Neuronetics Earnings Call: Growth Momentum Meets Margin Strain

Neuronetics ((STIM)) has held its Q4 earnings call. Read on for the main highlights of the call.

Neuronetics’ latest earnings call struck a cautiously optimistic tone as management highlighted strong pro forma revenue growth and clear benefits from the Greenbrook integration while acknowledging meaningful headwinds. Investors heard a story of expanding treatment volumes, rising capital sales, and improving cash metrics, but also of margin compression, ongoing losses, and regulatory and reimbursement risks that could test execution in 2026.

Revenue Acceleration on a Pro Forma Basis

Total revenue in Q4 reached $41.8 million, up 86% year over year on a reported basis primarily due to the Greenbrook acquisition. On an adjusted pro forma basis that reflects the combined business, Q4 revenue still grew a robust 23%, underscoring solid demand momentum for both NeuroStar and clinic services.

Clinic and Treatment Volumes Continue to Scale

Clinic revenue in Q4 was $23.5 million, representing a 37% adjusted pro forma increase, while full‑year clinic revenue advanced 28% on the same basis. Total treatment volume climbed 18% versus the prior‑year quarter, and utilization per system improved about 11%, suggesting the installed base is being worked harder, not just expanded.

NeuroStar Capital Sales Deliver Steady Growth

Neuronetics shipped 49 NeuroStar systems in Q4 compared with 46 in the same period last year, signaling healthy demand for its capital equipment. U.S. system revenue of $4.4 million rose 15% pro forma, and average selling prices remained above target for the fourth straight quarter, supporting the premium positioning of the franchise.

Referral and Provider Network Expands Rapidly

The company added 430 new referring providers in Q4, a 25% year‑over‑year increase, and more than 1,300 new referrers over 2025, deepening its funnel for patient treatments. Field teams completed over 47,000 outreach activities, helping drive more than 2,300 referrals in Q4 alone, up 46% versus the prior year and pointing to growing awareness among clinicians.

SPRAVATO Rollout Boosts Clinic Growth

Greenbrook’s rollout of SPRAVATO is nearly complete, with 84 clinics now offering the therapy and contributing to higher recurring revenue. SPRAVATO’s share of total treatments increased from around 30% early in 2025 to roughly 35% by year‑end, materially supporting clinic growth and generating incremental maintenance revenue streams.

Commercial Programs and Partnerships Gain Traction

The Better Me Provider program now includes over 420 active sites, with about 100 more in qualification, and has connected more than 66,000 patients since inception. The newer Provider Connection initiative launched with more than 400 educational meetings and created over 210 new referral sites, indicating growing engagement across the mental‑health ecosystem.

Cash Flow and Balance Sheet Trend in the Right Direction

Neuronetics posted positive operating cash flow of $0.9 million in Q4, marking a sharp turnaround from earlier in the year and reflecting tighter cost control and revenue scale. Operating cash burn improved each quarter in 2025, moving from negative $17.0 million in Q1 to positive territory in Q4, leaving the company with $34.1 million of cash, including $6.0 million restricted, at year‑end.

Path Toward Profitability and Cost Discipline

The Q4 net loss narrowed to $7.2 million, or $0.10 per share, compared with $12.7 million a year ago, while EBITDA improved to negative $4.3 million from negative $11.0 million. Management outlined a trajectory to bring the operating expense run‑rate below $100 million by Q4 2026 and expects operating cash flow to turn positive in the second half of 2026 as efficiencies take hold.

Strategic Upside from Psilocybin Collaboration

Neuronetics’ Greenbrook unit is collaborating with COMPASS on COMP360, a psilocybin‑based therapy that has reported durable Phase 3 benefits through 26 weeks and could receive a regulatory decision by year‑end. Management argues that prior experience implementing SPRAVATO should limit incremental infrastructure needs, positioning the platform to potentially leverage any future approval with modest added investment.

Margin Pressure Weighs on Profitability

Despite revenue growth, Q4 gross margin fell to 52% from 66% in the prior‑year quarter as the lower‑margin Greenbrook clinics became a larger share of the mix. Management’s 2026 gross margin outlook of 47% to 49% implies further pressure as clinic operations expand, making margin improvement initiatives critical to the long‑term earnings story.

Persistent Losses and Negative EBITDA Remain a Drag

The company remains in the red, with Q4 net loss still at $7.2 million and EBITDA at negative $4.3 million despite the year‑over‑year improvement. Management continues to expect full‑year 2026 operating cash flow to be negative $13 million to $17 million, with a planned inflection only in the back half of the year, underlining that profitability is not yet in sight on a full‑year basis.

Seasonality and Cash Burn Limit Near‑Term Cushion

Neuronetics flagged typical seasonality, with Q1 representing the weakest period for patient volumes and capital equipment revenue, a pattern amplified by winter weather disruptions. As a result, cash burn is expected to be heaviest in the first quarter, and projected year‑end cash of roughly $14 million to $15 million at midpoint guidance leaves a thinner liquidity buffer that investors will monitor closely.

Legal Inquiry Adds Regulatory Overhang

The company is cooperating with an investigation by a U.S. Attorney’s Office into historical billing practices that predate the Greenbrook acquisition, creating a legal and reputational overhang. While management did not quantify potential financial impact, the inquiry introduces uncertainty and could lead to future costs or operational changes depending on the outcome.

Integration Costs and Efficiency Investments Hit Margins

The Greenbrook acquisition added roughly $8.5 million of general and administrative expenses and contributed to lower blended margins as the clinic footprint expanded. For 2026, operating expenses are expected to run between $100 million and $105 million, including about $8.5 million of non‑cash stock‑based compensation, as the company funds efficiency initiatives before fully realizing cost‑reduction benefits.

Reimbursement Risk Clouds New‑Therapy Economics

While COMP360 offers strategic upside, Neuronetics emphasized that commercialization economics and reimbursement terms remain unclear and will be pivotal to profitability. COMPASS is still pursuing payer coverage and works with multiple collaborators, so Neuronetics has no exclusivity and will rely on favorable reimbursement decisions to make the therapy financially attractive for its clinics.

Execution Remains Central to Reaching Cash Flow Goals

Management’s plan for sustained positive operating cash flow hinges on successfully executing efficiency efforts, improving clinic margins, and maintaining growth in referral conversion programs. Achieving adequate reimbursement for new treatment modalities is equally critical, leaving 2026 as a high‑execution year where operational missteps could delay the expected financial inflection.

Guidance Signals Moderate Growth with Second‑Half Turnaround

For 2026, Neuronetics expects revenue of $160 million to $166 million, implying just over 9% growth at the midpoint, with clinic revenue growing in the double‑digits to mid‑teens and NeuroStar system revenue increasing in the low‑ to mid‑single digits. The company projects Q1 revenue of $33 million to $35 million, gross margin of 47% to 49%, operating expenses of $100 million to $105 million, and operating cash flow of negative $13 million to negative $17 million for the year, with sequential improvement from Q2 and a turn to positive operating cash flow in the second half.

Neuronetics’ earnings call painted a picture of a business gaining commercial traction and tightening its cash profile, yet still navigating margin, legal, and reimbursement challenges. For investors, the story now rests on whether management can sustain growth, improve clinic profitability, and convert second‑half 2026 cash‑flow promises into durable financial momentum despite the clear execution risks ahead.