• Total Revenue: $18.5 million, a 4% increase over the third quarter of 2023.
• NeuroStar System Revenue: $4.1 million with 49 systems shipped.
• US Treatment Session Revenue: $13.3 million, a 2% increase year-over-year.
• Gross Margin: 75.6%, up 980 basis points from the prior year.
• Operating Expenses: $21.7 million, a 5% increase compared to the third quarter of 2023.
• Net Loss: $13.3 million or $0.44 per share, compared to a net loss of $9.4 million or $0.33 per share in the prior year quarter.
• Cash and Cash Equivalents: $20.9 million as of September 30, 2024.
• Fourth Quarter Revenue Guidance: Expected to be $19 million to $20 million.
• Full Year Revenue Guidance: Expected to be in the range of $71 million to $72 million.
• Full Year Operating Expenses Guidance: Expected to be in the range of $81 million to $82 million, excluding $2 million of pre-close transaction expenses.

• Warning! GuruFocus has detected 5 Warning Signs with STIM.

Release Date: November 12, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Neuronetics Inc (NASDAQ:STIM) reported a 4% increase in total revenue for the third quarter of 2024, reaching $18.5 million.
• The company successfully shipped 49 NeuroStar systems during the quarter, contributing to a system revenue of $4.1 million.
• Gross margin improved significantly to 75.6%, up from 65.8% in the prior year quarter, driven by a favorable product mix and absence of previous manufacturing costs.
• The Greenbrook acquisition is expected to close in the fourth quarter, with anticipated synergies increasing from $15 million to $20 million.
• Neuronetics Inc (NASDAQ:STIM) is implementing a buy-and-bill model for SPRAVATO, which is expected to enhance reimbursement and create an additional revenue stream.

Negative Points

• Net loss for the third quarter was $13.3 million, an increase from the $9.4 million loss in the prior year quarter.
• Operating expenses rose by 5% to $21.7 million, primarily due to transaction expenses incurred before the Greenbrook acquisition closing.
• Revenue per active site decreased slightly to approximately $11,400 from $11,900 in the prior year quarter.
• The company reduced its full-year revenue guidance, citing changes in customer purchasing patterns and reimbursement issues.
• Neuronetics Inc (NASDAQ:STIM) is focusing more on profitability, which may come at the expense of losing some top-line revenue.

Q & A Highlights

Q: Can you explain the guidance reduction for full year 2024 and how it affects expectations for 2025? A: Stephen Furlong, CFO, explained that the Q4 guidance is based on current trends, noting a change in purchasing patterns due to reimbursement and cash flow issues experienced by customers in Q1. Although there has been some recovery, it wouldn't be responsible to forecast a full recovery in Q4. The focus is on profitability, which may impact revenue in Q4.

Q: Are you still committed to mid-teens growth for the combined entity in 2025 and 2026? A: Stephen Furlong stated that while mid-teens growth is an internal goal, the primary focus is on profitability and achieving cash flow breakeven by Q3 2025, which may come at the expense of some top-line revenue.

Q: Can you provide granularity on how the separate businesses of Greenbrook and non-Greenbrook are trending? A: Keith Sullivan, CEO, mentioned that while he hesitates to comment on Greenbrook's progress before the deal closes, the business with Greenbrook remains strong. The local consumable business is up significantly and continues to be strong.

Q: What is the impact of the commercial restructuring on guidance, and what strategic changes are being made? A: Keith Sullivan explained that the restructuring focuses on utilizing regional area managers to work with local providers around Greenbrook centers, driving patients more efficiently into practices. This shift aims to enhance treatment session sales and drive more capital systems as second system sales into existing accounts.

Q: How should we think about cash usage in Q4 and the first half of 2025, and are you comfortable with the cash position? A: Stephen Furlong stated that they are comfortable with the current cash position and forecast a reduced burn in Q1 2025. They are in discussions with their lender regarding the potential drawdown of a second tranche of debt, but forecasts predict a decent cash balance post-transaction close.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.