Neuronetics (STIM) 12 Nov 242024 Q3 Earnings call transcript

Good day, and thank you for standing by. Welcome to the Neuronetics Third Quarter 2024 Financial and Operating Results Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Mark Klausner. Please go ahead.

you conference us call. thank third the and XXXX quarter morning, for for joining Neuronetics Good

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

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

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

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

today. I'll Mark, acquisition. providing discuss thanks overview and results on our everyone, some us review of Steve begin by Good with balance Greenbrook for XXXX joining of conclude the before then of then I'll turning to will introduction. for financial an our the performance, the and morning, thoughts the status thank Q&A. you recent

Let me was Total XXXX. revenue in over the increase million, quarter X% our million. with start of performance the revenue quarter. of $XX.X was NeuroStar third an system $X.X

systems. to quarter represents Greenbrook the increase U.S. the million, we approved close During turn revenue transaction, like which which week, fourth quarter. X% treatment was our XX our of a XXXX. I'd acquisition to quarter, the third shareholders during expect the to to shipped $XX.X Last of we session compared TMS.

what means well and our We laser-focused our we for as are are combined the company. incredibly shareholders. Today, this excited customers the our combined the long-term patients company, of driving on the employees about of organization, as success

with OpEx As operating together to increase we have profitable operational we estimated revenue the a transaction, synergies control. expense proactive new work the to When that reduction; efficiencies; Neuronetics, be growth. Starting we approach on shareholder approximately areas optimize focuses comprehensive X $XX key value: integrate and million. and to announced we

cost have into the we to and bringing As operation, our synergy incremental million. $X dug identified an $XX million, both we've Greenbrook's approximately new deeper target

These consolidating to generate synergies XXXX marketing in reorganization X, go-forward with in million and $X.X This Neuronetics, from combined no additional costs spend, in and expense model $X business million annualized that million remaining our support a our synergies with throughout streamlining reorganization along be we XXXX. savings alone longer reduction out include both will have to implemented reduction take approximately the $XX.X with will costs taken of departments to benefit of a strategy. action align definitive November programs We strategic reducing realized businesses. On back-office annualized that combined functions.

the Turning efficiencies. operational to

Our initiatives optimizing the way team commercial our patients centered we structure, employees. our target we commercial including organization, and are on our how operational train efficiency customers and

a across sites. with customers. To to on both of focus beginning and efficient are are data-driven our a the existing and improved sites productivity driving other Greenbrook our Greenbrook we in flow patient introducing more reinvigorated support We increase help process approach this, NeuroStar into

treating to NeuroStar prescription have process We identify have TMS us for done site. Using a psychiatrists an for radius to will which has and be in XX-mile are markets, depression allowed personnel other patients other Greenbrook site. our those time first information, field the within who are for a directing providers who mental a qualify NeuroStar or this will SPRAVATO alternative of to able antidepressants and then Greenbrook institute health rapidly help or who actively target an or analysis to currently trends seeking a a of patients physician or for providers disorders into key a able patients who be

us driving efforts. will efficient that volume We marketing allow patient broad-based be this traditional to versus more expect at significantly

Another reach benefit and of resources it greatest us to of the territories effectively to allocate more number enhance and rationalize patients that this areas. data our allows coverage to is efforts to

practices a patients However, simply our other field providers Greenbrook potential educate our TMS immediately the almost from with put in to there referrals is drop-off improve expressing after know connecting they significant patient not a study continuing if in on of or to therapy we productivity. is place site contacted treatment. to We enough patient interest patients need experience in are personnel identifying isn't best to site. What allow into NeuroStar

are well NeuroStar other for also and patients protocol this, new the personnel qualify for field are customers for we complement to will pharmaceutical options To a Greenbrook to be on on the continuum. This the who fully with a of managing medical traditional are step our to step treatment. This well-versed the one traditional alternative and TMS developing the offerings or an process, process a help We our care looking for their most next treatment exploring are they comprehensive not are therapy from providers our continuum. Under immediately one personnel to related they of next it's patients therapy as their move patient training how not how the sites result, patient's next on this to care those educated to of services progression tried. ensures whether contacted providers that for developing in who in the SPRAVATO the achieve our to paradigm. if their by patients program on do appropriate begin therapy, yet in field process includes that desired training continuing have as fit which ensures our they of the

working at few last Better operationalize of comprehensive to a to patient process ensure implementation tenets University been ensure have consistent with Greenbrook commercial we our across optimal treatment This and in we review November outcomes includes establishing Me key Program, network. the over our scheduling new to training NeuroStar While Provider priorities. are quarters our of structure

