Neuronetics (STIM) 2 Aug 222022 Q2 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Neuronetics' Reports Second Quarter 2022 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions]. today's being that advised be conference recorded. is Please hand over to would now speaker conference to like Klausner. I your the today, Mark begin. Please

morning, for quarter you and for Good second Neuronetics' joining XXXX us call. conference thank

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

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

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

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

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

of of of performance led who second and our of over ahead mid-teens and we driven and quarter team, macro sequential the performance during partnership million was event, shifting stayed revenue X% the quarter a was pipeline growth of treatment NeuroStar possible primarily not on we by Summit, $XX.X only improving sales which and the the XX% following quarter was session growth. This immediately but up made also to XX% to of six months boosts attribute solid uptick on that was sales systems our gaining the in and impact years. encouraging second broad up marketing since quarter to over our revenue by business, part built momentum follow. XXXX. highest three in robust nine program. in result the U.S. quarterly launch strongest the utilization traction place put XXXX Despite a our our equipment disruption, fourth saw Our initiatives XX garnered possibilities its Robinson of and which over capital and growth. straight on marginal a market over sales, was million campaign, $XXX achieved impressions quarter marketing The which have created the impressions, program, NeuroStar representing is a of the XXXX, second of sales has increasing new System environment. utilization other fifth our capital tap our revenue into by rates team million $X.X U.S. growth new fueled strong quarter by was millions including last over This which attributed last since our hundreds Drew digital of conversion consecutive the into for we months. with March of the X, to depression

of was trend utilization click utilization with the with operations overall to utilization some typical the quarter per largest the year-over-year, which softness disrupted their customers, seems strong during XX%, quarter. to offsetting merger During up our increasing two related have X% the

focused the have in first XXXX, four half Now of of drive throughout the turning to growth operational areas we the to highlights, organization.

awareness. First, increasing customer patient and

NeuroStar XX prospective Our out over in which once included was held was sold customers. Atlanta, and quarterly completely Summit again

build education main We technology today, during programs the grow a quarter to will within be and during to throughout North third many next and place events year, benefits. summit our Charlotte, We our and awareness advancement continued of need these performance existing exist patients key the optimization its and with in about these the One practice continue to taking these and host was driver of within our quarter. Carolina of and NeuroStar program. educated practices focus is NeuroStar the year-to-date customers' know The operation. successful potential our

and seeing tool, campaign existing has implement real with our socialize PHQ-XX awareness our and more force the time had to as are progress customers. with We sales our both

be traction been gaining is tool whereas highly practices on within a tool PHQ-XX daily rolled out. the basis and Our a productive continues to

number to tool impact. We this have of continue to to increasing introduced practices its maximize an in push

XX a for In the practice the Charlotte, to We the teach new The an Within how As of can will Connect of with patients to in looking their we their of our for non-drug used education just PHQ-XX XX developed performed two to customer experts. -- advanced customers our and recently a the depression. benefit marketing to look the it NSU that launched immersive clinical customer hours, consultation example providing continuing percentage University program. completed over second alternative southeast. been techniques. existing and become generated base. and training experience attendees We forward site type five greater construction tool grow potential a the NeuroStar and bring of the optimize and North have. of understanding has in practices we to in within center large This assessments, star to their and single quarter, tool field or deep specialists deliver an be NSU revolutionary curriculum a other with NeuroStar Carolina. using this

we As to patient see experience improved from accelerating growth an a an attend. customers who result, expect

is our of the optimization second organization. area Our commercial continued focus

coaching managers positive total to provide the geographies, three With which practice been our seen We and brought more to able have smaller the last of quarter, impact the service from covering customers. seven. smaller teams addition have to frequent better regional we

will managers forward, needed. we hire Going as new

help training Their who multiple affiliates. states. because made purchase of use third to Centers area with its network the Our an to of partnership new Arkansas-based the a health systems the system Alleviant supplier number service most will marketing NeuroStar initiatives. Summit, across Alleviant ongoing previously our is be our clinics. Alleviant growing competitive change of expand after support, focus and exclusive commercial and recent the elected Health of will equipment switch attending agreement, Under TMS initiated mental several they recently exclusive We full footprint their of to partnerships. Neuronetics

national of to aware drive across an which NeuroStar shared supported growth we As accounts operational will XXX merged believe many leadership give are and be are promise patient approximately NeuroStar's marketing even the which help TMS solidifies systems new market bigger largest in too of over NeuroStar capabilities, position. footprint July, by entity speaks the This in expertise will you and and sites. XXX

