Neuronetics (STIM) 9 Nov 212021 Q3 Earnings call transcript

Good day and thank you fro standing by. Welcome to the Neuronetics' Third Quarter 2021 Financial and Operating Results Conference Call. [Operator instructions] Please be advised today's conference maybe. I would now like to hand the conference over to Mike Vallie from Westwicke.

Good morning and thank you for joining us for Neuronetics' third quarter 2021 conference call.

call and President Furlong. Chief today's Officer, Chief on Sullivan, Keith Financial me are and Neuronetics' Executive Joining Officer, Steve

we guidance, Private during related like information results would under our including the include begin statements listeners provisions issues the covered differ Reform financial business, revenue impact operational stated Actual and Before certain and to risks of those Act these and COVID-XX, from harbor that with and XXXX, the forward-looking metrics. to by statements discussed Litigation uncertainties forward-looking conference to this could caution business. due management of materially other safe implied associated call strategy, or company's Securities will the by I of statements

uncertainties Form disclaims XX-Q, Form Neuronetics' you will with of the For Exchange business, filings this later the to and law. on discussion review course filed to including as Securities statements risks report during XX-K encourage Commission, annual call, with be forward-looking obligation and except company's the of required any company's the any I the and made by The company which today. update associated

excluding trends to we'll against be our indicative certain to press and believes the noncash tables conjunction decisions. financial call Officer, to are not uses competitors Chief President and release, and non-GAAP presented non-GAAP our pleasure on certain operating Executive strategic plans in turn discuss including over Sullivan. for it's website. Reconciliations performance which non-GAAP EBITDA. benchmark compensation certain measures GAAP and useful information taken are Keith to basis, performance forecast provide can measures my that, financial on other relative our externally compare that results our Neuronetics' our of and With viewed Management to During information by between with accompanying U.S. and management results. call, that the investors information also financial GAAP expenses non-GAAP a in in U.S. Management both for

providing Good morning an of XXXX and review thank the third $XX.X million, the you our for XX% of operational to by XXXX. before conclude performance our was will of financial by Q&A. turning I'll joining quarter update. Total over for Steve balance thoughts then I'll up an overview begin and third results with Revenue the us. quarter followed

the see we progress the in direction. the of and we to are moving right in top into our place initiatives growth initiatives conversion into slowed to The in has continuing primarily been have strategic business many While believe line underlying due put are trends of COVID.

equipment System On of the by increased NeuroStar quarter XXXX. Therapy side, third X% capital US over the Advanced revenue

productive beginning time to the team Our continue year. the be our assumption that through launched progress at we in of begin commercial the and to at the year the would balance quarter second the was organization the of

two to have than expansion longer in our we largest pipeline focused efforts. was this slower growth, providers into anticipated a the than expansion shown support by sales We accounts than Although, the quarter a fundraising of expected experienced cycle. anticipated on expansion accounts as national result were year new as slower

a and Greenbrook accounts like TMS we national TMS. large As reminder, as Success providers define

in XXXX and to accounts, I in plans these continue support closely and believe position are teams work with to Our growth national we good their beyond. a

the impacted XX% patient was start. believe by the over growth, XXXX. performance by quarter the treatment US Our session Despite COVID new headwinds delaying we third of revenue increased

healing the In TMS providers, and exclusive In we Advanced five multiple partnerships In leading announced a Zion one services. agreement, October, Now behavioral months, health. nation's recent agreement announced year franchisor we the Therapy our adoption operational commercial design commercial leaders contract and September, turning we will effort be an of the mental TMS, Healing, with accelerate on exclusive leading TMS its with in the in In extension of a NeuroStar to with this of Success space franchisees. equipment, one have to highlights. Neuronetics of announced for longest supplier a of accounts. TMS standing

As part exclusively systems System agreement, NeuroStar of will treat health this suffering utilize Success treatment to our mental resistant depression. for TMS Therapy Advanced patients from

