Neuronetics Reports Third Quarter 2023 Financial and Operating Results
Neuronetics, Inc. (NASDAQ: STIM) reported a third-quarter 2023 revenue of $17.9 million, an 8% increase over the same period in 2022. The company also achieved a record U.S. treatment session revenue of $13.1 million and shipped 43 NeuroStar systems. Neuronetics launched the 'Better Me Guarantee' Provider pilot program and accessed $22.5 million from its existing debt facility. The company also achieved a milestone of over 162,500 global patients treated with 5.9 million treatment sessions.
11/07/2023 - 07:30 AM
MALVERN, Pa., Nov. 07, 2023 (GLOBE NEWSWIRE) -- Neuronetics, Inc. (NASDAQ: STIM) (the “Company” or “Neuronetics”) a commercial stage medical technology company with a strategic vision of transforming the lives of patients whenever and wherever they need help, with the best neurohealth therapies in the world, today announced its financial and operating results for the third quarter of 2023.
Third Quarter 2023 Highlights
Third quarter 2023 revenue of $17.9 million , an increase of 8% over the third quarter of 2022 Record U.S. treatment session revenue of $13.1 million Shipped 43 NeuroStar systems Recent Operational Highlights
Launched the “Better Me Guarantee” Provider pilot program Accessed $22.5 million from existing debt facility Recent Marketing Highlights
Achieved milestone of over 162,500 global patients treated with 5.9 million of our treatment sessions “Our strong performance in the third quarter reflects the positive impacts from our focus on commercial and customer education, in part resulting in record treatment session revenue driven by 18% year over year growth in our local consumable customers. Additionally, we are thrilled by the pilot launch of the Better Me Guarantee Provider program and its potential to deliver the highest standard of care to patients,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. “We are excited about the opportunities that lie ahead and are especially enthusiastic about the initial response to the program. We remain extremely well-positioned to continue to drive the adoption of NeuroStar, allowing our customers to deliver a meaningful impact on the lives of their patients suffering from mental health disorders.”
Third Quarter 2023 Financial and Operating Results for the Three Months Ended September 30, 2023
Revenues by Geography Three Months Ended September 30, 2023 2022 Amount Amount % Change (in thousands, except percentages) U.S. $ 17,211 $ 16,244 6 % International 673 254 165 % Total revenues $ 17,884 $ 16,498 8 %
$17.9 million , an increase of 8% compared to the revenue of $16.5 million in the third quarter of 2022. During the quarter, total U.S. revenue increased by 6% and international revenue increased by 165% over the third quarter of 2022. The U.S. growth was primarily driven by an increase in NeuroStar treatment session sales. The increase in international growth was mainly due to an increase in NeuroStar Advanced Therapy system sales and treatment session revenue.
U.S. Revenues by Product Category Three Months Ended September 30, 2023 2022 Amount Amount % Change (in thousands, except percentages) NeuroStar Advanced Therapy System $ 3,597 $ 3,934 (9 ) % Treatment sessions 13,060 $ 11,864 10 % Other 554 $ 446 24 % Total U.S. revenues $ 17,211 $ 16,244 6 %
U.S. NeuroStar Advanced Therapy System Revenues by Type Three Months Ended September 30, 2023 2022 Amount Amount % Change (in thousands, except percentages) NeuroStar capital $ 3,479 $ 3,664 (5 ) % Operating lease 18 48 (63 ) % Other 100 222 (55 ) % Total U.S. NeuroStar Advanced Therapy system revenues $ 3,597 $ 3,934 (9 ) %
$3.6 million , a decrease of 9% compared to the revenue of $3.9 million in the third quarter of 2022. For the three months ended September 30, 2023, and 2022, the Company shipped 43 and 50 systems, respectively.
U.S. treatment session revenue for the three months ended September 30, 2023, was $13.1 million , an increase of 10% compared to the revenue of $11.9 million in the third quarter of 2022. The revenue growth was primarily driven by an increase in utilization, in particular within our local consumable customer segment.
In the third quarter of 2023, U.S. treatment session revenue per active site was $11,917 compared to $11,364 in the third quarter of 2022.
