Executive Summary / Key Takeaways

• Transformative Integration: Neuronetics has strategically pivoted into a vertically integrated mental healthcare provider through the Greenbrook TMS acquisition, aiming to expand patient access and drive operational efficiencies.
• Differentiated Technology & Market Leadership: The NeuroStar Advanced Therapy System, a non-invasive TMS technology, holds a leading position with the largest clinical data set and is the first and only FDA-cleared TMS for adolescent MDD.
• Accelerated Growth, Evolving Margins: Q2 2025 revenue surged 132% year-over-year, driven by clinic revenue, but gross margins are compressing due to the mix shift towards lower-margin clinic services and SPRAVATO buy-and-bill.
• Clear Path to Profitability: Management targets cash flow positive from operations by Q4 2025, supported by significant cost synergies, operational optimizations, and recent capital raises, despite increased strategic investments.
• Strategic Expansion & Patient Access: Programs like Better Me Provider (BMP) and Provider Connection are enhancing patient conversion and physician referrals, particularly for the underserved adolescent population, fueling future utilization.

Setting the Stage: A New Era for Mental Health Treatment

Neuronetics, Inc. is at the forefront of transforming mental healthcare, driven by the conviction that mental health is as vital as physical well-being. The company's core offering, the NeuroStar Advanced Therapy System, represents a significant leap in non-invasive treatment for neurohealth disorders. This innovative system utilizes transcranial magnetic stimulation (TMS) to generate a pulsed, MRI-strength magnetic field, inducing electrical currents that precisely stimulate specific brain regions associated with mood.

The NeuroStar system's technological differentiation is a cornerstone of Neuronetics' competitive advantage. It is cleared by the FDA for a broad spectrum of indications, including adult major depressive disorder (MDD) in patients who have not responded to prior antidepressant medication, as an adjunct for adults with obsessive-compulsive disorder (OCD), and to alleviate anxiety symptoms in adult MDD patients with comorbid anxiety. Critically, NeuroStar is the first and only TMS treatment approved for adolescent patients aged 15-21 with MDD, significantly expanding its addressable market. The system is supported by the largest clinical data set of any competing TMS system, drawing from the NeuroStar TrakStar clinical database, the world's largest depression outcomes database. A recent study published in the Journal of the American Academy of Child and Adolescent Psychiatry Open, involving 1,200 adolescent patients, demonstrated nearly 70% experienced clinically meaningful improvement with less than 1% reporting worsening symptoms. This robust clinical validation underscores NeuroStar's efficacy and safety, contributing to its strong competitive moat.

The market for mental health treatments is vast and underserved. Depression affects an estimated 4.3 million U.S. adolescents aged 15-21, and approximately 1 in 5 adolescents struggle with the condition, highlighting a critical need for safe and effective therapeutic options. Furthermore, 69% of patients with depression are initially treated within primary care settings, presenting a substantial opportunity for Neuronetics to expand awareness and access to its specialized treatments.

In this landscape, Neuronetics positions itself as a specialized leader in non-invasive neurostimulation. While larger, diversified medical device companies like Medtronic and Abbott Laboratories offer broader neuromodulation portfolios, often including implantable devices, Neuronetics' focus on outpatient, non-systemic TMS provides a distinct value proposition. Direct TMS competitors such as Nexstim (NXTM) and Magstim also operate in the space, but NeuroStar's extensive clinical data, FDA clearances, and dedicated health policy team provide a strong competitive edge, particularly in commercialization for routine clinical use.

The Transformative Journey: From Device Maker to Integrated Care

Neuronetics, incorporated in 2001, built its foundation on the NeuroStar system, progressively securing FDA clearances that broadened its market reach. Despite a history of operating losses since inception, the company consistently invested in its technology and market development. The year 2024 marked a pivotal transformation, fundamentally reshaping Neuronetics' strategic direction and market footprint.

In March 2024, the company achieved a significant milestone with FDA clearance for the NeuroStar system as the first and only TMS treatment for adolescent depression. This was followed by a strategic debt refinancing in July 2024, securing a new $90 million Perceptive Credit Facility and repaying its previous facility. Concurrently, the Better Me Provider (BMP) Program, designed to enhance patient care and responsiveness, began a nationwide rollout, expanding to over 350 sites.

