Neuronetics Q4 2024 Earnings Report

Neuronetics EPS Results

• Actual EPS: N/A
• Consensus EPS: -$0.26
• Beat/Miss: N/A
• One Year Ago EPS: N/A

Neuronetics Revenue Results

• Actual Revenue: N/A
• Expected Revenue: $18.98 million
• Beat/Miss: N/A
• YoY Revenue Growth: N/A

Neuronetics Announcement Details

• Quarter: Q4 2024
• Date: 3/4/2025
• Time: Before Market Opens
• Conference Call Date: Tuesday, March 4, 2025
• Conference Call Time: 8:30AM ET

Neuronetics (NASDAQ:STIM), a commercial stage medical technology company, designs, develops, and markets products for patients with neurohealth disorders in the United States and internationally. The company offers NeuroStar Advanced Therapy System, a non-invasive and non-systemic office-based treatment to treat adult patients with major depressive disorder. Its NeuroStar Advanced Therapy System uses transcranial magnetic stimulation to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The company sells its products through its sales and customer support team to psychiatrists. The company was incorporated in 2001 and is headquartered in Malvern, Pennsylvania.

Neuronetics Q4 2024 Earnings Call Transcript

Key Takeaways

• Total Q4 revenue of $22.5 million (up 11% YoY) included $3.8 million from NeuroStar systems (46 shipped), $12.9 million in U.S. treatment sessions and $4.4 million from Greenbrook clinics.
• The Greenbrook acquisition created a vertically integrated provider network, realized over 90% of the targeted $22 million in annualized cost synergies and positions the company to be cash-flow positive by Q3 2025.
• Neuronetics’ Better Me provider program has expanded to 350 sites, delivering a 36% increase in patient volume, tripling patients treated per site per quarter and reducing time to care by 2.2×, with plans for 500 sites by year-end 2025.
• FDA clearance of NeuroStar as the first TMS therapy for adolescents (ages 15–21) drove a 10% rise in new patient starts, a 78% clinical improvement rate and an 18% increase in sites treating adolescents.
• 2025 guidance calls for revenue of $145–155 million, gross margin of ~55%, operating expenses of $90–98 million, Q1 revenue of $28–30 million and cash-flow breakeven in Q3.

Presentation

[Operator]

Good day and thank you for standing by. Welcome to the Neuronetics Fourth Quarter twenty twenty four Financial and Operating Results Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there will be a question and answer session.

[Operator]

Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Mark Klosner. Please go ahead.

[Mark Klausner, Investor Relations at Neuronetics]

Good morning, and thank you for joining us for the Neuronetics Fourth Quarter twenty twenty four Conference Call. Joining me on today's call are Neuronetics President and Chief Executive Officer, Keith Sullivan and Chief Financial Officer, Steve Furlong. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance, the Greenbrook acquisition and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics' business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10 ks, which will be filed later this month.

[Mark Klausner, Investor Relations at Neuronetics]

The company disclaims any obligation to update any forward looking statements made during the course of this call, except as required by law. During the call, we'll also discuss certain information on a non GAAP basis, including EBITDA. Management believes that non GAAP financial information taken in conjunction with U. S. GAAP financial measures provide useful information for both management and investors by excluding certain non cash and other expenses that are not indicative of trends in our operating results.

[Mark Klausner, Investor Relations at Neuronetics]

Management uses non GAAP financial measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliations between U. S. GAAP and non GAAP results are presented in the tables accompanying our press release, which can be viewed on our website. With that, it's my pleasure to turn the call over to Neuronetics' President and Chief Executive Officer, Keith Sullivan.

[Keith Sullivan, President and CEO at Neuronetics]

Thanks for the introduction, Mark. Good morning, everyone, and thank you for joining us today. I'll begin by providing an overview of our recent performance and key accomplishments in 2024. Steve will review our financial results and I'll conclude with some thoughts on 2025 before turning to Q and A. Let me start with our performance in the quarter, which includes nearly one month of Greenbrook operations.

[Keith Sullivan, President and CEO at Neuronetics]

Total revenue was $22,500,000 an increase of 11% over the fourth quarter of twenty twenty three. During the quarter, NeuroStar system revenue was $3,800,000 with 46 systems shipped. U. S. Treatment session revenue was $12,900,000 and U.

