Neuronetics Picks Up An Activist As Cannell Capital Seeks Board Seat

Neuronetics Picks Up An Activist As Cannell Capital Seeks Board Seat
PIX1861 / Pixabay

Wyoming-based activist firm Cannell Capital said this week that it’s accumulated a just under 13% stake in medical technology firm Neuronetics Inc (NASDAQ:STIM) and wants to put a director on the board at the company.

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The fund, run by J. Carlo Cannell, said it bought the shares between February 22 and June 1 for $3.5 million. The position accounts for just over two percent of Cannell’s assets under management.

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Cannell Capital said it and its investment group bought the shares as a long term investment and “not with the intent to change or influence control of the company.”

But, in the following sentence, the activist made clear his wish for change, noting in Item 4 of its filing that Cannell, the manager, made the filing after “a June 21, 2022, call which Mr. Cannell enjoyed with Robert Cascella, Chairman of the Board of the company, during which CC, the largest shareholder, requested the appointment of a certain board member.”

While not identifying the director he wants, Cannell said the person would help the company as he lives in the company’s home base, “enjoys a predilection to buy a lot of stock in the company,” and is experienced in the medical technology sector.

Cannell Capital LLC is an employee owned hedge fund manager. The firm primarily provides its services to high net worth individuals. It also caters to pooled investment vehicles and proprietary accounts. The firm also manages separate-client focused equity portfolios..

The firm typically invests in stocks of small-cap companies employing long/short equity strategies. It uses fundamental analysis with bottom-up stock picking approach to make its investments. The firm employs internal and external research to make its investments. Cannell Capital LLC was founded in 1996 and is based in Alta, Wyoming, with additional offices in Sausalito, California.

The move to seat a new Neuronetics director is Cannell’s nineteenth activist campaign since 2016.

According to the company’s bylaws, the board of directors has the exclusive right to elect a director to fill a vacancy created by the expansion of the board of directors or the resignation, death or removal of a director.

On March 31, cash and its equivalents were $80.8 million; the company added, “Due to typical seasonality, we expect first quarter cash burn to be the highest of the year, stepping down throughout the rest of the year.”

For the full year, Neuronetics expects revenue between $58 and $62 million, and, for the second quarter, $15 million to $16 million. “The company expects year-over-year growth in each of the remaining quarters, along with a more normalized seasonal pattern with a slowdown in the third quarter before a strong fourth quarter, which is typically the largest of the year,” said.

Additionally, the company sees operating expenses totaling $86 million to $90 million for the full year. And said it remains on track to post a profit before interest and taxes in 2024.

Article by Greg Morcroft, Fintel

Updated on Jun 24, 2022, 3:51 pm

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