Neuronetics Q1 2026 Earnings Call - New CEO Pivots Strategy Amid Cash Constraints and Strategic Review Pressure

Operator: Good day, and thank you for standing by. Welcome to the Neuronetics first quarter 2026 financial and operating results call. At this time, all participants are in listen-only mode. After the speaker’s presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today.

Mark, Investor Relations / Corporate Communications, Neuronetics: Good morning, thank you for joining us for the Neuronetics first quarter 2026 conference call. Joining me on today’s call is Neuronetics President and Chief Executive Officer, Dan Reuvers. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance, and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company’s business.

For a discussion of risks and uncertainties associated with Neuronetics business, I encourage you to review the company’s filings with the Securities and Exchange Commission, including the company’s annual report on Form 10-K, which was filed in March, and the company’s quarterly report on Form 10-Q for the quarter ended March 31st, 2026. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we’ll also discuss certain information on a non-GAAP basis, including EBITDA and adjusted EBITDA. Management believes that non-GAAP financial information taken in conjunction with U.S. GAAP financial measures provides useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results.

Reconciliations between US GAAP and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website. With that, it’s my pleasure to turn the call over to Neuronetics President and Chief Executive Officer, Dan Reuvers.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Thanks, Mark, and welcome everyone to our first quarter 2026 earnings call. I’ll begin by sharing some perspectives on my background and why I joined the company, discuss some early observations, I’ll walk through the key drivers of our performance in the quarter. I’ll walk through our quarterly financial results in greater detail, I’ll conclude with my perspective on the rest of 2026 before opening the line for questions. This is my first earnings call as CEO of Neuronetics, I’m pleased to be here. I’ve spent about 35 years in the med tech industry, Most of my career has been in businesses where patient impact, execution, and operational rigor drive the outcome. Most recently, I served as CEO of Tactile Medical, where we grew revenue from $187 million to approximately $300 million.

During that time, we expanded patient reach, grew gross margins, delivered record earnings, and cash flow generation. Before that, I spent 12 years with Integra LifeSciences, where I led the $1 billion Codman Neurosurgery Division. Earlier in my career, I held leadership roles at several other med tech companies. There were a couple things that drew me to this role. First, our mission to renew lives by restoring hope for patients and their families is one that I’m passionate about. It’s amazing how many people have reached out to me since taking the role, sharing their stories of how they or someone they knew have either suffered from depression or, better yet, benefited from one of our therapies. Second, I think my background gives me a great perspective on how to move this business forward.

My experience in the device space will allow me to come up to speed on the NeuroStar business quickly, and it’s notable that Tactile was vertically integrated, meaning we designed, manufactured, and sold our therapy solutions, but also directly billed third-party payers, an experience I expect to draw on as we continue to improve efficiency within our Greenbrook clinics. Since stepping into the role, I’ve spent the bulk of the last month on a listening tour. I’ve been on the road with our field team, inside our clinics, and meeting with customers. I’ve also engaged with shareholders, analysts, and others, helping me shape my understanding of the business. My approach has been deliberate and comprehensive, intended to allow me to fully understand this business before making decisions about where to lean in, where to adjust, and how we maximize the value of what we have.

With that said, what I’ve seen in my first few weeks has reinforced my conviction in the underlying opportunity that exists for us. First, on the NeuroStar side, I see a clear opportunity to broaden how we go to market and reach customer segments where we’ve not historically been positioned to compete. I’ll talk more about that in a moment. Second, with the Greenbrook clinics, workflows are key to optimizing profitability in our clinics, not only ensuring that patients have an efficient path to initiate their treatment and gain relief, but also to minimize operational handoffs. Revenue cycle management is also an area where I’ve spent time in my previous role, and what I’ve seen inside our clinic operations tells me there is more opportunity ahead.

