Neuronetics, Inc.

Good day and thank you for standing by. Welcome to the Noronetics third quarter 2023 conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 11 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference call is being recorded. I would now like to hand the conference over to your first speaker today, Mark Klausner. Please go ahead.

Good morning, and thank you for joining us for the Neuronetics third quarter 2023 conference call. 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 Neuronetic's 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, filed in March 2023, as well as the company's quarterly report on 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 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 all for joining us. I'll begin by providing an overview of the recent performance, followed by an operational update. Steve will then review our financial results. And I'll conclude with some thoughts on the rest of 2023 before turning to Q&A. In the third quarter, we maintained our momentum, executing effectively across the organization as our commercial and customer education initiatives gained traction, which resulted in record revenue. Total revenue was $17.9 million, an increase of 8% over the third quarter of 2022. Neurostar system revenue was 3.6 million. During the quarter, we shipped 43 systems, slightly below our plan of 45 to 50. While financing for customers to acquire systems remains readily available, the process took slightly longer during the third quarter than in the past due to increased diligence from the leasing company. As a result, a few deals that we expected to close in Q3 were pushed into Q4, most of which have already closed. Our NeuroStar summits continue to play a pivotal role in our capital strategy, serving as a platform to educate customers about our transformative impact NeuroStar can have on patients' lives. The recent summit in Austin, Texas, which was at capacity, led to a substantial number of system sales during the event. US treatment session revenue was $13.1 million, up 10% over the third quarter of 2022. This represents a new record for treatment session revenue and utilization in a single quarter. The growth was primarily driven by an 18% year-over-year rise in local consumable utilization. Additionally, the successful implementation of key initiatives like Neurostar University, our five-star solution program, expanded use of the PHQ-10 tool, and co-op marketing positively impacted our performance, leading to our record revenue. During the quarter, we also observed positive utilization trends at Greenbrook sites as they continue to return their business to pre-merger levels. Notably, all of the GreenBrook systems that were offline earlier this year, as a result of their store closures, have been moved out of storage. Currently, all of these systems are located in clinics, with 42 of the 52 systems actively treating patients. We expect the remaining systems to be online over the near term. Although the historical success TMS sites are making headway, they are still lagging behind GreenBrook sites. Overall, we remain very pleased with the rebound of GreenBrook's business and will continue to work in close partnership with them to drive our mutual success going forward through co-op marketing and our new Better Me Guarantee pilot program. Now let's shift our attention to our operational highlights. Last quarter, we discussed the introduction of a new customer-facing initiative we've named the Better Me Guarantee Provider Program. This program is designed to establish a nationwide network of accounts that adhere to best practices that were developed in collaboration with expert TMS clinicians. The Better Me Guarantee Providers commit to follow specific standards of patient care and responsiveness to enter and remain in the program. It is open to all Neurostar customers that agree to fulfill the five pivotal standards of the BMG program, which will allow practices to be confident in their ability to provide exceptional care. These standards include attending Neurostar University, ensuring offices Answer the phones during business hours. Advise patients of the benefits of treating to the full course of 36 sessions where medically appropriate. Assigning a medical personnel to promptly respond to PHQ-10 assessments. And lastly, updating websites and social media platforms to align with our brand, aided by our co-op marketing program. Ultimately, we expect accounts who participate in the program to be better positioned to help more patients suffering from depression. Currently, in its pilot phase, the program and marketing campaign is being implemented in several Greenbrook offices, enabling us to measure outcomes and make necessary refinements before rolling out to a broader customer base. Our entire sales team has received training on the program and is engaging with customers to provide training to accounts so that they can meet the program standards. The response thus far has been overwhelmingly positive, and we have seen significant interest in becoming part of the program. We are planning a measured rollout across our customer base, and we will be adding our next customer cohorts on January 22nd followed by another group on April 8th of 2024. Each program expansion will be capped in size to ensure a successful rollout. The first step of the Better Me Guarantee providers is to participate in Neurostar University, which further helps them understand the educational benefits of our five-star solution, PHQ-10s, and co-op marketing. We will execute marketing and social media campaigns over the next several months to build patient awareness about the program and the benefits of NeuroStar. Marketing will evolve and expand more broadly throughout 2024. NSU continues to be a tremendous program for the company, as well as our customers and their patients. Year to date, we've conducted a total of 20 fully booked classes, with over 420 participants. The program continues to see increased demand due in part to NSU attendance being a requirement for customers to participate in the Better Me Guarantee Provider Program. To accommodate this demand, we have increased the size of classes and added two extra classes in 2023 and one in early January. turning our attention to the co-op marketing program. Since its relaunch in April, our co-op marketing has helped educate a broader group of people who are looking for an alternative for their depression. This structured approach to marketing has not only amplified awareness of NeuroStar, but it has also proven to be a powerful tool both within and beyond practice settings. With the introduction of new marketing materials and enhanced training resources, we've witnessed an upswing in both customer participation and utilization rates, as customers have learned to improve their marketing, thereby educating more patients about NeuroStar and helping to treat their depression. In Q3, co-op participation increased 10% over Q2. turning to a regulatory update. As previously discussed, during the second quarter, we submitted a 510K to the FDA seeking to expand our patient population. The process has progressed as expected. We are working to respond to questions from the FDA on the submission and expect to receive a decision by the end of the year. As we've stated previously, one of the keys to helping more patients is expanding access to care with NeuroStar. We're very excited about an initiative we've recently launched, which is working with state and federal legislators to open up access to insurance reimbursement for TMS. The initial reception we've received on the federal and state levels has been really encouraging, and we will update you on the progress on the future calls. We are pleased with our performance in the third quarter and enthusiastic about how we're positioned for the future. With continued execution by our commercial organization and the positive response in the market from both customers and patients reinforces that what we are doing is resonating. I'm confident that we are focused on the right initiatives to execute on the growth strategy as we seek to expand upon our market leadership position and bring relief to more patients suffering from mental health disorders. With that, I'd like to turn the call over to Steve. Thank you, Keith.