Neuronetics (STIM) risk factors, FY2024 10-K

Risks Related to Our Business and Industry

1. 01We have incurred losses in the past and may be unable to achieve or sustain profitability in the future
2. 02We rely on the sale of our NeuroStar Advanced Therapy System and treatment sessions to generate revenues
3. 03Our business and ability to meet obligations to our customers may be disrupted and our results of operations, financial condition, cash flows and liquidity may be adversely affected by a global pandemic or epidemic diseases
4. 04If 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
5. 05alternatives), appropriate for the specific patient, cost-effective, supported by peer-reviewed medical journals and/or included in clinical practice guidelines
6. 06The marketability of our products may suffer if the government and third-party payors fail to provide adequate coverage and reimbursement. Even if favorable coverage and reimbursement status is attained, less favorable coverage policies and reimbursement rates may be implemented in the future
7. 07If we are unable to adequately train psychiatrists and other treatment providers on the safe and appropriate use of our products, we may be unable to achieve our expected growth
8. 08Our 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
9. 09Customers and their patients may be slow to adopt and use TMS therapies
10. 10Our success depends upon patient satisfaction with the effectiveness of our NeuroStar Advanced Therapy System
11. 11We 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
12. 12We may face difficulties encountered by companies in new and evolving markets
13. 13If 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
14. 14The loss of any member 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
15. 15Our long-term growth depends on our ability to commercialize our approved products and services for current and future indications and to develop and commercialize additional products and services through our research and development efforts. If we fail to do so we may be unable to compete effectively
16. 16We 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
17. 17We may be unable to achieve or manage our anticipated growth effectively, which could make it difficult to execute our business strategy
18. 18We 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
19. 19We face risks associated with our international business
20. 20Our employees, consultants, distributors and other commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
21. 21We rely in part on third parties to conduct our clinical trials. If these third parties fail to perform their duties on time or as expected, we may not be able to obtain regulatory approval for additional indications that we may seek for the NeuroStar Advanced Therapy System
22. 22If 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
23. 23Our insurance policies protect us only from some business risks, which will leave us exposed to significant uninsured liabilities
24. 24We bear the risk of warranty claims on our products
25. 25We could be negatively impacted by violations of applicable anti-corruption laws or violations of our internal policies designed to ensure ethical business practices
26. 26If we experience significant disruptions in our information technology systems, our business may be adversely affected
27. 27Performance issues, service interruptions or price increases by our shipping carriers could adversely affect our business and harm our reputation and ability to provide our services on a timely basis
28. 28Security and privacy breaches may expose us to liability and harm our reputation and business
29. 29HITECH, 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
30. 30Employment litigation and unfavorable publicity could negatively affect our future business
31. 31Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts
32. 32Our operations are vulnerable to interruption or loss due to natural or other disasters, power loss, strikes and other events beyond our control
33. 33Foreign acquisitions involve unique risks in addition to those mentioned above, including those related to integration of operations across different cultures, languages and legal and regulatory environments, currency risks and the particular economic, political and regulatory risks associated with specific countries
34. 34Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States
35. 35Our sales volumes and our results of operations may fluctuate over the course of the year
36. 36The combination with Greenbrook may be more difficult, costly or time-consuming than expected, and the combined company may fail to realize the anticipated benefits of the Arrangement
37. 37The pro forma financial information is presented for illustrative purposes only and may not be an indication of the Company’s financial condition or results of operations following the Arrangement
38. 38The Company may not realize the anticipated benefits of the Arrangement
39. 39Significant demands have been placed on the Company as a result of the integration of Greenbrook
40. 40The Company’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock
41. 41Failure to timely or accurately bill for services could have a negative impact on our revenue and cash flow. We have had difficulty processing claims
42. 42We may be subject to fines, penalties, and other sanctions if we fail to comply with laws governing our business
43. 43successfully defend against it, could result in significant legal expenses and divert our management’s attention from the operation of our business, which could have a material adverse effect on our business, operations and prospects
44. 44Our ability to obtain SPRAVATO from our suppliers on a timely basis at competitive costs could suffer as a result of events that adversely affect our suppliers or cause disruptions in their businesses
45. 45Consequently, our ability to provide SPRAVATO treatments to our patients on acceptable terms and within acceptable timelines may be impacted, which could have a material adverse effect on our profitability and results of operations
46. 46We may incur increased costs if third-party payors impose additional requirements related to the provision of services at our Treatment Centers
47. 47If our Treatment Centers lose clinicians, our financial results could be adversely affected
48. 48We are dependent on the timely credentialing of our affiliated clinicians. The lack of availability of properly licensed medical professionals could adversely impact our financial results
49. 49Technological change in our industry or novel drug treatments for MDD could reduce the demand for our services or require us to incur significant cost to incorporate new technology into our centers
50. 50Tariffs implemented by the new presidential administration could adversely affect our business and financial results, if we are not able to sufficiently offset increased supply prices caused by any such tariffs
51. 51If Greenbrook’s actual financial results materially differ from its reported financial statements, our future profitability, cash flows and stock price could be adversely affected

