STIM - Neuronetics Reports Third Quarter 2023 Financial and Operating Results

MALVERN, Pa., Nov. 07, 2023 (GLOBE NEWSWIRE) -- Neuronetics, Inc. (NASDAQ: STIM) (the “Company” or “Neuronetics”) a commercial stage medical technology company with a strategic vision of transforming the lives of patients whenever and wherever they need help, with the best neurohealth therapies in the world, today announced its financial and operating results for the third quarter of 2023.

Third Quarter 2023 Highlights

• Third quarter 2023 revenue of $17.9 million, an increase of 8% over the third quarter of 2022
• Record U.S. treatment session revenue of $13.1 million
• Shipped 43 NeuroStar systems
  

Recent Operational Highlights

• Launched the “Better Me Guarantee” Provider pilot program
• Accessed $22.5 million from existing debt facility

Recent Marketing Highlights

• Achieved milestone of over 162,500 global patients treated with 5.9 million of our treatment sessions
  

“Our strong performance in the third quarter reflects the positive impacts from our focus on commercial and customer education, in part resulting in record treatment session revenue driven by 18% year over year growth in our local consumable customers. Additionally, we are thrilled by the pilot launch of the Better Me Guarantee Provider program and its potential to deliver the highest standard of care to patients,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. “We are excited about the opportunities that lie ahead and are especially enthusiastic about the initial response to the program. We remain extremely well-positioned to continue to drive the adoption of NeuroStar, allowing our customers to deliver a meaningful impact on the lives of their patients suffering from mental health disorders.”

Third Quarter 2023 Financial and Operating Results for the Three Months Ended September 30, 2023

Total revenue for the three months ended September 30, 2023, was $17.9 million, an increase of 8% compared to the revenue of $16.5 million in the third quarter of 2022. During the quarter, total U.S. revenue increased by 6% and international revenue increased by 165% over the third quarter of 2022. The U.S. growth was primarily driven by an increase in NeuroStar treatment session sales. The increase in international growth was mainly due to an increase in NeuroStar Advanced Therapy system sales and treatment session revenue.

U.S. NeuroStar Advanced Therapy system revenue for the three months ended September 30, 2023, was $3.6 million, a decrease of 9% compared to the revenue of $3.9 million in the third quarter of 2022. For the three months ended September 30, 2023, and 2022, the Company shipped 43 and 50 systems, respectively.

U.S. treatment session revenue for the three months ended September 30, 2023, was $13.1 million, an increase of 10% compared to the revenue of $11.9 million in the third quarter of 2022. The revenue growth was primarily driven by an increase in utilization, in particular within our local consumable customer segment.

In the third quarter of 2023, U.S. treatment session revenue per active site was $11,917 compared to $11,364 in the third quarter of 2022.

Gross margin for the third quarter of 2023 was 65.8%, a decrease of approximately 1260 basis points from the third quarter of 2022 gross margin of 78.4%. The decline in gross margin was driven by a $1.9 million inventory impairment for specialized component parts secured for discontinued NeuroStar Advanced Therapy Systems for which cost exceeds net realizable value and one-time expenses relating to our transition to a new contract manufacturer. Without these expenses, gross margin would have been 77.3%.

Operating expenses during the third quarter of 2023 were $20.6 million, an increase of $0.2 million, or 1%, compared to $20.4 million in the third quarter of 2022.

Net loss for the third quarter of 2023 was $(9.4) million, or $(0.33) per share, as compared to the third quarter 2022 net loss of $(7.6) million, or $(0.28) per share. Net loss per share was based on 28,875,720 and 26,964,613 weighted-average common shares outstanding for the third quarters of 2023 and 2022, respectively.

EBITDA for the third quarter of 2023 was $(7.7) million as compared to the third quarter of 2022 EBITDA of $(6.2) million. See the accompanying financial table that reconciles EBITDA, which is a non-GAAP financial measure, to net loss.

Cash and cash equivalents were $35.8 million as of September 30, 2023. This compares to cash and cash equivalents of $70.3 million as of December 31, 2022, and $73.7 million as of September 30, 2022.

Pilot Launch of Better Me Guarantee Provider Program

The Better Me Guarantee Provider program creates a nationwide network of accounts, that are committed to meeting certain standards of patient care and responsiveness developed in collaboration with medical experts. Regardless of practice size or tenure, this program aims to address reported responsiveness issues and lack of knowledge of transcranial magnetic stimulation (“TMS”) therapy that have negatively impacted patient access to quality care. Participating providers agree to attend NeuroStar University, ensure that office phones are answered during business hours, advise patients of the benefits of treating to the full course of 36 sessions when medically appropriate, assign medical personnel to promptly respond to PHQ-10 assessments, and update websites and social media platforms to include NeuroStar TMS therapy as a treatment option. The program is currently in its pilot phase and the Company plans a measured roll-out, with new providers slated for inclusion on January 22, 2024 and April 8, 2024.

