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What changed in Neuronetics, Inc.'s 10-K — 2023 vs 2024

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Paragraph-level year-over-year comparison of Neuronetics, Inc.'s 2023 and 2024 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2024 report.

+535 added−352 removedSource: 10-K (2025-03-27) vs 10-K (2024-03-08)

Top changes in Neuronetics, Inc.'s 2024 10-K

535 paragraphs added · 352 removed · 281 edited across 9 sections

Item 1. Business

Business — how the company describes what it does

66 edited+34 added−10 removed147 unchanged
Biggest changeThese risks include, among others: ● We have incurred losses in the past and may be unable to achieve or sustain profitability in the future. ● If insurance coverage is unavailable or reimbursement from third-party payors for treatments using our products significantly declines, psychiatrists may be reluctant to use our products. ● Our revenue has been concentrated among a small number of customers, and if we lose any of these customers and fail to replace them, or if any of these customers fail to perform their obligations to us, our revenue may decrease substantially. ● Our success depends upon patient satisfaction with the effectiveness of our NeuroStar Advanced Therapy System. ● We operate in a very competitive environment and if we are unable to compete successfully against our existing or potential competitors, our sales and operating results may be negatively affected. ● The loss of certain members of our senior management or our inability to attract and retain highly skilled executives, salespeople, product development and other personnel could negatively impact our business. ● We rely on single-source suppliers for some components used in our NeuroStar Advanced Therapy System and on a single manufacturer for the assembly of our NeuroStar Advanced Therapy System, and we may be unable to find replacements or immediately transition to alternative parties for these components. ● We rely on a network of third-party distributors to market and distribute our products internationally, and if we are unable to maintain and expand this network, we may be unable to generate anticipated sales. ● If we are not able to obtain and enforce patent protection for our technologies, products, or product candidates, development and commercialization of our products and product candidates may be adversely affected. ● Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business. ● Modifications to our products may require new 510(k) clearances, de novo classification or PMAs, and may require us to cease marketing or recall the modified products until clearances are obtained. ● Our products must be manufactured in accordance with federal and state regulations, and we could be forced to recall our installed systems or terminate production if we fail to comply with these regulations. ● Our products may cause or contribute to adverse medical events that we are required to report to the FDA, and if we fail to do so, we would be subject to sanctions that could harm our reputation, business, financial condition and results of operations.
Biggest changeThese risks include, among others: ● We have incurred losses in the past and may be unable to achieve or sustain profitability in the future. ● If insurance coverage is unavailable or reimbursement from third-party payors for treatments using our products significantly declines, psychiatrists may be reluctant to use our products and our revenues, earnings and cash flows at our Treatment Centers would be substantially reduced. ● Our revenue has been concentrated among a small number of customers, and if we lose any of these customers and fail to replace them, or if any of these customers fail to perform their obligations to us, our revenue may decrease substantially. ● Our success depends upon patient satisfaction with the effectiveness of our NeuroStar Advanced Therapy System. ● We operate in a very competitive environment and if we are unable to compete successfully against our existing or potential competitors, our sales and operating results may be negatively affected. ● The loss of certain members of our senior management or our inability to attract and retain highly skilled executives, salespeople, product development, clinicians in our Treatment Centers and other personnel could negatively impact our business. ● We rely on single-source suppliers for some components used in our NeuroStar Advanced Therapy System and on a single manufacturer for the assembly of our NeuroStar Advanced Therapy System, and we may be unable to find replacements or immediately transition to alternative parties for these components. ● We rely on a network of third-party distributors to market and distribute our products internationally, and if we are unable to maintain and expand this network, we may be unable to generate anticipated sales. 21 Table of Contents ● If we are not able to obtain and enforce patent protection for our technologies, products, or product candidates, development and commercialization of our products and product candidates may be adversely affected. ● Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business.
Key Customers, Sales and marketing—United States We primarily market and sell the NeuroStar Advanced Therapy System and recurring treatment sessions to psychiatrists, with primary care physicians and pain management specialists representing a small percentage of our customer base. We are dependent upon a small number of customers, as the market for neurohealth disorder equipment is highly concentrated.
Key NeuroStar Customers, Sales and Marketing—United States We primarily market and sell the NeuroStar Advanced Therapy System and recurring treatment sessions to psychiatrists, with primary care physicians and pain management specialists representing a small percentage of our customer base. We are dependent upon a small number of customers, as the market for neurohealth disorder equipment is highly concentrated.
These include: ● establishment registration and device listing with the FDA; ● QSR requirements, which require manufacturers, including third-party manufacturers and contract manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and, manufacturing, and distribution process; 11 Table of Contents ● labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; ● clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices; ● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury or serious adverse events, if the malfunction were to recur; ● correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; ● complying with regulations requiring Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and ● post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and efficacy data for the device.
These include: ● establishment registration and device listing with the FDA; 12 Table of Contents ● QSR requirements, which require manufacturers, including third-party manufacturers and contract manufacturers, to follow stringent design, testing, control, documentation and other quality assurance procedures during all aspects of the design and, manufacturing, and distribution process; ● labeling and marketing regulations, which require that promotion is truthful, not misleading, fairly balanced and provide adequate directions for use and that all claims are substantiated, and also prohibit the promotion of products for unapproved or “off-label” uses and impose other restrictions on labeling; FDA guidance on off-label dissemination of information and responding to unsolicited requests for information; ● clearance or approval of product modifications to 510(k)-cleared devices that could significantly affect safety or efficacy or that would constitute a major change in intended use of one of our cleared devices; ● medical device reporting regulations, which require that a manufacturer report to the FDA if a device it markets may have caused or contributed to a death or serious injury, or has malfunctioned and the device or a similar device that it markets would be likely to cause or contribute to a death or serious injury or serious adverse events, if the malfunction were to recur; ● correction, removal and recall reporting regulations, which require that manufacturers report to the FDA field corrections and product recalls or removals if undertaken to reduce a risk to health posed by the device or to remedy a violation of the FDCA that may present a risk to health; ● complying with regulations requiring Unique Device Identifiers on devices and also requiring the submission of certain information about each device to the FDA’s Global Unique Device Identification Database; ● the FDA’s recall authority, whereby the agency can order device manufacturers to recall from the market a product that is in violation of governing laws and regulations; and ● post-market surveillance activities and regulations, which apply when deemed by the FDA to be necessary to protect the public health or to provide additional safety and efficacy data for the device.
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and 14 Table of Contents gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; ● the federal physician payment transparency requirements, sometimes referred to as the “Physician Payments Sunshine Act,” created under the Patient Protection and Affordable Care Act (“PPACA”), which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services, Centers for Medicare and Medicare Services,(“CMS”), information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other professionals (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and ● foreign and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; state laws that require device manufacturers to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and other federal and state laws that govern the privacy and security of health information or personally identifiable information in certain circumstances, including state health information privacy and data breach notification laws which govern the collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus requiring additional compliance efforts and data privacy and security laws and regulations in foreign jurisdictions that may be more stringent than those in the United States (such as the European Union, which adopted the GDPR, which became effective in May 2018).
HITECH also created new tiers of civil monetary penalties, amended HIPAA to make civil and criminal penalties directly applicable to business associates, and gave state attorneys general new authority to file civil actions for damages or injunctions in federal courts to enforce HIPAA laws and seek attorneys’ fees and costs associated with pursuing federal civil actions; ● the federal physician payment transparency requirements, sometimes referred to as the “Physician Payments Sunshine Act,” created under the Patient Protection and Affordable Care Act (“PPACA”), which requires, among other things, certain manufacturers of drugs, devices, biologics and medical supplies reimbursed under Medicare, Medicaid, or the Children’s Health Insurance Program (with certain exceptions) to report annually to the United States Department of Health and Human Services, Centers for Medicare and Medicare Services,(“CMS”), information related to payments or other transfers of value made to physicians (defined to include doctors, dentists, optometrists, podiatrists and chiropractors), other professionals (physician assistants, nurse practitioners, clinical nurse specialists, certified nurse anesthetists, and certified nurse-midwives) and teaching hospitals, as well as ownership and investment interests held by physicians and their immediate family members; and ● foreign and state law equivalents of each of the above federal laws, such as anti-kickback and false claims laws, that may impose similar or more prohibitive restrictions, and may apply to items or services reimbursed by any non-governmental third-party payors, including private insurers; state laws that require device manufacturers to comply with the industry’s voluntary compliance guidelines and the applicable compliance guidance promulgated by the federal government or otherwise restrict payments that may be made to healthcare providers and other potential referral sources; state laws that require device manufacturers to report information related to payments and other transfers of value to physicians and other healthcare providers or marketing expenditures and pricing information; and other federal and state laws that govern the privacy and security of health information or personally identifiable information in certain circumstances, including state health information privacy and data breach notification laws which govern the collection, use, disclosure, and protection of health-related and other personal information, many of which differ from each other in significant ways and often are not pre-empted by HIPAA, thus requiring additional compliance efforts and data privacy and security laws and regulations in foreign jurisdictions that may be more stringent than those in the United States (such as the European Union, which adopted the GDPR, which became effective in May 2018).
Dunner, et. al. published results of a naturalistic, prospective, observational trial conducted at 42 U.S. clinical sites in 257 patients who had tried and failed to receive relief from one or more medication trials in their current MDD episode who were treated with an acute course of NeuroStar Advanced Therapy.
Dunner, et. al. published results of a naturalistic, prospective, observational trial conducted at 42 U.S. clinical sites in 257 patients who had tried and failed to receive relief from one or more medication trials in their current MDD episode who were treated with an acute course of NeuroStar therapy.
We cannot predict the impact that health care reform under the Biden administration will have on our business, and there is uncertainty as to what healthcare programs and regulations may be implemented or changed at the federal and/or state level in the United States, or the effect of any future legislation or regulation.
We cannot predict the impact that health care reform under the former Biden administration will have on our business, and there is uncertainty as to what healthcare programs and regulations may be implemented or changed at the federal and/or state level in the United States, or the effect of any future legislation or regulation.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ● warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; ● recalls, withdrawals, or administrative detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; 12 Table of Contents ● refusing or delaying requests for 510(k) marketing clearance or PMAs of new products or modified products; ● withdrawing 510(k) clearances or PMAs that have already been authorized; ● refusal to authorize export or import approvals for our products; or ● criminal prosecution.
If the FDA determines that we failed to comply with applicable regulatory requirements, it can take a variety of compliance or enforcement actions, which may result in any of the following sanctions: ● warning letters, untitled letters, fines, injunctions, consent decrees and civil penalties; 13 Table of Contents ● recalls, withdrawals, or administrative detention or seizure of our products; ● operating restrictions or partial suspension or total shutdown of production; ● refusing or delaying requests for 510(k) marketing clearance or PMAs of new products or modified products; ● withdrawing 510(k) clearances or PMAs that have already been authorized; ● refusal to authorize export or import approvals for our products; or ● criminal prosecution.
The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, storage, installation, servicing, recordkeeping, premarket clearance or approval, import, export, adverse event 8 Table of Contents reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.
The FDA regulates the development, design, non-clinical and clinical research, manufacturing, safety, efficacy, labeling, packaging, 9 Table of Contents storage, installation, servicing, recordkeeping, premarket clearance or approval, import, export, adverse event reporting, advertising, promotion, marketing and distribution, and import and export of medical devices to ensure that medical devices distributed domestically are safe and effective for their intended uses and otherwise meet the requirements of the FDCA.
Moreover, there are no safe harbors for many common practices, such as reimbursement support programs, educational or research grants, or charitable donations; ● the federal civil and criminal false claims laws and civil monetary penalty laws, such as the FCA, which can be enforced by private citizens through civil qui tam actions, prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, false, fictitious or fraudulent claims for payment of federal funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
Moreover, there are no safe harbors for many common practices, such as reimbursement support programs, educational or research grants, or charitable donations; ● the federal civil and criminal false claims laws and civil monetary penalty laws, such as the FCA, which can be enforced by private citizens through civil qui tam actions, prohibits individuals or entities from, among other things, knowingly presenting, or causing to be presented, false, fictitious or 14 Table of Contents fraudulent claims for payment of federal funds, and knowingly making, using or causing to be made or used a false record or statement material to a false or fraudulent claim to avoid, decrease or conceal an obligation to pay money to the federal government.
Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the applicable statute or specific intent to violate it or to have committed a violation; ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, which imposes privacy, security, transmission and breach reporting obligations with respect to individually identifiable health information upon “covered entities” subject to the law, including health plans, healthcare clearinghouses and certain healthcare providers and their respective business associates that perform services on their behalf that involve individually identifiable health information.
Similar to the federal healthcare Anti-Kickback Statute, a person or entity does not need to have actual knowledge of the applicable statute or specific intent to violate it or to have committed a violation; 15 Table of Contents ● HIPAA, as amended by the Health Information Technology for Economic and Clinical Health Act (“HITECH”), and their implementing regulations, which imposes privacy, security, transmission and breach reporting obligations with respect to individually identifiable health information upon “covered entities” subject to the law, including health plans, healthcare clearinghouses and certain healthcare providers and their respective business associates that perform services on their behalf that involve individually identifiable health information.
The device sponsor must then fulfill more rigorous PMA requirements, or can request a risk-based classification determination for the device in accordance with 9 Table of Contents the “de novo” classification process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.
The device sponsor must then fulfill more rigorous 10 Table of Contents PMA requirements, or can request a risk-based classification determination for the device in accordance with the “de novo” classification process, which is a route to market for novel medical devices that are low to moderate risk and are not substantially equivalent to a predicate device.
The Social Security Act also has a provision that provides for the imposition of civil monetary penalties against any person who offers or transfers remuneration to a Medicare or Medicaid beneficiary that such person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for the 13 Table of Contents order or receipt of any item or service payable by a federal health care program.
The Social Security Act also has a provision that provides for the imposition of civil monetary penalties against any person who offers or transfers remuneration to a Medicare or Medicaid beneficiary that such person knows or should know is likely to influence the beneficiary’s selection of a particular provider, practitioner, or supplier for the order or receipt of any item or service payable by a federal health care program.
The discovery of serious safety issues with our 20 Table of Contents products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us. ● We are subject to certain federal, state and foreign fraud and abuse laws, health information privacy and security laws and transparency laws, which, if violated, could subject us to substantial penalties.
The discovery of serious safety issues with our products, or a recall of our products either voluntarily or at the direction of the FDA or another governmental authority, could have a negative impact on us. ● We are subject to certain federal, state and foreign fraud and abuse laws, health information privacy and security laws and transparency laws, which, if violated, could subject us to substantial penalties.
We intend to make further investments in marketing resources, such as our marketing portal, which consists of customizable practice development and advertising materials, and digital patient outreach tools all of which are designed to drive patient awareness and help identify patients who can benefit from NeuroStar TMS within an existing practice and in the local community.
We intend to make further investments in marketing resources, such as our marketing portal, which consists of customizable practice development and advertising materials, and digital patient outreach tools all of which are designed to drive patient awareness and help identify 6 Table of Contents patients who can benefit from NeuroStar TMS within an existing practice and in the local community.
In Japan, we have an exclusive distribution agreement with Teijin for the commercialization of our products. The current term of this distribution agreement expires March 31, 2027, subject to automatic renewal unless terminated by either party.
In Japan, we have an exclusive distribution agreement for the commercialization of our products. The current term of this distribution agreement expires March 31, 2027, subject to automatic renewal unless terminated by either party.
Many patients taking antidepressant medications experience intolerable or troubling side effects that contribute to a delay or failure in attaining an effective or optimal antidepressant dose, poor patient 3 Table of Contents treatment adherence or discontinuation of treatment therapy. The likelihood of achieving remission is limited and declines with each successive medication attempt.
Many patients taking antidepressant medications experience intolerable or troubling side effects that contribute to a delay or failure in attaining an effective or optimal antidepressant dose, poor patient treatment adherence or discontinuation of treatment therapy. The likelihood of achieving remission is limited and declines with each successive medication attempt.
We created the role of clinical training manager to partner with our customers to conduct initial and ongoing on-site clinical training to ensure clinical and practice success. 6 Table of Contents Practice Management Support and Psychiatrist Training—United States Our PDMs play a pivotal role in ensuring the success of our customers as they implement a new service line into their practice.
We created the role of clinical training manager to partner with our customers to conduct initial and ongoing on-site clinical training to ensure clinical and practice success. Practice Management Support and Psychiatrist Training—United States Our PDMs play a pivotal role in ensuring the success of our customers as they implement a new service line into their practice.
Although a variety of antidepressant medications are available, drug therapy has at least two primary limitations: limited effectiveness and treatment-emergent side effects. These limitations were demonstrated in the STAR*D Study, a large clinical trial funded by the U.S.
Although a variety of antidepressant medications are available, drug therapy has at least two 2 Table of Contents primary limitations: limited effectiveness and treatment-emergent side effects. These limitations were demonstrated in the STAR*D Study, a large clinical trial funded by the U.S.
It is likely that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and 16 Table of Contents services, which could result in reduced demand for a medical device manufacturer’s products or additional pricing pressure.
It is likely that additional state and federal healthcare reform measures will be adopted in the future, any of which could limit the amounts that federal and state governments will pay for healthcare products and services, which could result in reduced demand for a medical device manufacturer’s products or additional pricing pressure.
Our dedicated reimbursement managers help practices navigate issues regarding the reimbursement process including investigation of benefits, prior authorizations and claims documentation. This group has assisted our customers to conduct over 69,900 benefit investigations. Psychiatrists and staff training on the NeuroStar Advanced Therapy System is a key to success within each practice.
Our dedicated reimbursement managers help practices navigate issues regarding the reimbursement process including investigation of benefits, prior authorizations and claims documentation. This group has assisted our customers to conduct over 83,815 benefit investigations. Psychiatrists and staff training on the NeuroStar Advanced Therapy System is a key to success within each practice.
In addition to earning a base salary, eligible employees are compensated for their contributions to the Company’s goals with cash incentives and long-term equity-based incentives. The Company is committed to providing fair and equitable pay for employees. Eligible full-time employees also have access to medical, dental, and vision plans; savings and retirement plans; and other benefits.
In addition to earning a base salary, eligible employees are compensated for their contributions to the Company’s goals with cash incentives and long-term equity-based incentives. The Company is committed to providing fair and equitable pay for employees. Eligible full-time 20 Table of Contents employees also have access to medical, dental, and vision plans; savings and retirement plans; and other benefits.
To enhance the work our PDMs do to support customer training and education, our sales training team hosts bi-monthly NeuroStar University courses to educate existing customers on internal best practices that help them improve the patient experience and overall business operations. This group has trained 369 customers during the year 2023.
To enhance the work our PDMs do to support customer training and education, our sales training team hosts bi-monthly NeuroStar University courses to educate existing customers on internal best practices that help them improve the patient experience and overall business operations. This group has trained 344 customers during the year 2024.
At the state level, individual states in the United States are also increasingly passing legislation and implementing regulations designed to control product pricing or manufacturer interactions with healthcare providers, including price or patient reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures.
At the state level, individual states in the United States are also increasingly passing legislation and implementing regulations designed to control product pricing or manufacturer interactions with healthcare providers, including price or patient 17 Table of Contents reimbursement constraints, discounts, restrictions on certain product access and marketing cost disclosure and transparency measures.
We make available, free of charge on our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended, (the “Exchange Act”), as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the SEC.
We make available, free of charge on our website, our annual report on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K and all amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act, as soon as reasonably practicable after we electronically file those reports with, or furnish them to, the SEC.
Once the practice begins treating patients, our PDMs will educate the psychiatrist on how to track clinical outcomes, interpret data and effectively convey results to existing and potential patients and referring physicians. Our PDMs also work with our customers to increase awareness with referring physicians and develop external marketing tactics.
Once the practice begins treating patients, our PDMs will educate the psychiatrist on how to track clinical outcomes, interpret data and effectively convey results to existing and potential patients and referring physicians. Our 7 Table of Contents PDMs also work with our customers to increase awareness with referring physicians and develop external marketing tactics.
In the EU, a single regulatory approval process exists, in which a Notified Body assesses the conformity of the medical device intended to be marketed with the legal 17 Table of Contents requirements set forth in the EU MDR.
In the EU, a single regulatory approval process exists, in which a Notified Body assesses the conformity of the medical device intended to be marketed with the legal requirements set forth in the EU MDR.
We seek to protect our trade secrets and know-how by entering into confidentiality agreements with third-parties, consultants and employees who have access to such trade secrets and know-how.
