electroCore (NASDAQ:ECOR) reported second-quarter financial results on Thursday. The transcript from the company's second-quarter earnings call has been provided below.
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The full earnings call is available at https://electrocore.zoom.us/webinar/register/WN_nQ5RpfdYTtOoN0cL50CgsQ#/registration
Summary
electroCore reported a 28% year-over-year increase in quarterly revenue to $9.5 million, driven by growth in U.S. prescription sales and direct-to-consumer sales.
The company raised its 2026 revenue guidance to greater than 30% growth, attributing this to strategic changes in sales force structure and operational improvements.
GAAP net loss improved by 17% to $3.1 million, while adjusted EBITDA improved by 26% year over year.
Sales of the Quell product line grew significantly, with a 700% increase year over year, contributing $1.3 million in the second quarter.
The company is aiming for positive adjusted EBITDA by Q3 2027, supported by strategic investments in sales and marketing and operational efficiencies.
Operational highlights include the restructuring of the sales team, doubling sales regions, and expanding into new markets like first responders and federal channels.
Management expressed confidence in the company's trajectory and emphasized the importance of disciplined execution and strategic focus on non-pharmaceutical therapies.
Full Transcript
OPERATOR
Greetings and welcome to the electroCore second quarter 2026 earnings conference call. At this time, all participants have been placed in listen-only mode. Please make sure to mute yourself. A question-and-answer session will follow the formal presentation. As a reminder, this conference is being recorded. Earlier today, electroCore published results for the second quarter ended June 30, 2026, and the press release is available on the Company's website.
Before we begin, I would like to remind everyone that members on the call will make forward-looking statements within the meaning of the federal securities laws made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Any statements that are not historical facts should be deemed to be forward-looking, including, without limitation, any guidance, the Company's outlook on third quarter and full year performance, and its path to profitability.
These statements involve material risks and uncertainties that could cause actual results to differ materially from those anticipated. For a list of risk factors, please see the Company's filings with the Securities and Exchange Commission. electroCore disclaims any obligation to update these statements except as required by law. This call contains time-sensitive information accurate only as of today, August 6, 2026. Joining us on today's call from electroCore are Dr. JP Errico, one of the Company's founders, investor, and Independent Chairman of the Board of Directors; Joshua S. Lev, Interim President and Chief Financial Officer; and Michael Fox, Chief Operating Officer. It is now my pleasure to turn the call over to Dr. JP Errico, electroCore's Founder and Independent Chairman, for opening remarks. Dr. Errico.
JP Errico, Founder and Independent Chairman
Thank you, operator. Good afternoon, everyone, and thank you for joining electroCore's second quarter 2026 earnings call. It is a pleasure to have the opportunity to speak with you all again about the transformation and momentum underway at electroCore. As Chairman of the Board, I have been working closely with Josh Lev, Interim President, and Mike Fox, COO, for the entire quarter. Josh has kept the company focused and steady while skillfully managing investor relations, while Mike has moved quickly to make important operational changes, including a major transformation of our sales force.
Change is never easy, and managing change without disruption takes real skill. Today, I am proud to say that Josh and Mike have helped us make meaningful changes while keeping the organization moving forward. You are about to hear the results shortly, but we are entering a new phase of electroCore, one defined by accelerating revenue growth and improving operating leverage. Today we are raising our 2026 revenue guidance to greater than 30%. We are doing so while showing improvement in profitability, with GAAP net loss in the quarter improving by 17% to 3.1 million from 3.7 million in the prior year and adjusted EBITDA improving 26% year over year and 25% sequentially. This improvement comes as we deliberately invested roughly 1 million this quarter in initiatives designed to accelerate future growth. We now believe that this trajectory puts us on a path to achieve positive EBITDA in 2027. To me, that is what disciplined execution looks like: investing in durable growth opportunities while staying disciplined and holding the line everywhere on spending. The Board is extremely pleased with the competency, discipline, and leadership Josh and Mike have demonstrated in delivering this execution.
Our strategy has not changed. What has changed is the pace and precision with which we are executing it, and that reflects the leadership Josh and Mike are providing across the company. With that, Josh will provide opening remarks, Mike will walk you through the operational specifics, and then Josh will take you through the quarter and where we go from here. With that, I'd like to turn it over to Josh.
Joshua S. Lev, Interim President and Chief Financial Officer
Thank you, Tom. Good afternoon, everyone. This quarter marked the beginning of a new era for our company as we implemented significant changes across our commercial organization to better position us for long-term success while also improving reported financial performance. That included expanding our sales regions, adding new representatives, and redesigning our incentive structure to improve accountability and cost efficiency over time. While these actions required investment and focus throughout the quarter, we believe they've strengthened our foundation, improved operating efficiency, and enhanced our ability to accelerate revenue growth.
I'll let Mike walk you through the execution in more detail in a moment. Now to our results for the quarter. We reported quarterly revenue of 9.5 million, an increase of approximately 28% year over year, driven by continued growth in U.S. prescription sales, in the VA, and in direct-to-consumer Truvega sales. We restructured this quarter, making the results especially encouraging given the magnitude of the organizational changes. While revenue was flat sequentially, we expect revenue growth to accelerate throughout the year, underpinned by orders already received but not yet impacting revenue, as Mike will explain later on in the call.
