8-K: Neuronetics Reports Q3 Growth, Lowers 2025 Outlook Amid CEO Transition

Neuronetics, Inc. announced strong third-quarter revenue growth driven by its Greenbrook acquisition, but revised down its full-year 2025 guidance and revealed CEO Keith J. Sullivan's planned retirement.

Summary

• Total revenue for Q3 2025 reached $37.3 million, marking a 101% increase compared to Q3 2024 on an unadjusted basis, and an 11% increase on an adjusted pro forma basis.
• U.S. Greenbrook clinic revenue was $21.8 million in Q3 2025, representing 25% growth on an adjusted pro forma basis year-over-year.
• U.S. NeuroStar Advanced Therapy System revenue decreased by 15% to $3.5 million in Q3 2025, with 40 systems shipped.
• U.S. treatment session revenue declined by 21% to $10.5 million in Q3 2025, primarily due to the absence of $2.2 million in revenue from Greenbrook and changes in customer purchasing patterns.
• Gross margin for Q3 2025 was 45.9%, down from 75.6% in Q3 2024, mainly due to the inclusion of Greenbrook's clinic business.
• Net loss improved to $(9.4) million, or $(0.13) per share, in Q3 2025, compared to $(13.3) million, or $(0.44) per share, in Q3 2024.
• Cash used in operations for Q3 2025 was $0.8 million, indicating continued improvement in operating cash flow.
• The company ended Q3 2025 with $34.5 million in total cash, an increase from $19.5 million at December 31, 2024.
• CEO Keith J. Sullivan announced his intention to retire on June 30, 2026, with a search for his successor underway; he will remain as a consultant for a seamless transition.
• Neuronetics secured an additional $10 million in funding under its debt agreement with Perceptive and extended its $2 million minimum liquidity requirement to September 2026.
• The company raised approximately $7.8 million in net proceeds through an at-the-market (ATM) equity offering.
• New York State Medicaid expanded coverage for TMS therapy, including NeuroStar Advanced Therapy, for Major Depressive Disorder, effective October 1, 2025, for fee-for-service and November 1, 2025, for managed care plans.

Sentiment

Score: 6

Explanation: The sentiment is moderately positive. While the company demonstrated strong revenue growth (adjusted pro forma) and improved cash management, the lowered full-year guidance for both revenue and gross margin, coupled with the upcoming CEO transition, introduces some uncertainty. The expansion of Medicaid coverage and additional funding are strong positives, but the core NeuroStar system and treatment session revenue declines are concerning.

Positives

• Total revenue increased by 101% year-over-year to $37.3 million in Q3 2025, driven by the Greenbrook acquisition.
• Adjusted pro forma revenue growth was 11% in Q3 2025, demonstrating organic growth post-acquisition.
• U.S. Greenbrook clinic revenue showed strong adjusted pro forma growth of 25% to $21.8 million.
• Net loss significantly narrowed to $(9.4) million in Q3 2025 from $(13.3) million in Q3 2024.
• Cash used in operations improved to $0.8 million in Q3 2025, validating operational initiatives.
• Total cash balance strengthened to $34.5 million as of September 30, 2025, up from $19.5 million at year-end 2024.
• Secured an additional $10 million in funding from Perceptive, with eligibility for another $5 million.
• Extended the $2 million minimum liquidity requirement from September 2025 to September 2026.
• Raised $7.8 million in net proceeds from an at-the-market equity offering, enhancing liquidity.
• New York State Medicaid expanded coverage for TMS therapy, including NeuroStar, for MDD, increasing market access for over 5 million members.

Negatives

• Full-year 2025 total worldwide revenue guidance was lowered to $147 million $150 million from the previous $149 million $155 million.
• Full-year 2025 gross margin guidance was lowered to 47% 49% from the previous 48% 50%.
• U.S. NeuroStar Advanced Therapy System revenue decreased by 15% to $3.5 million in Q3 2025.
• U.S. treatment session revenue decreased by 21% to $10.5 million in Q3 2025, and 5.1% on a pro forma basis.
• Gross margin significantly decreased to 45.9% in Q3 2025 from 75.6% in Q3 2024, primarily due to the Greenbrook clinic business inclusion.

Risks

• The effect of the transaction with Greenbrook on business relationships, operating results, and business generally.
• Ability to execute business strategy and achieve or sustain profitable operations due to a history of losses.
• Reliance on the sale and usage of NeuroStar Advanced Therapy System to generate revenues.
• The scale and efficacy of the salesforce and ability to retain talent.
• Availability of coverage and reimbursement from third-party payors for treatments using products.
• Physician and patient demand for treatments using products.
• Developments in competing technologies and therapies for the indications that products treat.
• Product defects and revenue concentration among a small number of customers.
• Ability to obtain and maintain intellectual property protection for 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, and potential effects of evolving government regulation.
• The terms of the credit facility.
• Ability to successfully roll-out the Better Me Provider Program on the planned timeline.
• Self-sustainability and existing cash balances.
• Ability to achieve cash flow breakeven in the fourth quarter of 2025.