We seek to protect our trade secrets and know-how, among other measures, by entering into confidentiality agreements with third-parties, consultants and employees who have access to such trade secrets and know-how.
As of December 31, 2023, we engaged with Gharieni Group GmbH to supply our chair, Molex Incorporated to supply our SenStar Components, and other companies to supply components of our chairs and treatment packs. We are continuing to transition our console manufacturing to Ascential Technologies (previous D&K), collaborating with them on optimizing the global supply chain.
As of December 31, 2024, we engaged with Gharieni Group GmbH to supply our chair, Molex Incorporated to supply our SenStar Components, and other companies to supply components of our chairs and treatment packs. We are continuing to transition our console manufacturing to Ascential Technologies (previously D&K Engineering), collaborating with them on optimizing the global supply chain.
False Claims Act liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of $13,946 to $27,894 (beginning in 2024) per false or fraudulent claim or statement.
False Claims Act liability is potentially significant in the healthcare industry because the statute provides for treble damages and mandatory penalties of $13,946 to $27,894 (increasing in 2025) per false or fraudulent claim or statement.
In 2024, we expect that five U.S. patents will expire and 14 non -U.S. patents will expire. Our worldwide intellectual property portfolio includes multiple pending patent applications relating to methods and apparatuses for the treatment of psychiatric health conditions in Australia, Canada, the European Union, Japan and the United States.
In 2025, we expect that 11 U.S. patents will expire and 14 non-U.S. patents will expire. Our worldwide intellectual property portfolio includes multiple pending patent applications relating to methods and apparatuses for the treatment of psychiatric health conditions in Australia, Canada, selected European Union countries, Japan and the United States.
It is also cleared by the FDA as an adjunct for adults with obsessive-compulsive disorder (“OCD”), and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression).
It is also cleared by the FDA, as an adjunct for adults with obsessive-compulsive disorder (“OCD”) and for adolescent patients aged 15-21 with MDD. It is also cleared by the FDA as an adjunct for adults with OCD, and to decrease anxiety symptoms in adult patients with MDD that may exhibit comorbid anxiety symptoms (anxious depression).
On a worldwide basis, as of December 31, 2023, our patent estate included over 98 issued or allowed patents and 18 pending patent applications for our products and novel design methods, manufacturing processes, novel TMS devices and systems and future combination products that are mainly designed to treat psychiatric conditions or perform diagnostic procedures.
On a worldwide basis, as of December 31, 2024, our patent estate included 82 issued or allowed patents and 20 pending patent applications for our products and novel design methods, manufacturing processes, novel TMS devices and systems and future combination products that are mainly designed to treat psychiatric conditions or perform diagnostic procedures.
We estimate, based on data from the Sequenced Treatment Alternatives to Relieve Depression study (the “STAR*D Study”) that approximately 6.4 million of these patients have failed to achieve remission of their MDD from their prior antidepressant medication therapy and that approximately 3.8 million of those patients have commercial insurance or federal healthcare programs coverage for NeuroStar Advanced Therapy System.
We estimate, based on data from the STAR*D Study that approximately 6.4 million of these patients have failed to achieve remission of their MDD from their prior antidepressant medication therapy and that approximately 3.8 million of those patients have commercial insurance or federal healthcare programs coverage for NeuroStar Advanced Therapy System.
If a medical device manufacturer’s operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to it, it may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, substantial monetary penalties, individual imprisonment, exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, additional reporting obligations and oversight if it becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of operations, any of which could adversely affect the ability of a medical device manufacturer to operate its business and the results of its operations. 15 Table of Contents United States Healthcare Reform In the United States, a number of legislative and regulatory proposals have been considered or enacted to change the healthcare system in ways that could affect a medical device manufacturer’s business.
If a medical device manufacturer’s operations are found to be in violation of any of the laws described above or any other governmental regulations that apply to it, it may be subject to penalties, including civil, criminal and administrative penalties, damages, fines, disgorgement, substantial monetary penalties, individual imprisonment, exclusion from governmental funded healthcare programs, such as Medicare and Medicaid, additional reporting obligations and oversight if it becomes 16 Table of Contents subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of operations, any of which could adversely affect the ability of a medical device manufacturer to operate its business and the results of its operations.
In the United States, as of December 31, 2023, we owned or licensed 38 issued or 7 Table of Contents allowed patents and 10 pending patent applications that are directed to our TMS technology.
In the United States, as of December 31, 2024, we owned or licensed 33 issued or 8 Table of Contents allowed patents and 10 pending patent applications that are directed to our TMS technology.
We plan to expand our sales and customer support team to increase the number of patients treated at new and existing active customer sites using our NeuroStar Advanced Therapy Systems in the United States. We currently have 1,145 active customer sites in the United States.
We plan to optimize our sales and customer support team to increase the number of patients treated at new and existing active customer sites using our NeuroStar Advanced Therapy Systems in the United States.
Outside the United States, as of December 31, 2023, we owned or licensed 60 issued or allowed patents, 7 pending patent applications and 1 pending Patent Cooperation Treaty application. These U.S. issued patents are expected to remain in effect until between 2024 and 2035. Non-U.S. patents are expected to remain in effect until between 2024 and 2035.
Outside the United States, as of December 31, 2024, we owned or licensed 49 issued or allowed patents, 10 pending patent applications and zero pending Patent Cooperation Treaty application. These U.S. issued patents are expected to remain in effect until between 2025 and 2035. Non-U.S. patents are expected to remain in effect until between 2025 and 2035.
We believe psychiatrists can generate approximately $8,500 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their practices.
We believe psychiatrists can generate approximately $9,000 of average revenue per commercially insured patient for a standard course of treatment, which may provide meaningful incremental income to their practices.
We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the United States with the collaborative support of our 203 employees as of December 31, 2023. 4 Table of Contents We generate revenues from initial capital sales of our systems, sales of our recurring treatment sessions and service and repair and extended warranty contracts.
We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the United States with the collaborative support of our 716 employees as of December 31, 2024. We generate Neurostar revenues from initial capital sales of our systems, sales of our recurring treatment sessions, service and repair and extended warranty contracts and clinic revenue.
All of our employees are employed full time. We have never had a work stoppage and none of our employees are covered by collective bargaining agreements or represented by a labor union. We believe that our employee relations are strong. We recruit employees with the skills and training relevant to functional responsibilities.
We have never had a work stoppage and none of our employees are covered by collective bargaining agreements or represented by a labor union. We believe that our employee relations are strong. We recruit employees with the skills and training relevant to functional responsibilities. We believe that cultural fit and energy are important considerations.
Corporate Information We were incorporated in Delaware in April of 2003. Our principal executive offices are located at 3222 Phoenixville Pike, Malvern, Pennsylvania 19355, and our telephone number is (610) 640-4202. Our website address is https://neurostar.com/neuronetics/ .
During 2025, we intend to integrate the Neuronetics and Greenbrook benefit plans. Corporate Information We were incorporated in Delaware in April of 2003. Our principal executive offices are located at 3222 Phoenixville Pike, Malvern, Pennsylvania 19355, and our telephone number is (610) 640-4202. Our website address is https://neurostar.com/neuronetics/ .
We currently have 47 NeuroStar practice development managers in 2023 (“PDMs”), to focus exclusively on helping increase patient utilization of NeuroStar Advanced Therapy System in a practice. We intend to add to this team to support our revenue growth.
We currently have 40 NeuroStar practice development managers in 2024 (“PDMs”) as at December 31, 2024, to focus exclusively on helping increase patient utilization of NeuroStar Advanced Therapy System in a practice. We intend to add to this team to support our revenue growth.
For the year ended December 31, 2023, our U.S. revenues were $69.3 million, compared to $63.4 million for the year ended December 31, 2022, which represented an increase of 9% compared to the prior period.
For the year ended December 31, 2024, our U.S. revenues were $72.5 million, compared to $69.3 million for the year ended December 31, 2023, which represented an increase of 5% compared to the prior period.
We derive the majority of our revenues from recurring treatment sessions. For the year ended December 31, 2023, we generated revenues of $71.3 million and had a net loss of $30.2 million. Our revenues increased 9% during the year ended December 31, 2023 compared to the year ended December 31, 2022.
We derive the majority of our revenues from recurring treatment sessions. For the year ended December 31, 2024, we generated revenues of $74.9 million and had a net loss of $43.7 million. Our revenues increased 5% during the year ended December 31, 2024 compared to the year ended December 31, 2023.
Sales and Customer Support Team and Customer Training As of December 31, 2023, our sales and customer support team consisted of 91 employees working collaboratively across the following departments: sales, marketing, field service and customer support, and reimbursement.
Sales and Customer Support Team and Customer Training As of December 31, 2024, our sales and customer support team worked collaboratively across the following departments: sales, marketing, field service, customer support, and reimbursement.
We generated revenues of $71.3 million for the year ended December 31, 2023. MDD is a mood disorder characterized by the presence of one or both of two major diagnostic criteria: a depressed mood or loss of interest in pleasure that continues for at least two weeks.
MDD is a mood disorder characterized by the presence of one or both of two major diagnostic criteria: a depressed mood or loss of interest in pleasure that continues for at least two weeks.
Practices that involve remuneration to those who prescribe, purchase, or recommend medical device products, including discounts, or engaging individuals as speakers, consultants, or advisors, may be subject to scrutiny if they do not fit squarely within an exception or a safe harbor.
Practices that involve assisting patients with identifying providers of healthcare services, offering remuneration, including discounts, rebates and direct compensation, to those who prescribe, purchase, study or recommend medical device products, or engaging individuals as speakers, consultants, researchers or advisors, may be subject to scrutiny if they do not fit squarely within an exception or a safe harbor.
The information contained on, or accessible through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider any information contained in, or that can be accessed through, our website as part of this Annual Report on Form 10-K. 19 Table of Contents Summary Risk Factors An investment in shares of our common stock involves significant risks.
The information contained on, or accessible through, our website is not incorporated by reference into this Annual Report on Form 10-K, and you should not consider any information contained in, or that can be accessed through, our website as part of this Annual Report on Form 10-K.
The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the investigational protocol is scientifically sound.
Clinical trials for significant risk devices generally require submission of an application for an Investigational Device Exemption (“IDE”) to the FDA. The IDE application must be supported by appropriate data, such as animal and laboratory testing results, showing that it is safe to test the device in humans and that the investigational protocol is scientifically sound.
After a device is approved for importation and commercial sale in Japan, the MHLW continues to monitor sales of approved products for compliance with labeling regulations, which prohibit promotion of devices for unapproved uses, and reporting regulations, which require reporting of product malfunctions, including serious injury or death caused by any approved device.
The MHLW is also responsible for creating policies, regulations, guidance documents, and laws, and governs safe use of medical products as well as for social insurance, reimbursement policies, and pricing. 18 Table of Contents After a device is approved for importation and commercial sale in Japan, the MHLW continues to monitor sales of approved products for compliance with labeling regulations, which prohibit promotion of devices for unapproved uses, and reporting regulations, which require reporting of product malfunctions, including serious injury or death caused by any approved device.
To reach our target practices, we also plan to expand our advertising efforts, both online and through more traditional approaches, such as targeting leading psychiatric journals, practice outreach and education through webinars and in person events, attendance at key psychiatric trade shows and sponsoring clinical symposiums and product theaters . ● Increase utilization of our new and existing active customer sites of NeuroStar Advanced Therapy Systems.
To reach our target practices, we also plan to optimize our advertising efforts, both online and through more traditional approaches, such as targeting leading psychiatric journals, practice outreach and education through webinars and in person events, attendance at key psychiatric trade shows and sponsoring clinical symposiums and product theaters . ● Expanding Access to Greenbrook’s Services Through Targeted awareness Programs and Referral Pathways.
Symphony Health estimates that there are approximately 26,300 group and solo practice sites in the United States with psychiatrists that prescribe antidepressant medications. Our direct sales force primarily targets 53,000 psychiatrists at 26,000 psychiatric practices that treat approximately 13.9 million patients based on data from the Journal of the American Medical Association .
Our direct sales force primarily targets 53,000 psychiatrists at 26,000 psychiatric practices that treat approximately 13.9 million patients based on data from the Journal of the American Medical Association .
For example, in the U.S. the collection, maintenance, protection, use, transmission, disclosure and disposal of certain personal information and the security of medical devices are regulated at the U.S. federal and state, and industry levels.
Our business relies on the secure electronic transmission, storage and hosting of sensitive information, including personal information, financial information, intellectual property, and other sensitive information related to our customers and workforce. 19 Table of Contents For example, in the U.S. the collection, maintenance, protection, use, transmission, disclosure and disposal of certain personal information and the security of medical devices are regulated at the U.S. federal and state, and industry levels.
We believe that cultural fit and energy are important considerations. We assess the likelihood that a particular candidate will contribute to the Company’s overall goals, and beyond their specifically assigned tasks. We aim to provide market-based compensation and work to retain our employees for many years.
We assess the likelihood that a particular candidate will contribute to the Company’s overall goals, and beyond their specifically assigned tasks. We aim to provide market-based compensation and work to retain our employees for many years. During 2024, the Company continued to offer a two-day work from home policy to provide personal flexibility and support employees in managing family priorities.
We also plan to invest further in our direct to consumer marketing programs, which is comprised of paid search, display advertising, social media, billboards, radio and public relations. ● Expand our international market opportunities. We primarily sell our products within the United States.
We also plan to invest further in our direct to consumer marketing programs, which is comprised of paid search, display advertising, social media, billboards, radio and public relations. ● Pursue enhancements of our NeuroStar Advanced Therapy System and pipeline development for additional indications.
We were granted marketing authorization for our system using the de novo classification process after receiving a not substantially equivalent determination following the submission of a 510(k) premarket notification.
We were granted marketing authorization for our system using the de novo classification process after receiving a not substantially equivalent determination following the submission of a 510(k) premarket notification. 11 Table of Contents Clinical Trials A clinical trial is typically required to support a PMA application or de novo classification and is sometimes required for a 510(k) pre-market notification, particularly in the case of changes to indications.
In 2024, we plan to continue to expand our sales and customer support teams to have the largest direct sales and customer support team in the industry, including 47 NeuroStar practice development managers, 18 area sales managers, 7 clinical training managers, 18 field service and technical support specialists, 15 sales leaders, 8 customer service representatives, 4 inside sales managers and 10 reimbursement specialists and managers.
In 2025, we plan to continue to have a comprehensive direct sales and customer support team, including 40 PDMs, 21 regional account managers, 10 area sales managers, 2 clinical training managers, 18 field service and technical support specialists, 14 sales leaders, 7 customer service representatives, and 10 reimbursement specialists and managers.
Our initial international commercial focus is Japan, which has the third largest healthcare spend globally. We have entered into an exclusive distribution agreement with Teijin Pharma Limited (“Teijin”) a leading Japanese healthcare company, to further expand our commercialization efforts in this market. We are also evaluating the use of enhancements to our NeuroStar Advanced Therapy System to treat additional indications.
Our international commercial focus is on Japan, which has the third largest healthcare spend globally. 3 Table of Contents We are also evaluating the use of enhancements to our NeuroStar Advanced Therapy System to treat additional indications.
Revenues from treatment sessions represented 73% of our U.S. revenues for the year ended December 31, 2023 compared to 71% of our U.S. revenues for the prior year. Our Strategy Our goal is to maintain and extend our leadership position in TMS therapy for patients with neurohealth disorders.
Revenues from treatment sessions represented 70% of our U.S. revenues for the year ended December 31, 2024 compared to 73% of our U.S. revenues for the prior year.
See the “Risk Factors” section of this Annual Report on Form 10-K.
Summary Risk Factors An investment in shares of our common stock involves significant risks. See the “Risk Factors” section of this Annual Report on Form 10-K.
Legal requirements in these countries relating to the collection, storage, handling and transfer of personal data and, potentially, intellectual property continue to evolve with increasingly strict enforcement regimes. 18 Table of Contents Human Capital Employees As of December 31, 2023, we had 203 full time employees working collaboratively across our sales and customer support team, in research and development, including clinical, regulatory and certain quality functions, operations and in general and administrative.
Human Capital Employees As of December 31, 2024, we had 716 full time employees working collaboratively across our sales and customer support team, in research and development, including clinical, regulatory and certain quality functions, operations and in general and administrative. All of our employees are employed full time.
During 2023, the Company continued to offer a two-day work from home policy to provide personal flexibility and support employees in managing family priorities. Development Developing employees contributes to growing our business. The Company has leadership development programs which bring a consistent approach to leadership development that all managers and directors are required to attend.
Development Developing employees contributes to growing our business. The Company has leadership development programs which bring a consistent approach to leadership development that all managers and directors are required to attend. The Company also provides learning opportunities for all employees to continue to progress their development and career at the Company.
If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business. ​ ● If we experience significant disruptions in our information technology systems, our business may be adversely affected . ​
If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business. ​ ● If we experience significant disruptions in our information technology systems, our business may be adversely affected . ​ ● The combination with Greenbrook may fail to realize the anticipated benefits of the Arrangement, and integration efforts have placed significant demands on the Company. ​ ● The Company’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock. ​ ● Failure to timely or accurately bill for services could have a negative impact on our revenue and cash flow.
The Company focuses on attracting and advancing top talent as well as advancing initiatives that enhance diversity, inclusion and belonging.
Culture A diverse and welcoming culture that provides equal opportunities helps the Company remain competitive, advance its innovation culture, and serve customers. The Company focuses on attracting and advancing top talent as well as advancing initiatives that enhance belonging and broad representation.
NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. We believe we are the market leader in TMS therapy based on the estimated 169,068 global patients treated with over 6.1 million of our treatment sessions through December 31, 2023.
We believe we are the market leader in TMS therapy based on the estimated 195,356 global patients treated with over 7.1 million of our treatment sessions through December 31, 2024. We generated revenues of $74.9 million for the year ended December 31, 2024.
The key elements of our strategy include: ● Improve customer targeting and expand our direct sales and customer support team to accelerate growth. To capture new psychiatrist customers, we plan to expand our specialized, direct sales organization that targets MDD treating psychiatric practices that accept reimbursement from private insurance and Medicare.
To capture new psychiatrist customers, we plan to optimize our specialized, direct sales organization that targets MDD treating psychiatric practices that accept reimbursement from private insurance and Medicare. Symphony Health estimates that there are approximately 26,300 group and solo practice sites in the United States with psychiatrists that prescribe antidepressant medications.
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Item 1. Business. Overview We are a commercial stage medical technology company focused on designing, developing and marketing products that improve the quality of life for patients who suffer from neurohealth disorders.
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Item 1. Business Overview We believe that mental health is as important as physical health. As a global leader in neuroscience, we are delivering more treatment options to patients and healthcare providers by offering exceptional in-office treatments that produce extraordinary results.
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As of December 31, 2023, we had 1,145 active sites utilizing our NeuroStar Advanced Therapy Systems in the United States.
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In addition to selling the NeuroStar Advanced Therapy System and associated treatment sessions to customers, we operate Greenbrook treatment centers (“Treatment Centers”) across the United States, offering NeuroStar Advanced Therapy (“Neurostar”). The Company acquired Greenbrook, a leading provider of mental healthcare services, pursuant to an Arrangement Agreement effective as of December 9, 2024.
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We also sell our products through distributors in countries where we have received regulatory approval, including Japan, Saudi Arabia, The United Arab Emirates, Singapore, and the Republic of Korea. We primarily focus our commercial efforts outside of the United States on Japan.
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NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. Greenbrook 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.
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We worked 5 Table of Contents with Teijin to obtain reimbursement approval for the NeuroStar Advanced Therapy System in June 2019 and will continue to provide sales, marketing and clinical support to ensure our commercial success.
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Recent Transaction Effective as of December 9, 2024, Neuronetics and Greenbrook completed the planned acquisition whereby Neuronetics acquired all of the issued and outstanding common shares of Greenbrook (“Greenbrook Shares”) by way of a court-approved plan of arrangement under the Business Corporations Act (Ontario) (the “Arrangement”).
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We will continue to opportunistically evaluate additional markets outside the United States and Japan for commercial expansion. ● Pursue enhancements of our NeuroStar Advanced Therapy System and pipeline development for additional indications.
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Each Greenbrook Share issued and outstanding immediately prior to the effective time of the Arrangement was exchanged for 0.01149 of a share of common stock of Neuronetics (the “Exchange Ratio”) upon closing of the Arrangement.
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In 2022, our largest customer acquired our second-largest customer. The combined entity accounted for 15% of our revenue in 2023. We executed a new long-term, exclusive agreement with the customer in 2023, which covers sales to the combined organization on what we believe are mutually beneficial terms.
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In connection with and prior to closing of the Arrangement, Madryn Asset Management, LP and its affiliates (collectively, “Madryn”) converted (i) all of the outstanding amount owing under Greenbrook’s credit agreement into 2,056,453,835 Greenbrook Shares, representing 95.3% of the Greenbrook Shares (including the Greenbrook Shares held by Madryn prior to such conversion) immediately prior to closing of the Arrangement and (ii) all of the interim period funding provided by Madryn to Greenbrook into an additional 252,999,770 Greenbrook Shares, which Greenbrook Shares were exchanged for shares of common stock of Neuronetics (“Neuronetics Shares”) at the Exchange Ratio upon closing of the Arrangement.
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Clinical Trials A clinical trial is typically required to support a PMA application or de novo classification and is sometimes required for a 510(k) pre-market notification, particularly in the case of changes to indications. Clinical trials 10 Table of Contents for significant risk devices generally require submission of an application for an Investigational Device Exemption (“IDE”) to the FDA.
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The Company continues to operate as Neuronetics, Inc., and the Neuronetics Shares continue to trade on the NASDAQ Global Market under the ticker “STIM”.

