Q1 2024 Neuronetics Inc Earnings Call
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Thank you for standing by and welcome to the neuron ex first quarter 2024 conference call. At this time all participants are in a listen only mode.
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Please be advised that today's conference is being recorded I would now like to hand, the conference over to your speaker today Mark Clark.
Mark Clark: Mark go ahead, good morning, and thank you for joining us for the neuro networks first quarter 2024 conference call. Joining me on today's call are <unk>, President and Chief Executive Officer, Keith Sullivan, and Chief Financial Officer, Steve Furlong.
Mark Clark: 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 and other operational issues at <unk>.
Mark Clark: Tricks.
Mark Clark: Actual results can differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the Companys business.
Mark Clark: For a discussion of risks and uncertainties associated with <unk> business I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's Form 10-Q, which will be filed on or before may seven.
Mark Clark: The company disclaims any obligation to update any forward looking statements made during the course of this call except as required by law.
Mark Clark: During the call, we'll also discuss certain information on a non-GAAP basis, including EBITDA.
Mark Clark: 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 noncash and other expenses that are not indicative of trends in our operating results.
Mark Clark: Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans.
Mark Clark: Benchmark, our performance externally against competitors and for certain compensation decisions.
Mark Clark: 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.
Mark Clark: It's my pleasure to turn the call over to neuro networks, President and Chief Executive Officer, Keith Sullivan.
Keith J. Sullivan: Mark Thanks for the introduction and good morning, everyone and thank you for joining us today.
Keith J. Sullivan: I'll begin by providing an overview of the recent performance followed by an operational update Steve will then review the financial results and I'll conclude with some thoughts on 2024 before turning to Q&A.
Keith J. Sullivan: Building on the momentum we generated during 2023, we had a solid first quarter, our efforts to drive increased utilization and broader adoption of neurostar are paying dividends.
Keith J. Sullivan: Total revenue was $17 4 million, an increase of 12% over the first quarter of 2023.
Keith J. Sullivan: This continued solid performance reflects the outstanding efficacy of Neurostar therapy.
Keith J. Sullivan: The demand, we are generating and the ongoing execution by our commercial team.
Keith J. Sullivan: Eurostar system revenue was $3 $3 million, reflecting steady demand for new systems.
Keith J. Sullivan: During the quarter, we shipped 41 systems slightly below our plan of 45 to 50 systems per quarter.
Keith J. Sullivan: Partially due to a number of customers having challenges securing credit for capital purchases.
Keith J. Sullivan: As well as the negative impact experienced by some customers as a result of the change healthcare cyber security incident in late February.
Keith J. Sullivan: As a result of this incident providers has seen an impact on both collections on patient claims submissions as well as determination of patient eligibility due to the benefits investigation portal being shut down.
Keith J. Sullivan: During this time provider's ability to collect cash has been significantly impaired and is still being negatively impacted as of today.
Keith J. Sullivan: As a result of reduced cash collections due to change healthcare situation. Many psychiatry practices workforce to reallocate cash they had planned to use to purchase a neurostar in order to cover our central costs like rent and payroll, which impacted our ability to collect from customers.
Keith J. Sullivan: To further emphasize the impact on providers the American Medical Association published an article at the end of April discussing the results of a survey conducted with health care providers.
Keith J. Sullivan: Despite change healthcare's announcement of restored service. The survey found that 60% of providers are still facing challenges in verifying patient eligibility for treatment, 75% of providers still face barriers with claims submissions and 85%.
Keith J. Sullivan: Providers continued to experience disruption and claims payment.
Keith J. Sullivan: As the headwinds due to change healthcare subside, we expect that we'll return to our target of shipping 45 to 50 systems per quarter. Ultimately, we still expect to ship roughly 200 systems in 2024.
Keith J. Sullivan: Our Neurostar summit's had been a key driver of growth and adoption for our systems by educating healthcare professionals about the power of Neurostar in the battle against Depression, and other mental health disorders.
Keith J. Sullivan: We began hosting these events, we have conducted 12 summits across the United States.
Keith J. Sullivan: <unk>, we have sold a total of 200 systems generating over $14 million in capital sales with numbers steadily increasing each quarter.
