Neuronetics - Earnings Call - Q2 2025

Executive Summary

• Q2 2025 revenue was $38.1M, up 18% on an adjusted pro forma basis and up 132% year over year; U.S. clinic revenue (Greenbrook) reached a record $23.0M, while NeuroStar system shipments were 41 with ASP >$85k.
• Versus Wall Street, revenue beat consensus ($36.94M*) but EPS missed (actual -$0.15 vs -$0.08*), reflecting mix shift toward lower-margin clinic and SPRAVATO buy-and-bill revenues.
• Guidance: FY25 revenue maintained ($149–$155M), gross margin lowered to 48–50% from ~55%, OpEx raised to $100–$105M, and cash flow positive now targeted for Q4 (Q3 revised to -$3M to breakeven).
• Liquidity/funding: drew $10M from Perceptive Tranche 2 in August, extended the $2M minimum liquidity covenant to September 2026; remains eligible for an additional $5M Tranche 2.
• Likely stock reaction catalysts: revenue beat, margin guide-down and cash flow timing revision, record clinic performance, and continued SPRAVATO rollout with mix optimization.

What Went Well and What Went Wrong

What Went Well

• Record clinic revenue: “U.S. clinic revenue…was $23.0 million…representing the strongest Greenbrook quarterly clinic performance to date”.
• NeuroStar system ASP strength: “ASP was over $85,000 which was the highest ASP in the past 5 years” with 41 systems shipped.
• Operating cash burn improved: cash used in operations reduced to $3.5M, beating the “under $5M” target.
• Management quote: “We’re extremely pleased with our second quarter performance…We also reduced cash used in operations to just $3.5 million, better than our target” — CEO Keith Sullivan.

What Went Wrong

• Gross margin compression: GM fell to 46.6% from 74.0% YoY, driven by clinic mix and SPRAVATO buy-and-bill margin profile.
• EPS miss vs Street: reported -$0.15 vs consensus -$0.08*, as OpEx rose with Greenbrook G&A integration and claims collections resourcing.
• Cash flow timeline revised: CFO now guides Q3 cash flow from operations to -$3M to breakeven (prior: positive in Q3), with positivity pushed to Q4.

Transcript

Speaker 3

Welcome to the Neuronetics Report's second quarter 2025 financial and operating results. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press *11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press *11 again. Please be advised that today's conference is being recorded. I would now like to hand the call over to Mark Klausner. Please go ahead.

Speaker 0

Good morning, and thank you for joining us for the Neuronetics second quarter 2025 conference call. Joining me on today's call are Neuronetics President and Chief Executive Officer, Keith Sullivan, and Steve Pfanstiel, Neuronetics recently appointed 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 TMS 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 business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's quarterly report on Form 10-Q, which will be filed later 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'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 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's my pleasure to turn the call over to Neuronetics President and Chief Executive Officer, Keith Sullivan.

Thanks, Mark. Good morning, everyone, and thank you for joining us today. I'll begin by providing an overview of our second quarter performance and our key operational updates. Steve Pfanstiel will then provide a brief introduction and review our financial results. I'll conclude with our outlook before turning to Q&A. We had a strong second quarter at Neuronetics, both in terms of our ability to drive accelerated top-line growth and progress towards cash flow positivity. While we still have some fine-tuning to do to optimize the efficiency of the Greenbrook TMS operations, we are excited about the strength in the underlying business and feel the early results validate our thesis for the combination. Total revenue was $38.1 million, an 18% year-over-year increase on an adjusted pro forma basis. Revenue from the NeuroStar business was $15.1 million, comprised of NeuroStar System revenue of $3.5 million with 41 systems shipped, U.S.

treatment session revenue of $10.8 million, up 13% on a pro forma basis, and other revenue of $375,000. U.S. clinic revenue was $23 million, our largest quarterly clinic revenue to date, and only the second time Greenbrook TMS generated over $20 million in a single quarter. Beyond the strength of the revenue performance, we made progress on our path to cash flow positivity. Cash used in operations was $3.5 million, better than the previously guided target of under $5 million and a significant improvement from the first quarter. As we move through 2025, we continue to focus on three clear strategic priorities. First, executing on our Greenbrook TMS growth strategy. Second, continuing to scale our Better Me Provider, or BMP, Program. Third, continuing to improve operating efficiencies and optimize cash collections. Our Greenbrook TMS growth strategy continues to exceed expectations.

