Neuronetics (STIM) Q4 2025 Earnings Transcript

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Date
Tuesday, March 17, 2026 at 8:30 a.m. ET
Call participants
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President and Chief Executive Officer — Keith J. Sullivan
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Incoming President and Chief Executive Officer — Dan Reavers
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Chief Financial Officer — Steven E. Pfanstiel
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Chief Technology Officer — Corey Anderson
Full Conference Call Transcript
Keith J. Sullivan, and Steven E. Pfanstiel, Neuronetics, Inc.'s Chief Financial Officer. 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 integration, 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, Inc.'s 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-K, which was filed premarket today. 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 will 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, provides 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.
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 is my pleasure to turn the call over to Neuronetics, Inc.'s President and Chief Executive Officer, Keith J. Sullivan.
Keith J. Sullivan: Thanks, Mark. Good morning, everyone, and thank you for joining us today. Before I get into our results, I am pleased to announce that the Board has appointed Dan Reavers as our next President and Chief Executive Officer of Neuronetics, Inc., effective March 23. Dan is a proven leader with more than 30 years in medical devices, and he knows how to build and scale commercial health care businesses. Having spent time with Dan through the search process, I am confident he is the right person to lead the company into the next chapter, and I am looking forward to working with him to ensure a smooth transition. Now turning to our performance.
A little over a year ago, we closed the Greenbrook acquisition and set out to build a vertically integrated mental health company with the technology, the clinical infrastructure, and the scale to fundamentally change how patients access treatment for mental health conditions. I am proud to say that in our first full year as a combined company, we have done exactly that. We delivered strong fourth quarter results with adjusted pro forma revenue growth of 23%, driven by our strongest capital shipment quarter of the year and continued momentum across our Greenbrook clinic network.
We also achieved the key milestone of positive operating cash flow in the fourth quarter, driven by revenue growth, operational discipline, and the cash collection improvements that we have been implementing throughout the year. Starting with the update on Greenbrook. Over the course of 2025, we executed against our growth initiatives, and the results speak for themselves. Full-year clinic revenue grew 28% on an adjusted pro forma basis. Our Regional Account Manager program is building awareness among referring providers and helping more patients find relief from their depression in our clinics. In the fourth quarter, our referring provider network added 430 new providers, a 25% increase year over year, contributing to over 1,300 new referrers added across 2025.
This growth was supported by significantly higher field engagement, with our regional teams completing more than 47,000 physician outreach activities during the year. These efforts drove over 2,300 patient referrals in Q4, representing a 46% increase over the prior-year period. Our automated patient transfer process, educational tools, scheduling QR codes, and coordinated intake team engage patients while they are still at the primary care doctor's office. These capabilities are improving referral-to-treatment conversion while reducing friction for both the provider and the patient across the Greenbrook network. We are nearly complete with our SPRAVATO rollout, with 84 clinics now providing the treatment.
Throughout 2025, we optimized our billing practices based on the economics of buy-and-bill versus administer-and-observe, and we have taken a disciplined approach to deploying the right billing model by state, by payer, and by clinic. Our efforts across both SPRAVATO and TMS continue to drive strong results, with total treatment volume up 18% year over year in the fourth quarter. On the operational side, we continue to drive standardization across the network, focused on getting patients into treatment faster and simplifying their experience at our clinics. We deployed tablet kiosks across all locations, streamlining check-in and making it simple for a patient to remit their patient-responsibility payments at the time of the visit.
We are also piloting a patient portal that allows patients to complete intake forms and submit insurance information before their appointment, with the goal of offering an all-digital intake pathway in the future. We are starting to leverage AI in our benefits investigation, with initial applications helping us file claims faster and more accurately, increasing first-pass acceptance rates while reducing labor. Collectively, these efforts are enabling our team to care for more patients daily while improving our cash conversion. Turning to our NeuroStar business and the BMP program. On the system side, we had a strong finish to the year, shipping 49 systems in the quarter at an average selling price above our target for the fourth consecutive quarter.
That tells us customers continue to see the value in NeuroStar and in the support that comes with it. As we have discussed throughout the year, we made a deliberate decision to realign our capital team towards higher-volume, higher-growth accounts that could add NeuroStar TMS into their practices quickly, meaning that they have the staff available to incorporate TMS into their practice, are credentialed with insurance payers, and therefore can get up and running treating patients faster. With that focus on TMS-ready accounts, we are seeing the benefits in system ASP, a reduction in resources needed to go from purchase to treatment of the first patient, and in the quality of accounts we are adding to the network.
We believe this positions our NeuroStar business well heading into 2026, and I will discuss more about that shortly. On a pro forma basis, treatment session revenue increased 6% in Q4 on strong treatment utilization growth of 11%. Our Better Me Provider program had over 420 active sites at the end of 2025, with nearly 100 additional sites working towards qualification. Since inception, the program has connected more than 66,000 patients interested in NeuroStar TMS with one of our Better Me Providers. BMP sites continue to deliver significantly higher patient volumes and faster response times than nonparticipating sites, and we have observed that treatment session utilization is increasing at these sites, indicating strong patient flow and demand for existing equipment.
