Neuronetics Inc
For the period ended Sep 30, 2024. Filed Nov 12, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Sep 30, 2024 · Filed Nov 12, 2024
STIM$2.15-11.5%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-06-30; filed 2024-08-12.
0001558370-24-011800
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-09-30; filed 2024-11-12.
0001558370-24-015160
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 92 previous paragraphs and 92 current paragraphs.
34 unchanged; 39 reworded; 16 added; 18 removed; 1 previous and 3 current paragraphs rearranged.
Tables are not compared: 17 previous and 18 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (16)
Current report
Total revenues increased by $0.6 million, or 4%, from $17.9 million for the three months ended September 30, 2023 to $18.5 million for the three months ended September 30, 2024 and increased by $1.4 million, or 3%, from $51.0 million for the nine months ended September 30, 2023 to $52.4 million for the nine months ended September 30, 2024.
Current report
Greenbrook Acquisition
Current report
On August 11, 2024, the Company and Greenbrook entered into an arrangement agreement (the “Arrangement Agreement”), pursuant to which the Company agreed to acquire all of the issued and outstanding common shares of Greenbrook (each a “Greenbrook Share”) pursuant to a plan of arrangement (the “Plan of Arrangement”) under the Business Corporations Act (Ontario) (the “Arrangement”).
Current report
Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, each Greenbrook Share outstanding immediately prior to the effective time of the Arrangement (other than the shares held by Greenbrook Shareholders who have exercised rights of dissent in respect of the Arrangement) would be transferred to the Company in exchange for such number of shares of the Company’s Common Stock, as provided for in the Arrangement Agreement.
Current report
On November 8, 2024, Greenbrook Shareholders approved the Greenbrook Arrangement Resolution and Neuronetics Stockholders approved the Neuronetics Charter Amendment Proposal and Neuronetics Share Issuance Proposal (as such terms are defined in the Company’s Definitive Proxy Statement on Schedule 14A filed on October 4, 2024). Subject to the terms and conditions set forth in the Arrangement Agreement and the Plan of Arrangement, the Company and Greenbrook intend to consummate the Arrangement upon the satisfaction of the conditions precedent to closing.
Current report
We anticipate that our general and administrative expenses will increase from 2023 mainly due to legal and professional feesin connection with our proposed transaction with Greenbrook (the “Greenbrook Acquisition”).
Current report
Loss on debt extinguishment consist of prepayment penalties and impairment of deferred financing costs associated with the extinguishment of debt, as well as fees incurred with third parties in connection with debt extinguishment.
Current report
U.S. NeuroStar Advanced Therapy System revenue for the three months ended September 30, 2024 was $4.1 million, an increase of 14% compared to the three months ended September 30, 2023 revenue of $3.6
Current report
Sales and marketing expenses decreased by $0.2 million, or 2%, from $12.1 million for the three months ended September 30, 2023 to $11.9 million for the three months ended September 30, 2024. The decrease was primarily due to lower headcount partially offset by an increase in bad debt expense.
Current report
General and administrative expenses increased by $1.1 million, or 17% from $6.3 million for the three months ended September 30, 2023 to $7.4 million for the three months ended September 30, 2024. The increase was primarily due to an increase in legal costs and professional fees in connection with the Greenbrook Acquisition.
Current report
Research and development expenses increased by $0.2 million, or 12%, from $2.2 million for the three months ended September 30, 2023 to $2.4 million for the three months ended September 30, 2024. The increase was primarily due to software maintenance expense for previously released software.
Current report
Loss on extinguishment of debt amounting to $4.4 million was recorded during the three months ended September 30, 2024, related to the SLR Facility. This included $1.2 million of early prepayment fees and $3.2 million of deferred financing expense related to extinguishment of debt.
Current report
Comparison of the nine months ended September 30, 2024 and 2023
Current report
Sales and marketing expenses increased by $0.2 million, or 1%, from $35.6 million for the nine months ended September 30, 2023 to $35.8 million for the nine months ended September 30, 2024. The increase was primarily driven by higher bad debt expense.
Current report
Loss on extinguishment of debt amounting to $4.4 million was recorded during the three months ended September 30, 2024, related to the SLR Facility. This included $1.2 million of early prepayment fees and $3.2 million of deferred financing expense related to extinguishment of debt.
Current report
Net cash used in financing activities for the nine months ended September 30, 2024 was $16.4 million and primarily consisted of the repayment of the SLR Facility, proceeds from the Perceptive Facility and payment of debt issuance costs related to the Perceptive Facility.
Removed paragraphs (18)
Previous report
Total revenues decreased by $1.1 million, or 7%, from $17.6 million for the three months ended June 30, 2023 to $16.5 million for the three months ended June 30, 2024 and increased by $0.7 million, or 2%, from $33.2 million for the six months ended June 30, 2023 to $33.9 million for the six months ended June 30, 2024.
Previous report
We anticipate that our general and administrative expenses will remain relatively consistent during 2024 compared to our 2023 expenses.
Previous report
We plan to incur research and development expenses for the near future as we expect to continue our development of TMS therapy for the treatment of additional patient populations and new indications related to neurohealth disorders, as well as for various hardware and software development projects. As a result, we expect our research and development expenses to increase during 2024 compared to our 2023 expenses.
Previous report
Sales and marketing expenses increased by $0.7 million, or 6%, from $11.6 million for the three months ended June 30, 2023 to $12.3 million for the three months ended June 30, 2024. The increase was primarily due to the NeuroStar University program spend and bad debt expense.
