Neuronetics Announces the Closing of up to $90 Million Senior Secured Credit Facility with Perceptive Advisors

Rhea-AI Summary

Neuronetics (NASDAQ: STIM) has secured a $90 million senior secured credit facility with Perceptive Advisors. The company received an initial $50 million tranche at closing, part of which will be used to repay its existing SLR Capital term loan. Two additional tranches of $15 million and $25 million are available upon meeting certain milestones by December 31, 2025, and June 30, 2026, respectively.

The 5-year loan will support Neuronetics' initiatives, including commercial expansion, clinical indication development, and driving adoption of its NeuroStar Advanced Therapy for Mental Health. This new facility aims to strengthen the company's balance sheet and provide financial flexibility for its growth strategies in the neurohealth disorder treatment market.

Positive

• Secured up to $90 million in credit facility, strengthening the company's financial position
• Immediate access to $50 million, with potential for additional $40 million based on milestones
• 5-year loan term provides long-term financial stability
• Funding allows for investment in commercial initiatives and clinical indication expansion

Negative

• New debt obligation may increase financial burden and interest expenses
• Repayment of existing SLR Capital term loan with new debt

Financial Analyst

Neuronetics' new $90 million credit facility with Perceptive Advisors marks a significant financial maneuver that could reshape the company's growth trajectory. The structure of this debt facility is particularly noteworthy:

• Initial $50 million tranche available immediately
• Second $15 million tranche tied to milestone achievements
• Third $25 million tranche available upon request

This tiered approach allows Neuronetics to access capital as needed, potentially reducing interest expenses while maintaining financial flexibility. The 5-year term provides a substantial runway for the company to execute its strategic initiatives without immediate refinancing pressure.

The refinancing of the existing SLR Capital term loan with part of the initial tranche is a prudent move, likely aimed at optimizing the company's debt structure and potentially reducing interest costs. However, investors should be cautious about the overall increase in debt load and monitor the company's ability to generate sufficient cash flow to service this new facility.

The involvement of Perceptive Advisors, a well-known healthcare-focused investment firm, lends credibility to Neuronetics' business model and growth prospects. This could have positive implications for investor sentiment and potentially ease future capital raising efforts.

While the additional capital provides a buffer for operations and growth initiatives, it's important for investors to closely watch Neuronetics' execution, particularly in expanding clinical indications and driving adoption of its NeuroStar therapy. The company's ability to meet the milestones for accessing additional tranches will be a key indicator of its progress and financial health.

Medical Research Analyst

The substantial credit facility secured by Neuronetics underscores a significant vote of confidence in the company's neurohealth technology, particularly its NeuroStar Advanced Therapy for Mental Health. This influx of capital could accelerate several critical areas of development:

• Expansion of clinical indications
• Enhancement of existing therapies
• Acceleration of research and development efforts

The potential to broaden clinical indications is particularly exciting from a medical perspective. Mental health disorders are complex and often interconnected and expanding the application of NeuroStar therapy could open up new treatment avenues for patients who have options.

Moreover, the ability to invest in commercial initiatives could lead to wider adoption of transcranial magnetic stimulation (TMS) therapy, which has shown promise in treating depression and other mental health conditions. Increased adoption could generate more real-world data, further refining treatment protocols and potentially improving patient outcomes.

However, it's important to note that expanding clinical indications requires rigorous clinical trials and regulatory approvals. Investors should monitor the company's progress in initiating and completing these trials, as well as any interactions with regulatory bodies like the FDA.

The medical community will be watching closely to see how Neuronetics leverages this financial flexibility to advance the field of neurohealth. If successful, this could represent a significant step forward in non-pharmacological approaches to mental health treatment.

MALVERN, Pa., July 30, 2024 (GLOBE NEWSWIRE) -- Neuronetics, Inc. (NASDAQ: STIM), a medical technology company focused on designing, developing, and marketing products that improve the quality of life for patients who suffer from neurohealth disorders, today announced that it entered into a debt facility of up to $90 million with Perceptive Advisors LLC (Perceptive). Under the term loan, Neuronetics received the first tranche of $50 million at closing. Part of the initial $50 million tranche will be used to pay off, in full, the Company’s existing SLR Capital term loan. Upon achieving certain milestones, a second tranche of $15 million will be available until December 31, 2025. Under the third tranche, the Company can request to borrow $25.0 million on or before June 30, 2026.

