[10-Q] Neuronetics, Inc. Quarterly Earnings Report

Rhea-AI Filing Summary

Neuronetics (STIM) Q2 2025 Form 10-Q highlights

• Top-line acceleration: Revenue jumped 132% YoY to $38.1 m (H1 25: $70.1 m, +107%). Growth was driven by the December 2024 Greenbrook acquisition, which introduced clinic revenue now representing 61% of U.S. sales.
• Margin compression: Gross margin fell to 46.6% from 74.1% a year ago as lower-margin clinic services mix increased and cost of revenues rose to $20.4 m.
• Losses persist: Operating loss was $8.1 m (vs. $8.5 m), net loss attributable to stockholders widened slightly to $10.1 m; diluted loss/sh shrank to $(0.15) from $(0.33) on a doubled share count (66.2 m).
• Cash & liquidity: Cash and restricted cash fell to $17.5 m from $19.5 m at 12/31; operating cash burn H1 25 was $20.5 m. A February secondary offering raised net $18.9 m. Management believes liquidity is sufficient for ≥12 months.
• Leverage profile: Long-term debt stands at $55.5 m (Perceptive facility, matures 2029). Net bookings of additional tranches could add up to $25 m; warrants for 1.73 m shares are tied to the facility.
• Balance sheet impact of Greenbrook: Goodwill recorded at $19.1 m; intangible assets $18.9 m. Non-controlling interest $4.4 m reflects minority stake in acquired clinics.

Outlook: Management expects operating losses to narrow as clinic integration synergies materialise, supported by new cost-efficiency efforts and expanded treatment portfolio.

Positive

• 132% YoY revenue surge driven by Greenbrook integration and growing treatment sessions.
• $18.9 m equity raise in February 2025 strengthened near-term liquidity without increasing debt.
• Debt maturity extended to 2029 under Perceptive facility, providing long-term capital stability.
• Diversified revenue mix with 61% coming from clinic services, reducing reliance on system sales.

Negative

• Gross margin collapsed to 46.6% from 74.1% due to low-margin clinic revenue and higher costs.
• Operating cash burn of $20.5 m in H1 2025 decreased cash to $11 m, pressuring liquidity.
• Accumulated deficit widened to $442.6 m; company remains unprofitable with net loss of $22.8 m YTD.
• High leverage: $55.5 m variable-rate debt plus contingent warrants adds financial risk.
• Revenue covenant in credit facility introduces potential default risk if growth slows.

Insights

Financial Analyst

TL;DR – Rapid revenue growth offset by weaker margins and ongoing cash burn; liquidity adequate but tight.

Revenue more than doubled post-Greenbrook, validating the strategic pivot toward vertically integrated care. However, clinic operations dragged gross margin below 50%, undoing much of the scale benefit. Operating loss narrowed modestly, yet free-cash outflow hit $20 m in six months, depleting cash to $11 m (plus $6.5 m restricted). The February equity raise and 2029-maturity Perceptive debt extend runway, but higher leverage (net debt ≈$44 m) and a 12.3% lease discount rate point to elevated capital costs. Investors will focus on margin recovery, revenue per clinic trajectory, and compliance with quarterly revenue covenants under the credit facility.

Healthcare Industry Specialist

TL;DR – Acquisition broadens care model and upsells sessions; execution risk lies in harmonising clinic network.

The move into direct patient services via Greenbrook multiplies touchpoints for NeuroStar devices and consumables, evidenced by clinic revenue of $23.0 m in Q2. FDA clearances across MDD, OCD and anxious depression create a favourable demand backdrop. Key to profitability is standardising protocols and utilisation across 130+ centres while maintaining payer reimbursement levels. Management’s target to realise cost synergies should lift operating margin, but current mix shift shows early pressure. Competitive TMS landscape and upcoming ASU expense-disaggregation rules may also expose cost structure. Overall impact: strategically positive but financially neutral until clinics scale efficiently.

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended June 30, 2025

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _______ to _______

Commission File Number: 001-38546

NEURONETICS, INC.

(Exact name of registrant as specified in its charter)

​	​
Delaware	33-1051425
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)	​
​	​
3222 Phoenixville Pike, Malvern, PA	19355
(Address of principal executive offices)	(Zip Code)
(610) 640-4202	​
(Registrant’s telephone number, including area code)	​

​

Not applicable.

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

​

​	​	​	​	​
Title of each class		Trading Symbol (s)		Name on each exchange on which registered
Common Stock ($0.01 par value)	​	STIM	​	The Nasdaq Global Market

​

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

​

​	​	​	​
Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
​	​	Emerging growth company	☐

​

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

​

There were 66,124,820 shares of the registrant’s common stock outstanding as of July 31, 2025.

​

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Table of Contents

NEURONETICS, INC.

Quarterly Report on Form 10-Q for the quarterly period ended June 30, 2025

Table of Contents

​

​	​	​
​		Page
PART I – FINANCIAL INFORMATION
​	​	​
Item 1.	Financial Statements.	3
​	Consolidated Balance Sheets as of June 30, 2025 and December 31, 2024	3
​	Consolidated Statements of Operations for the Three and Six Months ended June 30, 2025 and 2024	4
​	Consolidated Statements of Changes in Equity for the Three and Six Months ended June 30, 2025 and 2024	5
​	Consolidated Statements of Cash Flows for the Six Months ended June 30, 2025 and 2024	6
​	Notes to Interim Consolidated Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	28
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	38
Item 4.	Controls and Procedures.	39
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	40
Item 1A.	Risk Factors.	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	40
Item 3.	Defaults Upon Senior Securities.	40
Item 4.	Mine Safety Disclosures.	40
Item 5.	Other Information.	40
Item 6.	Exhibits.	41
​	SIGNATURES	44

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2

Table of Contents

PART I - FINANCIAL INFORMATION

Item 1.     Financial Statements.

NEURONETICS, INC.

Consolidated Balance Sheets

(Unaudited; In thousands, except per share data)

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​		2025			2024		​
Assets		​			​		​
Current assets:		​			​		​
Cash and cash equivalents	​	$	10,969	​	$	18,459	​
Restricted cash and cash equivalents	​	​	6,500	​	​	1,000	​
Accounts receivable, net of allowance of credit losses of $920 and $1,930 as of June 30, 2025 and December 31, 2024, respectively	​		26,116	​		23,355	​
Inventory	​		4,943	​		4,248	​
Current portion of net investments in sales-type leases	​		176	​		206	​
Current portion of prepaid commission expense	​		3,139	​		3,078	​
Current portion of notes receivable	​	​	527	​	​	930	​
Prepaid expenses and other current assets	​		3,769	​		6,846	​
Total current assets	​		56,139	​		58,122	​
Property and equipment, net	​		5,324	​		6,242	​
Goodwill	​	​	19,079	​	​	18,634	​
Intangible assets, net	​	​	18,878	​	​	19,606	​
Operating lease right-of-use assets	​		24,480	​		27,093	​
Net investments in sales-type leases	​		103	​		86	​
Prepaid commission expense	​		8,226	​		8,902	​
Long-term notes receivable	​	​	334	​		295	​
Other assets	​		2,087	​		1,923	​
Total assets	​	$	134,650	​	$	140,903	​
Liabilities and Equity	​			​		​	​
Current liabilities:	​			​		​	​
Accounts payable	​	$	9,725	​	$	11,077	​
Accrued expenses	​		10,582	​		12,818	​
Current portion of deferred revenue	​		894	​		974	​
Deferred and contingent consideration	​	​	1,000	​	​	1,000	​
Other payables	​	​	285	​	​	605	​
Current portion of operating lease liabilities	​		5,317	​		4,791	​
Total current liabilities	​		27,803	​		31,265	​
Long-term debt, net	​		55,539	​		55,151	​
Deferred revenue	​		—	​		2	​
Operating lease liabilities	​		19,801	​		22,686	​
Total liabilities	​		103,143	​		109,104	​
Commitments and contingencies (Note 20)	​		​	​	​	​	​
Equity:	​			​		​	​
Preferred stock, $0.01 par value: 10,000 shares authorized; no shares issued or outstanding on June 30, 2025 and December 31, 2024	​		—	​		—	​
Common stock, $0.01 par value: 250,000 shares authorized; 66,113 and 55,679 shares issued and outstanding on June 30, 2025 and December 31, 2024, respectively	​		661	​		557	​
Additional paid-in capital	​		469,070	​		446,938	​
Accumulated deficit	​		(442,584)	​		(419,789)	​
Total Stockholders' equity	​		27,147	​		27,706	​
Non-controlling interest	​	​	4,360	​	​	4,093	​
Total equity	​	​	31,507	​	​	31,799	​
Total liabilities and equity	​	$	134,650	​	$	140,903	​

​

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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NEURONETICS, INC.

Consolidated Statements of Operations

(Unaudited; In thousands, except per share data)

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

Six Months Ended

​

​

June 30,

​

June 30,

​

​

2025

​

2024

​

2025

​

2024

Revenues

$

38,108

$

16,450

​

$

70,083

$

33,867

Cost of revenues

​

20,350

​

4,271

​

36,587

​

8,600

Gross profit

​

17,758

​

12,179

​

33,496

​

25,267

Operating expenses:

​

​

​

​

​

​

​

​

​

​

​

Sales and marketing

​

11,868

​

12,303

​

23,867

​

23,943

General and administrative

​

12,150

​

6,148

​

25,287

​

12,105

Research and development

​

1,798

​

2,235

​

3,414

​

4,585

Total operating expenses

​

25,816

​

20,686

​

52,568

​

40,633

Loss from operations

​

(8,058)

​

(8,507)

​

(19,072)

​

(15,366)

Other (income) expense:

​

​

​

​

​

Interest expense

​

1,969

​

1,978

​

3,891

​

3,804

Other income, net

​

(188)

​

(653)

​

(435)

​

(1,465)

Net loss

​

$

(9,839)

​

$

(9,832)

​

$

(22,528)

​

$

(17,705)

Less: Net income attributable to non-controlling interest

​

​

281

​

​

—

​

​

267

​

​

—

Net loss attributable to Neuronetics stockholders’

​

$

(10,120)

​

$

(9,832)

​

​

(22,795)

​

​

(17,705)

Net loss per share of common stock outstanding, basic and diluted attributable to Neuronetics stockholders’

​

$

(0.15)

​

$

(0.33)

​

$

(0.36)

​

$

(0.59)

Weighted average common shares outstanding, basic and diluted

​

66,180

​

30,052

​

63,835

​

29,762

​

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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NEURONETICS, INC.

Consolidated Statements of Changes in Equity

(Unaudited; In thousands)

​

​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
​				​			Additional									​
​	​	Common Stock				​	Paid-in		​	Accumulated		​	Noncontrolling		​	Total
​		Shares		Amount			Capital			Deficit			Interest			Equity
Balance at December 31, 2023		29,092	​	$	291	​	$	409,980	​	$	(376,081)	​	$	—	​	$	34,190
Share-based awards and options exercises		883	​		9	​		(9)	​		—	​		—	​		—
Share-based compensation expense		—	​		—	​		1,338	​		—	​		—	​		1,338
Net loss		—	​		—	​		—	​		(7,873)	​		—	​		(7,873)
Balance at March 31, 2024		29,975	​	$	300	​	$	411,309	​	$	(383,954)	​	$	—	​	$	27,655
Share-based awards and options exercises		161	​		1	​		(1)	​		—	​		—	​		—
Share-based compensation expense		—	​		—	​		1,563	​		—	​		—	​		1,563
Net loss		—	​		—	​		—	​	​	(9,832)	​	​	—	​		(9,832)
Balance at June 30, 2024		30,136	​	$	301	​	$	412,871	​	$	(393,786)	​	$	—	​	$	19,386
​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​	​
Balance at December 31, 2024		55,679	​	$	557	​	$	446,938	​	$	(419,789)	​	$	4,093	​	$	31,799
Share-based awards and options exercises		941	​		9	​		(1)	​		—	​		—	​		8
Issuance of common stock, net of issuance costs of $1,731	​	9,200	​	​	92	​	​	18,877	​	​	—	​	​	—	​	​	18,969
Share-based compensation expense		—	​		—	​		1,444	​		—	​		—	​		1,444
Net loss		—	​		—	​		—	​		(12,675)	​		(14)	​		(12,689)
Balance at March 31, 2025		65,820	​	$	658	​	$	467,258	​	$	(432,464)	​	$	4,079	​	$	39,531
Share-based awards and options exercises		293	​		3	​		(2)	​		—	​		—	​		1
Share-based compensation expense		—	​		—	​		1,814	​		—	​		—	​		1,814
Net income (loss)		—	​		—	​		—	​		(10,120)	​		281	​		(9,839)
Balance at June 30, 2025		66,113	​	$	661	​	$	469,070	​	$	(442,584)	​	$	4,360	​	$	31,507

​

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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NEURONETICS, INC.