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Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeThere are also criminal penalties, including imprisonment and criminal fines, for making or presenting false, fictitious or fraudulent claims to the federal government; ● the federal physician self-referral law (“Stark Law”) prohibits, subject to exceptions, referring Medicare patients for “designated health services” (including “durable medical equipment and supplies” and “outpatient hospital services”) (“DHS”) to entities with which a referring physician (or immediate family member) maintains a “financial relationship.” States (as required in order to maintain Medicaid funding) have further enacted similar prohibitions that apply to Medicaid, as well as other insurance programs, and which may be more restrictive than the Stark Law.
Biggest changeStates (as required in order to maintain Medicaid funding) have further enacted similar prohibitions that apply to Medicaid, as well as other insurance programs, and which may be more restrictive than the Stark Law. ​ ● The FCA provides the government a tool to pursue healthcare providers for submitting false claims or requests for payment for healthcare items or services.
It is not always possible to identify and deter misconduct by our employees, distributors, and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
It is not always possible to identify and deter misconduct by our employees, distributors, and other third parties, and the precautions we take to detect and prevent this activity may not be effective in controlling unknown or unmanaged risks or losses or in protecting us from governmental investigations or other actions or lawsuits stemming from a failure to comply with these laws or regulations.
Factors that could cause volatility in the market price of our common stock include, but are not limited to: ● the actual or anticipated fluctuations in our financial condition and operating results; 58 Table of Contents ● the actual or anticipated changes in our growth rate; ● the commercial success and market acceptance of our products; ● the success of our competitors in developing or commercializing products; ● media exposure of our products or of those of others in our industry; ● our ability to commercialize or obtain regulatory approvals for our products, or delays in commercializing or obtaining regulatory approvals; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; ● the addition or departure of key personnel; ● product liability claims; ● general prevailing economic, industry and market conditions, including factors unrelated to our operating performance or the operating performance of our competitors; ● business disruptions caused by earthquakes, fires, pandemic diseases (such as from coronavirus), or other natural disasters; ● disputes or other developments concerning our intellectual property or other proprietary rights, including litigation; ● the FDA or other U.S. or foreign regulatory actions affecting us or the healthcare or medical device industry; ● healthcare reform measures in the United States; ● third-party payor developments in the United States and other countries; ● sales of our common stock by our directors, officers, or stockholders; ● the timing and amount of our investments in the growth of our business; ● inability to obtain additional funding; ● future sales or issuances of equity or debt securities by us; ● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; and ● the issuance of new or changed securities analysts’ reports or recommendations regarding us .
Factors that could cause volatility in the market price of our common stock include, but are not limited to: ● the actual or anticipated fluctuations in our financial condition and operating results; ● the actual or anticipated changes in our growth rate; ● the commercial success and market acceptance of our products; ● the success of our competitors in developing or commercializing products; ● media exposure of our products or of those of others in our industry; ● our ability to commercialize or obtain regulatory approvals for our products, or delays in commercializing or obtaining regulatory approvals; ● announcements by us or our competitors of significant acquisitions, strategic partnerships, joint ventures, collaborations or capital commitments; ● the addition or departure of key personnel; ● product liability claims; ● general prevailing economic, industry and market conditions, including factors unrelated to our operating performance or the operating performance of our competitors; 70 Table of Contents ● business disruptions caused by earthquakes, fires, pandemic diseases (such as from coronavirus), or other natural disasters; ● disputes or other developments concerning our intellectual property or other proprietary rights, including litigation; ● the FDA or other U.S. or foreign regulatory actions affecting us or the healthcare or medical device industry; ● healthcare reform measures in the United States; ● third-party payor developments in the United States and other countries; ● sales of our common stock by our directors, officers, or stockholders; ● the timing and amount of our investments in the growth of our business; ● inability to obtain additional funding; ● future sales or issuances of equity or debt securities by us; ● failure to meet or exceed financial estimates and projections of the investment community or that we provide to the public; and ● the issuance of new or changed securities analysts’ reports or recommendations regarding us .
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our products; ● any of our pending patent applications or those of our licensors may issue as patents; ● others will not or may not be able to make, use, offer to sell, or sell products that are the same as or similar to our own but that are not covered by the claims of the patents that we own or license; ● we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents that we own or license expire; ● we were the first to make the inventions covered by each of the patents and pending patent applications that we own or license; ● we or our licensors were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe the patents we own or license; ● any of the patents we own or license will be found to ultimately be valid and enforceable; ● any patents issued to us or our licensors will provide a basis for an exclusive market for our commercially viable products or will provide us with any competitive advantages; 38 Table of Contents ● a third party may not challenge the patents we own or license and, if challenged, a court would hold that such patents are valid, enforceable and infringed; ● we may develop or in-license additional proprietary technologies that are patentable; ● the patents of others will not have an adverse effect on our business; ● our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we will develop additional proprietary technologies or products that are separately patentable; or ● our commercial activities or products will not infringe upon the patents of others.
The degree of future protection for our proprietary rights is uncertain, and we cannot ensure that: ● any of our patents, or any of our pending patent applications, if issued, or those of our licensors, will include claims having a scope sufficient to protect our products; ● any of our pending patent applications or those of our licensors may issue as patents; ● others will not or may not be able to make, use, offer to sell, or sell products that are the same as or similar to our own but that are not covered by the claims of the patents that we own or license; 46 Table of Contents ● we will be able to successfully commercialize our products on a substantial scale, if approved, before the relevant patents that we own or license expire; ● we were the first to make the inventions covered by each of the patents and pending patent applications that we own or license; ● we or our licensors were the first to file patent applications for these inventions; ● others will not develop similar or alternative technologies that do not infringe the patents we own or license; ● any of the patents we own or license will be found to ultimately be valid and enforceable; ● any patents issued to us or our licensors will provide a basis for an exclusive market for our commercially viable products or will provide us with any competitive advantages; ● a third party may not challenge the patents we own or license and, if challenged, a court would hold that such patents are valid, enforceable and infringed; ● we may develop or in-license additional proprietary technologies that are patentable; ● the patents of others will not have an adverse effect on our business; ● our competitors do not conduct research and development activities in countries where we do not have enforceable patent rights and then use the information learned from such activities to develop competitive products for sale in our major commercial markets; ● we will develop additional proprietary technologies or products that are separately patentable; or ● our commercial activities or products will not infringe upon the patents of others.
Any failure to maintain effective controls could negatively impact the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will be required to include in periodic reports we file with the SEC under Section 404 of the Sarbanes-Oxley Act, harm our operating results, cause us to fail to meet our reporting obligations or result in a restatement of our prior period financial statements.
Any failure to maintain effective controls could negatively impact the results of periodic management evaluations and annual independent registered public accounting firm attestation reports regarding the effectiveness of our internal control over financial reporting that we will be required to include in periodic reports we file with the SEC under Section 404 of the Sarbanes-Oxley Act, harm our operating results, cause us to fail to meet our reporting obligations or result in a restatement of our prior period consolidated financial statements.
Collaborations are subject to numerous risks, which may include that: ● collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; ● collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; ● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; ● a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; ● we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; ● collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources; ● collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products; ● collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and ● a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
Collaborations are subject to numerous risks, which may include that: ● collaborators have significant discretion in determining the efforts and resources that they will apply to collaborations; ● collaborators may not pursue development and commercialization of our products or may elect not to continue or renew development or commercialization programs based on trial or test results, changes in their strategic focus due to the acquisition of competitive products, availability of funding or other external factors, such as a business combination that diverts resources or creates competing priorities; ● collaborators could independently develop, or develop with third parties, products that compete directly or indirectly with our products or product candidates; ● a collaborator with marketing, manufacturing and distribution rights to one or more products may not commit sufficient resources to or otherwise not perform satisfactorily in carrying out these activities; ● we could grant exclusive rights to our collaborators that would prevent us from collaborating with others; ● collaborators may not properly maintain or defend our intellectual property rights or may use our intellectual property or proprietary information in a way that gives rise to actual or threatened litigation that could jeopardize or invalidate our intellectual property or proprietary information or expose us to potential liability; ● disputes may arise between us and a collaborator that causes the delay or termination of the research, development or commercialization of our current or future products or that results in costly litigation or arbitration that diverts management attention and resources; ● collaborations may be terminated, and, if terminated, may result in a need for additional capital to pursue further development or commercialization of the applicable current or future products; ● collaborators may own or co-own intellectual property covering our products that results from our collaborating with them, and in such cases, we would not have the exclusive right to develop or commercialize such intellectual property; and 53 Table of Contents ● a collaborator’s sales and marketing activities or other operations may not be in compliance with applicable laws resulting in civil or criminal proceedings.
In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate financial statements, investors may lose confidence in our operating results and the price of our common stock could decline.
In the event that we are not able to demonstrate compliance with the Sarbanes-Oxley Act, that our internal control over financial reporting is perceived as inadequate or that we are unable to produce timely or accurate consolidated financial statements, investors may lose confidence in our operating results and the price of our common stock could decline.
Foreign Corrupt Practices Act of 1977, (the “FCPA”), and anti-money laundering laws; ● differing regulatory requirements for obtaining clearances or approvals to market our products; ● changes in, or uncertainties relating to, foreign rules and regulations that may impact our ability to sell our products, perform services or repatriate profits to the United States; 29 Table of Contents ● tariffs and trade barriers, export regulations, sanctions and other regulatory and contractual limitations on our ability to sell our products in certain foreign markets; ● potential adverse tax consequences, including imposition of limitations on or increases of withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures; ● imposition of differing labor laws and standards; ● armed conflicts or economic, political, health (including pandemic diseases) or social instability in foreign countries and regions; ● fluctuations in foreign currency exchange rates; ● an inability, or reduced ability, to protect our intellectual property, including any effect of compulsory licensing imposed by government action; ● availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us; and ● conducting post-market surveillance on product performance.
Foreign Corrupt Practices Act of 1977, (the “FCPA”), and anti-money laundering laws; ● differing regulatory requirements for obtaining clearances or approvals to market our products; ● changes in, or uncertainties relating to, foreign rules and regulations that may impact our ability to sell our products, perform services or repatriate profits to the United States; ● tariffs and trade barriers, export regulations, sanctions and other regulatory and contractual limitations on our ability to sell our products in certain foreign markets; ● potential adverse tax consequences, including imposition of limitations on or increases of withholding and other taxes on remittances and other payments by foreign subsidiaries or joint ventures; ● imposition of differing labor laws and standards; ● armed conflicts or economic, political, health (including pandemic diseases) or social instability in foreign countries and regions; ● fluctuations in foreign currency exchange rates; ● an inability, or reduced ability, to protect our intellectual property, including any effect of compulsory licensing imposed by government action; ● availability of government subsidies or other incentives that benefit competitors in their local markets that are not available to us; and ● conducting post-market surveillance on product performance.
If product liability lawsuits are brought against us, our business may be harmed, and we may be required to pay damages that exceed our insurance coverage. Our business exposes us to potential product liability claims that are inherent in the testing, manufacture and sale of medical devices for the treatment of MDD.
If product liability lawsuits are brought against us, our business may be harmed, and we may be required to pay damages that exceed our insurance coverage. Our business exposes us to potential product liability claims that are inherent in the testing, manufacture, sale and use of medical devices for the treatment of MDD.
Our business prospects depend in part on our ability to develop and commercialize new products and applications for our technology, including in new markets that develop as a result of technological, pharmaceutical and scientific advances, while improving the performance and cost-effectiveness of our products.
Our business prospects depend in part on our ability to develop and commercialize new products, services and applications for our technology, including in new markets that develop as a result of technological, pharmaceutical and scientific advances, while improving the performance and cost-effectiveness of our products.
Our present and future funding requirements will depend on many other factors, including: ● our ability to achieve revenue growth and improve operating margins; ● our ability to comply with financial and other restrictive covenants in our credit facility, which, among other things, requires us to maintain specified financial covenants; ● our ability to improve or maintain coverage and reimbursement arrangements with domestic third-party and government payors; ● our rate of progress in establishing coverage and reimbursement arrangements from international commercial third-party and government payors, particularly in Japan; ● the cost of expanding our operations and offerings, including our sales and marketing efforts; ● our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products and maintaining or improving our sales to our current customers; 56 Table of Contents ● the cost of research and development activities, including research and development relating to additional indications; ● the effect of competing technological and market developments; ● costs related to international expansion; and ● the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
Our present and future funding requirements will depend on many other factors, including: ● our ability to achieve revenue growth and improve operating margins; ● our ability to comply with financial and other restrictive covenants in our credit facility, which, among other things, requires us to maintain specified financial covenants; ● our ability to improve or maintain coverage and reimbursement arrangements with domestic third-party and government payors; ● our rate of progress in establishing coverage and reimbursement arrangements from international commercial third-party and government payors, particularly in Japan; ● the cost of expanding our operations and offerings, including our sales and marketing efforts; ● our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products and maintaining or improving our sales to our current customers; ● the cost of research and development activities, including research and development relating to additional indications; ● the effect of competing technological and market developments; ● costs related to international expansion; and ● the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
If our facilities or those of our manufacturers or suppliers are found to be in violation of applicable laws and regulations, or if we or our manufacturers or suppliers fail to take satisfactory corrective action in response to an adverse inspection, the regulatory authority could take enforcement action, including any of the following sanctions: untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; customer notifications or repair, replacement, refunds, recalls, detention or seizure of our products; operating restrictions or partial suspension or total shutdown of production; refusing or delaying requests for 510(k) marketing clearance or PMA of new products or modified products; withdrawing 510(k) marketing clearances or PMAs that have already been granted; refusing to provide Certificates for Foreign Government; refusing to grant export approval for our products; or pursuing criminal prosecution.
If our facilities or those of our manufacturers or suppliers are found to be in violation of applicable laws and regulations, or if we or 61 Table of Contents our manufacturers or suppliers fail to take satisfactory corrective action in response to an adverse inspection, the regulatory authority could take enforcement action, including any of the following sanctions: untitled letters, warning letters, fines, injunctions, consent decrees and civil penalties; customer notifications or repair, replacement, refunds, recalls, detention or seizure of our products; operating restrictions or partial suspension or total shutdown of production; refusing or delaying requests for 510(k) marketing clearance or PMA of new products or modified products; withdrawing 510(k) marketing clearances or PMAs that have already been granted; refusing to provide Certificates for Foreign Government; refusing to grant export approval for our products; or pursuing criminal prosecution.
These provisions include: ● a prohibition on stockholder action through written consent; ● no cumulative voting in the election of directors; ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director; ● a requirement that special meetings of stockholders be called only by the board of directors, the chairman of the board of directors, the chief executive officer or, in the absence of a chief executive officer, the president; ● an advance notice requirement for stockholder proposals and nominations; ● the authority of our board of directors to issue blank-check preferred stock with such terms as our board of directors may determine; and ● a requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our amended and restated certificate of incorporation.
These provisions include: ● a prohibition on stockholder action through written consent; ● no cumulative voting in the election of directors; ● the exclusive right of our board of directors to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director; ● a requirement that special meetings of stockholders be called only by the board of directors, the chairman of the board of directors, the chief executive officer or, in the absence of a chief executive officer, the president; 72 Table of Contents ● an advance notice requirement for stockholder proposals and nominations; ● the authority of our board of directors to issue blank-check preferred stock with such terms as our board of directors may determine; and ● a requirement of approval of not less than 66 2/3% of all outstanding shares of our capital stock entitled to vote to amend any bylaws by stockholder action, or to amend specific provisions of our amended and restated certificate of incorporation.
Potential and completed acquisitions, strategic investments, licenses and other alliances involve numerous risks, including: ● difficulty assimilating or integrating acquired or licensed technologies, products or business operations; ● issues maintaining uniform standards, procedures, controls and policies; ● unanticipated costs associated with acquisitions or strategic alliances, including the assumption of unknown or contingent liabilities and the incurrence of debt or future write-offs of intangible assets or goodwill; ● diversion of management’s attention from our core business and disruption of ongoing operations; ● adverse effects on existing business relationships with suppliers, distributors and customers; ● risks associated with entering new markets in which we have limited or no experience; ● potential losses related to investments in other companies; 35 Table of Contents ● potential loss of key employees of the acquired businesses; and ● increased legal and accounting compliance costs.
Potential and completed acquisitions, strategic investments, licenses and other alliances involve numerous risks, including: ● difficulty assimilating or integrating acquired or licensed technologies, products or business operations; ● issues maintaining uniform standards, procedures, controls and policies; ● unanticipated costs associated with acquisitions or strategic alliances, including the assumption of unknown or contingent liabilities and the incurrence of debt or future write-offs of intangible assets or goodwill; ● diversion of management’s attention from our core business and disruption of ongoing operations; ● adverse effects on existing business relationships with suppliers, distributors and customers; ● risks associated with entering new markets in which we have limited or no experience; ● potential losses related to investments in other companies; ● potential loss of key employees of the acquired businesses; and ● increased legal and accounting compliance costs.
We have also filed a registration statement permitting certain shares of common stock issued under our 2003 Stock Incentive Plan, or the 2003 Plan, and shares of common stock issued pursuant to the 2018 Plan or our 2018 Employee Stock Purchase Plan (the “2018 ESPP”), to be freely resold by plan participants in the public market, subject to applicable vesting schedules and, for shares held by directors, executive officers and other affiliates, volume limitations under Rule 144 under the Securities Act.
We have also filed a registration statement permitting certain shares of common stock issued under our 2003 Stock Incentive Plan (“2003 Plan”), and shares of common stock issued pursuant to the 2018 Plan or our 2018 Employee Stock Purchase Plan (the “2018 ESPP”), to be freely resold by plan participants in the public market, subject to applicable vesting schedules and, for shares held by directors, executive officers and other affiliates, volume limitations under Rule 144 under the Securities Act.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for (i) any derivative action or proceeding brought on our behalf, other than an action or suit to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General 61 Table of Contents Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or amended and restated bylaws or (v) any action asserting a claim governed by the internal affairs doctrine.
Our amended and restated certificate of incorporation provides that, to the fullest extent permitted by law, the Court of Chancery of the State of Delaware is the exclusive forum for (i) any derivative action or proceeding brought on our behalf, other than an action or suit to enforce a duty or liability created by the Exchange Act or any other claim for which the federal courts have exclusive jurisdiction, (ii) any action asserting a claim of breach of a fiduciary duty or other wrongdoing by any of our directors, officers, employees or agents to us or our stockholders, (iii) any action asserting a claim arising pursuant to any provision of the Delaware General Corporation Law or our amended and restated certificate of incorporation or amended and restated bylaws, (iv) any action to interpret, apply, enforce or determine the validity of our amended and restated certificate of incorporation or amended and restated bylaws or (v) any action asserting a claim governed by the internal affairs doctrine.
Regardless of the merit or eventual outcome, product liability claims may result in: ● decreased demand for our products; ● injury to our reputation; ● significant litigation costs; ● substantial monetary awards to or costly settlements with patients; ● product recalls; ● material defense costs; ● loss of revenues; ● the inability to commercialize new products or product candidates; and 31 Table of Contents ● diversion of management attention from pursuing our business strategy.
Regardless of the merit or eventual outcome, product liability claims may result in: ● decreased demand for our products; ● injury to our reputation; ● significant litigation costs; ● substantial monetary awards to or costly settlements with patients; ● product recalls; 33 Table of Contents ● material defense costs; ● loss of revenues; ● the inability to commercialize new products or product candidates; and ● diversion of management attention from pursuing our business strategy.
Additional factors that we expect may contribute to variability in our sales and gross profit over the course of the year include: ● the growth or decline of our installed system base; ● the unpredictability of future sales by our international distributors, including through our exclusive distributor in Japan; ● the demand for, and pricing of, our products and the products of our competitors; 36 Table of Contents ● the timing of or failure to obtain regulatory clearances or approvals for other products, indications or treatments; or ● the costs, benefits and timing of new product introductions.
Additional factors that we expect may contribute to variability in our sales and gross profit over the course of the year include: ● the growth or decline of our installed system base; ● the unpredictability of future sales by our international distributors, including through our exclusive distributor in Japan; ● the demand for, and pricing of, our products and the products of our competitors; ● the timing of or failure to obtain regulatory clearances or approvals for other products, indications or treatments; or ● the costs, benefits and timing of new product introductions.
Our international business operations are subject to a variety of risks, including: ● difficulties in staffing and managing foreign and geographically dispersed operations, to the extent we establish non-U.S. operations; ● attaining reimbursement under differing and multiple payor reimbursement regimes, government payors or patient self-pay systems; ● difficulties in determining and creating the proper sales pathway in new, international markets; ● compliance with various U.S. and international laws, including export control laws and the U.S.
Our international business operations are subject to a variety of risks, including: ● difficulties in staffing and managing foreign and geographically dispersed operations, to the extent we establish non-U.S. operations; ● attaining reimbursement under differing and multiple payor reimbursement regimes, government payors or patient self-pay systems; ● difficulties in determining and creating the proper sales pathway in new, international markets; 31 Table of Contents ● compliance with various U.S. and international laws, including export control laws and the U.S.
Solar could declare a default upon the occurrence of any event that it interprets as a material adverse effect as defined under the credit facility, thereby requiring us to repay the loan immediately or to attempt to reverse the declaration of default through negotiation or litigation.
Perceptive could declare a default upon the occurrence of any event that it interprets as a material adverse effect as defined under the credit facility, thereby requiring us to repay the loan immediately or to attempt to reverse the declaration of default through negotiation or litigation.
Reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that a treatment is neither experimental nor investigational, safe, effective, medically reasonable and necessary (which may include provision of treatment only in the absence of certain alternatives), appropriate for the specific patient, cost-effective, supported by peer-reviewed medical journals and/or included in clinical practice guidelines.
Reimbursement by a third-party payor may depend upon a number of factors, including the third-party payor’s determination that a treatment is neither experimental nor investigational, safe, effective, medically reasonable and necessary (which may include provision of treatment only in the absence of certain 24 Table of Contents alternatives), appropriate for the specific patient, cost-effective, supported by peer-reviewed medical journals and/or included in clinical practice guidelines.
Misconduct by these parties could include intentional, reckless or 55 Table of Contents negligent conduct or other unauthorized activities that violate, regardless of intent, regulations of the FDA and other U.S. healthcare regulators, as well as non-U.S. regulators, including by violating laws requiring the reporting of true, complete and accurate information to such regulators, manufacturing standards, healthcare fraud and abuse laws and regulations in the United States and abroad or laws that require the true, complete, and accurate reporting of financial information or data.
Misconduct by these parties could include intentional, reckless or negligent conduct or other unauthorized activities that violate, regardless of intent, regulations of the FDA and other U.S. healthcare regulators, as well as non-U.S. regulators, including by violating laws requiring the reporting of true, complete and accurate information to such regulators, manufacturing standards, healthcare fraud and abuse laws and regulations in the United States and abroad or laws that require the true, complete, and accurate reporting of financial information or data.
Risks Related to Government Regulation Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business. We and our products are subject to extensive regulation in the United States and elsewhere, including by the FDA, FTC, and their foreign counterparts.
Our products and operations are subject to extensive government regulation and oversight both in the United States and abroad, and our failure to comply with applicable requirements could harm our business. We and our products are subject to extensive regulation in the United States and elsewhere, including by the FDA, FTC, and their foreign counterparts.
Any declaration by Solar of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.
Any declaration by Perceptive of an event of default could significantly harm our business and prospects and could cause the price of our common stock to decline. If we raise any additional debt financing, the terms of such additional debt could further restrict our operating and financial flexibility.
If we default under the credit facility, Solar may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations.
If we default under the credit facility, Perceptive may accelerate all of our repayment obligations and take control of our pledged assets, potentially requiring us to renegotiate our agreement on terms less favorable to us or to immediately cease operations.
