Neuronetics, Inc 10-Q for FY2021 Q2

Neuronetics, Inc. (STIM)

10-Q 2021-08-03 For: 2021-06-30

Added on April 10, 2026

About this 10-Q

Neuronetics, Inc filed this 10-Q on August 3, 2021, covering the quarter ended June 30, 2021 (FY2021 Q2).

Headline figures

Quarter ended June 30, 2021, as reported in this filing, compared with the same period a year earlier where the filing states it.

Revenue: $14.2M; up 45.8% from $9.74M a year earlier
Net loss: $7.53M; compared with a net loss of $7.77M a year earlier
Diluted EPS: -$0.29; compared with -$0.41 a year earlier

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Delaware	33-1051425
(State or other jurisdiction of	(I.R.S. Employer Identification No.)
incorporation or organization)

3222 Phoenixville Pike, Malvern, PA	19355
(Address of principal executive offices)	(Zip Code)
(610) 640-4202
(Registrant’s telephone number, including area code)


Title of each class	Trading Symbol (s)	Name on each exchange on which registered
Common Stock ($0.01 par value)	STIM	The Nasdaq Global Market


Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒


		Page
PART I – FINANCIAL INFORMATION

Item 1.	Financial Statements.	3
	Balance Sheets as of June 30, 2021 and December 31, 2020	3
	Statements of Operations for the Three and Six Months ended June 30, 2021 and 2020	4
	Statements of Changes in Stockholders’ Equity for the Three and Six Months ended June 30, 2021 and 2020	5
	Statements of Cash Flows for the Six Months ended June 30, 2021 and 2020	6
	Notes to Interim Financial Statements	7
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	20
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	35
Item 4.	Controls and Procedures.	35
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	36
Item 1A.	Risk Factors.	36
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	36
Item 3.	Defaults Upon Senior Securities.	36
Item 4.	Mine Safety Disclosures.	36
Item 5.	Other Information.	36
Item 6.	Exhibits.	37
	SIGNATURES	38


	June 30,		December 31,
	2021		2020
Assets
Current assets:
Cash and cash equivalents	$	115,783	$	48,957
Accounts receivable, net		9,002		7,166
Inventory		5,393		3,720
Current portion of net investments in sales-type leases		2,034		1,887
Current portion of prepaid commission expense		1,219		1,096
Prepaid expenses and other current assets		1,447		2,186
Total current assets		134,878		65,012
Property and equipment, net		708		730
Operating lease right-of-use assets		3,228		3,418
Net investments in sales-type leases		1,854		2,331
Prepaid commission expense		5,454		5,300
Other assets		1,976		1,866
Total Assets	$	148,098	$	78,657
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	2,425	$	3,749
Accrued expenses		6,604		7,319
Deferred revenue		1,937		2,020
Current portion of operating lease liabilities		612		594
Current portion of long-term debt, net		—		—
Total current liabilities		11,578		13,682
Long-term debt, net		34,944		34,620
Deferred revenue		1,488		1,741
Operating lease liabilities		2,922		3,121
Total Liabilities		50,932		53,164
Commitments and contingencies (Note 16)		—		—
Stockholders’ Equity:
Preferred stock, $0.01 par value: 10,000 shares authorized; no shares issued or
outstanding at June 30, 2021 and December 31, 2020		—		—
Common stock, $0.01 par value: 200,000 shares authorized; 26,167 and 19,114
shares issued and outstanding at June 30, 2021 and December 31, 2020, respectively		262		191
Additional paid-in capital		389,850		302,842
Accumulated deficit		(292,946)		(277,540)
Total Stockholders' Equity		97,166		25,493
Total Liabilities and Stockholders’ Equity	$	148,098	$	78,657


	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2021		2020		2021		2020
Revenues	$	14,203	$	9,741	$	26,491	$	21,217
Cost of revenues		2,750		2,323		4,971		5,134
Gross Profit		11,453		7,418		21,520		16,083
Operating expenses:
Sales and marketing		9,042		8,151		17,604		18,874
General and administrative		6,681		4,010		12,785		9,298
Research and development		2,294		2,116		4,604		5,137
Total operating expenses		18,017		14,277		34,993		33,309
Loss from Operations		(6,564)		(6,859)		(13,473)		(17,226)
Other (income) expense:
Interest expense		977		986		1,962		2,509
Loss on extinguishment of debt		—		—		—		924
Other income, net		(16)		(80)		(29)		(281)
Net Loss	$	(7,525)	$	(7,765)	$	(15,406)	$	(20,378)
Net loss per share of common stock outstanding, basic and diluted	$	(0.29)	$	(0.41)	$	(0.63)	$	(1.09)
Weighted-average common shares outstanding, basic and diluted		25,903		18,747		24,608		18,714


