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
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Revenues by Geography |
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|
|
|
Three Months Ended September 30, |
|
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|
|
|
2023 |
|
2022 |
|
|
|
|
|
Amount |
|
Amount |
|
% Change |
|
|
|
(in thousands, except percentages) |
|
U.S. |
|
$ |
17,211 |
|
$ |
16,244 |
|
6 |
% |
International |
|
|
673 |
|
|
254 |
|
165 |
% |
Total revenues |
|
$ |
17,884 |
|
$ |
16,498 |
|
8 |
% |
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.
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U.S. Revenues by Product Category |
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|
|
Three Months Ended September 30, |
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2023 |
|
2022 |
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|
|
Amount |
|
Amount |
|
% Change |
|
|
|
(in thousands, except percentages) |
|
NeuroStar Advanced Therapy System |
|
$ |
3,597 |
|
$ |
3,934 |
|
(9 |
) |
% |
Treatment sessions |
|
|
13,060 |
|
$ |
11,864 |
|
10 |
|
% |
Other |
|
|
554 |
|
$ |
446 |
|
24 |
|
% |
Total U.S. revenues |
|
$ |
17,211 |
|
$ |
16,244 |
|
6 |
|
% |
|
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|
|
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|
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|
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|
U.S. NeuroStar Advanced Therapy System |
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Revenues by Type |
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Three Months Ended September 30, |
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2023 |
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2022 |
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|
|
|
|
Amount |
|
Amount |
|
% Change |
|
|
|
(in thousands, except percentages) |
|
NeuroStar capital |
|
$ |
3,479 |
|
$ |
3,664 |
|
(5 |
) |
% |
Operating lease |
|
|
18 |
|
|
48 |
|
(63 |
) |
% |
Other |
|
|
100 |
|
|
222 |
|
(55 |
) |
% |
Total U.S. NeuroStar Advanced Therapy system revenues |
|
$ |
3,597 |
|
$ |
3,934 |
|
(9 |
) |
% |
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 KlausnerWestwicke
Partners443-213-0499ir@neuronetics.com
Media Contact:
EvolveMKD646-517-4220NeuroStar@evolvemkd.com
NEURONETICS, INC.Statements of
Operations(In thousands, except per share
data)
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|
Three Months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
Revenues |
|
$ |
17,884 |
|
|
$ |
16,498 |
|
|
$ |
51,034 |
|
|
$ |
47,008 |
|
Cost of revenues |
|
|
6,120 |
|
|
|
3,570 |
|
|
|
15,100 |
|
|
|
11,093 |
|
Gross Profit |
|
|
11,764 |
|
|
|
12,928 |
|
|
|
35,934 |
|
|
|
35,915 |
|
Operating expenses: |
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing |
|
|
12,141 |
|
|
|
11,643 |
|
|
|
35,602 |
|
|
|
37,977 |
|
General and administrative |
|
|
6,339 |
|
|
|
6,391 |
|
|
|
19,151 |
|
|
|
19,125 |
|
Research and development |
|
|
