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01/11 04:03
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
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.
Total Revenue $37.3 million, an increase of 101% compared to $18.5 million in Q3 2024. The increase is primarily driven by the inclusion of Greenbrook operations following the acquisition in December 2024. On an adjusted pro forma basis, revenue increased by 11% year-over-year.
NeuroStar Business Revenue $15.5 million, a decrease of 4% year-over-year on a pro forma basis. The decline was due to the realignment of the capital team to focus on higher growth accounts and changes in customer purchasing patterns for treatment sessions.
U.S. NeuroStar System Revenue $3.5 million, with 40 systems shipped. This marked the third consecutive quarter of system ASP exceeding the target, reflecting the value of the system and its features.
U.S. Treatment Session Revenue $10.5 million. NeuroStar treatment session utilization increased by 11% year-over-year, but revenue decreased due to changes in customer purchasing patterns, leading to increased inventory levels in 2024.
U.S. Clinic Revenue $21.8 million, a 25% adjusted pro forma increase year-over-year. Growth was driven by increased treatment sessions for both NeuroStar TMS and SPRAVATO patients.
Gross Margin 45.9%, down from 75.6% in Q3 2024. The decline was due to the inclusion of Greenbrook's clinic business, which operates at a lower margin.
Operating Expenses $24.4 million, an increase of 12% compared to $21.7 million in Q3 2024. The rise was primarily due to the inclusion of Greenbrook.
Net Loss $9.4 million or $0.13 per share, compared to a net loss of $13.3 million or $0.44 per share in Q3 2024.
EBITDA Negative $6.4 million, compared to negative $11.6 million in Q3 2024.
Cash Position $34.5 million as of September 30, 2025, including $28 million in cash and cash equivalents and $6.5 million in restricted cash.
Cash Used in Operations $0.8 million, a significant improvement from $17 million in Q1, $3.5 million in Q2, and now $0.8 million in Q3. This improvement reflects better revenue cycle management, expense discipline, and operational efficiencies.
NeuroStar TMS system sales: 40 systems shipped in Q3 2025, with an average selling price above target for the third consecutive quarter.
SPRAVATO rollout: 84 of 89 eligible clinics now offering therapy, with full rollout expected by year-end.
Better Me Provider Program (BMP): 425 active BMP sites, with 100 more working towards qualification. BMP sites treat significantly more patients per quarter than non-BMP practices.
Greenbrook clinics revenue: Generated $21.8 million in Q3 2025, up 25% on an adjusted pro forma basis compared to the prior year.
NeuroStar Provider Connection program: Educated 3,000 primary care providers since April 2025, increasing awareness and referrals for NeuroStar TMS.
Partnership with Elite DNA Behavioral Health: Signed a 3-year agreement to be the sole provider of TMS systems for over 30 clinics in Florida.
Partnership with Transformations Care Network: Expanded relationship to accelerate patient treatment for 72 clinics in the Northeastern U.S.
Operational efficiencies: Implemented self-check-in kiosks in over 30 centers, improving cash collections and reducing front desk bottlenecks.
Revenue cycle management: Accelerated cash collections, collecting more cash in Q3 2025 than revenue booked.
Organizational restructuring: Eliminated overlapping responsibilities and reduced management layers to improve efficiency.
Greenbrook integration: Optimized operations to capture full value of the combined businesses, including targeted outreach campaigns and improved patient conversion rates.
Regulatory and reimbursement advancements: Filed with FDA to broaden eligible patient population and secured New York State Medicaid coverage for NeuroStar TMS therapy.
Greenbrook Integration: While the integration of Greenbrook clinics has shown progress, there are risks associated with achieving full operational efficiency and realizing the expected synergies. Overlapping responsibilities and management layers have been identified, and changes are still being implemented, which could disrupt operations.
SPRAVATO Billing and Reimbursement: The economics of SPRAVATO billing methods vary significantly by state, payer, and clinic. This variability poses challenges in optimizing profitability and could lead to financial inefficiencies if not managed carefully.
Revenue Cycle Management: Although improvements have been made, revenue cycle management remains a critical area. Accelerating collection timing and ensuring the collection of longer-aged receivables are ongoing challenges that could impact cash flow.
Operational Efficiency: Efforts to streamline operations, such as self-check-in kiosks and AI tools, are underway but require successful implementation to avoid potential disruptions in patient care and administrative processes.
Market and Competitive Pressures: The company faces competitive pressures in the mental health treatment market, particularly in expanding the NeuroStar TMS footprint and maintaining its value proposition to customers.
Regulatory and Reimbursement Risks: The company is dependent on regulatory approvals and reimbursement policies, such as the recent New York State Medicaid coverage for NeuroStar TMS. Any changes or delays in these areas could adversely affect operations.
Financial Performance and Cash Flow: Despite progress, the company is still targeting cash flow positivity. Any setbacks in operational improvements or revenue growth could delay achieving this goal.
Customer Purchasing Patterns: Changes in customer purchasing patterns for treatment sessions have impacted revenue, and further unpredictability in these patterns could pose financial risks.
Revenue Guidance: For the fourth quarter, the company expects net revenue of between $40 million to $43 million. For the full year 2025, total revenue is projected to be between $147 million and $150 million, revised from the previous guidance of $149 million to $155 million. The adjustment is primarily due to expectations around SPRAVATO Buy & Bill usage.
Gross Margin Guidance: The full-year gross margin is now expected to be between 47% and 49%, revised from the prior guidance of approximately 48% to 50%. This change is driven by a shift in the overall mix of the business.
Operating Expenses: Operating expenses for the full year are projected to remain between $100 million and $105 million.
Cash Flow Projections: The company targets positive cash flow from operations in the fourth quarter of 2025, with a projected range of between $2 million positive and $2 million negative operating cash flow. Year-end 2025 total cash, including cash, cash equivalents, and restricted cash, is expected to be in the range of $32 million to $36 million.
SPRAVATO Rollout: The SPRAVATO rollout is on track, with 84 of the 89 eligible clinics now offering the therapy. Full rollout is expected by year-end. The company has expanded the Buy & Bill billing method in several states where the economics are favorable.
NeuroStar TMS Expansion: The company finalized a 3-year agreement with Elite DNA Behavioral Health to be the sole provider of TMS systems within their network of over 30 clinics. Additionally, a partnership with Transformations Care Network, which operates 72 clinics, will expand NeuroStar's footprint and bring advanced TMS access to thousands of patients.
Operational Efficiency: The company is implementing self-check-in kiosks across its network, with full rollout expected by mid-November. These kiosks are expected to improve cash collections and operational efficiency. AI and digital forms are also being introduced to streamline the intake process.
Regulatory and Reimbursement Advancements: The company has submitted a filing to the FDA to broaden the eligible patient population for NeuroStar TMS therapy. Additionally, New York State Medicaid began covering NeuroStar TMS therapy for adults with major depressive disorder as of October 1, expanding access to over 5 million members statewide.
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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