Q4 2024 Earnings Summary
- Neuronetics is rapidly expanding its Better Me Provider (BMP) Program, aiming to have over 500 sites enrolled by year-end 2025, representing nearly half of its customer base. The BMP Program has proven to significantly increase patient volume, with participating sites treating 3x more patients per quarter than non-participating sites. This expansion is expected to drive substantial growth in treatment sessions and revenue.
- The integration of Greenbrook TMS clinics presents a significant growth opportunity. Neuronetics plans to improve utilization in these clinics from 4 patients per day to 5 or 6 patients per day, potentially adding approximately $10 million in annualized revenue for each additional patient per day per chair. Additionally, rolling out the SPRAVATO buy-and-bill model across clinics is expected to triple the revenue per treatment, further contributing to revenue growth.
- The company has identified and realized significant cost synergies from the Greenbrook acquisition, capturing over 90% of the identified $22 million in annualized cost synergies by the end of 2024. Combined with ongoing cost optimization, this positions Neuronetics to become cash flow positive by the third quarter of 2025, improving profitability and strengthening the balance sheet.
- The company's 2025 revenue guidance heavily relies on successful integration and performance improvements from the Greenbrook acquisition, including increasing chair utilization and expanding SPRAVATO services, which may pose execution risks.
- Consolidated gross margins are expected to decrease from approximately 77% to 55% in 2025 due to the inclusion of Greenbrook's lower-margin clinic business, which may impact profitability.
- The rollout of the SPRAVATO buy-and-bill model requires significant capital outlay, including inventory commitments up to $5 million, and involves operational challenges such as lengthy payer contract negotiations and claim processes that may strain cash flow and delay expected benefits.
| Metric | YoY Change | Reason |
|---|---|---|
Total Revenue | +11% | Total revenue increased to $22.493 million in Q4 2024 from $20.314 million in Q4 2023. The growth likely reflects enhanced market performance and operational initiatives building on the previous period’s momentum. |
Net Loss | +126% | Net loss widened dramatically to $12.158 million in Q4 2024 from $5.377 million in Q4 2023. This steep increase is primarily due to a significant rise in operating expenses that outpaced revenue growth, amplifying the loss from the prior period. |
Total Operating Expenses | +28% | Operating expenses climbed to $25.842 million from $20.198 million. This 28% rise reflects higher spending—possibly in marketing, R&D, or transaction-related costs—which not only increased costs in the current period but also contributed to the deeper operating loss compared with the previous period. |
Total Assets | +81% (Q4 2024 vs Q3 2024) | Total assets surged to $133.449 million in Q4 2024 from $74.117 million in Q3 2024. This marked jump likely reflects significant asset acquisitions or revaluations, which build on earlier balance sheet restructuring, potentially to support future growth despite creating liquidity challenges. |
Long‑Term Debt | +20% (Q4 2024 vs Q3 2024) | Long‑term debt increased approximately 20% to $55.151 million. This rise suggests that new financing strategies or refinancing efforts were implemented—possibly to support asset investments seen in the current period—that continue trends seen in previous periods. |
Cash and Cash Equivalents | –11% (Q4 2024 vs Q3 2024) | Cash and cash equivalents declined by around 11% to $18.459 million from $20.867 million. The reduction indicates that increased investments and higher operating cash outflows, perhaps due to the enhanced expenses and asset acquisitions, have eroded liquidity compared with the prior period. |
| Metric | Period | Previous Guidance | Current Guidance | Change |
|---|---|---|---|---|
Fourth Quarter Revenue | Q4 2024 | $19 million to $20 million | no current guidance | removed |
Full Year Revenue | FY (assumed 2024) | $71 million to $72 million | no current guidance | removed |
Full Year Operating Expenses | FY (assumed 2024) | $81 million to $82 million | no current guidance | removed |
Cash Flow Breakeven | Q3 2025 | “aims to reach cash flow breakeven by Q3 2025” | “expects to achieve cash flow breakeven in Q3 2025” | no change |
Q1 2025 Revenue | Q1 2025 | no prior guidance | $28 million to $30 million | no prior guidance |
Full Year Revenue | FY 2025 | no prior guidance | $145 million to $155 million | no prior guidance |
Operating Expenses | FY 2025 | no prior guidance | $90 million to $98 million | no prior guidance |
Gross Margin | FY 2025 | no prior guidance | Approximately 55% | no prior guidance |
| Metric | Period | Guidance | Actual | Performance |
|---|---|---|---|---|
Revenue | Q4 2024 | $19M – $20M | $22.493M | Beat |
Revenue | FY 2024 | $71M – $72M | ~$74.9M (sum of $17.417M+ $16.450M+ $18.530M+ $22.493M) | Beat |
Operating Expenses | FY 2024 | $81M – $82M(excl. ~$2M pre-close expenses) | ~$88.2M (sum of $19.947M+ $20.686M+ $21.726M+ $25.842M) | Missed |
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Revenue Guidance and Variables
Q: What's needed to achieve revenue and OpEx guidance?