Lastly, we have a talented team that’s focused and executing, and I’ve been genuinely impressed with the quality of the people and the conviction toward our mission across the organization. Before I walk through the quarter, I’d like to briefly address two items. First, on our recently announced CFO transition. Steve Furlong departed earlier this month to pursue an opportunity outside Neuronetics. We’ve initiated a comprehensive search to identify his successor. We appreciate Steve’s contributions during his time at Neuronetics, and we’ll provide updates as the search progresses. Ultimately, this allows me to select a partner that I’m confident can help me lead our next chapter. Second, I want to share some perspective on the comments made by certain shareholders about our business.

While we believe that the integrated NeuroStar and Greenbrook businesses provide us with a strong foundation to grow from, we respect some shareholders’ views that the separation of the business could potentially unlock shareholder value. The board and I are aligned on operating this business with discipline and on making decisions that create long-term value for our shareholders. I assure you that I’m evaluating this business with an open mind, and I appreciate everyone’s patience as I work through my process. With that context, let me share a bit more about our performance in the quarter. Our Q1 results were largely in line with expectations, and we’re making progress on the commercial and operational priorities already in motion. Starting with the NeuroStar business. During the quarter, we shipped 34 systems, up 10% year-over-year.

We continued to support our installed base with the most comprehensive training and clinical resources in the category. We’re also modernizing how we deliver that support with more virtual, on-demand, and real-time engagement tools that provide customers with choices on how they want to be supported. We’re piloting an expanded set of commercial models for NeuroStar. Customers exist with a range of needs, and while we have a history of providing unparalleled ongoing support to our customers, we also know that not all customers’ needs are the same. Expanding our go-to-market menu is a priority. I’m convinced that we can compete on a broader horizon by listening to customers and responding in kind. Early feedback’s been positive, and I’ll have more to share in August. Now, a few comments on Greenbrook. Clinic revenue grew 15% in the quarter.

Growth in the quarter was driven by continued strength in SPRAVATO with treatment growth year-over-year and expansion of buy and bill. On the TMS side, within our clinics, volumes were modestly below prior year levels in the quarter, which we attribute in part to weather disruption across portions of our footprint during the first two months of the quarter. We saw patient flow normalize as the quarter progressed, and we expect to return to more typical volume trends as we move into the second quarter. Within our clinic operations more broadly, the focus remains on workflow and revenue cycle management. The teams made real progress on collections and operational efficiency, and we see continued runway. We’ve also leveled our marketing investment across the year rather than front-loading it, which we believe is the right cadence for the business.

We acted during the quarter to better align our cost structure. These steps are expected to deliver annualized savings of approximately two and a half to 3 million dollars with net savings beginning in the third quarter. Profitability and cash are top priorities and will be a focus of mine going forward. Taken together, the quarter reflects a business that’s executing on the priorities already in motion while we lay the groundwork for our next phase of growth. With that, I’ll walk through the financial results in greater detail. Unless otherwise noted, all performance comparisons are being made to the first quarter of 2026 versus the first quarter of 2025. Total revenue in the first quarter was $34.5 million, an increase of 8% compared to revenue of $32 million in the first quarter of 2025.

The increase in revenue was primarily driven by higher U.S. clinic revenue. Total revenue from our NeuroStar business, inclusive of our system revenue, as well as treatment session revenue, was $12.9 million in the first quarter of 2026. This represents a decrease of 3% versus the prior year. U.S. NeuroStar system revenue was $3.2 million, an increase of 13% on a year-over-year basis. We shipped 34 systems in the quarter, an increase of approximately 10% versus the prior year. U.S. treatment session revenue was $9.1 million, a decrease of 5%. While system treatment utilization increased 3.5%, this was offset primarily by a reduction in customer inventory levels. U.S. clinic revenue was $21.5 million, a 15% increase year-over-year.