[Keith Sullivan, President and CEO at Neuronetics]

S. Clinic revenue, which represents Greenbrook revenue, was $4,400,000 reflecting a solid quarter for the company and continued positive momentum. 2024 was truly a transformative year for Neuronetics, marked by a number of significant achievements, which include number one, transforming our business to become a vertically integrated mental health care provider through the acquisition of Greenbrook TMS second, significantly expanding our Better Me provider program based on its tremendous success third, securing an FDA clearance for the NeuroStar system to treat adolescent patients, making NeuroStar the first and only TMS option available to treat this underserved patient population fourth, refinancing our debt facility to provide more financial flexibility and strength to our balance sheet and fifth, although a 2025 event, we further strengthened our balance sheet to support our growth trajectory with our recent $18,900,000 capital raise. Steve and I will be discussing each of these achievements during our prepared remarks today. I'd like to begin by reviewing the success of the BMP program.

[Keith Sullivan, President and CEO at Neuronetics]

This program is establishing a nationwide network of accounts that follow patient care and responsiveness standards that were developed in collaboration with expert TMS clinicians aimed at delivering timely and consistent care to those who need it most. The program was piloted within a select group of customer sites in 2023 and the first half of twenty twenty four. Based on the success of the pilot, we began the process of a nationwide rollout in July of twenty twenty four, expanding participation to over three fifty sites. Demand to participate in the BMP program remains strong. There are currently more than 125 additional sites committed to the program that are actively working to achieve the five standards prior to the next enrollment date of 04/15/2025.

[Keith Sullivan, President and CEO at Neuronetics]

Through a combination of an increased number of training classes through NeuroStar University and in forced adherence to our best practices, this program has been a massive success. When practices begin to implement the program standards, their patient volume on average increases by 36% simply by providing a timely response to patients by a staff member that have the knowledge to educate patients about the benefits of the NeuroStar therapy. Once practices are fully in the BMP program, they are treating three times more patients per site per quarter than practices who are not in the program. On average, these sites went from treating three patients per quarter to over 10 patients per quarter. In addition, customer sites who participate in the BMP program are addressing patients in need materially faster, roughly 2.2 times faster when comparing results of 2024 versus 2023.

[Keith Sullivan, President and CEO at Neuronetics]

The outcomes demonstrated by BMP validate the benefits of our model for teaching practices how to better serve their patients with NeuroStar. Another milestone achieved during 2024 was our acquisition of Greenbrook TMS. As our largest customer for many years, we intimately understood their business and saw a unique opportunity to combine two leading TMS companies, creating an organization with the scale and expertise to revolutionize mental health care in The U. S. This combination makes Neuronetics a leading TMS supplier and provider in The United States.

[Keith Sullivan, President and CEO at Neuronetics]

By combining our innovative technology platform, proven training process and the BMP program with Greenbrook's established treatment center network, we are positioned to expand patient access to life saving mental health treatments, while improving our growth and financial position. Our integrated network now serves a broader patient population, while maintaining exceptional care standards across markets. An exciting acquisition benefit is our ability to implement BMP lessons across the entire Greenbrook network. We have a clear roadmap to enhance operational efficiency and patient care by implementing BMP's comprehensive standards and workflows at Greenbrook's existing sites. We view these implementations along with a number of other Greenbrook commercial initiatives as key growth drivers for 2025.

[Keith Sullivan, President and CEO at Neuronetics]

Beyond growth opportunities, we have identified significant cost synergies across both organizations. By the end of twenty twenty four, we captured over 90% of the identified $22,000,000 in annualized cost synergies, surpassing initial targets. Combined with ongoing cost structure optimization, these synergies will create a more efficient organization and give us confidence in becoming cash flow positive in the third quarter of twenty twenty five. Further strengthening our market position in March of twenty twenty four, NeuroStar received FDA clearance as the first and only TMS treatment approved as a first line therapy for depression in adolescents aged 15 to 21. Real world data showed seventy eight percent of adolescent patients achieved clinically meaningful improvement.

[Keith Sullivan, President and CEO at Neuronetics]

This milestone expands our total addressable market for major depressive disorder. We have quickly gained traction with wins in adolescent insurance coverage, making it easier for adolescents to qualify for treatment. Treatment sessions volume ramped up throughout 2024, yielding 10% growth in new patient starts versus 2023. Since clearance, we have seen an 18% increase in customer sites treating adolescent patients, which now includes more than half of our customer base. The increase in insurance coverage positions us for continued growth in this segment through 2025.

