceeded management’s expectations, with the first orders already placed. Any traction here would represent incremental upside to the base pediatric business.
Adult Commercial Market:
The adult market represents the largest long-term opportunity.
NeurAxis already holds FDA clearance for functional dyspepsia in adults, but commercial insurers typically require dedicated adult clinical trial data before issuing coverage policies.
To address this, the company is currently running a randomized, double-blind study at Cleveland Clinic and Stanford University. Management expects usable data within roughly one to two years. If successful, the adult IBS and functional abdominal pain markets together represent an estimated $14B serviceable addressable market.
RED Device:
NeurAxis also holds FDA clearance for a second product, the Rectal Expulsion Device (RED), a diagnostic tool used in adult gastroenterology for chronic constipation and evacuation disorders.
RED already has a Category I CPT code and Medicare reimbursement of ~$463 per procedure, addressing an estimated $2B market. Commercial activity was temporarily paused following a CPT coding change in early 2026, but management expects clarity in the future.
Because RED shares the same call point as the adult IB-Stim opportunity, it could eventually increase revenue per sales interaction with minimal additional commercial infrastructure.
The Manufacturing Advantage
What makes this opportunity particularly interesting is how simple the manufacturing side actually is.
The IB-Stim device is produced through a contract manufacturing partner located in Indiana, operating out of a ~69,000 square-foot facility dedicated to medical device manufacturing. The site includes offices, assembly lines, warehouse space, parts processing, and quality control infrastructure. It operates under a fully certified quality management system, including ISO 13485:2016 certification, FDA registration, and ITAR registration.
In 2022, the facility also built a dedicated environmentally controlled production room specifically for NeurAxis, where all materials used in the manufacturing process are stored and assembled.
The key point, however, isn’t the infrastructure itself. It’s how easily the system scales.
Today, the company’s entire commercial output is produced within a single shift in a single day. When I asked CEO Brian Carrico directly whether the company could support $50-100M in annual revenue today if demand suddenly required it, his answer was straightforward: yes.
Scaling production to that level would basically require adding additional shifts and eventually installing another machine, both of which are “very easy things to do.”
This matters more than it might initially appear. Manufacturing constraints are often one of the biggest bottlenecks for medical device companies approaching a commercial inflection point. Companies can find themselves with growing demand but limited production capacity, forcing expensive facility expansions or long equipment lead times.
NeurAxis doesn’t face that problem.
The manufacturing process is controlled, repeatable, and already capable of scaling significantly from current levels without major capital investment. According to management, meaningful increases in production could be achieved within roughly 90 days if necessary, and the company maintains approximately one year of inventory on a rolling basis to ensure supply stability.
For a company potentially approaching a rapid revenue ramp, the ability to scale production quickly and efficiently is a significant structural advantage.
Numbers & Valuation
Before discussing where NeurAxis could go, it’s worth being clear about where the company stands today.
In 2025, NeurAxis generated less than $4M in revenue. The company currently carries a market cap of roughly $70M, or about $125M on a fully diluted basis. On the surface, those numbers don’t look impressive. In fact, if one evaluates the company strictly through the lens of trailing financial metrics, it’s easy to dismiss the story entirely.
But that framing misses the point of where NeurAxis sits in its commercial lifecycle.
Applying a traditional revenue multiple to a medical device company that has just received its permanent CPT billing code, has recently surpassed 100M covered lives, and is only beginning to execute the commercial strategy it spent more than a decade building toward, is somewhat like appraising a restaurant the day it opens and concluding it is overpriced because it hasn’t yet served many customers.
The right question isn’t what NeurAxis is worth based on what it has already done. The right question is what a first-mover medical device company with FDA clearance, a permanent Category I CPT code, extremely high product margins, and no approved competing therapies could be worth if it begins capturing even a small portion of a well-defined multi-billion-dollar market.
What ultimately determines the value of this business is how quickly the reimbursement infrastructure translates into patient volume.
