Neuronetics Inc (STIM) Q4 2024 Earnings Call Highlights: Revenue Growth Amidst Rising Expenses ...

GuruFocus News

Wed, Mar 5, 2025, 12:06 AM 4 min read

Total Revenue: $22.5 million, an increase of 11% over the fourth quarter of 2023.
NeuroStar System Revenue: $3.8 million with 46 systems shipped.
U.S. Treatment Session Revenue: $12.9 million, a decrease of 14% year-over-year.
U.S. Clinic Revenue: $4.4 million, representing Greenbrook's revenues post-acquisition.
Gross Margin: 66.2%, down from 77.6% in the prior year quarter.
Operating Expenses: $25.8 million, an increase of 28% compared to the fourth quarter of 2023.
Net Loss: $12.1 million or $0.33 per share, compared to a net loss of $5.4 million or $0.19 per share in the prior year quarter.
EBITDA: Negative $10.5 million, including $10.6 million in non-recurring expenses.
Cash and Cash Equivalents: $18.5 million as of December 31, 2024.
Debt Facility: Secured up to $90 million, with $60 million accessed by year-end.
Capital Raise: $18.9 million in net proceeds from a public offering.
Guidance - Q1 2025 Revenue: Expected to be $28 million to $30 million.
Guidance - Full-Year 2025 Revenue: Expected to be $145 million to $155 million.
Guidance - Full-Year 2025 Gross Margin: Approximately 55%.
Guidance - Full-Year 2025 Operating Expenses: Expected to be $90 million to $98 million.

Warning! GuruFocus has detected 8 Warning Signs with STIM.

Release Date: March 04, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

Neuronetics Inc (NASDAQ:STIM) reported a total revenue of $22.5 million for Q4 2024, marking an 11% increase over the same period in 2023.
The acquisition of Greenbrook TMS has transformed Neuronetics into a vertically integrated mental health care provider, enhancing its market position.
The Better Me Provider (BMP) program has been a success, with participating sites treating three times more patients per quarter than non-participating sites.
Neuronetics received FDA clearance for the NeuroStar system to treat adolescent patients, expanding its addressable market.
The company has captured over 90% of the identified $22 million in annualized cost synergies from the Greenbrook acquisition, surpassing initial targets.

Negative Points

Gross margin decreased to 66.2% from 77.6% in the prior year quarter, primarily due to the inclusion of the Greenbrook Clinic business.
Operating expenses increased by 28% to $25.8 million, largely due to professional fees and the inclusion of Greenbrook's expenses.
Net loss for the fourth quarter was $12.1 million, compared to a net loss of $5.4 million in the prior year quarter.
EBITDA was negative $10.5 million, with non-recurring expenses associated with the Greenbrook acquisition impacting results.
Cash and cash equivalents decreased significantly to $18.5 million as of December 31, 2024, from $59.7 million the previous year.

Q & A Highlights

Q: How long will it take to implement the BMP and standardize operations at Greenbrook sites, and what impact has been observed so far? A: Keith Sullivan, President and CEO, stated that training for RAMs and technicians has been conducted, with ongoing virtual education for providers. Changes will continue throughout the year, with improvements in efficiencies being identified and implemented.

Q: Can you provide details on the revenue guidance of $145 million to $155 million and the expected operating expenses? A: Steve Furlong, CFO, explained that $65 million to $70 million is expected from standalone Neuronetics, with $80 million to $85 million from Greenbrook TMS. The programs need to continue working, but no heroic efforts are required. Operating expenses are expected to be between $90 million and $98 million, with significant cost synergies already realized.

Q: What opportunities exist to improve the margin profile of Greenbrook, and what is the expected impact on consolidated margins? A: Steve Furlong noted that Greenbrook's clinic margins are expected to improve to mid-30s from 27%-28% due to the elimination of underperforming clinics. Consolidated margins are projected at 55%, with ongoing efforts to improve both NeuroStar and clinic margins.

Q: How is the SPRAVATO rollout progressing, and what are the capital requirements for this initiative? A: Steve Furlong mentioned that SPRAVATO is offered in 63 clinics, with 35 capable of buy and bill. The capital outlay is minimal, with infrastructure already in place. Inventory commitments could reach $5 million, but distribution partners offer 120-day terms to manage cash flow.

Q: What is the current productivity level at Greenbrook sites, and what improvements are expected? A: Steve Furlong stated that Greenbrook is averaging four patients per day per system, with expectations to increase to five or six patients per day through training and education. This could add approximately $10 million in annualized revenue.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

This article first appeared on GuruFocus.

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