A major earthquake, fire or other disaster, such as a major flood, seasonal storms, global pandemic (such as COVID-19), or terrorist attack affecting our facilities, or those of our third-party manufacturers or suppliers, could significantly disrupt our or their operations, and delay or prevent product shipment or installation during the time required to repair, rebuild or replace our third-party manufacturers or suppliers’ damaged manufacturing facilities.
A major earthquake, fire or other disaster, such as a major flood, seasonal storms, global pandemic (such as COVID-19), or terrorist attack affecting our facilities, or those of our third-party manufacturers or suppliers, could significantly disrupt our or their operations, and delay or prevent product shipment or installation during 36 Table of Contents the time required to repair, rebuild or replace our third-party manufacturers or suppliers’ damaged manufacturing facilities.
Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including passage of the newly enacted federal income tax law, changes in the mix of our profitability from state to 34 Table of Contents state, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and changes in tax laws.
Nevertheless, our effective tax rate may be different than experienced in the past due to numerous factors, including passage of the newly enacted federal income tax law, changes in the mix of our profitability from state to state, the results of examinations and audits of our tax filings, our inability to secure or sustain acceptable agreements with tax authorities, changes in accounting for income taxes and changes in tax laws.
In the United States, before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive either clearance under Section 510(k) of the Federal Food, Drug and Cosmetic Act or approval of a premarket approval application (PMA) from the FDA, unless an exemption applies.
In the United States, before we can market a new medical device, or a new use of, new claim for or significant modification to an existing product, we must first receive either clearance under Section 510(k) of the Federal Food, Drug and Cosmetic 60 Table of Contents Act or approval of a premarket approval application (PMA) from the FDA, unless an exemption applies.
Further, patients who are treated in-office for a medical condition generally rely on third-party payors to reimburse all or part of the costs associated with 22 Table of Contents the treatment and may be unwilling to undergo such treatment in the absence of coverage and adequate reimbursement, or due to large annual deductibles associated with certain health insurance plans.
Further, patients who are treated in-office for a medical condition generally rely on third-party payors to reimburse all or part of the costs associated with the treatment and may be unwilling to undergo such treatment in the absence of coverage and adequate reimbursement, or due to large annual deductibles associated with certain health insurance plans.
Shares of common stock that are either subject to outstanding options, or are outstanding but subject to vesting or reserved for future issuance under our 2018 Equity Incentive Plan (the “2018 Plan”), will become eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, Rule 144 and Rule 701 under the Securities Act.
Shares of common stock that are either subject to outstanding options, or are outstanding but subject to vesting or reserved for future issuance under our 2018 Equity Incentive Plan (the “2018 Plan”), will become 71 Table of Contents eligible for sale in the public market to the extent permitted by the provisions of various vesting schedules, Rule 144 and Rule 701 under the Securities Act.
If we are found to infringe the intellectual property rights of third parties, we could be required to pay substantial damages (which may be increased up to three times of awarded damages) and/or substantial royalties and could be prevented from selling our products unless we obtain a license or are able to redesign our products to avoid infringement.
If we are found to infringe the intellectual property rights of third parties, we 49 Table of Contents could be required to pay substantial damages (which may be increased up to three times of awarded damages) and/or substantial royalties and could be prevented from selling our products unless we obtain a license or are able to redesign our products to avoid infringement.
PHI, a subset of individually identifiable information, is regulated at the federal level by HIPAA, as amended by HITECH, and by various laws at the state level, as more fully described below. We are required to safeguard PHI in accordance with HIPAA and, as a business associate, we are also directly liable for compliance with HIPAA.
PHI, a subset of individually identifiable information, is regulated at the federal level by HIPAA, as amended by 35 Table of Contents HITECH, and by various laws at the state level, as more fully described below. We are required to safeguard PHI in accordance with HIPAA and, as a business associate, we are also directly liable for compliance with HIPAA.
Further, collaborators may infringe the intellectual property rights 41 Table of Contents of third parties, which may expose us to litigation and potential liability. Also, we may be obligated under our agreements with our collaborators, licensors, suppliers and others to indemnify and hold them harmless for damages arising from intellectual property infringement by us.
Further, collaborators may infringe the intellectual property rights of third parties, which may expose us to litigation and potential liability. Also, we may be obligated under our agreements with our collaborators, licensors, suppliers and others to indemnify and hold them harmless for damages arising from intellectual property infringement by us.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. 43 Table of Contents Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
Even if we are successful in defending against such claims, litigation could result in substantial costs and be a distraction to management and other employees. Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products.
Whether or not we are successful in defending against such 30 Table of Contents actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations. We rely in part on third parties to conduct our clinical trials.
Whether or not we are successful in defending against such actions or investigations, we could incur substantial costs, including legal fees, and divert the attention of management in defending ourselves against any of these claims or investigations. We rely in part on third parties to conduct our clinical trials.
Since patent applications in the US and most other countries are confidential for a period of time after filing, we cannot be certain that we or our licensors were the first to file any patent application related to our technologies, products, or product candidates.
Since patent applications in the US and most other countries are confidential for a period of time after filing, we cannot be certain that we 45 Table of Contents or our licensors were the first to file any patent application related to our technologies, products, or product candidates.
Our determination of the expiration date of any patent in the United States or abroad that we consider relevant may be incorrect, which may negatively impact our ability to develop and market our products or product candidates. Significant litigation regarding patent rights occurs in our industry.
Our determination of the expiration date of any patent in the United States or abroad that we consider relevant 48 Table of Contents may be incorrect, which may negatively impact our ability to develop and market our products or product candidates. Significant litigation regarding patent rights occurs in our industry.
To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support substantial 46 Table of Contents equivalence.
To be “substantially equivalent,” the proposed device must have the same intended use as the predicate device, and either have the same technological characteristics as the predicate device or have different technological characteristics and not raise different questions of safety or effectiveness than the predicate device. Clinical data are sometimes required to support substantial equivalence.
Our ability to 24 Table of Contents compete successfully will depend on our ability to develop products that reach the market in a timely manner, to receive adequate coverage and reimbursement from third-party payors, and to successfully demonstrate to psychiatrists and patients the merits of our products compared to those of our competitors.
Our ability to compete successfully will depend on our ability to develop products that reach the market in a timely manner, to receive adequate coverage and reimbursement from third-party payors, and to successfully demonstrate to psychiatrists and patients the merits of our products compared to those of our competitors.
Any of these sanctions could impair our ability to produce or commercialize our products in a cost-effective and timely manner in 47 Table of Contents order to meet our customers’ demands and could have a material adverse effect on our reputation, business, results of operations and financial condition.
Any of these sanctions could impair our ability to produce or commercialize our products in a cost-effective and timely manner in order to meet our customers’ demands and could have a material adverse effect on our reputation, business, results of operations and financial condition.
These inherent limitations reflect the reality that judgments can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.
These inherent limitations reflect the reality that judgments can be faulty, and that 74 Table of Contents breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by an unauthorized override of the controls.
Further, if we are liquidated, Solar’s right to repayment would be senior to the rights of the holders of our common stock to receive any proceeds from the liquidation.
Further, if we are liquidated, Perceptive’s right to repayment would be senior to the rights of the holders of our common stock to receive any proceeds from the liquidation.
Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we determine do not require notification to the FDA.
Companies are required to maintain certain records of recalls and corrections, even if they are not reportable to the FDA. We may initiate voluntary withdrawals or corrections for our products in the future that we 65 Table of Contents determine do not require notification to the FDA.
We may also consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: ● expand our sales and marketing efforts to increase market adoption of our products and address competitive developments; ● fund development and marketing efforts of any future products or additional features to then-current products; ● acquire, license or invest in new technologies; ● provide for supply and inventory costs associated with plans to accommodate potential increases in demand for our products ● acquire or invest in complementary businesses or assets; and ● finance capital expenditures and general and administrative expenses.
We may also consider raising additional capital in the future to expand our business, to pursue strategic investments, to take advantage of financing opportunities or for other reasons, including to: ● expand our sales and marketing efforts to increase market adoption of our products and address competitive developments; ● fund new and existing Treatment Centers; ● fund development and marketing efforts of any future products or additional features to then-current products; ● acquire, license or invest in new technologies; 68 Table of Contents ● provide for supply and inventory costs associated with plans to accommodate potential increases in demand for our products. ● acquire or invest in complementary businesses or assets; and ● finance capital expenditures and general and administrative expenses.
In such an event, competitors might be able to enter the market earlier than would otherwise have been the case. If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages and we could lose license rights that are critical to our business.
In such an event, competitors might be able to enter the market earlier than would otherwise have been the case. 52 Table of Contents If we fail to comply with our obligations under license or technology agreements with third parties, we may be required to pay damages and we could lose license rights that are critical to our business.
As long as we qualify as a smaller reporting 62 Table of Contents company, based on our public float, and report less than $100 million in annual revenues in a fiscal year we are permitted, and we intend to, omit the auditor’s attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act.
As long as we qualify as a smaller reporting company, based on our public float, and report less than $100 million in annual revenues in a fiscal year we are permitted, and we intend to, omit the auditor’s attestation on internal control over financial reporting that would otherwise be required by the Sarbanes-Oxley Act.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies are covered by valid and enforceable patents or are effectively maintained as trade secrets. We have agreements with our employees and selected consultants that obligate them to assign their inventions to us.
We will be able to protect our proprietary rights from unauthorized use by third parties only to the extent that our proprietary technologies are covered by valid and enforceable patents or are effectively maintained as trade secrets. We have agreements with our employees and selected consultants that obligate 47 Table of Contents them to assign their inventions to us.
Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may contain certain limited publication rights.
Though our agreements with third parties typically restrict the ability of our advisors, employees, collaborators, licensors, suppliers, third-party contractors and consultants to publish data potentially relating to our trade secrets, our agreements may 50 Table of Contents contain certain limited publication rights.
We may be unable to achieve or manage our anticipated growth effectively, which could make it difficult to execute our business strategy. We have a relatively short history of operating as a commercial company and our growth rate may be volatile. For example for 2023, 2022 and 2021 our growth rate was 9%, 18% and 12% respectively.
We may be unable to achieve or manage our anticipated growth effectively, which could make it difficult to execute our business strategy. We have a relatively short history of operating as a commercial company and our growth rate may be volatile. For example for 2024, 2023 and 2022 our growth rate was 5%, 9% and 18% respectively.
Even if granted, a 510(k) clearance, de novo classification, or PMA imposes substantial restrictions on how our devices may be marketed or sold, and the FDA continues to place considerable restrictions on our products and operations. For example, the manufacture of medical devices must comply with the FDA’s Quality System Regulation (QSR).
Even if granted, a 510(k) clearance, de novo classification, or PMA imposes substantial restrictions on how our devices may be marketed or sold, and the FDA continues to place considerable restrictions on our products and operations. For example, the manufacture of medical devices must comply with the QSR.
Because the market for TMS therapy is still developing and 21 Table of Contents contains a limited number of market participants, sales of our products could be negatively impacted by unfavorable market reactions to our or other TMS devices.
Because the market for TMS therapy is still developing and contains a limited number of market participants, sales of our products could be negatively impacted by unfavorable market reactions to our or other TMS devices.
In many foreign countries, particularly in countries with developing economies, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other laws and regulations. We have implemented company policies relating to compliance with the FCPA and similar laws.
In many 34 Table of Contents foreign countries, particularly in countries with developing economies, it may be a local custom that businesses operating in such countries engage in business practices that are prohibited by the FCPA or other laws and regulations. We have implemented company policies relating to compliance with the FCPA and similar laws.
Such proceedings could include supplemental examination or contested post-grant proceedings such 40 Table of Contents as review, reexamination, interference or derivation proceedings before the USPTO and challenges in U.S. District Court. Patents may be subjected to opposition, post-grant review or comparable proceedings lodged in various foreign, both national and regional, patent offices.
Such proceedings could include supplemental examination or contested post-grant proceedings such as review, reexamination, interference or derivation proceedings before the USPTO and challenges in U.S. District Court. Patents may be subjected to opposition, post-grant review or comparable proceedings lodged in various foreign, both national and regional, patent offices.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending 42 Table of Contents intellectual property rights in certain foreign jurisdictions.
The laws of some foreign countries do not protect intellectual property rights to the same extent as the laws of the United States. Many companies have encountered significant problems in protecting and defending intellectual property rights in certain foreign jurisdictions.
The significance of the impact of a global pandemic on our operations depends on numerous evolving factors that we may not be able to accurately predict or effectively respond to, including, among others: ​ ● the effect on global economic activity, financial markets and the resulting impact on our customer’s businesses, their credit and liquidity, and their demand for our solutions and services, as well as their ability to pay; ● our ability to deliver and implement our solutions in a timely manner, including as a result of supply chain disruptions and related cost increases; and ● actions taken by U.S., foreign, state, and local governments, suppliers, and individuals in response to the outbreak (including the extent of travel restrictions and business closures). ​ If insurance coverage is unavailable or reimbursement from third-party payors for treatments using our products significantly declines, psychiatrists may be reluctant to use our products.
The significance of the impact of a global pandemic on our operations depends on numerous evolving factors that we may not be able to accurately predict or effectively respond to, including, among others: ​ ● the effect on global economic activity, financial markets and the resulting impact on our customer’s businesses, their credit and liquidity, and their demand for our solutions and services, as well as their ability to pay; ● our ability to deliver and implement our solutions in a timely manner, including as a result of supply chain disruptions and related cost increases; and ● actions taken by U.S., foreign, state, and local governments, suppliers, and individuals in response to the outbreak (including the extent of travel restrictions and business closures). ​ If insurance coverage is unavailable or reimbursement from third-party payors for treatments using our products significantly declines, psychiatrists may be reluctant to use our products and our revenues, earnings and cash flows at our Treatment Centers would be substantially reduced.
In addition, the terms of our credit agreements contain, and the terms of any future credit agreements we may enter into may contain, terms prohibiting or limiting the amount of dividends that may be declared or paid on our common stock.
In addition, the terms of our credit agreements contain, and the terms of any future credit agreements we may enter into may contain, terms prohibiting or limiting the amount 73 Table of Contents of dividends that may be declared or paid on our common stock.
Any material non-payment or non-performance by one of these customers, a significant downturn or deterioration in the business or financial condition of any of these customers, or any other event significantly negatively impacting a 23 Table of Contents contractual relationship with one of these customers could adversely affect our financial condition and results of operations.
Any material non-payment or non-performance by one of these customers, a significant downturn or deterioration in the business or financial condition of any of these customers, or any 25 Table of Contents other event significantly negatively impacting a contractual relationship with one of these customers could adversely affect the financial condition and results of operations of the Company.
If we do not have enough money to service our existing or future debt, we may be required to refinance all or part of our existing or future debt, sell assets, borrow more money or raise equity.
If we 69 Table of Contents do not have enough money to service our existing or future debt, we may be required to refinance all or part of our existing or future debt, sell assets, borrow more money or raise equity.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s Quality System Regulation (QSR) which is a complex regulatory scheme that covers the procedures and documentation of the design, testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
The methods used in, and the facilities used for, the manufacture of our products must comply with the FDA’s QSR which is a complex regulatory scheme that covers the procedures and documentation of the design, 63 Table of Contents testing, production, process controls, quality assurance, labeling, packaging, handling, storage, distribution, installation, servicing and shipping of medical devices.
These laws and regulations, among other impacts, constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs, we may have with psychiatrists, other healthcare provides, or other potential purchasers of our products. We have also entered into consulting agreements with physicians, which are subject to these laws.
These laws and regulations, among other impacts, constrain our business, marketing and other promotional activities by limiting the kinds of financial arrangements, including sales programs and provider directory services, we may have with psychiatrists, other healthcare providers, or other potential purchasers of our products. We have also entered into consulting agreements with physicians, which are subject to these laws.
For us to be successful, our suppliers and contract manufacturer must be able to 27 Table of Contents provide us with components in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable costs and on a timely basis.
For us to be successful, our suppliers and contract manufacturer must be able to provide us with components in substantial quantities, in compliance with regulatory requirements, in accordance with agreed upon specifications, at acceptable costs and on a timely basis.
Although our agreements with our international distributors state our expectations for our distributors’ compliance with U.S. laws, including the FCPA, and provide us with various remedies upon any non- 32 Table of Contents compliance, including the ability to terminate the agreement, our distributors may not comply with U.S. laws, including the FCPA.
Although our agreements with our international distributors state our expectations for our distributors’ compliance with U.S. laws, including the FCPA, and provide us with various remedies upon any non-compliance, including the ability to terminate the agreement, our distributors may not comply with U.S. laws, including the FCPA.
We expect to continue to incur significant sales and marketing, product development, regulatory and other expenses as we continue to expand our marketing efforts to increase adoption of our products and expand existing relationships with our customers, to obtain regulatory clearances or approvals for our products in additional countries and for additional indications, and to develop new products or add new features to our existing products.
We expect to continue to incur significant integration, sales and marketing, product development, regulatory and other expenses as we continue to expand our marketing efforts to increase adoption of our products and expand existing relationships with our customers, to obtain regulatory clearances or approvals for our products in additional countries and for additional indications, integrate the Greenbrook business, and to develop new products or add new features to our existing products.
Risks Related to Our Business and Industry We have incurred losses in the past and may be unable to achieve or sustain profitability in the future. We have incurred net losses since inception, including net losses of $30.2 million and $37.2 million for the years ended December 31, 2023 and 2022, respectively.
Risks Related to Our Business and Industry We have incurred losses in the past and may be unable to achieve or sustain profitability in the future. We have incurred net losses since inception, including net losses of $43.7 million and $30.2 million for the years ended December 31, 2024 and 2023, respectively.
The security measures we have implemented relating to our NeuroStar Advanced Therapy System and TrakStar database, specifically, and our operations, generally, may not prevent security breaches that could 33 Table of Contents harm our business.
The security measures we have implemented relating to our NeuroStar Advanced Therapy System and TrakStar database, specifically, and our operations, generally, may not prevent security breaches that could harm our business.
Competitors may also be able to design around our patents. Other parties may develop and obtain patent protection for alternative and possibly more effective technologies, designs or methods. We may be unable to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, suppliers, vendors, former employees and current employees.
Other parties may develop and obtain patent protection for alternative and possibly more effective technologies, designs or methods. We may be unable to prevent the unauthorized disclosure or use of our technical knowledge or trade secrets by consultants, suppliers, vendors, former employees and current employees.
Our revenue has been concentrated among a small number of customers, and if we lose any of these customers and fail to replace them, our revenue may decrease substantially. A significant amount of our revenue is derived from a limited number of customers.
Our revenue has been concentrated among a small number of customers, and if we lose any of these customers and fail to replace them, our revenue may decrease substantially. A significant amount of Neuronetics’ revenue is derived from a limited number of customers, including current competitors of Greenbrook.
The negative covenants include, among others, restrictions on us transferring collateral, changing businesses, engaging in 57 Table of Contents mergers or acquisitions, incurring additional indebtedness and encumbering collateral.
The negative covenants include, among others, restrictions on us transferring collateral, changing businesses, engaging in mergers or acquisitions, incurring additional indebtedness and encumbering collateral.
These risks may be more pronounced, and we may find that the processes and policies we have implemented are not effective at preventing misconduct.
These risks may be more pronounced, and we may find that 32 Table of Contents the processes and policies we have implemented are not effective at preventing misconduct.
If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, additional reporting obligations and oversight if we becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and pursue our strategy.
Even an unsuccessful challenge or investigation into our practices could cause adverse publicity and be costly to respond to. 54 Table of Contents If our operations are found to be in violation of any of the healthcare laws or regulations described above or any other healthcare regulations that apply to us, we may be subject to penalties, including administrative, civil and criminal penalties, damages, fines, disgorgement, exclusion from participation in government healthcare programs, such as Medicare and Medicaid, imprisonment, additional reporting obligations and oversight if we becomes subject to a corporate integrity agreement or other agreement to resolve allegations of non-compliance with these laws, reputational harm, diminished profits and future earnings, and the curtailment or restructuring of our operations, any of which could adversely affect our ability to operate our business and pursue our strategy.
Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property or may lose our exclusive rights in that intellectual property. Either outcome could harm our business and competitive position.
Litigation may be necessary to resolve an ownership dispute, and if we are not successful, we may be precluded from using certain intellectual property or may lose our exclusive rights in that intellectual property.
Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Even if patents covering our technologies, products, or product candidates are obtained, once the patent life has expired, we may be open to competition.
Although various extensions may be available, the life of a patent, and the protection it affords, is limited. Even if patents covering our technologies, products, or product candidates are obtained, once the patent life has expired, we may be open to competition. Patents covering some of our core technology have expired or will expire within the next five years.
As of December 31, 2023, we had federal and state net operating loss carryforwards of $338.0 million and $217.1 million, respectively. The federal and state net operating loss carryforwards will begin to expire, if not utilized, beginning in 2024. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities.
As of December 31, 2024, we had federal and state net operating loss carryforwards of $424.4 million and $355.2 million, respectively. The federal and state net operating loss carryforwards will begin to expire, if not utilized, beginning in 2025. These net operating loss carryforwards could expire unused and be unavailable to offset future income tax liabilities.
In certain months of 2023 and 2021, we did not achieve the required revenue under the net product revenue covenant and we obtained waivers from Solar to cure the non-compliance of the net product revenue covenant. We cannot provide any assurance that our lender would provide us with a waiver should we not be in compliance in the future.
In certain months of 2023 and 2021, we did not achieve the required revenue under the net product revenue covenants under our prior Solar Facility. We cannot provide any assurance that our lender would provide us with a waiver should we not be in compliance in the future.
We rely on the sale of our NeuroStar Advanced Therapy System and treatment sessions to generate revenues, and we expect to generate substantially all of our revenues in the foreseeable future from sales of these and any related products and services.
We rely, in part, on the sale of our NeuroStar Advanced Therapy System and treatment sessions to generate revenues, and we expect to generate a substantial portion of our revenues in the foreseeable future from 23 Table of Contents sales of these and any related products and services.
These risks include our ability to: ● manage rapidly changing and expanding operations; ● increase awareness of our brand and strengthen customer loyalty; ● successfully execute our business and marketing strategy; ● respond effectively to competitive pressures and developments; ● continue to develop and enhance our products and products in development; ● obtain regulatory clearance or approval to commercialize new products and enhance our existing products; ● refrain from infringing on the intellectual property rights of others, and maintaining appropriate legal policies and procedures; ● expand our presence in existing and commence operations in new international markets; and ● attract, retain and motivate qualified personnel. 25 Table of Contents If we are unable to adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products and we may never generate sufficient revenues to achieve or sustain profitability.
These risks include our ability to: ● manage rapidly changing and expanding operations; ● increase awareness of our brand and strengthen customer loyalty; ● successfully execute our business and marketing strategy; ● respond effectively to competitive pressures and developments; ● continue to develop and enhance our products and products in development; ● obtain regulatory clearance or approval to commercialize new products and enhance our existing products; ● refrain from infringing on the intellectual property rights of others, and maintaining appropriate legal policies and procedures; 27 Table of Contents ● expand our presence in existing and commence operations in new international markets; and ● attract, retain and motivate qualified personnel.
Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. We employ individuals who previously worked with other companies, including our competitors or potential competitors.
Either outcome could harm our business and competitive position. 51 Table of Contents Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets. We employ individuals who previously worked with other companies, including our competitors or potential competitors.
Any future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.
Any collaboration arrangements that we may enter into in the future may not be successful, which could adversely affect our ability to develop and commercialize our products. Any future collaborations that we enter into may not be successful. The success of our collaboration arrangements will depend heavily on the efforts and activities of our collaborators.
The FDA’s 510(k) clearance process usually takes from three to 12 months, but can last longer. The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is filed with the FDA.
The process of obtaining a PMA is much more costly and uncertain than the 510(k) clearance process and generally takes from one to three years, or even longer, from the time the application is filed with the FDA. In addition, a PMA generally requires the performance of one or more clinical trials.
As a result of ongoing losses, as of December 31, 2023, we had an accumulated deficit of $376.1 million.
As a result of ongoing losses, as of December 31, 2024, we had an accumulated deficit of $419.8 million.

