Quarterly Report for Quarter Ending March 31, 2026 (Form 10-Q)

Management's Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion and analysis of our financial condition and results of operations, as well as other sections in this Quarterly Report on Form 10-Q, should be read in conjunction with our unaudited interim consolidated financial statements and related notes thereto included elsewhere herein. In addition to historical financial information, some of the information contained in the following discussion and analysis contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (the "Securities Act") and Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"). All statements other than statements of historical facts, including statements regarding our future results of operations and financial position, business strategy, current and prospective products, product approvals, research and development costs, current and prospective collaborations, timing and likelihood of success, plans and objectives of management for future operations and future results of current and anticipated products, are forward-looking statements. These statements involve known and unknown risks, uncertainties and other important factors that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by the forward-looking statements.

In some cases, you can identify forward-looking statements by terms such as "may," "will," "would," "should," "expect," "plan," "design," "anticipate," "could," "intend," "target," "project," "contemplate," "believe," "estimate," "predict," "potential," "outlook" or "continue" or the negative of these terms or other similar expressions. The forward-looking statements in this Quarterly Report on Form 10-Q are only predictions. We have based these forward-looking statements largely on our current expectations and projections about future events and financial trends that we believe may affect our business, financial condition and results of operations. These forward-looking statements speak only as of the date of this Quarterly Report on Form 10-Q and are subject to a number of risks, uncertainties and assumptions described under the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in our Annual Report on Form 10-K filed with the SEC on March 17, 2026. These risks and uncertainties include, without limitation, risks and uncertainties related to: the effect of the transaction with Greenbrook on our business relationships; operating results and business generally; our ability to execute our business strategy; our ability to achieve or sustain profitable operations due to our history of losses; our reliance on the sale and usage of the System to generate revenues; the scale and efficacy of our salesforce; our ability to retain talent; availability of coverage and reimbursement from third-party payors for treatments using our products; physician and patient demand for treatments using our products; developments in respect of competing technologies and therapies for the indications that our products treat; product defects; our ability to obtain and maintain intellectual property protection for our technology; developments in clinical trials or regulatory review of the System for additional indications; developments in regulation in the U.S. and other applicable jurisdictions; potential effects of evolving and/or extensive government regulation; the terms of our credit facility; and our self-sustainability;existing cash balances; our ability to achieve positive cash flows; and our ability to continue as a going concern. The events and circumstances reflected in our forward-looking statements may not be achieved or occur and actual results could differ materially from those projected in the forward-looking statements. The Company cautions investors not to place undue reliance on these forward-looking statements. Moreover, we operate in an evolving environment. New risk factors and uncertainties may emerge from time to time, and it is not possible for us to predict all risk factors and uncertainties. Except as required by applicable law, we do not plan to publicly update or revise any forward-looking statements contained in this Quarterly Report on Form 10-Q as a result of any new information, future events or changed circumstances or otherwise.

Overview

We believe that mental health is as important as physical health. The Company's first commercial product, the System, is a non-invasive and non-systemic office-based treatment that uses TMS to create a pulsed, MRI-strength magnetic field that induces electrical currents designed to stimulate specific areas of the brain associated with mood. The System is cleared by the FDA to treat adult patients with MDD who have failed to achieve satisfactory improvement from prior antidepressant medication in the current MDD episode. It is also

cleared by the FDA as an adjunct for adults with OCD and for adolescent patients aged 15-21 with MDD. It is also cleared by the FDA to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression). In addition to selling the System and associated treatment sessions to customers, the Company operates Greenbrook Treatment Centers across the U.S., offering TMS therapy using the Systems. The Company acquired Greenbrook, a provider of mental healthcare services, pursuant to the Arrangement. The System is safe, clinically effective, reproducible and precise, and the Company believes it is supported by the largest clinical data set of any competing TMS system. Treatment Centers also obtain SPRAVATO® to treat adults with treatment-resistant depression or depressive symptoms in adults suffering from MDD with acute suicidal ideation or behavior.

Effective as of December 9, 2024, Neuronetics and Greenbrook completed the Arrangement. Each Greenbrook Share outstanding immediately prior to the effective time of the Arrangement was exchanged for shares of Neuronetics common stock at a specified exchange ratio upon closing of the Arrangement. We continue to operate as Neuronetics, Inc., and the Company's shares trade on the NASDAQ Global Market under the ticker "STIM."

