Executive Summary / Key Takeaways

• CeriBell is pioneering point-of-care EEG with its portable system and AI-powered Clarity algorithm, addressing the critical unmet need for rapid neurological assessment, particularly for non-convulsive seizures, in acute care settings like ICUs and EDs.
• The company delivered robust Q1 2025 results, with total revenue growing 42% year-over-year to $20.5 million, driven by strong adoption and utilization in its expanding base of over 550 active accounts, leading to a raised full-year 2025 revenue guidance of $83 million to $87 million.
• CeriBell maintains strong gross margins, reaching 88% in Q1 2025, and expects to remain in the mid-eighty percent range for FY 2025, demonstrating operational efficiency despite potential future impacts from increased tariffs on goods sourced from China, for which mitigation strategies are being actively pursued.
• Strategic investments in R&D are accelerating pipeline expansion beyond seizure detection into high-impact areas like pediatric seizure detection (recently FDA cleared), delirium (Breakthrough Device Designation, FDA submission planned for 2025), and stroke, leveraging the company's extensive EEG database and AI expertise to unlock significant future market opportunities.
• Despite ongoing operating losses due to investments in growth and public company costs, CeriBell possesses a strong liquidity position with $182.7 million in cash and marketable securities as of March 31, 2025, and management expresses high conviction in reaching cash flow breakeven with current cash on hand.

A New Vital Sign: Transforming Brain Monitoring in Acute Care

In the high-stakes environment of acute care, where every second counts, diagnosing and managing serious neurological conditions like seizures has historically been hampered by the limitations of conventional electroencephalography (EEG). Traditional EEG systems are often cumbersome, require specialized personnel for setup and interpretation, and can lead to significant delays in diagnosis and treatment. CeriBell, Inc. is a medical technology company built on the mission to fundamentally transform this paradigm, aiming to make EEG a new vital sign accessible at the point of care.

Founded in 2014, CeriBell developed the Ceribell System, a novel, portable EEG platform designed specifically for the acute care setting. The company's journey began with securing FDA 510(k) clearance for its core hardware – a disposable headband and a pocket-sized recorder – in 2017, enabling its first commercial sales the following year. This was quickly followed by clearance for an early version of its AI-powered algorithm, Clarity, in 2019. These foundational approvals allowed CeriBell to begin addressing the critical unmet need for rapid, accessible brain monitoring in hospitals.

The Ceribell System's core technological differentiation lies in its combination of user-friendly, rapidly deployable hardware and sophisticated artificial intelligence. The disposable headband can be applied within minutes by non-specialized healthcare professionals after minimal training (approximately one hour), a stark contrast to the hours often required for conventional EEG setup. The portable recorder captures EEG signals and wirelessly transmits them to a web-based portal, allowing neurologists remote, real-time access.

At the heart of the system is the proprietary Clarity AI algorithm. Clarity continuously monitors the EEG signal, providing real-time support for clinicians in assessing seizure activity. This AI capability is a significant differentiator, offering quantifiable benefits over traditional methods. While specific, comprehensive head-to-head performance metrics against all competitors are not readily available, the company highlights that its system enables rapid diagnosis and treatment, leading to improved patient outcomes and potentially reducing costly ICU length of stay. The recent FDA clearance of Clarity for pediatric patients (ages 1 and older), supported by data from over 700 patients – noted as the largest validation dataset ever used for FDA clearance of a seizure detection algorithm – underscores the rigor and scale of CeriBell's AI development and validation process.

CeriBell operates as a single reportable segment, focusing its commercial efforts directly on acute care facilities in the United States. The business model generates revenue from two recurring sources: product revenue from the sale of disposable headbands and subscription revenue from monthly fees for access to the Clarity algorithm, recorders, and the portal. In Q1 2025, product revenue accounted for $15.6 million (41% YoY growth), while subscription revenue contributed $4.9 million (45% YoY growth), demonstrating strong performance across both streams. The subscription component, notably, boasts a 97% gross margin and is not subject to the tariff risks impacting hardware.

The company's commercial strategy centers on expanding its footprint within the estimated 6,000 acute care facilities in the U.S. that could benefit from the system. As of March 31, 2025, CeriBell had grown to over 550 active accounts, adding 29 new accounts in Q1 alone. This growth is driven by an expanding direct sales force, aiming for 55 territory managers by mid-2025 to focus on new account acquisition. Complementing this is a clinical account management team dedicated to driving utilization within existing accounts through education, disease awareness initiatives (leveraging clinical guidelines), and facilitating departmental expansion within hospitals. Management notes that they currently estimate serving only about 3% of the U.S. population who could benefit from their technology, suggesting significant runway for growth within their existing market focus. Recent achievements like obtaining FedRAMP High authorization, making CeriBell one of only 51 companies and the only medical device manufacturer with this clearance, opens doors to federal healthcare systems like VA hospitals, further expanding the addressable market within the U.S.

Financial Performance and Outlook

CeriBell's financial performance reflects its growth-oriented strategy and investments. For the first quarter of 2025, total revenue reached $20.5 million, a 42% increase compared to $14.4 million in the same period of 2024. This growth translated into a gross profit of $18.0 million, up 46% year-over-year, with a strong overall gross margin of 88% (85% for product, 97% for subscription). The improvement in product gross margin was attributed to increased sales volume allowing non-variable costs to be spread over a larger number of units.

