Neuronetics Reports Record Fourth Quarter and Record Full Year 2022 Financial and Operating Results

Neuronetics, Inc

MALVERN, PA — Neuronetics, Inc. (NASDAQ: STIM) this week announced its financial and operating results for the fourth quarter and full year of 2022.

Fourth Quarter 2022 Highlights

  • Fourth quarter 2022 revenue of $18.2 million, representing a 21% increase as compared to the fourth quarter 2021
  • Achieved record U.S. treatment session revenue of $12.5 million in the fourth quarter 2022
  • Increased NeuroStar System revenue 64% over the fourth quarter of 2021

Full Year 2022 Highlights

  • Full year 2022 revenue of $65.2 million, representing an 18% increase as compared to full year 2021
  • Full year 2022 U.S. treatment session revenue of $45.1 million
  • Full year 2022 U.S. NeuroStar Advanced Therapy revenue of $16.6 million

Recent Operational Highlights

  • Signed an exclusive and expanded commercial partnership with Greenbrook TMS which runs through 2028
  • Positive TMS coverage policy which expands patient access to NeuroStar Advanced Therapy for Mental Health, allowing Nurse practitioners (NPs) to order and provide TMS treatment to their patients with MDD
  • United Health Care and Optum indicated their benefits manager have expanded access to NeuroStar Advanced Therapy for Mental Health by reducing the number of prior failed medications from four to two. UHC policies cover 23.8 million lives
  • Announced a peer-reviewed publication that shows NeuroStar TMS as an effective non-drug treatment for depression with comorbid anxiety

Recent Commercial Highlights

  • Achieved milestones of over 145,000 global patients treated with more than 5.3 million of the Company’s Treatment Sessions, another Company record
  • During the fourth quarter, the Company shipped its 2,000th NeuroStar system
  • Over 75 accounts attended NeuroStar University in 2022

“Our strong performance in the fourth quarter reflects the positive impacts of our ongoing strategic initiatives such as the revamped sales force, innovative marketing programs, and continued physician and patient education. Performance was highlighted by record US Treatment Sessions revenue, while also achieving 64% year-over-year growth in US NeuroStar System revenue,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. “We will continue to concentrate on execution for the remainder of the year in order to fuel growth and put ourselves in a position to achieve cash flow breakeven in 2024.”

Fourth Quarter 2022 Financial and Operating Results for the Three Months Ended December 31, 2022

Revenues by Geography
Three Months Ended December 31, 
2022 2021
Amount Amount % Change
(in thousands, except percentages)
United States $ 17,513 $ 14,556 20 %
International 685 466 47 %
Total revenues $ 18,198 $ 15,022 21 %
Total revenue for the three months ended December 31, 2022, was $18.2 million, an increase of 21% compared to the three months ended December 31, 2021 revenue of $15 million. During the quarter, total U.S. revenue increased by 20% and international revenue increased by 47% over the prior year quarter. The U.S. and international revenue growth was primarily driven by an increase in NeuroStar Advanced Therapy System sales.
U.S. Revenues by Product Category
Three Months Ended December 31, 
2022 2021
Amount Amount % Change
(in thousands, except percentages)
NeuroStar Advanced Therapy System $ 4,616 $ 2,815 64 %
Treatment sessions 12,450 $ 11,245 11 %
Other 447 $ 496 (10 ) %
Total U.S. revenues $ 17,513 $ 14,556 20 %
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U.S. NeuroStar Advanced Therapy System
Revenues by Type
Three Months Ended December 31, 
2022 2021
Amount Amount % Change
(in thousands, except percentages)
NeuroStar Capital $ 4,371 $ 2,513 74 %
Operating lease 43 85 (49 ) %
Other 202 217 (7 ) %
Total United States NeuroStar Advanced Therapy System revenues $ 4,616 $ 2,815 64 %
U.S. NeuroStar Advanced Therapy System revenue for the three months ended December 31, 2022, was $4.6 million, an increase of 64% compared to the three months ended December 31, 2021, revenue of $2.8 million. For the three months ended December 31, 2022, and 2021, the Company shipped 58 and 48 systems, respectively.

