Neuronetics Reports Third Quarter 2020 Revenue of $12.4 Million, an Increase of 28%

Neuronetics, Inc

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 its financial and operating results for the third quarter of 2020.

Third Quarter 2020 Summary

  • Third quarter 2020 revenue was $12.4 million, compared to third quarter 2019 revenue of $16.0 million primarily due to the impact of the COVID-19 pandemic
  • Third quarter 2020 revenue increased 28% over the second quarter 2020
  • Third quarter 2020 operating expenses declined by 33%, or $5.9 million as compared to the third quarter of 2019 primarily as a result of cost reduction initiatives
  • Installed base was 1,143 systems, as of September 30, 2020, an increase of 11% over prior year period
  • Cash and cash equivalents were $50.7 million as of September 30, 2020

“We are very pleased with our performance during the third quarter. We saw a strong sequential rebound in the business, increasing total quarterly revenue 28% over the second quarter, and we made steady progress operationally with the restructuring of our commercial organization as well as the analysis of vast clinical datasets contained within our TrakStar system,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. “Looking ahead, we will continue refining our long-term commercial strategy and strengthen our foundation during the fourth quarter to execute on that strategy in 2021. We have done a great job building momentum in key areas of the , including reimbursement, clinical data development, customer segmentation, and the development of a new indication strategy, which should complement the work we are doing with our commercial strategy to drive strong future performance.”

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Third Quarter 2020 Financial and Operating Results

Revenues by Geography  
Three Months ended September 30,  
2020     2019         
Amount     Amount     % Change  
(in thousands, except percentages)  
United States $ 12,029 $ 15,294 -21 %
International 419 706 -41 %
Total revenues $ 12,448 $ 16,000 -22 %

Total revenue for the third quarter of 2020 was $12.4 million, a decrease of 22% versus third quarter 2019 revenue of $16.0 million primarily as a result of the COVID-19 pandemic and the resulting governmental actions to limit the spread of the virus. During the quarter, total U.S. revenue declined by 21% and international revenue declined by 41% over the prior year quarter. On a sequential basis, total revenue increased 28% over the second quarter of 2020.

United States Revenues by Product Category
Three Months ended September 30,
2020  2019 
Amount Amount % Change 
(in thousands, except percentages)
NeuroStar Advanced Therapy System $ 2,541 $ 4,616 -45 %
Treatment sessions 9,083 10,252 -11 %
Other 405 426 -5 %
Total United States revenues $ 12,029 $ 15,294 -21 %
  United States NeuroStar Advanced
Therapy System Revenues by Type
Three Months ended September 30,
 
    2020     2019        
    Amount     Amount     % Change  
    (in thousands, except percentages)  
NeuroStar Capital $ 2,438 $ 4,264 -43 %
Operating lease 88 185 -52 %
Other 15 167 -91 %
Total U.S. NeuroStar Advanced
Therapy System revenues $ 2,541 $ 4,616 -45 %

U.S. NeuroStar Advanced Therapy System revenue for the third quarter of 2020 was $2.5 million, a decrease of 45% versus third quarter 2019 revenue of $4.6 million. The decrease was primarily driven by a lower number of NeuroStar systems sold in the quarter as many prospective customers limited access to their offices in response to the COVID-19 pandemic. In the quarter, the Company sold 39 systems, down from 68 systems in the third quarter of 2019. On a sequential basis, U.S. NeuroStar Advanced Therapy System revenue increased 9% over the second quarter of 2020.

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As of September 30, 2020, the installed base in the U.S. was 1,143 systems. This represents an increase of 111 units, or 11%, over the installed base as of September 30, 2019.

U.S. treatment session revenue for the third quarter of 2020 was $9.1 million, a decrease of 11% versus third quarter 2019 revenue of $10.3 million. The decrease was primarily driven by a reduction in per click treatment session volume during the quarter as a result of COVID-19. On a sequential basis, U.S. treatment session revenue increased 39% over the second quarter of 2020.

Gross margin for the third quarter of 2020 was 78.7% compared to third quarter 2019 gross margin of 73.9%. The increase was primarily a result of a change in the product mix of revenues versus the prior year as well as reduced field service expenses.

Operating expenses during the third quarter of 2020 were $12.2 million, a decrease of $5.9 million compared to $18.1 million in the third quarter of 2019. The decrease was primarily due to reduced sales and marketing expenses as well as reduced research and development costs.

Net loss for the third quarter of 2020 was $(3.4) million, or $(0.18) per share, as compared to third quarter 2019 net loss of $(6.9) million, or $(0.37) per share. Net loss per share was based on 18,809,335 and 18,507,558 weighted-average ordinary shares outstanding for the third quarters of 2020 and 2019, respectively.

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EBITDA for the third quarter of 2020 was $(2.2) million as compared to the third quarter of 2019 EBITDA of $(5.6) million. See the accompanying financial table that reconciles EBITDA, which is a non-GAAP financial measure, to net loss.

Cash and cash equivalents were $50.7 million as of September 30, 2020. This compares to cash and cash equivalents of $63.6 million as of September 30, 2019 and $75.7 million as of December 31, 2019.

Business Outlook

For the full year 2020, the Company expects total revenue to be in the range of $46.7 to $47.2 million, which implies a revenue range for the fourth quarter of 2020 of $13.0 to $13.5 million.

For the full year 2020, the Company expects total operating expenses to be in the range of $59.0 to $61.0 million.

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