Greenbrook Tms Inc

Welcome to the Greenbrook TMS Inc. Fiscal Year 2023 Q2 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 and is also being webcast on the company's website at www.greenbrooktms.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 events to differ materially from current expectations are discussed in the risk factor section of the company's annual report on Form 20F for the fiscal year ended December 31, 2022, and in the company's other materials filed with the Canadian Securities Regulatory 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 obligation to update any forward-looking statement unless required by law. I would now like to turn the meeting over to Bill Leonard, President and Chief Executive Officer of Green Brook TMS, and Irms Lobsher, Chief Financial Officer. Please go ahead, Mr. Leonard.

Thank you, Michelle, and thank you to everyone for joining our conference call and webcast today. During Q2 2023, we continued to focus on the execution of our restructuring plan, and we were very pleased with our progress to date. The company has now effectively stabilized its cost structure with a headcount reduction of 145 employees, amounting to approximately $11 million in annualized savings. Furthermore, the rationalization of the marketing spend distinguishment of lease liabilities, and a reduction of other recurring corporate, general, and administrative expenses has effectively removed 10 million in annualized costs as compared to Q4 2022 with a total of approximately 21 million annualized cost saving from the business to date. Revenue in Q2 2023 and year-to-date 2023 increased by 29% to 18.3 million, and by 40% to $38.3 million respectively, predominantly due to the success TMS acquisition that was completed in July 2022. Q2 2023 revenue provided resilient at approximately 87% of the total quarterly revenue achieved in Q4 2022, despite the closure of 50 treatment centers in connection with the restructuring plan and a significantly reduced marketing spend. The lack of investment in marketing and general liquidity constraints prohibited any meaningful patient outreach year to date, and this significantly impacted the revenue we were able to generate in Q2, 2023. Despite this, our base level post-restructuring quarterly revenue proved to be very encouraging as it was achieved without any meaningful marketing investment. This presents a significant opportunity to build on the base revenue for a clear path to profitability. We believe a measured investment in our refined marketing strategy will enhance our TMS business and the continued rollout of Spravato program, including the launch of Buy and Build. It paints a clear and realistic path to profitability, especially in context of our newly rationalized cost structure. We have also commenced the rollout of a medication management program as an additional revenue stream and a mechanism to build an internal patient pipeline, which we expect to yield results in the longer run. We have also now strengthened our balance sheet through recent financing transactions with our supportive insiders and lender and expect to see continued access to capital to drive us to self-sufficiency. On the strategic partnership side, we continue to work with Norinetics leadership closely at various levels to implement a mutually beneficial strategy as it relates to enhancing TMS awareness, expanding patient access to care, and effectively redeploying systems from recently closed treatment centers. Additionally, key operators have attended North Star University in an effort to leverage a strong education and training program to better service our patients. Although the costs associated with the restructuring plan have been substantially executed, the full benefit will only reflect in the second half of the year as we expect our new operating structure will continue to allow us to rationalize costs while further reducing business complexity, streamline our operating model, and drive operational efficiencies. We believe that the mental health remains a key focus in the United States, and the unmet demand for treatment remains at an all-time high, with our network of treatment centers well-positioned to serve this unmet demand. We believe our business fundamentals are stronger than ever with the grossless bravado program, the opportunity to increase marketing investment in our streamlined business, the introduction of management, and the potential future of opportunities, including psychedelics. At the end of Q2 2023, the company had a footprint of 133 treatment centers. As of today, we have 50 treatment centers offering Spravato, and we expect to have 70 to 8 treatment centers offering Spravato by the end of the year through an accelerated rollout plan. And now, for a more detailed review of the company's financial and operating performance, I will turn it over to our CFO, Ernst Locher. Thank you, Bo.

