Neuronetics, Inc.

Good day and welcome to Neuronetics fourth quarter and full year 2022 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there'll be a question and answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to turn the call over to Mark Klausner. You may begin.

Good morning and thank you for joining us for the Neuronetics fourth quarter and full year 2022 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 can 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, 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 forecast 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 the 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.

Thank you, Mark. Good morning, and thank you for joining us. I'll begin by providing an overview of our recent performance, followed by an operational update. Steve will then review our financial results, and I'll conclude with some thoughts on 2023 before turning to Q&A. We are pleased with our performance throughout 2022, a year which included several record quarters and the achievements of key milestones. We shipped over 210 systems to customers bringing total system shift all time to over 2,000. In addition, our efforts to drive increased treatment session utilization has continued to pay off. As of the end of the year, the number of all-time treatment sessions surpassed 5.3 million across roughly 145,000 patients. This all contributed to the total revenue growth of 18% for 2022. proof that the investments made over the past two years in marketing, practice development, and patient education initiatives are working. I'm very proud of everything that we have accomplished in 2022, which we capped off by a strong fourth quarter. And I'd like to thank our employees who delivered this high level of success by way of their hard work throughout the year. For the fourth quarter, Total revenue was $18.2 million, up 21% over the fourth quarter of 2021. The strong performance was primarily driven by record treatment session revenue, as well as continued capital equipment sales growth. As we've seen, our programs and initiatives take root. NeuroStar System revenue was $4.6 million, up 64% over the fourth quarter of 2021. The success is due to the ongoing hard work of our strong team of area sales managers who found their groove in nurturing and converting a robust pipeline, which was strengthened by yet another sold-out Neurostar Summit. The U.S. treatment session revenue was an all-time record of $12.5 million, up 11% over the fourth quarter of 2021. This record revenue was the result of positive growth at the local per-click sites and was accomplished despite slower than anticipated growth at our largest service provider as they worked their way through merger integration. Our per-click success was driven by our investments in Five Star's training program, the expansion of our PHQ-10 tool into more offices, and greater availability of practice management training. Now, turning to our operational highlights. Our first focus area is increasing customer and patient awareness. We once again had a completely sold-out Neurostar Summit in Chicago attended by 50 participants from 38 different practices. This event received outstanding feedback, which led to the conversion of several high-quality customers and the growth of our pipeline. The Neurostar summits have proven to be the number one event for educating and partnering with new TMS practices. Our area sales managers have done an excellent job helping these potential customers see the benefits Neurostar can bring to them and their patients. The implementation of our proprietary PHQ-10 digital assessment tool, which allows our Neurostar practices easily identify patients within their practice who are candidates for and have expressed interest in a NeuroStar treatment has been extremely fruitful. We collected 98,000 PHQ-10s in 2022, and we will continue to enhance this tool to include new features within TrackStar to better manage and identify patients who are candidates for NeuroStar treatment. Our Neurostar University in Charlotte, North Carolina continues to receive excellent reviews from our customers. By year end, we had hosted eight full capacity classes with attendees representing 75 accounts. And we now have a lengthy waiting list. As we continue to evolve the capabilities of the platform, as well as the support services that we offer our customers, these classes will continue to be highly beneficial for both the new and existing users as we seek to leverage the power of NeuroStar to help more patients suffering from mental disorders. We have begun to see positive benefits linked directly to the NSU training classes, such as the increase of 23% in treatment session utilization and an increase in PHQ-10 utilization from these NSU attendees. Our second focus area is the continued optimization of our commercial organization. In the quarter, we started to see some benefits from the efficiencies gained from our newly implemented Salesforce reporting tools, which help our PDMs better understand our customers, their patient base, and utilization trends. These tools allow the PDMs to help our accounts set goals and measure their progress towards achieving them. In particular, allowing accounts to more efficiently and more effectively identify and treat people in need from within their own existing patient base. As planned, we hired four additional PDMs earlier this year due to the new account growth over the course of 2022. These additions will support the growth of our installed base and ensure we provide our customers with the highest level of service and support. Our third area of focus is leveraging exclusive commercial partnerships. We recently announced an expanded commercial partnership with Greenbrook TMS, which runs through year end 2028. Under the agreement, we will be the exclusive supplier of TMS equipment to Greenbrook. with all other TMS devices being replaced with Neurostars as their existing leases expire. This expanded partnership will deliver several important synergies, including co-branding and co-marketing opportunities, enhanced patient and clinical awareness, improved patient access to care, and a collaboration on product development and publication. Importantly, this agreement converts the entire Greenbrook organization, including Success TMS, to our consumable pricing model and away from a fixed price one. We will offer our full spectrum of support and programs to Greenbrook centers and practitioners. In particular, we will offer tailored NSU classes and integrate our PHQ-10s and TrackStar to help Greenbrook reach and treat patients more effectively. With the help of this agreement, NeuroNetics and GreenBrook will be able to make NeuroStar advanced therapy for mental health accessible to a growing number of people who are struggling with mental illness. While we are enthusiastic about the long-term partnership with GreenBrook and our ability to help them drive increased patient volume in their centers, I did want to highlight that we have continued to see disruption resulting from the merger of Greenbrook and Success and the subsequent integration of the two businesses. As Steve will mention later, when he provides our guidance, we expect some revenue headwinds in 2023 as they continue to work through combining their companies. Lastly, I want to provide an update with our clinical and regulatory progress. In January, we announced a peer-reviewed publication which shows Neurostar TMS as an effective non-drug treatment for depression with comorbid anxiety. Significant anxiety symptoms are present in the vast majority of depressed individuals, and the majority of patients with anxiety disorders also have associated depression. We were able to study actual results and establish the effectiveness of this crucial therapy option for patients with anxious depression, thanks to the strength of TrackStar and the largest clinical data set for TMS in depression. Now for a quick update on the expanded Medicare coverage. In February, NGS updated their healthcare policy, allowing nurse practitioners and physician assistants who are within their scope of practice to order and provide TMS treatments to their patients with major depressive disorder. This is a welcome change, as we have always recognized the importance of psychiatric nurse practitioners in delivering mental health care. This is especially true now given the shortage of healthcare professionals. In addition, UnitedHealthcare recently announced a positive coverage change which expands access to Neurostar therapy. Optum, the behavioral health benefit manager for United, reduced the number of prior medication failures for TMS eligibility from four down to two, and removed the requirement for a trial of evidence-based psychotherapy. As the largest healthcare insurer in the country, covering 23.8 million lives, UnitedHealthcare Optum's decision to make Neurostar more easily accessible and make a real difference in helping to alleviate the burden of drug-resistant depression. To continue to provide greater access to Neurostar therapy, we recently expanded our reimbursement team. This larger team will be able to increase our advocacy efforts related to favorable health policies and provide our customers with best-in-class reimbursement and billing support. In closing, I'd like to express my gratitude to our team for their dedication and perseverance in navigating the challenges of the current operating environment with ease. This hard work has enabled us to successfully execute on all initiatives during the year and bring relief to patients suffering from depression. Looking ahead to 2023, we anticipate that the momentum we have built will continue to grow as we build on the solid foundation we have laid throughout 2022. With that, I'd like to turn the call over to Steve. Thank you, Keith.

