Neuronetics Reports Strong Q1 Growth Amid Challenges

Neuronetics ((STIM)) has held its Q1 earnings call. Read on for the main highlights of the call.

Neuronetics’ recent earnings call painted a picture of robust revenue growth, primarily driven by strategic initiatives and acquisitions. The sentiment was mixed, with optimism around revenue and strategic execution tempered by challenges in margins and expenses. Despite these hurdles, the company remains optimistic about achieving cash flow positivity by the third quarter.

Significant Revenue Growth

Neuronetics reported a total revenue of $32 million, marking an impressive 84% increase over the first quarter of 2024. On a pro forma basis, the revenue saw a 7% rise from $29.8 million, indicating strong underlying growth.

Successful Greenbrook Integration

The integration of Greenbrook has been notably effective, with 95% of identified synergies realized by the end of 2024. The company expects to exceed $23 million in total realized synergies, highlighting the success of this strategic acquisition.

SPRAVATO Rollout Progress

The rollout of SPRAVATO has progressed significantly, with its availability expanding to 75 of the 95 Greenbrook clinics. This expansion has resulted in a revenue boost, as the Buy & Bill treatment model generates approximately three times the revenue compared to the administer and observe model.

Expansion of BMP Program

Neuronetics’ BMP program now includes over 385 active sites, with participating sites treating three times more patients per site per quarter than non-participating practices. This expansion underscores the program’s effectiveness in driving patient engagement.

Adolescent Treatment Growth

The company reported a 38% increase in the number of adolescent patients receiving treatment in the first quarter of 2025 compared to the same period in 2024, reflecting a growing demand for adolescent mental health services.

Decreased Gross Margin

Despite revenue growth, the gross margin decreased to 49% from 75% in the prior year quarter. This decline is primarily attributed to the inclusion of Greenbrook’s clinic business, which operates at a lower margin.

Increased Operating Expenses

Operating expenses rose to $26.8 million, a 35% increase from $19.9 million in the first quarter of 2024. This rise is largely due to the incorporation of Greenbrook’s operating costs.

Net Loss Increase

Neuronetics reported a net loss of $12.7 million for the quarter, a significant increase from the previous year’s net loss of $7.9 million. This reflects the financial challenges the company faces amidst its growth initiatives.

Cash Burn and Vendor Payments

The company experienced a cash burn of $17 million, driven by proactive vendor payment settlements, which elevated cash burn levels above typical for the first quarter.

Forward-Looking Guidance

Neuronetics provided significant guidance for the future, maintaining its full-year revenue guidance at $149 million to $155 million, with expectations of a 55% gross margin for the year. The company aims to achieve cash flow positivity by the third quarter of 2025, supported by strategic initiatives and a strengthened capital position following a public offering that raised $18.9 million.

In summary, Neuronetics’ earnings call highlighted strong revenue growth and strategic execution, particularly with the Greenbrook integration and SPRAVATO rollout. However, challenges in gross margin and increased expenses present hurdles that the company is addressing as it aims for cash flow positivity by the third quarter. The forward-looking guidance remains optimistic, with expectations of continued growth and improved financial metrics.