Previous report
General and administrative expenses remained materially consistent, decreasing from $6.2 million for the three months ended June 30, 2023 to $6.1 million for the three months ended June 30, 2024.
Previous report
Research and development expenses decreased by $0.2 million, or 5%, from $2.4 million for the three months ended June 30, 2023 to $2.2 million for the three months ended June 30, 2024. The decrease was primarily due to higher software capitalization related to the latest development of the NeuroStar system.
Previous report
Comparison of the six months ended June 30, 2024 and 2023
Previous report
Revenues
Previous report
General and administrative expenses decreased by $0.7 million, or 6% from $12.8 million for the six months ended June 30, 2023 to $12.1 million for the six months ended June 30, 2024. The decrease was primarily due to a decrease in personnel expenses and legal costs in the current period versus the prior period.
Previous report
Subsequently, on July 25, 2024, the Company entered into a Credit Agreement and Guaranty with Perceptive Credit Holdings IV, LP, (“Perceptive”) as collateral agent andother lenders defined in the agreement (the “Perceptive Facility”) that replaced the Company’s previous $60.0 million credit facility with SLR Investment Corp (“SLR”, and such facility, the “SLR Facility”).
Previous report
The Perceptive Facility permits the Company to borrow up to an aggregate amount of $90.0 million in three tranches of term loans, a “Tranche 1 Loan”, a “Tranche 2 Loan” and a “Tranche 3 Loan.” On July 25, 2024, the Company borrowed an aggregate amount of $50.0 million, which was the aggregate amount available under the Tranche 1 Loan portion of the Perceptive Facility. Under the Tranche 2 Loan portion of the Perceptive Facility, the Company is permitted to borrow, at its election, up to an aggregate amount of $15.0 million, (i) upon the Company achieving a specified amount of trailing twelve months net revenue, and (ii) assuming there has been no event of default under the Perceptive Facility prior to such election. The Tranche 2 Loan portion of the Perceptive Facility must be borrowed on or before December 31, 2025. Under the Tranche 3 Loan portion of the Perceptive Facility, the Company may request to borrow, at the consent of the Majority Lenders (as defined in the Perceptive Facility), up to an aggregate amount of $25.0 million. The
Previous report
Tranche 3 Loan portion of the Perceptive Facility must be borrowed on or before June 30, 2026. All amounts borrowed under the Perceptive Facility are due on July 25, 2029.
Previous report
Each of the Tranche 1 Loan, Tranche 2 Loan and Tranche 3 Loan accrues interest from the date of borrowing through the date of repayment at a floating per annum rate of interest equal to the sum of 7.00% plus the greater of (a) 4.50% and (b) One-Month Term SOFR (as defined in the Perceptive Facility). There will be no scheduled repayments of the principal on the Tranche 1 Loan, Tranche 2 Loan and Tranche 3 Loan prior to the maturity date.
Previous report
If the Company prepays either the Tranche 1 Loan, Tranche 2 Loan or Tranche 3 Loan prior to their scheduled maturity date, the Company will also be required to pay prepayment fees to Perceptive equal to 6% of the principal amount of such term loan then-prepaid if prepaid on or before the first anniversary of the closing date, 5% of the principal amount of such term loan then-prepaid if prepaid after the first anniversary and on or before the second anniversary of the closing date, 4% of the principal amount of such term loan then-prepaid if prepaid after the second anniversary and on or before the third anniversary of the closing date, and 3% of the principal amount of such term loan then-prepaid if prepaid after the third anniversary and on or before the fourth anniversary of the closing date.
Previous report
The Company’s obligations under the credit facility are secured by a first priority security interest in substantially all of its assets, including its intellectual property. The Perceptive Facility requires the Company to comply with a quarterly minimum trailing revenue covenant and a $5 million liquidity covenant as well as customary affirmative and negative covenants.
Previous report
The Perceptive Facility contains events of default, including, without limitation, events of default upon: (i) failure to make payment pursuant to the terms of the agreement; (ii) violation of covenants; (iii) material adverse changes to the Company’s business; (iv) insolvency; (v) material cross-defaults; (vi) significant judgments, orders or decrees for payments by the Company; (vii) incorrectness of representations and warranties; (viii) significant adverse ERISA events; (ix) failure by the Company to be registered with the United States Securities and Exchange Commission in good standing; and (x) failure by the Company to maintain a valid and perfected lien on the collateral securing the borrowing.
Previous report
As consideration for the Perceptive Facility, the Company agreed to issue to Perceptive warrants to purchase up to 1,462,500 shares of the Company’s common stock, with a warrant exercisable into 1,125,000 shares of the Company’s common stock issued on the closing date (the “Initial Warrant”). The per share exercise price for the Initial Warrant is equal to the lower of (x) the 10-day volume weighted average price of the Company’s common stock on the business day immediately prior to the closing date and (y) the 10-day volume weighted average price of the common stock ended on August 31, 2024. In addition to the Initial Warrant, an additional warrant will be issued for 337,500 shares of common stock concurrently with the borrowing of the Tranche 2 Loan. The per share exercise price for the additional warrant will be equal to the exercise price of the Initial Warrant. Each warrant will be exercisable, in whole or in part, until the tenth anniversary of the applicable date of issuance.