Importantly, we showed continued operating leverage, as illustrated by our continued improvement in adjusted EBITDA, up 26% year over year and 25% quarter over quarter. We view this performance as a meaningful win, demonstrating the resilience of our business and our ability to execute while positioning the company for long-term profitable growth. The changes implemented during the second quarter are already showing promise, and given the momentum we are seeing across the business, we are raising our full year 2026 revenue guidance to greater than 30% growth over full year 2025 revenue.
As Dr. Errico mentioned, we believe the operating improvements described today position us to execute our plan of achieving positive adjusted EBITDA in the third quarter of 2027. Turning to the portfolio, the VA continued to be our largest growth driver in the quarter. Prescription gammaCore revenue grew approximately 11% year over year, and approximately 16,400 VA patients have now received the gammaCore device, representing approximately 2.7% penetration of the estimated addressable VA headache market.
When we acquired NeuroMetrix last year, we added two Class II medical devices to our portfolio. The first, Quell Fibromyalgia, is currently marketed as a prescription therapy through the VA. The second, Quell 2.0, is an FDA-cleared over-the-counter device for lower extremity pain. It is not currently in production or for sale, and we may rebrand and relaunch it to direct-to-consumer in the future. At the time of the acquisition, we saw the opportunity to bring a different technology than gammaCore, sold through the same VA relationships, the same reps, the same call points—just a new product to sell.
Since making the acquisition, Quell has become a bright spot in our product portfolio. Sales of the Quell product line were 1.3 million in the second quarter, growing approximately 700% year over year and roughly 30% over the first quarter of 2026. Cumulative Quell revenue is approximately 4 million since our acquisition of NeuroMetrix in May 2025, of which 3.8 million of Quell Fibromyalgia has been sold into the VA. We believe Quell Fibromyalgia continues to be a significant opportunity for the company, where, according to an article in Rheumatology Advisor, the prevalence of fibromyalgia among male and female U.S. service members rose from 2.2% and 2% before deployment to 8% and 11.1% after deployment, respectively. The consistency we're seeing, particularly in fibromyalgia, reinforces our thesis of providing noninvasive bioelectronic therapeutics for patients in need of nonpharmaceutical options. Truvega, our over-the-counter wellness brand, grew approximately 27% year over year to 1.3 million. Media costs expanded as competition in the health and wellness space increased, driving up the cost to acquire customers and reducing our media efficiency ratio to 1.91 in the first half of 2025.
Five competitors bid on Truvega's own branded search terms through the first half of 2026; that grew to eight, a 60% increase in the number of advertisers showing up on the exact terms that should be Truvega's most defensible territory. As a result, the direct cost per click of acquiring a customer increased by roughly 30%. In response to the increased cost of advertising in the space, we reduced our media spend by 2% in the quarter, allowing us to spend less while still driving to achieve year-over-year Truvega growth.
In our first quarter 2026 10-Q, we announced that on May 5, 2026, FDA personnel visited our facility in Rockaway, New Jersey, to inspect matters relating to a follow-up 2017 inquiry on our wholly owned subsidiary NeuroMetrix. On May 27, 2026, the FDA concluded their inspection and issued the Company a preliminary 483 letter citing four observations and two discussion points around how the Company addresses and documents patient complaints. Since receiving the letter, we have responded to the preliminary 483 letter with corrective actions to address the observations and discussion points.
These corrective actions will delay the potential rebrand and relaunch of Quell 2.0 direct to consumer in the near term, but ultimately we believe the changes will result in a stronger product and brand, positioning us to update our claims over time to better reflect the broader benefits of a newly branded product. And now I'd like to turn the call over to Mike to cover some of the specific changes that were implemented during the quarter. Mike.
Michael Fox, Chief Operating Officer
Thanks, Josh. Good afternoon, everyone. At the time of our last earnings call, I was three weeks into my new position. With nearly four months under my belt, I have never been more confident that electroCore is positioned to drive accelerating revenue growth with greater predictability and enhanced profitability. My belief is underpinned by progress on three core priorities which I shared on my first earnings call: expanding VA medical center breadth; increased depth of product utilization within each VA; building out the broader federal channel; and driving operating discipline as we scale. I want to walk you through where each of those stands as of today.
First, within our sales organization, we evaluated how our team was structured against the size of the opportunity in front of us and the conclusion was very clear. We needed to execute a clear plan to expand coverage and assign clear accountability within the sales team. We doubled the number of sales regions and realigned our regional sales directors against that new structure, providing enhanced focus and stronger leadership over smaller geographical areas, allowing our RSDs to coach, lead, and expand advocacy within their assigned regions.
This improved focus provides an immense opportunity for us for increased customer value, stronger patient advocacy, and higher return on investment for the efforts of our sales team. Alongside that, we recruited, contracted, and trained 17 new 1099 sales representatives who are now covering 29 VA medical centers. This is approximately 20% of the national VAMC network. Let me stress this group of new 1099s are not new to the VA market or new to medical device sales.
These are some of the most talented and high-performing sales professionals available within the US market. I personally work with every one of these new colleagues and can assure you they have all built legacies within their accounts and with their customers due to the many years of dedicated top-level customer service resulting in top-tier performance. Their addition reflects the highest number of sales colleagues added to our team in any given quarter and illustrates that not only that we are dedicated to adding strength to every position and process within electroCore, but it showcases that the best are wanting to join in on our mission in a short amount of time. With these newly added 1099s we have opened new VA accounts and expanded the number of new prescribers, representing tangible expansion of our footprint within the VA and Department of Defense accounts. The exact federal channel where we said the opportunity is largest and requires greater penetration. These additions will help diversify our revenue across more facilities. We're currently our top 15 accounts produce 54% of our Q2 VA revenue.