Operating expenses saw a significant increase, rising 55% from $20.8 million in Q1 2024 to $32.2 million in Q1 2025. This increase was primarily driven by investments in the commercial organization, increased headcount across the business, and costs associated with operating as a public company following the October 2024 IPO. Stock-based compensation expense is expected to contribute approximately $50 million to total operating expenses for the full year 2025. The company reported a net loss of $12.8 million for Q1 2025, compared to $8.5 million in Q1 2024, reflecting these planned investments.

Despite the operating losses, CeriBell maintains a strong liquidity position. As of March 31, 2025, the company held $182.7 million in cash, cash equivalents, and short-term marketable securities, largely bolstered by the net proceeds from its IPO. This cash position is deemed sufficient to fund planned operating expenses and capital expenditures for at least the next 12 months. The company also has access to a $50 million term loan facility (with $20 million drawn) and a $10 million revolving credit facility, and was in compliance with associated debt covenants.

Management expressed increased confidence in the company's trajectory, raising the full-year 2025 revenue guidance to a range of $83 million to $87 million, representing 27% to 33% annual growth over 2024. This upward revision from the prior $81 million to $85 million range reflects the strong Q1 performance and conviction in the effectiveness of their commercial strategies. Gross margins are expected to remain in the mid-eighty percent range for the full year, even considering the increase in tariffs on materials sourced from China from 25% to 35%. While a potential future tariff increase to 145% could impact gross margins by less than 10 percentage points before mitigation, the company has sufficient inventory to avoid material impact until at least Q4 2025 and is actively pursuing mitigation strategies, including potential reshoring, which they believe are quickly actionable (within quarters, not years) and will allow them to maintain strong, above-industry-average margins around 80% in the medium term, with a path back to the mid-80s. Critically, management reiterated their high conviction in achieving cash flow breakeven with current cash on hand, even under assumptions including the current tariff rate and no incremental revenue from pipeline initiatives in the near term.

Competitive Landscape and Strategic Expansion

The market for EEG and neurological monitoring is highly competitive. CeriBell faces primary competition from established conventional EEG providers like Natus (NTUS) and Nihon Kohden (NHNKY), which benefit from greater name recognition, market share, and resources. These companies offer systems that are the standard of care but suffer from the limitations CeriBell aims to address in acute settings. Additionally, CeriBell competes with companies developing or offering rapid EEG systems for acute care and other settings.

CeriBell positions itself as the category leader in point-of-care EEG, differentiating through its ease of use, rapid deployment, and advanced AI capabilities. While direct, quantifiable financial comparisons with all private competitors are challenging to ascertain publicly, CeriBell's reported revenue growth rates (42% in Q1 2025) and strong gross margins (88% in Q1 2025) suggest a compelling value proposition and operational efficiency relative to some competitors who may face lower margins due to hardware focus or slower growth in traditional markets. The company's investment in its sales force and clinical support aims to overcome the legacy status of conventional providers and drive adoption by highlighting the clinical and economic benefits of rapid EEG.

Beyond its core seizure detection market, CeriBell is strategically investing in its R&D pipeline to expand the utility of the Ceribell platform and address a broader range of neurological conditions, with the ultimate goal of making EEG a new vital sign. This pipeline includes:

• Pediatric Seizure Detection: Following recent FDA clearance, a limited commercial release and pilot are planned to refine the go-to-market strategy for this new patient population.
• Neonate Clarity: Development is on track for a 510(k) submission in 2026, further expanding seizure detection capabilities to the youngest patients.
• Delirium Detection and Monitoring: With FDA Breakthrough Device Designation already secured, CeriBell is preparing for an FDA submission later in 2025. This represents a significant opportunity in a market with a large unmet need and no currently available diagnostic device.
• Stroke Detection: Investment has been accelerated, with data collection underway to refine algorithms and inform regulatory strategy in this critical area where "time is brain."

These pipeline initiatives are designed to leverage CeriBell's existing platform and AI expertise, targeting incremental patient populations largely within existing call points, which management believes will meaningfully impact the total addressable market and create significant growth upside over time. The strategy involves piloting new indications for at least a year post-clearance to optimize commercialization, a proven approach from the initial Clarity launch.

Key risks to the investment thesis include the intense competitive environment, potential impacts from increased tariffs on components sourced from China, the ability to effectively manage rapid growth and scale operations, dependence on third-party manufacturers and suppliers, regulatory risks associated with new product clearances and ongoing compliance, potential challenges related to AI development and data privacy, and the need to successfully drive utilization within the existing customer base.

Conclusion

CeriBell is executing on its vision to transform neurological monitoring in acute care with its innovative point-of-care EEG system and AI-powered platform. The company's strong Q1 2025 performance, coupled with a raised full-year revenue outlook, demonstrates solid commercial momentum driven by increasing adoption and utilization in its core seizure detection market. CeriBell's technological differentiation, particularly its rapid deployment capabilities and the expanding applications of its Clarity AI algorithm into pediatric seizure detection, delirium, and stroke, positions it for significant long-term growth by addressing large, unmet needs and expanding its addressable market. While navigating competitive pressures and potential supply chain challenges, the company's robust liquidity and stated confidence in reaching cash flow breakeven with existing resources provide a foundation for continued investment in its promising pipeline. For investors, CeriBell represents an opportunity in a company leveraging AI and innovative hardware to disrupt a critical area of healthcare, with multiple potential catalysts on the horizon as its pipeline progresses and market penetration deepens.