Neuronetics (STIM) Q2 2024 earnings summary

Executive summary

• Q2 2024 revenue was $16.5 million, down 7% year-over-year, mainly due to the lingering impact of the Change Healthcare cybersecurity breach affecting customer cash flow and treatment session purchases; U.S. revenue declined 7% and international revenue was flat.

• Net loss widened to $9.8 million ($0.33/share) from $4.9 million ($0.17/share) in Q2 2023; EBITDA was $(8.0) million vs. $(3.3) million prior year.

• Announced a definitive agreement to acquire Greenbrook TMS, the largest TMS provider in the U.S., creating a vertically integrated mental health company and aiming for scale, cost synergies, and accelerated profitability.

• FDA-cleared NeuroStar TMS therapy for adolescents (ages 15-21) saw positive adoption, with over 425 adolescent patients treated since April and expanded insurance coverage by major insurers.

• Launched the nationwide Better Me Provider program, improving provider follow-up rates, patient access, and operational efficiency, and initiated a TV ad pilot in Tampa.

Financial highlights

• Q2 2024 total revenue: $16.5 million, down 7% year-over-year; U.S. NeuroStar system revenue: $4 million (49-50 systems shipped), down 11% year-over-year.

• U.S. treatment session revenue: $11.7 million, down 5% year-over-year; revenue per active site: $10,000 vs. $11,400 prior year.

• Gross margin: 74%, up from 72.5% in Q2 2023, aided by a new contract manufacturer and favorable product mix.

• Operating expenses: $20.7 million, up 3% year-over-year, mainly due to expanded NeuroStar University utilization.

• Cash and equivalents: $42.6 million as of June 30, 2024.

Outlook and guidance

• Q3 2024 revenue expected at $18.5–$19.5 million.

• Full-year 2024 revenue guidance maintained at $78–$80 million, assuming normalization of treatment session ordering and inventory.

• Full-year operating expenses expected at $78–$80 million.

• Path to profitability reaffirmed; company expects to be cash flow positive in Q4 2024 and on a full-year basis in 2025.

• Combined company (post-Greenbrook merger) expects mid-teens revenue growth in 2025 and 2026, with cost synergies of at least $15 million annually.