The optimization of our Regional Account Manager, or RAM, program is delivering strong results. We have seen significantly improved patient conversion rates through the implementation of our enhanced patient connection capabilities, including automated patient transfer processes, QR codes, and the coordinated intake team that engages patients while they are still at the referring physician's office. During a recent awareness campaign, we scheduled over 350 meetings for our RAM team, with physicians anxious to learn how the Greenbrook TMS clinics can provide care for their patients and help them experience relief from their depression. These meetings are taking place this quarter and next and should have an impact on the referrals to our clinics going forward. We know that a direct referral from a trusted provider has a much higher conversion into treatment than a marketing lead.

We also continue to improve our operational standardization by placing patient coordinators across most Greenbrook TMS clinics to enable more efficient in-person consultations. Our Spravato rollout continues its strong momentum, with 77 of 83 Spravato eligible clinics now offering the therapy, up from 75 in Q1, keeping us on track for a full rollout across all eligible clinics by year-end. Additionally, we are taking a thoughtful approach to our buy-and-bill model expansion based on key learnings from Q2. As pioneers in the rollout of Spravato's buy-and-bill model, we are navigating a reimbursement landscape that is not well-traveled, creating valuable learnings for both us and the payers in the space. What we have learned is that the payers reimburse Spravato at significantly different rates with different timings. With the knowledge we now have, we are taking a more analytical approach to buy-and-bill expansion, focusing on opportunities that deliver good margins.

As we balance our mix of buy-and-bill and administer and observe, our revenue and gross margins should increase. Building off of the momentum from Q1, the collective execution of these initiatives across the Greenbrook TMS network led us to achieving the strongest Greenbrook TMS clinic revenue quarter in the history of the business, a performance trend we expect to continue as our operational initiatives are more widely implemented in the business. Turning to our second focus area, our Better Me Provider (BMP) Program expansion remains a key driver to our business. Currently, we have 395 active BMP sites, with another 113 sites working towards qualification. The performance metrics of the program continue to validate its effectiveness. BMP sites treat three times more patients in need per site per quarter than a non-BMP practice, and these sites respond to patients approximately two times faster than non-participating sites.

These strong BMP performance metrics have fine-tuned our broader marketing approach as we have learned what patients want. This led us to refocus our marketing strategy around educating physicians about the NeuroStar treatment and the benefits of referring their patients. What we learned from the Greenbrook TMS is powerful. A referral from a medical provider is 10 times more likely to result in a new patient start relative to traditional marketing. We have expanded our outreach beyond psychiatrists to include primary care physicians, gynecologists, and other healthcare providers who treat large populations of patients suffering from depression. We are educating these providers about our services and help them evaluate whether to refer their depressed patients for NeuroStar treatment.

As I mentioned earlier, we recently conducted a successful pilot program leveraging our intake and coordinator teams to schedule meetings for our RAMs with depression care providers, including psychiatrists and primary care physicians who care for the majority of patients battling depression. Leveraging the learnings from that program, we conducted a similar campaign for our PDMs. Through this effort, we systematically identified providers surrounding our NeuroStar accounts and secured meetings with over 210 new primary care practices in just a few days. The level of interest in these educational meetings has been high, and we have already seen referrals to our NeuroStar accounts and Better Me Provider Program providers in particular. Going forward, I am confident that this will be an effective use of our marketing dollars and time well spent for our PDM team.

We are calling this comprehensive approach our provider connection program, and it works because patients are receiving referrals from their trusted healthcare providers, and primary care physicians are particularly excited about what Better Me Provider Program accounts offer. We have found that community physicians prefer to send patients to Better Me Provider Program sites based on their commitment to the patient responsiveness and education standards. This provider connection program complements our other marketing efforts, including our successful TV campaigns and our co-op marketing program that continue to drive results. Our digital marketing efforts continue to drive brand search impression growth, and we are pleased with the overall marketing efficiency improvements we are achieving across the combined organization. Turning to our third focus area, continuing to improve operational efficiencies and optimize cash collections.

