On November 12, 2024, Neuronetics Inc (STIM, Financial) released its 8-K filing detailing its financial and operating results for the third quarter of 2024. Neuronetics Inc, a commercial stage medical technology company, focuses on improving the quality of life for patients with psychiatric disorders through its NeuroStar Advanced Therapy System, a non-invasive treatment for major depressive disorder (MDD).
Performance Overview
Neuronetics Inc reported total revenues of $18.5 million for the third quarter of 2024, marking a 4% increase from $17.9 million in the same period of 2023. However, this fell short of the analyst estimate of $19.13 million. The U.S. market saw a 4% revenue increase, driven by higher sales of the NeuroStar Advanced Therapy System and treatment sessions, while international revenues declined by 10%.
Despite the revenue growth, Neuronetics Inc faced challenges with a net loss of $13.3 million, or $0.44 per share, compared to a net loss of $9.4 million, or $0.33 per share, in the third quarter of 2023. This result was below the analyst estimate of a $0.23 loss per share. The company's EBITDA also worsened, recording a loss of $11.6 million compared to $7.7 million in the previous year.
Financial Achievements and Challenges
The gross margin improved significantly to 75.6% from 65.8% in the prior year, attributed to a favorable product mix and the absence of one-time manufacturing costs and inventory impairments from 2023. However, operating expenses increased by 5% to $21.7 million, impacting the overall profitability.
Neuronetics Inc's cash and cash equivalents stood at $20.9 million as of September 30, 2024, a significant decrease from $59.7 million at the end of 2023. This reduction highlights the company's ongoing cash flow challenges, which are critical for sustaining operations and funding strategic initiatives.
Strategic Developments
The acquisition of Greenbrook TMS, approved by Neuronetics' stockholders, is a strategic move to enhance its position in the mental health care market. This acquisition is expected to expand access to mental health solutions and accelerate the rollout of additional services like SPRAVATO®.
“We are very excited about the approval of the acquisition of Greenbrook TMS, which positions Neuronetics to be one of the largest, and most innovative provider of mental health care in the United States,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics.
Income Statement Highlights
| Metric | Q3 2024 | Q3 2023 | % Change |
|---|---|---|---|
| Total Revenue | $18.5 million | $17.9 million | 4% |
| Gross Profit | $14.0 million | $11.8 million | 18.9% |
| Net Loss | $(13.3) million | $(9.4) million | -41.5% |
| EBITDA | $(11.6) million | $(7.7) million | -50.6% |
Analysis and Outlook
Neuronetics Inc's performance in the third quarter of 2024 reflects both progress and challenges. The revenue growth and improved gross margin are positive indicators, yet the increased net loss and cash flow issues pose significant concerns. The strategic acquisition of Greenbrook TMS is a pivotal step towards enhancing market presence and operational efficiency, potentially leading to improved financial outcomes in the future.
For the fourth quarter of 2024, Neuronetics Inc expects total worldwide revenue between $19.0 million and $20.0 million, indicating a cautious optimism for continued growth. The company's ability to integrate Greenbrook TMS and achieve cash flow breakeven by the second quarter of 2025 will be crucial for its long-term success.
Explore the complete 8-K earnings release (here) from Neuronetics Inc for further details.