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Item 1C. Cybersecurity

Cybersecurity — threats and controls disclosure

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Biggest changeAudit Committee meetings include discussions of emerging industry-wide trends in cybersecurity risks along with specific risk areas our company has greater risks throughout the year, including, among 64 Table of Contents others, those relating to cybersecurity threats. These reports come from the Head of IT to include our enterprise risk profile on a quarterly basis.
Biggest changeThe Audit Committee of the board oversees our risk management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term timeframe. Audit Committee meetings include discussions of emerging industry-wide trends in cybersecurity risks along with specific risk areas our company has greater risks throughout the year, including, among others, those relating to cybersecurity threats.
The current Head of IT has over 20 years of experience in information security and possesses the requisite education, skills and experience expected of an individual assigned to these duties.
The Company’s Head of IT is responsible for the establishment and maintenance of our cybersecurity program, as well as the assessment and management of cybersecurity risks. The current Head of IT has over 20 years of experience in information security and possesses the requisite education, skills and experience expected of an individual assigned to these duties.
We collaborate with third parties to assess the effectiveness of our cybersecurity prevention and response systems and processes through various penetration testing and best practice reviews. These include cybersecurity assessors, consultants, and other external cybersecurity experts to assist in the identification, verification, and validation of cybersecurity risks, as well as to support associated mitigation plans when necessary.
These include 75 Table of Contents cybersecurity assessors, consultants, and other external cybersecurity experts to assist in the identification, verification, and validation of cybersecurity risks, as well as to support associated mitigation plans when necessary.
The Audit Committee reviews our cybersecurity risk profile with management on a periodic basis using key performance and/or risk indicators. These key performance indicators are industry-standard metrics and measurements designed to assess the effectiveness of our cybersecurity program in the prevention, detection, mitigation, and remediation of cybersecurity incidents.
These key performance indicators are industry-standard metrics and measurements designed to assess the effectiveness of our cybersecurity program in the prevention, detection, mitigation, and remediation of cybersecurity incidents. We take a risk-based approach to cybersecurity and have implemented cybersecurity policies throughout our operations that are designed to address cybersecurity threats and incidents.
Removed
The Audit Committee of the board oversees our risk management program, which focuses on the most significant risks we face in the short-, intermediate-, and long-term timeframe.
Added
We collaborate with third parties to assess the effectiveness of our cybersecurity prevention and response systems and processes through various penetration testing and best practice reviews.
Removed
We take a risk-based approach to cybersecurity and have implemented cybersecurity policies throughout our operations that are designed to address cybersecurity threats and incidents. The Company’s Head of IT is responsible for the establishment and maintenance of our cybersecurity program, as well as the assessment and management of cybersecurity risks.
Added
These reports come from the Company’s Chief Information and Operations Officer (the “Head of IT”) to include our enterprise risk profile on a quarterly basis. The Audit Committee reviews our cybersecurity risk profile with management on a periodic basis using key performance and/or risk indicators.

Item 2. Properties

Properties — owned and leased real estate

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Removed
We believe that our existing facilities are adequate to meet our needs for the foreseeable future. ​
Added
We believe that our existing facilities are adequate to meet our needs for the foreseeable future. ​ Our administrative office for Greenbrook is located at 890 Yonge Street, 7th Floor, Toronto, Ontario, Canada, M4W 3P4 and at 8401 Greensboro Drive, Suite 425, Tysons Corner, Virginia, United States, 22102.
Added
We have designated TMS NeuroHealth Centers Inc. as our agent for service of process in the United States and its address is 8401 Greensboro Drive, Suite 425, Tysons Corner, Virginia, USA, 22102. ​ For our Greenbrook locations, we do not own any real estate. Instead, we lease all of our retail Treatment Center locations.
Added
Our existing Treatment Centers are leased from third parties, with typical lease commitments ranging from “month-to-month” to seven years.
Added
The entirety of the Company’s revenue is generated through treatment delivered at the Treatment Centers. 76 Table of Contents As at December 31, 2024, our Treatment Center network consisted of 95 Treatment Center locations spanning 17 management regions in the States of Alaska, California, Connecticut, Florida, Illinois, Maryland, Massachusetts, Michigan, Missouri, North Carolina, Ohio, Oregon, South Carolina, Texas and Virginia. ​

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeManagement believes that there are currently no claims or legal actions that would reasonably be expected to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows. ​ Item 4. Mine Safety Disclosures. Not applicable. ​ ​ 65 Table of Contents PART II
Biggest changeManagement believes that there are currently no claims or legal actions that would reasonably be expected to have a material adverse effect on the Company’s results of operations, financial condition, or cash flows. ​ Item 4. Mine Safety Disclosures. Not applicable. ​ ​ 77 Table of Contents PART II

Item 4. Mine Safety Disclosures

Mine Safety Disclosures — required of mining issuers

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Biggest changeItem 4. Mine Safety Disclosures. 65 ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 66 Item 6 . [Reserved] 67 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . 67 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 77 Item 8.
Biggest changeItem 4. Mine Safety Disclosures. 77 ​ ​ PART II ​ Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities. 78 Item 6 . [Reserved] 79 Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations . 79 Item 7A. Quantitative and Qualitative Disclosures About Market Risk. 92 Item 8.