Consolidated Statements of Cash Flows

(Unaudited; In thousands)

​

​	​	​	​	​	​	​
​	​	Six Months Ended June 30,
​	​	2025		​	2024
Cash flows from Operating activities:		​			​
Net loss	​	$	(22,528)	​	$	(17,705)
Adjustments to reconcile net loss to net cash used in operating activities:	​			​
Depreciation and amortization	​		1,812	​		1,115
Allowance for credit losses	​	​	83	​	​	1,238
Inventory impairment	​	​	177	​	​	94
Share-based compensation	​		3,258	​		2,901
Non-cash interest expense	​		388	​		474
Loss on disposal of property and equipment	​	​	43	​	​	—
Changes in certain assets and liabilities:	​		​	​
Accounts receivable, net	​		(2,479)	​		(3,204)
Inventory	​		(791)	​		1,844
Net investments in sales-type leases	​		12	​		614
Prepaid commission expense	​		613	​		(482)
Prepaid expenses and other assets	​		3,356	​		683
Accounts payable	​		(1,803)	​		(844)
Accrued expenses	​		(2,236)	​		(3,359)
Other liabilities	​	​	(320)	​	​	—
Deferred revenue	​		(82)	​		(353)
Net Cash used in Operating activities	​		(20,497)	​		(16,984)
​	​	​	​	​	​	​
Cash flows from Investing activities:	​			​
Purchases of property and equipment and capitalized software	​		(471)	​		(991)
Repayment of notes receivable	​	​	—	​	​	940
Net Cash used in Investing activities	​		(471)	​		(51)
​	​		​	​	​	​
Cash flows from Financing activities:	​			​
Proceeds from the issuance of common stock	​	​	20,700	​	​	—
Payments of common stock offering issuance costs	​	​	(1,731)	​	​	—
Proceeds from exercises of stock options	​		9	​		—
Net Cash provided by Financing activities	​		18,978	​		—
Net decrease in Cash, Cash equivalents and Restricted cash	​		(1,990)	​		(17,035)
Cash, Cash equivalents and Restricted cash, Beginning of Period	​		19,459	​		59,677
Cash, Cash equivalents and Restricted cash, End of Period	​	$	17,469	​	$	42,642
​	​	​	​	​	​	​
Reconciliation of cash, cash equivalents and restricted cash to the consolidated balance sheet:	​	​	​	​	​	​
Cash and cash equivalents	​	​	10,969	​	​	42,642
Restricted cash and cash equivalents	​	​	6,500	​	​	—
Total cash, cash equivalents and restricted cash	​	$	17,469	​	$	42,642
​	​	​	​	​	​	​
Supplemental disclosure of cash flow information:	​		​	​
​	​	​	​	​	​	​
Cash paid for interest	​	$	3,488	​	$	3,330
Transfer of inventory to property and equipment	​	​	36	​	​	36
Supplemental disclosure of non-cash investing and financing activities:	​			​
Purchases of property and equipment and capitalized software in accounts payable and accrued expenses	​	$	6	​	$	193
Reduction of accounts receivable in current and long-term notes receivable	​	$	—	​	$	606

​

The accompanying notes are an integral part of these unaudited interim consolidated financial statements.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

1.     DESCRIPTION OF BUSINESS

Neuronetics, Inc. (the “Company” or “Neuronetics” or the “Registrant”) believes that mental health is as important as physical health. As a global leader in neuroscience, the Company is delivering more treatment options to patients and healthcare providers by offering exceptional in-office treatments that produce extraordinary results. The Company’s first commercial product, the NeuroStar Advanced Therapy System, is a non-invasive and non-systemic office-based treatment that uses transcranial magnetic stimulation (“TMS”), to create a pulsed, magnetic resonance imaging (“MRI”)-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The system is cleared by the United States (“U.S.”) Food and Drug Administration (the “FDA”) to treat adult patients with major depressive disorder (“MDD”) who have failed to achieve satisfactory improvement from prior antidepressant medication in the current MDD episode. It is also cleared by the FDA as an adjunct for adults with obsessive-compulsive disorder (“OCD”) and for adolescent patients aged 15-21 with MDD. It is also cleared by the FDA to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression). In addition to selling the NeuroStar Advanced Therapy System and associated treatment sessions to customers, we operate Greenbrook TMS Inc. (“Greenbrook”) treatment centers (“Treatment Centers”) across the U.S., offering NeuroStar Advanced Therapy. We acquired Greenbrook, a leading provider of mental healthcare services, pursuant to an Arrangement Agreement effective as of December 9, 2024. The NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. Treatment Centers also obtain SPRAVATO® to treat adults with treatment-resistant depression or depressive symptoms in adults suffering from MDD with acute suicidal ideation or behavior.

The Company’s shares continue to trade on the Nasdaq Global Market under the ticker “STIM”.

Liquidity

As of June 30, 2025, the Company had cash and cash equivalents of $11.0 million and an accumulated deficit of $442.6 million. The Company incurred negative cash flows from operating activities of $20.5 million for the six months ended June 30, 2025 and $31.0 million for the year ended December 31, 2024. The Company has incurred operating losses since its inception, and management anticipates that our operating losses will lessen in the near term due to revenue growth and the pursuit of ongoing cost efficiencies in connection with our Greenbrook acquisition. The Company’s primary sources of capital to date have been from its initial public offering (“IPO”), private placements of its convertible preferred securities, borrowings under its credit facility, proceeds from its secondary public offerings of common stock, and revenues from sales of its products. As of June 30, 2025, the Company had $60.0 million of borrowings outstanding under its credit facility, which mature in July 2029.

​

On February 10, 2025, the Company completed a secondary public offering of its common stock in which the Company issued and sold 9,200,000 shares of its common stock, which included shares pursuant to an option granted to the underwriter to purchase additional shares, at a public offering price of $2.25 per share. The Company received net proceeds of $18.9 million after deducting underwriting discounts, commissions and estimated offering expenses.

​

The Company’s ability to meet its liquidity needs is dependent on growth in existing and acquired product lines and the realization of synergies subsequent to its acquisition of Greenbrook. Management believes that the Company’s cash and cash equivalents as of June 30, 2025 and anticipated revenues from sales of our products and services are sufficient to fund the Company’s operations for at least the next 12 months from the issuance of these consolidated financial statements.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

2.     BASIS OF PRESENTATION

The accompanying financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”). Any reference in these notes to applicable guidance is meant to refer to U.S. GAAP as found in the Accounting Standards Codification and Accounting Standards Updates (“ASUs”) promulgated by the Financial Accounting Standards Board (the “FASB”).

Basis of Consolidation

The consolidated financial statements of the Company are presented in U.S. dollars and include the accounts of Neuronetics and Greenbrook. All significant intercompany accounts and transactions have been eliminated in consolidation.

The Company consolidates entities in which it has a controlling financial interest based on either the variable interest entity (“VIE”) or voting interest (“VOE”) model. The Company is required to first apply the VIE model to determine whether it holds a variable interest in an entity, and if so, whether the entity is a VIE. ASC Topic 810, Consolidation ("Topic 810") defines the criteria for determining the existence of VIEs and provides guidance for consolidation.

An entity is considered to be a VIE if (i) the entity does not have enough equity to finance its own activities without additional support, (ii) the entity's at-risk equity holders lack the characteristics of a controlling financial interest, or (iii) the entity is structured with non-substantive voting rights. The primary beneficiary of a VIE is the party that has the power to direct the activities that most significantly impact the performance of the entity and the obligation to absorb losses or the right to receive benefits that could potentially be significant to the entity. The primary beneficiary is required to consolidate the VIE for financial reporting purposes. A VIE can have only one primary beneficiary but may not have a primary beneficiary if no party meets the criteria described above.

If the Company determines it does not hold a variable interest in a VIE, the Company applies the VOE model. To the extent the entity does not meet the definition of a VIE, Topic 810 guidance for voting interest entities is applied. The usual condition for a controlling financial interest, and therefore consolidation by the Company, is ownership of a majority voting interest of a corporation or a majority of kick-out rights for a limited partnership. The Company has determined that all its subsidiaries are VOEs primarily because it holds a majority voting interest in the entities.

Interim Consolidated Financial Statements

The accompanying unaudited interim consolidated financial statements have been prepared from the books and records of the Company in accordance with U.S. GAAP for interim financial information and Rule 10-01 of Regulation S-X promulgated by the U.S. Securities and Exchange Commission (the “SEC”), which permit reduced disclosures for interim periods. All adjustments, consisting only of normal recurring adjustments, necessary for a fair presentation of the accompanying consolidated balance sheets and consolidated statements of operations and stockholders’ equity and consolidated cash flows have been made. Although these interim consolidated financial statements do not include all of the information and footnotes required for complete annual consolidated financial statements, management believes the disclosures are adequate to make the information presented not misleading. The unaudited interim consolidated statement of operations for the three and six months ended June 30, 2025, and the consolidated statements of cash flows for the six months ended June 30, 2025, are not necessarily indicative of the results that may be expected for the full year. Unaudited interim consolidated financial statements and footnotes should be read in conjunction with the audited consolidated financial statements and footnotes included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025, wherein a more complete discussion of significant accounting policies and certain other information can be found.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

Currency Risk

Currency risk is the risk to the Company’s earnings that arises from fluctuations in foreign exchange rates and the degree of volatility of those rates. The Company has minimal exposure to currency risk as substantially all of the Company’s revenue, expenses, assets and liabilities are denominated in U.S. dollars. The Company pays certain vendors and payroll costs in Canadian dollars from time to time, but due to the limited size and nature of these payments, it does not give rise to significant currency risk.

Use of Estimates

The preparation of financial statements in accordance with U.S. GAAP and the rules and regulations of the SEC, requires the use of estimates and assumptions, based on judgments considered reasonable, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period. The Company bases its estimates and assumptions on historical experience, known trends and events and various other factors that management believes to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Although management believes its estimates and assumptions are reasonable when made, they are based upon information available at the time they are made. Management evaluates the estimates and assumptions on an ongoing basis and, if necessary, makes adjustments. Due to the risks and uncertainties involved in the Company’s business and evolving market conditions, and given the subjective element of the estimates and assumptions made, actual results may differ materially from estimated results.

​

3.     SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

The Company’s complete summary of significant accounting policies can be found in “Summary of Significant Accounting Policies” in the audited consolidated financial statements included in the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025.

​

4.     RECENT ACCOUNTING PRONOUNCEMENTS

In November 2023, the FASB issued ASU 2023-07, Improvements to Reportable Segment Disclosures (“ASU 2023-07”), which requires public companies to disclose for each reportable segment the significant expense categories and amounts for such expenses. ASU 2023-07 is effective for annual periods beginning December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. Accordingly, we have expanded our interim consolidated financial statement disclosures in order to comply with the guidance.

In December 2023, the FASB issued ASU 2023-09, Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires public business entities to disclose specific categories in the rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 is effective for annual periods beginning after December 15, 2024. ASU 2023-09 will be effective for our annual period ended December 31, 2025. The Company is currently evaluating the impact of the adoption of ASU 2023-09 on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU 2024-03, Income Statements–Reporting Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses (“ASU 2024-03”), which requires enhanced disclosure of income statement expense categories to improve transparency and provide financial statement users with more detailed information about the nature, amount, and timing of expenses impacting financial performance. ASU 2024-03 is effective for the Company for the annual reporting period beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The amendments in ASU 2024-03 may be adopted either on a prospective basis to financial statements issued for reporting periods after the effective date or on a

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

retrospective basis to all periods presented. The Company is currently evaluating the impact of the adoption of ASU 2024-03 on its consolidated financial statements and related disclosures.

Other than the items noted above, there have been no new accounting pronouncements not yet effective or adopted in the current year that we believe have a material impact, or potential material impact, to our unaudited interim consolidated financial statements.

​

​

5.   ACQUISITION

Effective as of December 9, 2024, pursuant to the Arrangement, the Company completed the acquisition of Greenbrook whereby the Company acquired all of the issued and outstanding common shares of Greenbrook, which became a wholly owned subsidiary. The results of operations and financial position of Greenbrook are included in the Company’s consolidated financial statements from the date of acquisition.

The allocation of the purchase price to the assets acquired and liabilities assumed was based on preliminary information and is subject to further adjustment within the measurement period.