Since the closing of the Greenbrook TMS acquisition, we have made significant strides in driving operational efficiencies across the network, but there are still more opportunities in front of us. For example, in June, we successfully rolled out a self-check-in program using self-check-in kiosks at four pilot locations, which allow patients to check in for their appointment and pay their co-pay independently. The implementation was so seamless that we quickly expanded it to seven additional locations, and we are now planning a full network rollout. We have also integrated this through our EMR system, which will streamline room management and improve overall patient flow efficiency. This system not only improves the patient experience but optimizes the time spent by our technicians and intake coordinators, allowing them to help care for more patients on a daily basis without the need for additional headcount.

Beyond the self-check-in program, we have engaged a consultant to conduct a comprehensive review of our operations team structure across the Greenbrook TMS network. This review will identify additional cost savings and optimization opportunities that we expect to implement through the remainder of 2025, further improving our operational efficiencies and cost structure. Turning to cash collections, the initiatives we have put into place are delivering meaningful results. Claims are being paid more quickly and more reliably than ever as we continue to systematically address legacy issues with payers, including the resolution of historical challenges with prepayment audits. We have also implemented processes to identify and resubmit previously uncollected claims. Most importantly, we have analyzed why claims have been denied in the past, mostly due to incorrect billing submissions.

We are putting fixes in place to ensure correct information is submitted the first time, which should reduce rejections and accelerate cash flow going forward. Beyond these three strategic priorities, we continue to focus on driving growth amongst adolescent patients. We have seen 25% growth in adolescent new patient starts in the first half of 2025 compared to 2024, driven by a 2.6 times increase among 15 to 17-year-olds. In the first half of 2025, we treated more than double the number of adolescent patients treated in all of 2023. This growth has been supported by expanded insurance coverage for adolescent patient treatments over the past year, and this remains an important growth opportunity for us.

I am also proud to announce the publication of real-world clinical data in the Journal of the American Academy of Child and Adolescent Psychiatry Open, demonstrating the effectiveness of the NeuroStar TMS system in adolescents and young adults with major depressive disorder. Drawing from the NeuroStar TrackStar clinical database, the world's largest depression outcome database, the study included 1,200 patients ages 12 to 21 and revealed nearly 70% experience clinically meaningful improvement, with less than 1% reporting worsening symptoms. With depression affecting one in five adolescents and limited safe treatment options available, we offer a much-needed therapy for these patients. Overall, I am extremely pleased with the second quarter results. We delivered strong financial performance that exceeded our expectations while making meaningful progress on our key strategic initiatives.

The operational momentum we have built gives me confidence that we are successfully executing on the significant value creation potential of the combined business. Before we run through the financials, I'd like to take a moment to introduce Steve Pfanstiel, who joined us as Chief Financial Officer on July 15th. Steve brings over two decades of healthcare experience and has already made valuable contributions to our team in the first few weeks. I am confident he will be an excellent leader for our finance organization. Steve, would you like to say a few words about your first few weeks with the company?

Speaker 1

Thank you, Keith, and good morning, everyone. It's a pleasure to be here today. I'm excited to be a part of the Neuronetics team. Throughout my career, I have always had a passion for healthcare, specifically in delivering solutions that make a difference in patients' lives. I was drawn to Neuronetics by the significant opportunity in mental healthcare, where there continues to be a profound and growing need to improve patients' lives. Neuronetics has built a unique and significant position in this space through its combination of the leading TMS treatment system in NeuroStar and through the breadth of its clinical presence with the Greenbrook network. In just a few short weeks, I've been able to see the dedication which Keith and the whole Neuronetics team bring every day to helping patients, and it's an honor to be part of this team.