U.S. Treatment Session revenue for the three months ended December 31, 2022, was $12.5 million, an increase of 11% compared to the three months ended December 31, 2021 revenue of $11.2 million. The revenue growth was primarily driven by an increase in utilization, in particular among the Company’s local per-click customer segment.

In the fourth quarter of 2022, U.S. treatment session revenue per active site was approximately $11,500 compared to approximately $12,200 in the fourth quarter of 2021. 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 and Success TMS, revenue per active site was consistent year over year.

Gross margin for the fourth quarter of 2022 was 75.9%, a decrease of approximately 50 basis points from the fourth quarter of 2021 gross margin of 76.4%.

Operating expenses during the fourth quarter of 2022 were $21.5 million, an increase of $3.1 million, or 17.1%, compared to $18.4 million in the fourth quarter of 2021. The increase was primarily driven by the Company’s expanded sales force, the opening of NeuroStar University and additional headcount in product development and clinical to support strategic project growth.

Net loss for the fourth quarter of 2022 was $(8.3) million, or $(0.31) per share, as compared to the fourth quarter 2021 net loss of $(7.6) million, or $(0.29) per share. Net loss per share was based on 27,207,184 and 26,371,382 weighted-average common shares outstanding for the fourth quarters of 2022 and 2021, respectively.

EBITDA for the fourth quarter of 2022 was $(6.5) million as compared to the fourth quarter of 2021 EBITDA of $(6.3) million. See the financial table that reconciles EBITDA within the original earnings release, which is a non-GAAP financial measure, to net loss.

Full Year Financial and Operating Results

Revenues by Geography
Year Ended December 31, 
2022 2021
Amount Amount % Change
(in thousands, except percentages)
United States $ 63,406 $ 53,447 19 %
International 1,800 1,865 (3 ) %
Total revenues $ 65,206 $ 55,312 18 %
Total revenues increased by $9.9 million, or 18%, from $55.3 million for the year ended December 31, 2021 to $65.2 million for the year ended December 31, 2022. For the period ended December 31, 2022, U.S. revenue increased by 19% and international revenue decreased by 3% over the comparative prior year period. The U.S. revenue growth was primarily due to an increase in NeuroStar Advanced Therapy System revenue. There was a marginal reduction in international revenue.
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U.S. Revenues by Product Category
Year Ended December 31, 
2022 2021
Amount Amount % Change
(in thousands, except percentages)
NeuroStar Advanced Therapy System $ 16,575 $ 9,760 70 %
Treatment sessions 45,077 41,933 7 %
Other 1,754 1,754 %
Total U.S. revenues $ 63,406 $ 53,447 19 %
U.S. NeuroStar Advanced Therapy System
Revenues by Type
Year Ended December 31, 
2022 2021
Amount Amount % Change
(in thousands, except percentages)
NeuroStar Capital $ 15,792 $ 8,820 79 %
Operating lease 222 $ 279 (20 ) %
Other 561 $ 661 (15 ) %
Total United States NeuroStar Advanced Therapy System revenues $ 16,575 $ 9,760 70 %
U.S. NeuroStar Advanced Therapy System revenue increased by $6.8 million, or 70%, in the year ended December 31, 2022 compared to the year ended December 31, 2021. For the period ended December 31, 2022 and 2021, the Company shipped 213 and 147 systems, respectively.

U.S. treatment session revenues increased by 7% from $41.9 million for the year end December 31, 2021 to $45.1 million for the year ended December 31, 2022. The revenue growth was primarily driven by an increase in treatment session volume over the prior year period.

Gross margin for the full year 2022 was 76.3%, a decrease of approximately 260 basis points from the full year 2021 gross margin of 78.9%. The decline was primarily due to an unfavorable revenue shift between NeuroStar capital and treatment session revenue.