River part signed loan coming a the October, Region a their a southeastern TMS provider $XX in leading River the of the term in commercial United As plans support States. extension, agreement secured we we Also over million made year. to with expansion re Psychiatry,

systems. We are TMS excited to exclusive for supplier been have their chosen as

XXXX in River executing We Region in team to our plans their beyond. expansion prepared and have assist

September, on we to attended practice the to with in-depth to accounts. was and well The update event, our events of NeuroStar over offer. Turning event November. Chicago. was opportunity And subsequently; second another scheduled and our opportunities. growth event continue managers put have an customers, we including to to expand partnership the sales offer our a physicians XX In capital This over an event from at the various review several marketing these and summit seven an the hosted provide calendar them programs of in we'll expect practice We number support we we on for closed initiatives.

their new identify our X-STARS practices these believe a within In are customers, to our patients. significant opportunity recently Pulse drug interested NeuroStar patients. authorization Precision designed will process, Over additional become investment XXX we earlier for to more without able programs meet their a points tool non Utilizing their their a any proprietary we in we NeuroStar to in existing help the over the candidates patients several we and addition as who treatment in are launched help program were screening tool, to part. practices our base better for patients therapy. patients a a The programs, on our who patients outcomes pre new customer practices identify piloted depression year, success of and the many be criteria the to deliver within to to work way through NeuroStar time,

an paper a lower with treatment than the from seizure Recently, our regulatory we the that work survey struggles progress. what patient's H-Coil half NeuroStar on have a an a to with published system Advanced and titled TMS clinical Risk Therapy I in peer results market. TMS important supports of provide we with and update effective Seizure most was Lastly, doing over solve that mental Stimulation, treatments paper to million with The the further on technology. risk believe with published health for reviewed a stimulation a safest claim deeper was showed sessions mental health repetitive Brain which patients want is are significantly

dialogue the FDA our additional an potential our recent We and clearance label regarding indication. expansion with with are encouraged for

the the initiatives control, below exact of drive are decision While and have We to timing expectations. quarter future discussions are the our growth. with performance make is to believe FDA progress in our this continuing moving right of we revenue In was believe that to productive agency continue we summary, our direction. our the out strategic while we on

provide continue the the health. Advanced and to to I'd overview. identify work drive expand now to efforts drive turn our call seek of Therapy our patients adoption ways optimize to awareness, to to NeuroStar for financial and out and broader mental We to with educate Steve like over existing customers

$XX.X prior increase Unless XX% NeuroStar systems over revenue. compared was lease operating increase revenue of XX.X% of to per was Us year a up compared of revenue program. XX $X.X up an increase part a year year in XX%. prior in discussed by XX% million, an was these revenue XXXX. approximately Advanced were approximately Therapy $XX,XXX In million. Keith. margin to year. treatment the US revenue by systems was XX.X% international the a in The the all driven to site session million. Several Gross $XX.X to session in was $XX,XXX of XXXX quarter, to revenue compared revenue noted, US the treatment quarter. over Revenue year. XX% you, Total US active the year. was otherwise prior with increase costs. new primarily of organization commercial initiatives. results of $X.X increased increased company expenses million, from compared in million our was driven related increased implementation decrease XX rebuild the $X.X the the associated supply costs third the of by million, $XX.X year, revenue prior $XX.X of were result marketing an The prior increase the the of of was of compared System Total prior primarily will the quarter revenue by million, quarter growth be US an prior Thank of third Operating sold chain and to X%

in XXXX. million incurred loss as million, compared non million the was $X.X Net or compared $X.X to $X.X negative During $X.XX expenses. approximately XXXX. negative was net million $X.X we per loss compensation or in $X.XX share stock-based cash to of quarter, per as share, $X.X a million EBITDA of

equivalents and which as the balance to Moving cash in investment were cash of $XX.X XX, sheet, million, includes TMS. September Success the XXXX,

Now previous million, our of $XX $XX a the turning range we guidance guidance; to to of for million down million. from revenue of full implying quarter to in XXXX, range now expect $XX.X year to the $XX million, million $XX $XX.X fourth million

the headwinds overhang impacting XXXX COVID be operating would seasonality the the million like expenses projects as of call over guidance year starts Keith. now to holidays. a related $XX I $XX The for company in to back is Assumed new turn well the as now patient in full our range continued total to million. to during