The most impactful event of this period was the acquisition of Greenbrook TMS Inc. on December 9, 2024. This strategic move transformed Neuronetics into a vertically integrated mental healthcare provider, combining its innovative technology platform with Greenbrook's extensive network of treatment centers across the U.S. This integration was driven by a clear rationale: to expand patient access, enhance operational efficiency, and realize substantial cost synergies. Initial synergy estimates of $15 million were later revised to over $22 million by year-end 2024, with over 95% already realized. This vertical integration allows Neuronetics to control the entire patient journey, from technology development to direct care delivery, a strategic response to the competitive dynamics of the mental health market.

Operational Synergy and Strategic Growth Pillars

Neuronetics' post-acquisition strategy centers on optimizing the integrated business to drive growth and achieve profitability. The Greenbrook integration is a multi-faceted effort focusing on operational efficiencies and revenue capture.

The optimization of Greenbrook's Regional Account Manager (RAM) program is yielding strong results. By implementing enhanced patient connection capabilities, including automated patient transfer processes, QR codes, and a coordinated intake team, Neuronetics has significantly improved patient conversion rates. These initiatives ensure patients are engaged while still at the referring physician's office, streamlining the path to treatment.

The rollout of SPRAVATO treatment across the Greenbrook network is progressing rapidly, with 77 of 83 SPRAVATO-eligible clinics now offering the therapy, up from 75 in Q1. The company is strategically expanding its "Buy & Bill" model, which generates approximately three times the revenue compared to the "Administer & Observe" model. While this requires managing medication inventory, it results in higher overall reimbursement. Neuronetics is taking an analytical approach to this expansion, focusing on opportunities that deliver good margins, acknowledging the varying reimbursement rates and timings from payers.

Operational standardization across the Greenbrook network is also a key initiative. Patient coordinators are now placed in most clinics to facilitate efficient in-person consultations. A self-check-in program using kiosks, successfully piloted at four locations and expanded to seven, is slated for a full network rollout. This system, integrated with the AMD platform, streamlines room management and improves patient flow, optimizing staff time. A comprehensive review of Greenbrook's operations team structure is underway to identify further cost savings and optimization opportunities for implementation in the latter half of 2025. Furthermore, cash collection initiatives, including identifying and resubmitting uncollected claims and fixing billing submission errors, are designed to reduce rejections and accelerate cash flow.

The Better Me Provider (BMP) Program continues to be a vital growth driver for the NeuroStar business. Currently, 395 active BMP sites exist, with another 113 working towards qualification. The program's effectiveness is evident: BMP sites treat three times more patients per site per quarter than non-BMP practices and respond to patients approximately two times faster. This superior performance drives utilization and attracts referrals. The newly launched Provider Connection Program leverages Greenbrook's success in educating primary care physicians (PCPs) and other healthcare providers about NeuroStar. This strategy is highly effective, as referrals from medical providers are ten times more likely to result in a new patient start than traditional marketing leads, with PCPs preferring to send patients to BMP sites due to their commitment to patient responsiveness and education standards.

The adolescent treatment segment is experiencing significant growth, with a 25% increase in new patient starts in the first half of 2025 compared to 2024, and a 2.6x increase among 15- to 17-year-olds. This growth is more than double the total number of adolescent patients treated in all of 2023. Expanded insurance coverage, including Evernorth Health Services (a Cigna Group (CI) subsidiary) covering 15 million lives, along with Humana (HUM), Aetna (CVS), and Blue Cross Blue Shield entities, is bolstering this momentum.

Financial Performance and Liquidity: A Path to Profitability

Neuronetics' financial performance in the second quarter of 2025 reflects the early impacts of its transformative integration. Total revenue for Q2 2025 surged to $38.1 million, a 132% increase year-over-year, or an 18% increase on an adjusted pro forma basis. For the six months ended June 30, 2025, total revenue was $70.1 million, up 107% from the prior year period. This growth was primarily attributable to the inclusion of Greenbrook's clinic revenue, which reached $23 million in Q2 2025—the largest quarterly clinic revenue to date and a 23% sequential increase over Q1 2025. NeuroStar system revenue for Q2 2025 was $3.5 million, with 41 systems shipped. While the number of systems decreased year-over-year, the average selling price (ASP) per system increased by 6% to over $85,000, demonstrating the value of the system's features. U.S. treatment session revenue was $10.8 million in Q2 2025, representing a 13% increase on a pro forma basis, despite the elimination of intercompany sales to Greenbrook .
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Gross profit for Q2 2025 was $17.76 million, resulting in a gross margin of 46.6%. This marks a notable decrease from 74% in Q2 2024. The shift in product mix, with clinic revenue representing a greater percentage of total revenue, and the higher mix of SPRAVATO buy-and-bill treatments (which carry a lower gross percentage margin), were the primary drivers of this compression. Operating expenses for Q2 2025 increased by 25% to $25.8 million, largely due to the inclusion of Greenbrook's general and administrative expenses ($6.1 million increase), partially offset by savings in sales and marketing and R&D following restructuring efforts. The net loss for Q2 2025 was $9.8 million, with a net loss of $22.5 million for the first half of 2025. EBITDA for Q2 2025 was negative $7.2 million.

