Neuronetics, Inc. (NASDAQ: STIM) (“Neuronetics”) and Greenbrook TMS
Inc. (OTCMKTS: GBNHF) (“Greenbrook”) today announced that they have
entered into a definitive arrangement agreement (the “Definitive
Agreement”) in which Neuronetics will acquire all of the
outstanding common shares of Greenbrook in an all-stock
transaction.
“This transaction brings together two of the leaders in the
mental health space in the U.S., which will allow us to provide
access to innovative care to patients suffering from mental health
conditions. Leveraging the significant scale and capabilities of
the two businesses, we can drive increased awareness of NeuroStar,
consistently deliver best practices, facilitate improved
reimbursement on a regional and national level, and provide
additional services and training opportunities to all of our
customers which can improve their business operations,” said Keith
Sullivan, President and Chief Executive Officer of Neuronetics.
“Beyond the strategic benefits, we believe this acquisition will
help create a more attractive financial profile for the combined
company, including the increased scale and growth trajectory of our
top line, the ability to realize material cost synergies, the
acceleration of our path to profitability, and a bolstered balance
sheet. In combination, we expect this transaction will create
significant long-term value for shareholders.”
“This transaction combines two organizations who share a common
mission to better care for the growing number of patients who are
suffering from mental health conditions, many of whom are poorly
served by medication alone,” said Bill Leonard, President and Chief
Executive Officer of Greenbrook. “By combining Neuronetics’
innovative NeuroStar platform as well as their education and
training expertise, with Greenbrook’s well established practice
operations and support capabilities, we believe the combined
company can improve care at Greenbrook’s existing sites and, just
as importantly, at any practice across the country that is looking
to bring the benefits of NeuroStar to their patients.”
Rationale for the Transaction
By creating a vertically-integrated organization capable of
providing access to TMS therapy with significant scale, the
acquisition offers multiple strategic benefits for Neuronetics and
its customers, including:
- Increased
Brand Awareness for NeuroStar TMS. Through marketing
efforts under a single brand, Neuronetics expects to be able to
drive significant increases in awareness of NeuroStar amongst
patients, care givers, and providers.
- More
Consistent Delivery of Best Practices. Under centralized
management, Neuronetics believes it can better operationalize
NeuroStar TMS best practices across all Greenbrook sites
nationwide.
- Provides a
Variety of Positive Benefits for All NeuroStar Customers.
The benefits include increased brand recognition for NeuroStar, the
expansion of training opportunities on how to successfully
incorporate med management and Spravato® treatment alongside
NeuroStar, as well as access to centralized services to improve
their business operations, which includes the ability to benefit
from regional and national payor contracts, the outsourcing of
reimbursement billing and processing, better revenue cycle
management, and a national call center.
Beyond the strategic benefits, the transaction is expected to
create compelling financial benefits, which include:
- Increased
Revenue Scale and Strong Growth Trajectory. In fiscal year
2023, the pro forma revenue of the combined company would have been
approximately $145 million, effectively doubling the scale of the
stand-alone businesses. Additionally, the combined company expects
mid-teens year over year revenue growth in fiscal years 2025 and
2026.
- Material
Cost Synergies. Through the optimization of marketing
spend as well as back office functions, the combined company
expects to be able to realize at least $15 million of annualized
cost savings, the majority of which will be realized in fiscal year
2025.
- Accelerated
Path to Profitability. Coming as a result of strong
expected revenue growth and the realization of cost synergies, the
combined company anticipates to be Adjusted EBITDA positive and
also cash flow positive for the full fiscal year 2025, excluding
one-time costs related to the transaction.
- Bolstered
Balance Sheet. As a result of the pre-transaction
conversion of Greenbrook’s debt into common shares, in combination
with the scale of the business post-acquisition, the consolidated
company will be able to leverage an improved balance sheet to
execute on its long-term growth strategy.
Leadership Structure
Neuronetics’ executive management team will continue with the
combined company, and the executive leadership team will be
bolstered by key Greenbrook leadership team members, including Bill
Leonard, Greenbrook’s current President and Chief Executive
Officer, Peter Willett, Greenbrook’s current Chief Financial
Officer, and Dr. Geoffrey Grammer, Greenbrook’s current Chief
Medical Officer.
Terms of the Acquisition
Under the terms of the Definitive Agreement:
- Prior to the
completion of the transaction, all of Greenbrook’s existing credit
facility and subordinated convertible debt will be converted into
Greenbrook common shares.