Beyond cost revenue growth. also driving and operational efficiencies, focused we are on

offer inventory model both XXXX. To all the optimizing Greenbrook we all are into expand maintains buy-and-build the implementing clinics ability XX to implementing and patient the Greenbrook then treatment. a in observation maximize and planning and appropriate potential offer are utilizing to at sites. and as We all to practice currently facilities SPRAVATO are provider model, buy-and-bill for directly itself the aggressively purchases There bills SPRAVATO sites services. this Greenbrook across well sites Under program, SPRAVATO administration revenue treatment each Greenbrook insurance we of expanding the are the across that drug all drug our location. SPRAVATO program as and

administration this services. While results creates inventory, a requires reimbursement managing an enhanced billing This reimbursement structure treatments. overall medication stream additional our higher revenue to it for alongside in compared TMS

allows provide our our service to broader one As is the to all customers. outlined, this of transaction us benefits previously of of key offerings that scale

regional BMP can customer across negotiate of block leverage and economics, for to contracts. we to to our expand to customers also offers a payer offerings. Negotiating First, approximately customers. network of leading efficiencies SPRAVATO combined our contracts national reimbursement once These practice for to and payer services, and sites while management rates making customers Greenbrook at the favorable their improved profitability increasing potentially practice TMS ultimately easier it benefits better XXX extend medical and

navigating more of up providing payment our reimbursement in processing able insurance by speed could claims. offer reduce and will which complex Secondly, to customers, support to also landscape we be services billing robust the denied

NeuroStar potentially meet administrative burden to existing Finally, access centralized working Greenbrook's can provide to we rates for customer TMS. reducing the education manage center. By leveraging more and this we call patient calls to help are the increasing conversion required also call center operation, demand and efficiently,

Steve. since have value that, while quarter expanding XXXX. a on initiatives, treatments. the improvements our a the our mental meaningful announcing goals: in move transaction, to main the to value. Through we that now and and The mental and care of have flow critical on And based third call our we what treatment; we X achieve step combination And combined we growth this execution to forward, confident to represents will deliver to increasing for by turn we're the are our health I'd transformative organization of over breakeven path cash clear ability profitability As Greenbrook we shareholder cost in patients controls, operational learned focused disciplined true revenue health believe access advancing like shareholders. With journey. to

year was was the revenue XXXX. Operating of $XX.X year-over-year. quarter by for were the the was of impairment million, XX.X% an prior million, $XX.X XX was cost million manufacturer which driven active and third the $X. an incurred compared expenses, sales year. the due U.S. XXX prior performance or revenue in Advanced Gross being $XX.X to session System margin in primarily increase in increase of quarter. basis a XXXX approximately X% closing. the points in site during to in of product Unless in prior to the Therapy you, the revenue prior shipped The increase in approximately XX.X% XXXX. made increase manufacturing the of noted, Thank capital we of was expenses million treatment inventory $XX,XXX contract otherwise of over compared all an year quarter. U.S. Keith. year change prior increased comparisons margin up the to related the to an of a from transaction primarily quarter, Total were quarter million, mix, million onetime gross million, The are third versus was $XX.X Revenue the NeuroStar quarter revenue per our X% $XX.X increase and transaction in $X.X was $XX,XXX systems to quarter. charge compared X% quarter absence result the of XXXX. new in quarter third

or million noncash $X.X to in quarter, expense. stock-based or was of $XX.X quarter third incurred $X.XX the quarter. $X.XX prior a share compensation the for as per approximately During net year million loss loss we $X.X compared million share of Net per the

As million. XXXX, were and cash equivalents of XX, September cash $XX.X

Now turning to guidance.

For stand-alone the of expect million stand-alone $XX now million. year expect range the to fourth $XX in revenue quarter, million of revenue $XX we to million. $XX We full

We excludes approximately range which expect million over year operating to full Keith. to stand-alone like $X would million the transaction expenses for to the of expenses. I to call now be $XX in pre-close turn million, back the $XX total of

Thank Steve. you,

forward. Integration importantly, Let path at on long-term now. our more organizations for me presents combination of you operations, leave we're right focused everything teams center from to but with growth. opportunities creates The platform some immediate unified the of sustainable commercial a thoughts our on key it streamlined is

expectations, capturing initial in our the and phase synergies. integration identifying in Our planning first progress particularly exceeded initial of has

particularly to Looking organization. are that, ahead how to ability early This we expanded our together growth quarters our forward commitment care. With spirit wins you milestones and our business to as updating the I'd have patient a to milestone through we transform and the seeing We the across overall announcement. collaborative the worked The breakeven our progress open reflects since capabilities on for line execution like line teams in clear our shared in work quarter. to by evident mission our drive coming and we're integration the look questions. to encouraged third flow our the both sight to meaningful footprint. I'm cash and of acquisition by and XXXX, have both