We designed the System as a non-invasive therapeutic alternative to treat patients who suffer from MDD and to address many of the key limitations of existing treatment options. Additionally, through our acquisition of Greenbrook, we now derive revenue directly from our Treatment Centers, by providing TMS therapy and SPRAVATO® for MDD and other mental health disorders. We derive the majority of our revenues from clinic revenue and treatment sessions.

We currently operate in two segments: medical device and clinic services. We generate revenues from clinic operations, initial capital sales of our systems, sales of our recurring treatment sessions, service and repair, and extended warranty contracts.

For the three months ended March 31, 2026, revenues from sales of our treatment sessions, clinic revenue and the Systems represented 27%, 63% and 9% of our U.S. revenues, respectively.

Clinic revenue consists of revenue attributable to the performance of treatments to patients in 15 states in the U.S. In circumstances where the net patient fees have not yet been received, the amount of revenue recognized is estimated based on an expected value approach. Due to the nature of the industry and complexity of our clinic revenue arrangements, where price lists are subject to the discretion of payors, variable consideration exists that may result in price concessions and constraints to the transaction price for the services rendered.

Clinic revenue reimbursements are derived from third-party payors including federal and state agencies (under the Medicare programs), managed care health plans and commercial insurance companies.

We currently sell the System and recurring treatment sessions in the U.S. through our sales and customer support team. Our sales force targets an estimated 53,000 psychiatrists across 26,000 practices. We expect to continue to expand our direct sales and customer support team to further penetrate the market by demonstrating the benefits of the System to providers and their patients. Some of our customers have purchased or may purchase more than one of the Systems. Based on our commercial data, we believe many providers can recoup their initial capital investment in a System by providing a standard course of treatment to approximately 12 patients. We believe psychiatrists can generate approximately $9,000 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their practices. We have a diverse customer base in the U.S. providers are reimbursed by federal healthcare programs and the vast majority of commercial payors in the U.S. for treatment sessions utilizing the System.

We market our products in a few select markets outside the U.S. through independent distributors. International revenues represented 1% and 2% of our total revenues for the three months ended March 31, 2026 and 2025, respectively. We expect our international revenues to decrease as a percentage of our total revenue.

Our research and development efforts are primarily focused on hardware and software product developments and enhancements of the System and clinical development relating to additional indications. We outsource the manufacture of components of the Systems that are produced to our specifications, and individual components are either shipped directly from our third-party contract manufacturers to our customers or consolidated into pallets at our Malvern, Pennsylvania facility prior to shipment. Final installation of these systems occurs at the customer site.

Total revenues increased by $2.5 million, or 8%, from $32.0 million for the three months ended March 31, 2025 to $34.5 million for the three months ended March 31, 2026. For the three months ended March 31, 2026, our U.S. revenues were $34.2 million compared to $31.5 million for the three months ended March 31, 2025, representing an increase of 9%. The increase was primarily attributable to an increase in clinic revenue. We incurred net losses of $10.8 million for the three months ended March 31, 2026 compared to net losses of $12.7 million for the three months ended March 31, 2025. As of March 31, 2026, we had an accumulated deficit of $469.6 million.

Global Economic Conditions

We are continuing to closely monitor macroeconomic impacts, including but not limited to developments affecting financial institutions, supply chains, unemployment rates, investment values, consumer confidence, inflationary and potential recessionary pressures, on our business, results of operations and financial results, which could adversely affect us.

Components of Our Results of Operations

Revenues

We have generated revenues primarily from the sale of the Systems and related sales and rentals of the System, clinic revenue and the recurring revenues from our sale of treatment sessions in the U.S.

Clinic Revenues. Clinic revenue, consisting of TMS services, SPRAVATO® sales and other mental wellness services is determined based on net patient fees, which includes estimates for contractual allowances and discounts. Net patient fees are estimated using an expected value approach where management considers such variables as the average of previous net patient fees received by the applicable payor and fees received by other patients for similar services and the Company's best estimate leveraging industry knowledge and expectations of third-party payors' fee schedules. We expect clinic revenue to increase in 2026.

System Revenues. System revenues consist primarily of sales or rentals of a capital component, including equipment upgrades to the initial sale of the System. The Systems can be purchased outright or on a sales type lease basis by certain customers.