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHolders of Record As of February 29, 2024, there were approximately 54 holders of record of our common stock, solely based upon the count our transfer agent provided to us as of that date. Sales of Unregistered Securities None.
Biggest changeHolders of Record As of March 18, 2025, there were approximately 56 holders of record of our common stock, solely based upon the count our transfer agent provided to us as of that date. Sales of Unregistered Securities None except as disclosed on Form 8-K.
Employee Benefit Plans” for additional information on compensation plans under which equity securities of the registrant are authorized for issuance without the approval of stockholders. ​ ​ 66 Table of Contents Issuer Purchases of Equity Securities ​ None ​ ​ ​ ​
Employee Benefit Plans” for additional information on compensation plans under which equity securities of the registrant are authorized for issuance without the approval of stockholders. ​ ​ 78 Table of Contents Issuer Purchases of Equity Securities ​ None ​ ​ ​ ​
The shares of our common stock sold in our IPO on June 27, 2018 were priced at $17.00 per share. The shares of our common stock sold in our secondary public offering and sale of our common stock on February 2, 2021 were priced at $15.50 per share.
The shares of our common stock sold in our initial public offering (“IPO”) on June 27, 2018 were priced at $17.00 per share. The shares of our common stock sold in our secondary public offering and sale of our common stock on February 2, 2021 were priced at $15.50 per share.
See “Item 15. Exhibits and Financial Statement Schedules — Notes to Financial Statements — Note 13. Stockholders’ Equity, Note 15. Share-Based Compensation and Note 16.
See “Item 15. Exhibits, Consolidated Financial Statement Schedules — Notes to Financial Statements — Note 15. Stockholders’ Equity, Note 17. Share-Based Compensation and Note 18.
Equity Compensation Plans The following table details information regarding our existing equity compensation plans as of December 31, 2023: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ Securities ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ ​ ​ ​ Available for ​ ​ Number of ​ ​ ​ ​ Future ​ ​ Securities to ​ ​ ​ ​ Issuance ​ ​ be Issued ​ Weighted ​ Under Equity ​ ​ Upon ​ Average ​ Compensation ​ ​ Exercise of ​ Exercise ​ Plans ​ ​ Outstanding ​ Price of ​ (Excluding ​ ​ Options, ​ Outstanding ​ Securities ​ ​ Warrants ​ Options, ​ reflected ​ ​ and Rights ​ Warrants ​ in Column (a) ​ ​ (in thousands) ​ and Rights ​ (in thousands) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 1,270 ​ $ 3.90 ​ 2,028 Equity compensation plans not approved by security holders — ​ — (1) 285 Total 1,270 ​ $ 3.90 ​ 2,313 ​ (1) This number includes 284.9 thousand shares available for issuance under the 2020 Inducement Incentive Plan as of December 31, 2023.
Equity Compensation Plans The following table details information regarding our existing equity compensation plans as of December 31, 2024: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Number of ​ ​ ​ ​ ​ ​ ​ Securities ​ ​ ​ ​ ​ ​ ​ Remaining ​ ​ ​ ​ ​ ​ ​ Available for ​ ​ Number of ​ ​ ​ ​ Future ​ ​ Securities to ​ ​ ​ ​ Issuance ​ ​ be Issued ​ Weighted ​ Under Equity ​ ​ Upon ​ Average ​ Compensation ​ ​ Exercise of ​ Exercise ​ Plans ​ ​ Outstanding ​ Price of ​ (Excluding ​ ​ Options, ​ Outstanding ​ Securities ​ ​ Warrants ​ Options, ​ reflected ​ ​ and Rights ​ Warrants ​ in Column (a) ​ ​ (in thousands) ​ and Rights ​ (in thousands) Plan Category (a) (b) (c) Equity compensation plans approved by security holders 1,237 ​ $ 3.75 ​ 4,775 Equity compensation plans not approved by security holders — ​ — (1) 445 Total 1,237 ​ $ 3.75 ​ 5,220 ​ (1) This number includes 444.8 thousand shares available for issuance under the 2020 Inducement Incentive Plan as of December 31, 2024.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeRevenues by Product Category ​ ​ Years ended December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount Revenues Amount Revenues ​ ​ (in thousands, except percentages) NeuroStar Advanced Therapy System ​ $ 16,460 ​ 24 % $ 16,575 ​ 26 % Treatment sessions ​ 50,896 73 % 45,077 71 % Other ​ 1,980 3 % 1,754 4 % Total U.S. revenues ​ $ 69,336 100 % $ 63,406 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ United States NeuroStar Advanced Therapy System ​ ​ Revenues by Type ​ ​ Years ended December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount Revenues Amount Revenues ​ ​ (in thousands, except percentages) NeuroStar capital ​ $ 15,805 ​ 96 % $ 15,792 ​ 95 % Operating lease ​ ​ 162 1 % 222 1 % Other ​ ​ 493 3 % 561 3 % Total United States NeuroStar Advanced Therapy System revenues ​ ​ 16,460 100 % $ 16,575 100 % ​ Revenues Total revenues increased by $6.1 million, or 9%, from $65.2 million for the year ended December 31, 2022 to $71.3 million for the year ended December 31, 2023.
Biggest changeRevenues by Product Category ​ ​ Years ended December 31, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount Revenues Amount Revenues ​ ​ (in thousands, except percentages) NeuroStar Advanced Therapy System ​ $ 15,267 ​ 21 % $ 16,460 ​ 24 % Treatment sessions ​ 50,832 70 % 50,896 73 % Clinic revenue ​ ​ 4,445 6 % — — % Other ​ 1,944 3 % 1,980 3 % Total U.S. revenues ​ $ 72,488 100 % $ 69,336 100 % ​ ​ 83 Table of Contents Revenues Total revenues increased by $3.6 million, or 5%, from $71.3 million for the year ended December 31, 2023 to $74.9 million for the year ended December 31, 2024.
Net Cash Provided by Financing Activities Net cash provided by financing activities for the year ended December 31, 2023 was $22.7 million attributable primarily to additional debt net of final payment and amendment fee paid in connection with the two amendments of the Solar Facility in 2023.
Net cash provided by financing activities for the year ended December 31, 2023 was $22.7 million attributable primarily to additional debt net of final payment and amendment fee paid in connection with the two amendments of the Solar Facility in 2023.
If our cash and cash equivalents and anticipated revenues from sales or our products 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 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.
Item 7. 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 should be read in conjunction with our audited financial statements and related notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.
Item 7. 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 should be read in conjunction with our audited consolidated financial statements and related notes thereto and other financial information included elsewhere in this Annual Report on Form 10-K.
GAAP and the rules and regulations of the SEC requires us to make estimates and assumptions, based on judgments considered reasonable, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.
GAAP and the rules and regulations of the SEC requires us to make estimates and assumptions, based on judgments considered reasonable, which affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenses during the reporting period.
Net cash used in investing activities for the year ended December 31, 2023 was due to payments received on our promissory notes offset partially by purchases of property and equipment and capitalized software costs.
Net cash used in investing activities for the year ended December 31, 2023 was due to payments received on our promissory notes offset partially by purchases of property and equipment and capitalized software.
Our current and future funding requirements will depend on many factors, including: ● our ability to achieve revenue growth and improve operating margins; ● compliance with the terms and conditions, including covenants, set forth in our credit facility; ● the cost of expanding our operations and offerings, including our sales and marketing efforts; ● our ability to improve or maintain coverage and reimbursement arrangements with domestic third-party and government payors, particularly in Japan; ● our rate of progress in establishing coverage and reimbursement arrangements from international commercial third-party and government payors; ● our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products and maintaining or improving our sales to our current customers; 73 Table of Contents ● the cost of research and development activities, including research and development relating to additional indications of neurohealth disorders; ● the effect of competing technological and market developments; ● costs related to international expansion; and ● the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
Our current and future funding requirements will depend on many factors, including: ● our ability to achieve revenue growth and improve operating margins; ● compliance with the terms and conditions, including covenants, set forth in our credit facility; ● the cost of expanding our operations and offerings, including our sales and marketing efforts; ● our ability to improve or maintain coverage and reimbursement arrangements with domestic third-party and government payors, particularly in Japan; ● our rate of progress in establishing coverage and reimbursement arrangements from international commercial third-party and government payors; ● our rate of progress in, and cost of the sales and marketing activities associated with, establishing adoption of our products and maintaining or improving our sales to our current customers; ● the cost of research and development activities, including research and development relating to additional indications of neurohealth disorders; ● the effect of competing technological and market developments; ● costs related to international expansion; and ● the potential cost of and delays in product development as a result of any regulatory oversight applicable to our products.
Sales in the United States represented 97% of our total revenues for the years ending December 31, 2023 and 2022, respectively, and have been generated by our direct sales force. Outside the United States, our sales are made through local third-party distributors. International revenues were 3% for the years ended December 31, 2023 and 2022, respectively.
Sales in the United States represented 97% of our total revenues for the years ending December 31, 2024 and 2023, respectively, and have been generated by our direct sales force. Outside the United States, our sales are made through local third-party distributors. International revenues were 3% for the years ended December 31, 2024 and 2023, respectively.
The increase in net operating assets was primarily due to increases in accounts receivable and prepaid commission expense, and decreases in accrued compensation. Non-cash charges consisted of depreciation and amortization, inventory impairment, non-cash interest expense, share-based compensation, and the cost of rental units purchased by customers.
The increase in net operating assets was primarily due to increases in accounts receivable and prepaid commission expense, and decreases in accrued compensation. Non-cash charges consisted of depreciation and amortization, non-cash interest expense, share-based compensation, and the cost of rental units purchased by customers.
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.
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 85 Table of Contents 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.
We define our critical accounting policies as those accounting policies that are most important to the portrayal of our financial condition and results of operations and require our most difficult and subjective judgments. While our significant accounting policies are more fully described in “Note 3.
We define our critical accounting policies as those accounting policies that are most important to the portrayal of our financial condition and results of operations and require our most difficult and subjective judgments. While our significant accounting policies are more fully described in Note 3.
Other revenues are derived primarily from service and repair extended warranty contracts with our existing customers. 68 Table of Contents We refer you to the section titled “Critical Accounting Policies and Use of Estimates—Revenue Recognition” appearing elsewhere in this Annual Report on Form 10-K for additional information regarding how we account for revenues.
Other Revenues . Other revenues are derived primarily from service and repair extended warranty contracts with our existing customers. We refer you to the section titled “Critical Accounting Policies and Use of Estimates—Revenue Recognition” appearing elsewhere in this Annual Report on Form 10-K for additional information regarding how we account for revenues.
Based on our commercial data, we believe psychiatrists can recoup their initial capital investment in our system by providing a standard course of treatment to approximately 12 patients. We believe psychiatrists can generate approximately $8,500 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their 67 Table of Contents practices.
Based on our commercial data, we believe psychiatrists can recoup their initial capital investment in our system by providing a standard course of treatment to approximately 12 patients. We believe psychiatrists can generate approximately $8,500 of average revenue per patient for a standard course of treatment, which may provide meaningful incremental income to their practices.
International revenues represented 3% of our total revenues for the years ended December 31, 2023 and 2022, respectively. In October 2017, we entered into an exclusive distribution agreement with Teijin, for the distribution of our NeuroStar Advanced Therapy Systems and treatment sessions to customers who will treat patients with MDD in Japan.
International revenues represented 3% of our total revenues for the years ended December 31, 2024 and 2023, respectively. In October 2017, we entered into an exclusive distribution agreement, for the distribution of our NeuroStar Advanced Therapy Systems and treatment sessions to customers who will treat patients with MDD in Japan.
The increase in net operating assets was primarily due to increases in accounts receivable, inventory and prepaid commission expense, which were offset by increases in accounts payable and accrued expenses as a result of timing and accrued 2022 compensation and commissions as of December 31, 2022.
The increase in net operating assets was primarily due to increases in accounts receivable, inventory and prepaid commission expense, which were offset by increases in accounts payable and accrued expenses 87 Table of Contents as a result of timing and accrued 2022 compensation and commissions as of December 31, 2022.
We expect our international revenues to be consistent as a percentage of our total revenue. Our research and development efforts are focused on the following: hardware and software product developments and enhancements of our NeuroStar Advanced Therapy System and clinical development relating to additional indications.
We expect our international revenues to decrease as a percentage of our total revenue. Our research and development efforts are focused on the following: hardware and software product developments and enhancements of our NeuroStar Advanced Therapy System and clinical development relating to additional indications.
Under ASC 606, we recognize revenue when control of the promised good or service is transferred to our customers in an amount that reflects the consideration to which we expect to be entitled in exchange for those good or services.
Under ASC 606, we recognize revenue when control of the promised good or service is transferred to our customers in an amount that reflects the consideration to which we expect to be 89 Table of Contents entitled in exchange for those good or services.
Components of Our Results of Operations Revenues To date, we have generated revenues primarily from the capital portion of our business and related sales and rentals of the NeuroStar Advanced Therapy System and the recurring revenues from our sale of treatment sessions in the United States. NeuroStar Advanced Therapy System Revenues .
Components of Our Results of Operations Revenues To date, we have generated revenues primarily from the capital portion of our business and related sales and rentals of the NeuroStar Advanced Therapy System and the recurring revenues from our sale of treatment sessions in the United States. 80 Table of Contents NeuroStar Advanced Therapy System Revenues .
Summary of Significant Accounting Policies” in our audited financial statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K, we believe the following discussion addresses our most critical accounting policies. 76 Table of Contents Revenue Recognition We account for revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers .
Summary of Significant Accounting Policies in our audited consolidated financial statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K, we believe the following discussion addresses our most critical accounting policies. Revenue Recognition We account for revenue in accordance with Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers .
Non-cash charges consisted of depreciation and amortization, non-cash interest expense, share-based compensation, and the cost of rental units purchased by customers. Net Cash (Used in) Provided by Investing Activities Net cash (used in) provided by investing activities for the years ended December 31, 2023, 2022 and 2021 was $(1.3) million, $6.7 million and $(9.8) million, respectively.
Non-cash charges consisted of depreciation and amortization, non-cash interest expense, share-based compensation, and the cost of rental units purchased by customers. Net Cash (Used in) Provided by Investing Activities Net cash (used in) provided by investing activities for the years ended December 31, 2024, 2023 and 2022 was $(2.4) million, $(1.3) million and $6.7 million, respectively.
For the year ended December 31, 2022, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 71% and 26% of our U.S. revenues, respectively. We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the United States through our sales and customer support team.
For the year ended December 31, 2023, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 73% and 24% of our U.S. revenues, respectively. We currently sell our NeuroStar Advanced Therapy System and recurring treatment sessions in the United States through our sales and customer support team.
We incurred negative cash flows from operating activities of $32.0 million and $30.7 million for the years ended December 31, 2023 and 2022, respectively.
We incurred negative cash flows from operating activities of $31.0 million and $32.0 million for the years ended December 31, 2024 and 2023, respectively.
Debt” in our audited financial statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K for information regarding our current Solar Facility. Solar Credit Facility The following table sets forth by year our required future principal payments under the term loan portion of the Solar Facility (as discussed in “Note 12.
Debt in our audited financial statements and related notes thereto appearing elsewhere in this Annual Report on Form 10-K for information regarding our current Perceptive Facility. Perceptive Credit Facility The following table sets forth by year our required future principal payments under the term loan portion of the Perceptive Facility (as discussed in Note 14.
We derive the majority of our revenues from recurring treatment sessions. For the year ended December 31, 2023, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 73% and 24% of our U.S. revenues, respectively.
We derive the majority of our revenues from recurring treatment sessions. For the year ended December 31, 2024, revenues from sales of our treatment sessions and NeuroStar Advanced Therapy Systems represented 70% and 21% of our U.S. revenues, respectively.
Comparison of the Years ended December 31, 2022 and 2021 ​ The information required within this section is incorporated by reference to the information set forth in the section titled “Comparison of the Years ended December 31, 2022 and 2021” in “Management’s Discussion 72 Table of Contents and Analysis of our Financial Condition and Results of Operations” in our 2022 Annual Report on Form 10-K filed on March 7, 2023. ​ ​ Liquidity and Capital Resources Overview As of December 31, 2023, we had cash and cash equivalents of $59.7 million and an accumulated deficit of $376.1 million, compared to cash and cash equivalents of $70.3 million and an accumulated deficit of $345.9 million as of December 31, 2022.
Comparison of the Years ended December 31, 2023 and 2022 ​ The information required within this section is incorporated by reference to the information set forth in the section titled “Comparison of the Years ended December 31, 2023 and 2022” in “Management’s Discussion and Analysis of our Financial Condition and Results of Operations” in our 2023 Annual Report on Form 10-K filed on March 8, 2024. ​ ​ Liquidity and Capital Resources Overview As of December 31, 2024, we had cash and cash equivalents of $18.5 million and an accumulated deficit of $419.8 million, compared to cash and cash equivalents of $59.7 million and an accumulated deficit of $376.1 million as of December 31, 2023.
You should review the ‘‘Risk Factors’’ section of this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis.
You should review the Risk Factors section of this Annual Report on Form 10-K for a discussion of important factors that could cause our actual results to differ materially from the results described in or implied by the forward-looking statements contained in the following discussion and analysis. Overview We believe that mental health is as important as physical health.
Our total revenues increased by $6.1 million, or 9%, from $65.2 million for the year ended December 31, 2022 to $71.3 million for the year ended December 31, 2023.
Our total revenues increased by $3.6 million, or 5%, from $71.3 million for the year ended December 31, 2023 to $74.9 million for the year ended December 31, 2023.
Net cash provided by financing activities for the year ended December 31, 2022 was $0.2 million attributable primarily to proceeds related to stock option exercises.
Net cash provided by financing activities for the year ended December 31, 2022 was $0.2 million attributable primarily to proceeds related to stock option exercises. ​ ​ 88 Table of Contents Indebtedness Refer to Note 14.
We have a diverse customer base of psychiatrists in group psychiatric practices in the United States. For the years ended December 31, 2023, 2022 and 2021 one customer accounted for 15%, 17% and 20% respectively, of the Company’s revenue.
We have a diverse customer base of psychiatrists in group psychiatric practices in the United States. For the years ended December 31, 2024, 2023 and 2022 one customer Greenbrook accounted for 12%,15% and 17% respectively, of the Company’s revenue. Following the acquisition, Greenbrook is no longer a customer.
Revenues in the United States increased by $5.9 million, or 9%, from $63.4 million for the year ended December 31, 2022 to $69.3 million for the year ended December 31, 2023.
Revenues in the United States increased by $3.2 million, or 5%, from $69.3 million for the year ended December 31, 2023 to $72.5 million for the year ended December 31, 2024.
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 of directors’ fees and other administrative costs, such as corporate facility costs, including rent, utilities, depreciation and maintenance not otherwise included in cost of revenues. 69 Table of Contents We anticipate that our general and administrative expenses will remain relatively consistent during 2024 compared to our 2023 expenses.
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 of directors’ fees and other administrative costs, such as corporate facility costs, including rent, utilities, depreciation and maintenance not otherwise included in cost of revenues.
For the year ended December 31, 2023, our U.S. revenues were $69.3 million, compared to $63.4 million for the year ended December 31, 2022, which represented an increase of 9% period over period. As of December 31, 2023, we had an accumulated deficit of $376.1 million.
For the year ended December 31, 2024, our U.S. revenues were $72.5 million, compared to $69.3 million for the year ended December 31, 2023, which represented an increase of 5% period over period. As of December 31, 2024, we had an accumulated deficit of $419.8 million.
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 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 primary sources of capital to date have been from our IPO, private placements of our convertible preferred securities, borrowings under our credit facility, sales of our products and a secondary public offering of our common stock.