The results were driven by continued strong SPRAVATO growth and overall pricing improvement. Gross margin was 46.9% in the first quarter of 2026 compared to 49.2% in the prior year quarter. The decrease in gross margin is a result of revenue mix, with clinic revenues representing a higher portion of our overall revenues. We also saw some negative impact from the increase in SPRAVATO buy and bill from Q1 of last year when we were still launching that offering. Operating expenses during the quarter were $25.1 million, a decrease of $1.6 million or approximately 6% compared to $26.8 million in the first quarter of 2025. The decrease is primarily attributable to savings in SG&A expenses, where we have driven and will continue to drive efficiencies.

Net loss for the quarter was $10.8 million, or $0.16 per share, as compared to a net loss of $12.7 million or $0.21 per share in the prior year. First quarter 2026 adjusted EBITDA was negative $6.6 million as compared to negative $8.6 million in the prior year, an improvement of $2 million. Moving to the balance sheet and cash flow. As of March thirty-first, total cash was $19 million, consisting of cash and cash equivalents and restricted cash, as compared to $34.1 million as of December thirty-first. Cash used by operations in the first quarter was $9.4 million. This compares to an operating cash use of $17 million in Q1 of 2025, an improvement of $7.6 million versus the prior Q1.

As previously disclosed, in March 2026, we amended our debt agreement with Perceptive Advisors, which reduces our outstanding debt obligation and interest expense. Under the amendment, we made a one-time principal payment of $5 million to Perceptive Advisors, along with adjustments to the existing debt covenants. Turning to guidance, which remains unchanged. We continue to expect total revenue between $160 million and $166 million. Gross margins to be between 47% and 49%. Operating expenses in the range of $100 million-$105 million, inclusive of approximately eight and a half million dollars of non-cash stock-based compensation. Cash flow from operations between -$13 million and -$17 million.

As a reminder, our operating cash flow is projected to improve beginning in the second quarter and then sequentially through the remainder of the year, with operating cash flow being flat to positive during the second half of the year. In the second quarter, we expect to see mid-single-digit growth. As we look ahead to the remainder of 2026, our priorities are clear. We’re focused on disciplined execution, sharpening how we go to market, and continuing to drive the business towards being cash flow positive. The pilots we have underway in the NeuroStar side of the business are designed to expand our reach, and within our clinic operations, we’ll continue to focus on workflow, collections, and operational efficiency. We expect these benefits to continue building throughout the year. Looking further out, I want to briefly touch on Compass Pathways’ pending psilocybin therapy.

The regulatory process is Compass Pathways’ to navigate. The Trump administration’s recent executive order prioritizing such submissions is certainly encouraging. If approved, we believe Greenbrook TMS is among a very small number of providers genuinely equipped to deliver it. The protocol requires certified settings, trained clinical staff, and a proven back-office infrastructure for benefits investigation and prior authorization, all of which we already have in place through our SPRAVATO operations. While we will be prepared to execute if the product is approved, similar to SPRAVATO, we’d expect the revenue ramp to be measured in the first year of launch. The narrow pool of providers capable of delivering this therapy represents a durable advantage for our business. As I mentioned earlier, my approach in these first few weeks has been deliberate. I’m committed to making decisions that balance the interests of our patients, physicians, colleagues, and shareholders.

I expect to be able to share an even more grounded view of where we’re headed when we report next quarter. I want to thank the Neuronetics team for the work they’ve put in this quarter and for the welcome they’ve given me. I look forward to updating you all on our progress in August. With that, I’ll open the call for questions. Operator?

Operator: Thank you. At this time, we will conduct the question and answer session. Our first question comes from the line of William, sorry, William Plovanic from Canaccord Genuity. One moment while I bring him to the stage.

William Plovanic, Analyst, Canaccord Genuity: Hello. Good morning. Can you hear me?

Operator: Bill, your line is now open.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah. Morning, Bill.

