Neuronetics Q3 2026 Earnings Call Transcript

Neuronetics (NASDAQ:STIM) reported third-quarter financial results on Wednesday. The transcript from the company’s third-quarter earnings call has been provided below.

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Summary

Neuronetics reported Q3 2026 total revenue of $42 million, a 12.5% increase from the previous year, driven by a 20.1% rise in Greenbrook revenue.

The company achieved a gross margin of 52.2%, up from 45.9% in the prior year, due to its new go-to-market strategy and improved revenue cycle management at Greenbrook clinics.

Neuronetics has submitted a 510(k) to the FDA for an accelerated TMS protocol and signed a distribution agreement with Wave Neuroscience to integrate its MeRT system with NeuroStar.

The company announced the integration of its TrakStar platform with the AdvancedMD EHR system, increasing operational efficiency and paving the way for future EHR integrations.

Neuronetics plans to shift resources from direct-to-consumer advertising to expand its Greenbrook field sales team, aiming to improve patient acquisition and profitability.

For full-year 2026, Neuronetics maintains its revenue guidance of $160 million to $164 million and expects to achieve gross margins between 49% and 50%.

Management highlighted the publication of a study showing treatment gaps in TMS do not affect outcomes, which could encourage more patients to start treatment despite scheduling concerns.

Full Transcript

OPERATOR (Moderator)

Good day and thank you for standing by. Welcome to the Neuronetics third quarter 2026 financial and operating results conference call. At this time all participants are in a listen-only mode. After the presentation there will be a question-and-answer session. To ask a question during the session you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again.

Please be advised that today’s call is being recorded. I would now like to hand the conference over to your first speaker today, Aman Patel with ICR Healthcare. Please go ahead.

Aman Patel (Investor Relations)

Good morning and thank you for joining us for the Neuronetics third quarter 2026 conference call. Joining me on today’s call are Neuronetics President and Chief Executive Officer Dan Reuvers and Chief Financial Officer Nir Naor. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements related to our business strategy, financial and revenue guidance, and other operational issues and metrics. Actual results can differ materially from the Company’s expectations.

For a discussion of risks and uncertainties associated with Neuronetics’ business, I encourage you to review the Company’s filings with the Securities and Exchange Commission, including the Company’s Annual Report on Form 10-K which was filed in March, and the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2026. The Company disclaims any obligation to update any forward-looking statement made during the course of this call, except as required by law.

During the call we will also discuss certain information on a non-GAAP basis, including EBITDA. Management believes that non-GAAP financial information, taken in conjunction with U.S. GAAP financial measures, provides useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results. Reconciliations between U.S. GAAP and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website.

With that, it’s my pleasure to turn the call over to Neuronetics President and Chief Executive Officer Dan Reuvers.

Dan Reuvers (Chief Executive Officer)

Thanks Aman and good morning everyone. Thank you for joining us for our third quarter 2026 earnings call. I’ll first walk you through the quarter, reviewing our results on each side of the business, and then I’ll turn it over to Nir to discuss our financial results in greater detail. I’ll then come back with how we’re thinking about the rest of the year and the setup for 2027 before opening it up for questions. Turning to the quarter, we continued to execute against the profitability and operating cash goals we outlined earlier in the year, and we made meaningful progress on both fronts. Total revenue for the quarter was approximately $42 million, up over 12% versus the third quarter of last year. The results reflect a record quarter for NeuroStar system sales driven by a welcome reception from customers toward our expanded go-to-market strategy as well as continued strength within our Greenbrook clinics as we realize ongoing impacts of our revenue cycle management efforts.

Diving deeper into our NeuroStar performance, let me start there. Total worldwide revenue was $15.8 million, up approximately 2% year over year. This was primarily driven by our capital equipment business, where we had a record quarter of system sales. We saw strong double-digit year-over-year performance here, and I believe it’s being positively impacted by the go-to-market changes we introduced earlier this year. Notably, we believe many of these placements are with customers we would not have been able to compete for with our prior approach, including a recently awarded sole-source agreement with a large national player.

