On Monday, Neuronetics Inc. (NASDAQ:STIM), a provider of noninvasive treatments for psychiatric disorders, agreed to acquire Greenbrook TMS Inc. (OTC:GBNHF) in an all-stock transaction.

In fiscal year 2023, the combined company's pro forma revenue would have been approximately $145 million, effectively doubling the scale of the stand-alone businesses.

Additionally, the combined company expects mid-teens year-over-year revenue growth in fiscal years 2025 and 2026.

Through optimizing marketing spend and back office functions, the combined company expects to realize at least $15 million of annualized cost savings, most of which will be realized in fiscal year 2025.

Due to expected revenue growth and the realization of cost synergies, the combined company anticipates being Adjusted EBITDA positive and cash flow positive for the full fiscal year 2025, excluding one-time costs related to the transaction.

Neuronetics' executive management team will continue with the combined company.

Following the closing of the transaction, Neuronetics shareholders will own approximately 57% of the combined company, and Greenbrook shareholders will own approximately 43%.

Each Greenbrook share is expected to be exchanged for 0.01149 shares of Neuronetics stock.

The agreement provides for mutual termination fees of $1.9 million.

Neuronetics reported second-quarter revenues of $16.5 million, a decrease of 7% year over year, missing the consensus of $18.65 million.

Total U.S. revenue decreased by 7% during the quarter, and international revenue remained materially consistent over the second quarter of 2023. The decrease in U.S. revenue was primarily attributable to a decrease in U.S. treatment sessions and U.S. NeuroStar Advanced Therapy System sales.

U.S. NeuroStar Advanced Therapy system revenue reached $4 million in the quarter, representing 50 systems.

U.S. treatment session revenue decreased by 5% year over year due to lower treatment sessions. The decline was primarily due to the company's customers facing cash flow difficulties stemming from the Change Health cyberattack.

In the second quarter of 2024, U.S. treatment session revenue per active site was $10,000 compared to $11,392 in the second quarter of 2023.

The company reported EPS loss of $0.33, missing the consensus loss of $0.27.

Guidance: Neuronetics forecasts third-quarter revenue of $18.5 million-$19.5 million versus consensus of $20.12 million.

For 2024, the company expects sales of $78 million-$80 million compared to a consensus of $79.15 million.

Price Action: STIM stock is down 55.5% at $0.79 at last check Monday.

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