CORRECTION—Neuronetics Reports Record Third Quarter 2024 Financial and Operating Results

MALVERN, Pa., Nov. 12, 2024 (GLOBE NEWSWIRE) -- In a release issued earlier today under the same headline by Neuronetics, Inc. (NASDAQ: STIM), please note that in the second paragraph of the "Stockholders Approve Acquisition of Greenbrook TMS" section, it should say that the Company expects to achieve cash flow breakeven by the third quarter of 2025, not the second. The corrected release follows: Neuronetics, Inc. (NASDAQ: STIM) (the “Company” or “Neuronetics”) a commercial stage medical technology company with a strategic vision of transforming the lives of patients whenever and wherever they need help, with the best neurohealth therapies in the world, today announced its financial and operating results for the third quarter of 2024. Third Quarter 2024 Highlights Third quarter 2024 revenue of $18.5 million, a 4% increase as compared to the third quarter 2023U.S. NeuroStar Advanced Therapy system revenue of $4.1 million in the quarter, representing 48 systemsU.S. treatment session revenue increased by 2% versus the third quarter of 2023 Recent Operational and Marketing Highlights Neuronetics stockholders approved the acquisition of Greenbrook TMS on November 8, 2024NeuroStar Oral Presentation at AACAP 2024 Highlights Largest Study Evaluating TMS Efficacy in Adolescents with DepressionAchieved milestone of over 188,000 global patients treated with 6.9 million treatment sessions “We are very excited about the approval of the acquisition of Greenbrook TMS, which positions Neuronetics to be one of the largest, and most innovative provider of mental health care in the United States,” said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. “This strategic combination will significantly enhance our ability to expand access to mental health solutions through a unified commercial organization, while also creating opportunities to accelerate the rollout of additional services like SPRAVATO® across our network. By leveraging our complementary strengths - including Greenbrook’s extensive presence in the U.S. and Neuronetics’ industry-leading technology and training programs – we’re building an organization with the unique ability to increase patient access, improve outcomes, and ultimately, drive value for stockholders.” Keith J. Sullivan continued, “Beyond the Greenbrook acquisition, we saw continued progress across our strategic initiatives in the third quarter, highlighted by strong momentum in our adolescent treatment program and encouraging early results from our targeted marketing efforts. We're more confident than ever in our ability to create meaningful value for patients, providers, and stockholders while advancing mental health treatment.” Third Quarter 2024 Financial and Operating Results for the Three Months Ended September 30, 2024 Revenues by Geography Three Months Ended September 30, 2024 2023 Amount Amount % Change (Unaudited; in thousands, except percentages) U.S. $17,922 $17,211 4 %International 608 673 (10)%Total revenues $18,530 $17,884 4 % Total revenue for the three months ended September 30, 2024 was $18.5 million, an increase of 4% compared to the revenue of $17.9 million in the third quarter of 2023. During the quarter, total U.S. revenue increased by 4% and international revenue decreased marginally over the third quarter of 2023. The increase in U.S. revenue was primarily attributable to an increase in U.S. treatment sessions and U.S. NeuroStar Advanced Therapy System sales period over period. U.S. Revenues by Product Category Three Months Ended September 30, 2024 2023 Amount Amount % Change (Unaudited; in thousands, except percentages) NeuroStar Advanced Therapy System $4,108 $3,597 14 %Treatment sessions 13,326 $13,060 2 %Other 488 $554 (12)%Total U.S. revenues $17,922 $17,211 4 % U.S. NeuroStar Advanced Therapy System revenue for the three months ended September 30, 2024 was $4.1 million, an increase of 14% compared to $3.6 million in the third quarter of 2023. For the three months ended September 30, 2024, and 2023, the Company shipped 49 and 43 systems, respectively. U.S. treatment session revenue for the three months ended September 30, 2024 was $13.3 million, an increase of 2% compared to $13.1 million in the third quarter of 2023. In the third quarter of 2024, U.S. treatment session revenue per active site was $11,390 compared to $11,917 in the third quarter of 2023. Gross margin for the third quarter of 2024 was 75.6%, an increase of approximately 980 basis points from the third quarter of 2023 gross margin of 65.8%. The increase in gross margin was a result of the change in product mix, the absence of one-time manufacturing cost by our new contract manufacturer and inventory impairment incurred in 2023. Operating expenses during the third quarter of 2024 were $21.7 million, an increase of $1.1 million, or 