Envoy Medical Q3 2026 Earnings Call Transcript

Envoy Medical (NASDAQ:COCH) reported third-quarter financial results on Thursday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Envoy Medical’s Q3 2026 revenue from Esteem implants was $66,000, an increase from $42,000 in Q3 2025, with a focus on future revenue potential from the Acclaim Fully Implanted Cochlear Implant (FCI).

Research and development expenses rose to $3.1 million due to the expansion into stage two of the pivotal trial, while sales and marketing expenses decreased to $157,000 as resources shifted towards clinical trials.

The Acclaim FCI, which has received FDA’s Breakthrough Device designation, is in the pivotal study phase with full enrollment completed, and data collection expected to be completed by April 2027.

The company is pursuing a modular Premarket Approval (PMA) submission strategy, with two of four modules already submitted to the FDA, and plans to submit the remaining modules by mid-2027.

Envoy Medical plans to expand its workforce from 50 to 70-75 employees in the next 12-18 months, focusing on manufacturing and commercial readiness, aiming to increase production capacity to 10,000-15,000 units annually.

Management is optimistic about the company’s competitive position due to unique features of the Acclaim FCI, such as the middle ear sensor and chest-placed battery, which differentiate it from competitors.

The company believes the cochlear implant market is significantly underpenetrated and sees a substantial opportunity to capture market share and expand the market with its innovative fully implanted solution.

Full Transcript

OPERATOR

Hello and welcome everyone joining today’s Envoy Medical Q3 2026 earnings call. At this time, all participants are in a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. To register to ask a question at any time, please press star 1 on your telephone keypad. Please note this call is being recorded. We are standing by if you should need any assistance. It is now my pleasure to turn the conference over to Phil Carlson, KCSA Managing Director.

Please go ahead.

Phil Carlson (Managing Director)

Thank you, operator. Good morning and welcome everyone to the Envoy Medical third quarter 2026 earnings conference call. This is a special moment as this is Envoy Medical’s first ever quarterly earnings call. I’m joined today by members of Envoy Medical’s leadership team including Brent Lucas, Chief Executive Officer, and Robbie Patashnik, Chief Accounting Officer and VP of Finance. Before we begin, I’d like to remind everyone that statements made during today’s call contain or may contain forward-looking statements covered by the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 and applicable federal securities laws. Comments made on this call that look forward in time involve risks and uncertainties and are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995.

These statements, including statements regarding Envoy Medical’s clinical, regulatory, and commercial plans, strategies and estimates, the timing, results, data and outcomes of the clinical trial, timing of FDA submissions and potential approval, and expectations of financial or operational performance, are based on management’s current plans and assumptions and actual results may differ materially. Please refer to the company’s filings with the SEC, including our Form 10-Q for the quarter ended September 30, 2026 and our Form 10-K for the fiscal year ended December 31, 2025 for a detailed discussion on the risks and uncertainties facing Envoy Medical.

With that, I’d now like to turn the call over to Envoy Medical’s Chief Executive Officer, Brent Lucas. Brent, please go ahead.

Brent Lucas (Chief Executive Officer)

Thank you, Phil, and good morning everyone. Before we get into the quarter, we would like to take a few minutes to discuss who we are as a company. Many of you have supported us for years, but a growing number of investors around the world are new to Envoy Medical. Whether you are a long-term investor or just getting to know us, we hope you will leave today’s call with an understanding of why we are so energized about Envoy Medical’s future. We believe Envoy Medical is on the cusp of something transformative with our investigational, Acclaim, fully implanted cochlear implant. We believe we are uniquely positioned to reshape the multibillion-dollar cochlear implant market. If our assumptions prove correct, some may one day call Envoy Medical an overnight success. The reality is that our journey to this point spans more than three decades and over $350 million of invested capital. Rome, as they say, was not built in a day.

