Neuronetics Inc Q1 2025 Earnings Call Highlights: Revenue Surges Amid Margin Challenges

Neuronetics Inc reported Q1 2025 revenue of $32mln, an 84% increase YoY. Despite this, gross margin fell to 49% from 75% in the prior year, mainly due to the inclusion of Greenbrook's clinic business. Operating expenses rose 35% to $26.8mln, while net loss increased to $12.7mln. The company raised $18.9mln in a public offering to support growth initiatives.

Neuronetics Inc. (NASDAQ: STIM), a leading provider of transcranial magnetic stimulation (TMS) therapy for mental health disorders, reported its Q1 2025 financial results, showcasing a significant increase in revenue but facing operational challenges. The company's revenue for the quarter reached $32.0 million, representing an 84% year-over-year (YoY) increase [1]. This growth was primarily driven by the inclusion of clinic revenue from the acquisition of Greenbrook.

However, the company's gross margin decreased to 49% from 75% in the prior year, largely due to the integration of Greenbrook's clinic business [1]. Operating expenses rose by 35% to $26.8 million, while the net loss increased to $12.7 million. To support its growth initiatives, Neuronetics raised $18.9 million through a public offering [2].

The company's strategic acquisition of Greenbrook has expanded its operational footprint, allowing it to derive revenue directly from treatment centers. Neuronetics anticipates that its operating losses will decrease in the near term due to revenue growth and ongoing cost efficiencies [2]. The company also expects clinic revenue to increase in 2025.

Despite the strong revenue growth, investors should consider the significant drop in gross margin and the challenges in achieving profitability targets. The company's recent financial performance shows mixed signals, with strong revenue growth but continued operating losses. The key question remains whether Neuronetics can successfully execute its integration strategy and achieve cash flow positivity by Q3 2025 as promised.

References:
[1] https://www.investing.com/news/company-news/neuronetics-q1-2025-slides-combined-entity-targets-profitability-by-q3-amid-84-revenue-growth-93CH-4024912
[2] https://www.tradingview.com/news/tradingview:2e38d759a2d16:0-neuronetics-inc-sec-10-q-report/