This diversification is important in mitigating concentration risks where a few, albeit large, facilities drive a significant portion of revenue. To that end, in Q2 2026, one of our facilities had a staffing issue in their prosthetics department, creating a backlog of approximately 30 orders from being fulfilled. These orders, while prescribed in the second quarter 2026, were filled and fulfilled in July, pushing roughly $145,000 in revenue to Q3 2026.
The backlog did not eliminate the revenue; we booked it in the current quarter, but it does illustrate the need to expand the breadth of our facilities selling and fulfilling our prescription products so that no one facility can drastically affect our metrics. We're also being disciplined to how we measure and impact that expansion. We've updated our KPIs to focus on performance dashboards so we can see new patients and refill rates at the individual VA account level, allowing us to build a pipeline of future scripts and focus on increasing our refill rate by 30% in every region by the end of 2026.
To make sure this newly expanded team performs, we also revised our sales incentive compensation plan to raise the bar on expectations and accountability. We brought on a new dedicated recruiter whose sole job is filling vacant or underperforming VA territories with proven sales talent. This, in combination with those talented sales professionals who are contacting us directly requesting to join our team, will continue to strengthen our team and results.
These changes are also structured to improve our cost efficiency over time. Redesigning our incentive plan around sustained account-level growth rather than end-of-quarter volume is intended to reduce the sales and marketing expense associated with each dollar of revenue as it takes hold, and the realignment of territories is aimed at eliminating overlapping, inefficient coverage that added costs without building sustainable accounts. Based on the elimination of paying commission to overlapping sales colleagues, we expect to see a reduction in incentive compensation variable expense from approximately 35% of prescription revenue to approximately 27% by the end of 2027, and reduction of overall sales and marketing expense to approximately 54% by the end of 2027 under the new cost structure and territory alignment. Beyond the VA, we made two targeted federal hires this quarter as well. We contracted a 1099 representative with a specific mandate to grow our presence within Kaiser outside of the California market, and we hired a W-2 employee to bring dedicated focus and expertise to Department of Defense and federal workers’ compensation, two channels we've talked about in the past as underdeveloped relative to their potential.
One of the more structurally important moves this quarter was on the contracting side. Moving forward, Lovell Government Services will be the sole Federal Supply Schedule contract holder across all electroCore products in both the VA and Department of Defense markets. That simplifies how our products move through the federal procurement process and positions us to scale federal growth more efficiently. It will also cut roughly 3% of our general administrative expenses and transaction fees associated with direct sales.
This transition for all federal orders processed through Lovell will be completed before the end of this month, August 2026. We also have consultants identified with contracts being finalized to build advocacy and revenue specifically within opportunities identified within first responders, Department of Defense, and Department of Women's Health within the VA. One of our own board members has been directly engaged in the Women's Health Initiative and we're encouraged by the early alignment there.
On TAC-STIM, we're working on adoption outside of active-duty military and broadening our pipeline of potential customers. We're engaged in a study evaluating TAC-STIM during annual SWAT Training Academy scheduled in November of this year. We have also engaged another state police department for SWAT team evaluation and other opportunities to help our first responders in their daily roles. Additionally, we have seen expanded utilization as shown by units purchased and distributed by various domestic law enforcement and U.S. intelligence agencies. Finally, on marketing and enablement, we hired a Marketing Director with vast VA training and marketing experience and we're developing a new training and onboarding curriculum for our existing and expanded sales colleagues that will roll out this quarter in 2026. In parallel, marketing is expanding provider-facing access to the substantial number of our published clinical trials and data sets while updating our materials so they more directly meet the needs of our customers and patients.
We focus on Ultimately, this quarter was about building and growing the infrastructure, people, contracts, data, and process that turns stated strategy of market and specific facility depth into something measurable. We're seeing early signs of success and we believe this impact to grow over time as business progress translates into greater financial impact. I'm confident in the foundation that has been established and actions we implemented in the last 90 days.
We as a company are stronger and have set the blueprint for consistent and sustainable growth. I look forward to sharing more results and KPI metrics as the data develops in the months ahead. With that, I'll turn it back to Josh to walk through the financials.
Joshua S. Lev, Interim President and Chief Financial Officer
Thank you, Mike. For the three months ended June 30, 2026, electroCore reported net sales of $9.5 million compared to $7.4 million during the same period in 2025, an increase of approximately 28% over the prior year. The increase of $2.1 million was primarily driven by growth in net sales of Quell Fibromyalgia products acquired from Neuro in May 2025 and prescription gammaCore, which are sold to the VA, and continued growth in net sales of the company's non-prescription general wellness Truvaga product.
The company expects that the majority of the fiscal year 2026 revenue will come from the VA. Gross profit increased $1.7 million to $8.2 million for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The increase in gross profit is attributed to the increase in net sales. Gross margin decreased from 87.3% to 86.5% for the three months ended June 30, 2026, compared to the three months ended June 30, 2025. The slight decrease in gross margin was primarily due to an increase in our inventory reserve.
Research and development expense was $800,000 in the second quarter of 2026 compared to $500,000 in the second quarter of 2025. The increase was primarily due to increased studies and grants, higher stock-based compensation, and initial costs to develop enhancements to our Truvaga mobile application. Selling, general, and administrative expense was $10.1 million for the three months ended June 30, 2026, compared to $9.4 million in the prior year period.