As Will mentioned, revenue in Q2 2023 and year-to-date 2023 increased by 29% to 18.3 million and by 40% to 38.3 million, respectively, predominantly due to the success TMS acquisition that was completed in July 2022. Furthermore, Q2 2023 revenue proved resilient at approximately 87% of the total quarterly revenue achieved in Q4 2022. despite the closure of 50 treatment centers in connection with the restructuring plan and a significantly reduced marketing spend. The marketing spend in Q2 2023 represented less than 10% of the marketing spend in Q4 2022. Average revenue per treatment decreased by 2% to 2.24 in Q2 2023 and decreased by 3% to 2.19 in yesterday, 2023. This decrease was primarily attributable to change in pay mix and the geographical distribution of revenue. Despite lower revenue levels in Q2 2023, we continue to generate positive entity-wide regional operating income as a result of the significant cost reductions implemented in connection with the restructuring plan. The company has now effectively stabilized its cost structure with a headcount reduction of 145 employees amounting to approximately 11 million in annualized savings. Furthermore, The rationalization of marketing spend, extinguishment of lease liabilities, and a reduction of other recurring corporate G&A has effectively removed $10 million in annualized cost savings as compared to Q4 2022. That totals $21 million in annualized cost savings achieved to date. Globally, direct sensor and regional costs increased by 27% to 18.1 million during Q2 2023 compared to Q2 2023. But more importantly, decreased 18% compared to Q4 2022 due to the reduction in headcount, rationalization of marking spend, and a reduction in other direct sensor expenses resulting from execution of the restructuring plan. Furthermore, Q2 2023 other regional incentive support costs decreased 11% as compared to Q2 2022 and 50% compared to Q4 2022, also evidencing efficiencies gained through our condensed regional footprint post-restructuring. Given the ongoing nature of the restructuring plan execution, the reduction associated costs were only partially reflected in Q2 2023, but will be fully realized by the end of fiscal 2023. Regional operating income was $0.2 million during Q2 2023 as compared to $0.1 million loss in Q2 2022, and $1 million regional operating income during year-to-date 2023 as compared to a regional operating loss of $1.1 million during year-to-date 2022 as a result of the significant cost reductions previously described. Corporate G&A, excluding one-time costs and the revaluation of conversion instruments, increased 25% compared to Q2 2022 and increased by 23% as compared to year-to-date 2023, predominantly due to the success TMS acquisition. More importantly, we have seen a 14% decrease compared to Q4 2022 as a result of the restructuring plan. We believe we can continue to reduce corporate G&A costs as part of our restructuring plan. The loss for the period and comprehensive loss increased 68% in Q2 2023 to 12.3 million, up 4.9 million as compared to Q2 2022, and increased by 41% to 21.6 million for year-to-date 2023, up 6.2 million as compared to year-to-date 2022. The increase Increases are predominantly due to the increase in interest expense arising from the additional debt financings completed in Q1 2023, the increase in share-based compensation expense, the increased cost and depreciation as a result of the completion of the success TMS acquisition in Q3 2022, and one-time costs partially offset by revaluation of conversion instruments. From a balance sheet perspective, accounts receivable remain fairly stable as we have optimized our RCM function and now effectively generate cash revenue as our collection cycle shortened. Cash at the end of Q2, 2023 was 2.1 million, including restricted cash. Subsequent to Q2, 2023, the company secured 5 million of debt financing from Greybrook Health and Madron. These financing transactions have an answer liquidity position With secured access to further capital, we can continue to execute on our restructuring plan with the objective to achieve profitability. We remain confident in our ability to access capital to move to a self-sustaining business. Now more than ever, we believe we have a concretely defined pathway to profitability with a stable cost base, as Bill described earlier. Moving to our core operating metrics, As at the end of Q2 2023, the total treatment census decreased by 8% to 133 from 144 a year ago. Compared to Q2 2022, the number of consultations performed increased by 130% to 9,924, while the number of new patients starts increased by 46% to 2647. And the number of treatments performed increased 32% to 81,855. Compared to year-to-date 2022, the number of consultations performed increased 129% to 17,899, while the number of new patients starts increased by 52% to 5,501, and the number of treatments performed increased by 44% to 174,388. These increases were predominantly due to the completion of the success TMS acquisitions, and strong performance in our mature regions as compared to Q2 2022 and year-to-date, as I previously mentioned. We believe that devoting more resources and focus to our best-performing centers through the restructuring plan will increase conversions. This, paired with a measured approach to increased marketing, will boost our core TMS business and continue strong growth of our provider program will be a catalyst for future revenue growth. despite the reduction incentives. Back to you, Bo.