Neuronetics (STIM) 7 Nov 232023 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Neuronetics Third Quarter 2023 Conference Call. [Operator Instructions] Please be advised that today's conference call is being recorded.I would now like to hand the conference over to your first speaker today, Mark Klausner. Please go ahead.

Good morning, and thank you for joining us for the Neuronetics Third Quarter 2023 Conference Call.

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

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

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

Thank we was I'll our our an was you, conclude some an third X% education revenue commercial of rest followed thank results. Steve morning, thoughts review then as momentum, initiatives the all And you over providing performance, the by by $X.X I'll of in Q&A.In traction, joining recent before us. resulted Good NeuroStar with across will quarter organization overview quarter, financial XXXX. and operational increase an on turning which Mark. for maintained the million, and XXXX, the million. of revenue update. of effectively begin customer the system our revenue. gained record executing Total $XX.X third to

XX the During slightly quarter the to third increased from systems, quarter, took the XX.While diligence leasing financing our in than remains customers plan process to XX systems slightly the below we readily shipped available, of past during longer the acquire for to company. due

strategy, by serving pushed continue a about As summit NeuroStar platform transformative patients' a in in recent on that Texas, a our NeuroStar to customers as we were deals educate have have a which The play pivotal Austin, result, of up record an capital our system closed.Our already to in QX, into QX most close summits capacity, revenue a for sales event.U.S. can expected lives. year-over-year of revenue role XX% to a XXXX. few impact primarily and which million, driven Session local was utilization. number in represents substantial a led quarter. Treatment at The Session the new growth was This over XX% of rise in to $XX.X Treatment consumable utilization during was quarter single the third

that quarter, leading University, to program, we to tool, also and impacted PHQ-XX our revenue.During positive initiatives positively co-op of implementation moved this clinics, these expanded use successful Greenbrook are like business performance, trends Currently, continued all the of the of the they at offline with were all patients. closures Notably, marketing the the earlier as been systems Greenbrook out have in key levels. year sites NeuroStar systems to storage. of XX observed of return our located as pre-merger XX of Solution actively their X-STARS our systems utilization of Additionally, record their a store treating result

through to sites. remaining Better making mutual term.Although to near to the operational collaboration TMS headway, over Me will Greenbrook's highlights. initiative commit are our our we care We marketing designed to and program, they of promptly Guarantee the work fulfill a remain medical confident assessments, broader behind expect standards them and positioned program. to remain business assigning the to during online program. treating new going specific ensuring through program of to personnel in quarter, discussed benefits It measure establish offices, outcomes suffering are attention Guarantee and named developed websites introduction and our align program.Now care.These to Better medically customer to and depression.Currently, forward marketing pleased University, expect with hours, co-op our continue open patients of Providers sites Last a responsiveness us the a its new of all that from shift to lagging aided the our the in enabling clinicians.The program will in and network attending rolling include the by the with customer-facing This of enter pivotal Better ability pilot TMS social before which very historical several in XX refinements updating phase, expert the practices pilot media patient platforms the with of patients PHQ-XX systems lastly, provide close Greenbrook the phones the is success make to Success accounts marketing customers base. course to program. be we've appropriate, full co-op their where agree respond implemented Provider advise Guarantee in a is the is BMG Me sessions exceptional help follow being in program to to answer and offices, standards necessary to Overall, drive out business of accounts adhere partnership NeuroStar the practices X and we of we to that our still with who more let's allow to campaign better rebound to be standards be NeuroStar that to best participate Me in Greenbrook brand, nationwide Ultimately, were

with and they across seen X entire been thus Our base, of Each be and expansion sales rollout customer has the our standards. in be on of engaging is customers size provide our cohorts training to successful The response the program program.We planning has are meet group team next we positive, on on will significant interest January and the capped XX, program XXXX. so adding we program a another that a April overwhelmingly far to training customer will part can received accounts becoming ensure to followed measured in by rollout. have

as April, a expand broadly several build in classes our educational which social to to increased co-op Better marketing program helps continues program will powerful The of the our the attendance increased and has To this added the structured first part also to see Me the awareness tremendous participants. X is their step a for size understand within about its be approach University, being their it marketing relaunch in we have and and practice classes due them XXXX Guarantee marketing helped participate educate co-op co-op patients. beyond customers both well Since January.Turning program. attention further a patient conducted for our of alternative evolve demand, booked but we've and throughout a X total execute marketing.We The a fully in benefits customers the be are NeuroStar, next Better amplified to over in of Solution, for to awareness depression. an proven NSU classes the months group to only Provider of people continues PHQ-XXs, Guarantee X-STARS extra company demand, to in in requirement NeuroStar. XX NeuroStar media not over early campaigns broader tool, the program. to This the and of of more accommodate benefits Me settings. XXX XXXX.NSU looking as for participate the and our has has Year-to-date, will who and of with and marketing program Marketing to Providers