Previous report
The foregoing summary description of the Perceptive Facility for the Perceptive Facility and the Perceptive Facility does not purport to be complete and is qualified in its entirety by reference to the credit agreement for the Perceptive Facility, a copy of which is filed as Exhibit 10.3 hereto and incorporated herein by reference.
Reworded paragraphs (39)
Previous wording
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “would,” “should,” “expect,” “plan,” “design,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “outlook” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 8, 2024.These risks and uncertainties include, without limitation, risks and uncertainties related to: our ability to achieve or sustain profitable operations due to our history of losses; our reliance on the sale and usage of our NeuroStar Advanced Therapy System to generate revenues; the scale and efficacy of our salesforce; availability of coverage and reimbursement from third-party payors for treatments using our products; physician and patient demand for treatments using our products; developments in respect of competing technologies and therapies for the indications that our products treat; product defects; our revenue has been concentrated among a small number of customers; our ability to obtain and maintain intellectual property protection for our technology; developments in clinical trials or regulatory review of the NeuroStar Advanced Therapy System for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; the terms of our credit facility; our ability to successfully roll-out our Better Me Guarantee Provider Program on the planned timeline; our self-sustainability and existing cash balances; and our ability to achieve cash flow break-even in the fourth quarter of 2024 and on a full-year basis in 2025. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company cautions investors not to place undue reliance on these forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q as a result of any new information, future events or changed circumsta…
Excerpt shortened here; the source contains the full paragraph.
Current wording
our ability to achieve or sustain profitable operations due to our history of losses; our reliance on the sale and usage of our NeuroStar Advanced Therapy System to generate revenues; the scale and efficacy of our salesforce; availability of coverage and reimbursement from third-party payors for treatments using our products; physician and patient demand for treatments using our products; developments in respect of competing technologies and therapies for the indications that our products treat; product defects; our revenue has been concentrated among a small number of customers; our ability to obtain and maintain intellectual property protection for our technology; developments in clinical trials or regulatory review of the NeuroStar Advanced Therapy System for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; the terms of our credit facility; our ability to successfully roll-out our Better Me Provider Program on the planned timeline; our self-sustainability and existing cash balances; and our ability to achieve cash flow break-even in the fourth quarter of 2024 and on a full-year basis in 2025. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company cautions investors not to place undue reliance on these forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q as a result of any new information, future events or changed circumstances or otherwise.*
Previous wording
We are a commercial stage medical technology company focused on designing, developing and marketing products that improve the quality of life for patients who suffer from neurohealth disorders. Our first commercial product, the NeuroStar Advanced Therapy System, is a non-invasive and non-systemic office-based treatment that uses TMS to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The NeuroStar Advanced
Current wording
We are a commercial stage medical technology company focused on designing, developing and marketing products that improve the quality of life for patients who suffer from neurohealth disorders. Our first commercial product, the NeuroStar Advanced Therapy System, is a non-invasive and non-systemic office-
Previous wording
Therapy System is cleared by the FDA to treat adult patients with MDD that have failed to achieve satisfactory improvement from prior antidepressant medication in the current MDD episode. It is also cleared by the FDA as an adjunct for adults with OCD, and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression), and as an adjunct for the treatment of MDD in adolescent patients aged 15-21. The NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. We believe we are the market leader in TMS therapy based on over 182,125 global patients treated with over 6.6 million of our treatment sessions through June 30, 2024. We generated revenues of $16.5 million and $17.6 million for the three months ended June 30, 2024 and 2023, respectively, and $33.9 million and $33.2 million for the six months ended June 30, 2024 and 2023, respectively.
Current wording
based treatment that uses TMS to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The NeuroStar Advanced Therapy System is cleared by the FDA to treat adult patients with MDD that have failed to achieve satisfactory improvement from prior antidepressant medication in the current MDD episode. It is also cleared by the FDA as an adjunct for adults with OCD, and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression), and as an adjunct for the treatment of MDD in adolescent patients aged 15-21. The NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. We believe we are the market leader in TMS therapy based on over 188,662 global patients treated with over 6.9 million of our treatment sessions through September 30, 2024. We generated revenues of $18.5 million and $17.9 million for the three months ended September 30, 2024 and 2023, respectively, and $52.4 million and $51.0 million for the nine months ended September 30, 2024 and 2023, respectively.
Previous wording
We designed the NeuroStar Advanced Therapy System as a non-invasive therapeutic alternative to treat patients who suffer from MDD and to address many of the key limitations of other treatment options. We generate revenues from initial capital sales of our systems, recurring treatment sessions, service and repair and extended warranty contracts. We derive the majority of our revenues from recurring treatment sessions. For the three months ended June 30, 2024, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 72% and 25% of our U.S. revenues, respectively, and for the three months ended June 30, 2023 revenues from sales of our treatment sessions and NeuroStar Therapy Systems represented 71% and 26% of our U.S. revenues, respectively. For the six months ended June 30, 2024, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 75% and 22% of our U.S. revenues, respectively, and for the six months ended June 30, 2023 revenues from sales of our treatment sessions and NeuroStar Therapy Systems represented 71% and 26% of our U.S. revenues, respectively.
