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
first quarter of 2023.
First Quarter 2023 Highlights
- First quarter 2023 revenue of $15.5 million, an increase of 10%
over the first quarter of 2022
- U.S. treatment session revenue increased 12% over the first
quarter of 2022
- Shipped 49 systems continuing our capital expansion
strategy
Recent Operational Highlights
- Strengthened our balance sheet by amending our senior secured
credit facility with SLR Capital Partners that provides for
borrowings of up to $60 million
- United HealthCare updated its Medicare Advantage policy in
states covered by National Government Services (“NGS”) Medicare to
allow non-physician practitioners (“NPPs”) to prescribe
transcranial magnetic stimulation (“TMS”)
- BlueCross BlueShield of Mississippi updated its healthcare
policy to allow NPPs to prescribe TMS
- Fifth U.S Food and Drug Administration (“FDA”) clearance in
less than two years offers enhanced Wi-Fi capabilities for
NeuroStar Advanced Therapy
Recent Marketing Highlights
- Achieved milestones of over 150,000 global patients treated
with 5.5 million of our treatment sessions, another Company
record
“We are pleased to report a strong start to the year with our
first -quarter performance reflecting the positive impacts of our
ability to execute on our strategic initiatives. In addition to the
strength seen across both our NeuroStar system expansion and the
very encouraging trends in treatment sessions, we continue to see
improved access to our technology through healthcare policy updates
and enhanced connectivity capabilities for NeuroStar Advanced
Therapy. This is a testament to the effectiveness of our technology
and the dedication of our team,” said Keith J. Sullivan, President
and Chief Executive Officer of Neuronetics. “As we move forward, we
remain committed to executing on our strategy and building on this
momentum to deliver strong results benefiting our patients,
customers and shareholders.”
First Quarter 2023 Financial and Operating Results for
the Three Months Ended March 31, 2023
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|
Revenues by Geography |
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
2022 |
|
|
|
Amount |
|
Amount |
|
% Change |
|
(in thousands, except percentages) |
U.S. |
$ |
14,964 |
|
$ |
13,517 |
|
11 |
% |
International |
|
576 |
|
|
664 |
|
(13 |
)% |
Total revenues |
$ |
15,540 |
|
$ |
14,181 |
|
10 |
% |
|
|
|
|
|
|
|
|
|
Total revenue for the three months ended March 31, 2023, was
$15.5 million, an increase of 10% compared to the three months
ended March 31, 2022 revenue of $14.2 million. During the quarter,
total U.S. revenue increased by 11% and international revenue
decreased by 13% over the first quarter of 2022. The U.S. growth
was primarily driven by an increase in NeuroStar treatment sessions
sales. The decrease in international growth was mainly due to lower
NeuroStar Advanced Therapy system revenue.
|
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|
U.S. Revenues by Product Category |
|
|
|
|
Three Months Ended March 31, |
|
|
|
|
2023 |
|
2022 |
|
|
|
|
Amount |
|
Amount |
|
% Change |
|
|
(in thousands, except percentages) |
|
NeuroStar Advanced Therapy
system |
$ |
3,850 |
|
$ |
3,642 |
|
6 |
% |
Treatment sessions |
|
10,643 |
|
$ |
9,469 |
|
12 |
% |
Other |
|
471 |
|
$ |
406 |
|
16 |
% |
Total U.S. revenues |
$ |
14,964 |
|
$ |
13,517 |
|
11 |
% |
|
|
|
|
|
|
|
|
|
U.S. NeuroStar Advanced Therapy System |
|
|
|
Revenues by Type |
|
|
|
Three Months Ended March 31, |
|
|
|
2023 |
|
2022 |
|
|
|
Amount |
|
Amount |
|
% Change |
|
(in thousands, except percentages) |
NeuroStar capital |
$ |
3,649 |
|
$ |
3,485 |
|
5 |
% |
Operating lease |
|
39 |
|
|
67 |
|
(42 |
)% |
Other |
|
162 |
|
|
90 |
|
80 |
% |
Total U.S. NeuroStar Advanced Therapy system revenues |
$ |
3,850 |
|
$ |
3,642 |
|
6 |
% |
|
|
|
|
|
|
|
|
|
U.S. NeuroStar Advanced Therapy system revenue for the three
months ended March 31, 2023, was $3.9 million, an increase of 6%
compared to the revenue of $3.6 million in the first quarter of
2022. For the three months ended March 31, 2023, and 2022, the
Company shipped 49 and 48 systems, respectively.
