GlobeNewswire Inc | Nov 9, 2021 07:30AM EST

November 09, 2021

MALVERN, Pa., Nov. 09, 2021 (GLOBE NEWSWIRE) -- Neuronetics,Inc. (NASDAQ: STIM), a commercial stage medical technology company focused on designing, developing and marketing products that improve the quality of life for patients who suffer from neurohealth disorders, today announced its financial and operating results for the third quarter of 2021.

Third Quarter 2021 Highlights

-- As previously announced, third quarter 2021 revenue of $13.8 million, an increase of 11% over third quarter 2020

-- Entered into an agreement with Zion Healing, in which the Company will be the exclusive supplier of TMS equipment to Zion Healing and its franchisees

-- In September, entered into a five-year contract extension with Success TMS, in which the Company will be the exclusive supplier of TMS equipment to Success TMS

-- Provided a $10 million strategic loan to Success TMS to support Success TMS expansion efforts

-- Hosted 2nd NeuroStar Summit in September with over 50 prospective practices attending

-- Independent data published demonstrating patients have a significantly lower seizure risk with NeuroStar Advanced Therapy for Mental Health than with other TMS treatments

Despite lower than anticipated revenue during the third quarter primarily due to COVID, we have continued to make solid progress on our strategic initiatives to drive future growth. Most notably, we signed two agreements with national accounts to exclusively use NeuroStar Advanced Therapy for Mental Health to treat MDD patients, said Keith J. Sullivan, President and Chief Executive Officer of Neuronetics. Looking ahead to the balance of the year, we will be focused on helping our existing customers treat more patients, the maturation of our sales force, implementing marketing campaigns, and continuing to progress our regulatory filings related to potential label expansions and additional indications. While the results of our strategic initiatives have taken longer than expected, we remain highly enthusiastic about the opportunity to expand upon our market leading position to bring the benefits of NeuroStar Advanced Therapy for Mental Health to as many patients as possible who are suffering from mental disorders.

Third Quarter 2021 Financial and Operating Results for the Three Months Ended September 30, 2021

RevenuesbyGeography Three Months Ended September30, 2021 2020 Amount Amount %Change (inthousands,exceptpercentages)United States $ 13,280 $ 12,029 10 %International 519 419 24 %Total revenues $ 13,799 $ 12,448 11 %

As previously announced, total revenue for the three months ended September 30, 2021 was $13.8 million, an increase of 11% compared to the three months ended September 30, 2020 revenue of $12.4 million. During the quarter, total U.S. revenue increased by 10% and international revenue increased by 24% over the prior year quarter. The U.S. revenue growth was driven by an increase in U.S. treatment session revenue and the international revenue growth was driven by an increase in international NeuroStar Advanced Therapy System sales.

U.S.RevenuesbyProductCategory Three Months Ended September30, 2021 2020 Amount Amount %Change (inthousands,exceptpercentages)NeuroStar Advanced Therapy System $ 2,612 $ 2,541 3 %Treatment sessions 10,259 $ 9,083 13 %Other 409 $ 405 1 %Total U.S. revenues $ 13,280 $ 12,029 10 %

U.S.NeuroStarAdvancedTherapySystem RevenuesbyType Three Months Ended September30, 2021 2020 Amount Amount %Change (inthousands,exceptpercentages)NeuroStar Capital $ 2,277 $ 2,438 (7 )%Operating lease 30 $ 88 (66 )%Other 305 $ 15 1,933 %Total United States NeuroStar $ 2,612 $ 2,541 3 %Advanced Therapy System revenues

U.S. NeuroStar Advanced Therapy System revenue for the three months ended September 30, 2021 was $2.6 million, an increase of 3% compared to the three months ended September 30, 2020 revenue of $2.5 million. For the three months ended September 30, 2021 and 2020, the Company sold 33 and 39 systems, respectively, during each period. Additionally, for the three months ended September 30, 2021, the Company executed 7 operating lease agreements.