Total revenue for the fourth quarter was $18.2 million, an increase of 21% over fourth quarter 2021 revenue of $15 million. U.S. Neurostar advanced therapy system revenue was $4.6 million. Compared to the prior year revenue of $2.8 million, it was up 64%. The company shipped 58 systems in Q4, up from 48 systems shipped in the fourth quarter of 2021. U.S. treatment session revenue was $12.5 million. an increase of 11% over fourth quarter 2021 revenue of $11.2 million. The revenue growth was primarily driven by an increase in utilization, in particular among our local per-click customer segment. In the fourth quarter of 2022, revenue per active site was approximately $11,500, compared to approximately $12,200 in the prior year quarter. Excluding Greenbrook and Success, revenue per active site was consistent year over year, despite having added approximately 100 new active sites during the year. Gross margins were 76%, consistent with the fourth quarter of 2021. Operating expenses during the quarter were $21.5 million, an increase of $3.1 million compared to the fourth quarter of 2021. The increase was primarily driven by our expanded sales force, the opening of NSU, higher than expected sales commissions, incremental headcount and product development, investments in clinical, as well as increased costs from inflationary pressures. During the quarter, we incurred approximately $2.1 million of non-cash stock-based compensation expense. Net loss for the fourth quarter of 2022 was $8.3 million, or 31 cents per share, as compared to a net loss of $7.6 million, or 29 cents per share, during the fourth quarter of 2021. EBITDA for the fourth quarter of 2022 was negative $6.5 million as compared to negative $6.3 million for the fourth quarter of 2021. As of December 31st, 2022, cash and cash equivalents were $70.3 million. We continue to work with our lender, SLR Capital Partners, on an updated credit facility. We are on track to close on this new facility in March 2023. Now turning to guidance. For the full year 2023, we expect revenue in the range of $66 million to $72 million. As Keith mentioned, our guidance for 2023 assumes lower treatment session revenue from certain service providers, but continued strength from our local per-click customers. For the first quarter of 2023, we expect revenue of $15 million to $16 million. We expect total operating expenses for the full year 2023 to be in the range of $84 million to $88 million. For the full year, we expect cash utilization from operations to decrease year over year. Cash utilization will be the highest during the first quarter as it includes our national sales meeting, as well as prior year bonus payments, sales commissions, and retention costs. Our operating plan continues to show that we will achieve cash flow breakeven with cash on hand. Our path to profitability is still on track, thanks to our projections for top line growth, solid gross margin profile, and the careful management of our operating expenses. I would now like to turn the call back over to Keith.

Thank you, Steve. 2022 was a critical year for Neuronetics as we continue to drive the accelerated adoption of Neurostar. We have shown that the clinical results are superior. We have made significant investments in building the latest and most talented commercial team in the business. We have demonstrated unmatched ability to support our practices by assisting them with patient education and awareness campaigns to promote long-term success. To continue that success, we will focus on a number of key initiatives during 2023. One, increasing the number of customers who participate in Neurostar University. Two, working to incorporate a high percentage of customers into co-op marketing. creating a network of accounts across the country that follow Neurostar best practices. Beginning with increased customer participation in Neurostar University. As the initial cohort of customers has gone through training at NSU, we have clearly seen the immediate positive benefits at these accounts, including better PHQ-10 uptake and increased treatment session utilization. Because of this, we are working to increase the number of existing and prospective customers attending NSU classes, which provide important education to the providers to allow them to deliver better patient outcomes. The classes are crucial as we continue to develop Neurostar capabilities and features, such as our expansion into OCD, as well as the introduction of DETECT and the NT-CAP. Going forward, we are offering up to two classes per month throughout the year and incorporating attendance costs into our co-op marketing program. Our second focus for 2023 is to incorporate a higher percentage of our customers into our co-op marketing program. There are over 60 customers who are currently utilizing the benefits of our co-op marketing program on a regular basis. The co-op marketing program is one of a kind in the TMS industry. It provides us with an incremental opportunity to partner with our customers to help support their business and provide patients with access to care through increased awareness with co-branded localized marketing campaigns. Customers who have participated in co-op marketing program have seen an average increase of four patients per quarter. We will continue to emphasize the expansion of customer participation throughout the year to bring the benefits of the program to more customers and their patients. Turning to our third and final focus for 2023, creating a network of accounts across the country that follow Neurostar best practices. Over the past few years, our company has made significant investment in the organization and the development of best practices for each customer to market effectively and drive long-term growth. We would like to take certain aspects of these proven practices to a broader network of our accounts. As we look ahead to 2023, we want to set certain standards across the accounts we serve, such as offering consistently high levels of service and increasing patient marketing within their offices. We Expect to see these standards in customers who fully utilize the uniqueness of the Neurostar offering and our approach to the market. We will continue to follow our plan in 2023. We have done tremendous work over the last two years to set ourselves up for success. And we have the strategy in place to drive the accelerated adoption of Neurostar and bring relief to more patients suffering from mental health disorders.

With that, I'd like to open the line for questions. If you'd like to ask a question, please press star 1-1.

If your question has been answered and you'd like to remove yourself from the queue, please press star 1-1 again.

