Neuronetics Reports First Quarter 2022 Financial and Operating Results

Neuronetics, Inc

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

First Quarter 2022 Highlights

  • Exceeded guidance – First quarter 2022 revenue of $14.2 million, exceeded previously issued guidance of $13.0 million to $14.0 million
  • Increased NeuroStar System revenue 108% over the first quarter of 2021. First quarter 2022 system revenue increased 29% sequentially as compared to fourth quarter 2021

Recent Operational Highlights

  • Received FDA 510(k) clearance for Obsessive-Compulsive Disorder for the treatment of adult patients
  • Entered into long-term exclusive commercial partnership agreement with Greenbrook TMS, the country’s largest TMS provider
  • Entered into long-term commercial partnership agreement with Transformations Care Network, one of the country’s largest providers of mental health care

Recent Marketing Highlights

  • Achieved milestones of over 127,500 global patients treated with more than 4.5 million of the Company’s Treatment Sessions and over 5,000 new patient starts in the quarter, a Company record

“We are very excited with the strong performance delivered during the quarter, particularly as we were significantly impacted during the early part of the year as a result of the Omicron spike across the country. We had a fantastic capital quarter, growing revenue by over 100% compared to the prior year and showed resilience in U.S. treatment sessions after a challenging macro environment during January and February. Much of the strong performance has come as a result of the Company’s execution on key strategic initiatives led by the implementation of highly effective marketing and education campaigns, having a full and more mature commercial organization out in the field, and the continued contribution from key long-term commercial agreements,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. “As we look ahead to the balance of 2022, we expect to continue to generate accelerating momentum as we leverage the foundation we have established over the last two years and help a growing number of patients suffering from mental health disorders get relief.”

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First Quarter 2022 Financial and Operating Results for the Three Months Ended March 31, 2022

Revenues by Geography
Three Months Ended March 31, 
2022 2021
Amount Amount % Change
(In thousands, except percentages)
United States $ 13,517 $ 11,802 15 %
International 664 486 37 %
Total revenues $ 14,181 $ 12,288 15 %
Total revenue for the three months ended March 31, 2022, was $14.2 million, an increase of 15% compared to the three months ended March 31, 2021 revenue of $12.3 million. During the quarter, total U.S. revenue increased by 15% and international revenue increased by 37% over the prior year quarter. The U.S. and international revenue growth were each driven by an increase in NeuroStar Advanced Therapy System sales.
U.S. Revenues by Product Category
Three Months Ended March 31, 
2022 2021
Amount Amount % Change
(In thousands, except percentages)
NeuroStar Advanced Therapy System $ 3,642 $ 1,755 108 %
Treatment sessions 9,469 $ 9,629 (2 ) %
Other 406 $ 418 (3 ) %
Total U.S. revenues $ 13,517 $ 11,802 15 %
U.S. NeuroStar Advanced Therapy System revenue for the three months ended March 31, 2022, was $3.6 million, an increase of 108% compared to the three months ended March 31, 2021, revenue of $1.8 million. For the three months ended March 31, 2022, and 2021, the Company shipped 48 and 23 systems, respectively. Of the 48 systems shipped in the first quarter of 2022, 45 units were recognized as NeuroStar capital revenue, 1 unit was recognized as an operating lease contributing to operating lease revenue and 2 units the Company expects to recognize as NeuroStar capital revenue in the second quarter of 2022.

U.S. treatment session revenue for the three months ended March 31, 2022, was $9.5 million, a decrease of 2% compared to the three months ended March 31, 2021, revenue of $9.6 million. The revenue decline was primarily driven by a decrease in treatment session volume over the prior year quarter due to the impact of the COVID-19 Omicron virus in January and February 2022.

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In the first quarter of 2022, U.S. treatment session revenue per active site was $9,874 as compared to $10,512 during the first quarter of 2021.

Gross margin for the first quarter of 2022 was 75.4%, a decrease of approximately 650 basis points from the first quarter of 2021 gross margin of 81.9%. The decrease was primarily a result of a change in product mix and higher international capital sales compared to the first quarter of 2021.

Operating expenses during the first quarter of 2022 were $20.8 million, an increase of $3.8 million, or 23%, compared to $17.0 million in the first quarter of 2021. The increase was primarily driven by the implementation of new marketing initiatives and personnel costs related to the Company’s sales force compared to the prior year quarter.

Net loss for the first quarter of 2022 was $(10.8) million, or $(0.41) per share, as compared to the first quarter 2021 net loss of $(7.9) million, or $(0.31) per share. Net loss per share was based on 26,596,533 and 25,149,880 weighted-average common shares outstanding for the first quarters of 2022 and 2021, respectively.

EBITDA for the first quarter of 2022 was $(9.5) million as compared to the first quarter of 2021 EBITDA of $(6.6) million. See the accompanying financial table that reconciles EBITDA, which is a non-GAAP financial measure, to net loss.

Cash and cash equivalents were $80.8 million as of March 31, 2022. This compares to cash and cash equivalents of $94.1 million as of December 31, 2021, and $121.3 million as of March 31, 2021.

510(k) Clearance for Treatment of Adult OCD

In May of 2022, the U.S. Food and Drug Administration (FDA) granted clearance for NeuroStar as an adjunct treatment for adult patients suffering from OCD. In the United States, over 4 million adults suffer from OCD and approximately half of those patients have serious impairment. Importantly, this new indication can be remotely enabled on the customer’s existing NeuroStar hardware enabling NeuroStar to treat even more patients suffering from debilitating mental health disorders.

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Long Term Commercial Partnerships

Greenbrook TMS

In April of 2022, the Company entered into a five-year commercial agreement with Greenbrook TMS, the Company’s largest customer and the country’s largest TMS provider. The agreement provides for a stronger collaborative relationship between the Company and Greenbrook. Under the agreement, Greenbrook will purchase all of its new TMS devices for on-label indications exclusively from the Company and promote the use of NeuroStars in Greenbrook’s TMS centers, subject to certain exceptions related to the exercise of independent medical judgment. In exchange, the Company will provide joint education and marketing support, increased collaboration between the organizations, negotiated pricing terms, and other benefits.

Transformations Care Network (Transformations)

In May of 2022, the Company entered into a long-term commercial agreement with Transformations, one of the country’s largest providers of mental health care. The five-year agreement includes mutually beneficial growth targets which will be supported by marketing efforts to build broader awareness of the benefits of NeuroStar, improve patients’ access, and accelerate commercial adoption.

Business Outlook

For the full year 2022, the Company continues to expect to report total worldwide revenue between $58.0 million and $62.0 million.

For the full year 2022, the Company continues to expect total operating expenses to be between $86.0 million and $90.0 million.

For the second quarter of 2022, the Company expects to report total worldwide revenue of between $15.0 million and $16.0 million.

 

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