U.S. treatment session revenue for the three months ended September 30, 2021 was $10.3 million, an increase of 13% compared to the three months ended September 30, 2020 revenue of $9.1 million. The revenue growth was primarily driven by an increase in treatment session volume over the prior year quarter.

In the third quarter, U.S. treatment session revenue per active site was $11,163 as compared to $10,218 during the third quarter of 2020.

Gross margin for the third quarter of 2021 was 77.2%, a decrease of approximately 144 basis points from the third quarter of 2020 gross margin of 78.7%. The decrease was primarily a result of increased supply chain costs compared to the prior year quarter.

Operating expenses during the third quarter of 2021 were $17.8 million, an increase of $5.6 million compared to $12.2 million in the third quarter of 2020. The increase was primarily driven by costs associated with the rebuild of our commercial organization and the implementation of marketing initiatives as well as additional stock-based compensation expense compared to the prior year quarter.

Net loss for the third quarter of 2021 was $(8.2) million, or $(0.31) per share, as compared to the third quarter 2020 net loss of $(3.4) million, or $(0.18) per share. Net loss per share was based on 26,301,361 and 18,890,364 weighted-average common shares outstanding for the third quarters of 2021 and 2020, respectively.

EBITDA for the third quarter of 2021 was $(6.9) million as compared to the third quarter of 2020 EBITDA of $(2.2) million. See the accompanying financial table that reconciles EBITDA, which is a non-GAAP financial measure, to net loss.

Cash and cash equivalents were $99.4 million as ofSeptember 30, 2021. This compares to cash and cash equivalents of $49.0 million as of December 31, 2020 and $50.7 million as of September 30, 2020.

Exclusive National Account Commercial Agreements

Zion Healing

In September, the Company announced a commercial agreement with Zion Healing, a leading franchisor of Behavioral Health services. In this agreement, the Company will be the exclusive supplier of TMS equipment to Zion Healing and its franchisees.

Success TMS

In September, we entered into a five-year contract extension with Success TMS, one of the nations leading TMS providers. As part of this agreement, Success TMS will exclusively utilize the Companys NeuroStar Advanced Therapy for Mental Health system to treat patients suffering from treatment-resistant major depressive disorder.

In addition to the agreement, the Company made a strategic loan to the company in the form of a $10 million term loan to support Success TMS expansion plans over the coming year.

Clinical Data Publication on Seizure Risk

In September, a peer reviewed paper was published in Brain Stimulation titled Seizure risk with repetitive TMS: Survey results from over a half-million treatment sessions. The paper demonstrated patients have a significantly lower seizure risk with NeuroStar Advanced Therapy for Mental Health than with TMS treatments that claim deeper stimulation with H-Coil technology.

September NeuroStar Summit

In September in Chicago, IL, the Company held its second NeuroStar Summit event designed to provide prospective customers with a comprehensive understanding of the clinical and practice benefits of partnering with NeuroStar. The Summit was an interactive event and attendees from more than 50 practices were able to experience the NeuroStar Advanced Therapy System, interact with peers and hear from experts. Post survey results were extremely positive, and the Company plans to hold more Summits in the future.

Business Outlook

As previously announced, for the fullyear 2021, the Company now expects to report total worldwide revenue between $53.3 million and $54.3 million.

For the fullyear 2021, the Company now expects total operating expenses to be between $69 million and $71 million.

For the fourth quarter of 2021, the Company now expects to report total worldwide revenue of between $13 million and $14 million.

Webcast and Conference Call Information

Neuronetics management team will host a conference call on November 9, 2021 beginning at 8:30a.m. Eastern Time. Investors interested in listening to the conference call on your telephone, please dial (877) 472-8990 for United States callers or +1 (629) 228-0778 for international callers and reference confirmation code 3891687, approximately ten minutes prior to start time. To access the live audio webcast or subsequent archived recording, visit the Investor Relations section of Neuronetics website at ir.neuronetics.com. The replay will be available on the Companys website for approximately 60days.

