Listed TMS companies reached growth mode

Translation: Original comment published in Finnish on 3/13/2024 at 7:08 am EET

The medical technology company Nexstim designs and manufactures TMS systems (TMS = transcranial magnetic stimulation) that electronically stimulate the brain. The systems are used for pre-operative mapping of brain surgeries and treatment of major depressive disorder and chronic pain. The company has two listed competitors: American Neuronetics and American-Israeli Brainsway. All listed TMS companies generated record revenue in 2023. In addition to Nexstim, Brainsway also achieved a profit for the first time. 2023 was the best year in the history of listed companies in the industry as a whole, and the companies's guidance also indicate continued growth in 2024.

Revenues hit record levels

Nexstim’s revenue of 7.4 MEUR (+21% vs 2022) was the best in the company’s history, excluding 2022 that was supported by non-recurring license fees. Revenue focused especially on the seasonally strong H2, when several system orders were received over a short period. Brainsway’s revenue in 2023 was 31.8 MUSD (+17% vs 2022), which was the company’s record. Revenue of the largest player in the industry, Neuronetics was 71.2 MUSD in 2023 (+9% vs 2022). Neuronetics also achieved the best revenue in the company’s history.

*3.5 MEUR signing fee adjusted from Nexstim’s H1’22 figures.

In addition to Nexstim, Brainsway also reached profitability at the end of the year

Nexstim’s H2’23 EBIT was 0.2 MEUR, which marked the company’s first profitable comparable reporting period. However, the full-year EBIT (-1.2 MEUR) was still clearly loss-making due to the weaker H1. According to our information, Brainsway also reached its first positive EBIT of 0.2 MUSD in Q4’23 (2023: -5.0 MUSD). Neuronetics' EBIT for Q4'23 was -4.4 MUSD, which meant that the result was still clearly in the red (2023: -30.5 MUSD).

Listed TMS companies' guidance indicates continued growth in 2024

Concerning the outlook, Nexstim expects comparable revenue to grow and EBIT to improve in 2024. Brainsway's 2024 guidance was revenue of 37-40 MUSD which corresponds to an increase of about 20-30%. Neuronetics' guidance was revenue of 78-80 MUSD in 2024, which would mean an increase of 9-12%. The company estimates operating expenses of 80-84 MUSD, which, if realized, would mean an earnings improvement although the losses would continue. In light of recent reports, listed TMS companies have grown strongly in 2023 and all three companies indicate growth in 2024. Profitability has also improved, which is a positive signal for the whole sector. In addition to the three listed TMS companies, the remaining ten companies are unlisted. There is clearly less data available on the development of these companies' businesses. However, the development of listed companies suggests that the industry is growing and previously weak profitability is improving.