One moment while we compile the Q&A roster. Our first question comes from Bill Plavnik with Canaccord.

Your line is open.

Hey, great. Thanks. Good morning. So obviously the, I think the biggest question is on guidance and, um, you know, Greenbrook one, you know, what do you contemplate at the low end and high end in terms in, you know, how does that reflected with Greenbrook kind of what percentage of your revenues are they today? And what do you expect out of that versus kind of the rest of your business? Thanks.

Hey, Bill. This is Steve. Obviously, you know, with the press release yesterday, we did have to scramble and adjust guidance. At this point, all we know is, you know, they do anticipate closing 50 stores with a 10% impact on revenue. We don't know the mix. We don't know which stores are Neurostar. We don't know which percentage of revenue is Spravato versus TMS. And so, you know, we took the approach really based on their contributions in 2022 versus our expectations in 2023 for growth. You know, I think we're in a wait-and-see mode at this point. So you saw in our K, well, you haven't seen in our K yet, but you will. You know, they're a little bit north of 20% of our business. So, you know, we believe the 66% to 72% million range is appropriate at this time. You can also see we did expand the range in revenue from our typical four million for the year to six. Again, we just need to see how this plays out through the month of March and into the early part of Q2. Greenbrook announces the end of March, and maybe there'll be some more clarity into their plans and how it impacts us.

Well, Steve asked another way, what do you expect out of your core business in 2023? Historically, if I look back, you grew 18% in 22, 12% in 21, and I even think a lot of the growth as we exited 22 was out of the non-Greenbrook businesses.

um you know given that's 80 of your business kind of what what was the contemplation of of growth out of that core business as you think about 2023 thanks yeah i think it'll be consistent with what we saw in the second half of 2022 so in that 20 range again if you look at our q4 number you know 21 over per year you know that was negatively impacted by Greenbrook and Success's performance. So the per-click consumable segment and some of the other segments are performing quite well. So, you know, again, I think it'll be in that 20% range.

And then last on this guidance question, and then I'll jump back in, is just how do we think about kind of the capital versus disposable, especially, you know, getting our hands around like, you know, the assumptions probably given they're shutting down 50 centers, they can move capital around, you know, how do we think about capital in 2023 versus disposable? Thanks for taking my questions.

Sure, Bill. Yeah, capital is going to be consistent with 2022. So, you know, we've communicated between 45 and 50 systems a year. We did slightly more than that last year, and we anticipate that consistent level in 2023. So, there won't be an impact from the Greenbrook integration efforts. We also expect international revenues to be flat, so all of the growth in 23 will be related to treatment sessions.

You mean 45 to 50 systems a quarter, not for the full year, correct? Yes.

Thank you. Our next question comes from Adam Mader with Piper Sandler. Your line is open.

Hey, Keith. Hi, Steve. Thanks for your questions here.

Wanted to follow up a little bit on the guidance line of questioning. And I guess I'll ask about kind of, you know, cadence. You obviously gave Q1 guidance maybe a hair lighter than expected. But, you know, just kind of help us think through kind of how you see, you know, your business kind of progressing over the year. Maybe we'll start there and then I have a follow-up or two. Thanks.

Thanks, Adam. Yeah. If you look at our historical performance and I go back to 2018, so the year prior to IPO, you know, our revenue cadence by quarter is, you know, Q1 is 21 to 22% of annual revenue. Q2 is about 24 to 25%. Q3, 25 to 26. And then Q4 is always our strongest quarter at 28% to 29%. And so Q1, we always have the reset of deductibles. Patients have to go through and get their benefits investigations redone. And so the internal teams here have been processing about 400 or so BIs a week. And that's continued into early March. So that's really the biggest pressure on Q1. But, again, it's very typical for the past five years.

Okay. I appreciate that color, Steve. And I guess just, you know, one more on the guidance and then I'd have a follow-up. But just kind of obviously a lot of focus on the Greenbrook announcement yesterday and kind of how that impacts you guys. But if we just kind of look back, you know, more broadly, you know, it sounds like you – are very confident in the business, ex-Green Brook. So I guess one question I have just on the macro is, you know, how are you thinking about this year, 2023, you know, in a potential recessionary environment? Is anything factored into the guidance there? You know, are you allowing for some additional conservatism? Just kind of maybe walk through the philosophy on the outlook.

Yeah, I mean, there is there are no recessionary impacts in our guidance. I'm sure you remember Adam at your conference in New York that, you know, I communicated we were comfortable with where the consensus was for the year. And that was in that 73 million range. You know, we were also anticipating, you know, mid to high teen growth year over year. Again, the Greenberg press release yesterday was a little bit surprising, and so I think we need just some time to work through the impact. Otherwise, you saw our performance in Q3 and Q4. Even with, I would say, no to slow growth from them, we were still at that 20% level. And I think we're confident that we'll be able to maintain that in the other segments.

Adam, this is Keith. From a marketing standpoint, we have been working closely over the past couple months with the Greenbrook team, putting together a plan on how they would attend NSU, how they would market within their practices, how we would help them get PHQ-10s in. So there was some hints of the closing of the stores, but I believe that we have put together a solid plan with Bill and his team to, you know, see if we can take the remaining stores and get them back up to their prior service levels.

Okay, I appreciate the color, guys. And one last one, if I may, just on some of the payer changes, expanded Medicare coverage, and the United News from this week, you know, streamlining therapy. Maybe just kind of how do you think about the impact from those developments? Is this something that can impact the business near term, or do you think we need several quarters to kind of see any tailwind ultimately materialize? Thanks again for taking the questions.

So, Adam, on the reimbursement side, I think with UnitedHealthcare dropping from four to two, it is a great sign. Many of the other payers follow what UnitedHealthcare does. As recently as last fall, Aetna went from two to four because that's where UnitedHealthcare was. So, we are hoping that the other payers drop their requirements, too, and follow UnitedHealthcare's lead. You know, quite honestly, there are plenty of patients out there that have failed four drugs. So we're not in a, there's no shortage. It does expand the market when we, you know, drop it down to two. And I think our hope now is that United and the other payers make it easier to go through the prior authorization process. So it does expand our market. It does help our patients. Now we need to help our accounts with simplifying prior authorization.