Current wording
We designed the NeuroStar Advanced Therapy System as a non-invasive therapeutic alternative to treat patients who suffer from MDD and to address many of the key limitations of other treatment options. We generate revenues from initial capital sales of our systems, recurring treatment sessions, service and repair and extended warranty contracts. We derive the majority of our revenues from recurring treatment sessions. For the three months ended September 30, 2024, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 74% and 23% of our U.S. revenues, respectively, and for the three months ended September 30, 2023 revenues from sales of our treatment sessions and NeuroStar Therapy Systems represented 76% and 21% of our U.S. revenues, respectively. For the nine months ended September 30, 2024, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 75% and 22% of our U.S. revenues, respectively, and for the nine months ended September 30, 2023 revenues from sales of our treatment sessions and NeuroStar Therapy Systems represented 73% and 24% of our U.S. revenues, respectively.
Previous wording
We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the U.S. with the collaborative support of our 203 employees as of June 30, 2024. Symphony Health estimates that there are approximately 26,300 group and solo practice sites in the U.S. with psychiatrists that prescribe antidepressant medications. Our direct sales force primarily targets 53,000 psychiatrists at 26,300 psychiatric practices that treat approximately 13.9 million patients based on data from theJournal of the American Medical Association. Some of our customers have purchased or may purchase more than one NeuroStar Advanced Therapy System. Based on our commercial data, we believe our customers can recoup their initial capital investment in our system by providing a standard course of treatment to approximately 12 patients. We believe our customers can generate approximately $8,500 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their practices. We have a diverse customer base, including psychiatrists in group psychiatric practices, pain management physicians and other medical professionals in the U.S. For the three and six months ended June 30, 2024, one customer accounted for more than 10% of our revenues.
Current wording
We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the U.S. with the collaborative support of our 201 employees as of September 30, 2024. Symphony Health estimates that there are approximately 26,300 group and solo practice sites in the U.S. with psychiatrists that prescribe antidepressant medications. Our direct sales force primarily targets 53,000 psychiatrists at 26,300 psychiatric practices that treat approximately 13.9 million patients based on data from theJournal of the American Medical Association. Some of our customers have purchased or may purchase more than one NeuroStar Advanced Therapy System. Based on our commercial data, we believe our customers can recoup their initial capital investment in our system by providing a standard course of treatment to approximately 12 patients. We believe our customers can generate approximately $8,500 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their practices. We have a diverse customer base, including psychiatrists in group psychiatric practices, pain management physicians and other medical professionals in the U.S. For the three and nine months ended September 30, 2024, one customer accounted for more than 10% of our revenues.
Previous wording
We market our products in a few select markets outside the U.S. through independent distributors. International revenues represented 2% of our total revenues for the three months ended June 30, 2024 and 2023, and 3% for the six months ended June 30, 2024 and 2023. In October 2017, we entered into an exclusive distribution agreement with Teijin Pharma Limited for the distribution of our NeuroStar Advanced Therapy Systems and treatment sessions to customers who will treat patients with MDD in Japan. We received regulatory approval for our system in Japan in September 2017. We obtained reimbursement coverage for the NeuroStar Advanced Therapy System in Japan, which went into effect on June 1, 2019 and covers patients who are treated in the largest inpatient and outpatient psychiatric facilities in Japan. We expect our international revenues to be consistent as a percentage of our total revenue.
Current wording
We market our products in a few select markets outside the U.S. through independent distributors. International revenues represented 3% and 4% of our total revenues for the three months ended September 30, 2024 and 2023, respectively and 3% for the nine months ended September 30, 2024 and 2023. We received regulatory approval for our system in Japan in September 2017. We obtained reimbursement coverage for the NeuroStar Advanced Therapy System in Japan, which went into effect on June 1, 2019 and covers patients who are treated in the largest inpatient and outpatient psychiatric facilities in Japan. We expect our international revenues to be consistent as a percentage of our total revenue.
Previous wording
Our research and development efforts are focused on hardware and software product developments, enhancements of our NeuroStar Advanced Therapy System, and clinical development relating to additional indications. We outsource the manufacture of components of our NeuroStar Advanced Therapy Systems that are produced to our specifications, and individual components are either shipped directly from our third-party contract manufacturers to our customers or consolidated into pallets at our Malvern, Pennsylvania facility prior to shipment. Final installation of these systems occurs at the customer site.
Current wording
Our research and development efforts are focused on hardware and software product developments, enhancements of our NeuroStar Advanced Therapy System, and clinical development relating to additional indications. We outsource the manufacture of components of our NeuroStar Advanced Therapy Systems that are produced to our specifications, and individual components are either shipped directly from our third-party
Previous wording
For the three months ended, June 30, 2024, our U.S revenue was $16.1 million, compared to $17.3 million for the three months ended June 30, 2023, which represents a decrease of 7% period over period. The decrease was primarily attributable to a decrease in U.S. Treatment sessions and U.S NeuroStar Advanced Therapy System sales period over period.
Current wording
For the three months ended, September 30, 2024, our U.S revenue was $17.9 million, compared to $17.2 million for the three months ended September 30, 2023, which represents an increase of 4% period over period. The increase was primarily attributable to an increase in U.S. treatment sessions and U.S NeuroStar Advanced Therapy System sales period over period.
Previous wording
For the six months ended June 30, 2024, our U.S. revenue was $32.9 million, compared to $32.3 million for six months ended June 30, 2023, which represents an increase of 2% period over period. The increase was primarily attributable to an increase in U.S. Treatment sessions sales period over period.
Current wording
For the nine months ended September 30, 2024, our U.S. revenue was $51.0 million, compared to $49.5 million for nine months ended September 30, 2023, which represents an increase of 3% period over period. The increase was primarily attributable to an increase in U.S. treatment sessions period over period.
