MALVERN, PA — Neuronetics, Inc. (NASDAQ: STIM), a commercial-stage medical technology company, this week 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 the Company’s capital expansion strategy
Recent Operational Highlights
- Strengthened the Company’s balance sheet by amending its 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 the Company’s 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
| 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 | % | ||
| 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. 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 the Company’s 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 the Company’s 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 within the Company’s original disclosure, 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.
Additional details can be found on the Neuronetics’ website at ir.neuronetics.com.
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