in new QX, and thereby XX% the training both customer marketing witnessed With QX.Turning introduction to co-op patients have as utilization regulatory helping a their depression. over marketing, to increased upswing learned treat an and customers and to participation NeuroStar their about educating rates of resources, more update. improve we've In participation enhanced materials

the to XXX(k) a submitted progressed population. our we quarter, second seeking the expected. during process discussed, The expand previously has As to as FDA patient

working a decision to the end to receive FDA questions by on respond to the year. the from of and the are We expect submission

response As execution to we've to on commercial and with in turn access focused suffering as more is the organization which open previously, is with to right about is and about market to disorders.With I'm that, to very from of to stated federal by insurance and keys relief the legislators on care patients recently position one strategy our NeuroStar.We're launched, the initiative access reinforces to to the over has from expanding both received working how for encouraging, future. will upon federal our seek we're the third execute call quarter an we've we to leadership like I'd helping excited state up resonating. we've calls.We patients pleased we we and continued the on and been reimbursement that update on for market with TMS. the we health and positive performance and mental initiatives The enthusiastic really that Steve. customers With the you confident positioned doing in future state the progress more growth are reception what the are on levels bring are initial our expand the patients

active the was of versus System XXXX. being X% versus the XXXX $X.X in $XX.X of million, over revenue Treatment consumable XX of Unless third Thank prior of performance encouraging revenue of revenue sites success increased noted, active XX% last Session quarter. the was computer shipped margins U.S. management, the our third Therapy uptick segment.In was primarily to revenue charge all million. which prior in Advanced within a $XX,XXX XXXX local $XX,XXX result million. of is driven and U.S. of the was $XX.X last record compared quarter. quarter was NeuroStar quarter year strategic $XX.X million we an obsolete revenue million, The became of Keith. for over of prior million purchase when in time the year ongoing in year to third site the considering for increase under XX.X% quarter systems as NeuroStar revenue compared comparisons performance increase customer an quarter over you, are approximately This revenue per the prior a single strong as a XXXX, months.Gross of prior an development otherwise result of our made the were $X.X changed. product the the by $XX.X lifecycle approximately in the the growth impairment when company at XX growth was XX.X% board for initiatives Total a year

We sold expense manufacturer contract cost in our goods also transition. $XXX,XXX incurred to additional of an non-recurring related

of million million, $XXX,XXX of these $XX.X quarter would margin XX.X%.Operating Excluding of the one-time expenses pro-forma were increase during $X.X third have gross quarter XXXX. been the million, $XX.X compared in to our an charges

all to continue strong in expense departments. We management see

prior loss share, year EBITDA in the prior Adjusted our year-over-year cash XX, our that per in as or year expenses as equivalents facility, to expense. down share, stock-based marketing which you achieving accounts to quarter. and in compared is million, media flat working $X.X $X.XX breakeven.During a we incurred capacity quarter, million.As remember, quarter compensation was revenue $X.X our the flow $X.X million of cash expanding the per loss $X.XX for negative $XX.X did negative results to marketing down and deliver we balance compared paid path continue EBITDA, approximately $X.X for We was while negative we $X.X the $X.X as third million operating drive from these strategy on essentially a X, net of Net holding record were the our million $X.X $XX cash million Our expenses of our leverage quarter. gained drew September or initiatives million, October in XXXX, third excludes expense.As non-cash million in impairment, million. million was cash the was available pro-forma $XX.X as debt of to quarter. indicates the one efforts Being traction to able co-op further XXXX. which inventory grow our of with quarterly

without it capital, While we guidance. sheet the remain breakeven balance flow prudent challenging in additional given equity debt strengthen turning confident and to to environment.Now reaching equity raising cash our we capital felt market

the million range to full the to year, of in For $XX we $XX expect previously tightened $XX from now revenue of million, issued million. guidance our $XX million

quarter, our now $XX of stability margin expense million management $XX million and like million, prior expect result healthy turn a top $XX expense the the of to $XX to expect all profitability.I the the guidance Keith. growth, to We $XX of to back $XX we now revenue fourth would expenses call in management to full the year to a For million million gross total to careful ongoing from improved of profile, be operating projected operating to million. over as of initiatives.Our path range for line contribute

