Greenbrook Tms Inc

Welcome to the Greenberg TMS Inc. FY 2023 Q3 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 it's also being webcast on the company's website at www.greenbergtms.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 that any additional questions can be directed to the company at InvestorRelations at GreenbergTMF.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 Factors 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 in CEDAR, EDGAR, and on 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 Mr. Bill Leonard, President and Chief Executive Officer of Greenbrook TMS, and Peter Willett, Interim Financial Officer. Go ahead, please, Mr. Leonard.

Thank you, Blair, and thank you to everyone for joining our conference call and webcast today. During Q3, 2023, we continue to focus on the execution of our restructuring plan, and we were very pleased with the progress to date. The reduction in headcount, rationalization of the marketing spend, extinguishment of the lease liabilities, and a reduction of other recurring corporate, general, and administrative expenses has effectively removed $23 million in annualized costs from the company as compared to Q4, 2022. achieving our target range of 22 to 25 million in cost reductions. We remain optimistic about our future as we execute on the remaining components of the restructuring plan. Quarterly revenue decreased by 13% to 18 million, down 2.8 million as compared to Q3 2022, despite the closure of 53 treatment centers, or 29% of the active treatment centers in connection with the restructuring plan as at Q3 2022. Year-to-date 2023 revenue increased by 17% to $56.3 million, predominantly due to the success TMS acquisition that was completed in July 2022. Q3 2023 revenue provided resilient, proved to be resilient at approximately 86% of the total quarterly revenue achieved in Q4 2022. despite the closure of 53 treatment centers, mentioned above, and general liquidity constraints prohibiting any meaningful investment in marketing year-to-date, which impacted the revenue we were able to generate. Despite this, our base level post-restructuring quarterly revenue continues to prove very encouraging and presents a great foundation for future profitability, especially in context of our newly rationalized cost structure. We believe reverting back to more optimal levels of marketing investment will enhance our TMS business. The continued rollout of the Spravato program, including the launch of buy and bill, and a significant focus on contract negotiation with payers provides a realistic path to this goal. We have also commenced the rollout of medication management program as an additional revenue stream and a mechanism to build on internal patient pipeline, which has already yielded positive results to the business. While liquidity constraints still remain, we are confident in our ability to have continued access to capital to drive us to self-sufficiency as evidenced by our recent financing transaction with our supportive insiders and lender. On the strategic partnership side, we continue to work with Noronetics 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. We're also very excited about the launch of their new Better Me Guarantee pilot program, which we believe will allow us to further increase our access to patients suffering from mental health disorders. Early results of the pilot show an increase on historical averages in leads and book consults, which should translate into patients. Although we have achieved our previously announced annual cost savings, we continue to execute on the remaining components of the restructuring plan. Given the ongoing nature of execution, the reduction in costs were only partially reflected in Q3 2023, and 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 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 the unmet demand. We believe our business fundamentals are stronger than ever, with the growth of the Spravato program, the opportunity to increase marketing investment in our streamlined business, the introduction of medication management, and the potential future treatment option, including psychedelics. At the end of Q3 2023, the company had a footprint of 130 treatment centers. As of today, we have 56 treatment centers offering Spravato, and we expect to have 78 treatment centers offering Spravato by the end of the year through an accelerated rollout plan. And now, for more detailed review of the company's financial and operating performance, I will turn it over to our interim CFO, Peter Willett.

