On Tuesday, Canaccord Genuity adjusted its price target for Neuronetics (NASDAQ:STIM) shares to $3.00, down from the previous target of $6.00, while maintaining a Buy rating on the stock.
The adjustment follows Neuronetics' second-quarter revenue of $16.5 million, which fell short of expectations. The revenue dip was attributed to a decrease in treatment session revenue, as customers postponed restocking their inventory.
This customer behavior was a direct result of the ongoing challenges with prior authorization and reimbursement, exacerbated by a cybersecurity breach at Change Healthcare (NASDAQ:CHNG).
Despite the lower-than-anticipated quarterly results, Neuronetics has reaffirmed its full-year 2024 revenue guidance, which remains set between $78 million and $80 million.
The company's confidence is bolstered by the performance of its Better Me Guarantee Program and key performance indicators, particularly those related to actual treatment sessions completed.
The focus of investor discussions has shifted towards Neuronetics' impending merger with Greenbrook TMS, a move that is expected to create a leading provider in Transcranial Magnetic Stimulation (TMS) therapy and general mental health services. The merger is anticipated to yield revenue and cost synergies, propelling Neuronetics towards sustained profitability from 2025 onwards.
Greenbrook, previously a major customer of Neuronetics, is now positioned to enhance financial and operational efficiency and expand the reach of the Better Me Guarantee Program.
Neuronetics plans to leverage the merger to streamline operations and potentially extend insurance payor contracts to other customers, improving reimbursement processes and cash flow management. The merger is also expected to boost brand recognition for NeuroStar TMS therapy.
Furthermore, Neuronetics is continuing to invest in Better Me Guarantee Program accounts and is preparing to launch a television advertising campaign in Tampa Bay, Florida, in the fall, aiming to increase therapy awareness. The company is also gaining from the expansion of its adolescent indication, which has led to additional reimbursement wins.
In other recent news, Neuronetics, a frontrunner in non-invasive mental health treatments, reported a revenue of $16.5 million in the second quarter of 2024, a 7% decrease from the previous year.
The company attributes this decline to the Change Healthcare cybersecurity breach and a shift in customer spending patterns. Despite these challenges, Neuronetics remains hopeful of a temporary impact and a return to normal revenue levels.
Neuronetics also announced the acquisition of Greenbrook TMS, a move aimed at establishing a vertically-integrated mental health company with a larger market presence. The company foresees a rebound in the third quarter and anticipates mid-teens revenue growth next year following the merger.
Furthermore, Neuronetics has launched the Better Me program and adolescent therapy options, which have expanded insurance coverage and patient accessibility. The company has secured a new debt facility of up to $90 million with Perceptive Advisors.
These recent developments reflect the company's strategic steps to strengthen its position in the market. As Neuronetics continues to navigate through the current challenges, the company remains optimistic about achieving cashflow positivity in 2025.
InvestingPro Insights
The recent assessment by Canaccord Genuity of Neuronetics (NASDAQ:STIM) amidst its challenges and strategic merger with Greenbrook TMS brings to light the importance of understanding the company's financial health and market position. According to InvestingPro data, Neuronetics has a market capitalization of $22.35 million and has experienced a revenue growth of 10.01% over the last twelve months as of Q1 2024. Despite this growth, the company's stock price has seen a substantial decline, trading near its 52-week low and reflecting a 1-week total price return of -58.61% as of the most recent data.
An InvestingPro Tip worth noting is that Neuronetics' stock is currently in oversold territory according to the RSI, which could suggest potential for a rebound. Additionally, the company's liquid assets exceed its short-term obligations, providing some financial stability in the near term. Investors interested in the intricacies of Neuronetics' financial metrics and seeking further insights can explore more tips on InvestingPro, where 15 additional tips are available, including analysis on earnings revisions and stock volatility.
With the company's reaffirmed full-year 2024 revenue guidance and the upcoming merger poised to enhance operations, these InvestingPro insights can help investors gauge the potential risks and opportunities associated with Neuronetics' stock. For those looking to delve deeper into the company's financials and future outlook, the comprehensive analysis provided by InvestingPro at https://www.investing.com/pro/STIM could prove invaluable.
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