William Plovanic, Analyst, Canaccord Genuity: Okay, great. Good morning. Yeah. Okay. Thank you. Three questions for you, Dan, if I could. One is just clarity on the performance in the Greenbrook sites. I just wanna make sure I heard that Was it the treatment revenue and number of treatments was down year-over-year backing out the SPRAVATO? I just want to get to make sure I heard that correctly.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Overall, we were pleased with the Greenbrook performance. We were up double digits, as we said, about 15%. The TMS volumes were off a little bit, Bill. We think that that was related to 2 things. One, weather, which we, you know, pretty concentration up here in the Northeast. We were a little lumpy in our ad spend as we exited last year. Smoothing that this year I think is gonna bring that more in line with consistency. We also saw better performance in March than we did in January and February. Was, you know, we don’t think that that was a trend as much as an event.

On the SPRAVATO side, we saw growth in both the buy and bill and the A&O segments, double-digit in both segments. Yet buy and bill was up as a mix compared to Q1 of last year, but I think it’s worth noting that we’ve also seen that kind of equilibrate over the last couple of quarters as far as mix between that and A&O.

William Plovanic, Analyst, Canaccord Genuity: Okay, great. Then, thank you for that. Then just secondly, you know, one of the biggest challenges, you know, new executives face when they come into a company is just making sure to keep the team intact, and turnover. I just wanted to see if you could provide any color on, you know, what you’ve seen thus far. I know it’s only been 45 days, but, just kind of what you’ve seen across the organization thus far.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah. Yeah. First of all, I’ve been really impressed with how much the mission permeates through the company. People are really connected with the impact that we’re making on patients’ lives. I mentioned in my opening comments that I’ve been on a listening tour for the first month for the most part, and that gave me an opportunity to go out and spend time with folks in the field, as well as having spent a good amount of time in the office. I’ve met with a lot of people, have been trying to connect as best I can with things like podcasts and town halls. So far, I’ve been pleased with, as I said, kinda where people’s attitudes are.

I think there’s an anxious enthusiasm to think about how we might do things different, how we might continue to find ways to get better. Overall, I would say quite good. I haven’t seen anything, as far as turnover spikes or anything that would’ve, I would say, raised an eyebrow for me.

William Plovanic, Analyst, Canaccord Genuity: Okay. I think just the last question is really the elephant in the room. I mean, you addressed it, but I just wanted to hit home on it. Just, you know, you ended the quarter with $19 million in cash, $13 million unrestricted. You know, it sounds like, you know, given the guidance that would tell us you’ll use $4 million-$8 million of that during the full year. I would expect most of that would be in the second quarter given, you know, the guidance that the back half would be positive. I just, you know, any thoughts, comments, is that enough to get you through with working capital, and just how are you thinking about that today? Thanks for taking my questions, Dan.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah. Yeah. I mean, we’re always evaluating the balance sheet, but I think as we shared, at the midpoint of $15 million of burn for the full year, the math would lead you to $14 million at year-end. You know, you’re also right in that our assumptions are that we would be flat to positive in the second half of the year. You know, based on the current current plan, we feel like we’ve got sufficient headroom in the balance sheet to take us through the year.

William Plovanic, Analyst, Canaccord Genuity: Great. Thanks.

Operator: Thank you. Our next question comes from Adam Maeder of Piper Sandler.

Adam Maeder, Analyst, Piper Sandler: Good morning.

Operator: Your line is now open.

Adam Maeder, Analyst, Piper Sandler: Hey, Dan. Hopefully you can hear me okay. Congrats on the new role, and look forward to working with you again. Two from me, one kind of housekeeping question and one bigger picture question. Just on the housekeeping item, you know, weather, it sounded like there was an impact to TMS volumes at Greenbrook clinics. Was hoping you could kind of quantify that for us. Is it also reasonable to assume that your standalone NeuroStar business also saw some headwind from weather? You know, how do we think about how quickly these patients can potentially kind of be, their sessions can be recaptured? I had a follow-up. Thanks.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah. Not gonna quantify on the Greenbrook side, Adam Maeder, we do think that there was some of the impact there, particularly because we saw more of the weakness in January and February than we did in March. It’s also worth noting on the NeuroStar side that TMS patients are coming in every single day. Trying to manage a schedule around weather is more difficult than SPRAVATO patients that are coming in more episodically and have a lot more latitude in scheduling. I think that was one of the reasons that we saw the impact within Greenbrook. On the NeuroStar side, we think that we saw, you know, some of the same kind of impact from weather.