Lastly, we adjunct FDA for obsessive I treatment from and disorder. for as adult an clinical our NeuroStar to suffering progress. on In want compulsive update provide May, clearance an patients received regulatory

Importantly, be enabled NeuroStar on systems this new at charge. can indication our existing customers remotely no

is launch currently stage two underway. Our

and begin for the and pilot, to OCD. and fourth we limited During XXXX. and track on training expected started the aspects in marketing our commercial identified launch phase, are practices July the the sites optimizing of in early of is clinical in The at XX these process and of quarter, quarter next the

of received adult start quarter, will the new as anxiety the FDA anxious of a treat for then indication our this Subsequent also suffer from We depression. also the patients to roll to who symptoms for all from customers. indication end to clearance known NeuroStar we to out MDD

With to can database submission the under from studies, exclusive any consistently our world more Anxiety XX% FDA present this These seen leverage reimbursement the over sizable includes MDD indication, patients more suicidal new have This coverage indication improve able experience prone show sessions. portion to training symptoms data anxiety and MDD new will data NeuroStar completed estimated Importantly, and physicians a than we This who patients this depression covered does additional depression from which symptoms require clinical TrakStar, in be X.X to are numerous across outcomes. that X,XXX treatment thoughts. anxious is to codes and over real to patients policy. not of million patients patient severe more than be XXX,XXX in are of prevalence. patients. current database

novel year. process for improve new In speed have motor up addition additional of new the method FDA threshold information be cleared installed anticipate this compatible We to with patent healthcare later clearance just to submitted NeuroStar both this and recently the upon of will indications, product base is pending and and releasing a entire these update effectiveness we on our This professionals. patients systems.

our significantly and years, last to we have the use, expanded for anxious Over indications two depression. OCD include

to deliver huge due real of This regulatory collected view use of indication clinical efficiently and which continue indications. world on we as Because the decision. our Our will advance FDA this to and incredibly world willingness include in to FDA's this, to clearance repository to tool, our to regulatory in real the new rapid our clearances. largely teams receive engage is powerful with effectively continue of to ability the TrakStar to an validates ability leverage expansion to potential data data strategy TrakStar

to Steve, Before over recent provide turning made wanted update the regarding to progress an reimbursements. on the call I

MDD. policy number As suffering updates that announced failures Contractors reduce are include eligibility First increased prior from These that Coast of of local four patients in the coverage NeuroStar. policy one for from medication accessibility health mid-July, Medicare patient to series there Administrative is care and announced a TMS down to determination Novitas for updates to changing

XX,XXX previous covered area serve states. coverage includes XX Medicare for that also lives million psychotherapy coverage remove includes that XXX an over beneficiaries, X two and Medicare change trial. patients. a than more Novitas the and requirement There Coast was proposed physicians First hospitals additional over could million

Source, Highmark also affecting OCD, for their current that, We call environment. of disorders. turn I'd X.X other both the OCD, patient first mental decisions a publishing Pacific of execute. and macro policy look the and MDD and clinical our with pre-authorization policy have have including This providers to ongoing their Blue Plan patients, members publishing are reaction members. the Overall, we Despite and patients With provide We members and largely for treatment customers million ahead half impacted Cross continued our to positive us regulatory healthcare MDD employees first XXX,XXX to impacts to requirement Health, customer our am confirms kept removing forward to very The coverage have pleased the that suffering our Shield, strategies I which working operating working. Advantage that of of their continuing for related hard is the the Medicare received have number due positive from TMS Steve. to to Blue like help and committed MDD, over their throughout to who complexity Select performance commercial, changes health XXXX.

in it up prior-year increase the strong the was by quarter by our NeuroStar revenue $XX.X a Thank quarter, you, primarily million compared pipeline was the of Keith. revenue of and quarter Summits. sold million. XX%. XX% driven second Advanced The XXXX second NeuroStar XX million, Therapy revenue $X.X increase $XX.X was over an to revenue the U.S. capital was maturing systems, System million, In per Salesforce a company XXXX. was XXXX over of of Total for $XX.X quarter $X.X of of up relative second In an to approximately was $XX,XXX second from session in compared million, in the site treatment in revenue an approximately to volumes active per session quarter $XX,XXX quarter XX the systems specifically increase treatment an X% second uptick million utilization. prior-year quarter. driven the customer click increase of revenue U.S. the XXXX, by $XX.X revenue prior-year

marketing of the XX%. reminder, we second increase was sites. XXXX calculate margin quarter to by session XXXX. increase to pressures. As NeuroStar an expenses was second to increase from force total quarter the the by were this gross That the mix increased by and costs U.S. of new primarily million the metric compared related a million, of beginning quarter $XX.X revenue dividing compared Gross quarter due the XX% driven treatment decline of margin sales $X.X active expanded our costs implementation initiatives, Operating was during year-over-year. The capital of in to inflationary