In accordance with the acquisition method of accounting for a business combination, the purchase price of $38.8 million was allocated to the assets acquired and liabilities assumed based on their estimated fair values on the date of acquisition as follows (in thousands, except share data):

​	​	​	​
Consideration transferred:	​	​	​
Common stock	​	$	29,101
Cash consideration	​	​	4,175
Settlement of preexisting relationships	​	​	5,538
Total consideration transferred		$	38,814
​	​	​	​
Assets acquired and liabilities assumed at fair value:	​	​	​
Cash and Cash Equivalents	​	$	622
Restricted Cash	​	​	1,000
Accounts Receivable	​	​	8,837
Prepaid Expenses and Other Assets	​	​	1,917
Property and Equipment	​	​	4,561
Intangible Assets	​	​	19,690
Operating Right of Use Asset	​	​	24,835
Accounts Payable and Accrued Expenses	​	​	(11,502)
Other Payables	​	​	(671)
Deferred and Contingent Consideration	​	​	(1,000)
Operating Lease Liabilities	​	​	(24,442)
Total identifiable net assets		$	23,847
​	​	​	​
Non-controlling interest	​	​	(4,112)
​	​	​	​
Fair value of net assets acquired less noncontrolling interests acquired	​	$	19,735
​	​	​	​
Goodwill	​	​	19,079
​	​	​	​
​		$	38,814

​

During the period ended June 30, 2025, the Company recorded adjustments of $0.45 million to the preliminary fair values of the liabilities assumed, and goodwill. These adjustments reflect new information

10

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

obtained about facts and circumstances that existed as of the acquisition date. The Company will continue to assess and finalize these values during the measurement period.

Unaudited Pro Forma Financial Information

The following table reflects the pro forma operating results for the Company, which gives effect to the acquisition of Greenbrook as if it had occurred on January 1, 2024. The pro forma results are based on assumptions that the Company believes are reasonable under the circumstances. The pro forma results are not necessarily indicative of future results. The pro forma financial information includes the historical results of the Company and Greenbrook with eliminations for all intercompany transactions and excludes the effects of any synergies or cost reduction initiatives related to the acquisition of Greenbrook.

​

​	​	​	​	​	​
​	Unaudited Pro Forma
​	three months ended June 30,		​	six months ended June 30,
​	2024			2024
Revenue	$	34,575	​	$	67,120
Net loss	$	(17,510)	​	$	(35,407)

​

​

​

6.     INTANGIBLE ASSETS

Intangible assets consist of the following as of June 30, 2025 and December 31, 2024 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of June 30, 2025

​

​

Useful Life

​

Gross Value

​

Accumulated Amortization

​

Net Carrying Value

​

Weighted Average Remaining Useful Life

Management services agreements

​

17-21 years

​

$

17,100

​

$

(524)

​

$

16,576

​

19 years

Trade name

​

5 years

​

​

2,590

​

​

(288)

​

​

2,302

​

5 years

​

​

​

​

$

19,690

​

$

(812)

​

$

18,878

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

As of December 31, 2024

​

​

Useful Life

​

Gross Value

​

Accumulated Amortization

​

Net Carrying Value

​

Weighted Average Remaining Useful Life

Management services agreements

​

17-21 years

​

$

17,100

​

$

(30)

​

$

17,070

​

19 years

Trade name

​

5 years

​

​

2,590

​

​

(54)

​

​

2,536

​

5 years

​

​

​

​

$

19,690

​

$

(84)

​

$

19,606

​

​

​

Amortization expense of intangible assets was $0.4 million and $0 for the three months ended June 30, 2025 and 2024, respectively.

Amortization expense of intangible assets was $0.7 million and $0 for the six months ended June 30, 2025 and 2024, respectively.

11

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

Amortization expense over the remaining life of the intangible assets will be recognized as follows (in thousands):

​	​	​	​
Year		​	Amortization expense
Remainder of 2025	​	$	729
2026	​	​	1,457
2027	​	​	1,457
2028	​	​	1,457
2029	​	​	1,428
Thereafter	​	​	12,350
​	​	$	18,878

​

​

​

​

7.     FAIR VALUE MEASUREMENT AND FINANCIAL INSTRUMENTS

The carrying values of cash equivalents, accounts receivable, prepaids and other current assets, and accounts payable on the Company’s balance sheets approximated their fair values as of June 30, 2025 and December 31, 2024 due to their short-term nature. The carrying values of the Perceptive Facility (as defined below) approximated its fair value as of June 30, 2025 and December 31, 2024 due to its variable interest rate. The carrying value of the Company’s notes receivable approximated its fair value as of June 30, 2025 and December 31, 2024 due to its variable interest rate.

The Perceptive First Amendment (as defined below) included contingently issuable warrants of up to 900,000 shares that did not meet equity classification. Accordingly, the Company classified the warrants as a liability at their fair value and will adjust the warrants to their fair value at each reporting period. At June 30, 2025, the fair value of the liability-classified warrants was de minimis.

Certain of the Company’s financial instruments are measured at fair value using a three-level hierarchy that prioritizes the inputs used to measure fair value. This hierarchy maximizes the use of observable inputs and minimizes the use of unobservable inputs. The three levels of inputs used to measure fair value are as follows:

Level 1: Inputs are quoted prices for identical instruments in active markets.

Level 2: Inputs are quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; or model-derived valuations whose inputs are observable or whose significant value drivers are observable.

Level 3: Inputs are unobservable and reflect the Company’s own assumptions, based on the best information available, including the Company’s own data.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

The following tables set forth the carrying amounts and fair values of the Company’s financial instruments as of June 30, 2025 and December 31, 2024 (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

June 30, 2025

​

​

​

​

​

​

​

​

Fair Value Measurement Based on

​

​

​

​

​

​

​

​

Quoted

​

Significant

​

​

​

​

​

​

​

​

​

​

​

Prices In

​

Other

​

Significant

​

​

​

​

​

​

​

​

Active

​

Observable

​

Unobservable

​

​

Carrying

​

​

​

​

Markets

​

Inputs

​

Inputs

​

Amount

Fair Value

(Level 1)

(Level 2)

(Level 3)

Assets

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Money market funds (cash equivalents)

​

$

428

​

$

428

​

$

428

​

$

—

​

$

—

Money market funds (restricted cash and cash equivalents)

​

$

5,500

​

$

5,500

​

$

5,500

​

$

—

​

$

—

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

December 31, 2024

​

​

​

​

​

​

​

​

Fair Value Measurement Based on

​

​

​

​

​

​

​

​

Quoted

​

Significant

​

​

​

​

​

​

​

​

​

​

​

Prices In

​

Other

​

Significant

​

​

​

​

​

​

​

​

Active

​

Observable

​

Unobservable

​

​

Carrying

​

​

​

​

Markets

​

Inputs

​

Inputs

​

​

Amount

​

Fair Value

​

(Level 1)

​

(Level 2)

​

(Level 3)

Assets

​

​

​

​

​

Money market funds (cash equivalents)

​

$

5,200

​

$

5,200

​

$

5,200

​

$

—

​

$

—

​

​

​

​

8.     ACCOUNTS RECEIVABLE

The following table presents the composition of accounts receivable, net, as of June 30, 2025 and December 31, 2024 (in thousands):

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​		2025			2024		​
Gross accounts receivable - trade	​	$	27,036	​	$	25,285	​
Less: Allowances for credit losses	​		(920)	​		(1,930)	​
Accounts receivable, net	​	$	26,116	​	$	23,355	​

​

​

​

​

​

9.     INVENTORY

Inventory is stated at the lower of cost and net realizable value, with cost being determined on a first in, first out basis. The Company’s inventory is primarily comprised of finished goods and work-in-process.

​

​

​

​

​

​

13

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

10.     PROPERTY AND EQUIPMENT AND CAPITALIZED SOFTWARE

The following table presents the composition of property and equipment, net, as of June 30, 2025 and December 31, 2024 (in thousands):

​

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​		2025			2024		​
Laboratory equipment	​	$	637	​	$	626	​
Office equipment	​		495	​		495	​
Auto	​	​	23	​	​	23	​
Computer equipment and software	​		843	​		806	​
Manufacturing equipment	​		617	​		605	​
Clinical equipment	​	​	278	​	​	278	​
Leasehold improvements	​		1,608	​		1,608	​
TMS devices	​	​	4,277	​	​	4,447	​
Rental equipment	​		296	​		598	​
Property and equipment, gross	​		9,074	​		9,486	​
Less: Accumulated depreciation	​		(3,750)	​		(3,244)	​
Property and equipment, net	​	$	5,324	​	$	6,242	​

​

As of June 30, 2025 and December 31, 2024, the Company had capitalized software costs, net, of $0.6 million and $0.4 million, respectively, which are included in “Prepaid expenses and other current assets” and “Other assets” on the balance sheets.

Depreciation and amortization expense related to property and equipment and capitalized software costs was $0.5 million and $0.6 million for the three months ended June 30, 2025 and 2024, respectively, and $1.1 million and $1.1 million for the six months ended June 30, 2025 and 2024, respectively.

​

​

11.     NOTES RECEIVABLE

Greenbrook TMS Inc.

On March 31, 2023, the Company entered into a Secured Promissory Note and Guaranty Agreement (the “Promissory Note”) with TMS Neurohealth Centers Inc. (the “Maker”) and Greenbrook TMS Inc. and its subsidiaries, excluding the Maker, in the principal amount of $6.0 million for a period of four years.

The Promissory Note interest rate equaled the sum of (a) the floating interest rate of daily secured overnight financing rate as administered by the Federal Reserve Bank of New York on its website plus (b) 7.65%.

Effective as of December 9, 2024, pursuant to the Arrangement, the Promissory Note outstanding principal amount of $3.6 million was settled and recorded as additional purchase consideration.

Interest income recognized by the Company related to notes receivable was $0 and $0.2 million for the three months ended June 30, 2025 and 2024, respectively. Interest income recognized by the Company related to notes receivable was $0 and $0.3 million for the six months ended June 30, 2025 and 2024, respectively, and is included within other income, net on the consolidated statements of operations.

​

​

14

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

12.     LEASES

Lessee:

The Company has operating leases for its corporate headquarters, treatment centers, a training facility, and office equipment, including copiers. The corporate headquarters is located in Malvern, Pennsylvania, where the Company leases an approximately 42,000 square foot facility comprising office and warehouse space.

In the second quarter of 2025, the Company executed a lease modification for this facility, extending the lease term through June 2033 for 32,000 square feet of the premises.

The Company leases an approximately 9,600 square foot facility in Charlotte, North Carolina as a training facility for its NeuroStar Advanced Therapy Systems. The lease ends in September 2027. The Company has an option to extend the lease on its training facility for an additional one-year term; however, the Company has determined it is not reasonably certain to exercise the option at this time after assessing contract, asset, entity and market conditions present upon lease commencement.

Following the acquisition of Greenbrook, the Company has lease agreements related to its treatment centers and corporate offices. These lease agreements range from month-to-month to seven years in length.

Operating lease rent expense was $2.1 million and $0.2 million for the three months ended June 30, 2025 and 2024, respectively and $4.4 million and $0.4 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, the weighted average remaining lease term of operating leases was 5.5 years and the weighted average discount rate was 12.3%.

The following table presents the supplemental cash flow information as a lessee related to leases (in thousands):

​

​	​	​	​	​	​	​	​
​		Six Months Ended					​
​	​	June 30, 2025			June 30, 2024		​
Cash paid for amounts included in the measurement of lease liabilities:		​			​		​
Operating cash flows from operating leases	​	$	3,983	​	$	531	​

​

The following table sets forth by year the required future payments of operating lease liabilities (in thousands):

​

​	​	​	​	​
​		​		​
​	​	Amount		​
Remainder of 2025	​	$	3,816	​
2026	​	​	7,629	​
2027	​		6,245	​
2028	​		4,583	​
2029	​	​	3,898	​
Thereafter	​		9,082	​
Total lease payments	​		35,253	​
Less imputed interest	​		(10,135)	​
Present value of operating lease liabilities	​	$	25,118	​

​

Lessor sales-type leases:

Certain customers have purchased NeuroStar Advanced Therapy Systems on a rent-to-own basis. The lease term is two or four years with a customer option to purchase the NeuroStar Advanced Therapy System at the end of the lease or automatic transfer of ownership of the NeuroStar Advanced Therapy System at the end of the lease.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

​

The following table sets forth a maturity analysis of the undiscounted lease receivables related to sales-type leases (in thousands):

​

​	​	​	​	​
​		June 30, 2025		​
Remainder of 2025	​	$	102	​
2026	​	​	147	​
2027	​		30	​
Total sales-type lease receivables	​	$	279	​

​

As of June 30, 2025 and December 31, 2024 the carrying amount of the lease receivables was $0.3 million. The Company does not have any unguaranteed residual assets.

Lessor operating leases:

NeuroStar Advanced Therapy Systems sold for which collection is not probable are accounted for as operating leases. For the three months ended June 30, 2025 and 2024, the Company recognized operating lease income of $0.05 million and $0.03 million, respectively. For the six months ended June 30, 2025 and 2024, the Company recognized operating lease income of $0.1 million.

The Company maintained rental equipment, net, of $0.1 million and $0.3 million as of June 30, 2025 and December 31, 2024, respectively, which are included in property and equipment, net on the consolidated balance sheets. Rental equipment depreciation expense was $0.14 million and $0.02 million for the three months ended June 30, 2025 and 2024, respectively and $0.16 million and $0.05 million for the six months ended June 30, 2025 and 2024, respectively.