[Keith Sullivan, President and CEO at Neuronetics]

'20 '20 '4 was about building a stronger, more integrated Neuronetics. Through our successful Better Me provider program, expanding our market opportunity with the Adolescent Clearance and the strategic Greenbrook acquisition, we have created multiple growth drivers that work in tandem, while at the same time strengthening our balance sheet. These factors position us for accelerated, sustainable and profitable expansion in 2025. I'll now turn the call over to Steve to review the financial results.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Thank you, Keith. Unless otherwise noted, all performance comparisons are being made for the fourth quarter of twenty twenty four versus the fourth quarter of twenty twenty three. Total revenue was $22,500,000 an increase of 11% over prior year revenue of $20,300,000 U. S. NeuroStar advanced therapy system revenue was $3,800,000 and we shipped 46 systems in the quarter.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

U. S. Treatment session revenue was $12,900,000 a decrease of 14% year over year, primarily due to the removal of Greenbrook treatment session revenues from this revenue line subsequent to the acquisitions close. U. S.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Clinic revenue at $4,400,000 representing Greenbrook's revenues subsequent to the acquisition. Gross margin was 66.2% compared to 77.6% in the prior year quarter, down eleven forty basis points from the prior year. The decrease in gross margin was primarily a result of the inclusion of the Greenberg Clinic business. Operating expenses during the quarter were $25,800,000 an increase of $5,600,000 or 28% compared to $20,200,000 in the fourth quarter of twenty twenty three. The increase was mainly attributable to professional fees incurred on acquisition and the inclusion of Greenbrook's expenses subsequent to the acquisition.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

During the quarter, we incurred approximately $1,300,000 of non cash stock based compensation expense. Net loss for the fourth quarter was $12,100,000 or $0.33 per share as compared to a net loss of $5,400,000 or $0.19 per share in the prior year quarter. EBITDA was negative $10,500,000 as compared to negative $3,000,000 in the prior year quarter. EBITDA in the fourth quarter includes approximately $10,600,000 in non recurring expenses. Most of these expenses were associated with the close of the Greenbrook acquisition.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Excluding these expenses, EBITDA would have been positive $100,000 for the quarter. As of 12/31/2024, cash and cash equivalents were $18,500,000 This compares to cash and cash equivalents of $59,700,000 as of 12/31/2023. In July, we secured a debt facility of up to $90,000,000 with Perceptive Advisors, fifty million dollars of which we accessed in July to fully repay our SLR Capital Partners term loan and $10,000,000 of which we accessed in December to further support our combined enterprises operations. After the end of the year, we successfully completed the public offering raising $18,900,000 in net proceeds, strengthening our balance sheet and providing additional flexibility to execute on our growth strategy. This financing gives us incremental flexibility, allowing us to potentially accelerate high return initiatives like our buy and build program, Force Provado, expand our Beta Me provider program implementation and enhance our market analytics capabilities.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

This additional capital positions us to pursue these value creating programs, while maintaining both a strong balance sheet and cash flow breakeven in the third quarter of twenty twenty five. Now turning to guidance. For the first quarter, we expect revenue of $28,000,000 to $30,000,000 We expect full year revenue in the range of $145,000,000 to $155,000,000 This compares to pro form a combined revenue of $129,800,000 in 2024. For the full year 2025, we expect gross margin to be approximately 55% as a result of the inclusion of the Greenbrook Clinic business. We expect total operating expenses for the full year to be in the range of $90,000,000 to $98,000,000 Regarding Change Healthcare, the disruptions experienced throughout 2024 are largely behind us.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

We have successfully implemented alternative processing solutions and restored normal operations. While this created some headwinds in 2024, we do not anticipate any material impact on our revenue in 2025, positioning us well for efficient processing going forward. I would now like to turn the call back over to Keith.

[Keith Sullivan, President and CEO at Neuronetics]

Thanks, Steve. Let me leave you with some key thoughts on our path forward. As we enter 2025, we have two clear strategic priorities that will drive our growth. First, we are focused on rapidly scaling our Better Me provider program across our customer base. The program's proven success and accountability and accountability measures across both our existing customers and Greenbrook sites, aiming for similar performance improvements throughout our entire network. We have two action items for 2025 for the BMP program.