I will now turn to reviewing the financial results. Unless otherwise noted, all performance comparisons are being made for the second quarter of 2025 versus the second quarter of 2024. In the quarter, total revenue was $38.1 million, an increase of 132% compared to revenue of $16.5 million in the second quarter of 2024, primarily driven by the inclusion of Greenbrook operations following our acquisition. On an adjusted pro forma basis, adjusting for the impact of the Greenbrook acquisition and site closures, revenue increased 18%. Revenue from our NeuroStar business, representing our system revenue as well as U.S. treatment session revenue, was $15.1 million. U.S. NeuroStar system revenue was $3.5 million, and we shipped 41 systems. This represents our second consecutive quarter of system ASP greater than $85,000, demonstrating the value of our system and its features in an increasingly competitive market. U.S.

treatment session revenue was $10.8 million, a 13% increase compared to $9.6 million in the prior year quarter on a pro forma basis. U.S. clinic revenue, which represents revenue generated by treatment centers from the Greenbrook acquisition, was $23 million for the three months ended June 30, 2025, representing the strongest Greenbrook quarterly clinic performance to date and a 23% sequential increase over the first quarter. Gross margin was 46.6% compared to 74% in the prior year quarter. This change in gross margin was primarily a result of the inclusion of Greenbrook's clinic business, which operates at a lower margin, as well as a higher mix of clinic revenue associated with the buy-and-bill Spravato treatments. Operating expenses during the quarter were $25.8 million, an increase of $5.1 million, or 25% compared to $20.7 million in the second quarter of 2024.

The increase was primarily attributable to the inclusion of Greenbrook TMS's general and administrative expenses of $6.1 million, partially offset by savings in sales and marketing expenses. During the quarter, we incurred approximately $1.8 million of non-cash stock-based compensation expense. Net loss for the quarter was $9.8 million, or $0.15 per share, as compared to a net loss of $9.8 million, or $0.33 per share in the prior year quarter. EBITDA was negative $7.2 million as compared to negative $8 million in the prior year quarter. Turning to the balance sheet, as of June 30, 2025, total cash was $17.5 million, consisting of cash and cash equivalents of $11 million and restricted cash of $6.5 million. This compares to total cash of $19.5 million as of December 31, 2024, which consists of cash and cash equivalents of $18.5 million and restricted cash of $1 million.

The $5.5 million increase in restricted cash in the second quarter of 2025 was related to establishing a cash collateral account to support our Spravato operations. Our distributor for Spravato provides us with 120-day payment terms for purchases, which we have backed by placing $5.5 million of cash into a designated interest-bearing collateral account. Additionally, I'm pleased to report that in August 2025, we became eligible for and received an additional $10 million of funding under our existing debt agreement with Perceptive Advisors. We became eligible for these funds as a result of achieving required revenue conditions under the tranche two funds. We also remain eligible for an additional $5 million of tranche two funding subject to conditions described in the agreement. Furthermore, the existing $10 million minimum liquidity requirement has been extended from September 2025 through September 2026, after which the requirement becomes $5 million.

This enhanced financial flexibility strengthens our position as we execute our strategic initiatives and progress towards positive cash flow from operations. Our cash used in operations for the second quarter was $3.5 million, better than our previously guided target of under $5 million and significantly improved from $17 million in the first quarter, which, as a reminder, included steps to settle Greenbrook TMS's legacy vendor payment plans and the pull forward of certain expenses to secure favorable vendor concessions. Now turning to guidance. For the third quarter, we expect net revenue of between $37 million to $39 million. For the full year 2025, we continue to expect total revenue of between $149 million and $155 million. For gross margin, we now expect our full year to be between 48% and 50% versus our prior guidance of approximately 55%.

The key driver of the change is the shift in revenue mix, with clinic revenue representing a greater percentage of total revenue than previously expected. In addition, margin will be impacted by the mix of Spravato bill and buy revenue, which carries a lower gross margin versus the A&O model. In the balance of the year, we anticipate gross margin improvement relative to Q2 as we optimize the Spravato buy-and-bill rollout relative to our A&O business and leverage our fixed infrastructure through continued growth. To reiterate the point Keith made earlier in his remarks, we are looking to maximize the overall profitability of our Spravato offering. Operating expenses are now projected to be between $100 million and $105 million for the full year versus the prior guidance of $90 million to $98 million.