Keith J. Sullivan: New customer relationships, we have formed as a result of this service have enabled these practices to treat over 2850 patients leading to a $11 $2 million in treatment session revenue.
Keith J. Sullivan: Our next summit scheduled for mid May and Phoenix, Arizona is already fully booked with 75 attendees.
Keith J. Sullivan: Importantly, 20% of the attendees currently treat adolescents. We are very pleased with the initial interest from the adolescent psychiatrist as we have only just begun to educate them on the benefits of the neurostar treatment for their patients.
Keith J. Sullivan: Overall, we are encouraged by the continued demand for our technology and its potential to positively impact those battling depression.
Keith J. Sullivan: Turning to an update on our commercial partnerships in March we announced a five year exclusive partnership with transformations care network, one of the nation's largest metal health care providers.
Keith J. Sullivan: They operate 47 locations soon to be 48 across the U S primarily in the northeast and Pacific Northwest and currently have 20 neurostar systems across their network.
Keith J. Sullivan: In this new agreement narrow networks is now transformation exclusive provider of new Tms systems also as part of the agreement transformations has converted from a fixed price to a consumable model for all of their systems.
Keith J. Sullivan: We have had a longstanding relationship with transformations and we are very excited that the neurostar will become an increasingly bigger part of their plans moving forward as they seek to deliver exceptional care and provide their patients with access to the best possible metal health solutions.
Keith J. Sullivan: U S treatment session revenue was $13 million, which represents a 22% increase compared to the first quarter of 2023.
Keith J. Sullivan: This growth was mainly fueled by a more than 32% year over year increase in local consumable revenue.
Keith J. Sullivan: Hi asked year over year increase outside of Covid validating the effectiveness of our commercial initiatives while treatment session revenue growth remained strong we did note some impact from the change healthcare situation that I just mentioned as providers start to conserve capital as a result of <unk>.
Keith J. Sullivan: Cash collections.
Keith J. Sullivan: When discussing the issue with customers, we have heard anecdotally that patient demand for therapy remains strong, but many of those patients had been delayed moving into treatment as a result of slow prior authorizations from insurers.
Keith J. Sullivan: Now, let's shift our focus to operational updates beginning with an update for the better meet guarantee provider pilot program or <unk>.
Keith J. Sullivan: To better meet guarantee provider program aims to establish a nationwide group of accounts following patient care and responsiveness standards developed in collaboration with expert Tms clinicians aimed at delivering timely and consistent care to those who need it most.
Keith J. Sullivan: As discussed during our last earnings call. We officially launched the second phase of the pilot in January.
Keith J. Sullivan: This phase included more than 100 accounts made up of both the Green Brook sites from the initial launch in late 2023 as well as additional sites that met the qualification standards prior to January 20.
Keith J. Sullivan: In early April we will enroll another cohort of approximately 100 sites and currently have 204 sites, who are actively participating in the <unk> program.
Keith J. Sullivan: We continue to be thrilled with the significant positive trends, we are seeing coming out of the sites enrolled in the pilot.
Keith J. Sullivan: Particularly related to responsiveness and more timely follow up with the potential patients <unk> sites are seeing up to a six and a half time improvement in patient follow up within 24 hours versus our non <unk> sites.
Keith J. Sullivan: Which we know is critical to facilitating the treatment of patients suffering from mental health conditions, because the <unk> sites are more rapidly connecting with patients. They can more quickly educate patients and have them begin treatment using neurostar.
Keith J. Sullivan: On average better be guarantee provider sites are able to move a patient from being interested in neurostar to completing a motor threshold test five times faster than we saw across our customer base last year.
Keith J. Sullivan: Historically it took an average of 82 days to move a patient from interest to treatment.
Keith J. Sullivan: This process is now being completed in 17 days on average for <unk> sites. As a result, PMG sites are seeing a 48% improvement in the number of motor threshold tests being completed.
Keith J. Sullivan: These providers are improving patients' lives by providing them with faster access to potentially life changing treatment.
Keith J. Sullivan: While we continue to closely monitor the positive impact of the pilot program as we expand to a greater number of customers throughout the year. The continued success of the program highlights that the tactics being employed are working in a meaningful way.