[Keith Sullivan, President and CEO at Neuronetics]

First, we have directed our practice development manager team towards increasing the number of BMP accounts. We currently have three fifty sites in the program. Another 127 locations are working to enter it. On an average, each of these new sites needs to meet an additional two standards to qualify. By year end, we expect to have over 500 sites in the program or nearly half of our customer base.

[Keith Sullivan, President and CEO at Neuronetics]

We will focus training and marketing on these sites to help patients searching for non drug alternative for their depression find our providers. Second, our capital team will focus on selling additional systems to our BMP sites as those sites grow and need more capacity. In addition to our BMP program, we are executing our Greenbrook growth strategy with a focus on revenue capture. We have identified several opportunities to drive growth over the next several years. I'll focus on three.

[Keith Sullivan, President and CEO at Neuronetics]

First, we are optimizing our regional account manager team. In mid November, we held a training session for this team at NeuroStar University, where we rolled out new messaging to educate potential referring physicians on the benefits Greenbrook can offer their patients who have failed multiple antidepressants. We have created an automated patient transfer process combining educational tools, QR codes, our intake team and TMS and SPIRVATO coordinators. This allows us to connect with patients while they are still at their physician's office rather than requiring a follow-up contact. It is now a seamless and simple process.

[Keith Sullivan, President and CEO at Neuronetics]

Second, we are nearly 40% through the SPRAVATO buy and bill rollout of our clinics. From just seven locations in December, we now have over 35 clinics utilizing this billing method, which provides access to more payers and improves revenue threefold over the administer and observe method of billing. We will offer buy and bill SPRAVATO in most Greenbrook clinics by the end of twenty twenty five. Finally, we are standardizing operations at Greenbrook across all 95 clinics. We have placed patient coordinators who educate the patients on the benefits of TMS and SPRAVATO back in most clinics for in person consultations, knowing patients feel more comfortable when they can see and experience our centers.

[Keith Sullivan, President and CEO at Neuronetics]

We will continue to train to provide a consistent patient experience across all Greenbrook locations. With our combined five fifty plus clinics across 49 states by year end, which is comprised of 95 Greenbrook clinics and our anticipated over 500 BMP practices, we will have a network of clinics that will provide exceptional care with a wide geographic coverage. The broad geographic coverage, in-depth market analytics and combined QR code deployment have already improved patient referral process, reducing referral to treatment time by approximately 40%. From a profitability perspective, we have a clear path to being cash flow positive in the third quarter of this year. Our enhanced scale, proven practice optimization program and strengthened balance sheet gives us confidence that we will build sustainable long term value for our shareholders.

[Keith Sullivan, President and CEO at Neuronetics]

We look forward to updating you on the progress in the coming quarters as we work to transform our business and patient care. With that, I'd like to open the line for questions.

[Operator]

Thank

[Operator]

And our first question is going to come from the line of William Polnovich with Canaccord Genuity. Your line is open. Please go ahead.

[Bill Plovanic, Managing Director & Equity Research Medical Technology Analyst at Canaccord Genuity - Global Capital Markets]

Great. Thanks. Good morning and thanks for taking my questions. I just want to start out with just on Greenbrook. It's been about eighty days now, I think since the merger.

[Bill Plovanic, Managing Director & Equity Research Medical Technology Analyst at Canaccord Genuity - Global Capital Markets]

You talk about implementing the BMP and standardizing. Where are you and you say by year end, but you're already three months into this. Number one, how much longer before at least all the basics are in place and implemented? And then number two, kind of what have you seen in terms of standardization in those sites and kind of the return on that in terms of patient flow and what have you?

[Keith Sullivan, President and CEO at Neuronetics]

Good morning, Bill. This is Keith. We have conducted training on as we've mentioned in the script on the for the Rams. We've also had several trainings for the technicians that are in the clinics. And we have done, Doctor.

[Keith Sullivan, President and CEO at Neuronetics]

Grammer has done education of the providers. So we are we see the changes as continuing on throughout the year. And as we identify opportunities to improve the efficiencies, we will continue to conduct these trainings. They've all been virtual with the exception of the Rams. So it's really an easy system for us to implement.