That said, from a total utilization standpoint, we were actually up low single digits on absolute utilization within our NeuroStar business as far as treatment sessions were concerned. We saw a little softness in the revenue rec just because we had a little bit of customer inventory on hand that folks are working through. Overall, you know, I would say the business held up quite well in spite of the weather.

Adam Maeder, Analyst, Piper Sandler: Okay, fantastic. And then for my follow-up, you know, Dan, in the press release, you talked about significant value in the business that’s yet to be fully realized. You also have a large shareholder who issued a letter last month for asking for a strategic review and potentially a sale of the TMS business. You know, you touched on it in the prepared remarks. I think I heard you’re evaluating the business with an open mind. I guess I was hoping you could share a little bit more color here on your early learnings and thoughts as you think about kind of the broader makeup of Neuronetics.

You know, one question that I sometimes get from investors is, you know, the NeuroStar business, the standalone business, why can’t that business grow faster given the size of the total addressable market and what are the plans to kinda catalyze that business? Sorry for the multi-part question.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: No problem. First, as it relates to the shareholder letter that we saw, you know, as I said in my opening remarks, I mean, I really have been on a listening tour, and I’ve had outreach to that shareholder along with others, just to make sure that I’m hearing some of their thoughts and concerns. You know, I think there’s some frustration there, and quite frankly, I appreciate it. I think that what I’m still trying to do is really look at the business through a variety of different lenses, and I’m pretty pragmatic about it. I mean, I’m not wed to a predetermined conclusion, but I’m also not inclined to be impetuous and make sure that I look at the business overall.

I think as it relates to what can we do to continue to demonstrate strength and growth, which under any outcome scenario adds long-term value for shareholders, it’s, you know, looking at the NeuroStar business, I do think that we’ve probably underpunched our weight here lately. The opportunity to expand our go-to-market menu is one of the things that I believe is gonna be a helpful catalyst for us. We’re still in pilot phases on that, Adam, but, you know, ultimately, we have taken an approach that has conveyed what I would call unparalleled support to our TMS customers. I don’t think any other competitor out there comes even close to the kind of support we provide to our customers. That said, not all customers’ needs are the same.

I think it’s important for us to expand our menu and allow customers to kind of establish which parts of value they want and make sure that we’ve got kind of a broader berth of go-to-market menus that they can select from. We’re in the midst of doing some pilots right now. I think, you know, we’ll have a lot more clarity over the next couple of months. It includes making sure that we’re looking at incentive comp, that it’s aligned with our direction, that we have an opportunity to revisit our funnel and make sure that, you know, we’ve slotted those in the right in the right spaces.

More work to do, but I think that as we continue to really reevaluate our go-to-market and with an open mind, look at how we can make sure that we’re matching the right level of support to that which the customer wants to pay for, I think that’s, you know, that’s a ratio that I expect will bear some fruit.

Adam Maeder, Analyst, Piper Sandler: Thank you.

Operator: Thank you. Our final question comes from the line of Danny Stauder of Citizens JMP. Your line is open.

Danny Stauder, Analyst, Citizens JMP: Yeah, great. Thanks for the questions. Just, my first one, following up on kind of the TMS question, Dan, I wanted to ask about the commercial strategy for TMS. We know there was a realignment of the capital sales team. System sales have been strong the last 2 quarters. As you sit here in the early days of year 10, tenure, just broadly, how do you think about the balance between focusing on driving utilization per site versus expanding the install base? Are there any potential strategic changes here or, you know, how do you think about that balance?

