MALVERN, PA — Neuronetics, Inc. (NASDAQ: STIM), a commercial-stage medical technology company focused on designing, developing and marketing products that improve the quality of life for patients who suffer from psychiatric disorders, announced preliminary first quarter 2020 revenue and provided a business update, including the actions it is taking in response to COVID-19.
“During these uncertain times, our first priority is the health and safety of our employees, patients, customers and communities. Depression is a debilitating condition that millions of patients suffer from worldwide, and for those undergoing or in need of treatment, we believe that TMS treatment is a medical necessity. We continue to support our customers and the patients they serve during these challenging times,” said Steve Furlong, Neuronetics’ Chief Financial Officer and member of the interim Office of the President.
“In the short term, we expect that our capital equipment sales and treatment session revenues will be materially impacted by this pandemic as customers are deferring capital purchase decisions, and new patient treatment starts and system utilization have declined compared to our pre-COVID-19 projections.
“As a result, the Company has taken steps to significantly reduce operating expenses and maintain the strength of our balance sheet. Longer-term, we will continue to focus on providing products that improve the quality of life for those suffering from psychiatric disorders and are confident that the underlying fundamentals of our business remain strong.”
The Company is not aware of any COVID-19-related government order that prohibits the initiation or continuation of TMS therapy for the treatment of depression. This supports the widely held view that TMS therapy is a medically necessary treatment important for the mental health of patients with major depressive disorder.
To facilitate safe on-going use of the Company’s products, the Company has provided customers with clear sanitizing and disinfecting procedures for the NeuroStar TMS Therapy® System. Clinical associations, such as the Clinical TMS Society, are similarly providing guidance to practitioners on delivery of this important therapy in a manner that is protective of both patients and practitioners.
Preliminary First Quarter 2020 Revenue and 2020 Business Outlook
Preliminary unaudited revenue for the first quarter 2020 is expected to be in the range of $11.8 and $12.0 million.
Cash and cash equivalents finished at $63.0 million as of March 31, 2020.
At this date, the Company is currently unable to estimate the specific duration or scale of the impact of the COVID-19 pandemic on its financial and operating results for the full year 2020. As a result, the Company is withdrawing its previously announced full year 2020 guidance, which was issued on March 3, 2020.
In an effort to conserve cash and retain financial flexibility in these uncertain times, the Company has taken restructuring actions to reduce expenses including a reduction in discretionary expenses and headcount through layoffs and furloughs.
The Company now estimates operating expenses for the full year 2020 to be in the range of $58 to $60 million, compared to the previously issued guidance of $76 to $78 million. Going forward, beyond the year 2020, this restructuring is estimated to reduce annual operating expenses by $27 to $29 million.
The Company also is in the process of applying for a Payroll Protection Program Loan under the recently passed CARES Act and, to the extent other loan and aid programs become available, seek to participate in them as appropriate.
The Company plans to provide additional information during its first quarter earnings call.
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