[Bill Plovanic, Managing Director & Equity Research Medical Technology Analyst at Canaccord Genuity - Global Capital Markets]

Okay. And then for Steve, in terms of the guidance, first on revenue, the $145,000,000 to $155,000,000 just what kind of how are you looking at it? How much of this needs to work to hit those numbers? Like what's the spread between the low end and the high end and kind of what works or what yields you need to see off a lot of these programs to get there? And is there upside if this is done earlier or better than expected?

[Bill Plovanic, Managing Director & Equity Research Medical Technology Analyst at Canaccord Genuity - Global Capital Markets]

And then on the OpEx side, just if I use the $6,600,000 in one time charges in the fourth quarter on the OpEx you had, that gets me to $19,000,000 and change or maybe an $80,000,000 run rate versus the guide in $90,000,000 to $98,000,000 Just wondering where the investments are going there, that incremental amount? Thanks.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Hi, Bill, it's Steve. I think the best way to look at the guidance range of $145,000,000 to $155,000,000 is $65,000,000 to $70,000,000 is earmarked from standalone neuroinetics with $80,000,000 to $85,000,000 being earmarked from Greenberg TMS. In terms of variables within those numbers, I would say we don't have to be heroic to hit those numbers, but the programs that we're putting in place do need to continue to work. So we are forecasting growth on the Neuronetics side, primarily driven by the continued success of our BNP program. And on the Greenberg side, it's really the three growth drivers that we discussed.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

It's improving utilization in the NeuroStar Chairs within the Greenbrook Clinic. It's the continued rollout of SPRAVATO to as many clinics as it makes sense. Obviously, some clinics don't have the population to support SPRAVATO. And then the conversion from administer and observe to buy and bill. And so, we do have plans for all four of those initiatives throughout 2025 and they are all considered as part of our guidance.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

In terms of OpEx, the one time charges in Q4 were actually closer to $10,000,000 We did have a $4,000,000 software capitalization impairment charge. If I look at our OpEx normalized, it was close to $75,000,000 or so. But then when I factor in Greenberg's operating expenses, which are primarily their corporate expenses to support the individual clinics, I do come up really with a starting point around $108,000,000 entering into 2025 and that is without the synergies that we have identified. If you look at the $90,000,000 to $98,000,000 guidance, it's a midpoint of $94,000,000 so that would imply somewhere between $13,000,000 and $15,000,000 of cost synergies on the operating expense side, which is what we're forecasting. And as a reminder, greater than 90% of those cost savings have already been realized as we enter 2025.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

So there's no risk in that number at this point.

[Bill Plovanic, Managing Director & Equity Research Medical Technology Analyst at Canaccord Genuity - Global Capital Markets]

Thanks for taking my questions.

[Keith Sullivan, President and CEO at Neuronetics]

Thank you, Bill.

[Operator]

Thank you. And one moment as we move on to our next question. Our next question comes from the line of Max Krasinski with William Blair. Your line is open. Please go ahead.

[Max Kruszeski, Equity Research Associate at William Blair]

Hey, good morning guys. It's Max on for Margaret. I was just hoping you guys could touch on the margin profile of the green book a little bit. Core NeuroStar gross margin floated around 75% in the past and now with the guide down to 55% in 2025, Can you guys just speak to any leverage you can pull whether it be in 2025 or beyond to maybe help improve the margin profile a bit? Thanks.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Good question, Max. Yes. So there's definitely opportunities for improvement. And so when we look at margins, again, consolidated Neuronetics margins were about 77%. Our operating and manufacturing teams have been able to take out costs out of the NeuroStar for the past couple of years.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

And the margins on NeuroStar are actually approaching about 60%. On the treatment session side, again, it's really just a computer code, but there are some ancillary items that accompany the treatment sessions. And so their net margin is about 97.5. To your point, the clinic margins during 2024 for Greenbrook were in the 2728% range. The implied guidance for 2025 is actually to have those margins improve to the mid-30s, so 35%.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

And the primary driver of that were the elimination of 35 clinics during 2024. And they were the most underperforming clinics, which were dragging down the margins. And so if I look at my 77% and their 35% margins, that's how we get to the 55% consolidated. And we will continue to work on both sides to improve our NeuroStar margins as well as the clinic margins as we work through '25.

[Max Kruszeski, Equity Research Associate at William Blair]

That's helpful. Thanks. And then just on Greenbrook, would it be fair to say that the 95 accounts you guys are in now are your most productive accounts? And if not, what percentage of these accounts would you say are the most productive? And do you have any plans to bring this number down further?