Previous wording
We incurred net losses of $9.8 million and $17.7 million for the three and six months ended June 30, 2024 compared to net losses of $4.9 million and $15.4 million for three and six months ended June 30, 2023. We expect to continue to incur losses for the next several years as we invest in our commercial organization to support our planned sales growth and while continuing to invest in our pipeline indications. As of June 30, 2024, we had an accumulated deficit of $393.8 million.
Current wording
We incurred net losses of $13.3 million and $31.0 million for the three and nine months ended September 30, 2024 compared to net losses of $9.4 million and $24.8 million for three and nine months ended September 30, 2023. As we continue to reduce our expenses we expect to lower our losses and reach profitability in the upcoming years. As of September 30, 2024, we had an accumulated deficit of $407.1 million.
Previous wording
We are continuing to closely monitor macroeconomic impacts, including, but not limited to, developments affecting financial institutions, inflationary and potential recessionary pressures, on our business, results of operations and financial results. We currently believe these conditions have no material impact.
Current wording
We are continuing to closely monitor macroeconomic impacts, including, but not limited to inflationary and potential recessionary pressures, on our business, results of operations and financial results. We currently believe these conditions have no material impact.
Previous wording
Sales and marketing expenses consist of market research and commercial activities related to the sale of our NeuroStar Advanced Therapy Systems and treatment sessions and salaries and related benefits, sales commissions and share-based compensation for employees focused on these efforts. Other significant sales and marketing costs include conferences and trade shows, promotional and marketing activities, including direct and online marketing, practice support programs and radio media campaigns, co-op marketing, travel and training expenses.
Current wording
Sales and marketing expenses consist of market research and commercial activities related to the sale of our NeuroStar Advanced Therapy Systems and treatment sessions and salaries and related benefits, sales commissions and share-based compensation for employees focused on these efforts. Other significant sales and marketing costs include conferences and trade shows, promotional and marketing activities, including direct and online marketing, practice support programs and radio media campaigns, co-op marketing, travel, training expenses and bad debt expense.
Previous wording
We anticipate that our sales and marketing expenses will remain materially consistent during 2024 compared to 2023 expenses. We have plans to grow the co-op marketing program, but that increase in expense will be offset by savings in other areas.
Current wording
We anticipate that our sales and marketing expenses will remain materially consistent during 2024 compared to 2023, within this category our reduced personnel and marketing program expense have been offset by increases related to bad debt expense.
Previous wording
Total revenue for the three months ended June 30, 2024 was $16.5 million, a decrease of 7% compared to the three months ended June 30, 2023 revenue of $17.6 million. During the quarter, total U.S. revenue decreased by 7% and international revenue was consistent with the prior year quarter. The decrease in U.S. revenue was primarily attributable to a decrease in U.S. Treatment sessions and U.S NeuroStar Advanced Therapy System sales period over period.
Current wording
Total revenue for the three months ended September 30, 2024 was $18.5 million, an increase of 4% compared to the three months ended September 30, 2023 revenue of $17.9 million. During the quarter, total U.S. revenue increased by 4% and international revenue decreased marginally compared to prior year quarter. The increase in U.S. revenue was primarily attributable to an increase in U.S. treatment sessions and U.S. NeuroStar Advanced Therapy System sales period over period.
Previous wording
U.S. NeuroStar Advanced Therapy System revenue for the three months ended June 30, 2024 was $4.0 million, a decrease of 11% compared to the three months ended June 30, 2023 revenue of $4.5 million. For the three months ended June 30, 2024 and 2023, the Company sold 49 and 54 systems, respectively, that were recognized as NeuroStar Advanced Therapy System capital revenue during each period. Additionally, for the three months ended June 30, 2024, the Company executed 1 operating lease agreement that contributed to operating lease revenue.
Current wording
million. For the three months ended September 30, 2024 and 2023, the Company sold 48 and 43 systems, respectively, that were recognized as NeuroStar Advanced Therapy System capital revenue during each period. Increase in U.S. NeuroStar Advanced Therapy System revenue is mainly due to the increase in the sales price of the systems.
Previous wording
U.S. treatment session revenue for the three months ended June 30, 2024 was $11.7 million, a decrease of 5% compared to the three months ended June 30, 2023 revenue of $12.3 million. The decrease in revenue was primarily attributable to a decrease in treatment session volume over the prior year quarter. The decline was primarily a function of our customers facing cash flow difficulties stemming from the Change Health cyberattack.
Current wording
U.S. treatment session revenue for the three months ended September 30, 2024 was $13.3 million, an increase of 2% compared to the three months ended September 30, 2023 revenue of $13.1 million. The increase in revenue was primarily attributable to an increase in treatment session volume over the prior year quarter.
Previous wording
Cost of revenues decreased by $0.5 million, or 12%, from $4.8 million for the three months ended June 30, 2023 to $4.3 million for the three months ended June 30, 2024. Gross margin increased from 72.5% for the three months ended June 30, 2023 to 74.0% for the three months ended June 30, 2024. The increase in gross margin was primarily a result of the change in product mix and absence of one-time manufacturing cost charged in 2023 by our new contract manufacturer.