The strength of our capital business was partly offset by session revenue being down versus last year, which was expected. As we implement our new sales strategy, we continue to expect the overall revenue mix to be weighed more towards NeuroStar capital versus sessions going forward as we execute on our plan. As such, we expect session revenue to continue to trend slightly downwards. We believe that our go-to-market changes position us well to compete in a broader segment of the market and expect to yield higher overall net growth in 2027 and beyond.

It’s also worth reiterating that for customers preferring our treatment session model built around a high-touch partnership with Neuronetics, nothing changes. We believe this sessions model continues to set us apart, as we believe we’re uniquely equipped to help emerging TMS practices establish a profitable therapy adjunct. NeuroStar customers perform almost twice as many treatments per chair as the competitive landscape, a velocity differentiator we believe directly reflects the support and affirmation of value we bring.

During the quarter we also had several noteworthy advances that reinforced our commitment to growing the NeuroStar platform. On the regulatory front, in August we submitted a 510(k) to the FDA for an accelerated TMS protocol and it is currently under review. We expect that condensed protocols can be an advantage for some patients, and this could be another way to expand access to TMS for even more patients. We also had an important publication in the TMS Journal titled “The Impact of Treatment Gaps on the Effectiveness of Transcranial Magnetic Stimulation in Major Depressive Disorder.”

The paper reflected analysis of over 6,400 patients whose depression was treated with NeuroStar under real-world conditions. It showed that approximately 15% of patients completed their treatment course with no gaps, leaving 85% of patients who missed one or more scheduled treatment days. Since missed days can be common, patients and physicians often wonder if a missed treatment day may negatively affect outcomes. The analysis found that there was no statistically significant difference in outcome between patients that experienced a gap in their treatment versus those that didn’t. It further concluded that missing treatment for up to 13 days did not reduce effectiveness. This is an important consideration, as patients may otherwise put off initiating treatment based on their availability to commit to an uninterrupted sequence of days.

Lastly, we signed a distribution agreement with Wave Neuroscience to integrate its MeRT system with NeuroStar. MeRT uses EEG data to personalize TMS protocols and received FDA clearance in June for treating adults with post-traumatic stress disorder, achieving 68% remission in its pivotal trial. Prior to launch, we plan to seek FDA clearance to add NeuroStar as a TMS system compatible with Wave Neuroscience’s PTSD indication. Approximately 9 million U.S. adults experience PTSD annually, with an estimated 4-plus million of those seeking treatment.

Thus, this partnership represents a significant opportunity to expand NeuroStar’s clinical application. On the operational front, we announced in September what we believe is the first-ever integration between a TMS system and an electronic health record, or EHR, connecting our TrakStar practice management platform with AdvancedMD, a cloud-based EHR, practice management, and revenue cycle platform serving more than 65,000 practitioners across 13,000 independent practices, including our own Greenbrook clinics. Delivering TMS means coordinating care across a multi-session course of treatment along with documentation and clinical notes.

While claims and authorizations are often managed in separate systems, this creates duplicate work for practices. With this integration, treatment data flows into the same system where a practice manages its schedule, clinical records and notes, and revenue cycle. It will be available in the fourth quarter to NeuroStar providers already using AdvancedMD. We use AdvancedMD as our EHR at our Greenbrook clinics, so we expect to benefit from this efficiency just like our NeuroStar customers.

This inaugural integration further paves the way for us to integrate TrakStar into additional EHRs, extending additional practice efficiencies to NeuroStar customers and prospects alike. Moving to Greenbrook, revenue was approximately $26 million, up over 20% year over year. Our work on revenue cycle management continued to produce results, with better patient qualification, cleaner claims, and more efficient collections, all helping us convert more of each billed dollar to cash. This quarter we also began deploying Skypoint, an AI-enabled coding optimization tool which builds on automation technology established earlier this year.

This advances the operational discipline we’ve been building throughout the organization by ensuring insurance claims are submitted quickly and accurately. We are very encouraged by the early results and believe there’s still runway ahead for us. We continue to believe that filling the capacity in our existing clinics remains an important profitability lever. Our focus will continue to be on finding the most efficient ways to serve even more qualified patients that can benefit from our therapies. Two key measures that we monitor closely are relative return on our direct-to-consumer advertising and field sales team effectiveness. We determined, based on what we’re seeing to date, that field sales personnel deliver the better return and give us more control over patient acquisition cost and yield.