About Neuronetics

Neuronetics, Inc. believes that mental health is as important as physical health. As a global leader in neuroscience and the largest TMS company in the industry, Neuronetics is redefining patient and physician expectations by designing and developing products that improve the quality of life for people suffering from neurohealth conditions. An FDA-cleared, non-drug, noninvasive treatment for people with depression, Neuronetics NeuroStar Advanced Therapy system is todays leading transcranial magnetic stimulation (TMS) treatment for major depressive disorder in adults with over four million treatments delivered. NeuroStar is widely researched and backed by the largest clinical data set of any TMS system for depression, including the worlds largest depression Outcomes Registry. Neuronetics is committed to transforming lives by offering an exceptional treatment option 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 Neuronetics,Inc. (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 Companys business outlook and current expectations for upcoming quarter and fiscalyear 2021, including with respect to revenue, operating expense, 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 impact of COVID-19 on the Companys operational and budget plans as well as general political and economic conditions, including as a result of efforts by governmental authorities to mitigate COVID-19, such as travel bans, shelter in place orders and third-party business closures and the related impact on resource allocations, manufacturing and supply chains and patient access to commercial products; the Companys ability to execute its business continuity; the Companys ability to achieve or sustain profitable operations due to its history of losses; the Companys reliance on the sale and usage of its NeuroStar Advanced Therapy for Mental Health System to generate revenues; the scale and efficacy of the Companys salesforce; availability of coverage and reimbursement from third-party payors for treatments using the Companys products; physician and patient demand for treatments using the Companys products; developments in respect of competing technologies and therapies for the indications that the Companys products treat; product defects; the Companys ability to obtain and maintain intellectual property protection for its technology; developments in clinical trials or regulatory review of NeuroStar Advanced Therapy for Mental Health System for additional indications; and developments in regulation in the United States and other applicable jurisdictions. For a discussion of these and other related risks, please refer to the Companys recent SEC filings which are available on the SECs website at www.sec.gov. These forward-looking statements are based on the Companys 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 Companys expectations.

Investor Contact:

Mike Vallie or Mark KlausnerWestwicke Partners443-213-0499ir@neuronetics.com

Media Contact:

EvolveMKD646-517-4220NeuroStar@evolvemkd.com

NEURONETICS,INC.Statements of Operations(Unaudited; In thousands, except per share data)

ThreeMonthsended Nine months ended September30, September30, 2021 2020 2021 2020Revenues $ 13,799 $ 12,448 $ 40,290 $ 33,665 Cost of revenues 3,144 2,657 8,115 7,791 Gross Profit 10,655 9,791 32,175 25,874 Operating expenses: Sales and marketing 9,827 6,053 27,431 24,926 General and 6,435 4,210 19,220 13,508 administrativeResearch and development 1,575 1,952 6,179 7,089 Total operating expenses 17,837 12,215 52,830 45,523 Loss from Operations (7,182 ) (2,424 ) (20,655 ) (19,649 )Other (income) expense: Interest expense 993 1,002 2,955 3,511 Loss on extinguishment of ? ? ? 924 debtOther income, net (24 ) (8 ) (53 ) (288 )Net Loss $ (8,151 ) $ (3,418 ) $ (23,557 ) $ (23,796 )Net loss per share ofcommon stock outstanding, $ (0.31 ) $ (0.18 ) $ (0.94 ) $ (1.27 )basic and dilutedWeighted-average commonshares outstanding, basic 26,301 18,890 25,179 18,773 and diluted

NEURONETICS,INC.Balance Sheets(Unaudited; In thousands, except per share data)