Our primary sources of capital to date have been from our IPO, private placements of our convertible preferred securities, borrowings under our credit facility, sales of our products and a secondary public offering of our common stock. The Company entered into a Credit Agreement and Guaranty with Perceptive as collateral agent and other lenders defined in the Perceptive Facility.
As a result, we expect our research and development expenses to increase during 2024 compared to our 2023 expenses. Interest Expense Interest expense consists of cash interest payable under our credit facility and non-cash interest attributable to the accrual of final payment fees and the amortization of deferred financing costs related to our indebtedness.
Interest Expense Interest expense consists of cash interest payable under our credit facility and non-cash interest attributable to the accrual of final payment fees and the amortization of deferred financing costs related to our indebtedness.
Cost of Revenues and Gross Margin Cost of revenues increased by $4.2 million, or 27%, from $15.5 million for the year ended December 31, 2022 to $19.6 million for the year ended December 31, 2023.
Cost of Revenues and Gross Margin Cost of revenues increased by $1.1 million, or 6%, from $19.6 million for the year ended December 31, 2023 to $20.7 million for the year ended December 31, 2024. Gross margin was 72.3% for the year ended December 31, 2024 compared to 72.5% for the year ended December 31, 2023.
Debt”) (in thousands): ​ ​ ​ ​ ​ ​ Principal Year: ​ Payments 2024 ​ $ — 2025 ​ — 2026 ​ 22,500 2027 ​ 30,000 2028 ​ 7,500 Total principal payments ​ $ 60,000 ​ Common Stock Offering On February 2, 2021, we closed a secondary public offering of our common stock in which we issued and sold 5,566,000 shares of our common stock, which included shares pursuant to an option granted to underwriters to purchase additional shares, at a public offering price of $15.50 per share.
Debt) (in thousands): ​ ​ ​ ​ ​ ​ Principal Year: ​ Payments 2025 ​ $ — 2026 ​ — 2027 ​ — 2028 ​ — 2029 ​ 60,000 Total principal payments ​ $ 60,000 ​ Common Stock Offering On February 10, 2025, the Company closed on a secondary public offering of its common stock in which the Company issued and sold 9,200,000 shares of its common stock, which included shares pursuant to an option granted to the underwriter to purchase additional shares, at a public offering price of $2.25 per share.
We typically use our employee, consultant and infrastructure resources across our research and development programs.
We typically use our employee, consultant and infrastructure resources across our research and development programs. We expect our research and development expenses to decrease during 2025 compared to our 2024 expenses.
Access codes are purchased separately by our customers, primarily on an as-needed basis, and are required by the NeuroStar Advanced Therapy System in order to deliver treatment sessions. Other Revenues .
Access codes are purchased separately by our customers, primarily on an as-needed basis, and are required by the NeuroStar Advanced Therapy System in order to deliver treatment sessions. Clinic Revenue. Clinic revenue is determined based on net patient fees, which includes estimates for contractual allowances and discounts.
Other Income, Net Other income, net increased by $3.5 million from $2.2 million for the year ended December 31, 2022 to $5.8 million for the year ended December 31, 2023, primarily as a result of the Employee Retention Credit (the “ERC”) of $2.9 million, increased interest income earned on the Company’s money market accounts and increase in notes receivable interest .
Other Income, Net Other income, net decreased by $3.2 million from $5.8 million for the year ended December 31, 2023 to $2.5 million for the year ended December 31, 2024, primarily as a result of the Employee Retention Credit (the “ERC”) of $2.9 million recorded during the year ended December 31, 2023.
Cash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2023, 2022, and 2021: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2023 2022 2021 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Cash Used in Operating Activities ​ $ (32,038) ​ $ (30,739) ​ $ (27,983) Net Cash (Used in) Provided by Investing Activities ​ (1,322) ​ 6,731 ​ (9,839) Net Cash Provided by Financing Activities ​ 22,697 ​ 207 ​ 83,006 Net (Decrease) in Cash and Cash Equivalents ​ $ (10,663) ​ $ (23,801) ​ $ 45,184 ​ 74 Table of Contents Net Cash Used in Operating Activities Net cash used in operating activities for 2023 was $32.0 million, consisting primarily of a net loss of $30.2 million and an increase in net operating assets of $ 14 .1 million, partially offset by non-cash charges of $12.3 million.
Cash Flows The following table sets forth a summary of our cash flows for the years ended December 31, 2024, 2023, and 2022: ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ December 31, ​ ​ 2024 2023 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net Cash used in Operating activities ​ $ (30,997) ​ $ (32,038) ​ $ (30,739) Net Cash (used in) provided by Investing activities ​ (2,413) ​ (1,322) ​ 6,731 Net Cash (used in) provided by Financing activities ​ (6,808) ​ 22,697 ​ 207 Net (Decrease) in Cash and Cash Equivalents and Restricted cash ​ $ (40,218) ​ $ (10,663) ​ $ (23,801) ​ Net Cash Used in Operating Activities Net cash used in operating activities for 2024 was $31.0 million, consisting primarily of a net loss of $43.7 million and an increase in net operating assets of $6.8 million, partially offset by non-cash charges of $19.5 million, primarily consisting of depreciation and amortization, capitalized software impairment, allowance for credit losses, share-based compensation, non-cash interest expense and loss on extinguishment of debt.
Sales and marketing Expenses Sales and marketing expenses consist of market research and commercial activities related to the sale of our NeuroStar Advanced Therapy Systems and treatment sessions and salaries and related benefits, sales commissions and share-based compensation for employees focused on these efforts.
Our gross margins on revenues from sales of NeuroStar Advanced Therapy Systems and clinic revenue are lower than our gross margins on revenues from sales of treatment sessions and, as a result, the 81 Table of Contents sales mix between NeuroStar Advanced Therapy 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 our NeuroStar Advanced Therapy Systems and treatment sessions and 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.
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 increase in 2025 relative to 2024 as a result of the addition of the Greenbrook sales personnel to our company.
Net cash used in investing activities for the year ended December 31, 2021 was attributable to issuance of our promissory note and purchase of property and equipment and capitalized software costs.
Net cash used in investing activities for the year ended December 31, 2024 was due to cash paid for acquisition, net of cash and restricted cash acquired, purchases of property and equipment and capitalized software costs partially offset by payment received on our promissory notes.
The increase in net operating assets was primarily due to increases in accounts receivable, inventory and prepaid commission expense, which were offset by increases in accounts payable and accrued expenses as a result of timing and accrued 2021 compensation and commissions as of December 31, 2021.
The increase in net operating assets was primarily due to increases in accounts receivable, prepaid expenses and other assets, prepaid commission expense and decreases in accounts payable and accrued expenses.
NeuroStar capital sales consisted of 204 units in NeuroStar Advanced Therapy Systems for the year ended December 31, 2023 compared to 213 units for the year ended December 31, 2022. The Company expects to recognize future recurring treatment session revenue related to the sale of 204 NeuroStar Advanced Therapy systems for the year ended December 31, 2023.
The Company expects to recognize future recurring treatment session revenue related to the sale of 185 NeuroStar Advanced Therapy Systems for the year ended December 31, 2024. Treatment sessions revenues represented 70% and 73% of total revenues in the United States for the years ended December 31, 2024 and 2023, respectively.
NeuroStar Advanced Therapy System revenue in the United States for year ended December 31, 2023 was $16.5 million which was in line with revenue at December 31, 2022 at $16.6 million.
NeuroStar Advanced Therapy System revenue in the United States for the year ended December 31, 2024 decreased $1.2 million or 7% from $16.5 million for the year ended December 31, 2023 to $15.3 million for the year ended December 31, 2024.
Sales and marketing Expenses Sales and marketing expenses decreased by $2.7 million, or 5%, from $50.0 million for the year ended December 31, 2022 to $47.3 million for the year ended December 31, 2023. The decrease was primarily driven by the discontinuation of a sales compensation program in 2023.
The decrease in gross margin was primarily a result of the inclusion of Greenbrook’s clinic business and reduction in Treatment session revenue. Sales and marketing Expenses Sales and marketing expenses decreased by $1.7 million, or 4%, from $47.3 million for the year ended December 31, 2023 to $45.6 million for the year ended December 31, 2024.
We designed the NeuroStar Advanced Therapy 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. We generate revenues from initial capital sales of our systems, sales of our recurring treatment sessions and from service and repair and extended warranty contracts.
The Company continues to operate as Neuronetics, Inc., and the Neuronetics Shares continues to trade on the NASDAQ Global Market under the ticker “STIM”. We designed the NeuroStar Advanced Therapy 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.
Results of Operations Comparison of the Years ended December 31, 2023 and 2022 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ Increase / (Decrease) ​ ​ ​ 2023 2022 Dollars Percentage ​ ​ (in thousands, except percentages) Revenues ​ $ 71,348 ​ $ 65,206 ​ $ 6,142 9 % Cost of revenues ​ 19,643 ​ 15,483 ​ 4,160 27 % Gross Profit ​ 51,705 ​ 49,723 ​ 1,982 4 % Gross Margin ​ 72.5 % 76.3 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ Sales and marketing ​ 47,318 ​ 49,982 ​ (2,664) (5) % General and administrative ​ 25,426 ​ 25,516 ​ (90) (0) % Research and development ​ 9,515 ​ 9,336 ​ 179 2 % Total operating expenses ​ 82,259 ​ 84,834 ​ (2,575) (3) % Loss from Operations ​ (30,554) ​ (35,111) ​ 4,557 13 % Other (income) expense: ​ ​ ​ ​ Interest expense ​ 5,424 ​ 4,251 ​ 1,173 28 % Other income, net ​ (5,789) ​ (2,203) ​ (3,586) (163) % Net Loss ​ $ (30,189) ​ $ (37,159) ​ $ 6,970 19 % ​ 70 Table of Contents ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues by Geography ​ ​ Years ended December 31, ​ ​ 2023 ​ 2022 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount Revenues Amount Revenues ​ ​ (in thousands, except percentages) United States ​ $ 69,336 ​ 97 % $ 63,406 ​ 97 % International ​ 2,012 3 % 1,800 3 % Total revenues ​ $ 71,348 100 % $ 65,206 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Results of Operations Comparison of the Years ended December 31, 2024 and 2023 ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Years ended December 31, ​ Increase / (Decrease) ​ ​ ​ 2024 2023 Dollars Percentage ​ ​ (in thousands, except percentages) Revenues ​ $ 74,890 ​ $ 71,348 ​ $ 3,542 5 % Cost of revenues ​ 20,729 ​ 19,643 ​ 1,086 6 % Gross Profit ​ 54,161 ​ 51,705 ​ 2,456 5 % Gross Margin ​ 72.3 % 72.5 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Operating expenses: ​ ​ ​ ​ Sales and marketing ​ 45,631 ​ 47,318 ​ (1,687) (4) % General and administrative ​ 30,322 ​ 25,426 ​ 4,896 19 % Research and development ​ 12,771 ​ 9,515 ​ 3,256 34 % Total operating expenses ​ 88,724 ​ 82,259 ​ 6,465 8 % Loss from Operations ​ (34,563) ​ (30,554) ​ (4,009) (13) % Other (income) expense: ​ ​ ​ ​ Interest expense ​ 7,286 ​ 5,424 ​ 1,862 34 % Loss on extinguishment of debt ​ ​ 4,427 ​ ​ — ​ ​ 4,427 — % Other income, net ​ (2,549) ​ (5,789) ​ 3,240 56 % Net Loss ​ $ (43,727) ​ $ (30,189) ​ $ (13,538) (45) % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Revenues by Geography ​ ​ Years ended December 31, ​ ​ 2024 ​ 2023 ​ ​ ​ ​ ​ % of ​ ​ ​ ​ % of ​ ​ Amount Revenues Amount Revenues ​ ​ (in thousands, except percentages) United States ​ $ 72,488 ​ 97 % $ 69,336 ​ 97 % International ​ 2,402 3 % 2,012 3 % Total revenues ​ $ 74,890 100 % $ 71,348 100 % ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ U.S.
Critical Accounting Policies and Use of Estimates The preparation of our financial statements in accordance with U.S.
We received net proceeds of approximately $18.9 million after deducting underwriting discounts, commissions and estimated offering expenses. Critical Accounting Policies and Use of Estimates The preparation of our consolidated financial statements in accordance with U.S.
Non-cash charges consisted of depreciation and amortization, non-cash interest expense, share-based compensation, and the cost of rental units purchased by customers. Net cash used in operating activities for 2021 was $28.0 million, consisting primarily of a net loss of $31.2 million and an increase in net operating assets of $6.6 million, partially offset by non-cash charges of $9.8 million.
Net cash used in operating activities for 2023 was $32.0 million, consisting primarily of a net loss of $30.2 million and an increase in net operating assets of $14.1 million, partially offset by non-cash charges of $12.3 million.
Research and Development Expenses Research and development expenses remained relatively consistent at $9.5 million for the year ended December 31, 2023 compared with $9.3 million for the year ended December 31, 2022 Interest Expense Interest expense increased by $1.2 million, or 28%, from $4.2 million for the year ended December 31, 2022 to $5.4 million for the year ended December 31, 2023 due to interest rates and debt balance increases.
This increase was partially offset by savings related to project spend and personnel. 84 Table of Contents Interest Expense Interest expense increased by $1.9 million, or 34%, from $5.4 million for the year ended December 31, 2023 to $7.3 million for the year ended December 31, 2024 due to interest rates and debt balance increases.
We also earn revenue from customers from services outside of their warranty term or annual service contracts. Such service revenue is recognized as the services are provided. Recent Accounting Pronouncements We refer you to “Note 4. Recent Accounting Pronouncements” in our audited financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. ​
Any impairment recognized could significantly impact our results of operations in the period of impairment. ​ 91 Table of Contents Recent Accounting Pronouncements We refer you to Note 4. Recent Accounting Pronouncements in our audited consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K. ​
The system is cleared by the FDA to treat adult patients with MDD that have failed to achieve satisfactory improvement from prior antidepressant medication in the current MDD episode. NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system.
The system is cleared by the FDA to treat adult patients with MDD that 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.
We believe we are the market leader in TMS therapy based on the estimated 169,068 global patients treated with over 6.1 million of our treatment sessions through December 31, 2023. We generated revenues of $71.3 million and $65.2 million for the years ended December 31, 2023 and 2022, respectively.
NeuroStar Advanced Therapy System is safe, clinically effective, reproducible and precise and we believe is supported by the largest clinical data set of any competing TMS system. We believe we are the market leader in TMS therapy based on the estimated 195,356 global patients treated with over 7.1 million of our treatment sessions through December 31, 2024.
Other Income, Net Other income, net consists primarily of interest income earned on our money market account balances and notes receivable.
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. 82 Table of Contents Other Income, Net Other income, net consists primarily of interest income earned on our money market account balances and notes receivable.
Leases The Company has lease arrangements for equipment and certain facilities, including corporate headquarters and our warehouse in Malvern, Pennsylvania and a training facility in Charlotte, North Carolina. As of December 31, 2023, the Company had fixed lease payment obligations of $3.7 million, including $0.9 million due within the next twelve months.
The interest rate on borrowings under the Perceptive Facility is the monthly SOFR rate plus 7%. Leases The Company has lease arrangements for equipment and certain facilities, including corporate headquarters and our warehouse in Malvern, Pennsylvania and a training facility in Charlotte, North Carolina. Additionally following the acquisition of Greenbrook, the Company has lease agreements related to its Treatment Centers.
For the period ended December 31, 2023, U.S. revenue increased by 9% and international revenue increased by 12% over the comparative prior year period. The U.S. revenue growth was primarily due to an increase in Treatment sessions revenues in connection with the growth of active customer sites and utilization.
For the period ended December 31, 2024, U.S. revenue increased by 5% and international revenue increased by 19% over the comparative prior year period.
The Company’s material cash requirements include the following contractual and other obligations. Debt In March 2020, the Company entered into the Solar Facility. As of December 31, 2023, the Company had $60.0 million of borrowings outstanding under the Solar Facility, which has a final maturity in March 2028.
The Company’s material cash requirements include the following contractual and other obligations. Debt On March 2, 2020 the Company entered into a Loan and Security Agreement with Solar as collateral agent and other lenders as defined in the Solar Facility. On March 7, 2024, the Company entered into a sixth amendment (the “Solar Sixth Amendment”) to the Solar Facility.
We expect our cost of revenues to decrease as our product mix changes and we realize efficiencies with our new contract manufacturer. 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 new Treatment Center costs include direct center and patient care costs, regional employee compensation, regional marketing expenses, and depreciation. We expect our cost of revenues to increase mainly for Treatment Centers, as our product mix changes. We expect to realize efficiencies with our new contract manufacturer.
Treatment sessions revenues represented 73% and 71% of total revenues in the United States for the years ended December 31, 2023 and 2022, respectively, and increased by 13% from $45.1 million for the year ended December 31, 2022 to $50.9 million for the year ended December 31, 2023.
Treatment session revenue in United States for year ended December 31, 2024 was $50.8 million which was materially consistent with revenue for the year ended December 31, 2023 of $50.9 million.
Net cash provided by financing activities for the year ended December 31, 2021 was $83.0 million and primarily consisted of additional proceeds from our secondary public offering and sale of our common stock on February 2, 2021 and cash proceeds related to stock option exercises. ​ 75 Table of Contents Indebtedness Refer to “Note 12.
Net Cash (Used in) Provided by Financing Activities Net cash used in financing activities for the year ended December 31, 2024 was $6.8 million and primarily consisted of the repayment of the Solar Facility, proceeds from the Perceptive Facility issuance of long-term debt and warrants and payment of debt issuance costs related to the Perceptive Facility.
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Overview We are a commercial stage medical technology company focused on designing, developing and marketing products that improve the quality of life for patients who suffer from neurohealth disorders.
Added
As a global leader in neuroscience, we are delivering more treatment options to patients and healthcare providers by offering exceptional in-office treatments that produce extraordinary results.
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Our gross margins on revenues from sales of NeuroStar Advanced Therapy Systems are lower than our gross margins on revenues from sales of treatment sessions and, as a result, the sales mix between NeuroStar Advanced Therapy Systems and treatment sessions can affect the gross margin in any reporting period.
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We generated revenues of $74.9 million and $71.3 million for the years ended December 31, 2024 and 2023, respectively. 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 Neuronetics Shares at the Exchange Ratio upon closing of the Arrangement.
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We anticipate that our sales and marketing expenses will remain materially consistent during 2024 compared to 2023 expenses, with the exception of the planned growth in our co-op marketing program.
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In connection with and prior to closing of the Arrangement, Madryn converted (i) all of the outstanding amount owing under Greenbrook’s credit agreement into 2,056,453,835 Greenbrook Shares, representing 95.3% of the Greenbrook Shares (including the Greenbrook Shares held by Madryn prior to such conversion) immediately prior to closing of the Arrangement and (ii) all of the interim period funding provided by Madryn to Greenbrook into an additional 252,999,770 Greenbrook Shares, which Greenbrook Shares were exchanged for Neuronetics Shares at the Exchange Ratio upon closing of the Arrangement.
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We plan to incur research and development expenses for the near future as we expect to continue our development of TMS Therapy for the treatment of additional patient populations and new indications related to neurohealth disorders, as well as for various hardware and software development projects.
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We generate revenues from initial capital sales of our systems, sales of our recurring treatment sessions and 79 Table of Contents from service and repair and extended warranty contracts. Additionally, through our acquisition of Greenbrook we now derive revenue directly from our Treatment Centers, by providing TMS and SPRAVATO therapy for MDD and other mental health disorders.
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The increase in U.S. treatment session revenue was primarily the result of an increase of 218,244 treatment sessions sold from 572,587 units for the year ended December 31, 2022 to 791,023 for the year ended December 31, 2023.
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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 2025.
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We 71 Table of Contents believe the increase in overall volume of treatment session revenue between these two periods was primarily due to the growth in active customer sites of 44 from 1,101 as of December 31, 2022 to 1,145 as of December 31, 2023 and increase in overall utilization.
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We anticipate that our general and administrative expenses will increase in 2025 from 2024 due to an increase in the overall size of the general and administrative function within the consolidated company.
Removed
Due to the time it takes for the customer sites to become fully operational, treatment session revenue will lag in the growth of our active customer sites.
Added
The U.S. revenue growth was primarily due to the addition of U.S. clinic revenue as a result of the acquisition of Greenbrook and the international revenue growth was primarily driven by an increase in NeuroStar Advanced Therapy System revenue.
Removed
This increase was primarily due to the recording of a $1.9 million inventory impairment for specialized component parts secured for discontinued NeuroStar Advanced Therapy Systems for which costs exceed net realizable value. Also capitalized software and the corresponding amortization expense increased by $1.3 million associated with the latest product release.
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The $1.2 million decrease in revenue was directly attributable to a decrease in the number of units sold from 204 units for year ended December 31, 2023 to 185 units for the year ended December 31, 2024. This decrease in revenue was partially offset by a marginal increase in our average selling price per unit.
Removed
One-time expense relating to our transition to a new contract manufacturer amounted to $0.7 million. Gross margin was 72.5% for the year ended December 31, 2023 compared to 76.3% for the year ended December 31, 2022.