				Additional				Total
	Common Stock			Paid-in		Accumulated		Stockholders’
	Shares	Amount		Capital		Deficit		Equity
Balance at December 31, 2019	18,645	$	186	$	297,753	$	(250,087)	$	47,852
Share-based awards and options exercises	81		1		75		—		76
Share-based compensation expense	—		—		1,196		—		1,196
Net loss	—		—		—		(12,613)		(12,613)
Balance at March 31, 2020	18,726	$	187	$	299,024	$	(262,700)	$	36,511
Share-based awards and options exercises	83		1		47		—		48
Share-based compensation expense	—		—		646		—		646
Net loss	—		—		—		(7,765)		(7,765)
Balance at June 30, 2020	18,809	$	188	$	299,717	$	(270,465)	$	29,440

Balance at December 31, 2020	19,114	$	191	$	302,842	$	(277,540)	$	25,493
Share-based awards and options exercises	1,076		11		1,581		—		1,592
Issuance of common stock, net of issuance costs of $401	5,566		56		80,515		—		80,571
Share-based compensation expense	—		—		2,196		—		2,196
Net loss	—		—		—		(7,881)		(7,881)
Balance at March 31, 2021	25,756	$	258	$	387,134	$	(285,421)	$	101,971
Share-based awards and options exercises	411		4		707		—		711
Share-based compensation expense	—		—		2,009		—		2,009
Net loss	—		—		—		(7,525)		(7,525)
Balance at June 30, 2021	26,167	$	262	$	389,850	$	(292,946)	$	97,166


	Six Months Ended June 30,
	2021		2020
Cash Flows from Operating Activities:
Net loss	$	(15,406)	$	(20,378)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization		552		534
Share-based compensation		4,205		1,842
Non-cash interest expense		324		944
Cost of rental units purchased by customers		137		122
Loss on extinguishment of debt		—		622
Changes in certain assets and liabilities:
Accounts receivable, net		(1,835)		(66)
Inventory		(1,673)		(557)
Net investments in sales-type leases		330		(777)
Leasehold reimbursement		—		836
Prepaid commission expense		(278)		(723)
Prepaid expenses and other assets		1,120		356
Accounts payable		(1,365)		(2,408)
Accrued expenses		(715)		(3,492)
Deferred revenue		(336)		14
Net Cash Used in Operating Activities		(14,940)		(23,131)

Cash Flows from Investing Activities:
Purchases of property and equipment and capitalized software		(1,108)		(484)
Net Cash Used in Investing Activities		(1,108)		(484)

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		2,303		124
Proceeds from the issuance of common stock		80,972		—
Payments of common stock offering issuance costs		(401)		—
Net Cash Provided by Financing Activities		82,874		1,903
Net Increase (Decrease) in Cash and Cash Equivalents		66,826		(21,711)
Cash and Cash Equivalents, Beginning of Period		48,957		75,708
Cash and Cash Equivalents, End of Period	$	115,783	$	53,997
Supplemental disclosure of cash flow information:
Cash paid for interest	$	1,638	$	2,227
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment and capitalized software in accounts payable and accrued expenses	$	41	$	80


	Six Months Ended
	June 30, 2021		June 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	392	$	394


	June 30, 2021
Remainder of 2021	$	313
2022		639
2023		636
2024		646
2025		660
Thereafter		1,487
Total lease payments		4,381
Less imputed interest		(847)
Present value of operating lease liabilities	$	3,534


	Three Months Ended June 30,				Six Months Ended June 30,
	2021		2020		2021		2020
Profit recognized at commencement, net	$	148	$	474	$	281	$	726
Interest income		—		—		—		—
Total sales-type lease income	$	148	$	474	$	281	$	726


	Revenue
Year:	Recognition
Remainder of 2021	38	%
2022	23	%
2023	17	%
2024	17	%
2025	5	%
Thereafter	—	%
Total	100	%


	June 30, 2021	December 31, 2020
Shares of common stock issued	26,167	19,114
Shares of common stock reserved for issuance for:
Common stock warrants outstanding	75	105
Stock options outstanding	1,607	2,365
Restricted stock units outstanding	2,139	1,860
Shares available for grant under stock incentive plan	2,153	1,530
Shares available for sale under employee stock purchase plan	799	608
Total shares of common stock issued and reserved for issuance	32,940	25,582


June 30, 2021
Warrants
Outstanding
(in thousands)	Exercise Price		Expiration Date
14	$	19.55	Dec-2022
20	$	9.73	Aug-2023
20	$	9.73	Mar-2024
21	$	9.73	Dec-2024
75


					Aggregate
	Number of	Weighted-		Weighted-	average
	Shares under	average		Remaining	Intrinsic
	Option	Exercise Price		Contractual	Value
	(in thousands)	per Option		Life (in years)	(in thousands)
Outstanding at December 31, 2020	2,365	$	4.62
Granted	—	$	—
Exercised	(655)	$	3.94
Forfeited	(103)	$	14.84
Outstanding at June 30, 2021	1,607	$	4.39	7.8	$	18,763
Exercisable at June 30, 2021	451	$	7.44	5.0	$	3,925
Vested and expected to vest at June 30, 2021	1,607	$	4.39	7.8	$	18,763