As a result, we’re shifting a portion of our direct-to-consumer ad spend towards expanding our Greenbrook field sales team. We expect this to sponsor a bigger sales team without increasing overall sales and marketing expense. We plan to begin this process in the fourth quarter. We expect the new reps to be fully ramped up and contribute meaningfully by mid ’27. As we execute this strategy, we will update you on our progress. Overall this quarter, we continued doing what matters most: executing against our new go-to-market strategy for NeuroStar while competing for customers who were previously out of reach, running our Greenbrook clinics more efficiently, and delivering on our goals towards profitability and cash generation. With that, I’ll turn it over to Nir to take you through the financials, and I’ll come back with our outlook for the rest of the year.

Nir Naor (Chief Financial Officer and Corporate Secretary)

Thank you, Dan, and good morning, everyone. Unless otherwise noted, all comparisons are third quarter 2026 versus third quarter 2025. Total revenue in the third quarter was $42 million, an increase of 12.5% compared to $37.3 million in the third quarter of 2025. The increase was primarily driven by higher Greenbrook revenue. Greenbrook revenue was $26.2 million, a 20.1% increase. These results reflect continued growth of our Greenbrook business and operational gains across our clinics.

Northstar revenue was $15.8 million, an increase of 1.8%. As Dan explained, strong capital sales were partially offset by a decline in session revenue as we implement our new go-to-market strategy. Gross margin was 52.2% in the third quarter of 2026 compared to 45.9% in the prior-year quarter. The increase was driven by the positive impact of our new go-to-market strategy and improved revenue cycle management within the Greenbrook clinics. Operating expenses during the quarter were $21.3 million, a decrease of $3.1 million, or 12.6%, compared to $24.4 million in the third quarter of 2025. This was primarily due to lower sales and marketing expenses, partially offset by higher general and administrative expenses.

Income from operations was $0.5 million compared to a loss of $7.3 million in the prior-year quarter, an improvement of $7.9 million. Net loss attributable to Neuronetics stockholders was $1.7 million, or $0.02 per share, as compared to a net loss of $9 million, or $0.13 per share, in the prior year. Third quarter adjusted EBITDA was $1.9 million as compared to a loss of $4.7 million in the prior year, an improvement of $6.6 million. Moving to the balance sheet and cash flow, as of September 30, total cash was $27.9 million, consisting of $22.9 million of cash and cash equivalents and $5.8 million of restricted cash, as compared to total cash of $34.1 million as of December 31, 2025. Cash provided by operating and investing in the third quarter was $0.8 million, compared to negative cash flow from operating and investing of $0.9 million in the prior year.

Now turning to guidance for the full year 2026, we expect total revenue between $160 million and $164 million, unchanged from previous guidance. Gross margin between 49% and 50%, compared to prior guidance of 48% to 50%. Operating expenses excluding stock-based compensation of between $89 million and $92 million; stock-based compensation of $3.5 million, compared to prior guidance of $91 million to $96 million and stock-based compensation of $4 million.

Operating expenses between $92.5 million and $95.5 million, compared to prior guidance of $95 million to $100 million. Cash flow from operating and investing in the range of negative $10 million to negative $12 million, compared to prior guidance of negative $10.5 million to negative $14.5 million. We continue to target limited to no net cash utilization from operating and investing in the second half of the year. In summary, this was a quarter of solid financial progress. We grew revenue, expanded gross margin, reduced operating expenses, and delivered positive adjusted EBITDA and positive cash flow from operating and investing. Our goal is to turn this progress into sustained profitability and cash flow generation, and I look forward to building on this momentum into Q4 and next year. With that, I’ll turn it back to Dan for his closing remarks.