Sales and marketing increased $1.4 million from the prior year. The increase in sales and marketing expense was primarily driven by approximately $900,000 of variable expenses that supported the $2.1 million increase in net sales, reflecting the operating leverage embedded in the company's platform as it scales. General and administrative expense decreased $700,000 from the prior year. The decrease was primarily driven by $500,000 in bad debt expense associated with a tax receivable recorded in the three months ended June 30, 2025, that did not repeat in 2026, and a reduction in professional fees in the three months ended June 30, 2026.
Total operating expenses in the three months ended June 30, 2026, were $10.9 million compared to $9.9 million in the three months ended June 30, 2025. GAAP net loss in the second quarter of 2026 was $3.1 million compared to $3.7 million in the second quarter of 2025. The decrease in GAAP net loss was primarily attributed to higher gross profit associated with the increase in net sales, partially offset by variable sales and marketing expenses associated with the increase in those net sales.
Net loss per share for the second quarter of 2026 was $0.33 compared to a net loss of $0.44 per share in the second quarter of 2025. Adjusted EBITDA net loss in the second quarter of 2026 was $1.8 million compared to an adjusted EBITDA net loss of $2.4 million in the second quarter of 2025, an improvement of approximately $600,000, or 26% year-over-year. Total cash, cash equivalents, and marketable securities at June 30, 2026, was approximately $10 million compared to approximately $11.6 million at December 31, 2025.
This quarter realized the early infrastructure changes that Mike walked through, including expanded sales regions, growth in sales personnel, and focus on new KPIs driving sustained growth, giving us confidence to raise our previous guidance to greater than 30% annual growth over full year 2025. Based on our current model, we are targeting positive adjusted EBITDA by Q3 of 2027, and we believe we can reach that milestone using our existing capital resources without the need for a dilutive capital raise or additional equity issuances if we can realize the operating leverage described above.
I want to spend a moment on strategy because it is central to how we think about the business. We are changing the narrative from electroCore being a single-product, single-customer story into electroCore as a multi-catalyst platform in bioelectronic medicine. There are three catalysts we will manage and communicate against every quarter. Let me touch briefly on the catalysts ahead for the second half of the year. First, research and development: pursuing new prescription indications supported by more than 30 investigator-initiated trials currently underway across a range of therapeutic areas at no direct cost to the company and building the clinical evidence base for vagus nerve stimulation. Number one, we are working towards an FDA submission for CIPN, or chemotherapy-induced peripheral neuropathy, using our Quell device and are targeting completion by year-end, subject to ongoing analysis. Number two, we have begun working with the Dorn VA Research Institute on real-world studies with the VA to help us aggregate additional information in a post-use environment of our veterans utilizing gammaCore and its possible effects on PTSD.
The Dorn VA Institute is one of the many VA research institutes located across the country, with a primary focus on enhancing veteran clinical outcomes and quality of life. We believe this data will help us create an outline for an expanded label in mild traumatic brain injury and PTSD, expanding gammaCore from a headache therapeutic to a neurological health therapeutic. The real-world PTSD data-gathering work is now underway at the VA site we selected and feeds directly into our Acacia effort.
We'll keep you updated as that program develops. And three, on the product side, we have begun outlining the framework for our next-generation clinical device, which looks to incorporate a form factor that will allow us to capture biometrics as well as provide vagus nerve stimulation. While we are just at the beginning of this process, we are working to develop a form factor that does not require being held by the user and gives real-time feedback in a closed-loop system, which could be valuable in understanding and addressing the specific needs of individual users or patients.
The second catalyst: we are looking to diversify our commercial customer base outside of acceleration efforts within the VA. That includes: 1) push into new markets like TAC-STIM with first responders, such as a study utilizing TAC-STIM during annual SWAT training and other opportunities to help our first responders in their daily roles; or progress with other various domestic law and U.S. intelligence agencies; 2) expanding our Kaiser Permanente efforts outside of California and federal channels, such as DOD and Federal Workers Compensation, through our newly dedicated 1099 and W-2 employee respectively; and 3) new focus on advocacy within the VA's Department of Women's Health, assisted by members of our board. Third, the last catalyst will be our operating results: accelerating revenue, lowering our cost of sales as a percentage of revenue to roughly 54% by the end of 2027, cutting out 3% of general and administrative expenses associated with transaction fees on sales made off of our FSS contract, and progressing towards positive adjusted EBITDA.
We continue to expect operating leverage to improve as our expanded sales infrastructure matures and VA revenue scales against a largely fixed cost base. Before I hand the call over, a word on capital: our approach is disciplined. Our intent is to invest capital behind growth, new indications, and new products, not simply to fund operating burn. In the second quarter of 2026, approximately $1 million of the cash used was towards investment in growth, such as inventory purchases to meet our future sales expectations, capital improvements in our Rockaway facility so that our infrastructure can scale with our growth expectations, and commercial team reorganization to accelerate revenue. That discipline, combined with the momentum across the portfolio and $10 million of cash on the balance sheet, positions us well for accelerating revenue growth and moderating operating losses through the second half of 2026 and gives us confidence in achieving positive adjusted EBITDA by the third quarter of 2027. With that, I'd like to turn the call over for questions.
OPERATOR
Thank you, Josh. We will now open the call for the Q&A session. For those joining via Zoom, there are two ways to participate. First, you may use the Raise Hand icon located at the bottom of your screen. Selecting this will alert the operator that you would like to ask a live question and you will be placed in the queue. Please note that you will remain muted until your question is called. Second, you may submit a question using the Q&A widget, which allows you to type your question directly.
