Neuronetics(STIM) - 2025 Q2 - Quarterly Report

PART I – FINANCIAL INFORMATION Item 1. Financial Statements Neuronetics, Inc.'s interim consolidated financial statements as of June 30, 2025, reflect increased revenues from the Greenbrook acquisition, ongoing net losses, and negative operating cash flow, with assets and liabilities decreasing and cash bolstered by a stock offering Consolidated Balance Sheets As of June 30, 2025, total assets decreased to $134.7 million, primarily due to reduced cash, while total liabilities also decreased to $103.1 million, and total equity remained stable Consolidated Balance Sheet Highlights (in thousands) | Account | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $10,969 | $18,459 | | Total current assets | $56,139 | $58,122 | | Total assets | $134,650 | $140,903 | | Liabilities & Equity | | | | Total current liabilities | $27,803 | $31,265 | | Long-term debt, net | $55,539 | $55,151 | | Total liabilities | $103,143 | $109,104 | | Total equity | $31,507 | $31,799 | Consolidated Statements of Operations Q2 2025 revenues surged to $38.1 million due to the Greenbrook acquisition, but increased costs led to a lower gross margin and a stable net loss of $9.8 million, while the six-month net loss widened to $22.5 million Consolidated Statements of Operations Highlights (in thousands, except per share data) | Metric | Q2 2025 | Q2 2024 | 6 Months 2025 | 6 Months 2024 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $38,108 | $16,450 | $70,083 | $33,867 | | Gross Profit | $17,758 | $12,179 | $33,496 | $25,267 | | Loss from operations | ($8,058) | ($8,507) | ($19,072) | ($15,366) | | Net loss | ($9,839) | ($9,832) | ($22,528) | ($17,705) | | Net loss per share | ($0.15) | ($0.33) | ($0.36) | ($0.59) | Consolidated Statements of Cash Flows Net cash used in operating activities increased to $20.5 million for the six months ended June 30, 2025, offset by $19.0 million from financing activities, primarily a stock issuance, resulting in a $2.0 million decrease in total cash Cash Flow Summary for the Six Months Ended June 30 (in thousands) | Cash Flow Activity | 2025 | 2024 | | :--- | :--- | :--- | | Net Cash used in Operating activities | $(20,497) | $(16,984) | | Net Cash used in Investing activities | $(471) | $(51) | | Net Cash provided by Financing activities | $18,978 | $0 | | Net decrease in Cash | $(1,990) | $(17,035) | - The company received net proceeds of $18.9 million from the issuance of common stock during the first six months of 2025, which significantly offset the cash used in operations[18] Notes to Interim Consolidated Financial Statements The notes detail the Greenbrook acquisition's impact on revenue, the company's liquidity position, debt structure, and subsequent events including an ATM equity program and credit facility amendment, with management confident in funding operations for the next 12 months - The company completed the acquisition of Greenbrook TMS Inc. on December 9, 2024, for a total consideration of $38.8 million, which included common stock, cash, and the settlement of preexisting relationships, adding a new, significant revenue stream from treatment centers[20][41][42] - Management believes that cash and cash equivalents of $11.0 million as of June 30, 2025, along with anticipated revenues, are sufficient to fund operations for at least the next 12 months[22][24] - In February 2025, the company raised net proceeds of $18.9 million through a secondary public offering of its common stock at $2.25 per share[23][105] - Subsequent to the quarter end, on July 3, 2025, the company established an 'at the market' (ATM) equity offering program to sell up to $50.0 million of its common stock[136] - On August 1, 2025, the company amended its credit facility to borrow an additional $10.0 million, lower its minimum liquidity requirement, and issue additional warrants[139] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management attributes Q2 2025's 132% revenue growth to the Greenbrook acquisition's clinic revenue, despite a gross margin decline to 46.6% and increased G&A expenses, with liquidity supported by a $19.0 million offering and anticipated reduced operating losses Results of Operations Q2 2025 total revenue increased 132% to $38.1 million, primarily from new clinic revenue, but gross margin declined to 46.6% due to lower-margin business, while G&A expenses nearly doubled and the six-month net loss increased to $22.5 million Q2 2025 vs Q2 2024 Performance (in thousands) | Metric | Q2 2025 | Q2 2024 | Change ($) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $38,108 | $16,450 | $21,658 | 132% | | Gross Profit | $17,758 | $12,179 | $5,579 | 46% | | Gross Margin | 46.6% | 74.0% | - | - | | Sales and marketing | $11,868 | $12,303 | ($435) | (4)% | | General and administrative | $12,150 | $6,148 | $6,002 | 98% | | Research and development | $1,798 | $2,235 | ($437) | (20)% | | Net Loss | ($9,839) | ($9,832) | ($7) | (0)% | - The primary driver of revenue growth was the inclusion of $23.0 million in clinic revenue following the Greenbrook acquisition[175] - The decrease in gross margin from 74.0% to 46.6% was primarily a result of the inclusion of Greenbrook's lower-margin clinic business and a reduction in higher-margin treatment session revenue[178] Liquidity and Capital Resources As of June 30, 2025, the company held $11.0 million in cash with an accumulated deficit of $442.6 million, with liquidity bolstered by a $19.0 million secondary offering, and $60.0 million outstanding under its credit facility Key Liquidity Metrics (in thousands) | Metric | June 30, 2025 | December 31, 2024 | | :--- | :--- | :--- | | Cash and cash equivalents | $11,000 | $18,500 | | Accumulated deficit | ($442,600) | ($419,800) | | Net cash used in operations (6 months) | ($20,500) | N/A | - The company's primary sources of capital have been its IPO, private placements, credit facilities, secondary stock offerings, and product revenues[195] - Net cash provided by financing activities for the six months ended June 30, 2025 was $19.0 million, primarily from a secondary public offering[204] Item 3. Quantitative and Qualitative Disclosures About Market Risk No material changes to market risk have occurred since the last annual report, with the company monitoring macroeconomic impacts like inflation without significant financial effect to date - There have been no material changes to the company's market risk since the last annual report[207] - The company is monitoring macroeconomic impacts like inflation, but does not believe they have had a material impact on financial results to date[208] Item 4. Controls and Procedures Management concluded disclosure controls and procedures were effective as of June 30, 2025, while actively integrating Greenbrook's internal control structure - The Principal Executive Officer and Principal Financial Officer concluded that the company's disclosure controls and procedures were effective as of June 30, 2025[210] - The company is in the process of integrating Greenbrook's internal controls into its overall financial reporting process following the acquisition[211] PART II – OTHER INFORMATION Item 1. Legal Proceedings The company is not currently subject to any legal proceedings expected to have a material adverse effect on its financial condition or operations - There are currently no legal proceedings expected to have a material adverse effect on the company[214] Item 1A. Risk Factors Investors are referred to previously filed 10-K and 10-Q reports for a comprehensive discussion of the company's risk factors - The report directs readers to previously filed 10-K and 10-Q reports for a comprehensive list of risk factors[215] Other Items (Items 2, 3, 4, 5, 6) Items 2, 3, 4, and 5 of Part II are reported as 'Not applicable', with Item 6 detailing the exhibits filed with the quarterly report - Items 2, 3, 4, and 5 of Part II are not applicable for this reporting period[216][217][218][219]