Envoy Medical was founded in 1995 with a clear goal to create a fully implanted device that works with the natural ear. The founding principles were simple: avoid microphones and externally worn components at all costs, and use the body’s natural hearing pathway to capture sound. The benefits of a fully implanted hearing device were compelling: nothing to wear on or behind your ear, the ability to hear all day and all night, no expensive external hardware to lose or break, no discomfort or annoyance from wearing something on the side of your head all day, the potential for better sound localization, fewer limits on everyday activities, and of course, nothing for others to see. That was the dream, and Envoy Medical set out to make it a reality.

Our solution was a middle ear sensor that leverages the natural hearing pathway. No microphone on or behind the ear, no microphone buried under the skin. Instead, the sensor picks up vibrations of the middle ear and uses them as the signal, much as the natural ear does. We first validated our sensor technology in the Esteem fully implanted active middle ear implant. The Esteem fully implanted hearing device is the first and currently the only of its kind to receive FDA approval.

Roughly 1,000 Esteem devices have been implanted, some more than two decades ago, in early clinical trials. We believe no company has more experience with fully implanted hearing devices than Envoy Medical. Unfortunately for patients with hearing loss and the professionals who serve them, CMS classified the Esteem as a hearing aid. That classification made it ineligible for Medicare coverage and, in practice, limited patients’ access to the technology. We continue to believe that fully implanted active middle ear implants are hearing prosthetics, not hearing aids, and should be covered by public and private payers. If that policy changes, we believe the Esteem would be well positioned to benefit.

In 2015, we shifted our focus to an opportunity that had been calling for our attention for two decades: fully implanted invisible cochlear implants. Cochlear implants have been commercially available in the United States since the 1980s and are well established as an effective solution for severe to profound hearing loss. Yet only a small fraction of adult candidates, roughly 5%, have pursued one. We believe the significant reason for this low penetration is that most people do not want to live with or be limited by an external component worn on the side of their head.

We quickly got to work. With no preconceived notions holding us back, our team was able to examine different design choices from the ground up. After carefully weighing the options and trade-offs, we selected a design built to support long-term interests of the patient: a modular implanted system with four main components. These are our sensor, a processor connected to the electrode array, a large-capacity battery placed in the chest, and a power lead connecting the battery to the processor. We built the system ourselves using our own designs and intellectual property, which we believe makes it a more valuable independent technology.

That work became our investigational Acclaim Fully Implanted Cochlear Implant, or FCI. We are extremely proud of the Acclaim and believe its design offers several key advantages. No required head-worn externals: the Acclaim FCI is designed so that no sound processor or charger needs to be worn on the head. Middle ear sensor: the Acclaim FCI uses our middle ear sensor to pick up sound through the natural hearing pathway. There is no external microphone and no microphone under the skin. Flexibility: because the Acclaim FCI uses the ear itself to pick up sound, it is designed to allow patients to keep using earworn devices such as popular earbuds or even hearing aids.

As artificial intelligence drives rapid innovation in earworn consumer electronics, we believe Acclaim patients will be positioned to take advantage of those new devices. No magnet: there is no magnet anywhere in the Acclaim system. Because nothing needs to be held in place on the head, a magnet is not required. We believe this may offer advantages for patients who eventually need an MRI or other imaging of the head. Currently, the investigational Acclaim FCI has not received MR Conditional labeling, but we are hopeful this will change once testing is submitted and approved.

Large-capacity rechargeable battery: perhaps our most intentional design choice was placing a large-capacity rechargeable battery in the chest rather than in the head. In general, a larger battery generally means more time between charges. The Acclaim FCI is designed to run for several days uninterrupted on a single charge. Replaceable battery: all rechargeable batteries eventually lose capacity. The Acclaim FCI was designed so that when that happens, the battery can be replaced through a straightforward procedure without explanting the entire device.

The Acclaim FCI received Breakthrough Device designation from the FDA in 2019. The first patients were implanted in an early feasibility study at Mayo Clinic in Rochester, Minnesota in October 2022. In 2024, we advanced into our pivotal study, which the FDA requested we conduct in two stages: Stage 1 with 10 participants, followed by Stage 2 with an additional 46 participants for a total cohort of 56. Stage 1 was fully enrolled in April 2025. After three months of follow-up, we submitted the data to the FDA and requested expansion into Stage 2.