The updated guidance reflects approximately $20 million in realized annual cost savings from our efforts in 2024 and associated with the Greenbrook TMS integration. The change in guidance for 2025 reflects the need to augment some critical areas, including our claims collections team, which is crucial to our cash management, and additional time needed to fully assess and implement other synergies. This guidance includes approximately $6 million of non-cash stock-based compensation expense for the full year. We continue to make progress in our cash flow, and we are targeting cash flow from operations to be in the range of negative $3 million to break even in the third quarter and then turning positive in the fourth quarter of 2025.

This compares to our prior guidance of positive cash flow from operations beginning in the third quarter of 2025, which has been impacted by our updated expectations for gross margin mix and the strategic investments in operational capabilities I just described. We further project year-end 2025 total cash, inclusive of cash, cash equivalents, and restricted cash, to be in the range of $25 million and $28 million, inclusive of the recent Perceptive Advisors funding. I'll now turn it back to Keith for his closing remarks.

Speaker 0

As we look forward to the remainder of 2025, I'm confident that we are well-positioned to continue executing on the three strategic priorities and to drive sustainable growth for our shareholders. Our Greenbrook TMS integration and growth strategy exceeded our expectations in Q2, demonstrating the significant value creation potential for this combination. Going forward, we will continue the systematic rollout of SPRAVATO and the buy-and-bill model, advance our operational improvement initiatives, while simultaneously expanding our Better Me Provider (BMP) Program across our customer base. Most importantly, we remain focused on achieving cash flow positive from operations in 2025. Our strong second quarter performance, combined with our learnings on billing of SPRAVATO, ongoing operational improvements, and cost synergy realization, gives us the confidence in reaching this important milestone in the fourth quarter.

The integration of Neuronetics and Greenbrook TMS is creating exactly the value we anticipated when we announced this transaction: a vertically integrated organization capable of providing broad access to innovative mental health treatments while driving sustainable growth and profitability. With that overview, I will now open the call for questions. Operator?

Speaker 3

Thank you. At this time, we will conduct the question and answer session. As a reminder, to ask a question, you will need to press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again. One moment while we compile the Q&A roster. Our first question comes from William Plovanic. You're from Canaccord Genuity. Your line is now open.

Speaker 0

Great, thanks. Good morning. Can you hear me okay?

We can. Good morning, Bill.

Hey, good morning. A couple of things. One, obviously Greenbrook TMS is doing very well. You've done a great job integrating that. I'm just kind of curious, as we look at the traditional TMS business, maybe a little slower than what we were looking for, can you help us understand the dynamics? Are the referrals being pushed to the Greenbrook TMS centers from the physicians because of the Better Me Provider Program and they just have better efficiencies, or is there anything specific going on that's maybe making the traditional Neuronetics platform maybe not as successful as Greenbrook TMS?

No, thanks for the question, Bill. After our analysis of the RAM referral approach to patient education and awareness, it became clear to us that the more efficient use of the marketing dollar and the time of our PDMs was to use both to follow up on the provider connection path. Under this program, our marketing dollars go towards education of the PCPs through our digital and social media platform. Once we have these educational meetings with the PCPs and their staff set up, we deploy the conduits for the referrals to our NeuroStar customers and to primarily our BMP sites, which gives us a simple way for patients to go from one office to the providers. We know from the RAM program that this shift in strategy would take a few months to gain traction, and we felt that this quarter was the best time to start it.

We were able to deliver 13% growth in spite of the shift, and we believe that the provider connection program is way more efficient and will eventually turn to a higher conversion rate for our patients.

Okay. It's basically you've shifted the strategy to the referrals versus maybe just driving patients and conversions in the traditional accounts, if I read that correctly. I'm just, what type of impact on your marketing dollars does this have longer term? It seems it would be, you know, it's a human focus and maybe less spend on external kind of marketing. Is that a right way to think about it?

I think, as I said, it'll make our marketing dollars more efficient, which may give us an opportunity to lower that dollar volume. In going to primary care physicians, we do have to go to some additional trade shows associated with it. We are providing educational meetings in localities, so we still have a marketing spend to help educate them. Similar to what we have seen with the RAMs, once we educate these offices and they get a patient sent to one of our Better Me Provider (BMP) Program accounts and they see the results, we can expand further and wider into those practices. I honestly think we're looking at the RAM example and we're following that same playbook for the BMP accounts.