Thank you.

Our next question comes from Margaret Kayser with William Blair. Your line is open.

Hey, good morning. Thanks for taking the question. I'm going to chime in with all my colleagues on the guidance side, so apologies for that. But I guess one more, and it's Kind of a simple one. You know, I guess what gets you to the high and the low end of the range? Because it's obviously quite broad. So, and more specifically, I guess, do you need Greenbrook to improve to get to that high end of the range? Or can the base do that? And then kind of a similar question on the low end of that range.

No, I don't, Margaret. You know, I think we need some contribution from Greenbrook. And based on the release in their, you know, revenue haircut related to the 50 stores, We don't need any incremental growth from Greenbrook to get to either one of those figures. So, that should really be the growth from the other segments and would represent that 20% target.

Okay. So, sorry. The 20% growth from the other figures, I mean, again, it's a wider range. So, is 20% kind of the midpoint of the range? And then the two kind of high and low end, you know, depending if the base does better, if Greenberg does better or worse. Am I understanding that right?

Yeah, I think it represents the midpoint. Okay, perfect.

And then, you know, I wanted to follow up on the strategies because you spent a lot of time both at the beginning and the end kind of walking through that in 2022 and kind of the goals for 2023, you know, PHQ-10s, NFUs, et cetera. Yeah. Is 2023 a year where those efforts, I guess, can scale on a broader basis? Where you can get maybe two or three X or 20% of the base through those, or is it just kind of more of a continuation with some solid growth and engagement?

Thanks for the question, Margaret. I think if we look at the NSU We have seen the accounts that come through NSU adopt almost all of our programs on a universal basis. And as a result, their business has gone up. So I think that our focus is to try and get more of our accounts through the Neurostar University program. And I think that we have seen our number of accounts that are using the PHQ pens just in the fourth quarter went from a little over 300 to 450. So it is gaining traction. So I think 2023 is going to be a standout year for it. And I think that we can anticipate that that is going to be what's going to help us drive the growth.

Great. Thank you, guys.

Thank you. Our next question comes from Daniel Staudter with GMP Securities. Your line is open.

Yeah. Hi. Thanks. Just touching back on the previous question surrounding the coverage policy updates. You know, you mentioned this creates a larger funnel of patients and broadens the market, but do you feel that the coverage criteria has been a gating factor for adoption in the past?

I think what slows down our implementation within a practice is getting physicians credentialed and onto the insurance programs. So that's the number one factor. Number two is getting the reimbursement actually paid. And the struggle that we have is that every single patient has to go through a prior authorization process With some of the payers, it's simple. With other payers, they reject it out of hand, and then you have to do an appeal. Typically, they approve the appeal if the patient has met all the criteria. So, yeah, it is a gating factor here, but quite honestly, I think with the moves in Medicare and now UnitedHealthcare leading the way, I think we're encouraged that

they are finally recognizing that they need to make the access to care simpler great and then this one followed for me um you've called out higher utilization in your per click segment as a driver of treatment session revenues for a few quarters here i think double digits the last two quarters but um you highlight some of your initiatives that are driving this but if you could point to one or two aspects that's really leaving the charge here what would those be and then And what could this look like in 2023? Thank you.

So, I think the couple points that help drive that utilization, number one is our practice development managers. You know, we have invested heavily into a team of people. Right now, we have 47 of them that are each account is assigned to one of our practice development managers, and each one of those managers is responsible to generate awareness, education, and help capture those patients within the practice and educate their staff from the front desk to the treater on exactly how to do that education. So I think our practice development managers are the tip of the spear for us. And they're the ones that are deploying the PHQ-10s in the practice who are doing the five stars to success, which is a pure education at various levels within the practice, including marketing. So I think those are really our driving force. We rely heavily on our practice development managers and now Neurostar University to help educate the accounts.

Great. Thanks a lot.

Thank you. Our next question is a follow-up from Bill Plavnik with Canaccord. Your line is open.

Great, thanks. Just to ask the question again on the Green Brook. I mean, as I reread the announcement, you know, while they're shutting down a lot of centers, they say that it's only a little over 10% of the revenues. And if I do back of the napkin math, you know, just based on some of the commentary, it sounds like, you know, at the low end, you're looking for Greenbrook down closer to 25 to 30%. Uh, if you're assuming at the midpoint, the rest of your business is growing 20%. Um, is that the trends you're seeing in the business today at Greenbrook or given the newness of the information, um, you're kind of the low end of the guidance is almost assuming a worst case scenario. just because you don't have a lot of information upon which to make that decision today.

So, Bill, we monitor the utilization on all segments of our accounts every single week. And Greenbrook's utilization has decreased over the past five months, which I think, as we've said before and they have said, I think it's expected. that there would be some disruption. But we saw a significant amount of decline in their growth in Q4, and we were able to grow in spite of it. I think that if we are able to deploy the trainings and the education that we are doing with the rest of our accounts into Greenbrook, which You know, I think Bill is very, very supportive of us working closer together to get that done. I think we can help them get back on track. But we did see the decline in the third and the fourth quarter.

Okay. And then, you know, just clarity on the impact of the NGS, you know, starting on April 1st, getting the nurse practitioners to order and treat. How important or significant is that?

It's a great question. So we have been looking state by state, payer by payer at the opportunity that's out there with nurse practitioners. Some of the states have say that nurse practitioners have full authority if they have been under the guidance of a psychiatrist for five years. During the pandemic, Virginia, as an example, lowered the requirement under a psychiatrist to two years, but they have since reversed that and gone back to five. So there are areas of the country where nurse practitioners are allowed to diagnose the patient, to do the motor thresholds, and to treat. And we are beginning the process of identifying what areas that is and then how we're going to educate those nurse practitioners on the opportunity to help their patients.

Great. Thanks for taking my question.

Thanks, Bill.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Keith Sullivan for closing remarks.

Thank you again for joining us today. We look forward to updating you on our next quarterly call. Thank you all.

Ladies and gentlemen, this does include the program. You may now disconnect. Everyone, have a great day.

The conference will begin shortly. To raise and lower your hand during Q&A, you can dial star 11. Bye.