2,155 |
|
|
|
2,348 |
|
|
|
7,308 |
|
|
|
6,197 |
|
Total operating expenses |
|
|
20,635 |
|
|
|
20,382 |
|
|
|
62,061 |
|
|
|
63,299 |
|
Loss from Operations |
|
|
(8,871 |
) |
|
|
(7,454 |
) |
|
|
(26,127 |
) |
|
|
(27,384 |
) |
Other (income) expense: |
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense |
|
|
1,184 |
|
|
|
1,061 |
|
|
|
3,580 |
|
|
|
3,039 |
|
Other income, net |
|
|
(664 |
) |
|
|
(906 |
) |
|
|
(4,895 |
) |
|
|
(1,554 |
) |
Net Loss |
|
$ |
(9,391 |
) |
|
$ |
(7,609 |
) |
|
$ |
(24,812 |
) |
|
$ |
(28,869 |
) |
Net loss per share of common
stock outstanding, basic and diluted |
|
$ |
(0.33 |
) |
|
$ |
(0.28 |
) |
|
$ |
(0.87 |
) |
|
$ |
(1.08 |
) |
Weighted-average common shares
outstanding, basic and diluted |
|
|
28,876 |
|
|
|
26,965 |
|
|
|
28,505 |
|
|
|
26,797 |
|
NEURONETICS, INC.Balance
Sheets(In thousands, except per share
data)
|
|
|
|
|
|
|
|
|
September 30, |
|
December 31, |
|
|
2023 |
|
|
2022 |
|
Assets |
|
|
|
|
|
|
Current assets: |
|
|
|
|
|
|
Cash and cash equivalents |
|
$ |
35,847 |
|
|
$ |
70,340 |
|
Accounts receivable, net |
|
|
15,024 |
|
|
|
13,591 |
|
Inventory |
|
|
9,737 |
|
|
|
8,899 |
|
Current portion of net investments in sales-type leases |
|
|
968 |
|
|
|
1,538 |
|
Current portion of prepaid commission expense |
|
|
2,351 |
|
|
|
1,997 |
|
Current portion of note receivables |
|
|
1,850 |
|
|
|
230 |
|
Prepaid expenses and other current assets |
|
|
5,234 |
|
|
|
2,174 |
|
Total current assets |
|
|
71,011 |
|
|
|
98,769 |
|
Property and equipment,
net |
|
|
2,066 |
|
|
|
1,991 |
|
Operating lease right-of-use
assets |
|
|
2,916 |
|
|
|
3,327 |
|
Net investments in sales-type
leases |
|
|
700 |
|
|
|
1,222 |
|
Prepaid commission
expense |
|
|
8,018 |
|
|
|
7,568 |
|
Long-term notes
receivable |
|
|
4,191 |
|
|
|
362 |
|
Other assets |
|
|
4,086 |
|
|
|
3,645 |
|
Total Assets |
|
$ |
92,988 |
|
|
$ |
116,884 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
|
Accounts payable |
|
$ |
2,822 |
|
|
$ |
2,433 |
|
Accrued expenses |
|
|
10,037 |
|
|
|
14,837 |
|
Deferred revenue |
|
|
1,637 |
|
|
|
1,980 |
|
Current portion of operating lease liabilities |
|
|
840 |
|
|
|
824 |
|
Current portion of long-term debt, net |
|
|
— |
|
|
|
13,125 |
|
Total current liabilities |
|
|
15,336 |
|
|
|
33,199 |
|
Long-term debt, net |
|
|
36,851 |
|
|
|
22,829 |
|
Deferred revenue |
|
|
354 |
|
|
|
829 |
|
Operating lease
liabilities |
|
|
2,506 |
|
|
|
2,967 |
|
Total Liabilities |
|
|
55,047 |
|
|
|
59,824 |
|
Commitments and contingencies (Note 17) |
|
|
— |
|
|
|
— |
|
Stockholders’ Equity: |
|
|
|
|
|
|
Preferred stock, $0.01 par value: 10,000 shares authorized; no
shares issued or outstanding on September 30, 2023, and
December 31, 2022 |
|
|
— |
|
|
|
— |
|
Common stock, $0.01 par value: 200,000 shares authorized; 28,902
and 27,268 shares issued and outstanding on
September 30, 2023, and December 31, 2022,
respectively |
|
|
289 |
|
|
|
273 |
|
Additional paid-in capital |
|
|
408,356 |
|
|
|
402,679 |
|
Accumulated deficit |
