Neuronetics, Inc.

Good day and thank you for standing by. Welcome to the Neuronetics Third Quarter 2021 Financial and Operating Results Conference Call. At this time, all participant lines are in listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you'll need to press star then 1 on your telephone. Please be advised today's conference may be recorded. If you require operator assistance during the call, please press star then 0. I'd now like to hand the conference over to Mike Valley from Westwick.

Good morning, and thank you for joining us for Neuronetics third quarter 2021 conference call. Joining me on today's call are Neuronetics President and Chief Executive Officer Keith Sullivan and Chief Financial Officer Steve Furlong. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance, the impact of COVID-19, and other operational issues and metrics. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K and the Form 10-Q, which will be filed later today. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we'll also discuss certain information on a non-GAAP basis, including EBITDA. Management believes that non-GAAP financial information taken in conjunction with U.S. GAAP financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results. Management uses non-GAAP financial measures to compare our performance relative to forecasts and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in tables accompanying our press release, which can be viewed on our website. With that, it's my pleasure to turn the call over to Neuronetics President and Chief Executive Officer Keith Sullivan.

Good morning, and thank you for joining us. I'll begin by providing an overview of the third quarter performance, followed by an operational update. Steve will then review our financial results, and I'll conclude with our thoughts for the balance of 2021 before turning to Q&A. Total revenue was $13.8 million, up 11 percent over the third quarter of 2020. While we are continuing to see progress in many of the initiatives we have put into place and believe underlying trends in the business are moving in the right direction, the conversion of our strategic initiatives into top-line growth has been slowed, primarily due to COVID. On the capital equipment side, Eurostar Advanced Therapy System revenue increased by 3% over the third quarter of 2020. Our assumption at the time we launched our commercial organization at the beginning of the year was that the team would begin to be productive in the second quarter and continue to progress through the balance of the year. Although we have shown pipeline growth, the expansion into new accounts was slower than expected as a result of a longer than anticipated sales cycle. We experienced slower than anticipated expansion by national accounts in the quarter as our two largest providers were focused on fundraising this year to support expansion efforts. As a reminder, we define national accounts as large TMS providers like Greenbrook and Success TMS. Our teams continue to work closely with these national accounts, and I believe we are in a good position to support their growth plans in 2022 and beyond. Our U.S. treatment session revenue increased by 13 percent over the third quarter of 2020. Despite the growth, we believe performance was impacted by COVID headwinds, delaying the new patient starts. Now, turning to operational highlights. In recent months, we have announced multiple exclusive commercial partnerships with leaders in the TMS space in an effort to accelerate the adoption of Neurostar Advanced Therapy for Mental Health. In September, we announced a commercial agreement with Zion Healing, a leading franchisor of behavioral services. In this agreement, Neuronetics will be the exclusive supplier of TMS equipment to Zion Healing and its franchisees. In October, we announced a five-year contract extension with Success TMS. one of the nation's leading TMS providers, and one of our longest standing accounts. As part of this agreement, Success TMS will exclusively utilize our NeuroStar advanced therapy for mental health systems to treat patients suffering from treatment-resistant depression. As part of the extension, we made a $10 million secured term loan to support their expansion plans over the coming year. Also in October, we signed a commercial agreement with River Region Psychiatry, a leading TMS provider in the southeastern United States. We are excited to have been chosen as their exclusive supplier for TMS systems. We have our team prepared to assist River Region in executing their expansion plans in 2022 and beyond. Turning to an update on our marketing initiatives. In September, we hosted our second Neurostar Summit event in Chicago. The event was well attended, with over seven physicians and practice managers from over 50 accounts. This was an opportunity to provide an in-depth review of the partnership we offer to our customers, including the various practice support programs we offer. We closed a number of capital sales at the event, and several subsequently. We have another event scheduled for November and will continue to put these events on the calendar and expect them to expand growth opportunities. In addition to the programs we launched earlier in the year, our Five Stars and Precision Pulse programs, we recently piloted a new program designed to help our customers identify patients within their practices who are candidates for Neurostar therapy. Utilizing a proprietary screening tool, we were able to identify over 500 patients in several practices who are interested in a non-drug treatment for their depression and meet the criteria to be a Neurostar patient. Over time, as these patients work their way through the preauthorization process, we believe many will become Neurostar patients. The success of our new tool points to a significant opportunity within our existing customer base to help practices deliver better outcomes to more patients without any additional investment on their part. Lastly, I want to provide an update on our clinical and regulatory progress. Recently, a peer reviewed paper was published that showed patients had a significantly lower risk of seizure with NeuroStar Advanced Therapy for Mental Health than with TMS treatments that claim a deeper stimulation with an H-coil technology. The paper, titled Seizure Risk with Repetitive TMS, survey results from over a half a million treatment sessions, was published in Brain Stimulation, which further supports the important work we are doing to solve patients' mental health struggles with what we believe is the safest and most effective system on the market. We are encouraged with our recent dialogue with the FDA regarding our potential label expansion and clearance for an additional indication. While the exact timing of the FDA's decision is out of our control, we continue to have productive discussions with the agency and believe we are moving in the right direction. In summary, While our revenue performance this quarter was below our expectations, we believe that we are continuing to make progress on our strategic initiatives to drive future growth. We continue to optimize and expand our efforts to drive awareness, work with our existing customers to identify and educate patients, and seek out ways to drive the broader adoption of NeuroStar Advanced Therapy for mental health. I'd now like to turn the call over to Steve to provide financial overview.