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

balance Moving sheet. now to the

$XX.X to completed in principal of equivalents XX following Greenbrook and As of of merger collected cash quarter, were the and $XX.X we Subsequent million. million end the Success TMS. XXXX, June the cash loan

to Now guidance. turning

For $XX expect range the full-year revenue XXXX, in to million. million we $XX the now of

For of revenue quarter the million $XX.X to XXXX, third million. we of $XX.X expect

to the before the a to total a We normalized of more We seasonal full-year growth continue expect pattern fourth this for the million. quarter, typically to see range of quarter million in the to be slowdown expenses in remaining XXXX year. $XX a strong along each in which quarters, third the now expect operating $XX with with is largest of year-over-year

the like result to call I cost a to initiatives. Keith. of would As over back justification turn now

you, Steve. Thank

the XXXX will of second what We half bring. optimistic about very are

we suffering focus disorders. will take of number health awareness partnerships, opportunity to commercial clinical this on of help organization, ability Our growing mental leveraging lies the optimization that our exclusive extremely confident progress. regulatory and customer increased patients patient made therapies best the our and for The treat to continued for are solutions each the team's advantage ahead I thank commercial of remain reason I'd and I'm able industry to commitment with build line leader for for to a and patients. to market is up the that them one disorders in of to health And and innovative every like With brightest. TMS delivering dedication like team mental open questions. been have we of and that, would their in

[Operator first comes Instructions]. Adam of from And Maeder our question Piper Sandler.

is open. line Your

here. on And Steve. the for and taking Hi, good morning, the Thanks Keith questions progress. congrats

QX. and number treatment Solid in utilization improvement

your Greenbrook the pending you did I to and two Success customers think note due some around merger. largest softness

wondering It to transient volumes Just And this we're QX newly QX? to had at expect more two. how if have created number any you treatment follow-up volumes or for then not give headwind. if able a and could even on color Thanks. there. trend sounds like entity I in this And better then the do been

Adam. thanks, Well,

huge the some going winner. going that natural they're it's confidence two through a full companies Success think have that a be are Greenbrook that to I going experience when merger, is combination to and I disruption. TMS of

that blip they through to may months. temporary. the the them this I go few the think And whole it this going integration day, for and at continue for I So the it's of as industry. us next a is be for -- think that their end see winner But I

I don't as big So it see deal. a

Okay, side. Keith. helpful, maybe over to just to that. then system that's And the flip Appreciate

to year the environment, And look like the about XXX previously think drove for as talk sounds systems landscape? So what think framework just macro then good strength just you pipeline about talked being more given some about ahead, the of a per really how models. bit capital strong I you a CapEx XXX maybe like little quarter, pretty do good conversion. we It there. as

still holds? if that wondering just So

built So year, since with new quarters and XX -- has. it we it started every the the when on would about and think we in much pipeline, last team QX that brought out they at year started talking last quarter of We zero started and systems then. I pretty over it at build

have So summits think great continues team grow it the through to efforts and we our we right NeuroStar pipeline through have. a now I that of the robust marketing

a but in softness we there's with to economy, that the strong know I pipeline it. currently So backups have pretty

to a confident that XXX pretty still number XXX we're So for good is that us.

final if and good about I'll maybe we Do Novitas Coast we'll hear, to can and of just great know policy as Okay, kind get one. become In a ask First there. one you squeeze And last of then to the I follow updates some exactly when MACs at looked Novitas's. expect and bellwether. a and decision, i.e., kind those in other if proposed official ways will policy? would

impact again, there So progress. to situation maybe Thanks the on and potential kind the the status level any on just congrats of and business?