Current wording
Cost of revenues decreased by $1.6 million, or 26%, from $6.1 million for the three months ended September 30, 2023 to $4.5 million for the three months ended September 30, 2024. Gross margin increased from 65.8% for the three months ended September 30, 2023 to 75.6% for the three months ended September 30, 2024. The increase in gross margin was primarily a result of the change in product mix, the absence of one-time manufacturing cost by our new contract manufacturer and inventory impairment incurred in 2023.
Previous wording
Interest expense increased by $0.9 million, or 73%, from $1.1 million for the three months ended June 30, 2023 to $2.0 million for the three months ended June 30, 2024 due to an increase in interest rates and increase in debt balance.
Current wording
Interest expense increased by $0.5 million, or 46%, from $1.2 million for the three months ended September 30, 2023, to $1.7 million for the three months ended September 30, 2024 due increases in interest rates.
Previous wording
Other income, net decreased by $2.7 million from $4.2 million for the six months ended June 30, 2023 to $1.5 million for the six months ended June 30, 2024, primarily as a result of ERC of $2.9 million recorded for the
Current wording
Other income, net decreased by $0.1 million, or 19%, from $0.6 million for the three months ended September 30, 2023 to $0.5 million for the three months ended September 30, 2024, primarily as a result of decreased interest income earned on the Company’s money market accounts.
Previous wording
Total revenue for the six months ended June 30, 2024 was $33.9 million, an increase of 2% compared to the six months ended June 30, 2023 revenue of $33.2 million. During the six months ended June 30, 2024, total U.S. revenue increased by 2% and international revenue increased by 5%. The U.S. revenue growth was primarily driven by an increase in treatment sessions sales. The increase in international revenue was primarily driven by an increase in treatment session sales.
Current wording
Total revenue for the nine months ended September 30, 2024 was $52.4 million, an increase of 3% compared to the nine months ended September 30, 2023 revenue of $51.0 million. During the nine months ended September 30, 2024, total U.S. revenue increased by 3% and international revenue decreased by 1%. The increase in U.S. revenue was primarily attributable to an increase in U.S. treatment sessions sales period over period. The decrease in international revenue was primarily driven by a decrease in treatment session sales and NeuroStar Advanced Therapy System sales period over period.
Previous wording
U.S. NeuroStar Advanced Therapy System revenue for the six months ended June 30, 2024 was $7.3 million, a decrease of $1.0 million compared to the six months ended June 30, 2023 revenue of $8.3 million. For the six months ended June 30, 2024 and 2023, the Company sold 89 and 103 systems, respectively, that were recognized as NeuroStar Advanced Therapy System capital revenue during each period. Additionally, for the six months ended June 30, 2024 the Company executed 1 operating lease agreement which contributed to operating lease revenue.
Current wording
U.S. NeuroStar Advanced Therapy System revenue for the nine months ended September 30, 2024 was $11.4 million, a decrease of $0.5 million compared to the nine months ended September 30, 2023 revenue of $11.9 million. For the nine months ended September 30, 2024 and 2023, the Company sold 137 and 146 systems, respectively, that were recognized as NeuroStar Advanced Therapy System capital revenue during each period. Additionally, for the nine months ended September 30, 2024 the Company executed 1 operating lease agreement, which contributed to operating lease revenue.
Previous wording
U.S. treatment session revenue for the six months ended June 30, 2024 was $24.6 million, an increase of 7% compared to the six months ended June 30, 2023 revenue of $23.0 million. The revenue growth was primarily driven by an increase in treatment session volume and utilization over the comparative period.
Current wording
U.S. treatment session revenue for the nine months ended September 30, 2024 was $38.0 million, an increase of 5% compared to the nine months ended September 30, 2023 revenue of $36.0 million. The revenue growth was primarily driven by an increase in treatment session volume and utilization over the comparative period.
Previous wording
Cost of revenues decreased by $0.4 million, or 4%, from $9.0 million for the six months ended June 30, 2023 to $8.6 million for the six months ended June 30, 2024. Gross margin increased from 72.9% for the six months ended June 30, 2023 to 74.6% for the six months ended June 30, 2024. The increase in gross margin was primarily a result of increased sales volume of our treatment session sales resulting in a more favorable product mix and absence of one-time manufacturing cost charged in 2023 by our new contract manufacturer.
Current wording
Cost of revenues decreased by $2.0 million, or 13%, from $15.1 million for the nine months ended September 30, 2023 to $13.1 million for the nine months ended September 30, 2024. Gross margin increased from 70.4% for the nine months ended September 30, 2023 to 74.9% for the nine months ended September 30, 2024. The increase in gross margin was primarily a result of increased sales volume of our treatment session sales resulting in a more favorable product mix, absence of one-time manufacturing cost by our new contract manufacturer and inventory impairment incurred in 2023.
Previous wording
Sales and marketing expenses increased by $0.4 million, or 2%, from $23.5 million for the six months ended June 30, 2023 to $23.9 million for the six months ended June 30, 2024. The increase was primarily driven by growth in co-op marketing and bad debt expense.
Current wording
General and administrative expenses increased by $0.4 million, or 2% from $19.2 million for the nine months ended September 30, 2023 to $19.6 million for the nine months ended September 30, 2024. The increase was primarily due to an increase in legal costs and professional fees in connection with the Greenbrook Acquisition.
Previous wording
Research and development expenses decreased by $0.6 million, or 11% from $5.2 million for the six months ended June 30, 2023 to $4.6 million for the six months ended June 30, 2024. The decrease in research and development was primarily due to higher capitalization of product development costs related to certain of the Company’s software project costs.