Good day and welcome to Neuronetics' fourth quarter and full year 2022 conference call. At this time, all participants are in listen-only mode. After the speaker's presentation, there will be a question and answer session. Instructions will be given at that time. As a reminder, this call is being recorded. I would like to turn the call over to Mark Klausner. You may begin.

Good morning and thank you for joining us for the Neuronetics fourth quarter and full year 2022 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 can 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, 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 forecast 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 the 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.

Thank you, Mark. Good morning, and thank you for joining us. I'll begin by providing an overview of our recent performance, followed by an operational update. Steve will then review our financial results, and I'll conclude with some thoughts on 2023 before turning to Q&A. We are pleased with our performance throughout 2022, a year which included several record quarters and the achievements of key milestones. We shipped over 210 systems to customers. bringing total system shift all time to over 2,000. In addition, our efforts to drive increased treatment session utilization has continued to pay off. As of the end of the year, the number of all-time treatment sessions surpassed 5.3 million across roughly 145,000 patients. This all contributed to the total revenue growth of 18% for 2022. proof that the investments made over the past two years in marketing, practice development, and patient education initiatives are working. I'm very proud of everything that we have accomplished in 2022, which we capped off by a strong fourth quarter. And I'd like to thank our employees who delivered this high level of success by way of their hard work throughout the year. For the fourth quarter, total revenue was $18.2 million. of 21% over the fourth quarter of 2021. The strong performance was primarily driven by record treatment session revenue, as well as continued capital equipment sales growth. As we've seen, our programs and initiatives take root. NeuroStar System revenue was 4.6 million, up 64% over the fourth quarter of 2021. The success is due to the ongoing hard work of our strong team of area sales managers who found their groove in nurturing and converting a robust pipeline, which was strengthened by yet another sold-out Neurostar Summit. The U.S. treatment session revenue was an all-time record of 12.5 million, up 11% over the fourth quarter of 2021. This record revenue was the result of positive growth at the local per-click site. and was accomplished despite slower-than-anticipated growth at our largest service provider, as they worked their way through merger integration. Our per-click success was driven by our investments in Five Star's training program, the expansion of our PHQ-10 tool into more offices, and greater availability of practice management training. Now, turning to our operational highlights. Our first focus area is increasing customer and patient awareness. We once again had a completely sold-out Neurostar Summit in Chicago attended by 50 participants from 38 different practices. This event received outstanding feedback, which led to the conversion of several high-quality customers and the growth of our pipeline. The Neurostar Summits have proven to be the number one event for educating and partnering with new TMS practices. Our area sales managers have done an excellent job helping these potential customers see the benefits NeuroStar can bring to them and their patients. The implementation of our proprietary PHQ-10 digital assessment tool, which allows our NeuroStar practices to easily identify patients within their practice who are candidates for and have expressed interest in a NeuroStar treatment has been extremely fruitful. We collected 98,000 PHQ-10s in 2022, and we will continue to enhance this tool to include new features within TRACKSTAR to better manage and identify patients who are candidates for NeuroStar treatment. Our NeuroStar University in Charlotte, North Carolina continues to receive excellent reviews from our customers. By year end, we had hosted eight full capacity classes with attendees representing 75 accounts. And we now have a lengthy waiting list. As we continue to evolve the capabilities of the platform, as well as the support services that we offer our customers, these classes will continue to be highly beneficial for both the new and existing users. as we seek to leverage the power of NeuroStar to help more patients suffering from mental disorders. We have begun to see positive benefits linked directly to the NSU training classes, such as the increase of 23% in treatment session utilization and an increase in PHQ-10 utilization from these NSU attendees. Our second focus area is the continued optimization of our commercial organization. In the quarter, we started to see some benefits from the efficiencies gained from our newly implemented Salesforce reporting tools, which help our PDMs better understand our customers, their patient base, and utilization trends. These tools allow the PDMs to help our accounts set goals and measure their progress towards achieving them. allowing accounts to more efficiently and more effectively identify and treat people in need from within their own existing patient base. As planned, we hired four additional PDMs earlier this year due to the new account growth over the course of 2022. These additions will support the growth of our installed base and ensure we provide our customers with the highest level of service and support. Our third area of focus is leveraging exclusive commercial partnerships. We recently announced an expanded commercial partnership with Greenbrook TMS, which runs through year-end 2028. Under the agreement, we will be the exclusive supplier of TMS equipment to Greenbrook, with all other TMS devices being replaced with Neurostars as their existing leases expire. This expanded partnership will deliver several important synergies, including co-branding and co-marketing opportunities, enhanced patient and clinical awareness, improved patient access to care, and a collaboration on product development and publication. Importantly, this agreement converts the entire Greenbrook organization, including Success TMS, to our consumable pricing model and away from a fixed price one. We will offer our full spectrum of support and programs to Greenbrook centers and practitioners. In particular, we will offer tailored NSU classes and integrate our PHQ-10s and TRACSTAR to help Greenbrook reach and treat patients more effectively. With the help of this agreement, Neuronetics and Greenbrook will be able to make Neurostar advanced therapy for mental health accessible to a growing number of people who are struggling with mental illness. While we are enthusiastic about the long-term partnership with Greenbrook and our ability to help them drive increased patient volume in their centers, I did want to highlight that we have continued to see disruption resulting from the merger of Greenbrook and success. and the subsequent integration of the two businesses. As Steve will mention later, when he provides our guidance, we expect some revenue headwinds in 2023 as they continue to work through combining their companies. Lastly, I want to provide an update with our clinical and regulatory progress. In January, we announced a peer-reviewed publication which shows Neurostar TMS as an effective non-drug treatment for depression with comorbid anxiety. Significant anxiety symptoms are present in the vast majority of depressed individuals, and the majority of patients with anxiety disorders also have associated depression. We were able to study actual results and establish the effectiveness of this crucial therapy option for patients with anxious depression. thanks to the strength of TrackStar and the largest clinical data set for TMS in depression. Now for a quick update on the expanded Medicare coverage. In February, NGS updated their healthcare policy, allowing nurse practitioners and physician assistants who are within their scope of practice to order and provide TMS treatments to their patients with major depressive disorder. This is a welcome change, as we have always recognized the importance of psychiatric nurse practitioners in delivering mental health care. This is especially true now given the shortage of healthcare professionals. In addition, UnitedHealthcare recently announced a positive coverage change, which expands access to Neurostar therapy. Optum, the behavioral health benefit manager for United, reduce the number of prior medication failures for TMS eligibility from four down to two, and remove the requirement for a trial of evidence-based psychotherapy. As the largest healthcare insurer in the country, covering 23.8 million lives, UnitedHealthcare's opt-ins decision to make NeuroStar more easily acceptable and make a real difference in helping to alleviate the burden of drug-resistant depression. To continue to provide greater access to NeuroStar therapy, we recently expanded our reimbursement team. This larger team will be able to increase our advocacy efforts related to favorable health policies and provide our customers with best-in-class reimbursement and billing support. In closing, I'd like to express my gratitude to our team. for their dedication and perseverance in navigating the challenges of the current operating environment with ease. This hard work has enabled us to successfully execute on all initiatives during the year and bring relief to patients suffering from depression. Looking ahead to 2023, we anticipate that the momentum we have built will continue to grow as we build on the solid foundation we have laid throughout 2022. With that, I'd like to turn the call over to Steve. Thank you, Keith.