|
|
(370,704 |
) |
|
|
(345,892 |
) |
Total Stockholders’ Equity |
|
|
37,941 |
|
|
|
57,060 |
|
Total Liabilities and Stockholders’ Equity |
|
$ |
92,988 |
|
|
$ |
116,884 |
|
NEURONETICS, INC.Statements of Cash
Flows(In thousands)
|
|
|
|
|
|
|
|
|
Nine months ended September 30, |
|
|
2023 |
|
|
2022 |
|
Cash Flows from Operating
Activities: |
|
|
|
|
|
|
Net loss |
|
$ |
(24,812 |
) |
|
$ |
(28,869 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
1,503 |
|
|
|
1,044 |
|
Allowance for credit losses |
|
|
369 |
|
|
|
328 |
|
Inventory impairment |
|
|
1,905 |
|
|
|
— |
|
Share-based compensation |
|
|
5,693 |
|
|
|
6,633 |
|
Non-cash interest expense |
|
|
460 |
|
|
|
513 |
|
Cost of rental units purchased by customers |
|
|
— |
|
|
|
92 |
|
Changes in certain assets and liabilities: |
|
|
|
|
|
|
Accounts receivable, net |
|
|
(7,933 |
) |
|
|
(4,585 |
) |
Inventory |
|
|
(2,742 |
) |
|
|
(2,299 |
) |
Net investment in sales-type leases |
|
|
1,092 |
|
|
|
381 |
|
Prepaid commission expense |
|
|
(804 |
) |
|
|
(854 |
) |
Prepaid expenses and other assets |
|
|
(3,338 |
) |
|
|
176 |
|
Accounts payable |
|
|
54 |
|
|
|
(2,199 |
) |
Accrued expenses |
|
|
(4,801 |
) |
|
|
3,260 |
|
Deferred revenue |
|
|
(817 |
) |
|
|
(1,260 |
) |
Net Cash Used in Operating Activities |
|
|
(34,171 |
) |
|
|
(27,639 |
) |
|
|
|
|
|
|
|
Cash Flows from Investing
Activities: |
|
|
|
|
|
|
Purchases of property and equipment and capitalized software |
|
|
(1,490 |
) |
|
|
(2,766 |
) |
Repayment of notes receivable |
|
|
731 |
|
|
|
10,000 |
|
Net Cash (Used in) Provided by Investing Activities |
|
|
(759 |
) |
|
|
7,234 |
|
|
|
|
|
|
|
|
Cash Flows from Financing
Activities: |
|
|
|
|
|
|
Payments of debt issuance costs |
|
|
(863 |
) |
|
|
(90 |
) |
Proceeds from issuance of long-term debt |
|
|
2,500 |
|
|
|
— |
|
Repayment of long-term debt |
|
|
(1,200 |
) |
|
|
— |
|
Proceeds from exercises of stock options |
|
|
— |
|
|
|
52 |
|
Net Cash Provided by (Used in) Financing Activities |
|
|
437 |
|
|
|
(38 |
) |
Net Decrease in Cash and Cash Equivalents |
|
|
(34,493 |
) |
|
|
(20,443 |
) |
Cash and Cash Equivalents, Beginning of Period |
|
|
70,340 |
|
|
|
94,141 |
|
Cash and Cash Equivalents, End of Period |
|
$ |
35,847 |
|
|
$ |
73,698 |
|
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:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Three Months ended |
|
Nine months ended |
|
|
September 30, |
|
September 30, |
|
|
2023 |
|
|
2022 |
|
|
2023 |
|
|
2022 |
|
|
|
(in thousands) |
|
(in thousands) |
Net loss |
|
$ |
(9,391 |
) |
|
$ |
(7,609 |
) |
|
$ |
(24,812 |
) |
|
$ |
(28,869 |
) |
Interest expense |
|
|
1,184 |
|
|
|
1,061 |
|
|
|
3,580 |
|
|
|
3,039 |
|
Income taxes |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
Depreciation and
amortization |
|
|
500 |
|
|
|
387 |
|
|
|
1,503 |
|
|
|
1,044 |
|
EBITDA |
|
$ |
(7,707 |
) |
|
$ |
(6,161 |
) |
|
$ |
(19,729 |
) |
|
$ |
(24,786 |
) |
Neuronetics (NASDAQ:STIM)
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