Dan Reuvers (Chief Executive Officer)

Thank you, Nir. I’d like to take this time to recognize and thank our Neuronetics colleagues for their efforts in the clinics, field, and across the organization. Their effort is what delivers value to our patients and the strong performance we’re seeing. As Nir discussed, we’re pleased to have delivered another strong quarter driven by both our go-to-market strategy in NeuroStar as well as our continued momentum at Greenbrook. At the same time, we’re making meaningful progress toward profitability and cash generation, and we believe we’re well positioned for sustained overall growth in 2027.

In addition to the progress we’ve been making with NeuroStar, Greenbrook, and operationally, we also continued our collaboration with Compass Pathways to prepare for the anticipated commercial launch of their psychedelic therapeutic for treatment-resistant depression, or TRD. Compass recently reported 52-week data from its Phase 3 COMP005 trial showing that an additional dose of COMP360 extended the benefit in TRD out to one year, which we believe further supports COMP360’s differentiated profile and potential for long-lasting benefit.

Compass has reported that they expect to complete their FDA submission in approximately two weeks, with a launch expected in the first half of 2027. We continue to believe therapies like this will need exactly the kind of delivery platform that we already operate for Spravato, including a dignified in-office drug administration experience along with monitoring, REMS programs, trained clinical staff, benefits investigation, and prior authorization infrastructure.

Greenbrook’s experience, scale, and available capacity position us to be an early leader as we look forward to providing the most comprehensive menu of interventional psychiatry options for patients. Looking to the fourth quarter, we continue to expect NeuroStar revenue mix to be weighed slightly towards NeuroStar capital. As our expanded go-to-market and targeting efforts take root for Greenbrook, we’re deliberately rebalancing our sales and marketing spending with the goal of positioning us for sustained growth in 2027. And with that, operator, we’re ready to open the line for questions.

OPERATOR (Moderator)

Thank you both. At this time, we will conduct the question-and-answer session. Our first question comes from the line of John Young with Canaccord. John, your line is open.

John Young (Analyst)

Hey guys, congratulations on the quarter and thank you for taking the question this morning. You know, I want to focus on Greenbrook and the performance you are seeing there. How much of the growth in Q3 was pricing or revenue cycle gains versus just overall patient volume increases? And can you talk about the unused capacity that continues to exist today?

Dan Reuvers (Chief Executive Officer)

Sure. Thanks, John, for the questions. First of all, revenue cycle management I would say is an area that we’ve continued to demonstrate really solid progress. So the growth was of course a combination of revenue cycle management, and we saw growth in Spravato as well. I think we’ve described the Spravato business as certainly more durable because there’s a maintenance phase that patients continue within once they come into network. So it’s really a combination between those two.

I’m really pleased with the revenue cycle progress we continue to make as well. I think it really demonstrates that we’re positioning ourselves foundationally with just a better-run business. From an occupancy standpoint, that continues to be an area of focus, and it’s one of the reasons that we’re making some of the changes in our go-to-market approach commercially, trying to put more of our resources into expanding the sales team and revisiting the utility or efficiency of our direct-to-consumer ad approach. You know, we’ve got a pretty big range, John, in occupancy. I’d say it’s as low as 25% probably at the bottom and as high as 75% in our highest performers.

But clearly that’s a big range and we want to continue to move that bottom quartile up. So, you know, I think some of the changes that we’re making, as I said, we expect will certainly have impact as we go into 2027.

John Young (Analyst)

Thanks, Dan. And then just a double-click on Spravato, too. I think last time we checked you were at 84 sites that you’re offering it. Has that changed? And then, looking at J&J and their reported sales, I believe Spravato grew about 36% year over year. I’m not sure if you’re willing to quantify the contribution in a dollar amount that it contributed in Q3, but is that a good way to think about your growth as well, that 36% year-over-year growth?

Thanks again for taking the questions.

Dan Reuvers (Chief Executive Officer)

Yeah, I don’t know if we’ve given that number in Spravato growth, but certainly, as I mentioned, we’ve seen double-digit growth in Spravato, and again I think it’s a ladder approach as patients come into network and then continue on maintenance phase. So the growth that we do see in Spravato we expect will continue to be quite durable.

OPERATOR (Moderator)

Thanks, John. Our next question is from Madison Elsadi with B. Riley. Madison, your line is open.

