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01/11 04:02
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call indicates several positive developments: improved cash management, operational efficiencies, and strong adolescent patient growth. Despite a consistent net loss, the per-share loss improved, and EBITDA showed progress. The Q&A reveals strategic shifts and revenue cycle improvements, with optimistic guidance for Q4. However, some concerns remain, such as slower traditional STIM business and lack of specific targets. Overall, the positive aspects, including the potential for cash flow positivity and revenue growth, suggest a positive stock price movement.
Total Revenue $38.1 million, an 18% year-over-year increase on an adjusted pro forma basis. The increase was driven by the inclusion of Greenbrook operations following the acquisition.
NeuroStar Business Revenue $15.1 million, including NeuroStar system revenue of $3.5 million with 41 systems shipped, and U.S. treatment session revenue of $10.8 million, up 13% on a pro forma basis. Growth attributed to increased system ASP and treatment session revenue.
U.S. Clinic Revenue $23 million, the largest quarterly clinic revenue to date, representing a 23% sequential increase over the first quarter. Growth driven by operational improvements and the Greenbrook integration.
Gross Margin 46.6%, compared to 74% in the prior year quarter. The decline was due to the inclusion of Greenbrook's clinic business, which operates at a lower margin, and a higher mix of clinic revenue associated with buy and bill SPRAVATO treatments.
Operating Expenses $25.8 million, a 25% increase compared to $20.7 million in the second quarter of 2024. The increase was primarily due to the inclusion of Greenbrook's general and administrative expenses, partially offset by savings in sales and marketing expenses.
Net Loss $9.8 million or $0.15 per share, consistent with the prior year quarter's net loss of $9.8 million but improved on a per-share basis from $0.33 per share.
EBITDA Negative $7.2 million, compared to negative $8 million in the prior year quarter. Improvement attributed to operational efficiencies and cost management.
Cash Used in Operations $3.5 million, better than the previously guided target of under $5 million and a significant improvement from $17 million in the first quarter. Improvement driven by better cash management and operational efficiencies.
Adolescent Patient Growth 25% growth in adolescent new patient starts in the first half of 2025 compared to 2024, supported by expanded insurance coverage and increased awareness.
NeuroStar system revenue: $3.5 million with 41 systems shipped, demonstrating value in a competitive market.
SPRAVATO rollout: 77 of 83 eligible clinics now offering therapy, with full rollout expected by year-end.
Adolescent treatment growth: 25% growth in adolescent new patient starts in the first half of 2025 compared to 2024, supported by expanded insurance coverage.
Greenbrook growth strategy: Achieved $23 million in U.S. clinic revenue, the strongest quarterly performance to date, driven by enhanced patient connection capabilities and regional account manager program.
Provider Connection Program: Expanded outreach to primary care physicians and other healthcare providers, resulting in increased referrals to NeuroStar accounts and BMP providers.
Operational efficiencies: Implemented self-check-in kiosks at 11 locations, improving patient flow and reducing staff workload.
Cash collections optimization: Addressed legacy payer issues, reduced claim rejections, and improved cash flow reliability.
Greenbrook integration: Exceeded expectations with operational standardization and enhanced patient conversion rates.
SPRAVATO buy and bill model: Adopted an analytical approach to expansion, focusing on opportunities with good margins.
Greenbrook Operations Optimization: Challenges in optimizing the efficiency of Greenbrook operations post-acquisition, requiring fine-tuning and operational standardization.
SPRAVATO Reimbursement Landscape: Navigating a complex and inconsistent reimbursement landscape for SPRAVATO, with payers reimbursing at significantly different rates and timings, impacting margins and cash flow.
Operational Efficiencies: Need for further operational efficiencies and cost savings across the Greenbrook network, including reliance on consultants to identify optimization opportunities.
Cash Collections: Legacy issues with payers, including prepayment audits and incorrect billing submissions, leading to delays and challenges in cash collections.
Gross Margin Pressure: Lower gross margins due to the inclusion of Greenbrook's clinic business and the mix of SPRAVATO buy and bill revenue, which operates at a lower margin.
Increased Operating Expenses: Higher operating expenses due to the integration of Greenbrook's general and administrative costs and the need to augment critical areas like claims collections.
Financial Liquidity: Dependence on external funding, including debt agreements, to maintain liquidity and support operations, with minimum liquidity requirements increasing in 2026.
Revenue Guidance: For the third quarter of 2025, the company expects net revenue to be between $37 million and $39 million. For the full year 2025, total revenue is projected to be between $149 million and $155 million.
Gross Margin Guidance: Full-year gross margin is expected to be between 48% and 50%, revised from the prior guidance of approximately 55%. The change is attributed to a higher mix of clinic revenue and the SPRAVATO buy and bill model, which carries a lower gross margin.
Operating Expenses: Operating expenses for the full year 2025 are projected to be between $100 million and $105 million, reflecting adjustments for Greenbrook integration and strategic investments in claims collections and operational capabilities.
Cash Flow Projections: The company targets cash flow from operations to range from negative $3 million to breakeven in Q3 2025, turning positive in Q4 2025. Year-end 2025 total cash, including restricted cash, is projected to be between $25 million and $28 million.
SPRAVATO Rollout: The company plans to complete the rollout of SPRAVATO across all eligible clinics by the end of 2025. The buy and bill model will be expanded selectively to maximize profitability.
Adolescent Patient Growth: Neuronetics aims to continue driving growth among adolescent patients, supported by expanded insurance coverage and clinical data demonstrating the effectiveness of NeuroStar TMS in this demographic.
Operational Improvements: The company plans to implement further operational efficiencies, including a full network rollout of self-check-in kiosks and additional cost-saving measures identified through a consultant review.
The selected topic was not discussed during the call.
Despite record revenue growth and improved cash flow, the stock may not experience significant movement due to lowered gross margin guidance and unchanged operational efficiencies. Although Q4 guidance is optimistic, the market may remain cautious due to uncertainties in purchasing patterns and margin pressures. The Q&A session revealed confidence in growth segments but lacked detailed operational efficiency metrics, contributing to a neutral sentiment.
The earnings call indicates several positive developments: improved cash management, operational efficiencies, and strong adolescent patient growth. Despite a consistent net loss, the per-share loss improved, and EBITDA showed progress. The Q&A reveals strategic shifts and revenue cycle improvements, with optimistic guidance for Q4. However, some concerns remain, such as slower traditional STIM business and lack of specific targets. Overall, the positive aspects, including the potential for cash flow positivity and revenue growth, suggest a positive stock price movement.
The earnings call presents mixed signals: strong revenue growth and optimistic guidance are offset by risks related to integration, regulatory scrutiny, and increased expenses. The Q&A reveals management's confidence in BMP and SPRAVATO growth, but also highlights concerns about cash flow and operational integration. The lack of a shareholder return plan and widening losses further weigh on sentiment. With a narrowed guidance and no major catalysts, the stock is likely to remain neutral, with fluctuations within -2% to 2%.
Despite the strong revenue growth and optimistic guidance, the earnings call highlights several concerns: declining gross margins, increased operating expenses, and significant cash burn. The public offering raises capital but may dilute shareholder value. The Q&A session reveals unclear management responses, particularly regarding revenue mix and capital outlay, raising investor concerns. The market reaction is likely to be neutral, as positive revenue growth is offset by these concerns and uncertainties. The lack of market cap information limits the assessment of stock sensitivity, but overall sentiment remains balanced.
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