Steve. you, Thank

opening line to growth. the up as outline Before for of key the for we focus areas during fourth set wanted ourselves to quarter questions, our work long-term I

accounts. have recently national earlier, noted we our As relationship three with leading expanded

TMS the and expansion a help that support growth to We plans, to US. for Success across have looking include number years, site continuing significant which partnered partnership forward with their of are

footprints Zion both noted, more to And will expand are as The other closely work partnerships organizations early Region stages. treat we their very and with we River respective Psychiatry, they patients. and in look

these to TMS. a largest customer largest Greenbrook and close have we our country's the Beyond relationship with agreements, account national continue

plans We a greater with footprint utilization systems of their facilitate and hand increased work will sites number have new hand we within support to in XXX on expansion of with a individual the to patients. and significant locations, NeuroStar continue their their

move In and maturation through And new the we we focused already pipeline acceleration as this, our on we we the as into an be later Summit grow. spikes, prospects XXXX. remain to conversions the work national of demand holiday on exceeded we NeuroStar addition month. will And to an highly continues of of COVID ongoing support accounts, season, hosting capacity. the recent this In of emphasis a the salesforce; has expect

utilization we addition in support of fourth the NeuroStar. In continue quarter to on work the increased new existing customers grow practice implementing we system utilization. sales focus this, to to To to focusing team and drive plan will accelerate sales, NPC to alongside help the programs expand on

October As many aware, Month. Awareness of are you National was Depression

to active and Board we As who and awareness of partnership patients Shepherd. Melissa our Certified part drive with is mental Psychotherapist efforts is Dr. an Psychiatrist among Dr. psychiatrist, a announced advocate. health Shepherd a

In Dr. In this will forward. be and she followers. social with the highlighting addition opinion leader the Advanced cornerstone social which is in to industry, being education will from a over media her a influencer awareness channels Therapy known million initiatives well X going NeuroStar key partnership, Shepherd be own in

number As it drug long the are expansion our data for to regulatory non of leveraging the Neuronetics. summary, to here the future new support The world to significant to by optimistic we we depression relates very about with as needing be interaction patients are continue label term treat the recent their to from continues our TrakStar rise. FDA, indications. and real alternatives opportunity encouraged is and In strategy,

come inflection that With has growth we like to the I'd in line line than to the right point growth doubt later we While open no questions. deliver future for quarters. expected, that strategy the have in have in place that, top

William comes question [Operator with first Instructions] Kaczor Blair. Our from Margaret

national that and good everyone. maybe of to in taking I larger questions. on for morning, referenced the the underlying Thanks first market focused accounts the Hi, some perspective from comments an start fundraising. you wanted that on earlier

some think behind maybe us. I those of

translate that than longer patient to that? it maybe endeavor that. or clinic starts? openings, how new several quarter But new So can clarify quickly Is

Hi, Margaret. It's Keith.

positioned I a think opportunities as that help with success in them And the open I discuss relationship think have We out met -- are can comment, team help -- how think using we I [Indiscernible] by major areas has -- them. with field help quickly. have are sites their for them -- we strong our those a account specific we to to

Okay, yes.

start you got that, network. that, opening I prospect, a a little if more of process, the so And if want six about then you associated with and push the kind to is think build months a operational bit you've that requirements if obviously open on three clinic to clinic kind of we months a today, referral

those So is or tandem? that can do behind? Or another of you two in both quarter

get it's a out to that Greenbrook about but a later and about up NeuroStar, probably lay in takes I believe today, running. We has three their But experience, new running. earnings a into more open clinic, our can months it to and think when plan up we three NeuroStar precise physician months to call a them clinic a get Bill

you're to Okay, about But of it, key then there's walk seasonality little associated can for lower perfect. think higher the about through is the is the I what adds a And productivity end fourth some that about Steve, know 'XX key with rep range maybe that the for thinking what an assuming leading if for really talk you least first bit ultimately, and to wanted we at in you guidance quarter. the element. gets what for extra indicator metrics. a guys. mean Thanks guidance which of implied quarter utilization, and or I

you, Thank [Indiscernible]. this Yes, Margaret.