Madison Elsadi (Analyst)

Hi guys, thanks for taking the question and congrats on the progress. A couple from us, maybe on the Compass pilot. Have you said how many clinics would be involved in that pilot program, and curious how you pick them and what needs to be true before you would roll this out across the network? And Greenbrook ran a Spravato pilot back in 2021 — obviously that was in the wake of COVID — but just wondering if that’s a good proxy, and then a follow-up if I may afterwards.

Dan Reuvers (Chief Executive Officer)

Yeah, thanks for the question, Madison. We haven’t shared how many sites we’re going to introduce initially, but I think it’s fair to assume that we’ll probably initially start with a bit of a hub-and-spoke model. I don’t know that we feel obligated to provide it in every one of our 84 Spravato clinics that exist today, as much as we want to be in each of the MSAs that we’re in. So I think that’s probably the key for us. We expect we will learn a lot with the introduction, and what we’re focused on right now are the work streams that are within our control.

So things like making sure that we’ve got training programs and curriculums clearly established for both our caregivers and our sales teams. And I think the next one is taking an extension of that — once our sales teams are trained, making sure that we’ve got a very thoughtful and targeted approach to HCP outreach from our field teams. And then our whole benefit investigation piece and payer relations team is also attempting to ramp up their readiness.

A lot of this in the early days is still going to be hand-to-hand combat. I mean single-case agreements initially will likely rule the day until we see some of the coverage components become a bit more mature. But ultimately, we’ve got a very dedicated work stream to each of those, and we’re downstream with our mitts open and ready to catch.

Madison Elsadi (Analyst)

Awesome, thanks for that color. And if I may, a second question related to NeuroStar. Sorry if I missed this, but how much of the record system sales was capital and lease conversions of your existing session customers versus new accounts? And then did treatment volume on the installed base grow in Q3? Thanks.

Dan Reuvers (Chief Executive Officer)

Sure. Yeah. First, the question about mix. We do continue to see our mix moving more towards capital and lease. We’re not recognizing unit sales if it’s an existing customer that just paid off something. So these are new boxes or new chairs and new systems that are going out. When we talk about a record number of units, I think the other thing that we saw was over half of all of our units sold in Q3 were capital or lease units. That was good for ASP.

It’s also good for gross margin. And I think it’s also a reflection that our customers appreciate the choices that we’ve given them. We’re allowing customers to determine where the value they think is. And while the sessions did grow among like customers, so customers that were customers a year ago, modest, but we did see growth on the session side from those customers. What we’re also seeing is that when we start to focus more on larger accounts, multi‑site accounts, national accounts, enterprise, some of the things that have kind of become our hallmark — which is we can help you with marketing, we can help you build your practice with co‑op, we can help you with training, reimbursement assistance, benefits investigation, bigger systems — they don’t need some of those things like the private practice psychiatry offices do.

So that’s why, again, we made the choice to expand our aperture on how we go to market. And we’ve been actually quite pleased on the kind of reception we’re getting from each independent type of customer. We think we’ve got a value proposition for them.

Madison Elsadi (Analyst)

Got it. Makes sense. Congrats again on the quarter.

Dan Reuvers (Chief Executive Officer)

Thank you.

OPERATOR (Moderator)

Thank you, Madison. Our next question comes from the line of Sam Iver with U.S. Bancorp BTIG. Sam, your line is open.

Sam Iver (Analyst)

Thank you. Good morning. Thanks for taking the questions and congrats on a nice quarter here. Maybe I can start on Greenbrook and coming back to the revenue cycle management improvements. I guess I’m curious, the durability of some of the progress that you made there and ability to, I guess, keep advancing some of that benefit into 2023. And then I’ll have a quick follow‑up question.

Dan Reuvers (Chief Executive Officer)

Sure. Thanks, Sam. I think I’ve talked a lot about the value drivers within Greenbrook and I think foundationally the first one is continued demonstration of improvement in our revenue cycle management approach. I think that the short answer is I think most of these changes are quite durable. You know, we talked a little bit about deploying an AI‑enabled new partner, Skypoint. There’s a lot of components of processing a claim that are largely labor‑intensive.