- Greenbrook
shareholders will receive a fraction of shares of Neuronetics
common stock for each Greenbrook common share owned at the exchange
ratio described below such that immediately following the closing
of the transaction, Neuronetics shareholders will own approximately
57% of the combined company, and Greenbrook shareholders will own
approximately 43% of the combined company, respectively, on a fully
diluted basis. As of the date of the Definitive Agreement, each
Greenbrook share is expected to be exchanged for 0.01149 shares of
Neuronetics common stock at the closing of the transaction, subject
to adjustment for any interim period funding by Madryn and other
customary adjustments prior to the closing based on the terms of
the Definitive Agreement. An aggregate of 25,304,971 Neuronetics
shares will be issued to Greenbrook shareholders in connection with
the transaction.
- The transaction will be implemented by
way of a court-approved plan of arrangement under the Business
Corporations Act (Ontario). The transaction must be approved by the
Superior Court of Ontario (Commercial List), which will consider
the fairness and reasonableness of the transaction to all
Greenbrook shareholders.
- As part of the transaction, Madryn
Asset Management LP and its affiliates (“Madryn”) has agreed to
convert all of the amount outstanding under its credit facility
with Greenbrook and all of the subordinated convertible notes of
Greenbrook (including notes held by Madryn and other third-parties,
which are forced to convert as a result of Madryn’s election) into
common shares of Greenbrook prior to the effective date of the
transaction. As a result, subject to adjustment for any interim
period funding by Madryn and other customary adjustments, Madryn
will own 95.3% of the Greenbrook common shares immediately prior to
closing and will receive 95.3% of the Neuronetics common stock
being issued to Greenbrook shareholders.
- The transaction
requires approval by (i) at least 66 2/3% of the votes cast by the
holders of Greenbrook shares present in person or represented by
proxy at a special meeting of the holders of the Greenbrook shares
to be called to consider the transaction; and (ii) a simple
majority of the votes cast by the holders of Greenbrook shares
present in person or represented by proxy, excluding Greenbrook
shares that are required to be excluded under Multilateral
Instrument 61-101 – Protection of Minority Security Holders in
Special Transactions (including shares held by Madryn).
- The issuance of the Neuronetics shares
pursuant to the transaction requires approval by holders of a
majority of shares of Neuronetics common stock who, being present
or voting by proxy and entitled to vote at the Neuronetics
stockholder meeting, cast votes affirmatively or negatively on the
Neuronetics share issuance resolution. Among other things,
Neuronetics will also propose to amend its certificate of
incorporation to increase the size of authorized share capital in
order to issue the Neuronetics shares. Approval of this proposed
amendment will be required by the holders of a majority of the
outstanding shares of Neuronetics common stock entitled to vote at
the Neuronetics stockholder meeting.
- The Definitive Agreement provides for
customary deal protection provisions, including reciprocal
non-solicitation covenants and rights to match superior
proposals.
- The Definitive Agreement provides for
mutual termination fees of $1,900,000 in the event the transaction
is terminated by either party in certain circumstances, including
to enter into a superior proposal.
- The combined company will continue to
operate as Neuronetics, Inc., and trade under the ticker STIM on
the NASDAQ stock exchange. Following closing of the transaction,
Neuronetics intends to cause the common shares of Greenbrook to be
delisted from the OTCQB and to cause Greenbrook to submit an
application to cease to be a reporting issuer under applicable
Canadian securities laws.
Each of Neuronetics’ directors and certain members of the
executive leadership team, as of the date hereof, who hold in the
aggregate 1,680,718 Neuronetics shares (representing approximately
5.55% of issued and outstanding Neuronetics shares (on a
fully-diluted basis) have entered into voting support agreements
agreeing to vote their stock in favor of the transaction.
Key shareholders of Greenbrook, including Madryn and certain
subordinated convertible noteholders, and directors and certain
members of the executive leadership team, as of the date hereof,
who hold in the aggregate 16,536,208 Greenbrook common shares
(representing approximately 48.7% of issued and outstanding
Greenbrook shares (on a non-diluted basis and assuming the
cancellation of 11,634,660 outstanding Greenbrook shares on or
about August 15, 2024, as previously disclosed by Greenbrook) have
entered into voting support agreements agreeing to vote their
Greenbrook shares in favor of the transaction.
The Madryn voting agreement is terminable under certain
specified circumstances including in the event of receipt of a
superior proposal that satisfies a hurdle that represents a 20%
premium to the value of the consideration payable under this
transaction and, concurrently therewith, the Definitive Agreement
is terminated for a superior proposal upon payment of a termination
fee. The voting agreement entered into with other key shareholders
of Greenbrook are terminable under certain specified circumstances
including upon the termination of the Madryn voting agreement.