5%, compared to $20.6 million in the third quarter of 2023. Net loss for the third quarter of 2024 was $(13.3) million, or $(0.44) per share, as compared to $(9.4) million, or $(0.33) per share, in the third quarter of 2023. Net loss per share was based on 30,267,236 and 28,875,720 weighted average common shares outstanding for the third quarters of 2024 and 2023, respectively. EBITDA for the third quarter of 2024 was $(11.6) million as compared to the third quarter of 2023 EBITDA of $(7.7) million. See the accompanying financial table that reconciles EBITDA, which is a non-GAAP financial measure, to net loss. Cash and cash equivalents were $20.9 million as of September 30, 2024. This compares to cash and cash equivalents of $59.7 million as of December 31, 2023. Stockholders Approve Acquisition of Greenbrook TMS On November 8, 2024, Neuronetics’ stockholders approved the previously announced acquisition of Greenbrook TMS Inc. (“Greenbrook”), in which Neuronetics will acquire all of the outstanding common shares of Greenbrook in an all-stock transaction. The next step in finalizing the transaction is a hearing in respect of the Final Order pursuant to the Ontario Business Corporations Act scheduled for November 15, 2024. The transaction will create a vertically integrated organization capable of providing access to mental health treatment with significant scale in the U.S. The transaction offers multiple strategic benefits for Neuronetics and its customers, including increased brand awareness for NeuroStar, more consistent delivery of best practices, and the ability to offer a variety of positive benefits for all NeuroStar customers. Beyond the strategic benefits, the transaction is expected to create compelling financial benefits, including increased revenue scale and a strong growth trajectory, material cost synergies, an accelerated path to profitability, and a bolstered balance sheet. The Company has outlined several key strategic initiatives, including merging Neuronetics’ sales team with Greenbrook's regional area managers to optimize commercial operations, implementing the Better Me Provider Program best practices across all Greenbrook sites, and accelerating the rollout of SPRAVATO® treatment across the combined network. Through these initiatives and additional identified opportunities to optimize the combined company's cost structure in connection with the transaction, the Company now expects to achieve cash flow breakeven by the third quarter of 2025. NeuroStar TMS Data Presented at Leading Child & Adolescent Psychiatry Conference Shows Strong Efficacy in Treating Teen Depression At the 2024 American Academy of Child and Adolescent Psychiatry (“AACAP”) annual meeting, Neuronetics presented data from the largest study to date evaluating transcranial magnetic stimulation (“TMS”) in adolescents with major depressive disorder. In an oral presentation, Paul E. Croarkin, DO, MS of Mayo Clinic shared compelling results showing NeuroStar's strong efficacy in treating Major Depressive Disorder (“MDD”) in adolescent patients, with impressive response and remission rates of 78% and 48% respectively. The findings were similar to those previously reported in adult populations treated with NeuroStar TMS including clinically meaningful improvement in anxiety symptoms in this MDD population. As the only FDA-cleared TMS device for first-line adjunct treatment of MDD in patients aged 15-21, these findings further establish NeuroStar's leadership in providing innovative solutions for adolescent mental health treatment. Business Outlook For the fourth quarter of 2024, on a stand alone basis, the Company expects total worldwide revenue between $19.0 million and $20.0 million. For the full year 2024, on a stand alone basis the Company now expects total worldwide revenue to be between $71.0 million and $72.0 million. For the full year 2024, on a stand alone basis, the Company now expects total operating expenses to be between $81.0 million and $82.0 million. This forecast excludes pre-closing transaction costs of approximately $2.0 million. Webcast and Conference Call Information Neuronetics’ management team will host a conference call on November 12, 2024, beginning at 8:30 a.m. Eastern Time. The conference call will be broadcast live in listen-only mode via webcast at https://edge.media-server.com/mmc/p/yk5bidgv. To listen to the conference call on your telephone, you may register for the call here. While it is not required, it is recommended you join 10 minutes prior to the event start. About Neuronetics Neuronetics, Inc. believes that mental health is as important as physical health. As a global leader in neuroscience, Neuronetics is redefining patient and physician expectations with its NeuroStar Advanced Therapy for Mental Health. NeuroStar is a non-drug, noninvasive treatment that can improve the quality of life for people suffering from