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Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeDebt” in our audited financial statements and related notes thereto appearing elsewhere in of this Annual Report on Form 10-K, our credit facility bears interest which resets monthly and is equal to the greater of (a) 3.95% or (b) Daily Simple Secured Overnight Financing Rate (“SOFR”) for a term of one month, plus 5.65% .
Biggest changeDebt in our audited financial statements and related notes thereto appearing elsewhere in of this Annual Report on Form 10-K, each of the Tranche 1 Loan, Tranche 2 Loan and Tranche 3 Loan accrues interest from the date of borrowing through the date of repayment at a floating per annum rate of interest equal to the sum of 7.00% plus the greater of (a) 4.50% and (b) One-Month Term SOFR (as defined in the Perceptive Facility).
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our cash is held in an insured cash sweep account at a large financial institution, which manages our risk by limiting the amount of cash in any one financial institution up to $250,000.
Item 7A. Quantitative and Qualitative Disclosures About Market Risk Our cash is held in an insured cash sweep account at a large financial institution, which manages our risk by limiting the amount of cash in any one financial institution to up to $250,000.
We have reviewed the financial statements of this institution and believe it has sufficient assets and liquidity to conduct its operations in the ordinary course of business with limited credit risk to us. Financial instruments that potentially subject us to concentrations of credit risk principally consist of cash equivalents and accounts receivable.
We have reviewed the consolidated financial statements of this institution and believe it has sufficient assets and liquidity to conduct its operations in the ordinary course of business with limited credit risk to us. Financial instruments that potentially subject us to concentrations of credit risk principally consist of cash equivalents and accounts receivable.
We limit our credit risk associated with cash equivalents by placing investments in highly-rated money market funds. We limit our credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary, but we do not require collateral to secure amounts owed to us by our customers. As discussed in “Note 12.
We limit our credit risk associated with cash equivalents by placing investments in highly-rated money market funds. We limit our credit risk with respect to accounts receivable by performing credit evaluations when deemed necessary, but we do not require collateral to secure amounts owed to us by our customers. As discussed in Note 14.
These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”), which provides an insurance coverage limit of $250,000 per 77 Table of Contents depositor, per FDIC-insured bank, per ownership category.
These balances are insured by the Federal Deposit Insurance Corporation (“FDIC”), which provides an insurance coverage limit of $250,000 per depositor, per FDIC-insured bank, per ownership category.

Other STIM 10-K year-over-year comparisons