Current wording
Research and development expenses decreased by $0.3 million, or 4%, from $7.3 million for the nine months ended September 30, 2023 to $7.0 million for the nine months ended September 30, 2024. The decrease in research and development was primarily due to higher capitalization of product development costs related to certain of the Company’s software project costs.
Previous wording
Interest expense increased by $1.4 million from $2.4 million for the six months ended June 30, 2023 to $3.8 million for the six months ended June 30, 2024 due to an increase in interest rates and debt balance.
Current wording
Interest expense increased by $1.9 million from $3.6 million for the nine months ended September 30, 2023 to $5.5 million for the nine months ended September 30, 2024 due to increases in interest rates.
Previous wording
Other income, net decreased by $2.9 million, or 82%, from $3.6 million for the three months ended June 30, 2023 to $0.7 million for the three months ended June 30, 2024, primarily as a result of ERC of $2.9 million recorded for the three months ended June 30, 2023 and decreased interest income earned on the Company’s money market accounts which was partially offset by increase in notes receivable interest.
Current wording
Other income, net decreased by $2.9 million from $4.9 million for the nine months ended September 30, 2023 to $2.0 million for the nine months ended September 30, 2024, primarily as a result of ERC of $2.9 million recorded for the nine months ended September 30, 2023 and decreased interest income earned on the Company’s money market accounts, which was partially offset by increase in notes receivable interest.
Previous wording
As of June 30, 2024, we had cash and cash equivalents of $42.6 million and an accumulated deficit of $393.8 million, compared to cash and cash equivalents of $59.7 million and an accumulated deficit of $376.1 million as of December 31, 2023. We incurred negative cash flows from operating activities of $17.0 million and $24.0 million for the six months ended June 30,2024 and 2023, respectively. We have incurred operating losses since our inception, and we anticipate that our operating losses will lessen in the near term as we adjust our sales and marketing initiatives, research and development activities and other corporate initiatives. The Company’s primary sources of capital to date have been proceeds from its IPO, private placements of its convertible preferred securities, borrowings under its credit facility, proceeds from its secondary public offering of common stock and revenues from sales of its products. As of June 30, 2024, the Company had $60.0 million of borrowings outstanding under its credit facility, which had a final maturity in March 2028. Management believes that the Company’s cash and cash equivalents as of June 30, 2024 and anticipated revenues from sales of its products are sufficient to fund the Company’s operations for at least 12 months from the issuance of these financial statements.
Current wording
As of September 30, 2024, we had cash and cash equivalents of $20.9 million and an accumulated deficit of $407.1 million, compared to cash and cash equivalents of $59.7 million and an accumulated deficit of $376.1 million as of December 31, 2023. We incurred negative cash flows from operating activities of $22.4 million and $34.2 million for the nine months ended September 30, 2024 and 2023, respectively. We have incurred operating losses since our inception, and we anticipate that our operating losses will lessen in the near term as we adjust our sales and marketing initiatives, research and development activities and other corporate initiatives. The Company’s primary sources of capital to date have been proceeds from its IPO, private placements of its convertible preferred securities, borrowings under its credit facility, proceeds from its secondary public offering of common stock and revenues from sales of its products. As of September 30, 2024, the Company had $50.0 million of borrowings outstanding under its credit facility, which has a final maturity in July 2029. Management believes that the Company’s cash and cash equivalents as of September 30, 2024 and anticipated revenues from sales of its products are sufficient to fund the Company’s operations for at least 12 months from the issuance of these financial statements.
Previous wording
If our cash and cash equivalents and anticipated revenues from sales or our products are insufficient to satisfy our liquidity requirements, we may seek to sell additional common or preferred equity or debt securities or enter into a new credit facility or another form of third-party funding or seek other debt financing. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all. It is also possible that we may allocate significant amounts of capital towards products or technologies for which market demand is lower than expected and, as a result, abandon such efforts. If we are unable to maintain our current financing or obtain adequate additional financing when we require it, or if we obtain financing on terms which are not favorable to us, or if we expend capital on products or technologies that are unsuccessful, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, or we may be required to delay the development, commercialization and marketing of our products. As of June 30, 2024, the Company was not in compliance with its minimum net product revenue covenant under the SLR Facility, see “Note 14. Debt” for further discussion. The amount of borrowing affected by this noncompliance was $60 million.
Current wording
If our cash and cash equivalents and anticipated revenues from sales or our products are insufficient to satisfy our liquidity requirements, we may seek to sell additional common equity or seek to sell preferred equity or debt securities or enter into a new credit facility or another form of third-party funding or seek other debt financing. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all. It is also possible that we may allocate significant amounts of capital towards products or technologies for which market demand is lower than expected and, as a result, abandon such efforts. If we are unable to maintain our current financing or obtain adequate additional financing when we require it, or if we obtain financing on terms which are not favorable to us, or if we expend capital on products or technologies that are unsuccessful, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, or we may be required to delay the development, commercialization and marketing of our products.
Previous wording
As of June 30, 2024, there were no significant changes to our material cash requirements as set forth in our Annual Report on Form 10-K filed with the SEC on March 8, 2024.
Current wording
As of September 30, 2024, there were no significant changes to our material cash requirements as set forth in our Annual Report on Form 10-K filed with the SEC on March 8, 2024 outside of the Company prepaying the Solar Facility in July 2024 and obtaining new financing through the Perceptive Facility. The principal payment associated with the Perceptive Facility will be paid in July 2029.