Draw Down of Remaining $22.5 Million Available Under Credit Facility

The Company drew down the remaining $22.5 million from its credit facility with SLR Investment Corp. This move bolsters Neuronetics' balance sheet in a non-dilutive manner, providing support for the ongoing execution of its strategic initiatives. The Company believes it can attain self-sustainability with its existing cash balance and aims to achieve cash flow break-even in the fourth quarter of 2024 and on a full-year basis in 2025.

Business Outlook

For the full year 2023, the Company now expects total revenue to be between $70.0 million and $72.0 million, compared to prior guidance of $69.0 million to $73.0 million.

For the full year 2023, the Company now expects total operating expenses to be between $82.0 million and $84.0 million, an improvement from prior guidance of $82.0 million to $86.0 million.

For the fourth quarter of 2023, the Company expects total revenue between $19.0 million and $21.0 million.

Webcast and Conference Call Information

Neuronetics’ management team will host a conference call on November 7, 2023, beginning at 8:30 a.m. Eastern Time.

The conference call will be broadcast live in listen-only mode via webcast at https://edge.media-server.com/mmc/p/a2ncdxuo . To listen to the conference call on your telephone, participants may register for the call here . While it is not required, it is recommended you join 10 minutes prior to the event start.

About Neuronetics

Neuronetics, Inc. believes that mental health is as important as physical health. As a global leader in neuroscience, Neuronetics is redefining patient and physician expectations with its NeuroStar Advanced Therapy for Mental Health. NeuroStar is a non-drug, noninvasive treatment that can improve the quality of life for people suffering from neurohealth conditions when traditional medication hasn’t helped. NeuroStar is FDA-cleared for adults with major depressive disorder (“MDD”), as an adjunct for adults with obsessive-compulsive disorder, and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression). NeuroStar Advanced Therapy is the leading TMS treatment for MDD in adults with over 5.6 million treatments delivered. NeuroStar is backed by the largest clinical data set of any TMS treatment system for depression, including the world’s largest depression outcomes registry. Neuronetics is committed to transforming lives by offering an exceptional treatment that produces extraordinary results. For safety information and indications for use, visit NeuroStar.com.

“Safe harbor” statement under the Private Securities Litigation Reform Act of 1995:

Statements in the press release regarding the Company that are not historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as “outlook,” “potential,” “believe,” “expect,” “plan,” “anticipate,” “predict,” “may,” “will,” “could,” “would” and “should” as well as the negative of these terms and similar expressions. These statements include those relating to the Company’s business outlook and current expectations for upcoming quarters and fiscal year 2023, including with respect to revenue, expenses, growth, and any statements of assumptions underlying any of the foregoing items. These statements are subject to significant risks and uncertainties and actual results could differ materially from those projected. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this release. These risks and uncertainties include, without limitation, risks and uncertainties related to: the impact of public health crises on the Company’s operations, manufacturing and supply chain interruptions or delays; the Company’s ability to execute its business strategy; the Company’s ability to achieve or sustain profitable operations due to its history of losses; the Company’s reliance on the sale and use of its NeuroStar Advanced Therapy system to generate revenues; the scale and efficacy of the Company’s salesforce; the Company’s ability to retain talent; availability of coverage and reimbursement from third-party payors for treatments using the Company’s products; physician and patient demand for treatments using the Company’s products; developments in competing technologies and therapies for the indications that the Company’s products treat; product defects; the Company’s ability to obtain and maintain intellectual property protection for its technology; developments in clinical trials or regulatory review of NeuroStar Advanced Therapy system for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; our ability to successfully roll-out our Better Me Guarantee Provider Program on the planned timeline; our self-sustainability and existing cash balances; and our ability to achieve cash flow break-even in the fourth quarter of 2024 and on a full-year basis in 2025. For a discussion of these and other related risks, please refer to the Company’s recent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov. These forward-looking statements are based on the Company’s expectations and assumptions as of the date of this press release. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, or changes in the Company’s expectations.

Investor Contact:

Mike Vallie or Mark Klausner
Westwicke Partners
443-213-0499
ir@neuronetics.com

Media Contact:

EvolveMKD
646-517-4220
NeuroStar@evolvemkd.com

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Non-GAAP Financial Measures (Unaudited)

EBITDA is not a measure of financial performance under generally accepted accounting principles in the U.S.   (“GAAP”), and should not be construed as a substitute for, or superior to, GAAP net loss. However, management uses both the GAAP and non-GAAP financial measures internally to evaluate and manage the Company’s operations and to better understand its business. Further, management believes the addition of the non-GAAP financial measure provides meaningful supplementary information to, and facilitates analysis by, investors in evaluating the Company’s financial performance, results of operations and trends. The Company’s calculation of EBITDA may not be comparable to similarly designated measures reported by other companies, because companies and investors may differ as to what type of events warrant adjustment.

The following table reconciles reported net loss to EBITDA: