Executive Summary / Key Takeaways

• Pioneering Point-of-Care EEG: Ceribell is transforming acute neurological care with its portable, AI-powered EEG system, addressing critical unmet needs in rapid seizure diagnosis and management, a market estimated at $2 billion annually in the U.S. alone.
• Robust Financial Growth & Strategic Investment: The company delivered strong Q2 2025 revenue of $21.2 million (38% YoY growth) and raised its full-year 2025 guidance to $85-$88 million, fueled by successful account acquisition and increasing utilization, while strategically deploying IPO proceeds into R&D and commercial expansion.
• Technological Moat & Pipeline Expansion: Ceribell's proprietary Clarity™ AI algorithm, coupled with its user-friendly hardware and recent FedRAMP High authorization, provides a significant competitive edge. Its pipeline, including FDA-cleared pediatric seizure detection and upcoming delirium and neonate algorithms, promises substantial total addressable market expansion.
• Proactive Risk Mitigation: Management is actively addressing supply chain vulnerabilities by establishing a redundant manufacturing line in Vietnam by Q3 2025 and is rigorously defending its intellectual property through patent infringement litigation against Natus Medical .
• Path to Profitability: Despite ongoing operating losses from aggressive growth investments, Ceribell maintains high confidence in achieving cash flow breakeven with its current cash reserves, underscoring a disciplined approach to long-term value creation.

The Dawn of a Neurological Revolution in Acute Care

In the high-stakes environment of acute care, where every minute counts, the brain often remains a "black box" for clinicians. Traditional electroencephalography (EEG) systems, while foundational, are cumbersome, slow, and require specialized personnel, leading to significant delays in diagnosing critical neurological conditions like non-convulsive seizures. This is the chasm Ceribell, Inc. (NASDAQ:CBLL) was founded to bridge. Since its inception in 2014, Ceribell has been on a mission to transform neurological diagnosis and management, aiming to make EEG a new vital sign by bringing rapid, AI-powered insights directly to the patient's bedside.

Ceribell operates in the medical device sector, specifically within the neurodiagnostic segment, where it has carved out a unique niche: point-of-care EEG. This market is characterized by a pressing need for faster, more accessible diagnostic tools, particularly in intensive care units (ICUs) and emergency departments (EDs). The company's overarching strategy is to become the standard of care for seizure management in acute settings, then expand its platform to address a wider array of neurological conditions. This ambitious vision is underpinned by its differentiated technology, a disciplined commercial expansion, and a robust R&D pipeline.

The competitive landscape for EEG solutions is diverse, ranging from established giants like Medtronic (MDT) and Philips (PHG) with their broad portfolios and integrated hospital systems, to specialized neurodiagnostic players such as Nihon Kohden and Natus Medical (NTUS). While larger competitors benefit from extensive global reach, deeper R&D budgets, and established customer relationships, Ceribell differentiates itself through its singular focus on point-of-care accessibility, AI-driven diagnostics, and a user-centric design that simplifies complex procedures. The company's recent patent infringement complaints against Natus Medical underscore its commitment to defending its leadership in the category it created.

Technological Edge: The Ceribell System's Differentiated Core

Ceribell's core innovation lies in its proprietary Ceribell System, a novel point-of-care EEG platform designed for rapid deployment and continuous monitoring. The system comprises three key components: disposable headbands, a pocket-sized recorder, and the cloud-based Ceribell EEG portal, all powered by its sophisticated AI algorithm, Clarity™.

The disposable headbands feature ten non-invasive electrodes pre-filled with conductive gel, designed for single-patient use. This eliminates the time-consuming and often complex electrode application process associated with conventional EEG. The pocket-sized, battery-operated recorder captures and wirelessly transmits EEG signals, making the system highly portable. After approximately one hour of training, any non-specialized healthcare professional can apply the hardware within minutes, a stark contrast to the hours often required for traditional EEG setup. The recorder seamlessly integrates with the Ceribell EEG portal, a secure cloud-based platform that allows neurologists to remotely access real-time EEG data from any web-enabled device.

