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Neuronetics Inc (STIM)
NASDAQ:STIM

Neuronetics (STIM) AI Stock Analysis

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Neuronetics

(NASDAQ:STIM)

Rating:49Neutral
Price Target:
$4.00
▲(7.53%Upside)
The most significant factor is the ongoing financial challenges, including consistent losses and cash flow issues, which weigh heavily on the score. While the earnings call provided some positive long-term guidance, short-term financial health remains a concern. Technical indicators suggest neutral sentiment, and valuation metrics highlight profitability challenges.
Positive Factors
Business Model Shift
The company is shifting away from capital sales to improve gross margins and focus on driving utilization for sustained operating profitability and positive free cash flow.
Merger Benefits
The merger with Greenbrook TMS is expected to enhance growth, scale, and patient reach as a vertically integrated mental healthcare provider.
Revenue Growth
STIM reported a solid Q1 operationally, with revenue of $32.0M, well above consensus estimates.
Negative Factors
Cash Burn
The stock traded off on the higher-than-expected cash burn for Q1.
Core Segment Weakness
Weakness in the core Neuronetics segment was driven primarily by treatment session revenues, partly offset by system sales.
Macroeconomic Risks
There are underlying risks with acquisitions, particularly given the two different business models at Neuronetics and Greenbrook on top of a continued uncertain macroeconomic environment.

Neuronetics (STIM) vs. SPDR S&P 500 ETF (SPY)

Neuronetics Business Overview & Revenue Model

Company DescriptionNeuronetics (STIM) is a medical technology company focused on developing non-invasive therapies for psychiatric and neurological disorders. The company's flagship product, NeuroStar Advanced Therapy System, is a transcranial magnetic stimulation (TMS) device designed to treat major depressive disorder. Operating in the healthcare and medical device sectors, Neuronetics aims to provide innovative solutions that enhance the quality of life for patients with mental health conditions.
How the Company Makes MoneyNeuronetics generates revenue primarily through the sale and leasing of its NeuroStar Advanced Therapy Systems to healthcare providers, including hospitals, clinics, and private practices. The company also earns income from the sale of related consumables and accessories required for the operation of its TMS devices. Additionally, Neuronetics offers service and maintenance contracts for its systems, providing an ongoing revenue stream. Key partnerships with healthcare providers and institutions help expand the adoption of its technology, contributing to its earnings. Neuronetics' financial performance is influenced by factors such as the growing demand for mental health treatments, regulatory approvals, and the expansion of its customer base.

Neuronetics Earnings Call Summary

Earnings Call Date:May 06, 2025
(Q1-2025)
|
% Change Since: -17.33%|
Next Earnings Date:Aug 12, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted robust revenue growth driven by the Greenbrook acquisition and successful execution of strategic initiatives such as the BMP program and SPRAVATO rollout. However, challenges were noted in terms of decreased gross margin, increased operating expenses, and a widened net loss. Despite these challenges, the company remains on track to achieve cash flow positivity by the third quarter.
Q1-2025 Updates
Positive Updates
Significant Revenue Growth
Total revenue was $32 million, an increase of 84% over the first quarter of 2024. On a pro forma basis, total revenue increased 7% over pro forma revenue of $29.8 million for the first quarter of 2024.
Successful Greenbrook Integration
The integration of Greenbrook has been effective, with 95% of identified synergies realized by the end of 2024, and expectations to exceed $23 million in total realized synergies.
SPRAVATO Rollout Progress
SPRAVATO is now offered in 75 of the 95 Greenbrook clinics, up from 35 clinics at the beginning of the quarter, with Buy & Bill treatments generating approximately 3x the revenue compared to the administer and observe model.
Expansion of BMP Program
The BMP program includes over 385 active sites, with sites in the program treating three times more patients per site per quarter than non-participating practices.
Adolescent Treatment Growth
The number of adolescent patients receiving treatment grew by 38% in the first quarter of 2025 compared to the first quarter of 2024.
Negative Updates
Decreased Gross Margin
Gross margin was 49% compared to 75% in the prior year quarter, primarily due to the inclusion of Greenbrook's clinic business which operates at a lower margin.
Increased Operating Expenses
Operating expenses were $26.8 million, an increase of 35% compared to $19.9 million in the first quarter of 2024, mainly due to the inclusion of Greenbrook's operating expenses.
Net Loss Increase
Net loss for the quarter was negative $12.7 million, a significant increase from a net loss of negative $7.9 million in the prior year quarter.
Cash Burn and Vendor Payments
Cash used in operations was $17 million, driven by proactive vendor payment settlements, which increased cash burn to levels above typical for the first quarter.
Company Guidance
During the Neuronetics First Quarter 2025 Financial and Operating Results Conference Call, significant guidance was provided with several key metrics highlighted. The company reported a total revenue of $32 million, marking an 84% increase over the first quarter of 2024. Pro forma revenue increased by 7% to $29.8 million compared to the same period last year. Key performance metrics included NeuroStar system revenue at $2.8 million with 31 systems shipped, U.S. treatment session revenue at $9.6 million, and U.S. Clinic revenue, attributed to the Greenbrook acquisition, at $18.7 million. The gross margin was reported at 49%, a decrease from 75% in the prior year, primarily due to the inclusion of the Greenbrook clinic business. Operating expenses increased by 35% to $26.8 million, largely due to the addition of Greenbrook's operating costs. The company also reported a net loss of $12.7 million, or $0.21 per share. Strategic initiatives such as the Greenbrook integration, SPRAVATO rollout, and the expansion of the Better Me Provider program were emphasized as core growth drivers. Neuronetics aims to achieve cash flow positivity by the third quarter of 2025, supported by their enhanced capital position following a public offering that raised $18.9 million. The company maintained its full-year revenue guidance at $149 million to $155 million, with expectations of a 55% gross margin for the year.