Steve. you, Thank

third accomplishments the to are Our a in and of the team. hard dedication quarter our testament work

patients on and positioned we're for vision, I'd for mental Looking enthusiastic for capital. co-op thank a like issues. solid trusting initiatives to to our marketing about clear their Provider impact foundation the opportunities further health Guarantee Better forward growth like the investors positive program, lie we're University, XXXX, before confidence and The with to continued reinforces NeuroStar well success.Before us. the that the our response making with and line we're the With the in us of Me opening questions, a suffering rest

to with order for that, execute people high who technology.With I'd level We continue to our to many in to create shareholders. execute life-changing possible the long-term thank to help line value at as work to with diligently depression our strategy the our dedicated I'd on open like for as They questions. to goal battle also like a continue our employees.

of [Operator Instructions] first Our question Canaccord. Bill comes Plovanic from

you Maybe if start revenues out for off financing, got guidance. updates It's as on and longer believe well? components on morning. of with guidance To QX, think Bill with you guidance more a forward Or as that the QX for on what's thing? the process that And system specifically, John essentially? the start the off that of this financing we think are of more one-time the the do there, do can pushed your the this customers difficulty going that was you have push-out, taking going around to

it's at view lenders' John, Yes, diligence Steve. increased QX. the we our on behalf the end of

think credit in we've be just a the going sustained we've that'll to he'll is the I forward lender it's summit and we're what at December. aggressive, more But be done with that having be markets. enlisted going new

the getting that that lengthened again, to a We it's trouble higher by of reps also pulled in diligence sales having deals.But our was to financing. It our week to summit level week another quarterly give a cycle. capital close the I sales think just customers note aren't important our

in this deals And do the quarter. we close expect those so to script, as the majority Keith of mentioned

will Again, is strongest that quarter always system we naturally, QX. anyway. capital our historically, XX north of QX in So target be

it'll So so. with carryover, that remain

then the that for too, the Or point add that get to -- do cohorts? separate go too? X appreciate clarity I And you Me right you of sites And The a Me as marketing? of to Guarantee, as those is just a just follow-up is here. mainly a co-op now Better another clarity. that in only until point that Better program clarity marketing, now exclusive the have to other through Greenbook Guarantee to co-op

approximately the to open Greenbrook messaging, marketing metrics. those approach, our centers the now an around refine be added. around us cohort refine and to current will of to January to right the accounts we the opportunity be the will of And that that's give XXnd, tied going is on refine So next up XXX it'll

that are to We that we agreement accounts asking outlined. our X will standards the follow an sign they

of the XXX have we weeks we X X date, up that to the signed outlined. commit standards to have following to far so And last those in that

Our Kaczor Margaret William next of question comes Blair. from

was annualized move start trends this fourth about of can impact does Greenbrook those this we frankly, digit as XXXX, a And on you that should think a Greenbrook about quarter? redeployed. give as great I they on How as think basis redeployed a treatment more about revenues? were I the to systems, category guess, have hear Did the think confidence quarter something were that towards lot want them a It we or you be an maybe Greenbrook. to or as number? double partial

closures systems were store due We Greenbrook. the -- were that put into of XX storage to there

all as started in XX of of deployed in -- many treating we said of now. script, patients, have them them We the quarter. third the are And actually we which

So throughout will hold Success quarter business picked side and have they stores. the back on up as Greenbrook year.Our stores that next fourth the the quickly the Greenbrook the steam up to continue original as whole pick not really of is

we're with XXXX, try we quarter So -- and the Greenbrook fourth back over to the and and continue feel those next they'll get online. Bill team But working the gain to through that ground.

Okay.

commentary no of terms the So in treatment.

enough. fine -- fine that's So

these can potentially I An that that is side for the this heard kind or leading encouraging better, that all of we guess, treatment field. into a usage growth obviously, with I or going On in think, How indicator, investments? the utilization mid-teens think I as of strong especially commentary. being well, in was assume of high-teens XXXX? XX%, or And

effect. the actually all together account taking refer all our used them programs upper growth their and as I of of our the programs within to And implementing program gives the And practice. think continuing the per-click I all think our banking on grow we're for pulls business reason teens. in we the of are them to BMG what per-click, to

incorporates So upper accounts. per-click our for our growth all plan a of teens

next the Our Maeder comes of Sandler. Piper question from Adam of line

up wanted asked. that of were I already to, on questions follow the and I guess, some try

first a one Can little centers? I bit first or question. on of non-Greenbrook to remarks. the -- flesh I trends follow-up us the centers and just for that that's X. kind kind you fared how Then The Greenbrook, guess positive a heard you versus in talk Greenbrook of are prepared utilization able about the out the

were of pulling Adam, I were think companies Success they when it's differences to way separately, X since entities I traded quicker Steve. than I companies business. together the require It the if to And they There integrated. X at look was and between think education for the company. side as Greenbrook has some the Yes, X recovered want -- operating some we publicly Greenbrook the some philosophy and don't why preferred. are Greenbrook speak did a certainly the work