​

13.     PREPAID COMMISSION EXPENSE

The Company pays a commission on both NeuroStar Advanced Therapy System sales and treatment session sales. Since the commission paid for NeuroStar Advanced Therapy System sales is not commensurate with the commission paid for treatment sessions, the Company capitalizes commission expense associated with NeuroStar Advanced Therapy System sales commissions paid that is incremental to specifically anticipated future treatment session orders. In developing this estimate, the Company considered its historical treatment session sales and customer retention rates, as well as technology development life cycles and other industry factors. These costs are periodically reviewed for impairment.

NeuroStar Advanced Therapy System commissions are deferred and amortized on a straight-line basis over a seven year period equal to the average customer term, which the Company deems to be the expected period of benefit for these costs.

On the Company’s consolidated balance sheets, the current portion of capitalized contract costs is represented by the current portion of prepaid commission expense, while the long-term portion is included in prepaid commission expense. Amortization expense was $0.8 million and $0.7 million for the three months ended June 30, 2025 and 2024, respectively, and $1.6 million and $1.4 million for the six months ended June 30, 2025 and 2024, respectively.

​

16

Table of Contents

NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

14.     ACCRUED EXPENSES

The following table presents the composition of accrued expenses as of June 30, 2025 and December 31, 2024 (in thousands):

​

​	​	​	​	​	​	​
​		June 30,			December 31,
​	​	2025		​	2024
Compensation and related benefits	​	$	7,049	​	$	7,952
Consulting and professional fees	​		968	​		1,579
Research and development expenses	​		344	​		421
Sales and marketing expenses	​	​	312	​	​	523
Warranty	​		190	​		232
Sales and other taxes payable	​		562	​		619
Other	​		1,157	​		1,492
Accrued expenses	​	$	10,582	​	$	12,818

​

​

15.     REVENUE AND DEFERRED REVENUE

Contract terms typically require payment upon shipment or installation of the NeuroStar Advanced Therapy System and additional payments as access codes for treatment sessions are delivered, which can span several years after the NeuroStar Advanced Therapy System is first delivered and installed. The timing of revenue recognition compared to billings and cash collections typically results in accounts receivable. However, sometimes customer advances and deposits may be required for certain customers and are recorded as contract liabilities (deferred revenue). For multi-year agreements, the Company generally invoices customers annually at the beginning of each annual coverage period and recognizes revenue over the term of the coverage period.

As of June 30, 2025, the Company expects to recognize approximately the following percentages of deferred revenue by year:

​

​	​	​	​
​		Revenue
Year:	​	Recognition
Remainder of 2025	​	75	%
2026		25	%
Total		100	%

​

Revenue recognized for the three months ended June 30, 2025 and 2024 that was included in the contract liability balance at the beginning of the year was $0.3 million and $0.4 million, respectively. Revenue recognized for the six months ended June 30, 2025 and 2024 that was included in the contract liability balance at the beginning of the year was $0.9 million and $1.1 million, respectively, and primarily represented revenue earned from separately priced extended warranties, customer deposits, milestone revenue, and clinical training.

Customers

Significant customers are those that represent more than 10% of the Company’s total revenue. For the three months ended June 30, 2024, one customer accounted for 14% of the Company’s revenue. For the six months ended June 30, 2024, one customer accounted for 13% of the Company’s revenue. Following the acquisition of Greenbrook, there are no significant customers for the three and six months period ended June 30, 2025.

17

Table of Contents

NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

Geographical information

The following geographic data includes revenue generated from the Company’s third-party distributors. The Company’s revenue was generated in the following geographic regions and by product line for the periods indicated:

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Revenues by Geography
​	​	Three Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​	​	​	% of
​	​	Amount		​	Revenues	​	Amount		​	Revenues
​	​	(in thousands, except percentages)									​
U.S.		$	37,656		99	%	$	16,130		98	%
International	​		452		1	%		320		2	%
Total revenues	​	$	38,108		100	%	$	16,450		100	%

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	U.S. Revenues by Product Category
​	​	Three Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​		​	% of
​		Amount			Revenues		Amount			Revenues
​		(in thousands, except percentages)									​
NeuroStar Advanced Therapy System	​	$	3,484	​	9	%	$	4,000	​	25	%
Treatment sessions	​		10,773		29	%		11,660		72	%
Clinic revenue	​	​	23,024	​	61	%	​	—	​	—	%
Other	​		375		1	%		470		3	%
Total U.S. revenues	​	$	37,656		100	%	$	16,130		100	%

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	International Revenues by Product Category
​	​	Three Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​	​	​	% of
​		Amount			Revenues		Amount			Revenues
​		(in thousands, except percentages)									​
NeuroStar Advanced Therapy System	​	$	162		36	%	$	—		-	%
Treatment sessions	​		280		62	%		139		43	%
Other	​		10		2	%		181		57	%
Total international revenues	​	$	452		100	%	$	320		100	%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenues by Geography

​

​

​

Six Months Ended June 30,

​

​

​

2025

​

2024

​

​

​

​

​

​

% of

​

​

​

​

% of

​

​

​

Amount

​

Revenues

​

Amount

​

Revenues

​

​

​

(in thousands, except percentages)

​

​

U.S.

$

69,139

99

%

$

32,923

97

%

​

International

​

944

1

%

944

3

%

​

Total revenues

​

$

70,083

100

%

$

33,867

100

%

​

​

18

Table of Contents

NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

​	​	​	​	​	​	​	​	​	​	​	​
​	​	U.S. Revenues by Product Category
​	​	Six Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​		​	% of
​		Amount			Revenues		Amount			Revenues
​		(in thousands, except percentages)									​
NeuroStar Advanced Therapy System	​	$	6,330	​	9	%	$	7,310	​	22	%
Treatment sessions	​		20,385		30	%		24,648		75	%
Clinic revenue	​	​	41,683	​	60	%	​	—	​	—	%
Other	​		741		1	%		965		3	%
Total U.S. revenues	​	$	69,139		100	%	$	32,923		100	%

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	International Revenues by Product Category
​	​	Six Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​	​	​	% of
​		Amount			Revenues		Amount			Revenues
​		(in thousands, except percentages)									​
NeuroStar Advanced Therapy System	​	$	326		35	%	$	259		27	%
Treatment sessions	​		430		45	%		309		33	%
Other	​		188		20	%		376		40	%
Total international revenues	​	$	944		100	%	$	944		100	%

​

​

​

16.     DEBT

The following table presents the composition of debt as of June 30, 2025 and December 31, 2024 (in thousands):

​	​	​	​	​	​	​	​
​	​	June 30,		​	December 31,		​
​		2025			2024		​
Outstanding principal	​	$	60,000	​	$	60,000	​
Less debt discounts	​		(4,461)	​		(4,849)	​
Total debt, net	​		55,539	​		55,151	​
Less current portion	​		—	​		—	​
Long-term debt, net	​	$	55,539	​	$	55,151	​

​

For the three months ended June 30, 2025, the Company recognized interest expense of $2.0 million, of which $1.8 million was cash and $0.2 million was non-cash interest expense related to the amortization of deferred debt issuance costs. For the three months ended June 30, 2024, the Company recognized interest expense of $2.0 million, of which $1.7 million was cash and $0.3 million was non-cash interest expense related to the amortization of deferred debt issuance costs and accrual of final payment fees.

For the six months ended June 30, 2025, the Company recognized interest expense of $3.9 million, of which $3.5 million was cash and $0.4 million was non-cash interest expense related to the amortization of deferred debt issuance costs. For the six months ended June 30, 2024, the Company recognized interest expense of $3.8 million, of which $3.3 million was cash and $0.5 million was non-cash interest expense related to the amortization of deferred debt issuance costs and accrual of final payment fees.

Perceptive Credit Facility

On July 25, 2024, the Company entered into a Credit Agreement and Guaranty with Perceptive Credit Holdings IV, LP (“Perceptive”) as collateral agent and other lenders defined in the agreement (the “Perceptive Facility”) which was used to partially repay the Company’s previous $60.0 million credit facility with SLR Investment Corp. (formerly known as Solar Capital Ltd.) (“Solar” and such facility, the “Solar Facility”).

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

​

The Perceptive Facility permits the Company to borrow up to an aggregate amount of $90.0 million in three tranches of term loans, a “Tranche 1 Loan”, a “Tranche 2 Loan” and a “Tranche 3 Loan.” On July 25, 2024, the Company borrowed an aggregate amount of $50.0 million, which was the aggregate amount available under the Tranche 1 Loan. Under the Tranche 2 Loan portion of the Perceptive Facility, the Company is permitted to borrow, at its election, up to an aggregate amount of $15.0 million, (i) upon the Company achieving a specified amount of trailing twelve months net revenue, and (ii) assuming there has been no event of default under the Perceptive Facility prior to such election. The Tranche 2 Loan must be borrowed on or before January 31, 2026. Under the Tranche 3 Loan, the Company may request to borrow, at the consent of the Majority Lenders (as defined in the Perceptive Facility), up to an aggregate amount of $25.0 million. The Tranche 3 Loan is available until June 30, 2026. There are no scheduled repayments of the principal on the Tranche 1 Loan, Tranche 2 Loan and Tranche 3 Loan prior to the maturity date. All amounts borrowed under the Perceptive Facility are due on July 25, 2029.

Each of the Tranche 1 Loan, Tranche 2 Loan and Tranche 3 Loan accrue interest from the date of borrowing through the date of repayment at a floating per annum rate of interest equal to the sum of 7% plus the greater of (a) 4.50% and (b) One-Month Term SOFR (as defined in the Perceptive Facility).

​

If the Company prepays either the Tranche 1 Loan, Tranche 2 Loan or Tranche 3 Loan prior to their respective scheduled maturity dates, the Company will also be required to pay prepayment fees to Perceptive equal to 6% of the principal amount of such term loan then-prepaid if prepaid on or before the first anniversary of the closing date, 5% of the principal amount of such term loan then-prepaid if prepaid after the first anniversary and on or before the second anniversary of the closing date, 4% of the principal amount of such term loan then-prepaid if prepaid after the second anniversary and on or before the third anniversary of the closing date, and 3% of the principal amount of such term loan then-prepaid if prepaid after the third anniversary and on or before the fourth anniversary of the closing date.

​

The Company’s obligations under the Perceptive Facility are secured by a first priority security interest in substantially all of the Company’s assets, including its intellectual property. The Perceptive Facility requires the Company to comply with a quarterly minimum trailing revenue covenant commencing March 2025 and a minimum liquidity covenant as well as affirmative and negative covenants.

​

The Perceptive Facility contains events of default, including, without limitation, events of default upon: (i) failure to make payment pursuant to the terms of the agreement; (ii) violation of covenants; (iii) material adverse changes to the Company’s business; (iv) insolvency; (v) material cross-defaults; (vi) significant judgments, orders or decrees for payments by the Company; (vii) incorrectness of representations and warranties; (viii) significant adverse events related to the Employee Retirement Income Security Act of 1974; (ix) failure by the Company to be registered with the SEC in good standing; or (x) failure by the Company to maintain a valid and perfected lien on the collateral securing the borrowing.

​

As consideration for the Perceptive Facility, the Company agreed to issue to Perceptive warrants to purchase up to 1,462,500 shares of the Company’s common stock, with a warrant exercisable into 1,125,000 shares of the Company’s common stock issued on the closing date (the “Initial Warrant”). The per share exercise price for the Initial Warrant is equal to the lower of (x) the 10-day volume weighted average price of the Company’s common stock on the business day immediately prior to the closing date and (y) the 10-day volume weighted average price of the common stock ended on August 31, 2024. In addition to the Initial Warrant, an additional warrant will be issued for 337,500 shares of common stock concurrently with the borrowing of the Tranche 2 Loan. The per share exercise price for the additional warrant will be equal to the exercise price of the Initial Warrant. Each warrant will be exercisable, in whole or in part, until the tenth anniversary of the applicable date of issuance.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

Effective as of December 9, 2024, the Company amended the Perceptive Facility and borrowed against the Tranche 3 Loan in a principal amount of $10.0 million and used the proceeds thereof to finance, in part, the operations of the combined enterprise after the acquisition of Greenbrook and the related transactions included in the Arrangement (the “Perceptive First Amendment”). As consideration for Tranche 3 Loan borrowing, the Company issued warrants to purchase 600,000 shares of the Company’s common stock at a per share exercise price of $0.94.

The Company calculated the issuance date fair value of the warrants using the Black-Scholes option pricing model, which resulted in a fair value of $2.6 million. Accordingly, the Company allocated the proceeds from the Perceptive facility on a relative fair value basis resulting in $2.5 million allocated to the warrants.

As of June 30, 2025, the Company had $60.0 million of borrowings outstanding under the Perceptive Facility, which has a final maturity in July 2029. The interest rate on borrowings under the credit facility is variable and resets monthly.

The Company was in compliance with the covenants under the Perceptive Facility as of June 30, 2025.

Solar Credit Facility

On March 2, 2020, the Company entered into a Loan and Security Agreement with Solar as collateral agent and other lenders as defined in the Solar Facility.

