Neuronetics (STIM) Q3 2025: Greenbrook Clinics Surge 25%, Offsetting Neurostar Revenue Drag

2025-11-04 | By EarningsIQ Research

Greenbrook clinic momentum and operational discipline drove Neuronetics’ Q3, as clinic revenue outpaced legacy Neurostar system sales, highlighting the company’s evolving business mix. Strategic focus on referral programs, payer optimization, and automation is reshaping profitability levers, while management signals further cost and cash flow improvements into 2026. Guidance reset reflects a deliberate shift in Spravato billing strategy, with margin and revenue mix under continued scrutiny.

Summary

• Clinic-Led Growth: Greenbrook sites delivered substantial patient volume and revenue acceleration, eclipsing legacy Neurostar system growth.
• Margin Compression Reality: Lower-margin clinic operations weigh on blended profitability as the business pivots toward integrated care models.
• Cash Flow Pivot: Operational improvements and revenue cycle discipline position Neuronetics for near-term cash flow inflection.

Performance Analysis

Neuronetics’ Q3 2025 results illuminated a decisive shift in business composition, with Greenbrook clinics now representing the majority of revenue and growth. Greenbrook’s $21.8 million in revenue, up 25% on an adjusted pro forma basis, accounted for over half of total revenue. This reflects both high treatment volume and the scaling of Spravato, esketamine-based therapy for depression, across the network. In contrast, Neurostar, transcranial magnetic stimulation (TMS) system and session revenue, declined 4% pro forma, primarily due to customer inventory normalization and a strategic realignment toward higher-growth accounts.

Gross margin compressed sharply to 45.9% from 75.6% a year ago, as the lower-margin clinic business became a larger revenue driver. Operating expenses rose 12% year-over-year, largely tied to Greenbrook integration, but the company’s net loss narrowed, and EBITDA loss improved materially. Most notably, operating cash burn fell to just $0.8 million, reflecting tighter expense management and accelerated collections. The company’s cash position was bolstered by additional debt funding and at-the-market equity proceeds, providing near-term flexibility.

• Greenbrook Outperformance: Clinic visits and treatment sessions surged, driven by referral programs and expanded therapy offerings.
• Neurostar Utilization vs. Revenue: 11% growth in treatment session use did not translate to revenue due to prior year inventory build; normalization expected in 2026.
• Spravato Mix Shift: Strategic move toward “administer and observe” (A&O) billing in regions with unfavorable “buy and bill” (B&B) economics, impacting revenue guidance.

While the Greenbrook platform is now the primary growth engine, management is focused on optimizing profitability levers and driving operational synergy as the business transitions to a vertically integrated care model.

Executive Commentary

Strategic Positioning

1. Greenbrook Integration and Clinic-First Model

The Greenbrook acquisition has fundamentally shifted Neuronetics’ revenue base, creating a vertically integrated model that combines device sales, treatment sessions, and direct patient care. The company is leveraging scale to drive operational efficiency, expand therapy offerings, and enhance patient conversion through targeted referral programs and intake process automation.

2. Referral and Provider Connection Programs

Regional Account Manager (RAM) and Better Me Provider (BMP) initiatives are now core growth levers. These programs focus on building relationships with primary care and psychiatric providers, streamlining patient referrals, and boosting conversion rates. The Provider Connection Program, in particular, has educated thousands of physicians and is driving incremental patient flow to both Greenbrook and independent Neurostar sites.

3. Payer and Billing Optimization

Spravato billing strategy has become a key margin and revenue determinant. The company is selectively deploying “buy and bill” only where reimbursement is favorable, while shifting the majority of volume to “administer and observe” to protect gross margin. This nuanced, state-by-state approach reflects a sophisticated understanding of payer dynamics and is now central to guidance and margin management.

4. Automation and Operational Excellence

Investment in self-check-in kiosks, digital forms, and AI-driven intake processes is reducing friction, accelerating collections, and enabling staff to focus on patient care without incremental headcount. These technology initiatives are already yielding measurable improvements in cash flow and patient throughput.