Okay. For Steven, welcome aboard. Just on the resubmitted claims, how much dollars are we talking about? What's the age of those? What's the, you know, percentage belief that you'll collect on those? Just on the optimizing the SPRAVATO buy-and-bill, it just sounds like to me, in layman's terms, you're going to halt kind of expanding that program for now until you get the actual dollar reimbursement and timing of getting that cash flow in the door. Thanks for taking my questions.

Speaker 1

Yeah, good morning, Bill. It's kind of two questions there. I'll try to tackle each of those. In terms of the revenue cycle management, we're really going after two things. I think you mentioned the aged AR, but we're also doing a much better job, and I'm looking at, say, January versus June of this year, in terms of our time to collect on that initial claim, wherein when we look at June, we're collecting 10% more of that revenue from June in the first month after those treatments happen. We're getting very efficient on just collecting what's due to us on time. Yes, we've got still open AR from 2024 and earlier this year that as we've gotten more efficient, we're catching up on that piece.

I think the problem is as you have any errors or issues with the submissions you have to resubmit, that's a longer kind of time commitment there. I think as the team has fixed that we're getting first pass, we go back and we know what we need to do on those other pieces. I expect this will continue to be a tailwind, both catching up on aged claims, but also just improving on that time to collect of recent treatments. I think that gives us a look through the balance of year and into 2026 as well. In terms of BMB, I would make two comments there. I think the BMB offering has a potential kind of in two places. One is it allows us to increase the number of patients we have access to.

There are plans where they're asking for both A&O and BMB to be a part of that program, to be able to offer A&O. Other places where only BMB is an offering. That's an opportunity for us to seek out and drive additional treatments, access to patients we didn't have. With that said, we have to make sure that the reimbursement is adequate so that we're getting appropriate profit on those treatments. I think there's a couple of ways to look at that. Certainly, that drug cost, when you think about BMB, is a pretty significant increase. We may not get the same GP % margin when we think about BMB versus A&O, but on a per-treatment basis, we would want those GP dollars to be incremental or higher because of the increased burden that we have of buying that drug.

That's how we think about it, giving us access to incremental patients and driving growth. It shouldn't be a step backward in terms of profitability on a per-treatment basis.

Speaker 0

Great. Thanks for taking my question.

Speaker 3

Thank you. Our next question comes from Adam Maeder of Piper Sandler. Your line is now open. Adam Maeder from Piper Sandler, your line is now open. One moment for our next question. Our next question comes from Danny Stauder of Citizens JMP. Your line is now open.

Speaker 2

Yeah, thanks for the questions. Just first on Greenbrook TMS, the clinical sales per site, it was $196,000 last quarter. This quarter, I think it was closer to $240,000 if I did that math right. I just want to ask your opinion or get any commentary, high level, on how we should be thinking about this metric, more steady state. It should be ramping up this year with SPRAVATO and some of the other optimization initiatives you're implementing. Long term, what's a normalized level we should think about in our models?

Speaker 1

Yeah, let me make sure I've got that, Dan. You're asking about just what you think it is on a per-clinic or per-site basis on the Greenbrook TMS side?

Speaker 2

Yeah, that's right. I think 196,000 you gave last quarter. I don't think you gave it this quarter, but just backing in from the 95 sites on the total clinic revenue.

Speaker 1

Yeah, I don't think we've put out a target for that. I think, you know, I would just continue to look at the total revenue trends for the business and what we've seen first half to second half. Right now, when we look at first half year-to-date performance overall, it's been about 60% clinic revenue business. We expect that'll continue to remain about that 60% level, and, you know, we provided guidance for the full year. That kind of gives you an ability to track into what we see that Greenbrook TMS revenue looking like for the full year. I think on a site basis, where it can be a little challenging to say there's a target there, certainly we can add beds, we can expand the size of some of these sites.

I think there's upward potential there, and we're seeing very nice volume growth on the Greenbrook TMS side of the business. We saw that as we talk about the NeuroStar business on the treatment side as well, 13% on an adjusted pro forma basis. I think that site number can go up, you know, continue to go up at a pretty high level.