	June 30,		December 31,
	2021		2020
Laboratory equipment	$	184	$	150
Office equipment		497		487
Computer equipment and software		1,541		1,360
Manufacturing equipment		327		273
Leasehold improvements		459		459
Rental equipment		131		405
Property and equipment, gross		3,139		3,134
Less: Accumulated depreciation		(2,431)		(2,404)
Property and equipment, net	$	708	$	730


	Non-vested		Weighted-	Non-vested		Weighted-
	Restricted		average	Performance Restricted		average
	Stock Units		Grant-date	Stock Units		Grant-date
	(in thousands)		Fair Value	(in thousands)		Fair Value
Non-vested at December 31, 2020	1,860	$	3.58	500	$	1.71
Granted	721	$	13.58	145	$	15.59
Vested	(586)	$	3.65	(250)	$	1.77
Forfeited	(250)	$	6.88	—	$	—
Non-vested at June 30, 2021	1,744	$	7.21	395	$	6.77


	June 30, 2021				December 31, 2020
Closing price of common stock	$	15.92		$	1.98
Risk-free interest rate		1.15	%		0.63	%
Expected volatility		99.7	%		87.4	%


	U.S. Revenues by Product Category
	Three Months Ended June 30,
	2021				2020
			% of				% of
	Amount		Revenues		Amount		Revenues

	(in thousands, except percentages)
NeuroStar Advanced Therapy System	$	2,577	19	%	$	2,338	25	%
Treatment sessions		10,801	78	%		6,547	71	%
Other		431	3	%		382	4	%
Total U.S. revenues	$	13,809	100	%	$	9,267	100	%


	Revenues by Geography
	Three Months Ended June 30,
	2021				2020
			% of				% of
	Amount		Revenues		Amount		Revenues

	(in thousands, except percentages)
United States	$	13,809	97	%	$	9,267	95	%
International		394	3	%		474	5	%
Total revenues	$	14,203	100	%	$	9,741	100	%


	International Revenues by Product Category
	Three Months Ended June 30,
	2021				2020
			% of				% of
	Amount		Revenues		Amount		Revenues

	(in thousands, except percentages)
NeuroStar Advanced Therapy System	$	284	72	%	$	310	66	%
Treatment sessions		14	4	%		115	24	%
Other		96	24	%		49	10	%
Total International revenues	$	394	100	%	$	474	100	%


	Three Months Ended
	June 30,						Increase / (Decrease)
	2021			2020			Dollars		Percentage

	(in thousands, except percentages)
Revenues	$	14,203		$	9,741		$	4,462	46	%
Cost of revenues		2,750			2,323			427	18	%
Gross Profit		11,453			7,418			4,035	54	%
Gross Margin		80.6	%		76.2	%

Operating expenses:
Sales and marketing		9,042			8,151			891	11	%
General and administrative		6,681			4,010			2,671	67	%
Research and development		2,294			2,116			178	8	%
Total operating expenses		18,017			14,277			3,740	26	%
Loss from Operations		(6,564)			(6,859)			295	4	%
Other (income) expense:
Interest expense		977			986			(9)	(1)	%
Other income, net		(16)			(80)			64	(80)	%
Net Loss	$	(7,525)		$	(7,765)		$	240	3	%


	U.S. NeuroStar Advanced Therapy System
	Revenues by Type
	Three Months Ended June 30,
	2021				2020
			% of				% of
	Amount		Revenues		Amount		Revenues

	(in thousands, except percentages)
NeuroStar Capital	$	2,441	95	%	$	2,224	95	%
Operating lease		55	2	%		114	5	%
Other		81	3	%		—	—	%
Total United States NeuroStar Advanced Therapy System revenues	$	2,577	100	%	$	2,338	100	%


Exhibit Number		Description
3.1		Certificate of Elimination of Series A Junior Participating Preferred Stock of Neuronetics, Inc. (incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on April 9, 2021)
10.1		Consulting Agreement, dated April 1, 2021 by and between Neuronetics, Inc. and Gregory Harper (incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed on May 4, 2021).
10.2*		Form of Restrictive Covenant and Severance Agreement
10.3*		Third Amended and Restated Bylaws of the Registrant
31.1*		Certification of the Principal Executive Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2*		Certification of the Principal Financial Officer Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1**		Certification of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2**		Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
101.INS		Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because iXBRL tags are embedded within the Inline XBRL document.
101.SCH		Inline XBRL Taxonomy Extension Schema Document
101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB		Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document
104		Cover Page Interactive Data File (Formatted as Inline XBRL and contained Exhibit 101).


	NEURONETICS, INC.
	(Registrant)
Date: August 3, 2021	By:	/s/ Keith J. Sullivan
	Name:	Keith J. Sullivan
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)
Date: August 3, 2021	By:	/s/ Stephen Furlong
	Name:	Stephen Furlong
	Title:	SVP, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)