Treatment Session Revenues. Treatment session revenues primarily include sales of treatment sessions and SenStar treatment links. The treatment sessions are access codes that are delivered electronically in the U.S. The SenStar treatment links are disposable units containing single-use access codes that are sold and used outside the U.S. Access codes are purchased separately by our customers, primarily on an as-needed basis, and are required by the System in order to deliver treatment sessions.

Other Revenues. Other revenues are derived primarily from service and repair, research collaboration agreements and extended warranty contracts with our existing customers.

Refer to the section titled "Critical Accounting Policies and Use of Estimates-Revenue Recognition" in our Annual Report on Form 10-K filed with the SEC on March 17, 2026. Also, refer to "Summary of Significant Accounting Policies" in Notes to Interim Consolidated Financial Statements located in Part I - FINANCIAL INFORMATION, Item 1. Financial Statements.

Cost of Revenues and Gross Margin

Cost of revenues primarily consists of the costs of components and products purchased from our third-party contract manufacturers of the Systems as well as the cost of treatment packs for individual treatment sessions. We use third-party contract manufacturing partners to produce the components for and assemble the Systems. Cost of revenues also includes costs related to personnel, royalties, warranty, shipping, amortization of capitalized software and our operations and field service departments. Our Treatment Center costs include direct center and patient care costs, regional employee compensation and depreciation. We expect our cost of revenues to increase mainly for Treatment Centers, as our product mix changes.

Our gross profit is calculated by subtracting our cost of revenues from our revenues. We calculate our gross margin as our gross profit divided by our revenues. Our gross margin has been and will continue to be affected by a variety of factors, primarily product sales mix, pricing and third-party contract manufacturing costs. Our gross margins on revenues from sales of the Systems and clinic revenue are lower than our gross margins on revenues from sales of treatment sessions and, as a result, the sales mix between the Systems, clinic revenues and treatment sessions can affect the gross margin in any reporting period.

Sales and Marketing Expenses

Sales and marketing expenses consist of market research and commercial activities related to the sale of the Systems and treatment sessions and personnel costs including salaries and related benefits, sales commissions and share-based compensation for employees focused on these efforts. Other significant sales and marketing costs include conferences and trade shows, promotional and marketing activities, including direct and online marketing, practice support programs, primarily digital media campaigns, travel and training expenses.

We anticipate that our sales and marketing expenses will decrease in 2026 relative to 2025 as a result of the cost efficiencies realized post-acquisition across the sales and marketing divisions.

General and Administrative Expenses

General and administrative expenses consist primarily of personnel expenses, including salaries and related benefits, share-based compensation and travel expenses, for employees in executive, finance, information technology, legal and human resource functions. General and administrative expenses also include the cost of insurance, outside legal fees, accounting and other consulting services, audit fees from our independent registered public accounting firm, Board fees and other administrative costs, such as corporate facility costs, including rent, utilities, depreciation and maintenance not otherwise included in cost of revenues.

We anticipate that our general and administrative expenses will increase in 2026 from 2025 due to an increase in the overall size of the general and administrative function within the consolidated company and investments needed to streamline systems and leverage automation.

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Research and Development Expenses

Research and development expenses consist primarily of personnel expenses, including salaries and related benefits and share-based compensation for employees in clinical development, product development, regulatory and quality assurance functions, as well as expenses associated with outsourced professional scientific development services and costs of investigative sites and consultants that conduct our preclinical and clinical development programs. We typically use our employee, consultant and infrastructure resources across our research and development programs.

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We expect our research and development expenses to remain consistent during 2026 compared to 2025 expenses.

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Interest Expense

Interest expense consists of cash interest payable under our credit facility and the amortization of deferred financing costs related to our indebtedness.

Other Income, Net

Other income, net, consists primarily of interest income earned on our money market account balances and notes receivable and ERC payments.

Loss on extinguishment of debt

Loss on debt extinguishment consists of prepayment penalties and impairment of deferred financing costs associated with the extinguishment of debt, as well as fees incurred with third parties in connection with debt extinguishment.

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Results of Operations

Comparison of the three months ended March 31, 2026 and 2025

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Revenues

Total revenue for the three months ended March 31, 2026 was $34.5 million, an increase of $2.5 million, or 8%, compared to the three months ended March 31, 2025 revenue of $32.0 million.