We will monitor and take questions submitted there as well. If time does not permit us to address all questions during today's call, a member of the investor relations team will follow up directly. With that, we will pause briefly to allow the queue to form. Our first question comes from Jeffrey Cohen from Ladenburg Thalmann. Jeffrey?
Jeffrey Cohen, Analyst at Ladenburg Thalmann
Hello. Hi, Josh. So two questions. Firstly, can you give us a better sense of back-half sales and marketing expense as far as the adds? Walk us through the adds again as far as the salesforce. You talked about 72 adds that are 1099s. Are there any adds that are W-2s, and maybe how that relates to back-half spend versus front half, please? Sure. Mike.
Joshua S. Lev, Interim President and Chief Financial Officer
Mike, you want to take that? You want to talk about the changes you're making in the commercial organization.
Michael Fox, Chief Operating Officer
Yeah, that sounds great. Sorry, I'm getting a little feedback. I don't know if you can hear any back talk, but we'll see if we can clear that up for you. Yeah, Jeffrey, great question. As you know, 1099s we pay a percent commission based on revenue. So the additive cost of those 1099s that I said in the discussion points were some of the best in the country—there's no economic additions to that. That's truly just a percent-of-revenue enhancement to our bottom line.
The increase in our regional directors from three to six was an additive cost. However, a few of those were promotions internally because we have a very strong bench internally at the company. So there is very little additional cost to that leadership change. In my opinion, it was a very smart investment and will be easily taken up by the increased revenue based on the focus. And what was your other question, Jeffrey?
OPERATOR
Sorry, Jeffrey, you need to unmute.
Jeffrey Cohen, Analyst at Ladenburg Thalmann
Sorry about that. And then as a follow-up, could you talk about peripheral neuropathy, please? What is the study that you anticipate to finish by the end of the year, and then how do you plan time-wise and pathway to get to an expanded label, I believe?
Joshua S. Lev, Interim President and Chief Financial Officer
Yeah, so great question, Jeff. Thanks so much, and always thanks for the support. So our CIPN work is actually already done. When we acquired Neurometrics in 2025, there was a study already completed around the chemotherapy-induced peripheral neuropathy. When we took a look at the marketplace, we saw a really big unmet need. I think one of the statistics that I saw was roughly 70% of patients that go through chemotherapy have some form of chemotherapy-induced peripheral neuropathy.
So from our point of view, there's no real additional work, per se, that needs to happen on a clinical study point of view. Where we are now is really just organizing the data and presenting it in a way that we can go ahead and submit to the FDA before the end of the year. So from an overall workload perspective, we don't actually anticipate the need right now for any additional data points. It's really more about packaging the information and working with our FDA consultants to go ahead and put it in front of the FDA as an expanded label for the Quell product line.
OPERATOR
Okay, I think Jeffrey has asked all his questions, and we're going to go to our next caller, RK Ramakanth from HC Wainwright.
RK Ramakanth, Analyst
Good afternoon, Josh and Mike, thank you for doing this. A few questions from me. The first one: the prescription gammaCore revenue certainly grew 11% year over year this quarter. However, if my math is correct, sequentially it is down 4%. So how much of that deceleration is the commercial reorg that you have completed or are undergoing versus underlying demand for the product itself at the account level? And if I think about the guidance, which says greater than 30%, which means you've got to reach somewhere close to $23 million in the second half, what needs to get done from here to get to that point?
Joshua S. Lev, Interim President and Chief Financial Officer
Well, so, RK, that was a great question. Thanks so much, and thanks for participating today. I think from our point of view, if you take a look at the gammaCore deceleration, a lot of it has to do, yes, with the change in the new era or the restructuring that we were doing. But I think it's less about the actual changes that were made or the demand, and more that we're changing the KPIs and the way that we're addressing the growth of the business moving forward.
What I mean by that is, historically speaking, we've had a very robust pipeline of refills, and our renewed focus moving forward is not only on the refills, but building up that pipeline of future new patient starts as well. So I think what we saw in this quarter was, number one, a change in philosophy where we have our team starting to shift a little bit of their focus away from what they were doing before to what we're looking for them to do in the future.
The other thing that's important to note is we did have that one hiccup in a particular location in Phoenix with the prosthetics department there. Typically that VA facility has roughly seven prosthetics agents that are fulfilling orders. That number was down because of resourcing issues to one, which created a backlog. And as Mike indicated, that was roughly $145,000 worth of orders which have since been fulfilled, meaning they will be recognized in the Q3 revenue.
But going back to it, you're asking about the deceleration. I'm not so sure that while on paper it was decelerated, it's really more of a philosophy and how we worry about the acceleration moving forward, which also then leads into your second question: where do we think that acceleration is going to come from? Part and parcel of what you saw is the work being done in this quarter to help with the acceleration moving forward. We believe, based off the changes that have been made to the commercial organization — and that's a function of not only the territory reorganization, but also the addition of new 1099s, changing the incentive compensation plan, and focusing on many of the new KPIs that we're going to look for as leading indicators to the growth of our revenue moving forward — that will start kicking in in this quarter, meaning in the third quarter of 2023. And then on top of that, when you think about the greater than 30% growth, the other areas where we've had more focus started towards the back half of the second quarter and are now moving into the third quarter, in areas such as Taxden, where Mike had mentioned that we're increasing our work and our efforts primarily around different forms of federal agencies, both governmental statewide police organizations as well as different intelligence agencies. So Mike, as part of his expansion, has not only hired 17 new 1099s that he's worked with in the past, but some of those people actually have Rolodexes and experience selling primarily into new channels which we really didn't have before. Mike, is there anything else you want to add to that?