Risks Related to Intellectual Property

1. 52If 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
2. 53Our inability to effectively protect our proprietary technologies could harm our competitive position
3. 54The lives of our patents may not be sufficient to effectively protect our products and business
4. 55Litigation or other proceedings or third-party claims of intellectual property infringement could require us to spend significant time and money and could prevent us from selling our products
5. 56may be incorrect, which may negatively impact our ability to develop and market our products or product candidates
6. 57If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed
7. 58We may be unable to enforce our intellectual property rights throughout the world
8. 59Third parties may assert ownership or commercial rights to inventions we develop
9. 60Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets
10. 61Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products
11. 62Obtaining and maintaining patent protection depends on compliance with various procedural, document submission, fee payment and other requirements imposed by governmental patent agencies, and our patent protection could be reduced or eliminated for non-compliance with these requirements
12. 63If 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
13. 64Any 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
14. 65If our trademarks and trade names are not adequately protected, then we may not be able to build name recognition in our markets of interest and our business may be adversely affected

Risks Related to Government Regulation

1. 66Healthcare policy changes, including recently enacted legislation reforming the U.S. healthcare system, could harm our cash flows, financial condition and results of operations
2. 67Our employees, distributors, and other third parties may engage in misconduct or other improper activities, including noncompliance with regulatory standards and requirements
3. 68from participation in Federal health care programs, each of which could have a material adverse impact on the Company’s business, results of operations and financial condition
4. 69If we are unable to achieve and maintain adequate levels of third-party payer coverage and reimbursement for any product we may offer, on reasonable pricing terms, the Company may not be paid for products that have been administered to patients
5. 70Our 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
6. 71We may not receive the necessary regulatory clearances or approvals to market our future products or other proposed indications for our products in the future, and failure to timely obtain necessary clearances or approvals for such future products or indications would adversely affect our ability to grow our business
7. 72Modifications 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 or approvals are obtained
8. 73Our 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
9. 74If treatment guidelines for the clinical conditions we are targeting change or the standard of care evolves, we may need to redesign and seek new marketing authorization from the FDA for one or more of our products
10. 75If we or our distributors do not obtain and maintain international regulatory registrations or approvals for our products, we will be unable to market and sell our products outside of the United States. We may decide not to maintain our CE Mark
11. 76Regulatory and compliance requirements associated with our billing and collections system could have a material adverse effect on our revenues, cash flows and operating results
12. 77We may become subject to professional malpractice liability, which could be costly and negatively impact our business
13. 78The effect of the uncertainty relating to potential future changes to U.S. healthcare laws may increase our and our clinical partners’ and contractors’ healthcare costs, limit the ability of patients to obtain health insurance, increase patients’ share of healthcare costs and negatively impact our financial results
14. 79The regulatory framework in which we operate is constantly evolving

Risks Related to Our Capital Structure

1. 80We may need to raise additional capital to fund our existing commercial operations, develop and commercialize new products and expand our operations
2. 81The terms of our credit facility place restrictions on our operating and financial flexibility and could subject us to potential default. If we raise additional capital through debt financing, the terms of any new debt could further restrict our ability to operate our business
3. 82Our ability to use net operating losses to offset future taxable income may be subject to limitations

Risks Related to Ownership of Our Common Stock

1. 83The price of our common stock has been and may continue to be volatile
2. 84On February 10, 2025, the Company issued and sold 9,200,000 shares of the its common stock at a price to the public of $2.25 per share which represented a significant discount to the closing price of our common stock on February 7, 2025
3. 85There is a concentration of ownership of our common stock by Madryn Asset Management, LP, or Madryn, and Madryn may exert substantial influence over the Company’s business, and the interest of Madryn may conflict with those interests of other stockholders
4. 86Provisions of our amended and restated charter documents or Delaware law could delay or prevent an acquisition of the company, even if the acquisition would be beneficial to our stockholders, which could make it more difficult for you to change management
5. 87Provisions in our charter documents and other provisions of Delaware law could limit the price that investors are willing to pay in the future for shares of our common stock
6. 88We do not anticipate paying any cash dividends on our common stock in the foreseeable future; therefore, capital appreciation, if any, of our common stock will be your sole source of gain for the foreseeable future
7. 89If securities or industry analysts do not publish research or reports about our business, or publish inaccurate or unfavorable research or reports about our business, our stock price and trading volume could decline
8. 90As a U.S.-public company, we may be subject to securities litigation, which is expensive and could divert our management’s attention
9. 91We are obligated to develop and maintain proper and effective internal controls over financial reporting and any failure to maintain the adequacy of these internal controls may adversely affect investor confidence in our company and the value of our common stock
10. 92Our independent registered public accounting firm is not required to formally attest to the effectiveness of our internal control over financial reporting due to our status as a smaller reporting company (“SRC”)