Thanks. if at we can't tell really going the they look MACs history have. you other are I whether to follow,

these So we're become period, it they it period, the they hoping across final, they final. all and then that of have question then review goes board. When that a things make a and have

So that hopefully of we're put end place, year. by of all changes into the become the the hoping

it leave Perfect. there. Thank you. I'll

Thanks.

our from Kaczor Thank Margaret you. And will next William Blair. question come of

open. Your line is

utilization, the kind maybe the when get foundation it's Hey, laying morning, for questions. revenue regulatory us out And along inside, mark which some terms next [indiscernible]. a you good more I'm sense we're I'm this with on in picture further quarter start, in trying in materials, Maybe taking trying can give other the on or player. But to context, one, step starts talking updates. everyone. quarter guess good I put fact, per in especially of is that for to about commercial a Thanks a just system. words of

we a Margaret, garbled. well, you hear I very couldn't was little -- it

question? the repeat to So are able you

hear Sure. Can me you anybody?

A a shot. little. Give it

hear you Keith, can me?

we can. Yes,

kind whether that short put they're heard quarter commercial, marketing, we updates want regulatory. get the to kind on just about of running, I of this to to Okay, you talk

context you the growth one these where in can give when So of revenue that growth impact occur? of your us is will And today's of growth give utilization per these metrics? and there some -- more can specifically of view system share you

Yes, question. a good that's

our out than the marketing our come out of PHQ-XXs. revenue within I the and of really is come rather patients the utilization And growth the of marketing and the on our efforts, and out practice, growth coming really our is think growth patients Utilization focus growth revenue airwave. efforts.

plenty failed not I have and very physicians think then have within of said at there are to that the to being and practices. the a been with -- the in speak that them convert four patients And able as marks, drugs we good to NeuroStar patient. prepared to them educate two them

So side. I look efforts us, for if marketing the revenue, a And growth anticipate to in impact system our treatment practice biggest I the surrounding the buying grow our honestly, within that it's bit continue would say our with efforts practice. what that And we our patterns PHQ-XXs. within marketing the there the quite at we our similar that makes to It's has and our of session quarter, to have practices. each revenue on is little change

buying of to our to align the a quarter with used our partial their -- really and a patient our patient through with we or even on are are per working Some them programs -- with And basis. purchasing programs.

follow-up quarter. be And capital number like helpful. have systems to a Obviously side That's throughout the more capital it's on to side. good a on almost example It seems the little reps are well. that sales maybe our this as bit Okay. the

you the year? forward, guidance look being a there for this Thanks. we be, maybe should what's half think, of what number, good as second So assuming

the year. XXX targeting XXX still for systems we're So to the

every good. we're to I do able XX that said, I quarter, single last we're of that. couple the get XX quarters we're track think to systems, if on to

that them be cautious that. And and do This for and teams everybody And the think think I focus and and this to that to running. be at quarter, up than got sure get attention higher even to XX our want able we gets we the we I our them make sure train have make I current and at need. levels, can efforts they quarter, we

Great, guys. thank you

Plovanic Canaccord William question next of come from Genuity. will our And

Thanks, good questions morning. questions. so my taking my Thanks couple Yes, for Thanks great. good for morning. question. Hey, of taking here. a Yes,

just, the in pipeline quarter, XX,XXX lifting. is your a terms anything First, is I the just one-time It's And system. close the sell sustainable, discounting to the robust, is capital there sales but obviously it to the done and impact systems? kind programs value in ASP everything XX,XXX, was ASP marketing add is filling, this, this getting all you've is of of also versus mean of

And So I we programs I mean now within years that traction. more more single gaining help them and front their talking think them their think sessions. about for talk every we I our right are practice do with are and have but see we about talking that NeuroStar up been then through practice. to about we almost outside it treatment of successful And the two Summits, thing we make

So the down, at up the and of it's think $X,XXX $X,XXX end the if that lease and or price I payment. system, it's a of the day, negligible

not us. for So it's the really issue

been have that changing -- ASPs our see we're So I all. at steadily. don't up And going

and And in on great I PHQ-XX think are for I like, you. mean this commentary thank Great, then sites it. been almost utilizing sounds the the getting the was And that traction it's you're you. tool, revolutionary then

the is, are utilizing question what today? sites my percentage your of PHQ-XX So

It's about XXX of our sites.

do many how again? sites have you And total

X,XXX.