Gross margin for the third quarter of 2023 was 65.8% , a decrease of approximately 1260 basis points from the third quarter of 2022 gross margin of 78.4% . The decline in gross margin was driven by a $1.9 million inventory impairment for specialized component parts secured for discontinued NeuroStar Advanced Therapy Systems for which cost exceeds net realizable value and one-time expenses relating to our transition to a new contract manufacturer. Without these expenses, gross margin would have been 77.3% .
Operating expenses during the third quarter of 2023 were $20.6 million , an increase of $0.2 million , or 1% , compared to $20.4 million in the third quarter of 2022.
Net loss for the third quarter of 2023 was $(9.4) million , or $(0.33) per share, as compared to the third quarter 2022 net loss of $(7.6) million , or $(0.28) per share. Net loss per share was based on 28,875,720 and 26,964,613 weighted-average common shares outstanding for the third quarters of 2023 and 2022, respectively.
EBITDA for the third quarter of 2023 was $(7.7) million as compared to the third quarter of 2022 EBITDA of $(6.2) million . See the accompanying financial table that reconciles EBITDA, which is a non-GAAP financial measure, to net loss.
Cash and cash equivalents were $35.8 million as of September 30, 2023. This compares to cash and cash equivalents of $70.3 million as of December 31, 2022, and $73.7 million as of September 30, 2022.
Pilot Launch of Better Me Guarantee Provider Program
The Better Me Guarantee Provider program creates a nationwide network of accounts, that are committed to meeting certain standards of patient care and responsiveness developed in collaboration with medical experts. Regardless of practice size or tenure, this program aims to address reported responsiveness issues and lack of knowledge of transcranial magnetic stimulation (“TMS”) therapy that have negatively impacted patient access to quality care. Participating providers agree to attend NeuroStar University, ensure that office phones are answered during business hours, advise patients of the benefits of treating to the full course of 36 sessions when medically appropriate, assign medical personnel to promptly respond to PHQ-10 assessments, and update websites and social media platforms to include NeuroStar TMS therapy as a treatment option. The program is currently in its pilot phase and the Company plans a measured roll-out, with new providers slated for inclusion on January 22, 2024 and April 8, 2024.
Draw Down of Remaining $22.5 Million Available Under Credit Facility
The Company drew down the remaining $22.5 million from its credit facility with SLR Investment Corp. This move bolsters Neuronetics' balance sheet in a non-dilutive manner, providing support for the ongoing execution of its strategic initiatives. The Company believes it can attain self-sustainability with its existing cash balance and aims to achieve cash flow break-even in the fourth quarter of 2024 and on a full-year basis in 2025.
Business Outlook
For the full year 2023, the Company now expects total revenue to be between $70.0 million and $72.0 million , compared to prior guidance of $69.0 million to $73.0 million .
For the full year 2023, the Company now expects total operating expenses to be between $82.0 million and $84.0 million , an improvement from prior guidance of $82.0 million to $86.0 million .
For the fourth quarter of 2023, the Company expects total revenue between $19.0 million and $21.0 million .
Webcast and Conference Call Information
Neuronetics’ management team will host a conference call on November 7, 2023, beginning at 8:30 a.m. Eastern Time.
The conference call will be broadcast live in listen-only mode via webcast at https://edge.media-server.com/mmc/p/a2ncdxuo here
About Neuronetics
Neuronetics, Inc. believes that mental health is as important as physical health. As a global leader in neuroscience, Neuronetics is redefining patient and physician expectations with its NeuroStar Advanced Therapy for Mental Health. NeuroStar is a non-drug, noninvasive treatment that can improve the quality of life for people suffering from neurohealth conditions when traditional medication hasn’t helped. NeuroStar is FDA-cleared for adults with major depressive disorder (“MDD”), as an adjunct for adults with obsessive-compulsive disorder, and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression). NeuroStar Advanced Therapy is the leading TMS treatment for MDD in adults with over 5.6 million treatments delivered. NeuroStar is backed by the largest clinical data set of any TMS treatment system for depression, including the world’s largest depression outcomes registry. Neuronetics is committed to transforming lives by offering an exceptional treatment that produces extraordinary results. For safety information and indications for use, visit NeuroStar.com.