Thank you, Phil. As Bill mentioned, revenue in Q3 2023 decreased by 13% to $18 million, down $2.8 million as compared to Q3 2022, despite the closure of the three treatment centers or approximately 29% of active treatment centers in connection with the restructuring plan as at Q3 2022. Year-to-date 2023 revenue increased by 17% to $36.3 million, up $8.3 million as compared to year-to-date 2022, predominantly due to the success TMS acquisition that was completed in July 2022. Furthermore, Q3 2023 revenue remained resilient at approximately 86% of a total quarterly revenue achieved in Q4 2022, despite the closure of three recruitment centers mentioned above and a significantly reduced marketing spend, which represented 10% of marketing spend in Q4 2022. Average revenue per treatment increased by 4% to $227 in Q3 2022 and remained consistent at $222 in year-to-date 2023. The quarter-over-quarter increase was primarily attributable to changes in payer mix, treatment modalities, and the geographical distribution of revenue. Despite low revenue levels in Q3 2023, we continue to generate entity-wide regional operating income for the third consecutive quarter as a result of the significant cost reductions implemented in connection with the restructuring plan. With reduction in headcounts, rationalization of marketing spend, extinguishment of lease liabilities, and reduction of other recurring corporate, general, and administrative expenses, the company has effectively stabilized its cost structure and removed $23 million in annualized costs as compared to Q4 2022. Direct center and regional costs decreased by 19% to $17.5 million during Q3 2023 compared to Q3 2022 due to the reduction in headcount, rationalization of marketing spend, and a reduction in other direct center expenses resulting from the execution of the restructuring plan. Given the ongoing nature of the restructuring plan execution, the reduction in associated costs were only partially reflected in Q3 2023 but will be fully realized by the end of fiscal 2023. Direct center and regional costs increased by 10% to $54.8 million during year-to-date 2023 as compared to year-to-date 2022, predominantly due to the success TMS acquisition, partially offset by the cost savings in relation to the execution of the restructuring plan previously mentioned. Entity-wide regional operating income was $0.5 million during Q3 2023 as compared to an entity-wide regional operating loss of $0.8 million in Q3 2022, and the company generated an entity-wide regional operating income of $1.5 million during year-to-date 2023, as compared to an entity-wide regional operating loss of $2 million during year-to-date 2022. Both increases were primarily a result of the significant cost reductions previously described. Corporate G&A, excluding one-time costs, and the revaluation of conversion instruments decreased by 10% compared to Q3 2022 and by 20% compared to Q4 2022 as a result of the restructuring plan execution, but increased by 10% as compared to year-to-date 2022 due to the success TMS acquisition offset by the restructuring plan execution. We believe we can continue to reduce corporate GNIC costs as we execute on the remaining components of the restructuring plan. The loss for the period and comprehensive loss decreased by 24% in Q3 2023 to $12.7 million, down $4.1 million as compared to Q3 2022, primarily due to the increase in regional operating income and decreases in corporate G&A as part of the execution of the restructuring plan. The loss for the period and comprehensive loss increased by 7% to $34.4 million for year-to-date 2023 up $2.3 million as compared to year-to-date 2022, primarily due to the increases in interest expenses arising from the additional debt finances, the loss on the vice contract termination, the increase in share-based compensation expense, the increase in cost and appreciation as a result of the completion of the success TMS acquisition, and one-time costs, partially offset by the increases in regional operating income and the cost savings associated with the execution of the restructuring plan. From a balance sheet perspective, accounts fee will remain fairly stable as we have optimized our RCN function and now effectively generate cash revenue. Cash at the end of Q3 2023 was $1.8 million, including restrictive cash. Subsequent to Q3 2023, the company received $4.7 million in financing from our supportive lender and various investors. We remain confident in our ability to continue 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 Q3 2023, total active treatment centers decreased by 29% to 130 from 183 a year ago. Compared to Q3 2022, the number of consultations performed decreased by 5% to 8,334 while the number of new patient starts decreased by 11% to 2,546, and the number of treatments performed decreased by 16% to 79,488. These decreases were primarily due to the decrease in treatment centers previously noted. Compared to year-to-date 2022, the number of consultations performed increased by 58% to 26,233, while the number of new patient starts increased by 24%, to 8,047, and the number of treatments performed increased by 17% to 233,876. These increases were done only due to the completion of the success TMS acquisition. We believe that devoting more resources and focus to our best reforming 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 to strong-goal our survival program will be a catalyst for future revenue growth despite reduction centers. Back to you, Bill.