In October 2025, the FDA authorized us to expand the study into Stage 2. Enrollment in Stage 2 moved quickly and the trial was fully enrolled in March 2026. All 56 participants have now passed their six-month follow-up milestone. We anticipate that all 56 will complete their 12-month follow-up visit by April 2027, at which point data collection for the trial will be complete. In July, we reported encouraging 12-month results from 10 participants in Stage 1. The mean CNC word recognition score was 53.2% compared with a pre-implantation baseline of 15.2%, representing a 38 percentage point improvement. While data in the full cohort needs to be collected and analyzed prior to drawing any conclusions, we are encouraged by these results and look forward to seeing the final data.

We are pursuing a modular premarket approval, or PMA, submission strategy. Rather than submitting one large PMA application, we plan to submit four modules over time. On June 30, 2026, we submitted our first module and on October 12, 2026, after quarter end, we submitted our second. With two of four modules now with the FDA, the agency can review these sections while clinical data collection continues. We continue to target submission of the remaining two modules, including the final clinical module, in the first half of 2027.

The market opportunity reinforces why we believe this work matters and why we are so energized about Envoy Medical’s future. We currently think about the cochlear implant market in three buckets. The first bucket is the current market. In the United States, cochlear implants represent roughly $1 billion in annual revenue. Exact numbers are difficult to pinpoint, but we estimate that roughly 20,000 to 25,000 cochlear implants are implanted in U.S. adults each year.

The second bucket is the expanded market. Today’s market is substantially underpenetrated. We estimate that approximately 2.8 million adults in the United States could be candidates for a cochlear implant, yet only about 150,000 adults within that candidate pool have received one. That represents only about 5% penetration of the estimated addressable population. If a new technology that patients want were able to increase that penetration, we believe the market could grow significantly.

The third bucket is existing cochlear implant recipients. Some may want the other ear implanted and others may want to replace their legacy device with a fully implanted cochlear implant. If the Acclaim is approved, we believe Envoy Medical would need to sell only a few thousand implants a year to generate significant revenue, and we see ample opportunity to do so. More importantly, we believe we have designed a device that could capture the market’s attention, gain market share, and help expand the market.

With that, I’ll turn the call over to Robbie Ptashnik, our Chief Accounting Officer and Vice President of Finance, to review our third quarter financial results.

Robert Potashnick (Chief Financial Officer)

Thank you, Brent, and good morning, everyone. Let me walk you through our financial results for the third quarter ended September 30, 2026. Net revenue for the third quarter from Esteem implants and battery replacements was $66,000 compared with $42,000 in the third quarter of 2025. We are not actively pursuing Esteem sales as our focus is the Acclaim FCI, but we continue to support existing Esteem recipients. We believe Esteem revenue could change materially if CMS changes how it classifies fully implanted active middle ear implants.

Cost of goods sold was $244,000 compared with $203,000 in the third quarter of 2025. Research and development expenses were $3.1 million, compared with $2.7 million in the prior year period. The increase was primarily driven by the expansion into stage two of the pivotal trial following FDA authorization in the fourth quarter of 2025. Sales and marketing expenses for the third quarter were $157,000 compared with $405,000 in the third quarter of 2025.

The decrease was primarily due to employees who previously supported sales and marketing and are currently supporting the clinical trial and related research and development activities. General and administrative expenses were $2.1 million compared with $2.0 million in the third quarter of 2025. Net loss attributable to common stockholders for the quarter was $5.2 million, or $0.50 per share, compared with $7.7 million, or $3.55 per share, in the same period.

As of September 30, 2026, we had cash of approximately $14.6 million. We remain focused on disciplined capital allocation as we advance the pivotal study and PMA submission. With that, I’ll turn the call back to Brent for closing remarks.

Brent Lucas (Chief Executive Officer)

Thank you, Robbie. To summarize, Envoy Medical has spent more than three decades pioneering fully implanted hearing solutions with our investigational Acclaim FCI. We believe we have developed a fully implanted cochlear implant that is fundamentally differentiated from other products. We believe patients want fully implanted options and ultimately it is patients who will decide this market. Our pivotal trial is fully enrolled and we expect data collection to be complete in the second quarter of 2027.

