MALVERN, PA — Neuronetics, Inc. (NASDAQ: STIM) and Greenbrook TMS Inc. (OTCMKTS: GBNHF) have announced a definitive arrangement, wherein Neuronetics will acquire all outstanding common shares of Greenbrook in an all-stock transaction. This strategic merger aims to consolidate two leaders in the U.S. mental health sector, promising substantial benefits for patients, providers, and shareholders.
“This transaction brings together two of the leaders in the mental health space in the U.S., which will allow us to provide access to innovative care to patients suffering from mental health conditions. Leveraging the significant scale and capabilities of the two businesses, we can drive increased awareness of NeuroStar, consistently deliver best practices, facilitate improved reimbursement on a regional and national level, and provide additional services and training opportunities to all of our customers which can improve their business operations,” said Keith Sullivan, President and CEO of Neuronetics.
“Beyond the strategic benefits, we believe this acquisition will help create a more attractive financial profile for the combined company, including increased scale and growth trajectory of our top line, the ability to realize material cost synergies, the acceleration of our path to profitability, and a bolstered balance sheet. In combination, we expect this transaction will create significant long-term value for shareholders.”
Bill Leonard, President and CEO of Greenbrook, added, “This transaction combines two organizations who share a common mission to better care for the growing number of patients who are suffering from mental health conditions, many of whom are poorly served by medication alone. By combining Neuronetics’ innovative NeuroStar platform as well as their education and training expertise, with Greenbrook’s well-established practice operations and support capabilities, we believe the combined company can improve care at Greenbrook’s existing sites and, just as importantly, at any practice across the country that is looking to bring the benefits of NeuroStar to their patients.”
Strategic Benefits
The merger aims to create a vertically integrated organization capable of providing extensive access to Transcranial Magnetic Stimulation (TMS) therapy. Some key strategic benefits include:
Increased Brand Awareness: By marketing under a single brand, Neuronetics aims to significantly enhance the visibility of NeuroStar among patients, caregivers, and providers.
Consistent Delivery of Best Practices: Centralized management will enable better operationalization of NeuroStar TMS best practices across all Greenbrook sites nationwide.
Enhanced Services for NeuroStar Customers: The merger will offer increased brand recognition for NeuroStar, expanded training opportunities, and access to centralized services to improve business operations, including better revenue cycle management and a national call center.
Financial Synergies and Growth
The transaction is expected to produce compelling financial benefits:
Increased Revenue Scale and Growth: In fiscal year 2023, the combined company’s pro forma revenue would have been approximately $145 million, effectively doubling the scale of the stand-alone businesses. The combined entity expects mid-teens year-over-year revenue growth in fiscal years 2025 and 2026.
Material Cost Synergies: The combined company expects to realize at least $15 million of annualized cost savings, primarily by optimizing marketing spend and back-office functions.
Accelerated Path to Profitability: The combined entity anticipates being Adjusted EBITDA positive and cash flow positive for the full fiscal year 2025, excluding one-time costs related to the transaction.
Bolstered Balance Sheet: The pre-transaction conversion of Greenbrook’s debt into common shares, combined with the enhanced scale post-acquisition, will strengthen the consolidated company’s balance sheet.
Leadership Structure and Terms
Neuronetics’ executive team will continue with the combined company, enhanced by key Greenbrook leaders, including Bill Leonard, Peter Willett (CFO), and Dr. Geoffrey Grammer (CMO).
Under the terms of the agreement:
- Greenbrook’s existing credit facility and subordinated convertible debt will convert into common shares before the transaction.
- Greenbrook shareholders will receive a fraction of Neuronetics common stock, resulting in Neuronetics shareholders owning approximately 57% and Greenbrook shareholders owning 43% of the combined company.
- The transaction will be executed via a court-approved plan of arrangement under the Business Corporations Act (Ontario). It requires approval from both companies’ shareholders and the Superior Court of Ontario.
Merger Set to Revolutionize Mental Health Care
The merger between Neuronetics and Greenbrook TMS is expected to be finalized in Q4 2024, subject to customary closing conditions. Both companies’ boards have unanimously approved the transaction, which promises to create significant long-term value by leveraging the strengths of both organizations to enhance mental health care delivery across the United States.
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