DEFM14A: Neuronetics to Acquire Greenbrook TMS in All-Stock Transaction

Neuronetics and Greenbrook TMS have entered into an arrangement agreement for Neuronetics to acquire all outstanding common shares of Greenbrook in an all-stock transaction.

Summary

• Neuronetics and Greenbrook TMS have agreed to a business combination where Neuronetics will acquire all outstanding Greenbrook shares.
• Greenbrook shareholders will receive 0.01149 shares of Neuronetics common stock for each Greenbrook share they own, subject to certain adjustments.
• Upon completion of the arrangement, Neuronetics stockholders are expected to own approximately 57% and Greenbrook shareholders are expected to own approximately 43% of the combined company on a fully diluted basis.
• The transaction is structured as a plan of arrangement under the Business Corporations Act (Ontario).
• Both Greenbrook and Neuronetics boards have unanimously approved the arrangement.
• The deal is subject to shareholder and court approvals and is expected to close in the fourth quarter of 2024.
• Madryn Asset Management, LP, a key Greenbrook shareholder, has agreed to convert its debt into equity prior to the arrangement.
• Following the debt conversion, Madryn and its affiliates are expected to own approximately 41.0% of the Neuronetics Shares following closing of the Arrangement.

Sentiment

Score: 6

Explanation: The document is largely factual, outlining the terms of the acquisition. While the transaction itself is a positive step for the companies involved, the negative aspects such as the dilution of Greenbrook shareholder equity and the discount to Greenbrook's share price temper the overall sentiment.

Positives

• The boards of both companies unanimously support the transaction.
• The combined company is expected to benefit from a stronger balance sheet and improved financial flexibility.
• The arrangement may expand Neuronetics revenue base and diversify its stockholder base.
• The arrangement may allow Neuronetics to better operationalize Greenbrook Treatment Centers by more rapidly growing treatment session utilization and improving in-store profitability.

Negatives

• Greenbrook shareholders will experience dilution in their ownership percentage of the combined company.
• The implied consideration per Greenbrook Share in the Arrangement was $0.02, which represented a discount of 51.6% to the closing price of Greenbrook Shares of $0.04 per share on August 9, 2024.
• The arrangement will generally be a taxable transaction for Greenbrook Shareholders who are residents of Canada for purposes of the Tax Act.

Risks

• The arrangement is subject to various closing conditions, including shareholder and court approvals.
• There is a risk that the arrangement may not be completed or may be delayed.
• The pending arrangement may divert management's attention from ongoing business operations.
• The combined company may face integration challenges and may not realize the anticipated benefits of the arrangement.
• The combined company may be subject to additional federal, state and foreign fraud and abuse laws, health information privacy and security laws and transparency laws, which, if violated, could subject the combined company to substantial penalties.

Future Outlook

Assuming all conditions are met, the arrangement is expected to become effective during the fourth quarter of 2024.

Management Comments

• The board of directors of Greenbrook UNANIMOUSLY recommends that Greenbrook Shareholders vote FOR the Greenbrook Arrangement Resolution.
• The board of directors of Neuronetics UNANIMOUSLY recommends that Neuronetics Stockholders vote FOR each of the Neuronetics Proposals.

Industry Context

The transaction represents a consolidation move within the mental health treatment sector, combining two companies focused on different but complementary therapies.

Comparison to Industry Standards

• The document does not provide enough information to make a detailed comparison to industry standards.
• However, the document does list a number of comparable companies that were used in the fairness opinions.
• These companies include: Treace Medical Concepts, Inc., NeuroPace, Inc., Sight Sciences, Inc., Pulmonx Corporation, CVRx, Inc., TELA Bio, Inc., Brainsway Ltd., Outset Medical, Inc., Acadia Healthcare Company, Inc., Surgery Partners, Inc., Option Care Health, Inc., RadNet, Inc LifeStance Health Group, Inc., U.S. Physical Therapy, Inc., Pediatrix Medical Group, Inc., ATI Physical Therapy, Inc., The Joint Corp., The Oncology Institute, Inc.

Related Party Transactions

• Madryn Asset Management, LP, a key Greenbrook shareholder, has agreed to convert its debt into equity prior to the arrangement.
• The Madryn Parties have agreed to deliver conversion notices in respect of the Convertible Notes prior to the issuance of the Debt Conversion Shares.

Stakeholder Impact

• Greenbrook Shareholders will receive Neuronetics shares and will become stockholders of the combined company.
• Neuronetics Stockholders will retain their shares and will become stockholders of the combined company.
• Employees of both companies may experience changes in their roles and responsibilities.
• Customers and suppliers of both companies may benefit from the combined entity's increased scale and resources.

Next Steps

• Greenbrook Shareholders will vote on the Greenbrook Arrangement Resolution.
• Neuronetics Stockholders will vote on the Neuronetics Proposals.
• Greenbrook will apply to the Court for the Final Order.
• The Arrangement will be completed if all conditions are satisfied or waived.

Key Dates

Keywords

Neuronetics, Greenbrook TMS, acquisition, merger, arrangement, shareholders, stock, transaction, TMS, Madryn Asset Management