Greenbrook Strategic Review Process
The transaction is the culmination of a strategic review process
undertaken by Greenbrook. The process and negotiation of the
transaction was supervised by a committee of independent directors
(the “Greenbrook Special Committee”). Both the Greenbrook board and
Greenbrook Special Committee determined, after receiving financial
and legal advice, that the transaction is in the best interest of
Greenbrook and is fair, from a financial point of view, to
Greenbrook shareholders (other than Madryn).
Alliance Global Partners has provided an opinion to the
Greenbrook board and the Greenbrook Special Committee that, as at
the date of its opinion and based upon and subject to the
assumptions, limitations and qualifications set out therein, the
consideration to be received by the shareholders of Greenbrook
pursuant to the transaction is fair, from a financial point of
view, to such shareholders.
The terms of the Definitive Agreement were negotiated with
oversight and participation of the Greenbrook Special Committee and
the assistance of Greenbrook’s external financial and legal
advisors. Such terms are reasonable in the judgment of the
Greenbrook Special Committee and the Greenbrook board.
Timing and Approvals
The Board of Directors of both companies have unanimously
approved the transaction.
The transaction is expected to close during the fourth quarter
of 2024, subject to approval by both companies’ shareholders, court
approval in respect of the plan of arrangement as well as other
customary closing conditions.
Further information regarding the transaction will be contained
in a joint proxy statement that Neuronetics and Greenbrook will
prepare, file and make available to their respective stockholders
and shareholders in advance of the Neuronetics stockholder meeting
and the Greenbrook shareholder meeting, respectively. Copies of the
Definitive Agreement and joint proxy statement will be available on
Greenbrook’s profile at the SEC’s website at www.sec.gov and on
SEDAR+ (www.sedarplus.ca) and the Definitive Agreement and joint
proxy statement will be available at the SEC’s website at
www.sec.gov. See “Important Information and Where to Find It”
below.
Advisors
Canaccord Genuity is serving as financial advisor to
Neuronetics, and Ballard Spahr LLP as well as Stikeman Elliott LLP
are serving as its legal counsel. A.G.P./Alliance Global Partners
is serving as financial advisor to Greenbrook, and Torys LLP is
serving as its legal counsel.
Conference Call and Webcast
Neuronetics’ management team will host a conference call to
discuss the transaction, in conjunction with the announcement of
their second quarter earnings call today, August 12, 2024,
beginning at 8:30 a.m. Eastern Time.
The conference call will be broadcast live in listen-only mode
via webcast HERE.
To listen to the conference call on your telephone, you may
register for the call HERE.
While it is not required, it is recommended you join 10 minutes
prior to the event start.
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.
About Greenbrook TMS
Operating through 130 company-operated treatment centers (118
treatment centers following completion of the previously-disclosed
settlement transaction), Greenbrook is a leading provider of
Transcranial Magnetic Stimulation (“TMS”) and Spravato® (esketamine
nasal spray), FDA-cleared, non-invasive therapies for the treatment
of Major Depressive Disorder (“MDD”) and other mental health
disorders, in the United States. TMS therapy provides local
electromagnetic stimulation to specific brain regions known to be
directly associated with mood regulation. Spravato® is offered to
treat adults with treatment-resistant depression and depressive
symptoms in adults with MDD with suicidal thoughts or actions.
Greenbrook has provided more than one million treatments to over
30,000 patients struggling with depression.
Neuronetics Contact:
Investors: Mike Vallie or Mark KlausnerICR
Westwicke443-213-0499ir@neuronetics.com
Media:EvolveMKD646-517-4220NeuroStar@evolvemkd.com
“Safe harbor” statement under the Private Securities
Litigation Reform Act of 1995:
This document includes “forward-looking statements” within the
meaning of Section 27A of the Securities Act of 1933, as amended
(the “Securities Act”), Section 21E of the Securities Exchange Act
of 1934, as amended, which are intended to be covered by the safe
harbors created by those laws and other applicable laws and
“forward-looking information” within the meaning of applicable
Canadian securities laws. Statements in the press release that are
not historical facts constitute “forward-looking statements” within
the meaning of the Private Securities Litigation Reform Act of
1995. These forward-looking statements may be identified by terms
such as “outlook,” “potential,” “believe,” “expect,” “plan,”
“anticipate,” “predict,” “may,” “will,” “could,” “would” and
“should” as well as the negative of these terms and similar
expressions. These statements include those relating to the
proposed combination of Greenbrook and Neuronetics, potential
benefits of the transaction and the timing thereof. These
statements are subject to significant risks and uncertainties and
actual results could differ materially from those projected.