Previous wording
The following table sets forth a summary of our cash flows for the six months ended June 30, 2024 and 2023:
Current wording
The following table sets forth a summary of our cash flows for the nine months ended September 30, 2024 and 2023:
Previous wording
Net cash used in operating activities for the six months ended June 30, 2024 was $17.0 million, consisting primarily of a net loss of $17.7 million and an increase in net operating assets of $5.1 million, offset by non-cash charges of $5.8 million. The increase in net operating assets was primarily due to decreases in our accrued expenses mainly from the 2024 bonus payment accrued as of December 31, 2023, increases in our accounts receivable offset by lower inventory levels from the prior year. Non-cash charges primarily consisted of depreciation and amortization, non-cash interest expense, allowance for credit losses and share-based compensation.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2024 was $22.4 million, consisting primarily of a net loss of $31.0 million and an increase in net operating assets of $4.6 million, offset by non-cash charges of $8.8 million and a loss on extinguishment of debt of $4.4 million. The increase in net operating assets was primarily due to decreases in accrued expenses related to the final payment fee to SLR, payment of our 2024 bonus accrued as of December 31, 2023 and increases in our accounts receivable offset by lower inventory levels from the prior year. Non-cash charges primarily consisted of depreciation and amortization, loss on extinguishment related to the SLR Facility, allowance for credit losses and share-based compensation.
Previous wording
Net cash used in operating activities for the six months ended June 30, 2023 was $24.0 million, consisting primarily of a net loss of $15.4 million and an increase in net operating assets of $13.5 million, partially offset by non-cash charges of $4.9 million. The increase in net operating assets was primarily due to increases in accounts receivable, the ERC and a decrease in accrued expense. Non-cash charges consisted of depreciation and amortization, non-cash interest expense and share-based compensation.
Current wording
Net cash used in operating activities for the nine months ended September 30, 2023 was $34.2 million, consisting primarily of a net loss of $24.8 million and an increase in net operating assets of $19.3 million, partially offset by non-cash charges of $9.9 million. The increase in net operating assets was primarily due to increases in accounts receivable, the ERC and a decrease in accrued expense. Non-cash charges consisted
Previous wording
Net cash used in investing activities for the six months ended June 30, 2024 was $0.1 million, which was attributable to purchases of property and equipment and capitalized software costs, partially offset by the repayment of notes receivable.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2024 was $0.04 million, which was attributable to purchases of property and equipment and capitalized software costs, partially offset by the repayment of notes receivable.
Previous wording
Net cash used in investing activities for the six months ended June 30, 2023 was $0.8 million, which was attributable to purchase of property and equipment and capitalized software costs, partially offset by the repayment of notes receivable.
Current wording
Net cash used in investing activities for the nine months ended September 30, 2023 was $0.8 million, which was attributable to purchase of property and equipment and capitalized software costs, partially offset by the repayment of notes receivable.
Previous wording
Net Cash provided by Financing Activities
Current wording
Net Cash (used in) provided by Financing activities
Previous wording
Net cash provided by financing activities for the six months ended June 30, 2024 was $0. Net cash provided by financing activities for the six months ended June 30, 2023 was $0.4 million and primarily consisted of the additional debt net of the final payment and amendment fee paid in connection with the SLR Fourth Amendment.
Current wording
Net cash provided by financing activities for the nine months ended September 30, 2023 was $0.4 million and primarily consisted of the additional debt net of the final payment and amendment fee paid in connection with the SLR Fourth Amendment.
Previous wording
For information regarding the SLR Facility and Perceptive Facility, refer to “Note 14. Debt” and “Note 21. Subsequent Events” in Notes to Interim Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.
Current wording
For information regarding the Perceptive Facility, refer to “Note 14. Debt” in Notes to Interim Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.
Previous wording
We refer you to “Note 3. Summary of Significant Accounting Policies” and “Note 4. Recent Accounting Pronouncements” in Notes to Interim Financial Statements in Notes to Interim Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.
Current wording
We refer you to “Note 3. Summary of Significant Accounting Policies” and “Note 4. Recent Accounting Pronouncements” in Notes to Interim Financial Statements located in Part I – FINANCIAL INFORMATION, Item 1. Financial Statements.
Rearranged current paragraphs (3)
Current report — wording carried from elsewhere
In some cases, you can identify forward-looking statements by terms such as “may,” “will,” “would,” “should,” “expect,” “plan,” “design,” “anticipate,” “could,” “intend,” “target,” “project,” “contemplate,” “believe,” “estimate,” “predict,” “potential,” “outlook” or “continue” or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described in “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in our Annual Report on Form 10-K filed with the SEC on March 8, 2024.These risks and uncertainties include, without limitation, risks and uncertainties related to: the effect of the Arrangement with Greenbrook, initially announced on August 11, 2024 and approved by the Greenbrook Shareholders and Neuronetics Stockholders on November 8, 2024, on our business relationships, operating results and business generally;
Current report — wording carried from elsewhere
contract manufacturers to our customers or consolidated into pallets at our Malvern, Pennsylvania facility prior to shipment. Final installation of these systems occurs at the customer site.
Current report — wording carried from elsewhere
of depreciation and amortization, inventory impairment, non-cash interest expense and share-based compensation.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
six months ended June 30, 2023 and decreased interest income earned on the Company’s money market accounts which was partially offset by increase in notes receivable interest.