Total revenue for the fourth quarter was $18.2 million, an increase of 21% over fourth quarter 2021 revenue of $15 million. U.S. NeuroStar Advanced Therapy System revenue was $4.6 million. Compared to the prior year revenue of $2.8 million, It was up 64%. The company shipped 58 systems in Q4, up from 48 systems shipped in the fourth quarter of 2021. U.S. treatment session revenue was $12.5 million, an increase of 11% over fourth quarter 2021 revenue of $11.2 million. The revenue growth was primarily driven by an increase in utilization in particular among our local per click customer segment. In the fourth quarter of 2022, revenue per active site was approximately $11,500 compared to approximately $12,200 in the prior year quarter. Excluding Greenbrook and Success, revenue per active site was consistent year over year, despite having added approximately 100 new active sites during the year. Gross margins were 76%, consistent with the fourth quarter of 2021. Operating expenses during the quarter were $21.5 million, an increase of $3.1 million compared to the fourth quarter of 2021. The increase was primarily driven by our expanded sales force, the opening of NSU, higher than expected sales commissions, incremental headcount and product development, investments in clinical, as well as increased costs from inflationary pressures. During the quarter, we incurred approximately $2.1 million of non-cash stock-based compensation expense. Net loss for the fourth quarter of 2022 was $8.3 million or 31 cents per share as compared to a net loss of $7.6 million or 29 cents per share during the fourth quarter of 2021. EBITDA for the fourth quarter of 2022 was negative $6.5 million. as compared to negative $6.3 million for the fourth quarter of 2021. As of December 31st, 2022, cash and cash equivalents were $70.3 million. We continue to work with our lender, SLR Capital Partners, on an updated credit facility. We are on track to close on this new facility in March 2023. Now turning to guidance. For the full year 2023, we expect revenue in the range of $66 million to $72 million. As Keith mentioned, our guidance for 2023 assumes lower treatment session revenue from certain service providers, but continued strength from our local per-click customers. For the first quarter of 2023, we expect revenue of $15 million to $16 million. We expect total operating expenses for the full year 2023 to be in the range of $84 million to $88 million. For the full year, we expect cash utilization from operations to decrease year over year. Cash utilization will be the highest during the first quarter as it includes our national sales meeting as well as prior year bonus payments sales commissions, and retention costs. Our operating plan continues to show that we will achieve cash flow break even with cash on hand. Our path to profitability is still on track, thanks to our projections for top line growth, solid gross margin profile, and the careful management of our operating expenses. I would now like to turn the call back over to Keith.

Thank you, Steve. 2022 was a critical year for Neuronetics as we continue to drive the accelerated adoption of Neurostar. We have shown that the clinical results are superior. We have made significant investments in building the latest and most talented commercial team in the business. We have demonstrated unmatched ability to support our practices by assisting them with patient education and awareness campaigns to promote long-term success. To continue that success, we will focus on a number of key initiatives during 2023. One, increasing the number of customers who participate in Neurostar University. Two, working to incorporate a high percentage of customers into co-op marketing. Three, creating a network of accounts across the country that follow Neurostar best practices. beginning with increased customer participation in Neurostar University. As the initial cohort of customers has gone through training at NSU, we have clearly seen the immediate positive benefits at these accounts, including better PHQ-10 uptake and increased treatment session utilization. Because of this, we are working to increase the number of existing and prospective customers attending NSU classes. which provide important education to the providers to allow them to deliver better patient outcomes. The classes are crucial as we continue to develop Neurostar capabilities and features, such as our expansion into OCD, as well as the introduction of DETECT and the NTCAP. Going forward, we are offering up to two classes per month throughout the year and incorporating attendance costs into our co-op marketing program. Our second focus for 2023 is to incorporate a higher percentage of our customers into our co-op marketing program. There are over 60 customers who are currently utilizing the benefits of our co-op marketing program on a regular basis. The co-op marketing program is one of a kind in the TMS industry. It provides us with an incremental opportunity to partner with our customers to help support their business and provide patients with access to care through increased awareness with co-branded localized marketing campaigns. Customers who have participated in co-op marketing program have seen an average increase of four patients per quarter. We will continue to emphasize the expansion of customer participation throughout the year. to bring the benefits of the program to more customers and their patients. Turning to our third and final focus for 2023, creating a network of accounts across the country that follow Neurostar best practices. Over the past few years, our company has made significant investment in the organization and the development of best practices for each customer to market effectively and drive long-term growth. We would like to take certain aspects of these proven practices to a broader network of our accounts. As we look ahead to 2023, we want to set certain standards across the accounts we serve, such as offering consistently high levels of service and increasing patient marketing within their offices. We expect to see these standards in customers who fully utilize the uniqueness of the Neurostar offering and our approach to the market. We will continue to follow our plan in 2023. We have done tremendous work over the last two years to set ourselves up for success, and we have the strategy in place to drive the accelerated adoption of NeuroStar and bring relief to more patients suffering from mental health disorders. With that, I'd like to open the line for questions.