"We are pleased to announce this new credit facility with Perceptive Advisors, which strengthens our balance sheet and provides additional financial flexibility to support our initiatives and programs," said Keith Sullivan, President and Chief Executive Officer of Neuronetics. "This funding will allow us to continue to invest in our commercial initiatives, expand our clinical indications, and drive adoption of our NeuroStar Advanced Therapy for Mental Health."

The loan has a 5-year term, maturing on the fifth anniversary of the closing date. Interest will accrue on the outstanding principal balance of the facility at a rate per annum equal to the greater of (a) forward-looking one-month term SOFR as posted by the CME group and (b) four and one-half percent 4.50% per annum, plus an applicable margin of 7.00%.

As part of the agreement, Neuronetics has issued warrants to purchase 1,125,000 shares of its common stock to Perceptive, with the potential for additional warrants if the second tranche is borrowed. The per share exercise price for the warrants is equal to the 10-day volume weighted average price (VWAP) ending on the business day immediately preceding the closing date.

"Neuronetics has established itself as a leader in the field of non-invasive neuromodulation for mental health disorders," said Sam Chawla at Perceptive Advisors. "We are excited to partner with the Company and support their mission to improve the lives of patients suffering from depression and other mental health conditions. This financing reflects our confidence in the company's growth potential and the increasing adoption of NeuroStar therapy."

Credo 180 acted as the sole financial advisor to Neuronetics on this transaction.

About Perceptive Advisors

Founded in 1999 and based in New York, NY, Perceptive Advisors is an investment management firm focused on supporting the progress of the life sciences industry by identifying opportunities and directing financial resources to the most promising technologies in healthcare. For more information about Perceptive, visit www.perceptivelife.com.

About Neuronetics

Neuronetics, Inc. believes that mental health is as important as physical health. As a global leader in neuroscience, Neuronetics is redefining patient and physician expectations with its NeuroStar Advanced Therapy for Mental Health. NeuroStar is a non-drug, noninvasive treatment that can improve the quality of life for people suffering from neurohealth conditions when traditional medication hasn’t helped. NeuroStar is indicated for the treatment of depressive episodes and for decreasing anxiety symptoms for those who may exhibit comorbid anxiety symptoms in adult patients suffering from MDD and who failed to achieve satisfactory improvement from previous antidepressant medication treatment in the current episode. It is also FDA-cleared as an adjunct for adults with obsessive-compulsive disorder and for adolescent patients aged 15-21 with MDD. NeuroStar Advanced Therapy is the leading TMS treatment for MDD in adults with over 6.4 million treatments delivered. Neuronetics is committed to transforming lives by offering an exceptional treatment that produces extraordinary results. For safety and prescribing information, NeuroStar.com.

Investor Contact:

Mike Vallie or Mark Klausner
ICR Westwicke
443-213-0499
ir@neuronetics.com

Media Contact:

EvolveMKD
646-517-4220
NeuroStar@evolvemkd.com

FAQ

What is the total amount of the credit facility Neuronetics (STIM) secured with Perceptive Advisors?

Neuronetics (STIM) secured a senior secured credit facility of up to $90 million with Perceptive Advisors.

How much did Neuronetics (STIM) receive initially from the credit facility?

Neuronetics (STIM) received an initial tranche of $50 million at closing from the credit facility.

What are the conditions for Neuronetics (STIM) to access the additional tranches of the credit facility?

Neuronetics (STIM) can access a second tranche of $15 million by achieving certain milestones by December 31, 2025, and can request a third tranche of $25 million on or before June 30, 2026.

How does Neuronetics (STIM) plan to use the funds from the credit facility?

Neuronetics (STIM) plans to use the funds to invest in commercial initiatives, expand clinical indications, and drive adoption of its NeuroStar Advanced Therapy for Mental Health.