Unit Economics and Path to Profitability
As explained before, each IB-Stim device has margins in the low-90% range. Reported gross margins in 2025 were lower, around 84%, largely because a meaningful number of devices were distributed through the patient assistance program at reduced or zero cost while reimbursement coverage was still developing.
As commercial coverage expands and more treatments are reimbursed at full price, that mix should improve mechanically.
CEO Brian Carrico has indicated that the company could reach operating breakeven at $10-11M in annual revenue. Given the margin profile of the business, incremental revenue above that level should translate into operating leverage relatively quickly.
On the balance sheet, the company currently holds ~$5M in cash, which represents 10 to 12 months of runway at current burn rates. Management has acknowledged that a small capital raise remains possible depending on how quickly the revenue ramp materializes. The company also maintains an ATM program that allows shares to be issued opportunistically without a formal secondary offering. Given the trading volume and price appreciation the stock experienced earlier in 2026, it’s possible the company has already utilized a portion of that program. The upcoming earnings call should provide more clarity.
Even so, the capital requirements of the business remain modest relative to most medical device or biotech companies. The clinical evidence already exists, the reimbursement infrastructure is already being built, and manufacturing capacity is very easy to scale.
This is a business that could become self-funding relatively quickly if the commercial ramp develops as expected.
The Pediatric Market Opportunity
For valuation purposes, I’ll focus only on the opportunity NeurAxis is currently already pursuing: the pediatric market for Functional Abdominal Pain associated with IBS and Functional Dyspepsia.
Together, those two indications represent a $5B serviceable addressable market in the U.S.
NeurAxis is currently the only FDA-cleared therapy for either condition. There is no approved drug and no competing device addressing the same clinical problem.
This market isn’t theoretical. The patients exist and are already showing up at children’s hospitals every day. The primary constraint on revenue today isn’t demand, but insurance coverage.
As coverage expands, the accessible portion of that market expands with it.
At 0.5% penetration, NeurAxis treats ~5,000 patients per year and generates ~$25M in revenue.
At 1% penetration, ~10,000 patients and $50M in revenue.
At 2%, the level Brian Carrico believes could make NRXS an attractive acquisition target, ~20,000 patients and $100M in revenue.
At 5%, $250M.
None of these scenarios require the company to do anything unrealistic. They require only that insurance coverage reaches the remaining population and that physicians do what they’re already doing in the handful of accounts performing well today.
Valuation Context
If you’re a regular reader, you already know that I don’t believe in building elaborate financial models to justify an investment thesis. If the only way to make a stock look cheap is to chain together a dozen optimistic assumptions across a fancy DCF, the stock probably isn’t cheap enough. What I want to see is a situation where even conservative assumptions produce an outcome that makes today’s valuation look obviously too low.
In my opinion, NeurAxis is that situation.
The sensitivity table below captures the range of outcomes across both penetration levels and P/S multiples, using a conservative assumption of 25M shares outstanding to account for potential future dilution (vs. 18M currently fully diluted).
One important note about the framework used: I generally don’t like valuing companies purely on a P/S multiple. In most situations, revenue multiples can be misleading.
Here, however, I believe it could be appropriate for two reasons. First, the company’s gross margin profile is already exceptionally high, meaning a large portion of incremental revenue should eventually translate into operating leverage. Second, Brian Carrico has acknowledged that if the company begins to meaningfully penetrate the pediatric market, it’s likely to become an acquisition target well before it reaches full maturity.
Importantly, he also noted that he wouldn’t even take the call if he got an acquisition proposal today. But the implication is clear: if the commercial ramp materializes, this company may ultimately be valued in the context of a strategic acquisition rather than as a long-term standalone business.
Note: These scenarios aren’t predictions but rather a framework to understand how modest market penetration could translate into different valuation outcomes.
Those figures exclude any contribution from the adult market, the Veterans Administration channel, or any additional pipeline indications.
It’s been a while since I’ve come across a microcap with such a compelling risk-reward profile.
