Neuronetics ((STIM)) has held its Q2 earnings call. Read on for the main highlights of the call.
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Neuronetics’ recent earnings call reflected a mixed sentiment, with strong revenue growth and progress towards cash flow positivity being overshadowed by challenges such as a decline in gross margin and increased operating expenses. The company also faced ongoing difficulties with the SPRAVATO buy and bill model, which affected their financial performance.
Strong Revenue Growth
Neuronetics reported a total revenue of $38.1 million for the second quarter of 2025, marking an 18% year-over-year increase on an adjusted pro forma basis. This growth was driven by $15.1 million from the NeuroStar business and a record $23 million in U.S. clinic revenue, highlighting the company’s robust financial performance.
Progress Toward Cash Flow Positivity
The company made significant strides towards achieving cash flow positivity, with cash used in operations amounting to $3.5 million. This figure was better than the previously guided target of under $5 million and showed a marked improvement from the first quarter.
Greenbrook Growth Strategy Success
Neuronetics’ Greenbrook growth strategy continues to exceed expectations. The strategy has resulted in improved patient conversion rates and strong results from the RAM program, leading to the strongest Greenbrook clinic revenue quarter in the history of the business.
Adolescent Treatment Growth
The company reported a 25% growth in adolescent new patient starts in the first half of 2025 compared to 2024. Notably, there was a 2.6x increase among 15- to 17-year-olds, indicating a successful expansion in this demographic.
SPRAVATO Rollout Momentum
Neuronetics continues to expand its SPRAVATO therapy, with 77 out of 83 eligible clinics now offering the treatment, up from 75 in the first quarter. A full rollout is expected by the end of the year.
Decline in Gross Margin
The company’s gross margin declined to 46.6% from 74% in the prior year quarter. This was primarily due to the inclusion of Greenbrook’s clinic business, which operates at a lower margin.
Increased Operating Expenses
Operating expenses rose to $25.8 million, a 25% increase from the previous year. This increase was largely attributed to the inclusion of Greenbrook’s general and administrative expenses.
Net Loss
Despite revenue growth, Neuronetics reported a net loss of $9.8 million for the quarter, similar to the prior year quarter, highlighting ongoing financial challenges.
SPRAVATO Buy and Bill Challenges
The company faced challenges in navigating the reimbursement landscape for SPRAVATO’s buy and bill model, which impacted their gross margin and cash flow timing.
Forward-Looking Guidance
Neuronetics provided a comprehensive outlook for the remainder of 2025, maintaining full-year revenue guidance between $149 million and $155 million. The company expects gross margins to adjust to 48%-50% due to revenue mix shifts. Neuronetics remains confident in achieving cash flow positivity by the fourth quarter of 2025, driven by strategic initiatives and operational momentum.
In summary, Neuronetics’ earnings call showcased a company experiencing robust revenue growth and strategic successes, particularly in the Greenbrook clinics. However, challenges such as declining gross margins and increased expenses underscore the hurdles that remain. The company’s forward-looking guidance reflects optimism in achieving cash flow positivity and continued growth in the coming quarters.