Release Date: August 12, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Neuronetics Inc (STIM, Financial) reported a gross margin increase to 74%, up from 72.5% in the same quarter last year.
- The company recognized revenue on 50 NeuroStar systems, hitting the high end of their quarterly guidance.
- Neuronetics Inc (STIM) launched the Better Me program nationwide, showing significant improvements in patient follow-up rates and treatment accessibility.
- The company received FDA clearance for NeuroStar TMS therapy for adolescents, with over 425 adolescent patients treated since April.
- Neuronetics Inc (STIM) entered into a new debt facility of up to $90 million with Perceptive Advisors, providing additional financial flexibility.
Negative Points
- Total revenue for the quarter was $16.5 million, a decrease of 7% year over year.
- US treatment session revenue decreased by 5% year over year, impacted by delays in payments from Change Healthcare.
- Operating expenses increased by $600,000 or 3%, compared to the same quarter last year.
- Net loss for the quarter was $9.8 million, significantly higher than the $4.9 million net loss in the prior year quarter.
- EBITDA for the second quarter was negative $8.0 million, compared to negative $3.3 million in the same quarter last year.
Q & A Highlights
Q: Can you provide additional metrics to support that the Change Healthcare issue is isolated and when you expect it to resolve?
A: We are seeing positive trends in utilization and inventory levels, indicating recovery. We anticipate normalcy by the end of the year. (Keith Sullivan, CEO)
Q: Why is now the right time for the Greenbrook TMS merger, and how will capital allocation be managed?
A: The willingness of Greenbrook's lenders to convert debt to common shares was a key factor. We will continue to expand our customer base and solve industry pain points through the merger. (Keith Sullivan, CEO; Stephen Furlong, CFO)
Q: Can you quantify the impact of the Change Healthcare cybersecurity issue on the quarter?
A: The issue accounted for approximately $2 million of the revenue miss. Utilization was up, but purchasing patterns changed due to cash flow issues. (Stephen Furlong, CFO)
Q: How confident are you in the Q3 and Q4 guidance, and what factors contribute to this confidence?
A: We are very comfortable with Q3 guidance and expect a rebound in collections. The implied Q4 guidance reflects a return to normal inventory levels and purchasing patterns. (Stephen Furlong, CFO)
Q: Can you elaborate on the revenue and cost synergies expected from the Greenbrook merger?
A: We expect mid-teens revenue growth in 2025 and 2026, driven by increased utilization and marketing efficiencies. Cost synergies are estimated at $15 million annually. (Stephen Furlong, CFO)
Q: Are you extending receivables for customers, and do you expect a bolus of orders in Q4?
A: We are working with customers impacted by the Change Healthcare issue and expect a return to normal inventory levels in Q4, which is reflected in our guidance. (Stephen Furlong, CFO)
Q: What is the road map for integrating Greenbrook TMS, and what are the immediate priorities?
A: The top priority is achieving cost synergies, followed by increasing efficiency and utilization in Greenbrook stores. We will also expand the BMP program and SPRAVATO rollout. (Stephen Furlong, CFO; Keith Sullivan, CEO)
Q: What is the sustainable long-term revenue per active site, excluding current headwinds?
A: Our goal is $15,000 to $17,000 per quarter per site, driven by increased utilization and the BMP program. (Stephen Furlong, CFO)
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