Our Instructions] [Operator from question from Adam Sandler. Piper first comes Maeder

what just then look And This on we should help help can us a think you guidance expectations? bit Kyle your for changed XXXX terms forward? full is understand in the I as that looking [ for of ] Adam. just year about how us at reduction first, guess, XXXX,

Yes. Steve. is This

QX. cash see we experienced change the that So flow guidance QX. trends to and there's really based they in on issues due customers to been in The in continue patterns QX -- reimbursement from essentially, purchasing our the a we

some were seen with QX X.X quarter have years, being recovery their slowed. collection flows in We about but our cash largest

our they we're were the the is in it seeing actually did what levels treatment our pre-COVID historic sessions. Right are now approaching databases change so inventory lows in historically purchasing at And way levels. TrakStar

used customers treat a holding they of be cut really their or to quarter's quarter's and worth whereas inventory So are next X worth to back X they almost able inventory. holding purchase between probably months they're patients, of and to

stabilization October in our a again, rest if utilization strong responsible in forecast seen the that QX, it to quarter. bodes will a business, and system very the of have for improvement. But had have utilizations session forecast full it's wouldn't remain some I we -- recovery be so which And say a well And impacted from October, treatment very for we strong. QX. our again, And perspective. a we strong it the

are we the we important stabilization focusing year. It improvement on team. the are that, we close and disappointed did restructuring that that though, some of did in seeing the the impact script, commercial had, to and we the is last we impact as some are the Keith reimbursement week more mentioned but out no, as note, So profitability

forecast is impact on QX. revenues to in that So some have

that congrats of guess Okay. And a so of second the and then to 'XX into as remind entity there. super on helpful. regards you us 'XX? kind you combined to Yes, for look is and with committed question acceleration? growth mid-teens I can the Are that's we as still what driving progress growth if Greenbrook

Yes.

lot the is of that one proxy we transaction realize the a moving -- But goals. at And and in so it's our are internal state parts that point. of did this with there I

profitability. it revenue losing at line is to of our expense profitability. to so focus to is And top not come And again, is and primary may line QX It our get goal flow breakeven top cash growth. some the improve in

will our we as haven't closed the updates obviously top that's I to will where through yet, in think be so really focus. And -- be and as we And we reminder, XXXX. work a number line providing

from comes Plovanic Genuity. Our William Canaccord question next from

give future on treatments? threshold Just can and a you'd about out you those and the quarters was of for businesses talked separated which if are trending business then how just just kind including past, us wondering testing, today non-Greenbrook. I give us separate of -- is a predictive between granularity in kind we've the Greenbrook and kind even little of

comment since deal strong. yet, Yes. This is the we business with on our haven't progress Keith, Greenbrook Will. closed I'm still hesitant but Greenbrook's to is very

had One of the removed things in our QX guidance was also. the intercompany been revenue

So business. we're strong. that and to was significantly of I think local is business taken out Steve looking continues at as our And that up it. But consumable be mentioned,

well, and Greenbrook on report business both TMS they'll And on side, is strong. on on So shortly. both SPRAVATO business sides, -- the their TMS on their very

much just, just cut removal guidance, million. of then revenue? How Okay. us that big the $XX million, understand that of And could Street Steve, help sitting pretty intercompany in $XX terms a mean, you down of million, $XX it's to at I was

projected had, that stand-alone, purchases. does so it To clarify, include it Greenbrook is guidance the we

bulk to the And would to the shortfall the say of $XX restructuring. Street so million of is I the due

QX and impact at it And flow board. of so it commercial come getting we've that decision really some an the commercial focus breakeven. again, our team across on members the And team revenues. did on internally, the did cash have to profitability made to impact and expense And the will

Okay. And then just last question me. for

exactly up change less like was the rep, commercial you change doing territories physicians. in what Was you it talk us force? It I field sounds differently. XX-mile radius in just you in talked you're it a help when about capital as mean, so you're capital? a the Just the -- is sell the it tightening about restructuring, understand strategically

or better. how a us Just a Just help help [ us us provide about XX% XX% this to can understand us understand give lift we think commercial us help ] should Was this? lift? anything the little to you -- a

Sure.

is So Bill, really the commercial a change in strategy just shift.

