Neuronetics (STIM) risk factors, FY2025 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 future30% rewritten
2. 02We rely on the sale of our NeuroStar Advanced Therapy System and treatment sessions to generate revenues23% rewritten
3. 03may be adversely affected by a global pandemic or epidemic diseasesNew
4. 04If insurance coverage is unavailable or reimbursement from third-party payors for treatments using our products or services significantly declines, providers may be reluctant to use our products or services and our revenues, earnings and cash flows at our Treatment Centers would be substantially reduced67% rewritten
5. 05The marketability of our products and services 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
6. 06If we are unable to adequately train providers on the safe and appropriate use of our products and services, we may be unable to achieve our expected growth32% rewritten
7. 07Customers and their patients may be slow to adopt and use TMS therapies
8. 08Our success depends upon patient satisfaction with the effectiveness of our NeuroStar Advanced Therapy System
9. 09We 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 affected26% rewritten
10. 10We may face difficulties encountered by companies in new and evolving markets
11. 11If we are unable to adequately address our customers’ needs, it could negatively impact sales and market acceptance of our products and services and we may never generate sufficient revenues to achieve or sustain profitability
12. 12The 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 business39% rewritten
13. 13Our 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 effectively25% rewritten
14. 14We 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
15. 15We may be unable to achieve or manage our anticipated growth effectively, which could make it difficult to execute our business strategy55% rewritten
16. 16We 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
17. 17We currently market and sell our products outside of the United States, including through our exclusive distribution agreement in JapanNew
18. 18Our employees, consultants, distributors and other commercial partners may engage in misconduct or other improper activities, including non-compliance with regulatory standards and requirements
19. 19We 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
20. 20If 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
21. 21Our insurance policies protect us only from some business risks, which will leave us exposed to significant uninsured liabilities
22. 22We bear the risk of warranty claims on our products
23. 23We could be negatively impacted by violations of applicable anti-corruption laws or violations of our internal policies designed to ensure ethical business practices
24. 24If we experience significant disruptions in our information technology systems, our business may be adversely affected20% rewritten
25. 25Performance 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
26. 26Security and privacy breaches may expose us to liability and harm our reputation and business87% rewritten
27. 27Employment litigation and unfavorable publicity could negatively affect our future business
28. 28Our effective tax rate may fluctuate, and we may incur obligations in tax jurisdictions in excess of accrued amounts
29. 29Our operations are vulnerable to interruption or loss due to natural or other disasters, power loss, strikes and other events beyond our control
30. 30Foreign 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
31. 31Our reported financial results may be adversely affected by changes in accounting principles generally accepted in the United States
32. 32Our sales volumes and our results of operations may fluctuate over the course of the year
33. 33The integration with Greenbrook may be more difficult, costly or time-consuming than expected, and our business may fail to realize the anticipated benefits35% rewritten
34. 34The 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
35. 35Significant demands have been placed on the Company as a result of the integration of Greenbrook50% rewritten
36. 36The Company’s failure to meet the continued listing requirements of Nasdaq could result in a delisting of our common stock
37. 37Failure to timely or accurately bill for services could have a negative impact on our revenue and cash flow. We have had difficulty processing claims
38. 38We may be subject to fines, penalties, and other sanctions if we fail to comply with laws governing our business77% rewritten
39. 39Our 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
40. 40Consequently, 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
41. 41We may incur increased costs if third-party payors impose additional requirements related to the provision of services at our Treatment Centers
42. 42If our Treatment Centers lose clinicians, our financial results could be adversely affected
43. 43We 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
44. 44Technological 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 Treatment Centers
45. 45Tariffs implemented by the current 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

Risks Related to Government Regulation

1. 46Healthcare policy changes, including recently enacted legislation reforming the U.S. healthcare system, could harm our cash flows, financial condition and results of operations91% rewritten
2. 47If 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
3. 48Our products and services 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 business88% rewritten
4. 49Modifications 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
5. 50Our products and services 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
6. 51If 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 products96% rewritten
7. 52treatment guidelines change so that different treatments become desirable, the clinical utility of one or more of our products could be diminished and our business could sufferNew
8. 53If 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 Mark23% rewritten
9. 54countries or by the FDA. However, a failure or delay in obtaining regulatory clearance or approval in one country may have a negative effect on the regulatory process in othersNew
10. 55Regulatory and compliance requirements associated with our billing and collections system could have a material adverse effect on our revenues, cash flows and operating results
11. 56We may become subject to professional malpractice liability, which could be costly and negatively impact our business
12. 57The 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
13. 58The regulatory framework in which we operate is constantly evolving

Risks Related to Intellectual Property

1. 59If 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. 60Our inability to effectively protect our proprietary technologies could harm our competitive position
3. 61The lives of our patents may not be sufficient to effectively protect our products and business
4. 62Litigation 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 products69% rewritten
5. 63If we are unable to protect the confidentiality of our trade secrets, our business and competitive position could be harmed
6. 64We may be unable to enforce our intellectual property rights throughout the world
7. 65Third parties may assert ownership or commercial rights to inventions we develop
8. 66Third parties may assert that our employees or consultants have wrongfully used or disclosed confidential information or misappropriated trade secrets
9. 67Changes in U.S. patent law could diminish the value of patents in general, thereby impairing our ability to protect our products
10. 68Obtaining 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
11. 69If 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
12. 70Any 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
13. 71If 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 Our Capital Structure

1. 72We may need to raise additional capital to fund our existing commercial operations, develop and commercialize new products and expand our operations
2. 73The 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. 74Our ability to use net operating losses to offset future taxable income may be subject to limitations42% rewritten

Risks Related to Ownership of Our Common Stock

1. 75The price of our common stock has been and may continue to be volatile
2. 76On February 10, 2025, the Company issued and sold 9,200,000 shares of 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, 202522% rewritten
3. 77There is a concentration of ownership of our common stock by Madryn, and Madryn may exert substantial influence over the Company’s business, and the interest of Madryn may conflict with those interests of other stockholders51% rewritten
4. 78Provisions 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. 79Provisions 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. 80We 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. 81If 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. 82As a U.S.-public company, we may be subject to securities litigation, which is expensive and could divert our management’s attention40% rewritten
9. 83We 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. 84Our 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 SRC