Investors are cautioned not to place undue reliance on the
forward-looking statements contained in this release. These risks
and uncertainties include, without limitation, risks and
uncertainties related to: (i) the parties’ ability to meet
expectations regarding the timing and completion of the
transaction; (ii) the occurrence of any event, change or other
circumstance that would give rise to the termination of the
Definitive Agreement; (iii) the fact that Greenbrook’s and
Neuronetics’ respective stockholders may not approve the
transaction; (iv) the fact that certain terminations of the
Definitive Agreement require Greenbrook or Neuronetics to pay a
termination fee; (v) the failure to satisfy each of the conditions
to the consummation of the transaction; (vi) the disruption of
management’s attention from ongoing business operations due to the
transaction; (vii) the effect of the announcement of the
transaction on Greenbrook’s and Neuronetics’ relationships with
their respective customers, as well as their respective operating
results and business generally; (viii) the outcome of any legal
proceedings related to the transaction; (ix) retention of employees
of Greenbrook following the announcement of the transaction; (x)
the fact that Greenbrook’s and Neuronetics’ stock price may decline
significantly if the transaction is not completed; and other
factors described under the heading “Risk Factors” in Neuronetics’
Annual Report on Form 10-K for the fiscal year ended December 31,
2023 and its Quarterly Report on Form 10-Q for the quarter ended
March 31, 2024, and Greenbrook’s Annual Report on Form 10-K for the
fiscal year ended December 31, 2023 and its Quarterly Report on
Form 10-Q for the quarter ended March 31, 2024, as each may be
updated or supplemented by subsequent reports that Neuronetics has
filed or files with the SEC and Greenbrook files with the SEC and
on SEDAR+. These forward-looking statements are based on
expectations and assumptions as of the date of this press release.
Except as required by law, Neuronetics and Greenbrook undertake no
duty or obligation to update any forward-looking statements
contained in this press release as a result of new information,
future events, or changes in their expectations.
Important Additional Information and Where to Find
It
In connection with the transaction, Neuronetics and Greenbrook
will be filing preliminary and definitive joint proxy statements
and other relevant documents relating to the proposed transaction
with the Securities and Exchange Commission (the “SEC”) and on
SEDAR+, as applicable. This communication is not a substitute for
the joint proxy statement or any other document that Neuronetics or
Greenbrook may file with the SEC or on SEDAR+ or send to their
stockholders in connection with the transaction. The description of
the Definitive Agreement and voting agreements above do not purport
to be complete and are qualified in its entirety by reference to
such agreement as filed pursuant to the joint proxy statement
and/or any other filing with the SEC and on SEDAR+. Before making
any voting decision, Neuronetics’ and Greenbrook’s stockholders are
urged to read all relevant documents filed with the SEC and on
SEDAR+, including the joint proxy statement, when they become
available because they will contain important information about the
transaction. Investors and security holders will be able to obtain
the joint proxy statement and other documents filed by Neuronetics
or Greenbrook with the SEC (when available) free of charge at the
SEC’s website, www.sec.gov or on SEDAR+, at www.sedarplus.ca, as
applicable, or from Neuronetics or Greenbrook at the investor
relations page of their respective websites,
https://ir.neuronetics.com/ and
greenbrooktms.com/investor-relations. These documents are not
currently available.
No Offer or Solicitation
This communication is for information purposes only and is not
intended to and does not constitute, or form part of, an offer,
invitation or the solicitation of an offer or invitation to
purchase, otherwise acquire, subscribe for, sell or otherwise
dispose of any securities, or the solicitation of any vote or
approval in any jurisdiction, pursuant to the proposed transaction
or otherwise, nor shall there be any sale, issuance or transfer of
securities in any jurisdiction in contravention of applicable
law.
Participants in the Solicitation
Neuronetics, Greenbrook and their respective directors and
executive officers may be deemed participants in the solicitation
of proxies from Neuronetics’ stockholders in connection with the
transaction. Neuronetics’ stockholders and other interested persons
may obtain, without charge, more detailed information (i) regarding
the directors and officers of Neuronetics in Neuronetics’ Annual
Report on Form 10-K filed with the SEC on March 7, 2024, its proxy
statement relating to its 2024 Annual Meeting of Stockholders filed
with the SEC on April 11, 2024 and other relevant materials filed
with the SEC when they become available; and (ii) regarding
Greenbrook’s directors and officers in Greenbrook’s Annual Report
on Form 10-K filed with the SEC and on SEDAR+ on April 25, 2024 and
other relevant materials filed with the SEC and on SEDAR+, as
applicable, when they become available. Information regarding the
persons who may, under SEC rules, be deemed participants in the
solicitation of proxies to Neuronetics’ stockholders in connection
with the transaction will be set forth in the joint proxy statement
for the transaction when available. Additional information
regarding the interests of participants in the solicitation of
proxies in connection with the transaction will be included in the
joint proxy statement that Neuronetics and Greenbrook intend to
file with the SEC and on SEDAR+, as applicable.
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