U.S. treatment session revenue for the three months ended March
31, 2023, was $10.6 million, an increase of 12% compared to the
revenue of $9.5 million in the first quarter of 2022. The revenue
growth was primarily driven by an increase in utilization, in
particular within our local consumable customer segment.
In the first quarter of 2023, U.S. treatment session revenue per
active site was approximately $9,700 compared to approximately
$9,874 in the first quarter of 2022. The decline was primarily due
to over 100 incremental sites introduced to our installed base and
a slowdown in revenue from the service provider segment. Excluding
Greenbrook TMS Inc. and its wholly owned subsidiary, Check Five LLC
(doing business as Success TMS), revenue per active site was
consistent year over year.
Gross margin for the first quarter of 2023 was 73.3%, a decrease
of approximately 210 basis points from the first quarter of 2022
gross margin of 75.4%. The decline in gross margin was driven by
revenue mix, as well as an increase in capitalized software and the
corresponding amortization expense associated with the latest
product release.
Operating expenses during the first quarter of 2023 were $21.3
million, a marginal increase of $0.5 million, or 2%, compared to
$20.8 million in the first quarter of 2022.
Net loss for the first quarter of 2023 was $(10.5) million, or
$(0.38) per share, as compared to the first quarter 2022 net loss
of $(10.8) million, or $(0.41) per share. Net loss per share was
based on 28,038,612 and 26,596,533 weighted-average common shares
outstanding for the first quarters of 2023 and 2022,
respectively.
EBITDA for the first quarter of 2023 was $(8.8) million as
compared to the first quarter of 2022 EBITDA of $(9.5) million. See
the accompanying financial table that reconciles EBITDA, which is a
non-GAAP financial measure, to net loss.
Cash and cash equivalents were $55.4 million as of March 31,
2023. This compares to cash and cash equivalents of $70.3 million
as of December 31, 2022 and $80.8 million as of March 31, 2022.
Secures Up To $60 Million in Amended Debt Financing with
SLR Capital Partners
Neuronetics entered into an amended senior secured credit
facility with SLR Capital Partners that provides for borrowings of
up to $60 million, including three tranches of term loans. The new
facility will further strengthen Neuronetics' balance sheet and
drive continued commercial adoption of NeuroStar Advanced Therapy.
The loan has an annual interest rate of SOFR plus 5.65%, with
interest only payments until March 2026.
United Health Care Medicare Advantage Plans in NGS
States Expand Access via NPPs
United HealthCare has updated their Medicare Advantage policy in
states covered by NGS Medicare. This policy expansion increases
access to NeuroStar Advanced Therapy by allowing NPPs, such as
nurse practitioners to order and administer TMS therapy to patients
with major depressive disorder (“MDD”) in states where they have
the scope of practice to do so. This policy update increases the
accessibility of TMS therapy for patients and is the latest trend
in mental health coverage from commercial and government
payers.
BlueCross BlueShield of Mississippi to Allow NPPs to
Prescribe TMS
BlueCross BlueShield (BCBS) of Mississippi has updated its
healthcare policy to allow TMS- trained healthcare professionals,
such as nurse practitioners, to prescribe TMS treatment for
patients with MDD. This policy change will increase access to
NeuroStar Advanced Therapy. The revised policy also lowers the
medication requirement from four failed medications to two prior to
TMS treatment. Neuronetics is the only TMS company with a dedicated
health policy team that partners with providers and payers to
advocate for health policy changes.
FDA Clears Enhanced
Wi-Fi Capabilities for NeuroStar Advanced
Therapy
Neuronetic’s fifth FDA clearance in less than two years offers
greater flexibility to improve the patient and provider experience.
The new Wi-Fi capability offers improved internet connectivity for
NeuroStar providers with restricted networks. This advancement
allows for greater flexibility in the NeuroStar system placement
and access to more connectivity options for TrakStar, while
maintaining Health Insurance Portability and Accountability Act
compliance and patient security. The improved internet connectivity
feature also grants NeuroStar providers access to all the features
and benefits exclusive to TrakStar cloud customers. This
advancement also allows for improved access to TrakStar
insights.
Business Outlook
For the full year 2023, the Company now expects total worldwide
revenue to be between $68.0 million and $73.0 million.
For the full year 2023, the Company continues to expect total
operating expenses to be between $84.0 million and $88.0
million.
For the second quarter of 2023, the Company expects total
worldwide revenue between $17.0 million and $18.0 million.
Webcast and Conference Call Information
Neuronetics’ management team will host a conference call on May
9, 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/dkh33hi3.