On March 7, 2024, the Company entered into a sixth amendment (the “Solar Sixth Amendment”) to the Solar Facility.

Under the Solar Sixth Amendment, Solar (i) waived the specified events with respect to the Company’s non-compliance with the required revenue under the net product revenue covenant and (ii) amended the financial covenants to reflect current projections.

In connection with the Company’s entry into the Perceptive Facility, on July 25, 2024, the Company prepaid in full all outstanding obligations under and terminated the Solar Facility. In connection with this prepayment, the Company paid total consideration of $64.7 million, which consisted of (i) $60.0 million of remaining principal amount outstanding, (ii) $0.5 million of accrued and unpaid interest, (iii) $3.0 million in connection with the final payment fee, and (iv) $1.2 million in connection with the prepayment fee. The Company funded the prepayment of the Solar Facility using proceeds from the Perceptive Facility and cash on hand.

​

​

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

17.     COMMON STOCK

Common Stock Offering

On February 10, 2025, the Company completed a secondary public offering of its common stock in which the Company issued and sold 9,200,000 shares of its common stock, which included shares pursuant to an option granted to the underwriter to purchase additional shares, at a public offering price of $2.25 per share. The Company received net proceeds of approximately $18.9 million after deducting underwriting discounts, commissions and estimated offering expenses.

Common Stock

The following table summarizes the total number of shares of the Company’s common stock issued and reserved for issuance as of June 30, 2025 and December 31, 2024 (in thousands):

​

​	​	​	​	​	​
​		June 30, 2025		December 31, 2024	​
Shares of common stock issued		66,113		55,679	​
Shares of common stock reserved for issuance for:					​
Common stock warrants outstanding		1,725		1,725	​
Stock options outstanding		1,223		1,237	​
Restricted stock units outstanding		5,267		5,253	​
Shares available for grant under stock incentive plans		4,541		3,596	​
Shares available for sale under employee stock purchase plan		2,181		1,624	​
Total shares of common stock issued and reserved for issuance		81,050		69,114	​

​

Common Stock Warrants

The following table summarizes the Company’s outstanding common stock warrants as of June 30, 2025 and December 31, 2024:

​

​	​	​	​	​	​
Warrants			​
Outstanding	​	​	​	​	​
(in thousands)	​	Exercise Price		​	Expiration Date
1,125	​	$	0.94	​	July-2034
600	​	$	0.94	​	Dec-2034
1,725	​

​

There have been no grants, exercises, or cancellations of warrants during the three and six months ended June 30, 2025 and 2024.

​

​

​

​

​

​

​

​

​

18.     LOSS PER SHARE

The Company’s basic loss per common share is computed by dividing the net loss by the weighted average number of shares of common stock outstanding during the period. The Company’s restricted stock awards (non-vested shares) are issued and outstanding at the time of grant but are excluded from the Company’s computation of weighted average shares outstanding in the determination of basic loss per share until vesting occurs.

A net loss cannot be diluted, so when the Company is in a net loss position, basic and diluted loss per common share are the same. If the Company achieves profitability in the future, the denominator of a diluted earnings per common share calculation will include both the weighted average number of shares outstanding and the number of common stock equivalents, if the inclusion of such common stock equivalents would be

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

dilutive. Dilutive common stock equivalents potentially include warrants, stock options, non-vested restricted stock units and non-vested performance restricted stock units (“PRSUs”) using the treasury stock method, along with the effect, if any, from the potential conversion of outstanding securities, such as convertible preferred stock.

The following potentially dilutive securities outstanding as of June 30, 2025 and 2024 have been excluded from the denominator of the diluted loss per share of common stock outstanding calculation (in thousands):

​

​	​	​	​	​	​
​	​	June 30,			​
​		2025		2024	​
Stock options	​	1,223	​	1,258	​
Non-vested PRSUs		1,622		395	​
Non-vested restricted stock units		3,645		3,038	​
Common stock warrants		1,725		21	​

​

​

​

19.     SHARE-BASED COMPENSATION

The amount of share-based compensation expense recognized by the Company by location in its consolidated statements of operations for the three and six months ended June 30, 2025 and 2024 is as follows (in thousands):

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended June 30,

​

Six Months Ended June 30,

​

​

​

2025

2024

2025

2024

​

Cost of revenues

​

$

47

​

$

37

​

$

74

​

​

71

​

Sales and marketing

​

377

​

359

​

461

​

​

709

​

General and administrative

​

1,214

​

976

​

2,371

​

​

1,753

​

Research and development

​

176

​

191

​

352

​

​

368

​

Total

​

$

1,814

​

$

1,563

​

$

3,258

​

$

2,901

​

​

2018 Equity Incentive Plan

In June 2018, the Company adopted the 2018 Equity Incentive Plan, (the “2018 Plan”), which authorized the issuance of up to 1.4 million shares, subject to an annual 4% increase based on the number of shares of common stock outstanding, in the form of restricted stock, stock appreciation rights and stock options to the Company’s directors, employees and consultants. Effective as of December 9, 2024, the Company authorized the issuance of up to 5,592,670 shares under the 2018 Plan. The amount and terms of grants are determined by the Company’s board of directors. All stock options granted to date have had exercise prices equal to the fair value, as determined by the closing price as reported by the Nasdaq Global Market, of the underlying common stock on the date of grant. The contractual term of stock options is up to 10 years, and stock options are exercisable in cash or as otherwise determined by the Company’s board of directors. Generally, stock options vest 25% upon the first anniversary of the date of grant and the remainder ratably monthly thereafter for 36 months. Restricted stock units generally vest ratably in three equal installments on the first, second and third anniversaries of the grant date. PRSUs generally vest based on attainment of performance metrics, such as achievement of cash flow breakeven or retention of key employees as determined by the Company’s board of directors. The fair value of the PRSUs are determined using a risk neutral Monte Carlo simulation valuation model. As of June 30, 2025, there were 3.9 million shares available for future issuance under the 2018 Plan.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

2020 Inducement Incentive Plan

In December 2020, the Company adopted the 2020 Inducement Incentive Plan (the “2020 Plan”), which authorized the issuance of up to 0.4 million shares, subject to increase by approval of the Company’s board of directors, in the form of stock options, stock appreciation rights, restricted stock awards, restricted stock unit awards, performance stock awards and other stock awards to eligible employees who satisfy the standards for inducement grants under Nasdaq Global Market rules. In March 2022, the Company’s board of directors approved an additional 0.5 million shares for the issuance under the 2020 Plan. Effective as of December 9, 2024, the Company authorized the issuance of up to 1,400,000 shares under the 2020 Plan. An individual who previously served as an employee or director of the Company is not eligible to receive awards under the 2020 Plan. The amount and terms of grants are determined by the Company’s board of directors. As of June 30, 2025, there were 0.6 million shares available for future issuance under the 2020 Plan.

Stock Options

The following table summarizes the Company’s stock option activity for the six months ended June 30, 2025:

​

​	​	​	​	​	​	​	​	​	​	​
​					​		Weighted		Aggregate
​	​	Number of	​	Weighted		​	average	​	average
​	​	Shares under	​	average		​	Remaining	​	Intrinsic
​	​	Option	​	Exercise Price		​	Contractual	​	Value
​	​	(in thousands)	​	per Option		​	Life (in years)	​	(in thousands)
Outstanding at December 31, 2024		1,237	​	$	3.75		​		​	​
Granted		—	​	$	—				​
Exercised		(5)	​	$	1.62		​		​
Forfeited and Expired		(9)	​	$	6.33				​
Outstanding at June 30, 2025		1,223	​	$	3.74		4.6		$	1,421
Exercisable at June 30, 2025		1,223	​	$	3.74		4.6		$	1,421
Vested and expected to vest at June 30, 2025		1,223	​	$	3.74		4.6		$	1,421

​

The Company recognized share-based compensation expense related to stock options of $0 and $0.1 million for the three months ended June 30, 2025 and 2024, respectively, and $0 and $0.1 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025, there was no remaining unrecognized compensation cost related to non-vested stock options.

For the six months ended June 30, 2025 the Company did not grant stock options.

Restricted Stock Units and PRSUs

The following table summarizes the Company’s restricted stock unit and PRSU activity for June 30, 2025:

​

​	​	​	​	​	​	​	​	​	​	​
​		Non-vested		​	Weighted		Non-vested		​	Weighted
​	​	Restricted	​	​	average	​	PRSUs	​	​	average
​	​	Stock Units	​	​	Grant-date	​	​	​	​	Grant-date
​	​	(in thousands)	​	​	Fair Value	​	(in thousands)	​	​	Fair Value
Non-vested at December 31, 2024	​	3,553	​	$	3.10		1,700	​	$	2.45
Granted		1,955	​	$	4.31		398	​	$	4.34
Vested		(1,273)	​	$	3.62		—	​	$	—
Forfeited		(590)	​	$	3.03		(476)	​	$	1.33
Non-vested at June 30, 2025		3,645	​	$	3.58		1,622	​	$	3.24

​

The Company recognized $1.8 million and $1.5 million in share-based compensation expense related to the restricted stock units and PRSUs for the three months ended June 30, 2025 and 2024, respectively, and $3.3 million and $2.8 million for the six months ended June 30, 2025 and 2024, respectively. As of June 30, 2025,

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

there was $12.6 million of unrecognized compensation cost related to non-vested restricted stock units and PRSUs, which the Company expects to recognize over a weighted average period of 2.2 years. The total fair value at the vesting date of restricted stock units and PRSUs vested during the six months ended June 30, 2025 was $4.4 million.

During the period ended June 30, 2025, the Company granted PRSUs to certain key employees, with vesting subject to the recipient’s continued service with the Company through the applicable vesting date and the achievement of certain performance conditions as outlined in the award document. The awards are subject to the Company’s 2018 Plan

The Company offers our board of directors and certain employees the opportunity to defer restricted stock units into an equity-based deferred equity compensation plan (the “RSUDEP”). Benefits from the RSUDEP are payable in shares of the Company’s stock and the awards under the RSUDEP are unfunded to the plans’ participants. Restricted stock units deferred under the RSUDEP are counted against the total shares available for future issuance under the 2018 Plan. As at June 30, 2025, there were 0.3 million shares deferred under this plan.

​

​

20.     COMMITMENTS AND CONTINGENCIES

Legal Matters

The Company is subject from time to time to various claims and legal actions arising during the ordinary course of its business. Management believes that there are currently no claims or legal actions that would reasonably be expected to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows.

​

Other Matters

​

The Company is subject to various audits from government agencies including Medicaid and Medicare which involve the potential recoupment of reimbursements received from these agencies. These audits occur in the ordinary course of business, and their impact on the Company’s results of operations, financial condition or cash flows cannot be estimated.

​

On July 4, 2025, the “One Big Beautiful Bill Act” (the “Act”) was enacted into law. The legislations have multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. These changes include provisions allowing accelerated tax deductions for qualified property and research expenditures. We are in the process of evaluating the impact of the Act to our Consolidated Financial Statements.

​

​

21.     SEGMENT INFORMATION

Operating segments are defined as components of an enterprise about which separate discrete information is available for evaluation by the chief operating decision maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company currently operates in one business segment focused on the sale and delivery of TMS products and clinical services that improve the quality of life for people suffering from neurohealth disorders. The CODM is the Company’s chief executive officer.

The accounting policies of the Company’s segment are the same as those described in the summary of significant accounting policies. The key measure of segment profit or loss that the CODM uses to allocate resources and assess performance is the Company’s net loss from operations, as reported on the accompanying statements of operations. The measure of segment assets is reported on the balance sheets

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

as total consolidated assets with particular emphasis on the Company’s available liquidity, including its cash and cash equivalents and restricted cash.

​

The following table illustrates information about reported segment revenue, measures of a segment’s profit or loss, significant segment expenses, and measure of a segment's assets for the current reporting period.

​

​	​	​	​	​	​	​	​	​	​	​	​
​		Three months ended June 30,					​	Six months ended June 30,
​	​	2025			2024		​	2025			2024
Revenue	​	$	38,108	​	$	16,450	​	$	70,083	$	33,867
Cost of revenues	​	​	20,350	​	​	4,271	​	​	36,587	​	8,600
Segment Gross profit	​	$	17,758	​	$	12,179	​	$	33,496	$	25,267
​	​	​	​	​	​	​	​	​	​	​	​
Personnel	​	$	17,489	​	$	12,450	​	$	35,165	$	24,588
Marketing	​	​	2,692	​	​	2,474	​	​	5,629	​	4,702
Research and development	​	​	458	​	​	623	​	​	713	​	1,423
Professional fees	​	​	1,221	​	​	1,197	​	​	2,666	​	2,300
Other segment expenses (a)	​	​	3,956	​	​	3,943	​	​	8,395	​	7,621
Segment income/(loss)	​	$	(8,058)	​	$	(8,507)	​	$	(19,072)	$	(15,366)
​	​	​	​	​	​	​	​	​	​	​	​
Unallocated	​	​	​	​	​	​	​	​	​	​	​
Interest expense	​	​	1,969	​	​	1,978	​	​	3,891	​	3,804
Other income, net	​	$	(188)	​	​	(653)	​	$	(435)	​	(1,465)
​	​	​	​	​	​	​	​	​	​	​	​
Net income/ (loss)	​	$	(9,839)	​	$	(9,832)	​	$	(22,528)	$	(17,705)

​

(a) Other segment expenses include travel and entertainment, bad debt, depreciation and amortization, insurance, rent, and other costs.