A: Stephen Furlong stated that to achieve the $145 million to $155 million revenue guidance, they expect $65 million to $70 million from standalone Neuronetics and $80 million to $85 million from Greenbrook TMS. He mentioned that while they don't need to be heroic to reach these numbers, the programs need to continue working, with growth driven by the BMP program and three growth drivers at Greenbrook: improving utilization of NeuroStar chairs, expanding SPRAVATO rollout, and converting from administer-and-observe to buy-and-bill. On OpEx, after adjusting for one-time charges, they start with about $108 million entering 2025, and forecast $13 million to $15 million in cost synergies, over 90% of which have already been realized. -
Margin Outlook and Improvements
Q: How can margins be improved for Greenbrook?
A: Stephen Furlong noted that while consolidated Neuronetics margins were about 77%, the clinic margins for Greenbrook were around 27% to 28% in 2024. The guidance for 2025 implies improving these clinic margins to the mid-35%, primarily by eliminating 35 underperforming clinics in 2024. This, combined with Neuronetics' margins, leads to a consolidated margin of 55%. They will continue working to improve margins on both sides throughout 2025. -
SPRAVATO Revenue Impact and Buy-and-Bill Model
Q: What's the impact of SPRAVATO on revenue, and details on the buy-and-bill model?
A: Stephen Furlong explained that of the $80 million to $85 million revenue expected from Greenbrook, approximately 75% of the growth is attributed to SPRAVATO. They aim to increase the number of clinics offering SPRAVATO from 63 to possibly 80 or 85, and increase those using the buy-and-bill model from 35 to about 50 during the year. The buy-and-bill transition involves working with payers and takes time, but it is a key growth driver for Greenbrook. The capital outlay for SPRAVATO rollout is not significant, with about $10,000 per clinic for infrastructure and an inventory commitment that could approach $5 million. They are working to manage this through lines of credit and leveraging distribution partners offering 120-day terms, ensuring cash flow is not strained. -
Productivity Improvements
Q: How will productivity be improved across Greenbrook sites?
A: Stephen Furlong mentioned that Greenbrook is currently averaging about 4 patients per day per NeuroStar system. By implementing efficiencies and embracing the Better Me Program, they expect to increase this to 5 to 6 patients per day during 2025, similar to BMP partners who average 6 to 8 patients per day. Increasing from 4 to 5 patients per day could add approximately $10 million in annualized revenue. -
Confidence in Achieving Full-Year Outlook
Q: How confident are you in achieving the full-year guidance?
A: Stephen Furlong expressed high confidence in the 2025 guidance, noting that Q1 revenue typically represents 19% to 20% of annual revenue due to seasonality, with a rebound in Q2 and Q3 and the strongest quarter in Q4 at about 30% of annual revenue. They have been working collaboratively with Greenbrook since August and are already seeing dividends, expecting process improvements and efficiencies to be fully in place entering Q2. -
Greenbrook Clinics Focus
Q: Are the 95 current clinics the most productive, and plans for expansion?
A: Keith Sullivan confirmed that they are focused on the 95 clinics, which are the most profitable from Greenbrook. There are no plans to reduce or expand this number further; instead, they aim to make an impact on these existing clinics and grow them this year. Currently, 63 clinics offer SPRAVATO, with 35 capable of buy-and-bill. -
BMP Expansion Plans
Q: Will you add all 125 sites to the BMP if they qualify?
A: Keith Sullivan stated that their goal is to add all sites that meet the five standards of the BMP program. As they approach April 15, if they can get 30 to 50 of those sites into the program, it would be considered a success.
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