Speaker 2

Great, appreciate that. Just one follow-up on the adolescent indication. Great to see the progress here as well as the positive updates on the clinical and reimbursement side. As far as patient outreach, I imagine the marketing strategy here has to be a little bit more nuanced. Could you give us any color on your approach and how you are driving awareness and adoption, and what is driving that on your end? Thank you.

Speaker 0

Yeah, we have the data for each one of our providers, and we know which are taking care of adolescent patients. We have targeted those folks through our provider connection program and are educating them both by going to trade shows that they attend, primarily in their offices. It gives us a more intimate opportunity to explain to them the benefits that TMS can provide to those patients. We have seen a very nice uplift from the provider connection program when we can identify exactly who those providers are.

Speaker 2

Great, thank you very much.

Speaker 3

As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. Our next question comes from Adam Maeder of Piper Sandler. Your line is now open.

Speaker 1

Hey, can you guys hear me?

Speaker 0

We can, Adam. How are you?

Speaker 1

This is actually Kyle on for Adam. Thanks for taking the questions. Sorry about the technical difficulties there.

Speaker 0

Oh, no problem.

Speaker 1

I just wanted to ask, I guess, just one on kind of the cadence for the guidance here and how we're thinking about the back half. If my math is right, just kind of looking at the Q3 guidance, I think we're kind of contemplating a steep ramp here in Q4. Just kind of trying to get an idea between Q3 and Q4 for revenue and the different pieces there. Thanks. Yeah, Kyle. Maybe the first point to make is we had a strong Q2 sales result. We went from $32 million in sales in Q1 to over $38 million. We were very pleased with that. We exceeded the guidance and the consensus for the quarter. I think in Q3, we just have seasonality in the business. That's a result of the July 4th holiday, summer vacation season.

That generally impacts the overall treatments, just driving slower growth for that first half of the third quarter here. I think what we expect to see and what we've seen historically is a pretty significant increase as we go from Q3 to Q4, where we see the offsetting benefit, the tailwind of that seasonality coming back in Q4. That's how we kind of look at this. That's where the guidance is set up. Having a $6 million increase from Q1 to Q2 and then having a similar increase Q3 to Q4, I think that's consistent with what we're seeing in the business and then just the seasonality piece driving that.

Speaker 2

Perfect. Thanks, Steven. That's super helpful. Maybe another one for you, just on the gross margin, you know, guide down a little bit, which I understand is just a function of Greenbrook TMS becoming, you know, a larger portion of the mix. You talked about, you know, back half, maybe you can get up kind of towards the higher end of that range since I think the front half was about 48%. How should we kind of expect maybe the trajectory of gross margins over the medium term, you know, as we look out into 2026 for the combined business kind of on this trend?

Speaker 1

Yeah, and we haven't provided any specific 2026 guidance, but I would say the mix is really going to be the biggest product of revenue, right? That difference between NeuroStar and Greenbrook. You know, if you look when we were standalone, the NeuroStar margins were around, you know, mid-70%, you know, 74%, 75%, and nothing's fundamentally changed in that cost structure. Greenbrook, if you just do the math on our 48% year-to-date, the Greenbrook, you know, gross profit margin's around 30%. I think that the biggest thing we have going, you know, once you account for that mixed piece, we do have upside, I think, especially on the Greenbrook side, just leveraging that fixed clinical infrastructure. The more efficient, the more treatments per chair you do in those Greenbrook clinics, you're leveraging that fixed overhead. I think that's going to help us on a continual basis, even throughout 2026.

I think the optimizing the BMB piece to drive incremental, but we know versus Q2, we're going to optimize where we make that offering and ensure we've got adequate reimbursement and pricing. I think we'll be able to optimize relative to what I would consider a lower Q2 base on the buy-and-bill portion of SPRAVATO.

Speaker 2

Super helpful. Thanks.

Speaker 3

Thank you. This concludes the question and answer session. I would now like to turn the call over to Keith Sullivan for closing remarks.

Speaker 0

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

Speaker 3

This concludes the conference today. Thank you for your participation. You may now disconnect.