​

​

​

​

22.     NONCONTROLLING INTEREST

The Company has operating agreements with 22 non-wholly owned entities. The non-controlling interest percentages range from 10% to 49%. The Company has control over these entities under U.S. GAAP as the Company has power over all significant decisions made by these entities. Thus, 100% of the financial results of these subsidiaries are included in the Company’s consolidated financial results.

There were no changes in the Company’s non-wholly owned entities in the three and six month periods ended June 30, 2025.

23.     GOVERNMENT ASSISTANCE

Employee Retention Credit

​

The Coronavirus Aid, Relief and Economic Security Act provided an Employee Retention Credit (the “ERC”), which was a refundable tax credit related to certain payroll taxes. The Company applied the grant model and determined that the criteria for recognition of the ERC was met during the year ended December 31, 2023 based on the Company’s determination of eligibility and filing of the ERC claim. As of December 31, 2024, the $2.9 million ERC receivable was reported within prepaid expenses and other current assets on the Company’s consolidated balance sheets.

The entire balance of the ERC receivable was received during the six months ended June 30, 2025.

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NEURONETICS, INC.

Notes to Interim Consolidated Financial Statements

(Unaudited)

​

24.     SUBSEQUENT EVENTS

On July 3, 2025, the Company entered into an Equity Distribution Agreement (the “Distribution Agreement”) with Canaccord Genuity LLC (“Canaccord”), pursuant to which the Company may offer and sell shares of its common stock having an aggregate offering price of up to $50.0 million from time to time through an “at the market” equity offering program (the “ATM Program”). Sales under the Distribution Agreement, if any, will be made pursuant to the Company’s Registration Statement on Form S-3 (File No. 333-288526), and a related prospectus and prospectus supplement.

The Company intends to use any net proceeds from the ATM Program for general corporate purposes, which may include working capital, capital expenditures, research and development, and potential strategic acquisitions.

No shares have been issued under the ATM Program as of the date of this filing.

On July 15, 2025, the Company’s board of directors appointed Steven Pfanstiel as the Company’s Executive Vice President, Chief Financial Officer, and Treasurer. Subsequent to Mr. Pfanstiel’s appointment as Chief Financial Officer of the Company on July 15, 2025, the separation of service date from the Company for Stephen Furlong, Executive Vice President and Senior Advisor to the CEO, was accelerated to August 1, 2025.

On August 1, 2025, the Company entered into Amendment No. 3 to Credit Agreement and Guaranty (the “Amendment”). The Amendment amends the Perceptive Facility to (i) borrow a Tranche 2A Loan in a principal amount of $10,000,000 on the date of the Amendment, (ii) lower the minimum liquidity balance requirement to $2,000,000 through September 30, 2026, and (iii) issue Perceptive a warrant certificate exercisable into 225,000 shares of the Company’s common stock.

​

​

​

​

27

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Item 2.     Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations, as well as other sections in this Quarterly Report on Form 10 Q, should be read in conjunction with our unaudited interim consolidated financial statements and related notes thereto included elsewhere herein. In addition to historical financial information, some of the information contained in the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the “Securities Act”) and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical facts, including statements regarding our future results of operations and financial position, business strategy, current and prospective products, product approvals, research and development costs, current and prospective collaborations, timing and likelihood of success, plans and objectives of management for future operations and future results of current and anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “would,” “should,” “expect,” “plan,” “design,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “outlook” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described under the sections entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 27, 2025. These risks and uncertainties include, without limitation, risks and uncertainties related to: the effect of the transaction with Greenbrook on our business relationships; operating results and business generally; our ability to execute our business strategy; our ability to achieve or sustain profitable operations due to our history of losses; our reliance on the sale and usage of our NeuroStar Advanced Therapy System to generate revenues; the scale and efficacy of our salesforce; our ability to retain talent; availability of coverage and reimbursement from third-party payors for treatments using our products; physician and patient demand for treatments using our products; developments in respect of competing technologies and therapies for the indications that our products treat; product defects; our revenue has been concentrated among a small number of customers; our ability to obtain and maintain intellectual property protection for our technology; developments in clinical trials or regulatory review of the NeuroStar Advanced Therapy System for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; the terms of our credit facility; our ability to successfully roll-out our Better Me Provider Program on the planned timeline; our self-sustainability and existing cash balances; and our ability to achieve cash flow breakeven in the third quarter of 2025. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company cautions investors not to place undue reliance on these forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q as a result of any new information, future events or changed circumstances or otherwise.

Overview

We believe that mental health is as important as physical health. As a global leader in neuroscience, we are delivering more treatment options to patients and healthcare providers by offering exceptional in-office treatments that produce extraordinary results. Our first commercial product, the NeuroStar Advanced Therapy System, is a non-invasive and non-systemic office-based treatment that uses TMS to create a pulsed, MRI-

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strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The system is cleared by the FDA to treat adult patients with MDD that have failed to achieve satisfactory improvement from prior antidepressant medication in the current MDD episode. It is also cleared by the FDA as an adjunct for adults with OCD and for adolescent patients aged 15-21 with MDD. The NeuroStar Advanced Therapy System is also available in other parts of the world. NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. We believe we are the market leader in TMS therapy based on over 209,215 global patients treated with over 7.6 million of our treatment sessions through June 30, 2025. We generated revenues of $38.1 million and $16.5 million for the three months ended June 30, 2025 and 2024, respectively, and $70.1 million and $33.9 million for the six months ended June 30, 2025 and 2024, respectively.

We designed the NeuroStar Advanced Therapy System as a non-invasive therapeutic alternative to treat patients who suffer from MDD and to address many of the key limitations of existing treatment options. Additionally through our acquisition of Greenbrook, we now derive revenue directly from our treatment centers, by providing TMS therapy and SPRAVATO for MDD and other mental health disorders. We derive the majority of our revenues from clinic revenue.

We generate revenues from initial capital sales of our systems, sales of our recurring treatment sessions and from service and repair and extended warranty contracts.

For the three months ended June 30, 2025, revenues from sales of our clinic revenue, treatment sessions and NeuroStar Advanced Therapy Systems represented 61%, 29% and 9% of our U.S. revenues, respectively. For the six months ended June 30, 2025, revenues from sales of our clinic revenue, treatment sessions and NeuroStar Advanced Therapy Systems represented 60%, 29% and 9% of our U.S. revenues, respectively.

Clinic revenue consists of revenue attributable to the performance of treatments to patients in 15 states in the U.S. In circumstances where the net patient fees have not yet been received, the amount of revenue recognized is estimated based on an expected value approach. Due to the nature of the industry and complexity of our clinic revenue arrangements, where price lists are subject to the discretion of payors, variable consideration exists that may result in price concessions and constraints to the transaction price for the services rendered.

Clinic revenue reimbursements are derived from third-party payors including federal and state agencies (under the Medicare programs), managed care health plans and commercial insurance companies.

We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the U.S. through our sales and customer support team. Our sales force targets an estimated 53,000 psychiatrists across 26,000 practices. We expect to continue to expand our direct sales and customer support team to further penetrate the market by demonstrating the benefits of our NeuroStar Advanced Therapy System to psychiatrists and their MDD patients. Some of our customers have purchased or may purchase more than one NeuroStar Advanced Therapy System. Based on our commercial data, we believe psychiatrists can recoup their initial capital investment in our system by providing a standard course of treatment to approximately 12 patients. We believe psychiatrists can generate approximately $8,500 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their practices. We have a diverse customer base of psychiatrists in group psychiatric practices in the U.S. Patients are reimbursed by federal healthcare programs and the vast majority of commercial payors in the U.S. for treatment sessions utilizing our NeuroStar Advanced Therapy System. For the three months ended June 30, 2024, one customer, Greenbrook, accounted for 14% of the Company’s revenue. Following the acquisition of Greenbrook, there are no significant customers.

We market our products in a few select markets outside the U.S. through independent distributors. International revenues represented 1% and 2% of our total revenues for the three months ended

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June 30, 2025 and 2024, respectively and 1% and 3% for the six months ended June 30, 2025 and 2024, respectively. We expect our international revenues to decrease as a percentage of our total revenue.

Our research and development efforts are focused on the following: hardware and software product developments and enhancements of our NeuroStar Advanced Therapy System and clinical development relating to additional indications. We outsource the manufacture of components of our NeuroStar Advanced Therapy Systems that are produced to our specifications, and individual components are either shipped directly from our third-party contract manufacturers to our customers or consolidated into pallets at our Malvern, Pennsylvania facility prior to shipment. Final installation of our NeuroStar Advanced Therapy Systems occurs at the customer site.

Total revenues increased by $21.6 million, or 132%, from $16.5 million for the three months ended June 30, 2024 to $38.1 million for the three months ended June 30, 2025 and increased by $36.2 million, or 107%, from $33.9 million for the six months ended June 30, 2024 to $70.1 million for the six months ended June 30, 2025. The increase was primarily attributable to an increase in clinic revenue.

We incurred net losses of $9.8 million and $22.5 million for the three and six months ended June 30, 2025 compared to net losses of $9.8 million and $17.7 million for three and six months ended June 30, 2024. As of June 30, 2025, we had an accumulated deficit of $442.6 million.

Global Economic Conditions

We are continuing to closely monitor macroeconomic impacts, including, but not limited to, developments affecting financial institutions, supply chains, trade and tariff policy, unemployment rates, investment values, consumer confidence, inflationary and potential recessionary pressures, on our business, results of operations and financial results, which could adversely affect us.

Components of Our Results of Operations

Revenues

We have generated revenues primarily from the sale of our NeuroStar Advanced Therapy Systems and related sales and rentals of the NeuroStar Advanced Therapy System, clinic revenue and the recurring revenues from our sale of treatment sessions in the U.S.

Clinic Revenue. Clinic revenue is determined based on net patient fees, which includes estimates for contractual allowances and discounts. Net patient fees are estimated using an expected value approach where management considers such variables as the average of previous net patient fees received by the applicable payor and fees received by other patients for similar services and the Company’s best estimate leveraging industry knowledge and expectations of third-party payors’ fee schedules. We expect clinic revenue to increase in 2025.

NeuroStar Advanced Therapy System Revenues. NeuroStar Advanced Therapy System revenues consist primarily of sales or rentals of a capital component, including equipment upgrades to the initial sale of the NeuroStar Advanced Therapy System. NeuroStar Advanced Therapy Systems can be purchased outright or on a rent-to-own basis by certain customers.

Treatment Session Revenues. Treatment session revenues primarily include sales of treatment sessions and SenStar treatment links. The treatment sessions are access codes that are delivered electronically in the U.S. The SenStar treatment links are disposable units containing single-use access codes that are sold and used outside the U.S. Access codes are purchased separately by our customers, primarily on an as-needed basis, and are required by the NeuroStar Advanced Therapy System in order to deliver treatment sessions.

Other Revenues. Other revenues are derived primarily from service and repair, research collaboration agreements and extended warranty contracts with our existing customers.

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Refer to the section titled “Critical Accounting Policies and Use of Estimates—Revenue Recognition” in our Annual Report on Form 10-K filed with the SEC on March 27, 2025. Also, refer to “Summary of Significant Accounting Policies” in Notes to Interim Consolidated Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.

Cost of Revenues and Gross Margin

Cost of revenues primarily consists of the costs of components and products purchased from our third-party contract manufacturers of our NeuroStar Advanced Therapy Systems as well as the cost of treatment packs for individual treatment sessions. We use third-party contract manufacturing partners to produce the components for and assemble the completed NeuroStar Advanced Therapy Systems. Cost of revenues also includes costs related to personnel, royalties, warranty, shipping, amortization of capitalized software and our operations and field service departments. Our treatment center costs include direct center and patient care costs, regional employee compensation, regional marketing expenses, and depreciation. We expect our cost of revenues to increase mainly for treatment centers, as our product mix changes.

Our gross profit is calculated by subtracting our cost of revenues from our revenues. We calculate our gross margin as our gross profit divided by our revenues. Our gross margin has been and will continue to be affected by a variety of factors, primarily product sales mix, pricing and third-party contract manufacturing costs. Our gross margins on revenues from sales of NeuroStar Advanced Therapy Systems and clinic revenue are lower than our gross margins on revenues from sales of treatment sessions and, as a result, the sales mix between NeuroStar Advanced Therapy Systems, clinic revenues and treatment sessions can affect the gross margin in any reporting period.

