Neuronetics reports third quarter 2023 financial and operating results

Neuronetics, Inc. 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.
MB Bureau