“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995:
Statements in the press release regarding the Company that are not historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as “outlook,” “potential,” “believe,” “expect,” “plan,” “anticipate,” “predict,” “may,” “will,” “could,” “would” and “should” as well as the negative of these terms and similar expressions. These statements include those relating to the Company’s business outlook and current expectations for upcoming quarters and fiscal year 2023, including with respect to revenue, expenses, growth, and any statements of assumptions underlying any of the foregoing items. These statements are subject to significant risks and uncertainties and actual results could differ materially from those projected. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this release. These risks and uncertainties include, without limitation, risks and uncertainties related to: the impact of public health crises on the Company’s operations, manufacturing and supply chain interruptions or delays; the Company’s ability to execute its business strategy; the Company’s ability to achieve or sustain profitable operations due to its history of losses; the Company’s reliance on the sale and use of its NeuroStar Advanced Therapy system to generate revenues; the scale and efficacy of the Company’s salesforce; the Company’s ability to retain talent; availability of coverage and reimbursement from third-party payors for treatments using the Company’s products; physician and patient demand for treatments using the Company’s products; developments in competing technologies and therapies for the indications that the Company’s products treat; product defects; the Company’s ability to obtain and maintain intellectual property protection for its technology; developments in clinical trials or regulatory review of NeuroStar Advanced Therapy system for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; our ability to successfully roll-out our Better Me Guarantee Provider Program on the planned timeline; our self-sustainability and existing cash balances; and our ability to achieve cash flow break-even in the fourth quarter of 2024 and on a full-year basis in 2025. For a discussion of these and other related risks, please refer to the Company’s recent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov. These forward-looking statements are based on the Company’s expectations and assumptions as of the date of this press release. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, or changes in the Company’s expectations.
Investor Contact:
Mike Vallie or Mark Klausnerir@neuronetics.com
Media Contact:
EvolveMKD
Statements of Operations (In thousands, except per share data)
Three Months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 Revenues $ 17,884 $ 16,498 $ 51,034 $ 47,008 Cost of revenues 6,120 3,570 15,100 11,093 Gross Profit 11,764 12,928 35,934 35,915 Operating expenses: Sales and marketing 12,141 11,643 35,602 37,977 General and administrative 6,339 6,391 19,151 19,125 Research and development 2,155 2,348 7,308 6,197 Total operating expenses 20,635 20,382 62,061 63,299 Loss from Operations (8,871 ) (7,454 ) (26,127 ) (27,384 ) Other (income) expense: Interest expense 1,184 1,061 3,580 3,039 Other income, net (664 ) (906 ) (4,895 ) (1,554 ) Net Loss $ (9,391 ) $ (7,609 ) $ (24,812 ) $ (28,869 ) Net loss per share of common stock outstanding, basic and diluted $ (0.33 ) $ (0.28 ) $ (0.87 ) $ (1.08 ) Weighted-average common shares outstanding, basic and diluted 28,876 26,965 28,505 26,797
Balance Sheets (In thousands, except per share data)
September 30, December 31, 2023 2022 Assets Current assets: Cash and cash equivalents $ 35,847 $ 70,340 Accounts receivable, net 15,024 13,591 Inventory 9,737 8,899 Current portion of net investments in sales-type leases 968 1,538 Current portion of prepaid commission expense 2,351 1,997 Current portion of note receivables 1,850 230 Prepaid expenses and other current assets 5,234 2,174 Total current assets 71,011 98,769 Property and equipment, net 2,066 1,991 Operating lease right-of-use assets 2,916 3,327 Net investments in sales-type leases 700 1,222 Prepaid commission expense 8,018 7,568 Long-term notes receivable 4,191 362 Other assets 4,086 3,645 Total Assets $ 92,988 $ 116,884 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $ 2,822 $ 2,433 Accrued expenses 10,037 14,837 Deferred revenue 1,637 1,980 Current portion of operating lease liabilities 840 824 Current portion of long-term debt, net — 13,125 Total current liabilities 15,336 33,199 Long-term debt, net 36,851 22,829 Deferred revenue 354 829 Operating lease liabilities 2,506 2,967 Total Liabilities 55,047 59,824 Commitments and contingencies (Note 17) — — Stockholders’ Equity: Preferred stock, $0.01 par value: 10,000 shares authorized; no shares issued or outstanding on September 30, 2023, and December 31, 2022 — — Common stock, $0.01 par value: 200,000 shares authorized; 28,902 and 27,268 shares issued and outstanding on September 30, 2023, and December 31, 2022, respectively 289 273 Additional paid-in capital 408,356 402,679 Accumulated deficit (370,704 ) (345,892 ) Total Stockholders’ Equity 37,941 57,060 Total Liabilities and Stockholders’ Equity $ 92,988 $ 116,884
Statements of Cash Flows (In thousands)
Nine months ended September 30, 2023 2022 Cash Flows from Operating Activities: Net loss $ (24,812 ) $ (28,869 ) Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,503 1,044 Allowance for credit losses 369 328 Inventory impairment 1,905 — Share-based compensation 5,693 6,633 Non-cash interest expense 460 513 Cost of rental units purchased by customers — 92 Changes in certain assets and liabilities: Accounts receivable, net (7,933 ) (4,585 ) Inventory (2,742 ) (2,299 ) Net investment in sales-type leases 1,092 381 Prepaid commission expense (804 ) (854 ) Prepaid expenses and other assets (3,338 ) 176 Accounts payable 54 (2,199 ) Accrued expenses (4,801 ) 3,260 Deferred revenue (817 ) (1,260 ) Net Cash Used in Operating Activities (34,171 ) (27,639 ) Cash Flows from Investing Activities: Purchases of property and equipment and capitalized software (1,490 ) (2,766 ) Repayment of notes receivable 731 10,000 Net Cash (Used in) Provided by Investing Activities (759 ) 7,234 Cash Flows from Financing Activities: Payments of debt issuance costs (863 ) (90 ) Proceeds from issuance of long-term debt 2,500 — Repayment of long-term debt (1,200 ) — Proceeds from exercises of stock options — 52 Net Cash Provided by (Used in) Financing Activities 437 (38 ) Net Decrease in Cash and Cash Equivalents (34,493 ) (20,443 ) Cash and Cash Equivalents, Beginning of Period 70,340 94,141 Cash and Cash Equivalents, End of Period $ 35,847 $ 73,698
EBITDA is not a measure of financial performance under generally accepted accounting principles in the U.S. (“GAAP”), and should not be construed as a substitute for, or superior to, GAAP net loss. However, management uses both the GAAP and non-GAAP financial measures internally to evaluate and manage the Company’s operations and to better understand its business. Further, management believes the addition of the non-GAAP financial measure provides meaningful supplementary information to, and facilitates analysis by, investors in evaluating the Company’s financial performance, results of operations and trends. The Company’s calculation of EBITDA may not be comparable to similarly designated measures reported by other companies, because companies and investors may differ as to what type of events warrant adjustment.
The following table reconciles reported net loss to EBITDA:
Three Months ended Nine months ended September 30, September 30, 2023 2022 2023 2022 (in thousands) (in thousands) Net loss $ (9,391 ) $ (7,609 ) $ (24,812 ) $ (28,869 ) Interest expense 1,184 1,061 3,580 3,039 Income taxes — — — — Depreciation and amortization 500 387 1,503 1,044 EBITDA $ (7,707 ) $ (6,161 ) $ (19,729 ) $ (24,786 )
What was Neuronetics' third-quarter 2023 revenue?
Neuronetics reported a third-quarter 2023 revenue of $17.9 million, an 8% increase over the same period in 2022.
What is the ticker symbol for Neuronetics, Inc.?
The ticker symbol for Neuronetics, Inc. is NASDAQ: STIM.
What is the 'Better Me Guarantee' Provider pilot program?
The 'Better Me Guarantee' Provider pilot program is a new initiative launched by Neuronetics to deliver the highest standard of care to patients.
How many global patients has Neuronetics treated?
Neuronetics has achieved a milestone of over 162,500 global patients treated with 5.9 million treatment sessions.