of RAMS' utilization to their The of managers. has they aspects, their models providers [ to business of is centers ], patients and refer area responsibility one Greenbrook RAMS that the are with Greenbrook local to to currently work and don't the can is around regional One TMS as the providers those about they that or providers TMS to to that SPRAVATO SPRAVATO. bring offer TMS drugs. These have failed or talk that don't multiple benefits offer what plan

driver So and that an to been model excellent worked team Greenbrook of has locations. very has Greenbrook well for that revenue

the data are to managers they we our locations with with our have be to development practices. with providers training BMP so -- work also accounts help more local drive their into can doing using make we The So we practice going efficiently are and that the that group also those and that same patients efficient. more around

model. With the system session in the these result, the major those a more on really will sales And would capital into true that's treatment the So be a systems come that shift business business. side driving accounts. existing focus second we as as accounts of on

question comes Blair. next from Beers Our William from James

on accounts. adoption. Jimmy give I I or it? BNP treatment from maybe And why clarify reduction. as want just thing one And coming terms update also I'm of just all ]. to -- your in us then opened guess, talk looking just to Is maybe for an then It's at Margaret this you've sessions, primarily [ to adolescent up on guidance

you you So to as why contribution then it contributing? initiatives guess, those expectations bear -- Or isn't QX? talk look to begin we along? do start fruit? maybe any seeing is that And to assuming pushed or offsetting then are just And in I further 'XX, are

sessions. QX the of weakness is majority the to say would treatment I Yes. related

lending credit of have a stabilization We environment. and seen the

change on from little bit really short well capacity, existing customers of the of So a as as focus little we Greenbrook's getting But to QX will levels. historic a again, current systems our capital with it take may be time.

the so session well. treatment the more would shortfall a side. And to big with opportunity regarding related And strong. It's adolescents, as say is Greenbrook I remains extremely it

adolescents and as March it's so approval. providers, and look end significantly we in look patients the we where at we when received was through treated And QX at both it to if up the of

and some then Japan, And last talked of terms that this That's Okay. cycle. there one and would opportunity something over-the-air on drive international an about helpful. we maybe time. upgrade in update But was believe is I sort of just

you still the there you're maybe QX? for talk that's implication seeing and So just to if what can

So growing, our Korea. business in Japan in is also

to our really business there systems entire So providing honestly our -- of are the hospital system. It's throughout to though on it focus focus is are said it -- over take quite that international -- and we've advantage their is our sustain the before, markets. now now broadening in

is Our great States. And team. as focus Steve United the indicated, with Greenbrook we in have a the opportunity

has location benefits now You The few been the to opportunity in Greenbrook goes them mentioned and on tomorrow that front, the focus to the adolescents through starts days on educate but adolescents. continue it not for for growth. we which provide the the trainings really an that have going a adolescent RAMS, we're and

centers of number adolescent treating Our patients now has significantly. is has -- that grown

last reaching I quarter. helpful. the second the Okay. I clarifying And might breakeven release cash says just this by be believe quarter. wrong, but reading believe you maybe third That's I flow the press said one question.

the you there. just timing what is clarify if So could

third the It's quarter.

the comes JMP. Danny question Stauder of last from Our line at

Or is you what other there this entity had million. to some for the it that strategic of number today, as be reorg $XX on additional And more you do like, will called primarily at from? you that point? just $XX more where updated other here million synergies, coming time this is there could Just opportunities million look having you sit $X Where out? digest ceiling that feel the combined are any synergies? to areas Is

the increment Yes, came within from newest the Neuronetics. restructuring

of activities not definitive anticipated included wasn't the the the level we and ceiling. specific I were these within the all is parties $XX departments. as working during at have million through that higher So think lot do really have the not summer agreement. Again, of been a the

that more closely more post-close. with see number up inch I So think as we you'll work involvement

do into new just anticipate the debt? follow-up And timing. XXXX, How given position cash first Great. usage cash the that comfortable half that one then how about second of flow in you timing? of drawing cash on breakeven we And should the here? XQ down are with tranche then think you just And

in that our I expenses cash significant forecast mean, right with incur QX. are burn Yes. companies comfortable on with now also the position we're close. that's and by we'll There both deal

a QX So of are balance in burn a again, forecasting exiting and 'XX. healthy with we think we're reduced

lender, We are in Advisors. Perceptive conversations with our

again, the to so close. always cash the cash not. Again, and going predict think forecasts And or to decent we from we'd say initial as down bit we're little I company perspective, it's our transaction work draw a balance early months a of a little a models cushion. do if of through like But

Thank question-and-answer now Sullivan remarks. will you. The closing session turn is closed. for Keith now to back it I

call. interest on your forward we next for the updating Neuronetics. you to quarterly Thank in And look you

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

now You may disconnect.