The increase in revenue was primarily driven by higher U.S. clinic revenue, which increased $2.8 million, or 15%, to $21.5 million in the first quarter of 2026 from $18.7 million in the first quarter of 2025, reflecting continued contributions from clinics acquired in connection with the Greenbrook transaction. This growth was partially offset by a decline in U.S. treatment session revenue, which decreased $0.5 million to $9.1 million for the three months ended March 31, 2026 from $9.6 million for the three months ended March 31, 2025, primarily due to lower treatment volumes.

U.S. System revenue for the three months ended March 31, 2026 was $3.2 million, representing an increase of $0.4 million, or 13%, compared to $2.8 million in the first quarter of 2025. For the three months ended March 31, 2026, and 2025, the Company sold 35 and 31 systems, respectively.

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Cost of Revenues and Gross Margin

Cost of revenues increased by $2.1 million, or 13%, from $16.2 million for the three months ended March 31, 2025 to $18.3 million for the three months ended March 31, 2026. Gross margin decreased from 49.2% for the three months ended March 31, 2025 to 46.9% for the three months ended March 31, 2026. The decrease in gross margin is mainly attributable to the revenue mix within the Clinic revenue segment.

Sales and Marketing Expenses

Sales and marketing expenses decreased by $1.3 million, or 11%, from $12.0 million for the three months ended March 31, 2025 to $10.7 million for the three months ended March 31, 2026. The decrease was primarily driven by lower personnel costs, reduced marketing program spend, and a favorable bad debt adjustment related to the current expected credit loss reserve.

General and Administrative Expenses

General and administrative expenses decreased by $0.1 million, or 1%, from $13.1 million for the three months ended March 31, 2025 to $13.0 million for the three months ended March 31, 2026.

Research and Development Expenses

Research and development expenses decreased by $0.3 million, or 16%, from $1.6 million for the three months ended March 31, 2025 to $1.4 million for the three months ended March 31, 2026. The decrease in research and development was driven by personnel expense.

Interest Expense

Interest expense increased by $0.4 million, or 18%, from $1.9 million for the three months ended March 31, 2025 to $2.3 million for the three months ended March 31, 2026 due to a higher outstanding debt balance.

Loss on extinguishment of debt

Loss on extinguishment of debt amounting to $0.5 million was recorded during the three months ended March 31, 2026, related to the Perceptive Facility. This included $0.3 million of early prepayment fees and $0.2 million of deferred financing expense related to extinguishment of debt.

Other Income, Net

Other income, net, increased by $0.8 million from $0.2 million for the three months ended March 31, 2025 to $1.0 million for the three months ended March 31, 2026, primarily as a result of the ERC claim net proceeds, and updated estimates regarding the audits from government agencies including Medicaid and Medicare.

Liquidity and Capital Resources

Overview

As of March 31, 2026, we had cash and cash equivalents of $13.2 million and an accumulated deficit of $469.6 million, compared to cash and cash equivalents of $28.1 million and an accumulated deficit of $458.8 million as of December 31, 2025. We incurred negative cash flows from operating activities of $9.4 million and $17.0 million for the three months ended March 31, 2026 and 2025, respectively. The Company has incurred operating losses since its inception, and management anticipates that its operating losses will continue in the near term as the Company continues to invest in sales and marketing and product development activities. The Company's primary sources of capital to date have been from its initial public offering, borrowings under its credit facility, proceeds from its secondary public offering of common stock (including, without limitation, the ATM Program), and revenues from sales of its products. As of March 31, 2026, the Company had $65.0 million of borrowings outstanding under the Perceptive Facility, which has a final maturity on July 25, 2029. The Perceptive Facility is subject to certain financial covenants including a minimum net revenue covenant that escalates over the term of the Perceptive Facility and a minimum liquidity covenant.

If our cash and cash equivalents and anticipated revenues from sales or our products and services are insufficient to satisfy our liquidity requirements, we may seek to sell additional common or preferred equity or debt securities or enter into a new credit facility or another form of third-party funding or seek other debt financing. If we raise additional funds by issuing equity or equity-linked securities, our stockholders would experience dilution and any new equity securities could have rights, preferences and privileges superior to those of holders of our common stock. Debt financing, if available, may involve covenants restricting our operations or our ability to incur additional debt. We cannot be assured that additional equity, equity-linked or debt financing will be available on terms favorable to us or our stockholders, or at all. It is also possible that we may allocate significant amounts of capital towards products or technologies for which market demand is lower than expected and, as a result, abandon such efforts. If we are unable to maintain our current financing or obtain adequate additional financing when we require it, or if we obtain financing on terms which are not favorable to us, or if we expend capital on products or technologies that are unsuccessful, our ability to continue to support our business growth and to respond to business challenges could be significantly limited, or we may be required to delay the development, commercialization and marketing of our products.