Liquidity has been a key focus. As of June 30, 2025, Neuronetics held $11 million in cash and cash equivalents, along with $6.5 million in restricted cash, primarily for SPRAVATO operations collateral. Operating cash flow for Q2 2025 improved significantly to negative $3.5 million, better than the previously guided target of under $5 million. The company's balance sheet was further strengthened by a secondary public offering in February 2025, which raised $18.9 million in net proceeds. In August 2025, Neuronetics received an additional $10 million in funding from its Perceptive Credit Facility, triggered by achieving specific revenue conditions, with another $5 million remaining eligible. The minimum liquidity covenant has been extended to $2 million through September 2026. Additionally, an at-the-market (ATM) equity offering program for up to $50 million was established in July 2025, providing further financial flexibility.

Outlook, Guidance, and Strategic Positioning

Neuronetics' outlook for the remainder of 2025 reflects a continued focus on integrating Greenbrook, optimizing operations, and driving towards profitability. For Q3 2025, the company anticipates net revenue between $37 million and $39 million, acknowledging typical summer seasonality. The full-year 2025 revenue guidance has been narrowed to $149 million to $155 million.

Gross margin for the full year 2025 is now projected to be between 48% and 50%, a revision from the prior 55%. This adjustment primarily reflects the greater-than-expected contribution of lower-margin clinic revenue and the evolving mix of SPRAVATO buy-and-bill treatments. Management expects gross margin improvement in the second half of the year as the SPRAVATO buy-and-bill rollout is optimized for profitability and fixed clinical infrastructure is leveraged. Full-year operating expenses are now guided between $100 million and $105 million, an increase from prior guidance, reflecting strategic investments in areas like the claims collections team and additional time needed to fully assess and implement synergies.

The company's primary financial objective remains achieving cash flow positive from operations, now targeted for Q4 2025, a slight adjustment from the previous Q3 2025 target due to the updated gross margin mix and strategic operational investments. Year-end 2025 total cash is projected to be between $25 million and $28 million, inclusive of recent Perceptive funding.

Neuronetics' competitive standing is defined by its specialized focus and innovative technology. The NeuroStar system's FDA clearances, particularly for adolescents, and its extensive clinical data set, provide a strong competitive moat against broader neuromodulation players like Medtronic (MDT) and Abbott Laboratories (ABT). While these larger competitors benefit from greater scale, diversified portfolios, and superior financial resources (evidenced by their higher gross, operating, and net profit margins, and lower debt-to-equity ratios), Neuronetics' vertical integration strategy aims to capture more value within its niche. Its dedicated health policy team is a unique asset, actively partnering with providers and payers to advocate for policy updates, further solidifying its market position. The company's focus on non-invasive, outpatient care, coupled with its BMP and Provider Connection programs, directly addresses patient and provider needs, differentiating it from both device-centric rivals and pharmaceutical alternatives.

Conclusion

Neuronetics is undergoing a profound transformation, strategically positioning itself as a vertically integrated leader in the mental health space. The acquisition of Greenbrook TMS (GBNH), coupled with the proven efficacy of the NeuroStar Advanced Therapy System and its expanded indications, forms the bedrock of a compelling investment thesis. While the journey involves navigating evolving reimbursement landscapes and optimizing operational synergies, the company's clear strategic pillars—driving Greenbrook growth, scaling the BMP program, and enhancing operational efficiencies—are designed to unlock significant value.

Despite near-term adjustments to gross margin and operating expense guidance reflecting strategic investments and revenue mix shifts, Neuronetics remains firmly on track to achieve cash flow positive from operations by the fourth quarter of 2025. The company's technological leadership, particularly in adolescent MDD, combined with its expanding network and patient-centric approach, positions it for sustainable growth. Investors should closely monitor the execution of the SPRAVATO buy-and-bill optimization, the continued expansion of the BMP network, and the realization of further cost synergies as key indicators of Neuronetics' ability to translate its integrated model into long-term shareholder value.