[Max Kruszeski, Equity Research Associate at William Blair]

And then just a quick follow-up to that is, how many of those accounts is SPRAVATO currently in? That's it for me. Thanks for taking the questions.

[Keith Sullivan, President and CEO at Neuronetics]

Okay, Max. Currently, we are at 95 clinics and our plan is to stay there. They are the most profitable clinics that Greenbrook had. And we have looked at each one of those to see if we can make an impact on them and grow them this year. So we're very comfortable at 95 clinics.

[Keith Sullivan, President and CEO at Neuronetics]

And we don't have a plan to expand. We're going to focus on the ones that we currently have. SPRAVATO. And in for SPRAVATO, we have 63 of our clinics that are offering SPRAVATO. And today, we have 35 of those that are capable of offering buy and fill.

[Operator]

Thank you. And one moment as we move on to the next question. And our next question comes from the line of Adam Mehta with Piper Samuels.

[Adam Maeder, Senior Research Analyst at Piper Sandler Companies]

Maybe one to start on the guidance. Just want to better understand quarterly sequencing of revenue on the top line. I think the Q1 guide is $28,000,000 to $30,000,000 That's a pretty healthy ramp throughout the year that's kind of embedded there and certainly realize part of that seasonality. But just wanted to double click on the Q1 framework and how you see the rest of the year playing out and just the level of confidence in achieving that full year outlook? And then I had a follow-up. Thanks.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Thanks, Adam. Greenberg experiences the same type of seasonality that Neuronetics has, again, primarily driven by the reset and of the insurance plans and also the reset of patient deductibles. And so if we go back the six years that I've been here, our Q1 revenue as a percentage of the total year is somewhere between 19 percent and 20 percent. And then it ramps, it's a nice rebound in Q2 when a lot of the deductible issues are already behind patients. So Q2 and Q3 revenues are about 25% each per quarter.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

And then again, our strongest quarter has always been Q4 and that'll be approximately 30% of annual revenue. Again, as a reminder, we've been working collaboratively with Greenbrook at all levels since we signed the definitive agreement in August. And so we've got six months of efforts behind us and we're already seeing dividends across the board. And so we have a high level of confidence exiting Q1 that we're going to have a lot of the process improvements, improved efficiencies and just some changes in learnings between the two companies fully in place as we enter Q2. And so again, we're very comfortable with the Q1 guide and the remainder of 2025.

[Adam Maeder, Senior Research Analyst at Piper Sandler Companies]

That's good color, Steve. Thank you for all that. And for the follow-up, I wanted to circle back to SPRAVATO and the medical management opportunity for the Greenbrook centers. So I guess the first question is of the $80,000,000 to $85,000,000 for your Greenbrook revenue assumption for 2025, hopefully I have that right. What is attributed to SPRAVATO and medical management?

[Adam Maeder, Senior Research Analyst at Piper Sandler Companies]

Where can that go in the future? And we'd just love to hear a little bit more about the buy and bill model. Thank you for taking the questions.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Yes, Adam. So there's very little med management built into that guidance figure. Again, Greenbrook was founded on TMS and essentially their service was to offer patients TMS, when the providing psychiatrist didn't offer it. And so, they would refer the patient to a Greenbrook facility. They would get treated, for the seven weeks and then the patient would go back to their psychiatrist.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

And that really hasn't changed. And so again, the two growth drivers are increased chair utilization and also SPRAVATO. And so, I would say 75% of the growth is about SPRAVATO. So both improving the 63 clinics that currently offer it to maybe 80 or 85 clinics. And then moving into the buy and bill type of operation.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

And again, Keith mentioned it's at 35. If we could get that to 50 or so during the year, it would be great. And as a reminder, it's not like we're just flipping a switch, moving to buy and build. There are a lot of behind the scenes activities working with the payers and getting the contracts and negotiating the price. And so it does take a little time, even though we've already identified our ability to convert to buy and build, it does take months to get everything in place and to start submitting the claims and then collecting.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

But again, the lion's share of the growth for Greenbrook is targeted on SPRAVATO.

[Adam Maeder, Senior Research Analyst at Piper Sandler Companies]

Helpful. Thank you.

[Operator]

Thank you. And one moment.