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. To access the live audio webcast or subsequent
archived recording, visit the Investor Relations section of
Neuronetics’ website
at ir.neuronetics.com.
About Neuronetics
Neuronetics, Inc. believes that mental health is as important as
physical health. As a global leader in neuroscience and the largest
TMS company in the industry, Neuronetics is redefining patient and
physician expectations by designing and developing products that
improve the quality of life for people suffering from psychiatric
disorders. An FDA-cleared, non-drug, noninvasive treatment for
people with depression, Neuronetics’ NeuroStar® Advanced Therapy
system is today’s leading TMS treatment for MDD with over 4.8
million treatments delivered. NeuroStar is widely researched and
backed by the largest clinical data set of any TMS system for
depression, including the world’s largest depression outcomes
registry. Our NeuroStar® Advanced Therapy system is also
FDA-cleared to treat people suffering from obsessive-compulsive
disorder, as well as for the treatment of comorbid anxiety symptoms
(“anxious depression”) for adults with MDD suffering from anxiety
symptoms. Neuronetics is committed to transforming lives by
offering an exceptional treatment option 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; and
developments in regulation in the U.S. and other applicable
jurisdictions. 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) |
|
|
|
|
|
|
|
Three Months ended |
|
March 31, |
|
2023 |
|
2022 |
Revenues |
$ |
15,540 |
|
|
$ |
14,181 |
|
Cost of revenues |
|
4,144 |
|
|
|
3,485 |
|
Gross Profit |
|
11,396 |
|
|
|
10,696 |
|
Operating expenses: |
|
|
|
|
|
Sales and marketing |
|
11,902 |
|
|
|
12,649 |
|
General and administrative |
|
6,611 |
|
|
|
6,379 |
|
Research and development |
|
2,790 |
|
|
|
1,803 |
|
Total operating expenses |
|
21,303 |
|
|
|
20,831 |
|
Loss from Operations |
|
(9,907 |
) |
|
|
(10,135 |
) |
Other (income) expense: |
|
|
|
|
|
Interest expense |
|
1,253 |
|
|
|
978 |
|
Other income, net |
|
(640 |
) |
|
|
(275 |
) |
Net Loss |
$ |
(10,520 |
) |
|
$ |
(10,838 |
) |
Net loss per share of common
stock outstanding, basic and diluted |
$ |
(0.38 |
) |
|
$ |
(0.41 |
) |
Weighted-average common shares
outstanding, basic and diluted |
|
28,034 |
|
|
|
26,597 |
|
|
|
|
|
|
|
|
|
NEURONETICS, INC. |
Balance Sheets |
(In thousands, except per share data) |
|
|
|
|
|
|
|
March 31, |
|
December 31, |
|
2023 |
|
2022 |
Assets |
|
|
|
|
|
Current assets: |
|
|
|
|
|
Cash and cash equivalents |
$ |
55,443 |
|
|
$ |
70,340 |
|
Accounts receivable, net |
|
9,452 |
|
|
|
13,591 |
|
Inventory |
|
9,142 |
|
|
|
8,899 |
|
Current portion of net investments in sales-type leases |
|
1,257 |
|
|
|
1,538 |
|
Current portion of prepaid commission expense |
|
2,097 |
|
|
|
1,997 |
|
Current portion of note receivables |
|
1,498 |
|
|
|
230 |
|
Prepaid expenses and other current assets |
|
2,218 |
|
|
|
2,174 |
|
Total current assets |
|
81,107 |
|
|
|
98,769 |
|
Property and equipment,
net |
|
1,990 |
|
|
|
1,991 |
|
Operating lease right-of-use
assets |
|
3,193 |
|
|
|
3,327 |
|
Net investments in sales-type
leases |
|
989 |
|
|
|
1,222 |
|
Prepaid commission
expense |
|
7,643 |
|
|
|
7,568 |
|
Long-term note receivable |
|
5,189 |
|
|
|
362 |
|
Other assets |
|
3,493 |
|
|
|
3,645 |
|
Total Assets |
$ |
103,604 |
|
|
$ |
116,884 |
|
Liabilities and
Stockholders’ Equity |