5. Strategic Partnerships and Service Expansion

New agreements with Elite DNA Behavioral Health and Transformations Care Network extend Neuronetics’ reach, leveraging the Greenbrook intake center to offer scalable, systemized TMS access. These partnerships validate the company’s service model and expand its addressable patient base.

Key Considerations

Q3 marked a turning point, with Neuronetics now operating as an integrated clinic and device business, prioritizing operational leverage and payer-driven revenue optimization. The interplay between clinic growth, device utilization, and billing strategy is now the core axis of performance.

Key Considerations:

• Clinic-Centric Revenue Mix: More than half of revenue now comes from Greenbrook clinics, shifting the margin profile and growth drivers.
• Utilization Outpaces Revenue in Devices: Neurostar system usage is rising, but revenue lags due to prior year inventory dynamics, with normalization expected in 2026.
• Margin Management Requires Mix Discipline: Selective Spravato billing and payer optimization are critical to stabilizing gross margin.
• Cash Flow Inflection Near: Sequential improvement in operating cash burn signals path to positive cash flow, underpinned by automation and disciplined expense management.
• Leadership Transition on Horizon: CEO retirement announcement introduces succession planning as a potential overhang, though transition is planned and staged.

Risks

Margin pressure remains acute as clinic revenue dominates, and future profitability will depend on the success of billing optimization and operational efficiency gains. Guidance reset points to continued uncertainty in payer reimbursement and Spravato mix, while leadership transition could introduce strategic drift or execution risk. Competitive dynamics in mental health and device innovation may further challenge growth rates and pricing power.

Forward Outlook

For Q4 2025, Neuronetics guided to:

• Net revenue of $40 million to $43 million

For full-year 2025, management lowered guidance:

• Total revenue of $147 million to $150 million (prior: $149 million to $155 million)
• Gross margin of 47% to 49% (prior: 48% to 50%)
• Operating expenses of $100 million to $105 million
• Year-end cash of $32 million to $36 million

Management highlighted several factors that will drive results into year-end and 2026:

• Spravato billing mix optimization to maximize margin and minimize reimbursement risk
• Continued automation and operational efficiency initiatives to further reduce cash burn
• Expansion of referral and partnership programs to sustain clinic volume growth

Takeaways

Neuronetics is now a clinic-driven business, with Greenbrook integration and payer optimization at the center of its strategy. Cash flow and margin improvement will require disciplined execution, particularly as the business navigates a lower-margin revenue mix and evolving reimbursement landscape. Leadership succession and industry competition add layers of complexity to the forward outlook.

• Greenbrook’s Outperformance Is the New Growth Engine: Clinic revenue and patient volume are the primary levers, with device sales now a secondary growth vector.
• Margin and Revenue Mix Will Remain Volatile: Payer-driven billing choices and operational efficiency gains must offset lower clinic margins for sustainable profitability.
• Watch for Execution on Automation, Partnerships, and Succession: The next quarters will test the company’s ability to deliver cash flow, scale partnerships, and manage leadership transition without losing strategic focus.

Conclusion

Neuronetics’ Q3 confirms its transformation into a clinic-first, integrated mental health platform. The company’s ability to manage margin, cash flow, and operational complexity amid this pivot will define its long-term value creation potential as it enters a new leadership era.

Industry Read-Through

Neuronetics’ results underscore a broader mental health industry shift toward integrated, clinic-based care models, where payer dynamics and operational scale are critical to profitability. The focus on referral programs and automation reflects a trend toward systematized patient acquisition and efficiency, which competitors must adopt to remain viable. Reimbursement risk and billing mix volatility are sector-wide challenges, especially for therapies like Spravato and TMS, suggesting that margin management will be a central theme for all players in the behavioral health space. Device manufacturers and clinic operators alike will need to invest in partnerships, digital tools, and payer strategy to sustain growth and defend margins.

STIM Healthcare Mental health Clinic operations Device sales Payer optimization Automation Leadership transition