Greenbrook Tms Inc

Welcome to the Greenbrook TMS, Inc. FY 2022 results conference call and webcast. All lines are currently on mute to prevent any background noise. I would like to remind you that this conference call is being recorded today. It is also being webcast on the company's website at www.greenbrookstms.com under the investor section events. After the speaker's remarks, there will be a question and answer session. Analysts and investors are reminded that any additional questions can be directed to the company at InvestorRelations at GreenBrookTMS.com. This call contains forward-looking statements which reflect the current expectations or beliefs of the company based on currently available information. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward-looking statements. Factors that could cause actual results or event to differ materially from current expectations are discussed in the risk factors sections of the company's annual report on Form 20-F for the fiscal year ended December 31, 2022, and the company's other materials filed with the Canadian Securities Regulation Authorities and the U.S. Securities and Exchange Commission from time to time, which are available on CDAR, EDGAR, and the company's website. Any forward-looking statement speaks only as of the date on which it is made, and the company disclaims any intent or obligations to update any forward-looking statements unless required by law. And I would like to turn the meeting over to Mr. Bill Leonard, President and Chief Executive Officer of Greenbrook TMS and Ernst Lobser. Chief Financial Officer, please go ahead.

Thank you, operator, and thank you to everyone for joining our conference call and webcast today. During fiscal year 2022, we added significant operating scale and top line growth to the business. We are now focused on the execution of the recently announced restructuring plan to leverage our scale with the goal of further reducing complexity, streamlining our operating model, and drive operational efficiencies to improve our cash flows and ultimately achieve profitability in the future. During Q4 2022, we continued the ongoing integration of success TMS, including the convergence and overlaying of the best-in-breed processes, such as the success TMS marketing and intake process. We were very excited about the record highs in the forward-looking indicators in Q3 2022 going into Q4 2022 from these efforts. Unfortunately, this pipeline did not translate into expected proportionate ramp-up in new patient starts impacting the expected revenue ramp and cash collections, which ultimately put the stress on the company's liquidity position late in Q4 2022 and early into Q1 2023. Despite this turbulence, we believe the key lessons learned in Q4 2022 was the catalyst for the restructuring plan, which will allow us to utilize resources more efficiently and reduce the business cost structure to operate profitably. We are very excited about the ongoing rollout of Spravato program, where we have now more than tripled our footprint during fiscal 2022. This program supports our long-term business plan of utilizing our existing network of treatment centers to deliver new and innovative treatments to patients suffering from MDD and other mental health disorders. We believe our leadership position and nationwide footprint continue to serve as a valuable platform to bring the needed help to patients. As at December 31st, 2022, the company has expanded its offerings for Votto to 42 TMS centers across the U.S. As previously announced, the company has embarked on a comprehensive restructuring plan aimed at decreasing our footprint by 50 treatment centers and focusing operations to the company's most profitable treatment centers across the United States. The purpose of this restructuring plan is to address liquidity concerns and allow us to achieve sufficient cost savings to satisfy operating cash requirements, debt obligations, and remain in compliance with our debt covenants. We expect that restructuring plan will streamline patient engagement and delivery care while reducing facility and logistical overhead. We also expect that restructuring plan will enable Greenbrook to concentrate marketing spend on more effective outreach while continuing to deliver quality care to patients in all of its core markets. As of the date of this press release, the company has realized approximately $17 million in annualized recurring cost reductions through a significant reduction in headcount and by optimizing marketing spend through key learnings from the company's Q4 2022 marketing efforts. The company will also continue to reduce recurring corporate, general, and administrative expenses. These savings will be fully reflected starting late Q2 2023, going into Q3 2023 as the cost related to executing these savings dissipates. We believe we remain on track to achieve the previously announced target of $22 million to $25 million in cost reduction once the restructuring plan is fully implemented. And for now, a more detailed review of the company's financial and operating performance, I will turn it over to our CFO, Ernst Lukscher. Thank you, Bill.

As Bill mentioned, revenue for fiscal 2022 increased by 32% to 69.1 million as compared to fiscal 2021 and 50% to 21.1 million for Q4 2022 as compared to Q4 2021. This was driven predominantly by the completion of the success TMS acquisition in Q3 2022 and the Chief TMS Eastern Central acquisition in Q4 2021. Average revenue per treatment decreased by 4% to 221 in fiscal 2022 as compared to fiscal 2021. The decrease was primarily attributable to the geographic distribution of revenue. Same region sales growth was 9.7% in fiscal 2022 as our core established region shows resilient performance and continue to grow. Fiscal 2022 resulted in entry-wide regional operating loss of 2.1 million as compared to an entity-wide regional operating income of 0.3 million during fiscal 2021, predominantly due to operating 183 active TMS treatment centers as of December 31, 2022, as compared to 147 active treatment centers as of December 31, 2021. Entity-wide regional operating loss was 0.1 million during Q4 2022, as compared to a small regional operating income during Q4 2021. The increased loss position were primarily as a result of incurring duplicate costs of the combined business subsequent to the acquisition of success TMS arising from additional operating synergies not yet executed and increased marketing spend. As Bill mentioned, we were very excited about the potential of the significant amount of new leads and the positive trend in forward-looking indicators late in Q3 2022 into Q4 2022, we previously reported. Unfortunately, the pipeline did not translate into new patient starts, as ongoing integration initiatives paired with a significant pipeline overwhelmed our team during a significant transition period, and resources were spread too thin. Despite these challenges and turbulences caused, we came away with some key learnings, which was the catalyst for the restructuring plan, where we are condensing our footprint, enabling to concentrate marketing spend and other resource for more effective outreach, conversion, and treatment. Corporate G&A increased by 27% to $26.2 million during fiscal 2022 as compared to fiscal 2021, and by 18% to $5.9 billion during Q4 2022 as compared to Q4 2021. These increases were predominantly due to the success of TMS acquisition. We believe we can reduce corporate G&A costs significantly as part of our restructuring plan. The loss for the period and comprehensive loss during fiscal 2022 was $62.4 million, predominantly due to the impairment loss of $20.7 million recognized, which was necessitated by the restructuring plan and current market conditions. Despite these impairment charges, the company believes it can improve its financial circumstances significantly in the near term as we execute on the restructuring plan. From a balance sheet perspective, the account receivable balances at the end of fiscal 2022 increased by 2.9 million as compared to the end of fiscal 2021, primarily due to the acquisition offset by improved collection activity. Cash at the end of fiscal 2022 was 2.6 million, including restricted cash, putting pressure on our liquidity position, which we subsequently addressed through additional financing from our supportive insiders and lender. Moving on to our core operating metrics. As at the end of fiscal 2022, the total treatment centers increased by 23% to 183 from 149 a year ago. As mentioned previously, subsequent to the acquisition of the restructuring plan, we will be operating 133 treatment centers. Compared to fiscal 2021, the number of consultations performed increased by 97% to 27,831, while the number of new patient sites increased by 44% to 99. 9,253, and the number of treatments performed increased by 38% to 312,940. Compared to Q4 2022, the number of consultations performed increased by 216% to 11,215, while the number of new patients starts to increase by 67% to 279, and the number of treatments performed increased by 58% to 69,789. These increases were predominantly due to the completion of the success TMS acquisition in Q3 2022, overlaying the success TMS intake progress across our existing platform, as well as increased marketing spend, as I previously mentioned. We believe that devoting more resources and a focus to our best performing centers through the restructuring plan and robust growth of our provider program will be the catalyst for future revenue growth, despite the reduction in centers. Back to you, Bill.