The Company is subject to certain financial covenants under its credit facility, including a liquidity and trailing twelve-month minimum revenue covenants. On March 12, 2026, the Company amended the terms of its credit arrangement to modify the required quarterly revenue covenants through December 31, 2026 and the liquidity covenants through September 30, 2027. As of March 31, 2026 the Company was in compliance with the financial covenants in accordance with this agreement. The Company currently projects trailing twelve-month revenue for the period ended March 31, 2027 to be below the minimum required revenue for that period as stated in the credit facility agreement. Should the Company not be able to meet its March 31, 2027 minimum revenue covenant, the lender may at that time and at its discretion, call the credit facility. Should the lender call the facility, the Company is not projected to have the liquidity required to meet its requirement to pay off the loan. Therefore, substantial doubt exists about the Company's ability to continue as a going concern.

The Company remains actively engaged in ongoing collaborative and constructive discussions with its lender. Additional actions within the Company's control to meet its minimum revenue covenant include improvements to its revenue cycle management to increase collections, introducing new treatment options at its clinic locations and pursuing new strategies within its medical device business to accelerate sales growth and optimize its product mix. The Company's ability to meet its liquidity needs, including meeting future revenue and liquidity covenants, is dependent on growth in existing and acquired product and service lines and the realization of synergies related to its acquisition of Greenbrook. However, at this time, these actions do not fully mitigate the risk related to compliance with the revenue covenant for the March 31, 2027 period. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Our current and future funding requirements will depend on many factors, including:

As of March 31, 2026, there were no significant changes to our material cash requirements as set forth in our Annual Report on Form 10-K filed with the SEC on March 17, 2026.

Cash Flows

The following table sets forth a summary of our cash flows for the three months ended March 31, 2026 and 2025:

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Net Cash used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2026 was $9.4 million, consisting primarily of a net loss of $10.8 million, and an increase in net operating assets of $1.8 million, partially offset by non-cash charges of $3.2 million, primarily consisting of depreciation and amortization, loss on disposal of property and equipment, share-based compensation and loss on extinguishment of debt. The increase in net operating assets was primarily due to decreases in accrued expenses, an increase in prepaid commission expense, partially offset by a decrease in accounts receivable.

Net cash used in operating activities for the three months ended March 31, 2025 was $17.0 million, consisting primarily of a net loss of $12.7 million, and an increase in net operating assets of $6.9 million, partially offset by non-cash charges of $2.5 million, primarily consisting of depreciation and amortization and share-based

compensation. The increase in net operating assets was primarily due to increase in accounts receivable, and decreases in accounts payable, accrued expenses, prepaid expenses and other assets and prepaid commission expense.

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Net Cash used in Investing Activities

Net cash used in investing activities for the three months ended March 31, 2026 was $0.2 million, which was primarily due to purchases of property and equipment and capitalized software costs, partially offset by proceeds from the sale of property and equipment.

Net cash used in investing activities for the three months ended March 31, 2025 was $0.2 million, which was primarily due to purchases of property and equipment and capitalized software costs.

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Net Cash (used in) provided by Financing Activities

Net cash used in financing activities for the three months ended March 31, 2026 was $5.6 million and consisted of $5.0 million of repayments of long-term debt, $0.3 million of payments related to debt issuance costs, $0.3 million of payments related to deferred and contingent consideration, and $0.1 million of distributions to non-controlling interests.

Net cash provided by financing activities for the three months ended March 31, 2025 was $19.0 and primarily consisted of net proceeds from our secondary public offering.

Indebtedness

For information regarding the Perceptive Facility, refer to "Debt" in Notes to Interim Consolidated Financial Statements located in Part I - FINANCIAL INFORMATION, Item 1. Financial Statements.

Recent Accounting Pronouncements

Refer to "Summary of Significant Accounting Policies" and "Recent Accounting Pronouncements" in Notes to Interim Consolidated Financial Statements located in Part I - FINANCIAL INFORMATION, Item 1. Financial Statements.

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