Michael Fox, Chief Operating Officer
Yeah, thanks, Josh. Exactly what you said. I would say the one thing to remember, RK, is that we try to do our best in some of these federal channels to have stability, but it depends on the stability of the market you're in. The VA has always been one of those where it's hard to consistently expect quarter-over-quarter stability from them. But I am extremely proud of that 11% you talked about, because in our transition, if you understand our price points of some of our products we offer to the VA — for example, we have a 90-day for a trial run on the product to make sure things work for gammaCore, then we have a one-year and a three-year — through this quarter our new patient starts have been very strong during the transition. The difference is we've had some accounts in some areas that, instead of a three-year prescription, have decided to use the one-year prescription to better align with their fiscal year budgets and to make sure the patients are doing well and are able to maintain therapy before they give them longer-term therapy. So it's not a loss; it's really a reformation of the processes in place for treating patients with migraines and cluster headaches.
When we see more patients being treated by more providers and more accounts behind that number — which is the part I see that you haven't been able to see, RK — I'm extremely happy with what I saw. Would we love that number to be higher? Of course. But to see it at 11%, it's very easy to explain. The second part — why we have the excitement for moving forward — is because of the ability to get into these new accounts and have breadth and depth in so many different accounts.
We can do better, but more importantly, we have a lot of providers in various departments beyond neurology and beyond the headache clinics that treat patients that need our help. And we've hired and are coaching our people up to attain a higher level of expectations. And just like Josh said, there are things outside of the VA, within the Department of Defense, that are extremely of interest. I was just at a Department of Defense meeting yesterday in D.C., and all I can say is the active military need us as much as the VA does.
So that is a focus point. Hopefully that gives you a little clarity.
RK Ramakanth, Analyst
Perfect. But if I may ask another set of questions. We have been used to certain metrics that electroCore has been giving us over the years, so this is a question on that. You certainly disclosed 16,400 cumulative VA patients. I'm also trying to understand, in terms of the facility count or the utilization and reorder metrics, is there some of that information that you can provide on this call? And also, Mike, one of your mandates was trying to get 75% consistent monthly utilization.
Where does that sit, and how far have you been able to get some of the folks really focused on that sort of metric?
Michael Fox, Chief Operating Officer
Josh, I can take the second one for you first. Yeah, RK, great question. It probably is a better answer I could give you territory by territory or account by account. Stabilization, a lot of times, is: have we had the right people with the right message? Because I truly believe in the three Ps — people, process, and product. We've got extremely strong clinical data. Sometimes with 1099s, they were not putting us high enough in their order of products that they were selling.
So we weren't first or second in their bag. We were not getting priority time with the priority customers. That is what we've been focusing on. So sustainability of getting more patients and more excitement is really to drive the advocacy with the individual providers in the VA. That's where I'm seeing the greatest results. We have examples of a few of the 1099s that have come into accounts just in the last six to eight weeks and have gone from zero new patient starts to 12 new patient starts in six weeks, just because we have somebody who understands the VA and understands access and how to get to the key advocates.
And we have definitely enough patients to take care of in the VA. They need us there. Hopefully that gives you a little bit more. But it's hard to say nationally what's the one thing, because I would say the biggest part is the people and the expectations of performance that we're providing. That sound good?
Joshua S. Lev, Interim President and Chief Financial Officer
And then, RK, in terms of where we are in total number of facilities: our goal this quarter really was not to start to open up new facilities. It was to reorganize the team so that we have a plan moving forward for the third quarter. The number of new facilities that we ordered was flat from quarter to quarter. However, the other initiative that we really did start focusing on is we've had roughly — or we've sold, we've said publicly — roughly 200 different VA facilities that have purchased our products over the last few years.
However, the last quarter, when we were going through this process and exercise, we noted that only about a third of those facilities were really focused primarily on selling the Quell product. So one of the things that was a big focus of ours in the second quarter was: how do we expand that adoption of Quell within the existing accounts that have already purchased from us a product, whether that was gammaCore or something else? What we've done is change the training and the philosophy, as well as the focus of some of the sales executives that we have within our organization, whereby some of them now only sell Quell versus selling both.
But the broader point here is our focus this quarter was not to increase the number of facilities purchasing. Really what it was is to set the stage for the third quarter, identify the new targets within different territories, and, again, we have 17 new 1099s that are going to canvas different areas — different facilities that we don't already have — as well as increase adoption of Quell within existing accounts.
RK Ramakanth, Analyst
Thanks, Josh. I have a quick question on Quell. I appreciate you mentioning Quell and how you're managing and trying to grow that sales. In that vein, you grew over 30% sequentially on Quell sales. How are you assuring yourselves that that sort of growth will continue? I know it's a $1.3 million base — it's not a big base — but still, how are you thinking about growth there as you deepen your relationship within each of the VA facilities?
Joshua S. Lev, Interim President and Chief Financial Officer
Yeah. So I'll give you just my two cents, then I'll pass it to Mike to add anything that he feels. But I'd say there's a few things. Number one is we're really changing the way that we're thinking about our sales organization and how they're selling different products and who gets to sell Quell and who does not get to sell Quell. That's number one. Number two is, I had mentioned earlier on the call that the total market according to Rheumatology Advisors, I think it was roughly 2% of active duty military had some form of fibromyalgia before deployment.