Neuronetics Financial Statement Overview

Summary
Neuronetics faces ongoing financial challenges, with consistent losses and cash flow difficulties. Revenue growth is present but profitability remains elusive. High leverage and reliance on external financing pose risks.
Income Statement
40
Negative
Neuronetics shows a modest revenue growth over the years, with a 4.96% increase from 2023 to 2024. However, the company has consistently reported negative EBIT and net income margins, indicating ongoing profitability challenges. The gross profit margin remains relatively healthy, but the persistent negative EBITDA margin points to operational inefficiencies.
Balance Sheet
45
Neutral
The balance sheet reflects significant leverage with a high debt-to-equity ratio, although it has improved slightly from the previous year. The equity ratio is relatively low, suggesting limited financial flexibility. The company has maintained a positive cash position, yet declining stockholders' equity is a concern.
Cash Flow
35
Negative
Neuronetics has experienced negative free cash flow growth, with cash flows consistently in the red. The operating cash flow to net income ratio is negative, highlighting cash generation issues. The company relies heavily on financing activities to manage cash needs, which may not be sustainable long-term.
Breakdown
Dec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
74.89M71.35M65.21M55.31M49.24M
Gross Profit
54.16M51.70M49.72M43.66M37.69M
EBIT
-34.56M-30.55M-35.11M-27.56M-22.31M
EBITDA
-34.56M-22.76M-31.26M-26.55M-21.07M
Net Income Common Stockholders
-43.71M-30.19M-39.21M-35.60M-32.28M
Balance SheetCash, Cash Equivalents and Short-Term Investments
18.66M60.58M71.88M96.34M50.84M
Total Assets
140.90M115.83M116.88M141.22M78.66M
Total Debt
82.63M62.47M39.74M39.54M38.34M
Net Debt
64.17M2.80M-30.59M-54.60M-10.62M
Total Liabilities
109.10M81.64M59.82M56.05M53.16M
Stockholders Equity
27.71M34.19M57.06M85.17M25.49M
Cash FlowFree Cash Flow
-32.46M-34.41M-34.01M-30.34M-29.12M
Operating Cash Flow
-31.00M-32.04M-30.74M-27.98M-28.39M
Investing Cash Flow
-2.41M-1.32M6.73M-9.84M-730.00K
Financing Cash Flow
-6.81M22.70M207.00K83.01M2.37M

Neuronetics Technical Analysis

Technical Analysis Sentiment
Negative
Last Price3.72
Price Trends
50DMA
4.05
Negative
100DMA
3.98
Negative
200DMA
2.51
Positive
Market Momentum
MACD
-0.12
Positive
RSI
36.33
Neutral
STOCH
20.50
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For STIM, the sentiment is Negative. The current price of 3.72 is below the 20-day moving average (MA) of 4.06, below the 50-day MA of 4.05, and above the 200-day MA of 2.51, indicating a neutral trend. The MACD of -0.12 indicates Positive momentum. The RSI at 36.33 is Neutral, neither overbought nor oversold. The STOCH value of 20.50 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for STIM.

Neuronetics Risk Analysis

Neuronetics disclosed 70 risk factors in its most recent earnings report. Neuronetics reported the most risks in the “Finance & Corporate” category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 1 New Risks
1.
The Company's failure to meet the continued listing requirements of Nasdaq could result in a delisting of the Company's common stock. Q3, 2024

Neuronetics Peers Comparison

Overall Rating
UnderperformOutperform
Sector (54)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
57
Neutral
$460.17M-51.25%15.57%31.82%
55
Neutral
$102.46M-1552.23%25.46%21.83%
54
Neutral
$5.31B3.29-45.39%2.79%16.77%-0.07%
49
Neutral
$244.85M-152.14%22.16%-37.60%
46
Neutral
$165.67M-91.03%-40.09%-18.67%
45
Neutral
$58.39M-41.36%-44.17%12.77%
42
Neutral
$44.39M-1454.41%35.76%47.48%
* Healthcare Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
STIM
Neuronetics
3.72
1.70
84.16%
ACRS
Aclaris Therapeutics
1.53
0.47
44.34%
MDXH
MDxHealth
2.07
-0.73
-26.07%
PSNL
Personalis
5.21
3.89
294.70%
BDSX
Biodesix
0.30
-1.09
-78.42%
SERA
Sera Prognostics
1.55
-6.53
-80.82%

Neuronetics Corporate Events

Executive/Board ChangesShareholder Meetings
Neuronetics Holds Annual Meeting, Elects Directors
Neutral
May 28, 2025

On May 22, 2025, Neuronetics, Inc. held its Annual Meeting of Stockholders, where 81.38% of eligible shares were represented. During the meeting, all director nominees were elected for a one-year term, KPMG LLP’s appointment as the independent auditor for 2025 was ratified, and executive compensation for 2024 was approved. However, a proposal to eliminate supermajority voting requirements in the company’s governance documents was not approved.

The most recent analyst rating on (STIM) stock is a Buy with a $5.50 price target. To see the full list of analyst forecasts on Neuronetics stock, see the STIM Stock Forecast page.

Executive/Board ChangesFinancial Disclosures
Neuronetics Announces CFO Retirement Amidst Q1 Growth
Positive
May 6, 2025

On May 6, 2025, Neuronetics announced the upcoming retirement of CFO Stephen Furlong in March 2026, with a search for his successor underway. The company reported significant financial growth in the first quarter of 2025, with an 84% revenue increase driven by the Greenbrook acquisition. Neuronetics also highlighted major insurance coverage expansions for adolescent TMS treatment and projected achieving positive cash flow in the third quarter of 2025.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.