Operating expenses during the full year 2022 were $84.8 million, an increase of $13.6 million, or 19.1%, compared to $71.2 million in the full year 2021. The increase was primarily driven by higher sales and marketing expense related to personnel, new marketing initiatives and opening of NeuroStar University. The Company’s Research and Development costs were also higher in 2022, as the company invested in added personnel to support clinical research projects and continued upgrades to the NeuroStar Advanced Therapy system. Inflationary pressures resulted in higher travel expense.

Net loss for the full year 2022 was $(37.2) million, or $(1.38) per share, as compared to full year 2021 net loss of $(31.2) million, or $(1.22) per share. Net loss per share was based on 26,900,239 and 25,479,425 weighted-average common shares outstanding for the years ended 2022 and 2021, respectively. There were 27,267,867 shares outstanding as of December 31, 2022.

EBITDA for the full year 2022 was $(31.3) million as compared to $(26.1) million for the full year 2021. The decrease in EBITDA is primarily due to the increase in net loss in the current period compared to the comparative prior period. See the financial table that reconciles EBITDA within the original earnings release, which is a non-GAAP financial measure, to net loss.

Cash and cash equivalents were $70.3 million as of December 31, 2022. This compares to cash and cash equivalents of $94.1 million as of December 31, 2021.

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TMS Coverage Policies Updates

In February 2023, the National Government Services, Inc. (NGS), announced a healthcare policy update that increases access for patients to its NeuroStar® Advanced Therapy for Mental Health transcranial magnetic stimulation (TMS). The NGS policy, effective April 1, 2023, will allow non-physician practitioners (NPPs) who are within their scope of practice to order and provide TMS treatment to their patients with major depressive disorder (MDD). NGS is the Medicare Administrative Contractor for 6.3 million covered lives in MN, WI, IL, NY, NH, VT, ME, MA, RI, and CT. An additional update in the revised NGS policy is a lower medication requirement – reduced from four failed medications to two prior to TMS treatment.

Greenbrook TMS Six Year Exclusive Partnership

In January 2023, the Company announced an expanded commercial partnership through year end 2028 with Greenbrook TMS Inc. a leading provider of transcranial magnetic stimulation therapy. Under the partnership agreement, Neuronetics will be the exclusive supplier of TMS equipment to Greenbrook. Over time, Neuronetics’ NeuroStar devices will replace competitive TMS devices at Greenbrook locations. The Companies will work jointly to grow through co-branding and co-marketing programs, enhanced patient and clinician awareness, improved patient access to care, and collaboration on product development and publications. The agreement also has minimum purchase commitments, and all treatment session purchases will convert to a “per-click” consumable model.

Data Published on Efficacy of Treating Anxious Depression with NeuroStar TMS

In January 2023, the Company announced a peer-reviewed publication that shows NeuroStar TMS as an effective non-drug treatment for depression with comorbid anxiety. The Journal of Clinical Psychiatry, presenting real-world evidence of the efficacy of NeuroStar Advanced Therapy for adult patients who suffer concurrently from anxiety symptoms and major depressive disorder (MDD), also known as anxious depression. Using data from TrakStar®, the world’s largest depression outcomes registry of more than 15,000 patients, the publication authors analyzed a sample of over 1,800 patients. These 1,800 patients were treated with NeuroStar TMS in commercial clinics and represented a diversity of patients with MDD and moderate-to-severe anxiety symptoms. Patients with anxious depression exhibited clinically meaningful anxiety symptom improvement and antidepressant effects.

Business Outlook

For the first quarter of 2023, the Company expects total worldwide revenue between $15.0 million and $16.0 million.

For the full year 2023, the Company now expects total worldwide revenue to be between $66.0 million and $72.0 million.

For the full year 2023, the Company expects total operating expenses to be between $84.0 million and $88.0 million.

For more information, visit the Investor Relations section of Neuronetics’ website at ir.neuronetics.com.

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