Neuronetics, Inc 10-Q for FY2021 Q3

Neuronetics, Inc. (STIM)

10-Q 2021-11-09 For: 2021-09-30

Added on April 10, 2026

About this 10-Q

Neuronetics, Inc filed this 10-Q on November 9, 2021, covering the quarter ended September 30, 2021 (FY2021 Q3).

Headline figures

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

Revenue: $13.8M; up 10.9% from $12.45M a year earlier
Net loss: $8.15M; compared with a net loss of $3.42M a year earlier
Diluted EPS: -$0.28; compared with -$0.18 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 September 30, 2021 and December 31, 2020	3
	Statements of Operations for the Three and Nine Months ended September 30, 2021 and 2020	4
	Statements of Changes in Stockholders’ Equity for the Three and Nine Months ended September 30, 2021 and 2020	5
	Statements of Cash Flows for the Nine Months ended September 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.	24
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	38
Item 4.	Controls and Procedures.	38
PART II – OTHER INFORMATION
Item 1.	Legal Proceedings.	40
Item 1A.	Risk Factors.	40
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	40
Item 3.	Defaults Upon Senior Securities.	40
Item 4.	Mine Safety Disclosures.	40
Item 5.	Other Information.	40
Item 6.	Exhibits.	41
	SIGNATURES	42


	September 30,		December 31,
	2021		2020
Assets
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 sales-type leases		2,142		1,887
Current 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 or
outstanding at September 30, 2021 and December 31, 2020		—		—
Common stock, $0.01 par value: 200,000 shares authorized; 26,335 and 19,114
shares issued and outstanding at September 30, 2021 and December 31, 2020, respectively		263		191
Additional 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


	Three Months Ended				Nine Months Ended
	September 30,				September 30,
	2021		2020		2021		2020
Revenues	$	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 administrative		6,435		4,210		19,220		13,508
Research 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 debt		—		—		—		924
Other income, net		(24)		(8)		(53)		(288)
Net Loss	$	(8,151)	$	(3,418)	$	(23,557)	$	(23,796)
Net loss per share of common stock outstanding, basic and diluted	$	(0.31)	$	(0.18)	$	(0.94)	$	(1.27)
Weighted-average common shares outstanding, basic and diluted		26,301		18,890		25,179		18,773


				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
Share-based awards and options exercises	150		1		409		—		410
Share-based compensation expense	—		—		1,046		—		1,046
Net loss	—		—		—		(3,418)		(3,418)
Balance at September 30, 2020	18,959	$	189	$	301,172	$	(273,883)	$	27,478

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
Share-based awards and options exercises	168		1		99		—		100
Share-based compensation expense	—		—		1,961		—		1,961
Net loss	—		—		—		(8,151)		(8,151)
Balance at September 30, 2021	26,335	$	263	$	391,910	$	(301,097)	$	91,076


	Nine Months Ended September 30,
	2021		2020
Cash 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 investments 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 software		(1,552)		(615)
Issuance 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 the issuance of common stock		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 Equivalents		50,477		(24,989)
Cash and Cash Equivalents, Beginning of Period		48,957		75,708
Cash and Cash Equivalents, End of Period	$	99,434	$	50,719
Supplemental disclosure of cash flow information:
Cash paid for interest	$	2,471	$	3,060
Transfer of Inventory to PP&E		235		—
Supplemental disclosure of non-cash investing and financing activities:
Purchases of property and equipment and capitalized software in accounts payable and accrued expenses	$	398	$	83
Reduction of accounts receivable in long-term note receivable		2,514		—


	Nine Months Ended
	September 30, 2021		September 30, 2020
Cash paid for amounts included in the measurement of lease liabilities:
Operating cash flows from operating leases	$	526	$	575


	September 30, 2021
Remainder of 2021	$	157
2022		639
2023		636
2024		646
2025		660
Thereafter		1,487
Total lease payments		4,225
Less imputed interest		(787)
Present value of operating lease liabilities	$	3,438