[Operator]

Our final question is going to come from the line of Danny Stauter with CitizensJMP. Your line is open. Please go ahead.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Yes, great. Thanks for the questions. Just one follow-up on some of the SPRAVATO buy and build transition questions that we've heard already. Appreciate the color there. And it sounds like this is already included in the OpEx guidance, but could you comment on the capital outlay this requires and any capacity constraints that this could have as you contemplate your plans for free cash flow in 3Q 'twenty five? Thanks.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Hey, Danny, it's Steve. Yes, from a CapEx perspective, supporting this provider rollout, it's really not that significant. So from an infrastructure perspective, we do need rooms, which the majority of our clinics already have. And then it's a video or camera system embeds that the patients relax on after the treatment and then are administered or observed by the attending psychiatrist. So that's, you know, dollars 10,000 a clinic.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

So not crazy at all. It's really on the inventory side that we're working with our distribution partners on. And so having to purchase a dose of SPRAVATO is approximately $800 You need to keep a week's worth of inventory on hand. And as we roll that out, that inventory commitment could easily approach $5,000,000 We are working on getting lines of credit. And now with the capital raise of nearly $19,000,000 we do have a little bit of leverage if we had to use our own cash to get that flow going.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

But it's our intention to leverage our distribution partners. And right now, Janssen does make their distributors offer one hundred and twenty day terms. And so if we submit our claims and get them paid, the normal turnaround time is about sixty days. And so again, once we get that cadence and work through some of the usual early bugs in the claim system, we'll think that one hundred and twenty day term will be sufficient to make sure the cash flow doesn't strain my balance sheet.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Great. I appreciate that. And then just one follow-up on productivity. You've talked about driving and improving productivity across both Greenbrook sites and existing customers. But could you just remind us what that looks like today?

[Daniel Stauder, Director - Equity Research at Citizen JMP]

I think in the past you've given us a figure of four treatments per day per system. Is that still the case? And where you expect that to go in 2025? And where is the more steady state range or metric that you're comfortable with? Thank you.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Yes. I mean, the comparison that we're using now for Greenbrook is with our Better Me program partners. And we've seen for those sites that are in that program and have really embraced the five requirements, they're averaging between six and eight patients per day per NeuroStar. You are correct that Greenbrook is currently averaging about four patients per day. And as we work through efficiencies in 2025 and 2026, we do plan on seeing or we do expect to see Greenbrook increasing from four to five to six to get to the levels of our BNP partners.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

And so if I look at their installed systems, active systems, if we increase that four patients per day to five patients per day, that's an approximate $10,000,000 in annualized revenue. And so, I'm not implying that we're going to be able to get them to five by May. But as we work towards training and education, we're confident that we could exit 2025 at or close to that level.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Appreciate it. I'll try to squeeze one more in here. Just on BNP, the 125 additional sites, for the April 2025 date, is it your intention to take all of those if they meet the criteria or is there a max number of ads you're keeping in mind? Thanks.

[Keith Sullivan, President and CEO at Neuronetics]

Our goal is if they all make it that we would add them all into the program, but they have to meet all five standards. And so as they as we get closer to April 15, if we could get 30 to 50 of those sites in the program, it would be a home run for us.

[Daniel Stauder, Director - Equity Research at Citizen JMP]

Great. Appreciate the questions.

[Keith Sullivan, President and CEO at Neuronetics]

Thanks, Danny.

[Steve Furlong, EVP, CFO & Treasurer at Neuronetics]

Thank you, Danny.

[Operator]

Thank you. And I would now like to hand the conference back over to Keith Sullivan for his closing remarks.

[Keith Sullivan, President and CEO at Neuronetics]

Thank you all for your interest in Neuronetics. We'll look forward to updating you on our next quarterly call. Have a great day.

[Operator]

This concludes today's conference call. Thank you for participating and you may now disconnect.

Participants

Executives

• Mark Klausner, Investor Relations
• Keith Sullivan, President and CEO
• Steve Furlong, EVP, CFO & Treasurer

Analysts

• Bill Plovanic, Managing Director & Equity Research Medical Technology Analyst at Canaccord Genuity - Global Capital Markets
• Max Kruszeski, Equity Research Associate at William Blair
• Adam Maeder, Senior Research Analyst at Piper Sandler Companies
• Daniel Stauder, Director - Equity Research at Citizen JMP