The true differentiator is Clarity™, Ceribell's AI-powered seizure detection algorithm. Clarity continuously monitors the patient's EEG signal, providing real-time assessment of seizure activity. This capability offers tangible and quantifiable benefits:

• Rapid Diagnosis: The system's ease of use and AI-driven interpretation enable significantly faster diagnosis of neurological events. A recent patient story highlighted how the Ceribell System quickly ruled out seizure in an unresponsive elderly woman, allowing the care team to shift focus and discharge her within hours, avoiding unnecessary intubation and a prolonged ICU stay.
• Improved Patient Outcomes: By facilitating prompt identification of conditions like non-convulsive status epilepticus, the system has made a life-changing impact on over 200,000 patients, potentially saving thousands of lives and preventing tens of thousands of unnecessary medications and ICU days.
• Cost Efficiency for Hospitals: Administrators value Ceribell because it can substantially reduce costs associated with prolonged ICU stays and unnecessary interventions, directly impacting hospital economics.
• Cybersecurity Leadership: In April 2025, Ceribell achieved FedRAMP High authorization, one of the U.S. government's most stringent cybersecurity certifications. This makes Ceribell one of only 51 companies and the only medical device manufacturer to hold this authorization, significantly differentiating its cloud-based platform in an era of increasing cybersecurity concerns for healthcare providers.

This technological superiority forms Ceribell's competitive moat. While competitors like Natus Medical and Nihon Kohden offer rapid EEG systems, Ceribell's integrated platform, validated by extensive clinical evidence and robust cybersecurity, positions it as the clear category leader. Its focus on user-friendliness and AI-driven insights directly addresses the operational limitations of conventional EEG and the complexity of some competing rapid EEG solutions.

Financial Performance: Growth Amidst Strategic Investment

Ceribell's financial results for the second quarter of 2025 demonstrate robust growth, reflecting the increasing adoption and utilization of its system. Total revenue reached $21.2 million, marking a 38% increase over the same period in 2024. For the first half of 2025, total revenue grew 40% year-over-year to $41.7 million. This performance is particularly noteworthy given the typical seasonal dynamics, where Q2 and Q3 often see reduced utilization due to lower ICU census during summer months.

The company's revenue streams are bifurcated into product and subscription segments, both exhibiting strong growth. Product revenue, primarily from the sale of disposable headbands, increased 38% year-over-year to $15.9 million in Q2 2025, and 39% to $31.5 million for the first half of 2025. This growth is directly tied to new customer acquisition and increased headband utilization within existing accounts. Subscription revenue, derived from monthly fees for Clarity™, recorders, and the portal, grew 41% year-over-year to $5.3 million in Q2 2025, and 43% to $10.2 million for the first half. The subscription segment consistently boasts an impressive 97% gross margin, highlighting the leverage in Ceribell's software-as-a-service model. Product gross margins also remain strong at 85% in Q2 2025. Overall, the company maintained an excellent gross margin of 88% in Q2 2025, a testament to its operational efficiency and value proposition.

Despite strong top-line growth and high gross margins, Ceribell continues to incur operating losses, a common characteristic for high-growth medical technology companies in their investment phase. The net loss for Q2 2025 was $13.6 million, contributing to an accumulated deficit of $193.4 million as of June 30, 2025. These losses stem from significant investments in operating expenses, particularly in research and development (R&D) and sales and marketing. R&D expenses surged 48% year-over-year to $4.9 million in Q2 2025, driven by increased headcount and clinical study costs. Sales and marketing expenses rose 63% to $17.4 million, reflecting the expansion of the commercial organization. General and administrative expenses also increased 49% to $11.4 million, impacted by public company operating costs and legal fees associated with intellectual property enforcement.