So quarter about this. a of

lastly up there you we you. of down, the out And and or the something make then just sure in fourth you're excellent. everything all kind there, given And that's question. Thank the should in? is quarter. headwinds just want about a bake or guide, Is of be thinking you're this quarter COVID it my other from it's seems just, this terms not bringing quarter seeing like Okay, big to

it's is compared quarter down to third the to usually Historically, Hi, slightly flat Bill Steve. QX.

range to pull for inflation there's XX. current up component was And the end lingering our year, of the from quarter. so low for yes, impacts with guide And of the XX a we other but did the still and that factors,

with that midpoint right confident pretty now. we're So

you. thank Great,

You're welcome.

will question of from next come Thibault Marie BTIG. our And

open. is line Your

my forward around when one to year-over-year, were I the Steve. is you ask little softness base, of active taking it I understand a But up growing the just think merger expansion for to of first growth per treatment and if has I of base the treatment think some the to session Greenbrook, the Keith, starts the some want been bit catch the because so site, what to the site, on quickly. Hi, around active Success exclude here revenue questions. revenue of right given down think with you installed and was kind Thank you sort fast for utilization, installed session per do X% this was quarter?

I think a basis this our matching utilization which revenue growth per on XX%. be our click should was growth, quarter

for grow us So, harder accounts. I think it's price the fixed to

a to side business. click at going grow we And at of the So rate, that to per of think are our on efforts the XX% the I expect lot least.

half, How Okay, in expect some you're do University, you think what of very sort new sound the the to exciting. of given helpful. few And mentioned of expecting things to control these like you efforts? year. at which spend spend NeuroStar expenses back I we're about then operating half initiatives, a for quite in new

can puts on takes and So that us any about maybe metric? you tell

Yes, extensive Steve. through exercise. it's so Marie, forecasting we a went just Hey, pretty

a of was year, in justification you the For now, OpEx take did the really would would reconciliation higher the of of that budget costs we remainder some of some I bit. say, or high-end lower. even what inflation, didn't is impacts the a of down it have related and expectation range and what number reduced the if been to saw the have little and the was COGS, we

we new with with aligned R&D the very is So, to at, we're I clinical from we're an do think where and perspective. what spend, program and team the comfortable need

So range we're that right now. comfortable with pretty

the And built NeuroStar are University budget was into that costs planned. all our

Okay, if don't working Is still you're in still EBIT of something breakeven last think I heard a or you in toward? XXXX. reiterate quick it here. sneak can that I a target perfect. goal one, One I

is. it Yes

you so for much. it That's Thank right. All me.

Marie. Thanks,

Marie. Thanks,

And from you. of last come will our Dave JMP. Thank line Turkaly question the of

line open. Your is

some what if want or new be thinking but planning XXXX, you launches or Great, how even mix I'll anyhow, percentage us new good in additional could give this, it's of and their know can to these don't on? top XX% morning. do I you mean, two XXXX Keith, the are like what you X% with try in terms are know you indications, can don't I answer you I of of impact? your about this on MDD thoughts

So I discussion around patients few an would OCD. our opportunities add for expect been a are next opportunity think, over our has really we the patient that, that within to it's that battling dollars to physicians OCD treat years, few million are their base,

don't be majority, is it going it'll I So X% with the anticipate our But of be a meaningful physicians business. OCD. have to to even that that patients that battle

them our for accounts with seeing we're hands it we're patients asking help. raising and training their to get how really to is on seeing and depression. we're there out opportunity And Our them. And

protocol, you confirm Got this. it. the want look at I When to just

I mentioned the paying, for some in these similar. of actual just same same the be to sort imagine of and least indications, them. positioning you are And just are in charge of MDD? much I at terms very is insurers but or believe there like the amount same or the for you think And this differences therapy, release pretty the that or it's going the I I new think

and same with They with depression also. codes use often anxiety the suffer patients

for codes, educating we use OCD. But accounts the are test what now. that, is threshold a And they that's of same the outside our on So exact different motor it's there same thing.

are something that And is your for OCD, buy why some big they mentions for I need to they of in slideshow area else brain I or guess differently, that competitors, different are you you? mentioned the something you that? a treating And advantage they or targeting guess the lastly, is need other do that a

-- need able need physicians them. some They second buy the to our a coil to from so have competitors that and of to be treat

training. But and For enable software push, it controlling able are to we're remotely. a the us, through we it's that

it enable on charge. their we them, train we at As no system

you. Thank

conference I like turn remarks. closing Keith back for the now Sullivan to would to

look Thank for on thank the call. our We next quarterly you, you in us operator, call joining and updating you today. to on the progress forward

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

may You now disconnect.