Neuronetics ((STIM)) has held its Q1 earnings call. Read on for the main highlights of the call.
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Neuronetics’ latest earnings call painted a cautiously optimistic picture, with management stressing progress on growth and cash discipline while acknowledging real execution and liquidity risks. Revenue gains and improving profitability metrics contrasted with shrinking NeuroStar treatment revenue, lower gross margins, and a sharply reduced cash balance, leaving investors weighing stabilization prospects against near‑term financial strain.
Total Revenue Growth Signals Top-Line Momentum
Neuronetics reported Q1 2026 total revenue of $34.5 million, up 8% from $32.0 million a year earlier, showing that demand across the portfolio remains intact despite pockets of weakness. Management framed this as evidence that strategic initiatives are beginning to gain traction even as the mix of business shifts toward clinic operations.
Clinic Revenue Strength Led by SPRAVATO and Buy-and-Bill
U.S. clinic revenue, largely from Greenbrook, rose 15% year over year to $21.5 million, powered by continued SPRAVATO growth and broader use of buy‑and‑bill models. This high‑growth segment is becoming a more important driver of the business, although its economics differ from the company’s legacy device‑centric revenue streams.
NeuroStar System Sales Show Solid Unit Momentum
U.S. NeuroStar system revenue climbed 13% to $3.2 million, with 34 systems shipped in the quarter, about 10% more than last year. The company highlighted this as a sign that new installations continue, potentially setting up future treatment revenue even as current session revenue faces headwinds.
Profitability Metrics Improve but Losses Persist
Net loss narrowed to $10.8 million, or $0.16 per share, from $12.7 million, or $0.21, a year earlier, while adjusted EBITDA improved to negative $6.6 million from negative $8.6 million. Management pointed to these trends as proof that the cost structure is bending in the right direction, though the business remains meaningfully unprofitable.
Operating Expenses Fall on SG&A Efficiencies
Operating expenses declined to $25.1 million in Q1 2026, down $1.6 million, or roughly 6%, from the prior‑year period. The company attributed the reduction primarily to efficiencies in selling, general, and administrative spending, reinforcing its message of heightened cost discipline.
Operating Cash Use Improves but Remains Significant
Operating cash use improved sharply to $9.4 million from $17.0 million in Q1 2025, a $7.6 million year‑over‑year improvement. Even with that better performance, the call underscored that the company is still consuming cash and must execute on planned savings to move closer to break‑even.
Planned Cost Actions Target Millions in Annual Savings
Actions taken during the quarter are expected to generate approximately $2.5 million to $3.0 million of annualized savings, with net savings starting in Q3 2026. Management framed these measures as an important lever to narrow losses and extend the runway while it refines the go‑to‑market model.
Commercial Pilots Aim to Expand Reach and Utilization
Neuronetics is running pilots to broaden NeuroStar go‑to‑market approaches, with early feedback described as positive, alongside investments in virtual and on‑demand customer support. The company is also working on clinic workflow and revenue‑cycle improvements to boost utilization and collections, seeking to lift productivity from the installed base.
Regulatory and Payer Shifts Offer Potential Tailwinds
Management pointed to possible upside from emerging psychedelic‑based therapies if approvals materialize, stating the company is positioned to participate. In addition, a policy change at a major insurer allowing nurse practitioners to deliver TMS adds roughly 35 million covered lives, expanding the addressable patient pool for NeuroStar.
NeuroStar Revenue Declines Despite Higher Utilization
Total NeuroStar revenue, including systems and treatment sessions, fell 3% to $12.9 million, with U.S. treatment session revenue down 5% to $9.1 million. This drop came even as system treatment utilization rose about 3.5%, a disconnect management linked partly to customers running with lower inventory levels.
Gross Margin Contracts on Revenue Mix Shift
Gross margin slipped to 46.9% from 49.2%, a contraction of roughly 2.3 percentage points, driven mainly by a mix shift toward clinics and heavier SPRAVATO buy‑and‑bill activity. While these segments add revenue, they carry lower margins than the core device business, putting structural pressure on profitability.
Cash Position Declines, Highlighting Liquidity Risk
Total cash, including restricted balances, dropped to $19.0 million at March 31, 2026, from $34.1 million at year‑end, marking a material step‑down in liquidity. The reduced cash cushion heightens the importance of executing on cost savings and improving cash flow to avoid future balance‑sheet strain.
Losses Narrow but Profitability Remains Distant
Despite progress, Neuronetics still posted a GAAP net loss of $10.8 million and negative adjusted EBITDA of $6.6 million in Q1 2026. Management emphasized that while the direction is improving, the company must continue to shrink these deficits through both revenue growth and tighter expense control.
Clinic TMS Volumes Soft on Temporary Headwinds
Within Greenbrook clinics, TMS volumes were modestly below the prior year, creating short‑term utilization pressure. The company cited weather disruptions and uneven advertising spend as key factors and suggested that volume trends should normalize as these transitory issues ease.
Debt Payment Reduces Leverage but Drains Cash
An amended debt agreement required a one‑time $5.0 million principal payment to a key lender, lowering both outstanding debt and future interest expense. However, this move also consumed valuable cash in the quarter, contributing to the decline in the company’s overall liquidity position.
Management Turnover and Shareholder Pressure Cloud Outlook
The announced departure of the CFO in early May 2026 introduces near‑term uncertainty at a critical financial role. Meanwhile, public calls from shareholders for a strategic review or potential separation of businesses add another layer of strategic ambiguity around the company’s future direction.
Guidance Points to Growth with Ongoing Cash Burn
Neuronetics reiterated its 2026 outlook, calling for full‑year revenue of $160 million to $166 million, gross margins of 47% to 49%, and operating expenses of $100 million to $105 million, including non‑cash compensation. Operating cash flow is still expected to be negative $13 million to $17 million for the year, with mid‑single‑digit revenue growth in Q2 and a path to flat or slightly positive operating cash flow in the second half as cost savings begin to materialize.
The earnings call left investors with a nuanced picture: the company is growing revenue, tightening expenses, and improving cash efficiency, yet it is still burning cash and facing structural margin and liquidity challenges. Whether Neuronetics can translate pilots, payer wins, and cost cuts into sustainable profitability will be central to the stock’s story over the coming quarters.