From a liquidity standpoint, Ceribell is well-capitalized, with $177.4 million in cash, cash equivalents, and marketable securities as of June 30, 2025. Management confidently asserts that these resources, combined with expected revenue, are sufficient to fund operations for at least the next 12 months. The company remains "committed to our goal of achieving cash flow breakeven with cash on hand," indicating a clear path towards sustainable profitability despite current investment levels.

Strategic Expansion: Broadening the Horizon of EEG

Ceribell's strategy extends beyond its current success in seizure detection, aiming to expand its market reach and solidify EEG as a new vital sign. This involves a multi-pronged approach encompassing commercial expansion and a robust R&D pipeline across three distinct horizons.

On the commercial front, Ceribell continues to drive adoption and utilization. As of June 30, 2025, the company served 584 active accounts, an increase of 26 in Q2 alone. The sales force is expanding, targeting 55 territory managers by the end of August 2025, with the full impact on account acquisition expected to materialize in 2026 due to the sales cycle. Utilization within existing accounts is being driven through departmental penetration (ICUs, EDs, general floors), continuous physician training, and the protocolization of rapid EEG for specific patient populations, such as post-cardiac arrest patients. The company's recent FedRAMP High authorization has opened doors to federal healthcare systems, including VA hospitals, where Ceribell is already gaining significant interest.

The R&D pipeline is designed to leverage the Ceribell platform's inherent scalability and AI capabilities to address a broader spectrum of neurological conditions:

• Horizon 1 (Near-term - Seizure Management): Building on its existing seizure detection capabilities, Ceribell received FDA 510(k) clearance in April 2025 for Clarity™ in pediatric patients (ages one year and above). This makes it the first and only FDA-cleared AI technology for this vulnerable population, expanding the addressable market significantly. A limited commercial release and pilot are underway to refine the go-to-market strategy, with revenue contributions anticipated in future years. Furthermore, a NICU pilot for neonate Clarity is progressing, with a 510(k) submission planned for 2026, addressing the high prevalence and severe consequences of seizures in newborns.
• Horizon 2 (Medium-term - EEG as a Vital Sign): Ceribell aims to apply its platform to other critical neurological conditions. Delirium detection and monitoring is a key focus, having received Breakthrough Device Designation from the FDA. An FDA application is slated for later in 2025, targeting a market with no commercially available diagnostic device despite delirium affecting a large percentage of ICU patients. The company also accelerated investment in a stroke detection algorithm, collecting data from over 200 patients to refine its AI.
• Horizon 3 (Longer-term - Beyond Acute Care): The ultimate vision extends to developing solutions for conditions like depression, OCD, ADHD, and dementia, leveraging EEG as a potential biomarker outside the acute care setting.

Management emphasizes the "high degree of synergy and interdependency" across these initiatives, noting that regulatory pathways for new indications are often "faster and lower cost" due to the company's established EEG database and AI expertise. A strategic approach of piloting new product expansions for at least a year post-clearance ensures optimized market entry, a method proven successful since Clarity's initial introduction in 2020.

Competitive Dynamics: Defending and Expanding the Category

Ceribell has effectively created and leads the point-of-care EEG category, a position it intends to maintain through continuous innovation and robust intellectual property defense. While the market sees "emerging competitors trying to enter the category," Ceribell's management asserts that competitive activity is "not really impacting our commercial performance," as evidenced by its strong Q2 results and raised guidance.

The company's competitive advantages are multifaceted. Its technological superiority, particularly the unmatched AI capabilities of Clarity™ and the user-friendliness of its hardware, sets it apart from conventional EEG systems and even other rapid EEG offerings from larger players like Natus Medical and Nihon Kohden. The ability to deliver rapid, accurate diagnoses at the bedside, coupled with the proven clinical and economic benefits, reinforces its value proposition. Furthermore, Ceribell's recent FedRAMP High authorization provides a unique cybersecurity moat, a critical factor for healthcare institutions handling sensitive patient data.