Future Outlook

The company expects total worldwide revenue for Q4 2025 to be between $40 million and $43 million. For the full year 2025, total worldwide revenue is now projected between $147 million and $150 million, a reduction from previous guidance. Gross margin for full year 2025 is also revised down to 47% to 49%. Operating expenses are expected to remain between $100 million and $105 million. The company continues to target positive cash flow from operations in Q4 2025, with a range of $2 million positive to $2 million negative, and projects year-end 2025 total cash between $32 million and $36 million.

Management Comments

• "Our third quarter results reflect continued progress as we integrate and optimize our combined operations." Keith Sullivan, President and Chief Executive Officer.
• "On an adjusted pro forma basis, we delivered 11% revenue growth, with particularly strong performance from our Greenbrook clinics." Keith Sullivan, President and Chief Executive Officer.
• "We are finding opportunities to improve efficiency across both the Greenbrook clinic network and NeuroStar business, taking advantage of our combined scale, which is driving meaningful progress toward cash flow positivity." Keith Sullivan, President and Chief Executive Officer.
• "The momentum we're building gives us confidence in our ability to deliver value for both patients and shareholders." Keith Sullivan, President and Chief Executive Officer.
• "Keith has been instrumental in transforming Neuronetics in his five years as CEO. In particular, the strategic acquisition of Greenbrook TMS has vertically integrated the Company's value chain and positioned the Company well for long-term growth." Rob Cascella, Chairman of the Board.

Industry Context

The expansion of New York State Medicaid coverage for TMS therapy, including NeuroStar Advanced Therapy, for Major Depressive Disorder signifies a growing recognition and acceptance of non-drug, non-invasive treatments for mental health conditions. This trend is favorable for companies like Neuronetics, which are vertically integrated to provide both the therapeutic device and treatment services. The strategic acquisition of Greenbrook TMS positions Neuronetics to capitalize on increased access and demand for advanced neurohealth therapies, aligning with broader industry efforts to offer more comprehensive and accessible mental health solutions.

Comparison to Industry Standards

• The filing does not provide specific comparable companies, projects, or results to assess performance against global benchmarks.

Management Changes

Stakeholder Impact

• Shareholders: Mixed impact due to strong Q3 growth and improved cash position, but tempered by lowered full-year guidance and the uncertainty of a CEO transition.
• Patients: Positive impact from expanded New York State Medicaid coverage for TMS therapy, increasing access to NeuroStar Advanced Therapy for Major Depressive Disorder.
• Employees: Potential uncertainty due to the upcoming CEO transition, but Mr. Sullivan's consultancy aims for a seamless leadership change.
• Creditors (Perceptive): Positive impact from the company meeting revenue conditions for additional funding and the extension of liquidity requirements, indicating improved financial stability.
• Customers (Greenbrook clinics and BMP providers): Continued focus on integration, operational efficiency, and support programs like Better Me Provider Program and centralized call center.

Next Steps

• Continue the search for Keith J. Sullivan's successor as President and Chief Executive Officer.
• Keith J. Sullivan will remain as a consultant after his retirement to ensure a seamless transition.
• Continue to roll out SPRAVATO to more treatment centers, aiming for 89 centers by the end of Fiscal 2025.
• Expand referral networks for the 420+ Better Me Provider (BMP) Clinics, with 100 additional sites committed to the program.
• Continue implementation of fully optimized digital/direct-to-consumer investment benefiting patients and BMP practices.
• Expand services to existing customers through a centralized call center to manage patient inquiries more efficiently.

Key Dates

Recommendation

The company presents a mixed bag of results and forward-looking statements. While the significant revenue growth (driven by the Greenbrook acquisition) and improved cash flow from operations are positive, the downward revision of full-year revenue and gross margin guidance introduces caution. The upcoming CEO transition, while planned, adds an element of uncertainty. The expansion of Medicaid coverage is a strong long-term positive for market access. Given these factors, a 'hold' recommendation is appropriate, allowing investors to observe the execution of the revised guidance and the transition to new leadership before making further investment decisions.

Keywords

Neuronetics, NeuroStar, TMS therapy, Greenbrook, mental health, depressive disorder, MDD, medical technology, SEC filing, financial results, CEO retirement, capital raise, Medicaid coverage