We have to pair clinic notes, depending on who the payer is, what the requirement is, making sure that we’re matching up everything for each individual payer. Starting to use some software tools, including some AI optimization, is bearing fruit. I can tell you that when we deployed Skypoint, just that change in workflow has led to a low double‑digit improvement in the first month of collections. So we don’t obviously collect all of our collections in the first month.

There’s some that comes in month two, month three, month four. But importantly, the faster we can collect, the better it is for the business, of course, and we saw meaningful progress from some of those changes. It also reduced some of the headcount in the back office, which we were able to redirect into some other roles. So I do think that there is both durable impact from our efforts and I think there’s continued improvement available to us. But, you know, I would also add, you know, we’re going to have to keep climbing a little higher on the tree to find the fruit.

As we continue to get better, the improvements will become a bit more modest. But I do think that there’s more runway ahead for us.

Nir Naor (Chief Financial Officer and Corporate Secretary)

To build on that, Sam. So, yeah, as Dan mentioned, the very nice improvement that we have done, some further improvements that we can do just built off of them and basically the only thing, if you look at our, say, gross margin compared to the prior year, those improvements are for the most part durable. The ones that are not are simply some prior‑period RCM catch‑ups. But otherwise, yeah, they are durable and we’re building on them.

Sam Iver (Analyst)

Okay, that’s great. Makes sense. And then a quick follow‑up on the EHR integrations. I’m curious how much of a selling point and maybe a competitive advantage that is seamlessly integrating the EMR platform. And then I think you hinted at maybe additional integrations coming with maybe some of the bigger platforms. Curious if you’re able to put any sort of timeline on when that might be. Thanks for taking the questions.

Dan Reuvers (Chief Executive Officer)

Sure. Yeah, I think that the AMD TrakStar integration was an important first step for us, and there’s a fairly fragmented EHR network of providers out there. AMD is the larger of a pretty long tail of EHRs, so that’s why we selected them. We also selected them in part because that’s who we use at Greenbrook. So not only could we benefit from the efficiencies of integrating the EHR with TrakStar, but we can also obviously bring it to our NeuroStar customers.

Our goal is to make sure that we are focused on existing AMD customers that aren’t yet NeuroStar customers because we think that we bring another very unique value proposition that’s unavailable to our competitors. There’s a lot of work that goes on in managing the documentation within healthcare, as you know. So charting all the clinic notes, et cetera, often have to be transcribed, entered into two places. This allows our clinician customers to be able to do that just once. It also enriches our own TrakStar data. We’ve talked a lot about how rich and unique the database that we continue to collect within TrakStar is. This will allow us to start to collect even more information on each of those patient experiences, including was the patient pregnant, what medications were they on.

All of which I think can continue to be a powerful pool of data that will be available to us. I think as far as next EHR partners, we’re going to monitor how we do with the existing AMD user base. Assuming that we can demonstrate the improvements and our customers find value in that, certainly we will start to sequence the second and third and subsequent EHRs. We’ve got a pretty good prioritized list, but I want to see that we can make sure that we demonstrate the value through the AMD partnership as a bit of a predicate.

OPERATOR (Moderator)

Thank you, Sam. Our final question comes from the line of Daniel Stoddard with Citizens JMP. Daniel, your line is open.

Daniel Stoddard (Analyst)

Yeah, great. Thanks for taking the questions. I just wanted to follow up on some of the questions on the segment level in terms of margin, specifically on clinics. So, you know, strong improvement, gross margin, even more so in the operating margin. And you gave some commentary there already. But was there anything else beyond your progress on efficiency and workflow there that led to a benefit, maybe, you know, broader change in the average occupancy or some product mix benefits within clinics?

And, you know, it sounds like you still think there’s room to improve. But with that incremental sales rep investment, do you think that’s going to be absorbed pretty well into margins? Just how should we think about that? Thank you.

Dan Reuvers (Chief Executive Officer)

Sure. I think there’s probably two components to the margin. And let me just revisit the rep cost issue. On Greenbrook, most of the margin improvement was better revenue cycle management, more so than mix. I think on the NeuroStar side, it’s a mix function. You know, we continued to see, as I said, more than half of our units went out as capital or lease purchases. And when that happens, they go out at a point premium. So I think the combination between those two were probably the most significant contributors.