The story is significantly more de-risked today than it appears to a first-time reader. It’s exactly that gap between perception and reality that’s creating the opportunity. When most investors encounter NeurAxis for the first time without context, the surface-level read causes them to move on in thirty seconds. I know this because that’s exactly what I did a few months ago. What they miss is a company that spent a decade methodically building the evidentiary and reimbursement foundation that most medical device companies never successfully complete.
Brian Carrico said in a recent interview:
“I still think this is a highly undervalued company for the opportunity, and I think when we’re able to talk about Q1 everybody will understand what I’m talking about.”
I personally believe NeurAxis could reach at least 2% market penetration of the pediatric SAM by 2028. Look at the 2% row in the table above. That’s multibagger potential from today’s price.
As always, every investment carries risks, and we’ll touch on that later. In this case, though, I think the risk-reward is highly attractive.
Catalysts
One of the more compelling things about this thesis is that the catalysts aren’t really that speculative. They’re not contingent on a drug trial reading out, a regulatory decision going the right way, or any type of binary situation.
Many of the catalysts here are essentially related to the sequential completion of a reimbursement buildout that’s more than halfway done, against a backdrop where every structural prerequisite for commercial success is already in place.
1. Insurance coverage announcements
In December 2025, NeurAxis announced that Anthem had issued a written coverage policy covering IB-Stim across ~45M lives spanning 16 to 17 Blue Cross plans. The stock responded immediately and sharply, moving up in a way that reflected the market beginning to understand the magnitude of what a single payer’s decision means for the addressable revenue opportunity.
Each announcement of a new written coverage policy from a major commercial insurer is a discrete, press-released event that could act as a catalyst for the stock price. Each one expands the revenue-generating population by millions of lives. Each one makes the remaining holdouts progressively harder to justify on clinical or economic grounds. And unlike most catalysts in microcaps, these aren’t binary events where failure is almost a 50/50 outcome.
The question here is more about timing, not whether the coverage will eventually arrive. Brian Carrico has been clear that conversations are ongoing and that it should happen sooner or later over the next few quarters. That’s one of the final pieces of the puzzle.
2. Upcoming Earnings Calls
The earnings call scheduled for March 19 will be the first opportunity for NeurAxis to discuss, even if only partially, the post-Category I and post-Anthem commercial environment. The CEO has indicated he expects to share early observations from Q1 2026 during that call, which should give investors their first quantitative glimpse of what the commercial inflection might look like in the revenue line.
As of mid-February 2026, Brian has already stated publicly that he is very pleased with what he is seeing and that accounts operating with the Category I billing code and strong insurance coverage are performing better than expected.
The May earnings call, which will cover Q1 2026 results in full, is probably the one when investors will begin to understand what he has been signaling over the past year. Together, these two calls represent the point where the investment thesis could begin to transition from analytical to evidential, from a narrative about what should happen to one about what’s already happening.
Also, sooner or later, NeurAxis is expected to eventually begin providing formal revenue guidance once enough payer coverage data is available to build a reliable forecast.
3. VA channel ramp
The Veterans Administration channel launched on January 1, 2026, following the Federal Supply Schedule contract awarded in December 2025. Brian Carrico has indicated he expects to have a meaningful update on VA traction by around July 2026. The early signals from the first six weeks of activity exceeded his expectations, with the first order already placed and the learning curve proving shorter than anticipated.
A positive VA update in mid-2026 confirming that the channel is building meaningfully would introduce an entirely new revenue stream into the model that the market is currently valuing at zero.
4. Adult RCT data
Brian Carrico estimates usable data in one to two years. Positive results would open the door to pursuing commercial insurance coverage for the adult functional dyspepsia and eventually functional abdominal pain populations, unlocking an addressable market that is even larger than the entire pediatric opportunity currently being commercialized.
This is a longer-dated catalyst, and the thesis doesn’t require it. But for investors with a multi-year horizon, the adult RCT represents the potential for a step-change in the TAM at a point when the pediatric business may already be generating meaningful revenue.
5. Increased Awareness
This last catalyst is the least precise but arguably the most powerful in terms of share price impact, especially in a somewhat illiquid stock.