release, the financing we did out new program. press roll we As in indicated, a

we're it overall comfortable we're on forward. systems that does revenues. out, the slight treatment operating with But going sessions, a more laid treatment be given have we lease those program so our sessions And impact will focused because on generating that these

to October had vacations that are mix plays perspective, go. see out are to see we back But a work, we're in seasonality And a recovery decent treatment down. school back, folks back to factored didn't in whereas in so over. much we session did From QX. locked because XXXX, the is And folks nowhere pretty

sort on table. their That's off they of the So continued therapy.

so And is pretty the open. country much

And XXXX. so seen seasonality that we and in we've XXXX, are anticipating similar

COVID strong equipment But overhang balancing the very QX the is quarter seasonality. historically, a so from And we as are a capital perspective. with

range. so million to I $XX $XX And think derive that again, million that's how we

just that for as we seasonality programs ranges could more mean seasonality get that could Does range running? Or and those numbers? off QX? Okay, better mean some of that thoughts given it for the traditional a me, you're of on we kind what some excuse QX be more traditional get 'XX, of

Yes, in the pill we're still Again, game on vaccine, the stages there's new down Pfizer COVID and of be really so XXXX. could final nailing the a changer. much depends

this not point. rather comment we'd so And on 'XX at

Our next O'Brien from Piper Matthew with question Sandler. comes

taking question. Good the morning, for thanks

just what on transition little of bit point you can I account meaningful that that So revenue we Greenbrook? three the contribution and of national a mean have 'XX How into partnerships could expect finer we these newer impact. type be 'XX? outside as from

our Yes, these with large thanks, is providers. Matt. to national long-term strategy Steve; is contracts of part This get

are will Greenbrook, vary robust. I very And would Bill speaking be looking so plans call with recent I again, we're on excited announcements. expansion think will But very it success tonight say by at in the their largest, partner. his and the

of And grow 'XX to right revenue And into so now. that the beyond. continue overall group to our makeup we expect and about XX%

And so we these both is think providers a big for of exclusive partners us. deal being it's to

of bit So on point just, again, Steve. little the finer a finer point, top

call So million provider $XX somewhere the million $XX new that XX% of eventually. if to million sales $X for million per $X providers, is it maybe or range three in

in they're would four, different some it's to think it different lot because than So, to partners does a -- say two tough will that. geographies. have again, They models, be higher think I I vary. Matt, I five

me if partners. systems the XX It some year next take bit may longer. little we wouldn't And a surprise did between

ones hopefully, the was thought Okay. Two interesting. commentary, quick helpful. growth me, site I That's for really more

in QX includes last over raising maybe out COVID and here of XX,XXX, you've QX That period in year. versus just capital. XX,XXX, I think a got you the where said, headwind Greenbrook

visibility business the of So headwinds? of curious, far site, kind of you give less areas, these I'm as just help in what out into come productivity some seeing us as some were does the of affected we growth that the as maybe per

have sites more to deviations north ability slightly a too, XX%, impressive have the we customers that of And different others were growth very seen specific that's good question rates impacted to flat by COVID of track with We high those geographies. between do Yes, are down. are in Matt. some and different standard whereas

moving so we nice. that customer increase with other our better customers. And of ones with we're getting growth to there do the the sets the on sub some levels and base are was are impacted envision that the past pandemic, back But average, of doing vaccine made seeing much others. that the Again really were most hopefully that we've progress the than

as probably think about you up got can one you some headwinds, here on and tailwinds next last XXXX to then for do Okay, back Steve, side, you've for some get year think 'XX provider substantial well, levels? as we sales the

going believe, are treatment take XXXX at our I levels. session one. to I'm that look, on revenue, we

we're expansion capital field. So on out the team really and getting more placed the into focusing systems with

we capital do treatment there. So should able be on to believe I both sessions, that and get

question Bill Our comes from next with Canaccord. Plovanic

Great, taking thanks. for Good my Thanks question. morning.