Keith J. Sullivan: Moving forward the pilot phase, we'll be open to all Neurostar customers, who agreed to meet the five key standards of the program.
Keith J. Sullivan: We will continue to take a measured approach to a broader rollout of the program to ensure we effectively balanced demand while upholding standards.
Keith J. Sullivan: We will launch another group of 100 sites in June, bringing the total number of participating sites to over 300.
Keith J. Sullivan: Turning our attention to Neurostar University.
Keith J. Sullivan: This program continues to enhance our customers' understanding of the benefits offered by our five star solution, which includes educational programs and tools clinical best practices as well as marketing initiatives.
Keith J. Sullivan: As a result of the education that customers are receiving at <unk>, we are seeing material increases in utilization as compared to sites who have not participated.
Keith J. Sullivan: In fact, NFU attendees on average are seeing a 58% increase in utilization as compared to sites who have not attended.
Keith J. Sullivan: Because they've learned how to educate patients about neurostar and learn the latest clinical techniques for using our system.
Keith J. Sullivan: Because of this we have seen a trend of sites, becoming repeat attendees with 20% of sites that attended prior classes, having set additional team members to NSE you to benefit firsthand from our course.
Keith J. Sullivan: This underscores that the more we are able to educate customers on best practices and the benefits of partnering with neuro medics to more utility they were able to drive.
Keith J. Sullivan: Moving forward, we will continue to leverage and Su success to drive increased adoption and utilization.
Keith J. Sullivan: During the first quarter, we saw continued strength with our co op marketing program.
Keith J. Sullivan: The co op program remains a critical component of our commercial strategy for two key reasons first by matching our customers' marketing spend we are effectively getting double the return on dollars invested to help drive awareness and educate prospective patients and second by having.
Keith J. Sullivan: A customer participate it reinforces their commitment to neurostar and developing a successful Tms program within their practice.
Keith J. Sullivan: At the beginning of 2024, we introduced significant improvements to the program based on feedback from our customers, making it even easier for our practices to use our streamlined and turnkey marketing approach, which should ultimately lead to a greater patient awareness of neurostar.
Keith J. Sullivan: As of the end of the first quarter, we have approximately 300 sites participating.
Keith J. Sullivan: As the participation grows we are continuing to see uplift across a number of key metrics.
Keith J. Sullivan: Those accounts, who participate in co op marketing both during Q4 of 2023 and Q1 of 2024, so our year over year increase in both motor threshold tests and utilization during the first quarter.
Keith J. Sullivan: Turning to our regulatory and clinical update.
Keith J. Sullivan: As of the end of March we received our eighth FDA five 10-K clearance in the past three years.
Keith J. Sullivan: Our new indication for Neurostar is as a first line adjunct treatment for adolescent patients aged 15 to 21, who are suffering from major depressive disorder.
Keith J. Sullivan: For this patient population neurostar can be used in combination with other therapies without requiring failed prior courses of medication.
Keith J. Sullivan: This is a significant milestone for the company and more importantly, adolescent patients as the Neurostar is the first and only Tms treatment to be cleared for this age group.
Keith J. Sullivan: Adolescent depression is a complex mental health condition that impacts an estimated $4 3 million patients in the United States and its prevalence has been accelerating since COVID-19 pandemic.
Keith J. Sullivan: Currently treatment options available for adolescents are extremely limited and this advancement has the potential to set a new treatment paradigm for how clinicians address depression within this large and growing patient population.
Keith J. Sullivan: With the size and scale of the adolescent patient population, our total addressable market within MDT has increased by approximately 35%.
Keith J. Sullivan: This clearance was two years in the making and is a testament to our clinical team and highlights the increasing value of the data we are accumulating within track star.
Keith J. Sullivan: Leveraging over 1100 real world adolescent patients who were treated using Neurostar art track Star data analysis showed that 78% of adolescent patients achieved clinical meaningful improvement in their depression.
Keith J. Sullivan: Boeing a full course of treatment.