That came back to roughly 8 to 11% after deployment. This notion of attracting or going after active duty military, I think is a really, really large opportunity for the organization. We've historically really focused on the VA, but the Quell product line as its own right, when you think about it, doesn't really have so many natural competitors within the market space of bioelectronic therapeutics, specifically for different forms of fibromyalgia or fibromyalgia in general.
So the reason why that's important to us is we've changed our training around the way that we go and train for the Quell product line. Historically, we've had one, call it a product expert. That product expert is now working in conjunction with the rest of the new marketing team that was brought in that Mike mentioned on the resources and the training so that everyone has the ability to sell Quell, as well as what I had said before, opening up a new real target market for us, which is active duty military — not something that we focused on in the past.
Mike, you want to add anything to that?
Michael Fox, Chief Operating Officer
Yeah. Hey, RK, I was just going to say one other quick — a couple quick things. You can never get me to say one thing. First off, on the fibromyalgia side, I think the excitement that we have is if you really look back when we acquired that company, remember a company was established to stand alone on Quell, and if you really look at the market, it could be a standalone product by itself. We're lucky to have it as a second product in our armamentarium.
So this is, in my opinion, a very exciting time to have both products in the VA. Specifically with Quell, just as an FYI, you know, fibromyalgia, back in the literature, back in the day, they called it CHAOS (Chronic Hurts All Over Syndrome). The VA needs that type of treatment and there is a significant number of patients with unmet needs that are medically being treated but not having a quality of life. So there is an opportunity for us to dive deep.
I think the biggest answer to your question of what is our focus — it goes to our example with the Women's Health Department. Women have a very high rate of fibromyalgia versus their male counterparts within the VA and active military. Same is true for migraines. But there's a large business within the VA that is focused on these types of ailments that we have not aligned with as a company as much as we should have prior to my entrance to the company.
So we're focused on the right providers with the right therapy for the right patient. We do that, we're excited about the future with Quell.
RK Ramakanth, Analyst
Perfect. Thank you very much both for taking all my questions and appreciate the deep color that you provided. Thanks.
Joshua S. Lev, Interim President and Chief Financial Officer
Thank you, sir. Thanks, RK. Fazia, why don't we go to you. It looks like you've got a question as well.
Fazia
Yes. Hi, Mike and Josh. Thank you for taking my question. I was just wondering if you can elaborate on how this transitioning to Lovell Government Services as your primary Federal Supply Schedule contract holder will improve the process for VA and DoD customers, and if you can expand on what specific advantages will come with this partnership.
Michael Fox, Chief Operating Officer
Yeah, Josh, you want me to take that and I'll turn it back over to you for some of the contracting side of that?
Joshua S. Lev, Interim President and Chief Financial Officer
Yeah, absolutely.
Michael Fox, Chief Operating Officer
Yeah. So, yeah, Fazia, great question, because there's not a lot of knowledge about the difference between some of the opportunities in the FSS. One of them is to contract and have your products through small disabled veteran-owned groups. The advantage is very simple: the VA has requested a certain percent of their business go through those entities. So we're aligning with what the VA and Department of Defense want. But most importantly for our business, they're the experts in basically processing orders and maintaining harmony within the ordering systems within the federal space.
Not that we weren't doing a good job, but these are the experts at that job. So we were really lucky to have them taking us as a sole source. But also they offer things that we don't have the ability on our own. FSS — they have what's called DAPA, they have ECAT, they also have a web store. They have a lot of other opportunities to help us with active military, such as military treatment facilities and the VAs. And they have a strong relationship in D.C.; they have their own lobbyist firm. It's a really strong — it's not just a distribution network. It is a partnership, partnership. And I've worked with Lovell Government Services in the past with other companies, and they are the best in the country at helping to identify needs of veterans and taking care of those people that need help. So we chose this because economically it makes sense, no question. But we did it also because it makes our business stronger and it helps us do our job of taking care of the VA.
So, Josh, I'll turn over to you if you would like to add anything to that.
Joshua S. Lev, Interim President and Chief Financial Officer
Yeah, I think, look, on the contracting side, on the overall economic point of view, switching over to Lovell is something that we think can really help improve our margins. First and foremost, the way that Lovell gets paid is typically they have a markup to our overall price that we provide to the government. And the reason why that's important to note is when we sell direct from our own FSS contract, there are rebates that come off of that that we were required to go ahead and pay back to the customer.
It's called an IFF. But that being said, those rebates — that all comes out of Lovell's economics, so we don't have to pay that. It comes out of their fee. So incrementally speaking, there's no incremental cost to us because we net the same amount that we would have netted beforehand if we were selling direct. The difference is we keep the rebate. The second piece, which I think is even more substantial, if you will, is whenever we charge a government — and as I'm sure you're familiar with this — the government's prosthetics department typically provides us their credit card.
Every time we have a transaction that we swipe a credit card, it's roughly a 3% fee on all direct sales. Again, when we talk about Lovell's fee, their fee, which is incremental, captures that 3%. So typically what will happen is, on an order that we have from direct, when we go direct from our own contract, we'll have to pay back the rebate and we'll have to pay the transaction fee. When we go directly with Lovell, all of that we keep. Right. We keep that.
So I think that that's an economic benefit. The only, I would say, quote, detriment, if you'll call it that, is when you think about our cash-on-cash cycle and our accounts receivable. Historically speaking, you know, our accounts receivable have been very, very good, and the reason why is because typically we swipe the credit card and then we ship. In this particular instance with Lovell, or with all Lovell orders, what happens is we get the order from Lovell, we ship the product, the VA pays Lovell, and then Lovell goes ahead and pays us.