We remain on track to submit the remaining two modules of our PMA application, including the final clinical module, by the end of the second quarter of 2027. Depending on the FDA’s review, we could see a potential FDA decision by the end of 2027 or the first half of 2028. We believe the Envoy Medical opportunity is substantial. We are focused on disciplined execution through the remaining clinical follow-up and regulatory steps while preparing for potential commercialization, if approved. 2026 has been a year of meaningful progress, and we continue to be confident in the path forward. With that, operator, we’re ready to open the line for questions.

OPERATOR

Thank you. If you would like to ask a question, please press star one on your telephone keypad. To leave the queue at any time, please press star two. Once again, that is star one to ask a question. And we’ll pause for just a moment to allow everyone a chance to join the queue. We’ll take our first question from Frank Takanen with Lake Street Capital Markets. Please go ahead.

Frank Takanen (Analyst)

Great. Thanks, guys. Appreciate you taking the questions and congrats on all of the progress. I was hoping to start with one, Brent, just on the initial commercial launch, maybe speak to how large of a team you want to have in place at that point in time and when you might think it makes sense to start recruiting that team, and then maybe any other commercial preparedness actions you think are relevant to the conversation. Thanks.

Brent Lucas (Chief Executive Officer)

Thanks, Frank. Yeah, so we are currently kind of planning out how we intend to go about this. One of the things that Envoy Medical has successfully done over the last 11 years since I’ve been CEO is run a very lean team. So what we’ve been able to accomplish with who we have I think has been pretty darn impressive, especially when you compare us to the size and budget of our competitors. But one of the things we’re mindful of is it is time to start to ramp up for commercialization, being that we’re very encouraged by how the trial is proceeding.

So we’re currently around 50 full-time employees and I think in the next 12 to 18 months, we need to see that number closer to 70 or 75. A lot of that will be geared towards manufacturing personnel as well as commercial. Definitely want to locate a commercial leader in the next year, ideally somebody who has experience with active implantables as well as high ASP devices. So we’re going to be identifying that person. Also, we’re based in White Bear Lake, Minnesota. We are in a building that is quite large that has another company here that might be willing to give up some space. So we plan to expand in our existing location and build capacity for manufacturing. That should get to a point where we could do 10,000 to 15,000 units a year, which is what I think is attainable within about five years of commercialization if things go according to plan. So right now we’re at about 2,500 units, and that’s if we’re doing multiple shifts, and it’s going to be a little crowded in there.

So we definitely need to build out our clean room and get ready to expand. I think, you know, one of the things I would also highlight is I don’t anticipate having to spend a lot of sales and marketing dollars compared to some other companies that are coming to market. The cochlear implant market is established. It’s well known. The surgeons are easy to identify, and the audiologists who work with patients are easy to identify, as well as the fact that I think earned media, such as patient testimonials and things like that, are really going to drive the demand here.

So I think the demand will be there right out of the gate. This is something people have wanted for a very long time. I don’t anticipate having to spend a dramatic amount of sales and marketing dollars as some other companies have had to do when they come to the market. So I think we’ll be in a very, very good position to be efficient, yet strong as we enter the market.

Frank Takanen (Analyst)

Got it. Very helpful. And then my second was actually a topic you started to speak a little bit about. Maybe if we go a little deeper into what is required to expand manufacturing—obviously I heard expanding the footprint a little bit—but maybe talk through what other items need to occur to get the manufacturing to that level.

Brent Lucas (Chief Executive Officer)

Sure. We need to expand our footprint a little bit. We have currently about—I think we’re right around 17,000 square feet for offices and manufacturing, R&D—get that up to about 30,000, around that number, 35,000 for offices and manufacturing space. The big lift is going to be clean room. So obviously we’re very highly regulated, so we’ll need to build a clean room out. That’ll include various equipment and proper staging for the devices. Not a huge expense.