Sales and Marketing Expenses

Sales and marketing expenses consist of market research and commercial activities related to the sale of our NeuroStar Advanced Therapy Systems and treatment sessions and personnel costs including salaries and related benefits, sales commissions and share-based compensation for employees focused on these efforts. Other significant sales and marketing costs include conferences and trade shows, promotional and marketing activities, including direct and online marketing, practice support programs, primarily digital media campaigns, travel and training expenses.

We anticipate that our sales and marketing expenses will increase in 2025 relative to 2024 as a result of the addition of the Greenbrook sales and marketing related expenses.

​

General and Administrative Expenses

General and administrative expenses consist primarily of personnel expenses, including salaries and related benefits, share-based compensation and travel expenses, for employees in executive, finance, information technology, legal, compliance and human resource functions. General and administrative expenses also include the cost of insurance, outside legal fees, accounting and other consulting services, audit fees from our independent registered public accounting firm, board of directors fees and other administrative costs, such as corporate facility costs, including rent, utilities, depreciation and maintenance not otherwise included in cost of revenues.

We anticipate that our general and administrative expenses will increase in 2025 from 2024 due to an increase in the overall size of the general and administrative function within the consolidated company.

​

Research and Development Expenses

Research and development expenses consist primarily of personnel expenses, including salaries and related benefits and share-based compensation for employees in clinical development, product development, regulatory and quality assurance functions, as well as expenses associated with outsourced professional scientific development services and costs of investigative sites and consultants that conduct our preclinical

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and clinical development programs. We typically use our employee, consultant and infrastructure resources across our research and development programs.

​

We expect our research and development expenses to decrease during 2025 compared to our 2024 expenses.

​

Interest Expense

Interest expense consists of cash interest payable under our credit facility and the amortization of deferred financing costs related to our indebtedness.

Other Income, Net

Other income, net, consists primarily of interest income earned on our money market account balances and notes receivable.

Results of Operations

Comparison of the three months ended June 30, 2025 and 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Three Months Ended

​

​

​

​

​

​

​

June 30,

​

Increase / (Decrease)

​

​

2025

2024

Dollars

Percentage

​

​

(in thousands, except percentages)

Revenues

​

$

38,108

​

$

16,450

​

$

21,658

132

%

Cost of revenues

​

20,350

​

4,271

​

16,079

376

%

Gross Profit

​

17,758

​

12,179

​

5,579

46

%

Gross Margin

​

46.6

%

74.0

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating expenses:

​

​

​

​

​

Sales and marketing

​

11,868

​

12,303

​

(435)

(4)

%

General and administrative

​

12,150

​

6,148

​

6,002

98

%

Research and development

​

1,798

​

2,235

​

(437)

(20)

%

Total operating expenses

​

25,816

​

20,686

​

5,130

​

25

%

Loss from Operations

​

(8,058)

​

​

(8,507)

​

449

5

%

Other (income) expense:

​

​

​

​

​

​

Interest expense

​

1,969

​

1,978

​

(9)

(0)

%

Other income, net

​

(188)

​

(653)

​

465

(71)

%

Net Loss

​

$

(9,839)

​

$

(9,832)

​

$

(7)

(0)

%

​

​	​	​	​	​	​	​	​	​	​	​	​
​	​	Revenues by Geography
​	​	Three Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​	​	​	% of
​		Amount			Revenues		Amount			Revenues
​	​	(in thousands, except percentages)
U.S.	​	$	37,656	​	99	%	$	16,130	​	98	%
International	​		452		1	%		320		2	%
Total revenues	​	$	38,108		100	%	$	16,450		100	%

​

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​	​	​	​	​	​	​	​	​	​	​	​
​	​	U.S. Revenues by Product Category
​	​	Three Months Ended June 30,
​	​	2025				​	2024
​	​	​	​	​	% of	​	​	​	​	% of
​		Amount			Revenues		Amount			Revenues
​	​	(in thousands, except percentages)
NeuroStar Advanced Therapy System	​	$	3,484	​	9	%	$	4,000	​	25	%
Treatment sessions	​		10,773		29	%		11,660		72	%
Clinic revenue	​	​	23,024	​	61	%	​	—	​	—	%
Other	​		375		1	%		470		3	%
Total U.S. revenues	​	$	37,656		100	%	$	16,130		100	%

​

Revenues

Total revenue for the three months ended June 30, 2025 was $38.1 million, an increase of 132% compared to the three months ended June 30, 2024 revenue of $16.5 million. During the quarter, total U.S. revenue increased by 133% and international revenue decreased marginally compared to prior year quarter.

The revenue growth was primarily due to the inclusion of clinic revenue of $23.0 million as a result of the acquisition of Greenbrook, partially offset by the absence of sales to Greenbrook of $2.3 million. Additionally, revenue from customers excluding Greenbrook increased by $0.9 million, driven by higher sales of treatment sessions.

U.S. NeuroStar Advanced Therapy System revenue for the three months ended June 30, 2025 was $3.5 million, a decrease of 13% compared to the three months ended June 30, 2024 revenue of $4.0 million. For the three months ended June 30, 2025 and 2024, the Company sold 41 and 49 systems, respectively, that were recognized as NeuroStar Advanced Therapy System capital revenue during each period. While the number of systems decreased, the average selling price per system increased by 6%.

U.S. treatment session revenue for the three months ended June 30, 2025 was $10.8 million, a decrease of 8% compared to the three months ended June 30, 2024 revenue of $11.7 million. The decline was primarily attributable to the absence of $2.1 million in treatment session revenue to Greenbrook associated with the prior year quarter, which was partially offset by an increase in treatment session volume with other customers, over the prior year quarter.

Cost of Revenues and Gross Margin

Cost of revenues increased by $16.1 million, or 376%, from $4.3 million for the three months ended June 30, 2024 to $20.4 million for the three months ended June 30, 2025. Gross margin decreased from 74.0% for the three months ended June 30, 2024 to 46.6% for the three months ended June 30, 2025. The decrease in gross margin was primarily a result of the inclusion of Greenbrook’s clinic business and reduction in treatment session revenue.

Sales and Marketing Expenses

Sales and marketing expenses decreased by $0.4 million, or 4%, from $12.3 million for the three months ended June 30, 2024 to $11.9 million for the three months ended June 30, 2025. The decrease was primarily due to lower bad debt expense, partially offset by higher marketing program spend due to the inclusion of Greenbrook marketing.

General and Administrative Expenses

General and administrative expenses increased by $6.1 million, or 98%, from $6.1 million for the three months ended June 30, 2024 to $12.2 million for the three months ended June 30, 2025. The increase was primarily driven by the addition of Greenbrook general and administrative expenses of $6.1 million.

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Table of Contents

Research and Development Expenses

Research and development expenses decreased by $0.4 million, or 20%, from $2.2 million for the three months ended June 30, 2024 to $1.8 million for the three months ended June 30, 2025. The decrease in research and development was driven by personnel expense savings related to restructuring after the Company’s acquisition of Greenbrook.

Interest Expense

Interest expense was marginally consistent at $2.0 million for the three months ended June 30, 2025 and June 30, 2024.

Other Income, Net

Other income, net decreased by $0.5 million, or 71%, from $0.7 million for the three months ended June 30, 2024 to $0.2 million for the three months ended June 30, 2025, primarily as a result of decreased interest income earned on the Company’s money market accounts and notes receivable interest.

Comparison of the six months ended June 30, 2025 and 2024

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Six Months Ended

​

​

​

​

​

​

​

​

June 30,

​

Increase / (Decrease)

​

​

​

2025

2024

Dollars

Percentage

​

​

​

(in thousands, except percentages)

​

Revenues

​

$

70,083

​

$

33,867

​

$

36,216

107

%

​

Cost of revenues

​

36,587

​

8,600

​

27,987

325

%

​

Gross Profit

​

33,496

​

25,267

​

8,229

33

%

​

Gross Margin

​

47.8

%

74.6

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Operating expenses:

​

​

​

​

​

​

Sales and marketing

​

23,867

​

23,943

​

(76)

(0)

%

​

General and administrative

​

25,287

​

12,105

​

13,182

109

%

​

Research and development

​

3,414

​

4,585

​

(1,171)

(26)

%

​

Total operating expenses

​

52,568

​

40,633

​

11,935

29

%

​

Loss from Operations

​

(19,072)

​

(15,366)

​

(3,706)

(24)

%

​

Other (income) expense:

​

​

​

​

​

​

Interest expense

​

3,891

​

3,804

​

87

2

%

​

Other income, net

​

(435)

​

(1,465)

​

1,030

70

%

​

Net Loss

​

$

(22,528)

​

$

(17,705)

​

$

(4,823)

(27)

%

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

Revenues by Geography

​

​

​

Six Months Ended June 30,

​

​

​

2025

​

2024

​

​

​

​

​

​

% of

​

​

​

​

% of

​

​

Amount

Revenues

Amount

Revenues

​

​

​

(in thousands, except percentages)

​

United States

​

$

69,139

​

99

%

$

32,923

​

97

%

​

International

​

944

1

%

944

3

%

​

Total revenues

​

$

70,083

100

%

$

33,867

100

%

​

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Table of Contents

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

​

U.S. Revenues by Product Category

​

​

​

Six Months Ended June 30,

​

​

​

2025

​

2024

​

​

​

​

​

​

% of

​

​

​

​

% of

​

​

Amount

Revenues

Amount

Revenues

​

​

​

(in thousands, except percentages)

​

NeuroStar Advanced Therapy System

​

$

6,330

​

9

%

$

7,310

​

22

%

​

Treatment sessions

​

20,385

30

%

24,648

75

%

​

Clinic revenue

​

​

41,683

​

60

​

​

—

​

—

​

​

Other

​

741

1

%

965

3

%

​

Total U.S. revenues

​

$

69,139

100

%

$

32,923

100

%

​

​

Total revenue for the six months ended June 30, 2025 was $70.1 million, an increase of 107% compared to the six months ended June 30, 2024 revenue of $33.9 million. During the six months ended June 30, 2025, total U.S. revenue increased by 110% and international revenue remained consistent period over period.

The revenue growth was primarily due to the inclusion of clinic revenue of $ 41.7 million as a result of the acquisition of Greenbrook, partially offset by the absence of sales to Greenbrook of $5.2 million and a $0.3 million decline in sales of NeuroStar Advanced Therapy Systems and treatment session revenue to customers other than Greenbrook.

U.S. NeuroStar Advanced Therapy System revenue for the six months ended June 30, 2025 was $6.3 million, a decrease of 13% compared to the six months ended June 30, 2024 revenue of $7.3 million. For the six months ended June 30, 2025 and 2024, the Company sold 72 and 89 systems, respectively, that were recognized as NeuroStar Advanced Therapy System capital revenue during each period. Additionally, for the six months ended June 30, 2024 the Company executed 1 operating lease agreement which contributed to operating lease revenue. While the number of systems decreased, the average selling price per system increased by 7%.

U.S. treatment session revenue for the six months ended June 30, 2025 was $20.4 million, a decrease of 17% compared to the six months ended June 30, 2024 revenue of $24.6 million. The decline was primarily attributable to the absence of $4.9 million in treatment session revenue to Greenbrook associated with the prior year quarter which was partially offset by an increase in treatment session volume with other customers, over the prior year quarter.

Cost of Revenues and Gross Margin

Cost of revenues increased by $28.0 million, or 325%, from $8.6 million for the six months ended June 30, 2024 to $36.6 million for the six months ended June 30, 2025. Gross margin decreased from 74.6% for the six months ended June 30, 2024 to 47.8% for the six months ended June 30, 2025. The decrease in gross margin was primarily a result of the inclusion of Greenbrook’s clinic business and reduction in treatment session revenue.

Sales and Marketing Expenses

Sales and marketing expenses were consistent at $23.9 million for the six months ended June 30, 2025 and 2024.

General and Administrative Expenses

General and administrative expenses increased by $13.2 million, or 109% from $12.1 million for the six months ended June 30, 2025 to $25.3 million for the six months ended June 30, 2024. The increase was primarily driven by the addition of Greenbrook general and administrative expense of $12.6 million.

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Research and Development Expenses

Research and development expenses decreased by $1.2 million, or 26%, from $4.6 million for the six months ended June 30, 2024 to $3.4 million for the six months ended June 30, 2025. The decrease in research and development was driven by personnel expense savings related to restructuring after the Company’s acquisition of Greenbrook.

Interest Expense

Interest expense was marginally consistent at $3.8 million for the six months ended June 30, 2025 and 2024.

Other Income, Net

Other income, net decreased by $1.1 million from $1.5 million for the six months ended June 30, 2024 to $0.4 million for the six months ended June 30, 2025, primarily as a result of decreased interest income earned on the Company’s money market accounts and notes receivable interest.