NeurAxis is currently followed by a very small number of sell-side analysts and is largely unknown outside a narrow circle of microcap focused investors. As the revenue inflection becomes visible in reported financials, as coverage announcements accumulate, and as all the other catalysts materialize, the story will reach a broader audience.
Management has also been meeting with private investors to spread the thesis. When I met Brian a few days ago, he said he had been in twelve investor meetings in the previous two days alone.
Risks to the Thesis
No investment is without risk, and intellectual honesty requires laying them out plainly rather than burying them in qualifications.
I asked Brian Carrico directly what keeps him up at night. He isn’t particularly worried about the clinical story, the competitive landscape, the manufacturing capacity, or the reimbursement trajectory. The risks he does acknowledge are specific, manageable, and in most cases already being actively addressed.
A CEO who has spent a decade building toward a commercial inflection and cannot identify a long list of existential concerns is either deluded or genuinely operating from a position of strength. Based on everything I’ve seen, I believe it’s the latter.
That said, here are the risks I think deserve serious consideration.
1. Insurance Coverage Concentration and Timing
As an important catalyst for the thesis to materialize, this also represents a risk.
The entire commercial model depends on a relatively small number of large insurance payers issuing written coverage policies. If some of the largest remaining payers, United Healthcare, Aetna, or Cigna in particular, delay their decisions significantly or issue restrictive policies rather than permissive ones, the revenue ramp slows proportionally.
The timing of these decisions is almost entirely outside NeurAxis’s control. Payers don’t announce review schedules in advance, decisions can arrive at any point in the year, and there’s no formal appeals process available to a device manufacturer that believes a denial is clinically unjustified. NeurAxis can build relationships, provide evidence, and point to the Anthem policy as a template. It cannot force a decision.
However, the incentives for payers are definitely in place. Functional abdominal pain disorders in children often lead to repeated physician visits, diagnostic testing, and medication trials that frequently fail to deliver durable relief. A therapy that can reduce those downstream healthcare costs while improving patient outcomes is economically attractive to insurers. The pediatric nature of the indication also matters. Payers tend to apply less restrictive coverage policies when treatments address conditions affecting children, particularly when the clinical evidence base continues to expand.
What makes this risk more manageable today than it was eighteen months ago is the Category I CPT code and the Anthem decision, which together establish a strong market precedent. The evidentiary bar remaining payers would need to clear to justify continued exclusion is rising with every independent study published, every guideline update, and every major children’s hospital that adds IB-Stim to its standard of care.
2. Cash Runway and Dilution
If the insurance coverage buildout takes longer than expected to translate into meaningful revenue, NeurAxis will likely need to raise additional capital before reaching breakeven. Even if the ramp progresses as anticipated, the company may still choose to raise a modest amount of capital opportunistically to accelerate its commercial expansion.
Brian Carrico has been transparent about this possibility and has consistently framed any potential raise as dilution-sensitive.
Importantly, the valuation scenarios presented in my table already assume a fully diluted share count of 25M shares, which incorporates a level of dilution meaningfully higher than what the currently authorized ATM program would imply. In other words, the potential impact of future capital raises is more than embedded in my thesis.
3. Single Needle Supplier
The needle component used in the IB-Stim device is currently sourced from a single supplier based in Geneva, Switzerland. It’s the only non-U.S. component in the device, and its concentration in a single source introduces a degree of supply chain risk.
To Brian’s credit, he raised this point unprompted and described it as an active priority. NeurAxis is currently working to qualify a second needle supplier, which would remove the single-source dependency. That said, he also noted that the existing supplier is a very large company with operations across several countries, which significantly reduces the probability of a disruption.
The current tariff exposure on the needles is irrelevant.
4. Revenue Concentration
Approximately 80% of 2025 revenue came from just 10 accounts. That concentration is a natural consequence of where the company is in its commercial development. However, management indicated that this dynamic is likely to persist for some time.
The hospitals that already have the full setup, insurance coverage, Category 1 CPT reimbursement, a physician champion, and dedicated IB-Stim clinic time tend to treat a large number of patients and therefore account for a disproportionate share of volume. In other words, the model naturally concentrates revenue in the most advanced and active accounts.