I mean, you know, we’re talking a couple million dollars here. We’re not talking anything that’s crazy to be able to source that and build it out and properly certify it. But we want to make sure we start that process probably towards the back half of next year or first part of—sorry, first part of next year to acquire the space, start to plan it out, and then maybe start building it towards the back half of 2027. So that when we get to 2029, when we really expect quite a large jump in annual sales, we’ll have that capacity, the clean room will be up and running, we’ll have been certified, and all of that.

Frank Takanen (Analyst)

Got it. Very helpful. Appreciate taking the questions, thanks.

Brent Lucas (Chief Executive Officer)

Thanks, Frank.

OPERATOR

Thank you. We’ll take our next question from Alex Nowak with Lucid Capital. Please go ahead. Your line is open.

Alex Nowak (Analyst)

Okay, great. Good morning, everyone. I was hoping you could share any feedback you’ve had from the FDA on Modules 1 and 2 of the PMA submission.

Brent Lucas (Chief Executive Officer)

Sure. So, you know, I think the thing I’d just sort of generally speak about is it’s just validated our strategy. The modular PMA submission strategy is absolutely perfect for companies in our situation. These are smaller companies. I don’t have a team of 25 people in the regulatory department that can answer questions on the final PMA submission. So being able to clear the decks of questions as we go through each module is just wildly beneficial to us.

So far the feedback has been, you know, answer a question around why did you do this test, or benchtop testing, you know, maybe sample size on a test or two. So we’ve had good conversations there, not overly concerned about anything that we’ve received. It’s just going to give us the opportunity to clear the deck so that when we get ready for that final clinical submission, we can focus all of our attention on that module. Hopefully by that point everything else will have been answered and we can move on.

Alex Nowak (Analyst)

All right. No, that’s great. Two-part question related to the efficacy of the study, both stage one and stage two. For the stage two patients, how is the patient signal ramp-up occurring? Is that occurring kind of around that six-month mark and all in line with what you’re seeing, and just I guess how does that compare to stage one patients and also the non–fully implantable cochlear implants? And then the second part of the question is for those stage one patients, are you seeing the CNC word recognition scores improve beyond the 12 months?

Brent Lucas (Chief Executive Officer)

So it’s a great question. And you know, some of this I only understand at a high level from feedback from the sites, as I’m not privy to the full database, blinded to the full database. So I’m as excited as everybody else to see the final results when we do the proper analysis and send that to the FDA. But what I can tell you from what I’ve heard is that stage one and stage two are on similar tracks. Stage two is on a similar track to stage one. So in terms of, you know, the numbers are progressing as we expect to see based on stage one.

There’s nothing from stage two that I’m aware of to this point that suggests the efficacy is going to be any different. Hopefully a little bit better as we go and people are better in terms of turning, programming the device, and getting things ramped up. In terms of our ramp up, there is a slight difference from what we’ve seen in the beginning of the study, which was traditional cochlear implants. You know, these traditional cochlear implants have been around for 40 years.

I mean, some of these products got their first FDA approval in the ’80s and then the multichannel in the ’90s for some of them. So the people programming these, the audiologists and the surgeons, are very comfortable with kind of the process of these devices. And the fact of the matter is the Acclaim is an investigational device that’s different, and one of the very obvious differences is the sensor in the middle ear. So this has been an adjustment for the folks working with the device, for the investigators, and there has been sort of a little bit of a learning curve with that.

So we’ve seen a slight difference in terms of the ramp-up timing. But we are seeing that our patients eventually appear, at least from what we’ve seen to date, to be getting to where they need to get with that stage one data. The 12-month data, you know, 38 percentage points of improvement for CNC word scores, is right in the ballpark of what the other companies are doing across the board. So very comfortable with what we’ve seen so far from an efficacy standpoint.

I do also believe that as time goes and people are more comfortable with our device and more comfortable programming it in the clinic, kind of more comfortable pushing the envelope earlier in the programming, I think you’re going to see the ramp-up time start to trend with what other companies see with their device. But there will also be the fact that we have a middle ear sensor. And so, you know, there needs to be healing of that before you can really optimize the programming, and for some patients, because there is a lot of patient-to-patient variability, that could take a little bit longer with some folks.