pre-transaction from so levels.So at driving from advantage we're is our Again, partnership. Again, XXX% and really and go-forward marketing is getting they're utilization. to a sales we're high-level perspective, is improvements philosophy, levels, of and bullish company the And management on fully marketing. and a operating say I very pre-transaction those would Greenbrook and taking Success co-op making aligned gradually

in confident go-forward our very partnership. we're So

it. Got

Okay. kind you've That's XXX helpful there. colors. And that's to side. But past. to models year, good we've the in some of capital I I in the then maybe us a framework think discussion Is just systems to that for XXXX? still per switch had given framework the over know XXX

XX between quarter. XX systems communicating been a we've mean, I and

for say stretch would a would XXX I So year. next be

at XXX So better this point. XXX and target I somewhere between would is say a

and make them corner. the want We accounts are just don't up they can sitting train in that we boxes sure have and that these so to that running get

for the So good is XXX a number to XXX us.

some the But year. on margin gross about one And QX. mix would those, color weighed we just than margin be think for going you had gross you as would QX gross in better great. next what that revenue trajectory any last me gross Steve, one-timers then And forward? provide margin adjust We margin But there be can if on number and is And Okay. this do one your pretty for we modeled. that's perhaps good and we think reflection a how quarter. about of

to into year. been margins will communicating our improve revenue contract Treatment we've new Yes, that we head will increased the of as percentage transition next manufacturer and with that the that continue total represent Session to

with And so, comfortable definitely mid percentage. XX high to would that, we're I say,

improvements So our we with manufacturer to of overall efficiency see are terms contract cost. in and starting

crack next And and of some XX% XXXX. probably point that so, to yes, number, I but late QX that's mean, ideally, year in we'd

final question from JMP Stauder please comes Our Securities.If line is your muted, Daniel Daniel? of it. unmute

me? hear you Can Yes.

sir. Yes,

Yes.

Yes.

targets? Sorry think about in nicely per you ask to metric which about high site. about back think XXXX? what's here expectations think that you any active is and And that. the as Could just since enter do that That XXXX you highest $XX,XXX, up late this as been how the broad or exit you was we metric? remind model? our wanted then Any it's I quarter, us revenue have about And near-term I just XXXX. core level mid-term

Danny, we Yes, metric. very view it's as Steve. a that key

close even $XX,XXX site at so capacity. in still systems getting segment, the not near using utilization, we per to that again, if consumable they're XX% increase number nice. the And the is with look But

to And in going increase to number.And only headwind overall we're with push is that that the the really, sites. so continue

helps just selling site, sell more And new customer. a to systems second a as us third so opposed if into or we it systems, into definitely

that's little to good that and would be continue metric negatively. going. viewed a a to and to is expect the said, sign, of which highest there continue. since bit just So shouldn't we XXXX, But expect balance, increase you it do so Like a keep it's see we

infusion your then just cash from usage. facility. us Could on rate give burn additional and you You any credit have XXXX XXXX? exit color as that look And Great. here cash to more on your cash one you follow-up

noted about way plans Or from increase to Gap]? modestly [Audio what's we think take also to cash to this usage marketing Should as that mean programs. good a expand here? some it we could You

aren't But did our Yes goal that really targeting.I our will our a into -- than through the operating have operating secured We've expenses was senior the plans to AR of consistent been we're at that's year that impacted were that did a say expenses hold higher no, forecasting. we from time. last so draw had million is conversion we facility. communicating down that's this there of everybody since we good And cash. and this debt with note, to XXXX increase Danny. capacity saw year burn XXXX, $X where We Greenberg cash question,

We contractually, contract is also had word, maybe manufacturer. for reduced transition burn I with inventory And about million units nicely -- this in would cash as significantly we'll the year we receive those strong for be are in delivered prepaid credits the that $X next a to expectation going our XXXX.So is year. say but my

will flow normal. exit But a we breakeven perspective. relatively flat from that's So cash QX

is QX quarter burn revenue And year. in lowest into is with quarter upon timing then and flattens the orders month, normally digits. highest QX our the depending QX, our and a out burn bit collections it of Our of single highest last QX. quarter, that it

get that And year point. this the is flow continue to next it by end breakeven to then the high end year. of and we'll we what cash reduce hopefully So number

back Thank would turn like session. you. concludes Keith Sullivan remarks. I to the closing This now it question-and-answer for to

operator, in updating you look We next on Neuronetics. you you, your to quarterly interest thank Thank for our and call. forward

participation for you does program. in your This today's the Thank conference. conclude

now disconnect. may You