September30, December31, 2021 2020Assets Current assets: Cash and cash equivalents $ 99,434 $ 48,957 Accounts receivable, net 7,749 7,166 Inventory 5,355 3,720 Current portion of net investments in 2,142 1,887 sales-type leasesCurrent portion of prepaid commission expense 1,313 1,096 Prepaid expenses and other current assets 3,454 2,186 Total current assets 119,447 65,012 Property and equipment, net 920 730 Operating lease right-of-use assets 3,131 3,418 Net investments in sales-type leases 1,735 2,331 Prepaid commission expense 5,685 5,300 Long-term note receivable 10,000 ? Other assets 2,150 1,866 Total Assets $ 143,068 $ 78,657 Liabilities and Stockholders? Equity Current liabilities: Accounts payable $ 3,306 $ 3,749 Accrued expenses 6,913 7,319 Deferred revenue 1,870 2,020 Current portion of operating lease liabilities 616 594 Current portion of long-term debt, net 35,104 ? Total current liabilities 47,809 13,682 Long-term debt, net ? 34,620 Deferred revenue 1,361 1,741 Operating lease liabilities 2,822 3,121 Total Liabilities 51,992 53,164 Commitments and contingencies (Note 17) ? ? Stockholders? Equity: Preferred stock, $0.01 par value: 10,000 shares authorized; no shares issued oroutstanding at September30,2021 and ? ? December31,2020Common stock, $0.01 par value: 200,000 shares authorized; 26,335 and 19,114shares issued and outstanding atSeptember30,2021 and December31,2020, 263 191 respectivelyAdditional paid-in capital 391,910 302,842 Accumulated deficit (301,097 ) (277,540 )Total Stockholders? Equity 91,076 25,493 Total Liabilities and Stockholders? Equity $ 143,068 $ 78,657

NEURONETICS,INC.Statements of Cash Flows(Unaudited; In thousands)

Nine months ended September30, 2021 2020Cash Flows from Operating Activities: Net loss $ (23,557 ) $ (23,796 )Adjustments to reconcile net loss to net cash used in operating activities:Depreciation and amortization 768 741 Share-based compensation 6,166 2,888 Non-cash interest expense 484 1,113 Cost of rental units purchased by customers 137 150 Loss on extinguishment of debt ? 622 Changes in certain assets and liabilities: Accounts receivable, net (3,097 ) 1,005 Inventory (1,870 ) (1,004 )Net investment in sales-type leases 341 (1,271 )Leasehold reimbursement ? 875 Prepaid commission expense (602 ) (1,070 )Prepaid expenses and other assets (453 ) (1,263 )Accounts payable (840 ) (2,340 )Accrued expenses (405 ) (2,981 )Deferred revenue (531 ) (356 ) Net Cash Used in Operating Activities (23,459 ) (26,687 ) Cash Flows from Investing Activities: Purchases of property and equipment and capitalized (1,552 ) (615 )softwareIssuance of promissory note (7,486 ) ? Net Cash Used in Investing Activities (9,038 ) (615 ) Cash Flows from Financing Activities: Proceeds from issuance of long-term debt ? 41,360 Repayment of long-term debt ? (38,860 )Payments of debt issuance costs ? (721 )Proceeds from exercises of stock options 2,403 534 Proceeds from common stock offering 80,972 ? Payments of common stock offering issuance costs (401 ) ? Net Cash Provided by Financing Activities 82,974 2,313 Net Increase (Decrease) in Cash and Cash 50,477 (24,989 )Equivalents Cash and Cash Equivalents, Beginning of Period 48,957 75,708 Cash and Cash Equivalents, End of Period $ 99,434 $ 50,719

Non-GAAP Financial Measures (Unaudited)

EBITDA is not a measure of financial performance under generally accepted accounting principles in the United States, or 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 Companys operations and to better understand its business. Further, management believes the addition of the non-GAAP financial measure provides meaningful supplementary information to, and facilitates analysis by, investors in evaluating the Companys financial performance, results of operations and trends. The Companys 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:

ThreeMonthsended Nine months ended September30, September30, 2021 2020 2021 2020 (inthousands) (inthousands)Net loss $ (8,151 ) $ (3,418 ) $ (23,557 ) $ (23,796 )Interest expense 993 1,002 2,955 3,511 Income taxes ? ? ? ? Depreciation and 216 207 768 741 amortizationEBITDA $ (6,942 ) $ (2,209 ) $ (19,834 ) $ (19,544 )