On the gross margin side, just back to the rep cost, our goal is to add eight reps to our already base of 20 that would take us to 28 by sometime in Q1. We don’t expect any incremental cost associated with that. And it’s not magic, it’s just we’re going to repurpose a number of the dollars that are going into direct‑to‑consumer ads and sponsor more salespeople. And we’ve done enough data dive to be quite convinced that our return on our field salespeople is much higher.

First of all, they have access to pharma data. We know who the prescribers are at a primary care or psychiatry office in the communities where we have Greenbrook clinics. We also know how many patients each of them treat with two or more MDD drugs. So it’s easier to target the right audience. And what we find is the patients that are referred to us from those practices come in much better qualified and more likely for us to be able to help them. Patients who come in through DTC, while they’re well‑intentioned and we’d love to help them, if they don’t qualify, if they haven’t failed on two meds, we can’t yet.

It can clog up our intake teams as well trying to help patients that ultimately won’t qualify and we can’t get them into a treatment room. So I think that we expect the yield to be better and we also expect that our allocation of sales and marketing dollars to provide a better return for us.

Daniel Stoddard (Analyst)

That’s great color. Thank you for that. And just a follow‑up there. You hit on NeuroStar margins. Just with some of the shifting dynamics with capital, even within capital and session mix, how should we think about a more steady‑state gross margin here as this normalizes — the levels we’ve seen this quarter and in 2Q — what we should think about going forward, or is there any puts and takes we should consider?

Dan Reuvers (Chief Executive Officer)

I don’t know that I would predict any dramatic swings in gross margin on NeuroStar. I think we’re already starting to see the mix settle in a little bit more to a predictable future‑state mix. So I think we’re starting to see reflection of what that margin might look like. So I think it continues to depend on what the adoption rates are in our offering. But at this point I don’t know that I would expect any dramatic swings either way on gross margin from what we’ve seen more recently.

Daniel Stoddard (Analyst)

Great. I’ll try to squeeze one more in here. Just, you talked about some of that data on gap in treatment and missed days. Do you feel that this could alter how providers think about treatment regimens in the future? And how could that give patients more flexibility and optionality? And what’s the pathway for that potential change becoming a reality? Thank you.

Dan Reuvers (Chief Executive Officer)

Yeah, I think that’s a great question, and I think it’s an important one. This is the reference to the article in the TMS journal that we had published, demonstrating that a patient could miss days — as many as 13 days — doesn’t mean that they don’t get their full treatment. It just means that there could be lapses in those days. And with up to 13 days of missed treatments, there was no demonstrated reduction in effectiveness. And I think the relevance there is that for patients that have been reluctant to say, yes, I will go ahead and start a regime of TMS, I think a lot of them may, like all of us in life — life’s busy and, gee, I’ve got a commitment next week or there’s a holiday trip I’m going to take, or my kids are off school that day, or I can’t get off work, whatever it might be. It’s a commitment to be in TMS therapy for seven weeks.

The ability to be able to understand that I can actually take a break and still get the benefit, I think is a — it’s a welcome mat for patients that have been reluctant to start, or for referral sources for the same reasons who have been reluctant to send them our way. And then even in the fourth quarter, you think about holidays, a lot of times patients may be reluctant to start. The message that I think this sends, resoundingly, is start now, don’t wait.

If there has to be a break, there has to be a break. But suffering from depression can be a debilitating condition. So we want to help patients start to initiate their therapy as quickly as we can.

OPERATOR (Moderator)

Thank you for your questions, Daniel. This concludes the question-and-answer session. I would now like to turn it back to Dan Reuvers for final remarks. Dan.

Dan Reuvers (Chief Executive Officer)

Thank you. And thanks for everybody for participating and joining us for the call. We’re delighted to continue to demonstrate progress, and we certainly look forward to sharing our full year results once they’re completed in 2027. Until then, thank you again.

OPERATOR (Moderator)

We appreciate you for participating in today’s conference call. This does conclude the presentation. You may now disconnect. Thank you.

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