Ceribell is also proactive in defending its innovations. In July 2025, the company filed patent infringement complaints against Natus Medical Incorporated with both the U.S. International Trade Commission (USITC) and the U.S. District Court for the District of Delaware. These complaints allege infringement of six patents related to Ceribell's EEG headband and electrode design by Natus's BrainWatch system. This legal action, which could lead to an exclusion order barring infringing imports, highlights Ceribell's commitment to protecting its proprietary technology and maintaining its market leadership.

However, Ceribell faces inherent competitive disadvantages due to its relatively smaller scale compared to diversified medical device giants. Its ongoing operating losses, while strategic, contrast with the profitability of more mature competitors. The reliance on China for manufacturing key headband components also presents a vulnerability, particularly regarding trade policies and tariffs. To mitigate this, Ceribell is establishing a redundant production line in Vietnam by the end of Q3 2025, aiming to derisk its supply chain and maintain its industry-leading gross margins. Despite these challenges, Ceribell's deep market penetration (currently serving only about 3% of the U.S. market) suggests substantial runway for growth, allowing it to focus on expanding its unique value proposition rather than being solely reactive to competitive pressures.

Outlook and Risks: Charting a Course for Future Value

Ceribell's outlook for 2025 is optimistic, underpinned by strong Q2 performance and strategic initiatives. The company has raised its full-year 2025 revenue guidance to a range of $85 million to $88 million, representing an impressive annual growth of 30% to 34% over 2024. Gross margins are expected to remain robust, in the mid-to-high 80% range for 2025, with a target of mid-80% for 2026, reflecting proactive supply chain management and ongoing efficiency improvements.

Management's confidence is rooted in several key assumptions. The expansion of the sales force, while having a delayed impact on account acquisition, is expected to drive accelerated growth starting in 2026. Investments in R&D are being strategically deployed to pursue pipeline opportunities in parallel, rather than sequentially, accelerating the path to new indications like pediatric and neonate seizure detection, delirium, and stroke. While pediatric Clarity will not impact 2025 revenue, it is poised to contribute significantly in subsequent years after its full commercial launch. The establishment of a manufacturing line in Vietnam by Q3 2025 is a concrete step to mitigate tariff risks and ensure supply chain resilience, safeguarding future gross margins.

However, investors must consider several risks. Ceribell continues to operate at a net loss, a consequence of its aggressive growth investments. While management is confident in achieving cash flow breakeven with existing capital, this remains a critical financial milestone. The ongoing patent infringement litigation against Natus Medical will incur "ongoing cost associated with the action" throughout 2025 and 2026, impacting general and administrative expenses. Seasonal fluctuations in ICU census will likely lead to more modest sequential growth in Q2 and Q3 utilization compared to the winter months. Macroeconomic conditions, including inflation and high interest rates, could exert pressure on hospital budgets and potentially impact purchasing decisions. Furthermore, regulatory changes, such as the limited three-year NTAP designation for Clarity, and the evolving landscape of AI regulation, present ongoing compliance challenges.

Conclusion

Ceribell, Inc. stands at the forefront of a significant transformation in acute neurological care. Its proprietary Ceribell System, with its highly portable hardware and advanced AI-powered Clarity™ algorithm, is not merely an incremental improvement but a paradigm shift in how seizures and other neurological conditions are diagnosed and managed. The company's ability to deliver rapid, objective insights at the point of care, coupled with its robust cybersecurity credentials, creates a formidable competitive moat against both traditional and emerging rivals.

With strong financial performance in Q2 2025, a raised full-year revenue guidance, and a clear strategic roadmap for expanding into pediatric, neonate, delirium, and stroke indications, Ceribell is executing a compelling growth narrative. Proactive measures to de-risk its supply chain and vigorously defend its intellectual property further solidify its foundation. While the company continues to invest heavily, resulting in current operating losses, management's commitment to achieving cash flow breakeven with existing capital underscores a disciplined approach to long-term value creation. For discerning investors, Ceribell represents an opportunity to participate in a company that is not just innovating, but actively redefining the standard of care in neurological diagnostics, with a clear vision for making EEG a vital sign across the healthcare continuum.