Liquidity and Capital Resources

Overview

As of June 30, 2025, we had cash and cash equivalents of $11.0 million and an accumulated deficit of $442.6 million, compared to cash and cash equivalents of $18.5 million and an accumulated deficit of $419.8 million as of December 31, 2024. We incurred negative cash flows from operating activities of $20.5 million and $17.0 million for the six months ended June 30, 2025 and 2024, respectively. We have incurred operating losses since our inception, and we anticipate that our operating losses will lessen in the near term due to revenue growth and the pursuit of ongoing cost efficiencies in connection with our Greenbrook acquisition. The Company’s primary sources of capital to date have been proceeds from its IPO, private placements of its convertible preferred securities, borrowings under its credit facility, proceeds from its secondary public offerings of common stock and revenues from sales of its products. As of June 30, 2025, the Company had $60.0 million of borrowings outstanding under the Perceptive Facility, which have a final maturity on July 25, 2029. The Perceptive Facility is subject to certain financial covenants including a minimum net revenue covenant that escalates over the term of the Perceptive Facility and a minimum liquidity covenant.

If our cash and cash equivalents and anticipated revenues from sales or our products and services are insufficient to satisfy our liquidity requirements, we may seek to sell additional common or preferred equity or debt securities or enter into a new credit facility or another form of third-party funding or seek other debt financing. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all. It is also possible that we may allocate significant amounts of capital towards products or technologies for which market demand is lower than expected and, as a result, abandon such efforts. If we are unable to maintain our current financing or obtain adequate additional financing when we require it, or if we obtain financing on terms which are not favorable to us, or if we expend capital on products or technologies that are unsuccessful, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, or we may be required to delay the development, commercialization and marketing of our products.

Our current and future funding requirements will depend on many factors, including:

● our ability to achieve revenue growth and improve operating margins;

● compliance with the terms and conditions, including covenants, set forth in our credit facility;

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● the cost of expanding our operations and offerings, including our sales and marketing efforts;

● our ability to improve or maintain coverage and reimbursement arrangements with domestic third-party and government payors, particularly in Japan;

● our rate of progress in establishing coverage and reimbursement arrangements from international commercial third-party and government payors;

● our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products and maintaining or improving our sales to our current customers;

● the cost of research and development activities, including research and development relating to additional indications of neurohealth disorders;

● the effect of competing technological and market developments;

● efficiency of our clinic operations; and

● the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.

As of June 30, 2025, there were no significant changes to our material cash requirements as set forth in our Annual Report on Form 10-K filed with the SEC on March 27, 2025.

Cash Flows

The following table sets forth a summary of our cash flows for the six months ended June 30, 2025 and 2024:

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​	​	​	​	​	​	​	​
​	​	Six Months Ended June 30,					​
​		2025			2024		​
​	​	(in thousands)					​
Net Cash used in Operating activities	​	$	(20,497)	​	$	(16,984)	​
Net Cash used in Investing activities	​		(471)	​		(51)	​
Net Cash provided by Financing activities	​		18,978	​		—	​
Net decrease in Cash, Cash equivalents and Restricted cash	​	$	(1,990)	​	$	(17,035)	​

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Net Cash used in Operating Activities

Net cash used in operating activities for the six months ended June 30, 2025 was $20.5 million, consisting primarily of a net loss of $22.5 million and an increase in net operating assets of $3.7 million, offset by non-cash charges of $5.7 million primarily consisting of depreciation and amortization and share-based compensation. The increase in net operating assets was primarily due to increases in accounts receivable, and decreases in accounts payable, accrued expenses, prepaid expenses and other assets and prepaid commission expense.

Net cash used in operating activities for the six months ended June 30, 2024 was $17.0 million, consisting primarily of a net loss of $17.7 million and an increase in net operating assets of $5.1 million, offset by non-cash charges of $5.8 million. The increase in net operating assets was primarily due to decreases in our accrued expenses mainly from the 2024 bonus payment accrued as of December 31, 2023, increases in our accounts receivable offset by lower inventory levels from the prior year. Non-cash charges primarily consisted of depreciation and amortization, non-cash interest expense, allowance for credit losses and share-based compensation.

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Net Cash used in Investing Activities

Net cash used in investing activities for the six months ended June 30, 2025 was $0.5 million, which was attributable to purchases of property and equipment and capitalized software costs.

Net cash used in investing activities for the six months ended June 30, 2024 was $0.1 million, which was attributable to purchase of property and equipment and capitalized software costs, partially offset by the repayment of notes receivable.

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Net Cash provided by Financing Activities

Net cash provided by financing activities for the six months ended June 30, 2025 was $19.0 million and primarily consisted of net proceeds from our secondary public offering. There were no cash flows from financing activities for the six months ended June 30, 2024.

Indebtedness

For information regarding the Perceptive Facility, refer to “Debt” in Notes to Interim Consolidated Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.

Recent Accounting Pronouncements

Refer to “Summary of Significant Accounting Policies” and “Recent Accounting Pronouncements” in Notes to Interim Consolidated Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.

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Item 3.     Quantitative and Qualitative Disclosures About Market Risk.

Refer to the information described in “Item 7A. Quantitative and Qualitative Disclosures About Market Risk” section of the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025. There have been no material changes to our market risk described therein.

We are continuing to closely monitor macroeconomic impacts, including, but not limited to tariffs, developments affecting financial institutions, supply chains, unemployment rates, investment values, consumer confidence, inflationary and potential recessionary pressures, on our business, results of operations and financial results, which could adversely affect us. Although we do not believe inflation or tariffs have had a material impact on our financial condition, results of operations or cash flows to date, a high rate of inflation in the future may have an adverse effect on our ability to maintain and increase our gross margin or decrease our operating expenses as a percentage of our revenues if the selling prices of our products do not increase as much or more than our costs increase.

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Item 4.     Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

The term “disclosure controls and procedures,” as defined in Rules 13a 15(e) and 15d 15(e) of the Exchange Act, refers to controls and procedures that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to the company’s management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions regarding required disclosure. As required by Rules 13a 15(b) and 15d 15(b) of the Exchange Act, our management, with the participation of our principal executive officer and principal financial and accounting officer, evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this Quarterly Report on Form 10-Q. Based on that evaluation, our principal executive officer and our principal financial and accounting officer concluded that our disclosure controls and procedures were effective at the reasonable assurance level as of June 30, 2025.

Changes in Internal Control over Financial Reporting

Following the acquisition of Greenbrook, we are in the process of reviewing the internal control structure of Greenbrook and, if necessary, will make appropriate changes as we continue to integrate Greenbrook into our overall internal control over financial reporting process. During the quarter ended June 30, 2025, there were no changes in our internal control over financial reporting (as defined in Rule 13a 15(f) of the Exchange Act) that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II—OTHER INFORMATION

Item 1.     Legal Proceedings.

We are subject from time to time to various claims and legal actions arising during the ordinary course of our business. We believe that there are currently no claims or legal actions that would reasonably be expected to have a material adverse effect on our results of operations, financial condition, or cash flows.

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Item 1A.     Risk Factors.

You should carefully consider the information described in the “Risk Factors” section of the Company’s Annual Report on Form 10-K filed with the SEC on March 27, 2025 and Quarterly Report on Form 10-Q filed with the SEC on May 6, 2025.

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Item 2.     Unregistered Sales of Equity Securities and Use of Proceeds.

Not applicable.

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Item 3.     Defaults Upon Senior Securities.

Not applicable.

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Item 4.     Mine Safety Disclosures.

Not applicable.

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Item 5.     Other Information.

Not applicable.

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Item 6.     Exhibits.

The following is a list of exhibits filed as part of this Quarterly Report on Form 10-Q. Where so indicated, exhibits that were previously filed are incorporated by reference. For exhibits incorporated by reference, the location of the exhibit in the previous filing is indicated.

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​		​	​
Exhibit Number			Description
​		​	​
4.1		​	Form of Indenture, between the Registrant and one or more trustees to be named (incorporated by reference to Exhibit 1.1 to the Registrant’s Form S-3 File No. 333-288526 filed on July 3, 2025).
10.1◊		​	Sixth Amendment to Loan and Security Agreement, dated March 7, 2024, by and among SLR Investment Corp. (formerly known as Solar Capital Ltd.), as collateral agent, the lenders listed on the signature pages thereto, and Neuronetics, Inc. (incorporated by reference to Exhibit 10.9 to the Registrant’s Current Report on Form 10-K filed on March 8, 2024).
10.2◊	​		Secured Promissory Note and Guaranty Agreement, dated March 31, 2023, by and among TMS Neurohealth Centers Inc., as maker, Greenbrook TMS Inc. and its subsidiaries, excluding TMS Neurohealth Centers Inc., as guarantors, and Neuronetics, Inc. (incorporated by reference to Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on April 4, 2023).
10.3◊	​		Credit Agreement and Guaranty, dated July 25, 2024, by and among Neuronetics, Inc., as the borrower, certain Subsidiaries of Neuronetics, Inc. from time to time party thereto, as guarantors, the lenders from time to time party thereto, and PERCEPTIVE CREDIT HOLDINGS IV, LP, in its capacity as the administrative agent for the lenders (incorporated by reference to Exhibit 10.1 of the Registrant’s Current Report on Form 8-K filed on July 30, 2024).
10.4	​		Consent and Amendment No. 1 to Credit Agreement and Guaranty and Warrant Certificate dated December 9, 2024 (incorporated by reference to Exhibit 10.2 of the Registrant’s Current Report on Form 8-K filed on December 10, 2024).
10.5◊	​		Amendment No. 2 to Credit Agreement and Guaranty by and between the Company, as the borrower, and Perceptive, in its capacities as administrative agent for the lenders and the majority lender dated March 26, 2025 (incorporated by reference to Exhibit 10.52 of the Registrant’s Annual Report on Form 10-K filed on March 27, 2025).
10.6*	​		Amendment No. 3 to Credit Agreement and Guaranty by and between the Company, as the borrower, and Perceptive, in its capacities as administrative agent for the lenders and the majority lender dated August 4, 2025 (incorporated by reference to Exhibit 10.1 of the Registrant’s Annual Report on Form 8-K filed on August 5, 2025).
10.7	​		Underwriting Agreement, dated as of February 7, 2025, by and between Neuronetics, Inc. and Canaccord Genuity LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed on February 10, 2025).
10.8	​		Offer Letter, effective as of July 15, 2025, by and between the Company and Steven Pfanstiel (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on July 15, 2025).
10.9	​		Equity Distribution Agreement, dated as of July 3, 2025, by and between the Registrant and Canaccord Genuity LLC (incorporated by reference to Exhibit 1.1 to the Registrant’s Form S-3 File No. 333-288526 filed on July 3, 2025).
23.1	​		Consent of Ballard Spahr LLP (incorporated by reference to Exhibit 23.1 to the Registrant’s Current Report on Form 8-K filed on February 10, 2025).
31.1*		​	Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		​	Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		​	Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		​	Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS	​		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document.

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101.SCH	​		Inline XBRL Taxonomy Extension Schema Document
101.CAL	​		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF	​		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB	​		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE	​		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104	​		Cover Page Interactive Data File (Formatted as Inline XBRL and contained Exhibit 101).

* Filed herewith.

◊ Certain portions of this exhibit have been omitted to preserve the confidentiality of such information. The Company will furnish copies of any such information to the SEC or its staff upon request.

** This certification is being furnished solely to accompany this Quarterly Report on Form 10-Q pursuant to 18 U.S.C Section 1350 and is not being filed for purposes of Section 18 of the Exchange Act or otherwise subject to the liability of that section, nor shall it be deemed incorporated by reference into any filing of the registrant under the Securities Act or the Exchange Act, whether made before or after the date hereof, regardless of any general incorporation language in such filing.

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SIGNATURES

Pursuant to the requirements of the Exchange Act, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

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​	​	​	​
​		NEURONETICS, INC.
​	​	(Registrant)
Date: August 5, 2025	​	By:	/s/ Keith J. Sullivan
​	​	Name:	Keith J. Sullivan
​	​	Title:	President and Chief Executive Officer
​	​	​	(Principal Executive Officer)
Date: August 5, 2025	​	By:	/s/ Steven E. Pfanstiel
​	​	Name:	Stephen E. Pfanstiel
​	​	Title:	EVP, Chief Financial Officer and Treasurer
​	​	​	(Principal Financial and Accounting Officer)

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FAQ

How much did Neuronetics (STIM) revenue grow in Q2 2025?

Revenue rose to $38.1 million, a 132% YoY increase from $16.5 million in Q2 2024.

What caused the decline in Neuronetics' gross margin?

The addition of lower-margin clinic revenue (61% of U.S. sales) and higher cost of revenues cut gross margin to 46.6%.

How much cash does STIM have after the quarter?

Cash and cash equivalents were $11.0 million; including restricted cash, total liquidity was $17.5 million.

What is the status of Neuronetics' debt?

Long-term debt under the Perceptive facility is $55.5 million with final maturity in July 2029.

Did Neuronetics raise capital during the period?

Yes. A February 2025 secondary offering raised $18.9 million net from 9.2 million shares at $2.25 each.

Is the company compliant with its loan covenants?

Management states Neuronetics was in compliance with all Perceptive facility covenants as of June 30 2025.