We also continue to see growing recognition of NeuroStar TMS as a treatment option for adolescents. During the quarter, TRICARE West expanded coverage for TMS therapy to include adolescents age 15 and older diagnosed with depression, and the coverage is effective across 26 states. That is a meaningful development for military families and further validates the expanding insurance landscape for adolescent TMS treatment. Moving on to our Provider Connection program, which we launched last April. The program has gained real traction. Our field team has held over 400 educational meetings resulting in more than 210 new referral sites by year end. We have also seen strong engagement through the directed provider campaigns and the inside sales outreach efforts.
This program takes what we have learned at Greenbrook about educating primary care physicians on the benefits of NeuroStar TMS and applies it across our entire NeuroStar customer base, and it is becoming a meaningful part of how we help patients find and access care with NeuroStar providers. We are also leveraging our Greenbrook infrastructure to offer new services to our NeuroStar customers. Through our intake center, we are now providing benefits investigations and patient management support to partners like Transformations Care Network and Elite DNA.
Our benefits investigation model delivers financial clarity to patients within 24 hours, helping practices accelerate patient decision-making, and our patient management program guides patients from initial interest through to treatment, ensuring seamless engagement at every step. These programs are already driving new patient starts at our partner sites and represent a scalable model that we can extend across our national enterprise accounts. Stepping back, I want to put this year into context. When we announced the Greenbrook acquisition, we laid out a thesis that combining NeuroStar's technology platform and training programs with the Greenbrook National Care Delivery Network, we would expand patient access, accelerate growth, and create a path to profitability. One year in, that thesis is playing out.
We grew revenue, we reached positive operating cash flow, we strengthened our balance sheet, and we built a platform that is now enabling opportunities that neither company could have pursued on its own. I will now turn it over to Steve to take you through the financial details, and then I will come back to talk about what those opportunities look like heading into 2026.
Steven E. Pfanstiel: Thank you, Keith. Good morning, everyone. Unless otherwise noted, all performance comparisons are being made for 2025 versus 2024. Total revenue in the fourth quarter was $41.8 million, an increase of 86% compared to revenue of $22.5 million in 2024, primarily driven by the inclusion of Greenbrook operations following our acquisition in December 2024. On an adjusted pro forma basis, fourth quarter revenue increased 23% versus the prior year. Total revenue from our NeuroStar business, inclusive of our system revenue as well as treatment session revenue, was $18.3 million in 2025. On a pro forma basis, taking into account the impact of the intercompany revenue, this represents an increase of 9% versus the prior year. U.S.
NeuroStar system revenue was $4.4 million, an increase of 15% on a year-over-year pro forma basis, and we shipped 49 systems in the quarter. This compares favorably to our fourth quarter 2024 shipments of 46 units, and we continue to see strong system ASP in the quarter. U.S. treatment session revenue was $12.4 million. On a pro forma basis, treatment session revenue increased 6% compared to the prior-year quarter. The reported decline of 4% is primarily attributable to the absence of prior-year Greenbrook intercompany purchases. Clinic revenue was $23.5 million for the three months ended 12/31/2025, a 37% increase on an adjusted pro forma basis, driven by growth in treatments across both NeuroStar TMS and SPRAVATO treatments.
Gross margin was 52% in 2025 compared to 66% in the prior-year quarter. The decrease was due to the inclusion of Greenbrook's clinic business, which operates at a lower margin. It is worth noting that Q4 gross margin was our highest quarterly margin of the year, reflecting the impact of our efficiency efforts within the Greenbrook clinics as well as favorable product mix. Operating expenses during the quarter were $26.7 million, an increase of $0.4 million, or approximately 1.4%, compared to $26.4 million in 2024. The increase was primarily attributable to the inclusion of Greenbrook's general and administrative expenses of $8.5 million, partially offset by a reduction of R&D expenses.
During the quarter, we incurred approximately $2.2 million of non-cash stock-based expense. Net loss for the quarter was $7.2 million, or $0.10 per share, as compared to a net loss of $12.7 million, or $0.34 per share, in the prior-year quarter. Fourth quarter 2025 EBITDA was negative $4.3 million, as compared to negative $11.0 million in the prior year. Moving to the balance sheet and cash flow. As of 12/31/2025, total cash was $34.1 million, consisting of cash and cash equivalents of $28.1 million and restricted cash of $6.0 million. This compares to total cash of $19.5 million as of 12/31/2024.
Cash provided by operations in the fourth quarter was a positive $0.9 million, representing a continuation of the steady improvement we delivered throughout 2025. To put this in context, our operating cash burn improved sequentially every quarter this year from negative $17.0 million in Q1 to positive $0.9 million in Q4. This progress reflects the compounding effect of our continued revenue growth, expense discipline, revenue cycle management improvements, and operational efficiencies across the business. In March 2026, we amended our debt agreement with Perceptive, which reduces our outstanding debt obligation and interest expense. Under the amendment, we made a one-time principal payment of $5.0 million to Perceptive, along with adjustments to the existing covenants. Now turning to guidance.
For the full year 2026, we expect total revenue of between $160 million and $166 million, with the midpoint of that range representing greater than 9% growth versus 2025. We expect to see strong revenue performance in our clinic business, with growth year over year in the double digits to mid-teens. For the NeuroStar business, we see increased momentum driving revenue growth year over year in the low to mid-single digits. For the first quarter 2026, we project revenue of between $33 million and $35 million. We expect full-year gross margin to be between 47% and 49%. This reflects the impact of efficiency efforts within our clinic network as well as product mix associated with higher clinic revenue growth.
As we drive revenue growth, we remain highly focused on operating efficiency. We expect operating expenses of between $