Neuronetics (STIM) Q3 Earnings call transcript Nov 12, 2024
2min read In Neuronetics' third quarter earnings call for 2024, the company showcased a blend of challenges and opportunities, with a significant focus on the upcoming acquisition of Greenbrook and the strategic reorganization that followed. The call, led by CEO Keith Sullivan and CFO Steve Furlong, provided insights into the company's financial performance, strategic initiatives, and future outlook.
Financial Performance and Acquisition Update
Neuronetics reported a total revenue of $18.5 million, marking a 4% increase from the previous year. The company's NeuroStar system revenue stood at $4.1 million, with 49 systems shipped during the quarter. U.S. treatment session revenue grew by 2%, reaching $13.3 million. The acquisition of Greenbrook, which was approved by shareholders and is expected to close in the fourth quarter, was a major topic of discussion. The acquisition is expected to bring significant synergies, including operational efficiencies and revenue growth opportunities.
Operational Efficiencies and Strategic Restructuring
The call highlighted Neuronetics' strategic reorganization, which is aimed at reducing operating expenses and improving operational efficiencies. The company is targeting approximately $20 million in synergies through cost reductions and operational improvements. This restructuring includes a strategic reorganization of Neuronetics, which is expected to generate approximately $3.5 million in annualized expense reduction. The focus is on optimizing commercial operations, streamlining processes, and leveraging data to improve patient flow and targeting for TMS and SPRAVATO treatments.
Looking Ahead
For the fourth quarter, Neuronetics expects stand-alone revenue of $19 million to $20 million, with a full-year stand-alone revenue forecast in the range of $71 million to $72 million. The company is focusing on profitability and cash flow breakeven by the third quarter of 2025. The acquisition of Greenbrook is seen as a transformative step towards achieving these goals. The company is also working on expanding the use of SPRAVATO into all appropriate Greenbrook clinics and implementing a buy-and-build program across all sites.
Analyst Questions and Clarifications
During the Q&A session, analysts questioned the guidance reduction for full-year 2024 and the impact of reimbursement issues on customer purchasing patterns. Neuronetics clarified that the reduction was due to changes in purchasing patterns and reimbursement issues, as well as the company's focus on profitability. Analysts also asked about the growth prospects for the combined entity and the implications of the commercial restructuring. The company emphasized the potential for mid-teens growth in 2025 and the benefits of the Greenbrook acquisition, including increased scale, improved reimbursement rates, and expanded service offerings.
Conclusion
Neuronetics' third quarter earnings call provided a comprehensive overview of the company's performance, strategic initiatives, and future outlook. The acquisition of Greenbrook and the resulting operational efficiencies are seen as key drivers of growth and profitability. The company's focus on improving operational efficiencies, expanding service offerings, and achieving cash flow breakeven by the third quarter of 2025 underscores its commitment to sustainable growth and shareholder value. As Neuronetics moves forward, the integration of Greenbrook and the implementation of strategic initiatives will be critical in navigating the complex landscape of mental health treatments and achieving long-term success.