Dan Reuvers, President and Chief Executive Officer, Neuronetics: I think continuing to drive utilization is an important one, because whether we’re on a sessions model or otherwise, it’s what’s the underlying creation of demand. The more utilization, our customers continue to find more patients they can help, one way or another, that’s gonna lead to an expansion of our business. I think we’re, you know, we’re gonna continue to look to how we can expand our socket placement, or our placement of new capital units. I think that’s one of the places where we’ve probably slipped a bit. Focusing on new placements and expansion of capital, and making sure that it’s our unit that resides in those clinics, regardless, I guess, of what economic model is in place, we just wanna make sure that we’re demonstrating the most value across the competitive landscape.

I think that, you know, between the support we provide with our account managers in the field, with benefits investigation, our co-marketing, training, service, the cloud-based TrakStar utility that we’ve got, I just don’t think anybody can compare there. You know, we’re gonna, as I said, continue to work through a couple of pilots. The things that got us there, I think, will continue to be durable areas of value. How we structure that, I think, is some of the things that we’re still titrating a bit.

Danny Stauder, Analyst, Citizens JMP: Great. Appreciate that. Just one on the Compass collaboration. You know, obviously, the recent update from the administration is good news. I just wanna get a sense of how meaningful this could be. Obviously, Compass is already pretty far along in terms of the approval process, but do you feel this recent update could be more important on the reimbursement pathways? I know that’s been a focal point for eventual contribution. Just any thoughts you have there would be appreciated.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah. Well, first of all, I think that the whole Compass opportunity and psychedelics at large represent a big opportunity for us, given our footprint and our infrastructure. I was really excited in my first month to see the Trump executive order leaning into the FDA process on some of these. I think that it probably shortens the fuse. How much, I don’t know, it probably shortens the fuse on the path to approval, which I think is encouraging for all of us that are in this space. I’m not sure how much it impacts reimbursement. I think that’s probably a separate track, certainly the pursuit of that in tandem on Compass’ behalf, all of those things sort of point to faster than slower.

And, you know, as we get into 2027, we’ll certainly look forward to being able to try and better quantify what we think that means to us. I think if you look at the SPRAVATO rollout from the early days, as much enthusiasm as there was, it’s a bit measured in its early adoption. I think that the momentum is certainly moving in the right direction on this one.

Danny Stauder, Analyst, Citizens JMP: Great. I appreciate that. Just 1 last one from me. I just wanted to ask on some of the TMS coverage expansion to include nurse practitioners. I was just curious at, you know, high level, if there have been any incremental conversations with accounts on this topic. Have you seen that customers are waiting for this, maybe some with higher demand? Just anything more on how this could impact utilization and how you think it will play out in 2026 and beyond would be great. Thank you.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah. That’s the reference to the UnitedHealthcare and the Optum coverage policy change, where nurse practitioners can now be eligible to deliver TMS versus licensed psychiatrists. I think it’s a good move. We got a lot of really quality nurse prac caregivers out there. I don’t know that they were waiting for it as much because maybe they didn’t, sometimes you never know if it’s ever coming. There are 35 million covered lives in the 26 states that’ll be affected. I think what it will allow us to do, or has allowed us to do, is go revisit some of those clinics that are managed by nurse practitioners where TMS just wasn’t a viable option because of the reimbursement limitations.

You know, I think it probably added, a number of accounts to our target list, but, still early days since we’re, I think, a month in.

Danny Stauder, Analyst, Citizens JMP: Great. Appreciate the questions.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yep. Thank you.

Operator: This concludes the question and answer session. I would now like to turn it back to Dan Reuvers for closing remarks.

Dan Reuvers, President and Chief Executive Officer, Neuronetics: Yeah, I just wanted to thank all of our employees for a hard-fought quarter, as they all are, as we continue to try and restore hope to patients and their families. Wanted to thank our shareholders for their support, and I look forward to sharing an update on our progress when we have an opportunity to share the results of our second quarter. Thank you.

Operator: Thank you for your participation in today’s conference. This does conclude the program. You may now disconnect.