neurohealth conditions when traditional medication hasn’t helped. The NeuroStar Advanced Therapy System is cleared by the U.S. Food and Drug Administration (the “FDA”) for adults with MDD, as an adjunct for adults with obsessive-compulsive disorder, and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression), and as a first line adjunct for the treatment of MDD in adolescent patients aged 15-21. NeuroStar Advanced Therapy is the leading TMS treatment for MDD in adults with more than 6.9 million treatments delivered. NeuroStar is backed by the largest clinical data set of any TMS treatment system for depression, including the world’s largest depression outcomes registry. Neuronetics is committed to transforming lives by offering an exceptional treatment that produces extraordinary results. For safety information and indications for use, visit NeuroStar.com. “Safe harbor” statement under the Private Securities Litigation Reform Act of 1995: Statements in the press release regarding the Company that are not historical facts constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements may be identified by terms such as “outlook,” “potential,” “believe,” “expect,” “plan,” “anticipate,” “predict,” “may,” “will,” “could,” “would” and “should” as well as the negative of these terms and similar expressions. These statements include those relating to the Company’s business outlook and current expectations for upcoming quarters and fiscal year 2024, including with respect to revenue, expenses, growth, and any statements of assumptions underlying any of the foregoing items. These statements are subject to significant risks and uncertainties and actual results could differ materially from those projected. The Company cautions investors not to place undue reliance on the forward-looking statements contained in this release. These risks and uncertainties include, without limitation, risks and uncertainties related to: the effect of the Arrangement with Greenbrook, initially announced on August 11, 2024 and approved by Greenbrook’s shareholders and Neuronetics stockholders on November 8, 2024, on our business relationships, operating results and business generally; the Company’s ability to execute its business strategy; the Company’s ability to achieve or sustain profitable operations due to its history of losses; the Company’s reliance on the sale and use of its NeuroStar Advanced Therapy system to generate revenues; the scale and efficacy of the Company’s salesforce; the Company’s ability to retain talent; availability of coverage and reimbursement from third-party payors for treatments using the Company’s products; physician and patient demand for treatments using the Company’s products; developments in competing technologies and therapies for the indications that the Company’s products treat; product defects; our revenue has been concentrated among a small number of customers; the Company’s ability to obtain and maintain intellectual property protection for its technology; developments in clinical trials or regulatory review of NeuroStar Advanced Therapy system for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; the terms of our credit facility; our ability to successfully roll-out our Better Me Provider program on the planned timeline; our self-sustainability and existing cash balances; and our ability to achieve cash flow break-even in the third quarter of 2025. For a discussion of these and other related risks, please refer to the Company’s recent filings with the U.S. Securities and Exchange Commission (the “SEC”), which are available on the SEC’s website at www.sec.gov. These forward-looking statements are based on the Company’s expectations and assumptions as of the date of this press release. Except as required by law, the Company undertakes no duty or obligation to update any forward-looking statements contained in this press release as a result of new information, future events, or changes in the Company’s expectations. Investor Contact: Mike Vallie or Mark KlausnerICR Healthcare443-213-0499ir@neuronetics.com Media Contact: EvolveMKD646-517-4220NeuroStar@evolvemkd.com NEURONETICS, INC.Statements of Operations(Unaudited; In thousands, except per share data) Three Months ended Nine months ended September 30, September 30, 2024 2023 2024 2023Revenues $18,530 $17,884 $52,397 $51,034 Cost of revenues 4,529 6,120 13,129 15,100 Gross profit 14,001 11,764 39,268 35,934 Operating expenses: Sales and marketing 11,877 12,141 35,820 35,602 General and administrative 7,436 6,339 19,540 19,151 Research and development 2,416 2,155 6,999 7,308 Total operating expenses 21,729 20,635 62,359 62,061 Loss from operations (7,728) (8,871) (23,091) (26,127)Other (income) expense: Interest expense 1,725 1,184 5,529 3,580 Loss on extinguishment of debt 4,427 — 4,427 — Other income, net (539) (664) (2,001) (4,895)Net loss $(13,341) $(9,391) $(31,046) $(24,812)Net loss per share of common stock outstanding, basic and diluted $(0.44) $(0.33) $(1.04) $(0.87)Weighted average common shares outstanding, basic and diluted 30,267 28,876 29,931 28,505 NEURONETICS, INC.Balance Sheets(Unaudited; In thousands, except per share data) September 30, December 31, 2024 2023Assets Current assets: Cash and cash equivalents $20,867 $59,677 Accounts receivable, net 16,825 15,782 Inventory 4,960 8,093 Current portion of net investments in sales-type leases 572 905 Current portion of prepaid commission expense 2,921 2,514 Current portion of note receivables 2,477 2,056 Prepaid expenses and other current assets 4,837 4,766 Total current assets 53,459 93,793 Property and equipment, net 1,639 2,009 Operating lease right-of-use assets 2,328 2,773 Net investments in sales-type leases 140 661 Prepaid commission expense 8,733 8,370 Long-term notes receivable 2,878 3,795 Other assets 4,940 4,430 Total assets $74,117 $115,831 Liabilities and Stockholders’ Equity Current liabilities: Accounts payable $3,295 $4,752 Accrued expenses 11,429 12,595 Deferred revenue 1,311 1,620 Current portion of operating lease liabilities 862 845 Total current liabilities 16,897 19,812 Long-term debt, net 46,002 59,283 Deferred revenue 4 200 Operating lease liabilities 1,833 2,346 Total liabilities 64,736 81,641 Commitments and contingencies (Note 18) — — Stockholders’ equity: Preferred stock, $0.01 par value: 10,000 shares authorized; no shares issued or outstanding on September 30, 2024 and December 31, 2023 — — Common stock, $0.01 par value: 200,000 shares authorized; 30,317 and 29,092 shares issued and outstanding on September 30, 2024 and December 31, 2023, respectively 303 291 Additional paid-in capital 416,205 409,980 Accumulated deficit (407,127) (376,081)Total Stockholders’ equity 9,381 34,190 Total liabilities and Stockholders’ equity $74,117 $115,831 NEURONETICS, INC.Statements of Cash Flows(Unaudited; In thousands) Nine months ended September 30, 2024 2023Cash flows from Operating activities: Net loss $(31,046) $(24,812)Adjustments to reconcile net loss to net cash used in operating activities: Depreciation and amortization 1,627 1,503 Allowance for credit losses 1,947 369 Inventory impairment 346 1,905 Share-based compensation 4,320 5,693 Non-cash interest expense 580 460 Loss on extinguishment of debt 4,427 — Changes in certain assets and liabilities: Accounts receivable, net (3,834) (7,933)Inventory 2,718 (2,742)Net investment in sales-type leases 854 1,092 Prepaid commission expense (770) (804)Prepaid expenses and other assets (374) (3,338)Accounts payable (1,524) 54 Accrued expenses (1,166) (4,801)Deferred revenue (506) (817)Net Cash used in Operating activities (22,401) (34,171) Cash flows from Investing activities: Purchases of property and equipment and capitalized software (1,377) (1,490)Repayment of notes receivable 1,340 731 Net Cash used in Investing activities (37) (759) Cash flows from Financing activities: Payments of debt issuance costs (2,188) (863)Proceeds from issuance of long-term debt 48,084 2,500 Proceeds from issuance of warrants 1,916 — Repayment of long-term debt (60,000) (1,200)Payment for debt extinguishment cost (4,185) — Proceeds from exercises of stock options 1 — Net Cash (used in) provided by Financing activities (16,372) 437 Net decrease in Cash and Cash equivalents (38,810) (34,493)Cash and Cash equivalents, Beginning of Period 59,677 70,340 Cash and Cash equivalents, End of Period $20,867 $35,847 Non-GAAP Financial Measures (Unaudited) EBITDA is not a measure of financial performance under generally accepted accounting principles in the U.S. (“GAAP”), and should not be construed as a substitute for, or superior to, GAAP net loss. However, management uses both the GAAP and non-GAAP financial measures internally to evaluate and manage the Company’s operations and to better understand its business. Further, management believes that the addition of the non-GAAP financial measure provides meaningful supplementary information to, and facilitates analysis by, investors in evaluating the Company’s financial performance, results of operations and trends. The Company’s calculation of EBITDA may not be comparable to similarly designated measures reported by other companies, because companies and investors may differ as to what type of events warrant adjustment. The following table reconciles reported net loss to EBITDA: Three Months ended Nine months ended September 30, September 30, 2024 2023 2024 2023 (in thousands) (in thousands)Net loss $(13,341) $(9,391) $(31,046) $(24,812)Interest expense, net 1,186 1,184 3,528 3,580 Income taxes — — — — Depreciation and amortization 512 500 1,627 1,503 EBITDA $(11,643) $(7,707) $(25,891) $(19,729)

CORRECTION—Neuronetics Reports Record Third Quarter 2024 Financial and Operating Results

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