Over time, this risk should diminish as the account base broadens and more hospitals reach that same level of adoption.
5. Small Sales Force
NeurAxis currently operates with three dedicated pediatric sales representatives, four VA representatives, and a small number of MSLs being added as coverage expands. For a company addressing 260 children’s hospitals across the U.S., that’s a lean team.
The commercial strategy is predicated on the idea that insurance coverage does most of the selling, and that a small, deeply experienced sales force is sufficient to support adoption once the reimbursement infrastructure is in place. The evidence from the Centers of Excellence suggests this is correct in high-coverage markets.
The risk is that the sales force becomes a bottleneck as coverage expands rapidly. If multiple large payer decisions arrive in close succession, the ability to rapidly educate, onboard, and support newly eligible accounts across a broad geography could be stretched.
Brian Carrico has indicated that they’re adding commercial resources in advance of coverage expansion rather than reactively, which is the right approach, but execution risk here is real.
All in all, it’s always important to acknowledge the risks an investment faces, especially in a microcap stock. My thesis isn’t that NeurAxis carries no risks, but rather that the potential reward appears to be meaningfully larger than the risks currently being priced in by the market.
Final Thoughts
Most medical device companies spend years trying to prove that their technology works. Others receive FDA clearance but struggle to generate enough clinical evidence to convince insurers to reimburse it. Many never manage to navigate the complex path from scientific concept to a fully functioning commercial infrastructure.
NeurAxis appears to have completed most of that journey.
Over the past decade, the company has quietly built the foundations required for a medical device to scale. These weren’t small achievements. They were exactly the milestones that most early-stage medical device companies struggle to reach.
When I spoke with the CEO earlier this week, one point came up repeatedly: the biggest misconception about NeurAxis isn’t whether the technology works, it’s how close the company already is to its commercial phase.
In his words, the company is “on the five-yard line.”
What I appreciated most about the conversation, however, was the focus on execution.
Brian emphasized that NeurAxis has spent almost a decade moving through the milestones required for a medical technology to mature, and that the company has delivered on every major objective it set along the way. The goal now isn’t to reinvent the business model but simply to execute on the final steps: expanding payer coverage, increasing physician awareness, and scaling adoption across the hospital network.
As a final note, the company’s capital structure and ownership profile are also worth mentioning.
Institutional ownership remains relatively low, with most of the shareholder base composed of insiders and retail investors. As Peter Lynch argued, many of the best multibagger opportunities are found before institutional investors begin paying attention. Whether that ultimately proves true here remains to be seen, but the current setup suggests the story may still be early in its discovery phase.
Interestingly, one of the largest shareholders is Brian Hannasch, the former CEO of Alimentation Couche-Tard, who first invested in the company in 2018 and has continued adding shares over time. While the CEO’s direct ownership is quite small, the executive team does receive performance-based compensation, which ties their incentives to the long-term success of the company.
Ultimately, the investment case for NeurAxis comes down to this:
Today, the market is valuing the company at ~$70M.
If NeurAxis succeeds in capturing even a small portion of the opportunity it is pursuing, that valuation could look dramatically undervalued in hindsight.
Of course, the path won’t be perfectly smooth. But after studying the company and speaking with management, my conclusion is straightforward: the groundwork has been laid.
Now we find out how quickly the commercial ramp can follow.
For investors willing to accept the risks that come with microcaps, the risk-reward here appears compelling.
Thanks for reading!
Disclaimer: As of this writing, M. V. Cunha holds a position in NeurAxis (NRXS) at $5.57/share.
Disclaimer: The views expressed in this article are solely my own and are based on my personal research and analysis. This content is for informational purposes only and should not be considered financial, investment, or legal advice. Always conduct your own research before making investment decisions.
Great analysis and explanation - thank you for your efforts!
Thanks well done. Medical devices typically come with low multiple premiums. Hopefully this is a take out in 2029 or so, might be a slow grind up until then.