|
|
|
|
|
Current liabilities: |
|
|
|
|
|
Accounts payable |
$ |
4,970 |
|
|
$ |
2,433 |
|
Accrued expenses |
|
7,440 |
|
|
|
14,837 |
|
Deferred revenue |
|
1,891 |
|
|
|
1,980 |
|
Current portion of operating lease liabilities |
|
829 |
|
|
|
824 |
|
Current portion of long-term debt, net |
|
— |
|
|
|
13,125 |
|
Total current liabilities |
|
15,130 |
|
|
|
33,199 |
|
Long-term debt, net |
|
36,641 |
|
|
|
22,829 |
|
Deferred revenue |
|
671 |
|
|
|
829 |
|
Operating lease
liabilities |
|
2,817 |
|
|
|
2,967 |
|
Total Liabilities |
|
55,259 |
|
|
|
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 March 31, 2023 and
December 31, 2022 |
|
— |
|
|
|
— |
|
Common stock, $0.01 par value: 200,000 shares authorized; 28,465
and 27,268 shares issued and outstanding on
March 31, 2023 and December 31, 2022,
respectively |
|
285 |
|
|
|
273 |
|
Additional paid-in capital |
|
404,472 |
|
|
|
402,679 |
|
Accumulated deficit |
|
(356,412 |
) |
|
|
(345,892 |
) |
Total Stockholders’ Equity |
|
48,345 |
|
|
|
57,060 |
|
Total Liabilities and Stockholders’ Equity |
$ |
103,604 |
|
|
$ |
116,884 |
|
|
|
|
|
|
|
|
|
NEURONETICS, INC. |
Statements of Cash Flows |
(In thousands) |
|
|
|
|
|
|
|
Three months ended March 31, |
|
2023 |
|
2022 |
Cash Flows from Operating
Activities: |
|
|
|
|
|
Net loss |
$ |
(10,520 |
) |
|
$ |
(10,838 |
) |
Adjustments to reconcile net loss to net cash used in operating
activities: |
|
|
|
|
|
Depreciation and amortization |
|
516 |
|
|
|
319 |
|
Share-based compensation |
|
1,805 |
|
|
|
2,252 |
|
Non-cash interest expense |
|
188 |
|
|
|
164 |
|
Changes in certain assets and liabilities: |
|
|
|
|
|
Accounts receivable, net |
|
4,139 |
|
|
|
(545 |
) |
Inventory |
|
(243 |
) |
|
|
(1,021 |
) |
Net investment in sales-type leases |
|
535 |
|
|
|
389 |
|
Prepaid commission expense |
|
(175 |
) |
|
|
(295 |
) |
Prepaid expenses and other assets |
|
182 |
|
|
|
801 |
|
Accounts payable |
|
2,484 |
|
|
|
(2,226 |
) |
Accrued expenses |
|
(7,680 |
) |
|
|
(447 |
) |
Deferred revenue |
|
(247 |
) |
|
|
(735 |
) |
Net Cash Used in Operating Activities |
|
(9,016 |
) |
|
|
(12,182 |
) |
|
|
|
|
|
|
Cash Flows from Investing
Activities: |
|
|
|
|
|
Purchases of property and equipment and capitalized software |
|
(234 |
) |
|
|
(1,074 |
) |
Repayment (Issuance) of promissory note |
|
(6,146 |
) |
|
|
— |
|
Net Cash Used in Investing Activities |
|
(6,380 |
) |
|
|
(1,074 |
) |
|
|
|
|
|
|
Cash Flows from Financing
Activities: |
|
|
|
|
|
Payments of debt issuance costs |
|
(801 |
) |
|
|
(57 |
) |
Proceeds from issuance of long-term debt |
|
2,500 |
|
|
|
— |
|
Repayment of long-term debt |
|
(1,200 |
) |
|
|
— |
|
Proceeds from exercises of stock options |
|
— |
|
|
|
9 |
|
Net Cash Provided by (Used in) Financing Activities |
|
499 |
|
|
|
(48 |
) |
Net (Decrease) Increase in Cash and Cash Equivalents |
|
(14,897 |
) |
|
|
(13,304 |
) |
Cash and Cash Equivalents, Beginning of Period |
|
70,340 |
|
|
|
94,141 |
|
Cash and Cash Equivalents, End of Period |
$ |
55,443 |
|
|
$ |
80,837 |
|
|
|
|
|
|
|
|
|
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 |
|
March 31, |
|
2023 |
|
2022 |
|
(in thousands) |
Net loss |
$ |
(10,520 |
) |
|
$ |
(10,838 |
) |
Interest expense |
|
1,253 |
|
|
|
978 |
|
Income taxes |
|
— |
|
|
|
— |
|
Depreciation and
amortization |
|
516 |
|
|
|
319 |
|
EBITDA |
$ |
(8,751 |
) |
|
$ |
(9,541 |
) |
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