If you'd like to ask a question, please press star 1-1. If your question has been answered and you'd like to remove yourself in the queue, please press star 1-1 again. One moment while we compile the Q&A roster. Our first question comes from Bill Plavnik with Canaccord. Your line is open.

Hey, great. Thanks. Good morning. so obviously the i think the biggest question is on guidance and um you know green brook one you know what do you contemplate at the low end and high end in terms and you know how does that reflected with green brook kind of what percentage of your revenues are they today and what do you expect out of that versus kind of the rest of your business thanks

Hey, Bill. This is Steve. Obviously, you know, with the press release yesterday, we did have to scramble and adjust guidance. At this point, all we know is, you know, they do anticipate closing 50 stores with a 10% impact on revenue. We don't know the mix. We don't know which stores are Neurostar. We don't know which percentage of revenue is Spravato versus TMS. And so, you know, we took the approach really based on their contributions in 2022 versus our expectations in 2023 for growth. You know, I think we're in a wait-and-see mode at this point. So you saw in our K, well, you haven't seen in our K yet, but you will. You know, they're a little bit north of 20% of our business. So, you know, we believe the 66% to 72% million range is appropriate at this time. You can also see we did expand the range in revenue from our typical four million for the year to six. Again, we just need to see how this plays out through the month of March and into the early part of Q2. Greenbrook announces the end of March, and maybe there'll be some more clarity into their plans and how it impacts us.

Well, Steve asked another way, what do you expect out of your core business in 2023? Historically, if I look back, you grew 18% in 22, 12% in 21, and I even think a lot of the growth as we exited 22 was out of the non-Greenbrook businesses. you know, given that's 80% of your business, kind of what was the contemplation of growth out of that core business as you think about 2023? Thanks.

Yeah, I think it'll be consistent with what we saw in the second half of 2022. So in that 20% range, again, if you look at our Q4 number, you know, 21% over prior year, you know, that was negatively impacted by Greenbrook and Success's performance. So the per-click consumable segment and some of the other segments are performing quite well. So, you know, again, I think it'll be in that 20% range.

And then last on this guidance question, and then I'll jump back in, is just how do we think about kind of the capital versus disposable, especially, you know, getting our hands around like, you know, the assumptions probably given they're shutting down 50 centers, they can move capital around, you know, how do we think about capital in 2023 versus disposable? Thanks for taking my questions.

Sure, Bill. Yeah, capital is going to be consistent with 2022. So, you know, we've communicated between 45 and 50 systems a year. We did slightly more than that last year, and we anticipate that consistent level in 2023. So there won't be an impact from the Greenbrook integration efforts. We also expect international revenues to be flat, so all of the growth in 23 will be related to treatment sessions.

You mean 45 to 50 systems a quarter, not for the full year, correct? Yes.

Thank you. Our next question comes from Adam Mader with Piper Sandler. Your line is open.

Hey, Keith. Hi, Steve. Thanks for your questions here.

Wanted to follow up a little bit on the guidance line of questioning, and I guess I'll ask about kind of, you know, cadence. You obviously gave Q1 guidance maybe a hair lighter than expected, but, you know, just kind of help us think through kind of how you see, you know, your business kind of progressing over the year. Maybe we'll start there and then I have a follow-up or two. Thanks.

Thanks, Adam. Yeah, if you look at our historical performance, and I go back to 2018, so the year prior to IPO, our revenue cadence by quarter is Q1 is 21% to 22% of annual revenue. Q2 is about 24% to 25%. Q3, 25% to 26%. And then Q4 is always our strongest quarter at 28% to 29%. And so Q1, we always have the reset of deductibles. Patients have to go through and get their benefits investigations redone. And so the internal teams here have been processing about 400 or so BIs a week. And that's continued into early March. So that's really the biggest pressure on Q1. But, again, it's very typical for the past five years.

Okay. I appreciate that color, Steve. And I guess just, you know, one more on the guidance, then I'd have a follow-up. But just kind of obviously a lot of focus on the Greenbrook announcement yesterday and kind of how that impacts you guys. But if we just kind of look back, you know, more broadly, you know, it sounds like you – are very confident in the business, ex-Green Brook. So I guess one question I have just on the macro is, you know, how are you thinking about this year, 2023, you know, in a potential recessionary environment? Is anything factored into the guidance there? You know, are you allowing for some additional conservatism? Just kind of maybe walk through the philosophy on the outlook.

Yeah, I mean, there is there are no recessionary impacts in our guidance. I'm sure you remember Adam at your conference in New York that, you know, I communicated we were comfortable with where the consensus was for the year. And that was in that 73 million range. You know, we were also anticipating, you know, mid to high teen growth year over year. Again, the Greenberg press release yesterday was a little bit surprising, and so I think we need just some time to work through the impact. Otherwise, you saw our performance in Q3 and Q4. Even with, I would say, no to slow growth from them, we were still at that 20% level. And I think we're confident that we'll be able to maintain that in the other segments.

Adam, this is Keith. From a marketing standpoint, we have been working closely over the past couple months with the Greenbrook team, putting together a plan on how they would attend NSU, how they would market within their practices, how we would help them get PHQ-10s in. So there was some hints of the closing of the stores, but I believe that we have put together a solid plan with Bill and his team to, you know, see if we can take the remaining stores and get them back up to their prior service levels.

Okay, I appreciate the color, guys. And one last one, if I may, just on some of the payer changes, expanded Medicare coverage, and the United News from this week, you know, streamlining therapy. Maybe just kind of how do you think about the impact from those developments? Is this something that can impact the business near term, or do you think we need several quarters to kind of see any tailwind ultimately materialize? Thanks again for taking the questions.

So, Adam, on the reimbursement side, I think with UnitedHealthcare dropping from four to two, it is a great sign. Many of the other payers follow what UnitedHealthcare does. As recently as last fall, Aetna went from two to four because that's where UnitedHealthcare was. So, we are hoping that the other payers drop their requirements, too, and follow UnitedHealthcare's lead. You know, quite honestly, there are plenty of patients out there that have failed four drugs. So we're not in a, there's no shortage. It does expand the market when we, you know, drop it down to two. And I think our hope now is that United and the other payers make it easier to go through the prior authorization process. So it does expand our market. It does help our patients. Now we need to help our accounts with simplifying prior authorization.