That extra one or two days is going to change our accounts receivable outstanding. But Lovell has been very, very consistent in paying us well, well, well ahead of what they're supposed to be paying us in terms of what's current and not current. And we don't think it's actually going to be a material change overall in terms of our AR balances increasing. But it is the only real change, I'd say, on the side of the contracting that I wouldn't consider, quote, favorable.
Everything else as part of this is a favorable transaction for the organization. So moving to Lovell, just from an overall economics point of view, is going to be more favorable than it would be if we were going direct through our own FSS contract.
Fazia
Perfect. Thank you so much. I appreciate the color.
Joshua S. Lev, Interim President and Chief Financial Officer
Great. Thank you. Operator, are there any additional questions coming from members of the call? Okay, it looks like we're getting a question here from Jeremy Pearlman. Jeremy asks: You increased your full-year revenue outlook from approximately 30% growth to greater than 30%. Can you break down what's driving the increased confidence? Is the upside primarily coming from gammaCore and the VA, Quell, TRUVAGA, or all three? Mike, you want to handle that one?
Michael Fox, Chief Operating Officer
Yeah, sounds great, Josh. So great question, Jeremy. I know there's a lot of excitement here. So where is it coming from? I would say all of the above that you mentioned. But to put a little color on that, the VA has always been a focus, always will be, for both gammaCore and the growth of Quell. We are excited about the trajectories that we're going to see with both. But the Department of Defense — when we're talking about that downrange, we're talking about military treatment facilities, we're talking first responders, the effects and the efforts we're putting at Kaiser and some new entries.
People were discussing some potentials of TRICARE. I think the big excitement is because we're not just considering things; we're considering a lot of different points as critical access discussions for the quarter that have started to have actual metrics and results. So as discussed before, we have had first responder orders from various SWAT teams. We have intelligence agents ordering product. We do have military treatment facilities make their first order here in the last eight weeks.
So we are seeing fruits of our labor. So that's why the excitement is here. It's not because we have good thoughts. We're starting to see results from our actions. So that's what I would say right now. That's where the excitement's coming from.
Joshua S. Lev, Interim President and Chief Financial Officer
Thanks, Mike. Jeremy continues: The VA continues to be your largest prescription channel. Are you seeing increased utilization at existing VA facilities, expansion into new VA sites, or growth in patients per site? Which of those will be your biggest contributor over the next several quarters?
Michael Fox, Chief Operating Officer
Yeah, Josh, that's a great question, and that's probably the one I love to answer most. Jeremy, the answer is yes. I would say we have the team, we have the focus, we've got the products. So we have touched many VAs over the years since gammaCore has been here and also recently since the Quell addition. But we need to continue to have consistent utilization and advocacy in more accounts at more depth, and we have seen that during the next phase of which we incorporated here over the last 90 days.
So yes, we are going to continue to focus on that which is going to have the biggest impact. I would say when a vast majority of VAs — the majority nationally — are utilizing and we have a significant number of providers utilizing the technology, I may be somewhat happy at that point, but there's always room to grow. But it's a combination of both. We have to delineate the risk by having a few accounts carry large volume. We need to have more accounts with sustainable, consistent volume.
And that's the focus right now. That's going to continue to pay the biggest dividends. Back to you, Josh.
Joshua S. Lev, Interim President and Chief Financial Officer
Thanks, Mike. All right, last question from Jeremy. Should investors expect incremental gross profit to increasingly fall to the bottom line, or do you expect to continue investing aggressively in commercial expansion? So, Jeremy, again, another great question. I would say we do expect gross profit to increasingly fall to the bottom line as revenues continue to expand. We expect that gross profit to continue to drop. We are seeing that we are getting operating margin out of our FNL, and the higher the gross, the higher the net sales that we're able to generate, the more we believe is going to drop down to the bottom line in terms of gross margin.
However, we continue to guide both analysts and investors to model around that 85% gross profit margin. We believe that that number is sustainable definitely in the short to midterm, and that is what we would guide to the analysts. So we keep that pretty much fixed. And then in terms of investing aggressively in commercial expansion, I think Mike has done a lot of explaining of that over the course of the last hour or so on the call. We have taken a lot of steps over the course of this quarter to shepherd us into this new era.
And there's a lot of commercial expansion going on, both in terms of our existing customer accounts, but also in terms of the different areas by which we believe that we can show that expansion. That includes things from federal marketplaces, federal workers' comp, the taxdim examples that Mike had given earlier in different state police departments, SWAT, different intelligence, federal intelligence agencies, and then last but not least, of course, utilizing the knowledge, the data, and the product success that we've been having in Quell and bringing that, as well as gammaCore, to our active duty military.
So with that, that concludes the question and answer section of the earnings call. I appreciate everyone's time today. Thank you to our shareholders for your patience and the continued support, and then of course, most importantly to our team, thank you for showing up every day with discipline and the ambition to help us execute on the strategy and really do the things that are required that will help us achieve our goals and the ambition that the opportunity that is in front of us demands.
So with that, we appreciate everyone's participation in today's call, and we look forward to speaking with you again next quarter. With that, that concludes our earnings call. Thank you, everyone, and have a great day.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company's SEC filings and official press releases. Corporate participants' and analysts' statements reflect their views as of the date of this call and are subject to change without notice.
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