All right, in terms of your last part. Yeah, sorry, Alex, the last part of your question there, I haven’t seen the 24-month data or anything else. Our time points for the stage one patients were 12 months, and then their next scheduled visit is 24 months for those stage one patients. But we’re only collecting efficacy data for purposes of reporting it through 12 months.

Alex Nowak (Analyst)

Okay, understood. That makes sense. So we’ll get to see that later. Okay. And then just lastly, just your current view on the competitive landscape for a fully implantable cochlear implant.

Brent Lucas (Chief Executive Officer)

Yeah. So it’s very interesting what’s going on in the cochlear implant world. If you’ve been paying attention to this as long as I have, you’re seeing now that two of the competitors are starting to vocalize how excited they are about fully implanted cochlear implants. I really, absolutely believe this is the future of the cochlear implant industry. And I think more people are starting to admit that publicly. There’s a lot of buzz around the technologies that are coming out from our competitors as well as Envoy Medical.

So I just want to say, generally, I think there’s more of an acceptance and a broad awareness that fully implanted cochlear implants are being studied by three different companies. And people are starting to ask questions about it, get very excited about it. And I anticipate that patients are going to start to say, you know what, you know, this is not a life-and-death technology. Right. So if you have significant hearing loss and you’re considering a cochlear implant and you know that three devices are in clinical studies, you might wait and decide that, you know, I’ll wait for the fully implanted.

So I think you’re going to see people starting to really pay attention to the timelines for the three companies, Envoy, as well as two of our competitors. So I just think it’s really great to see that the momentum is starting to build. People are publicly talking about it. Two of my competitors who have been saying for a while, oh, maybe fully implanted is not the future, they’re now talking about fully implanted cochlear implants being the biggest innovation in the hearing industry.

So this is absolutely starting to get attention. And you’re going to see more and more of that as all three companies move through clinical trials. And then when it comes to the products, Envoy Medical has still successfully differentiated itself from the other two players. Right now, we are the only ones with the middle ear sensor. Middle ear sensor being the way of picking up sound through the hearing pathway, so we actually leverage vibrations coming through the ear. I think that is a transformational design attribute that really will give us an advantage in the market. It also allows for things like patients having the flexibility to use their ear with other devices.

So, you know, I’m a big AirPod user, for example, and if somebody wants to throw in an AirPod on top of an Acclaim, you can do that very easily without having to do anything different or special. I think that’s going to be a big thing. We don’t have a magnet in our system. The other two do. So not having a magnet is definitely something that I think can offer patients benefits when you think about imaging and not having to wear anything on the side of your head to charge or do something like that.

And then the replaceable nature of our batteries. So we are the only company that has made the intentional design choice to put the battery in the chest. And we think that that was a very wise choice, in part because you have a larger capacity battery, allowing for multiple days between charges, and then also the replaceable nature of that battery. So as the capacity begins to diminish over time, which happens to all rechargeable batteries — and we all know this because of our cell phones or smartphones — over time, you want to replace a battery, and having it in the chest allows for a very simple, straightforward procedure without having to replace or explant the entire system. So, of course, all of this has to be studied in our investigational clinical study. So we’re gathering data on this and hopefully being able to talk more about the specifics of it in the future.

But I think those factual design attributes are very exciting, and I’m very excited to really study this more as we go.

Alex Nowak (Analyst)

That’s great. I appreciate the update. Thank you.

Brent Lucas (Chief Executive Officer)

Thank you.

OPERATOR

Thank you. At this time, this concludes our question and answer session. I will now turn the call back to Brent Lucas for closing remarks.

Brent Lucas (Chief Executive Officer)

Thank you all for joining us today. We are excited about the continued progress and the path ahead for Envoy Medical. We look forward to updating you on our progress in a future call. Thank you very much for joining.

OPERATOR

This concludes today’s meeting. We appreciate your time and participation. You may now disconnect. Thank you.

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.