Thank you. Our next question comes from Margaret Kayser with William Blair. Your line is open.

Hey, good morning. Thanks for taking the question. I want to chime in with all my colleagues on the guidance side, so apologies for that. But I guess one more, and it's kind of a simple one. I guess what gets you to the high and the low end of the range? Because it's obviously quite broad. And more specifically, I guess, do you need Greenbrook to improve to get to that high end of the range, or can the base do that? And then kind of a similar question on the low end of that range.

No, I don't, Margaret. You know, I think we need some contribution from Greenbrook, and based on the release in their, you know, revenue haircut related to the 50 stores, we don't need any incremental growth from Greenbrook to get to either one of those figures. So that should really be, you know, the growth from the other segments and would represent that 20% target.

Okay, so sorry. Yeah, the 20% growth from the other figures, I mean, again, it's a wider range. So is 20% kind of the midpoint of the range? And then the two kind of high and low end, you know, depending if the base is better or worse. Am I understanding that right?

Yeah, I think it represents the midpoint. Okay, perfect.

And then, you know, I wanted to follow up on the strategies because you spent a lot of time both at the beginning and the end kind of walking through that in 2022 and kind of the goals for 2023, you know, PHQ-10s, NFUs, et cetera. Is 2023 a year where those efforts, I guess, can scale on a broader basis? Where you can get maybe two or three X or 20% of the base through those, or is it just kind of more of a continuation with some solid growth and engagement?

Thanks for the question, Margaret. I think if we look at the NSU, We have seen the accounts that come through NSU adopt almost all of our programs on a universal basis. And as a result, their business has gone up. So I think that our focus is to try and get more of our accounts through the Neurostar University program. And I think that we have seen our number of accounts that are using the PHQ pens just in the fourth quarter went from a little over 300 to 450. So it is gaining traction. So I think 2023 is going to be a standout year for it. And I think that we can anticipate that that is going to be what's going to help us drive the growth.

Great. Thank you, guys.

Thank you. Our next question comes from Daniel Staudter with GMP Securities. Your line is open.

Yeah. Hi. Thanks. Just touching back on the previous question surrounding the coverage policy updates. You know, you mentioned this creates a larger funnel of patients and broadens the market, but do you feel that the coverage criteria has been a gating factor for adoption in the past?

I think what slows down our implementation within a practice is getting physicians credentialed and onto the insurance programs. So that's the number one factor. Number two is getting the reimbursement actually paid. And the struggle that we have is that every single patient has to go through a prior authorization process. With some of the payers, it's simple. With other payers, they reject it out of hand, and then you have to do an appeal. Typically, they approve the appeal if the patient has met all the criteria. So, yeah, it is a gating factor here, but quite honestly, I think with the moves in Medicare and now UnitedHealthcare leading the way, I think we're encouraged that patients

they are finally recognizing that they need to make the access to care simpler great and then this one followed for me um you've called out higher utilization your per click segment as a driver of treatment session revenues for a few quarters here i think double digits the last two quarters but um you highlight some of your initiatives that are driving this but if you could point to one or two aspects that's really leaving the charge here what would those be and then and what could this look like in 2023? Thank you.

So, I think the couple points that help drive that utilization, number one is our practice development managers. You know, we have invested heavily into a team of people. Right now, we have 47 of them that are each account is assigned to one of our practice development managers, and each one of those managers is responsible to generate awareness, education, and help capture those patients within the practice and educate their staff from the front desk to the treater on exactly how to do that education. So I think, you know, our practice development managers are the tip of the spear for us. And they're the ones that are deploying the PHQ-10s in the practice who are doing the five stars to success, which is a pure education at various levels within the practice, including marketing. So I think those are really our driving force. We rely heavily on our practice development managers and now Neurostar University to help educate the accounts.

Great. Thanks a lot.

Thank you. Our next question is a follow-up from Bill Plavnik with Canaccord. Your line is open.

Great, thanks. Just to ask the question again on the Green Brook. I mean, as I reread the announcement, you know, while they're shutting down a lot of centers, they say that it's only a little over 10% of the revenues. And if I do back of the napkin math, you know, just based on some of the commentary, it sounds like, you know, at the low end, you're looking for Greenbrook down closer to 25 to 30%. Uh, if you're assuming at the midpoint, the rest of your business is growing 20%. Um, is that the trends you're seeing in the business today at Greenbrook or given the newness of the information, um, you're kind of the low end of the guidance is almost assuming a worst case scenario. just because you don't have a lot of information upon which to make that decision today.

So, Bill, we monitor the utilization on all segments of our accounts every single week. And Greenbrook's utilization has decreased over the past five months, which I think, as we've said before and they have said, I think it's expected. that there would be some disruption. But we saw a significant amount of decline in their growth in Q4, and we were able to grow in spite of it. I think that if we are able to deploy the trainings and the education that we are doing with the rest of our accounts into Green Brook, which You know, I think Bill is very, very supportive of us working closer together to get that done. I think we can help them get back on track. But we did see the decline in the third and the fourth quarter.

Okay. And then, you know, just clarity on the impact of the NGS, you know, starting on April 1st, getting the nurse practitioners to order and treat. How important or significant is that?

It's a great question. So we have been looking state by state, payer by payer at the opportunity that's out there with nurse practitioners. Some of the states have say that nurse practitioners have full authority if they have been under the guidance of a psychiatrist for five years. During the pandemic, Virginia, as an example, lowered the requirement under a psychiatrist to two years, but they have since reversed that and gone back to five. So there are areas of the country where nurse practitioners are allowed to diagnose the patient, to do the motor thresholds, and to treat. And we are beginning the process of identifying what areas that is and then how we're going to educate those nurse practitioners on the opportunity to help their patients.

Great. Thanks for taking my question. Thanks, Bill.

Thank you. There are no further questions at this time. I'd like to turn the call back over to Keith Sullivan for closing remarks.

Thank you again for joining us today. We look forward to updating you on our next quarterly call. Thank you all.

Ladies and gentlemen, this does include the program. You may now disconnect. Everyone, have a great day.