	Three Months Ended September 30,				Nine Months Ended September 30,
	2021		2020		2021		2020
Profit recognized at commencement, net	$	262	$	81	$	543	$	807
Interest income		—		—		—		—
Total sales-type lease income	$	262	$	81	$	543	$	807


	Revenue
Year:	Recognition
Remainder of 2021	22	%
2022	32	%
2023	20	%
2024	20	%
2025	6	%
Thereafter	—	%
Total	100	%


	September 30, 2021	December 31, 2020
Shares of common stock issued	26,335	19,114
Shares of common stock reserved for issuance for:
Common stock warrants outstanding	75	105
Stock options outstanding	1,567	2,365
Restricted stock units outstanding	2,042	1,860
Shares available for grant under stock incentive plan	2,101	1,530
Shares available for sale under employee stock purchase plan	799	608
Total shares of common stock issued and reserved for issuance	32,919	25,582


September 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	(669)	$	4.01
Forfeited	(129)	$	14.93
Outstanding at September 30, 2021	1,567	$	4.19	7.6	$	5,611
Exercisable at September 30, 2021	733	$	5.16	6.5	$	2,280
Vested and expected to vest at September 30, 2021	1,567	$	4.19	7.6	$	5,611


	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	846	$	12.72	145	$	15.59
Vested	(741)	$	3.54	(250)	$	1.77
Forfeited	(318)	$	7.42	—	$	—
Non-vested at September 30, 2021	1,647	$	7.55	395	$	6.77


	September 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 September 30,
	2021				2020
			% of				% of
	Amount		Revenues		Amount		Revenues

	(in thousands, except percentages)
NeuroStar Advanced Therapy System	$	2,612	20	%	$	2,541	21	%
Treatment sessions		10,259	77	%		9,083	76	%
Other		409	3	%		405	3	%
Total U.S. revenues	$	13,280	100	%	$	12,029	100	%


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

	(in thousands, except percentages)
NeuroStar Advanced Therapy System	$	306	59	%	$	222	53	%
Treatment sessions		90	17	%		99	24	%
Other		123	24	%		98	23	%
Total International revenues	$	519	100	%	$	419	100	%


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

	(in thousands, except percentages)
United States	$	13,280	96	%	$	12,029	97	%
International		519	4	%		419	3	%
Total revenues	$	13,799	100	%	$	12,448	100	%


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

	(in thousands, except percentages)
Revenues	$	13,799		$	12,448		$	1,351	11	%
Cost of revenues		3,144			2,657			487	18	%
Gross Profit		10,655			9,791			864	9	%
Gross Margin		77.2	%		78.7	%

Operating expenses:
Sales and marketing		9,827			6,053			3,774	62	%
General and administrative		6,435			4,210			2,225	53	%
Research and development		1,575			1,952			(377)	(19)	%
Total operating expenses		17,837			12,215			5,622	46	%
Loss from Operations		(7,182)			(2,424)			(4,758)	(196)	%
Other (income) expense:
Interest expense		993			1,002			(9)	(1)	%
Other income, net		(24)			(8)			(16)	200	%
Net Loss	$	(8,151)		$	(3,418)		$	(4,733)	(138)	%


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

	(in thousands, except percentages)
NeuroStar Capital	$	2,277	87	%	$	2,438	96	%
Operating lease		30	1	%		88	3	%
Other		305	12	%		15	1	%
Total United States NeuroStar Advanced Therapy System revenues	$	2,612	100	%	$	2,541	100	%


Exhibit Number		Description
10.1◊		Secured Promissory Note Agreement, dated September 29, 2021, by and between the Registrant and Check Five LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on October 5, 2021)
10.2		Third Amended and Restated Bylaws of the Registrant (incorporated by reference to Exhibit 10.3 to the Form 10-Q filed August 3, 2021)
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: November 9, 2021	By:	/s/ Keith J. Sullivan
	Name:	Keith J. Sullivan
	Title:	President and Chief Executive Officer
		(Principal Executive Officer)
Date: November 9, 2021	By:	/s/ Stephen Furlong
	Name:	Stephen Furlong
	Title:	SVP, Chief Financial Officer and Treasurer
		(Principal Financial and Accounting Officer)