saying when then it's yes, on X.X just to if contemplating we relative will capital what QX or And a Just sales? you've in QX X.X been QX look do capital are and think rebound? commentary, this? guidance by go QX, the that see I up, treatment at mean your I you really the utilization? little How had I you capital; back in are about tracking we be in mean, 'XX you to disposables and

really the it's treatment to Yes, been the sales are Bill, tough predict That's like has revenue. in high seasonality. an for is. But and we sessions. so in quarter, a most companies, the device anticipating capital COVID med overhang QX summary, that's always capital exactly increase

think revenue session we treatment be it's kind in to XX:XX of a that versus so And mix going that's capital revenue. still of,

And has look Okay. meeting? in as US capital at just Back January, what I capital salesforce, since that salesforce wondering, been the just then the the you of turnover was February.

Bill, this has estimates, tell you, I'll I'm XXX% I'm of in is morning, ordinary. good turnover out our sure, field not really give going not you because Keith, what and to been our the

side, think out any on of turned four four. we national capital a that were at what Out at say sales agreed we XX I that would side, And mutually may one had was -- was the loss. on meeting, the those have upon. reps NPC I think of was our the turnovers I of over

work sales But our that associated the I'll their very think to the this shifting with a stars are doing So when it And honestly, really I we or from session, majority changed NeuroStar well. marketing But treatment generation, is company, really NPCs. accounts, doing I call doing of not balance patient system, trainers extraordinarily get to NPCs but the awareness program, it clinical the and have it really the success. to system the, with the company well. five our And that, And in helping comfortable familiar now of we're get strictly were being think results how is job, we which clinical to a have a awareness. interested also we of quite generate with understandable. patient lot our responded time, them of job really asked you're patient them from great side in completely of some on and to

had amount of your think to I an turnover the answer we sales have extraordinarily a So, in it's again, organization. -- but question, not short long it's

handle in that's number for was treatment -- your regardless are think increase? been Thank of I And these the treatment a it year of that with partnerships is treatments And surprised customers. get caller. that I of a the move but me of revenue as more And to you're up trying things nature? these as think in these you do sessions. as fixed signing the Thank And session component one similar forward these us agreements know they earlier are the Or types with of that you. already, go today. fixed, I you it's for agreements, then economics, all about on, asked they're

signed because they we focusing -- So that helping models. the we we and Region River And grow quickly grow. our are Psychiatry per them both two as with grow, new Zion contracts that are energy click we have on

not longer. So are offering price fixed the any we they -- model are

We all done haven't that year.

Marie Our next with comes BTIG. Thibault question from

a on customer That new Hi, just in here. resistance from to good on Maybe get are morning, it This I the These opportunity, -- helped Keith who opportunity significant like hands? some How patients going existing I questions. take these on practices candidates Marie. guess right? what's for there, taking these say, patients Sam customers' are for chair? there? much for the Thanks me these and should patients XXX Steve. here one sounds customers pretty right, these the identify here customers or are to Thanks. is that within is

great Sam, that's a question.

I surprised hand the a raising think really us authorization. the of patient from them to then going was get saying prior through and the benefits it they're time length in investigation, interested the what quarter their third takes to

handful as and deploy are the reason patients able to a their said in handful that of to only the months. system I we the you, optimism So tell believe comments, this will my XXX. were over way accounts we our work that what few next is is those we for But through going in under

for a of are tool to they So fine, it's under providers are our patients good doing And think med demonstrated think really us. not. this many that their that is I and management

surprised closing Keith I'd the been concludes back to they session have Sullivan to now tool. we've and so so question-and-answer like for this remarks. the of our turn And effectiveness today. with That for call

updating on a progress have to quarter. us call Thank Thank you We next I look for you the you, hope holiday good operator the thank you season. and all joining today. on forward you.

participating. call. today's This you for Thank conference concludes

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