Keith J. Sullivan: Relying on the Fda's commitment to consider and utilize real world evidence and evaluating new indications, we combined our track star data with clinical data from published literature to demonstrate that Neurostar Tms was safe and effective when used in a first line.
Keith J. Sullivan: Add on therapy.
Keith J. Sullivan: This clearance highlights the immense power.
Keith J. Sullivan: Terry tracks to our platform in particular for the advancement of our regulatory strategy.
Keith J. Sullivan: We will continue to leverage the growing where profit Tory of real world data from our customers daily use subtract star in administering neurostar therapy to evaluate opportunities to make neurostar more widely applicable to treat additional mental health conditions.
Keith J. Sullivan: Moving forward, we will work to educate clinicians as well as adolescent NBD suffers and their parents on the benefits that neurostar can deliver.
Keith J. Sullivan: Beyond the adolescent patient population that may exist within our current customer practices. There are approximately 8000 adolescent psychiatrist and an additional 6000 adolescent nurse practitioners in the United States, who we now have the opportunity to educate.
Keith J. Sullivan: Kate.
Keith J. Sullivan: Prior to recent clearance that providers had no tms option available to them.
Keith J. Sullivan: The interest we have already received from the physician community has been extremely encouraging to date, we have received interest from dozens of providers, both current customers and prospects.
Keith J. Sullivan: Some have expressed appreciation for expanding treatment options for this underserved adolescent population, while others have sought to clarify specifics around the approved indication for use in this age group.
Keith J. Sullivan: To further educate providers, we held a seminar last week to review the clinical data supporting our adolescent clearance.
Keith J. Sullivan: This allowed us to address common questions as practices look to incorporate neurostar Tms for their adolescent patients. The webinar had over 140 physician attendees with roughly two thirds being current customers and one third being prospective neurostar users highlighting strong.
Keith J. Sullivan: Interest from clinicians for this new indication.
Keith J. Sullivan: We have a comprehensive launch strategy for expanding our indication to treat adolescence 15, an app that includes increasing awareness and education among practices and parents.
Keith J. Sullivan: Our goal is to ensure that everyone suffering from MTB knows about Neurostar and has an understanding about the benefits of the treatment.
Keith J. Sullivan: To amplify our outreach on digital and social media platforms. We are hosting a press event in New York City on May 15th with editors and writers from top consumer trade and helped media outlets.
Keith J. Sullivan: This event will feature the transformative experience and perspectives about neurostar from a top psychiatrist.
Keith J. Sullivan: A patient advocate accompanied by their parent and a key representative from Neurostar.
Keith J. Sullivan: This new indication is the most newsworthy event at Neurostar since our initial clearance in 2008.
Keith J. Sullivan: We anticipate a significant increase in media coverage will help reach mbd suffers and their families leading to a higher level of awareness and education, which will help more people in need get treatment.
Keith J. Sullivan: We expect to see some contribution from this new indication in the second half of the year and we believe the positive impact on our business will be even more material in 2025.
Keith J. Sullivan: After the end of the first quarter, we announced the publication of some significant findings in brain stimulation. The Premier Journal in the field of Neuromodulation, highlighting the criticality of patients completing a full course of treatment when using neurostar therapy.
Keith J. Sullivan: The analysis confirmed that if patients in treatment show early improvement in their MTB symptoms. It was a strong predictor of a successful clinical outcome.
Keith J. Sullivan: Importantly, it also confirmed that a substantial number of patients who had low levels of improvement early in their treatment course, ultimately experienced a meaningful reduction in symptoms. Once they completed a full course of therapy.
Keith J. Sullivan: This data reinforces one of the pillars of the BMG P program, which is that clinicians are required to educate patients on the benefits of completing a full course of 36 treatments, which the data shows provides the best clinical outcomes.
Keith J. Sullivan: With this data we will continue to work to educate clinicians and patients on the benefits of finishing a full course of treatment.
Keith J. Sullivan: We are excited about what we were able to accomplish during the first quarter.
Keith J. Sullivan: We continued to deliver solid financial performance as a result of the successful execution of our educational and awareness initiatives beyond that we achieved significant milestones by being the first and only Tms manufacturer with an adolescent indication approval.
Keith J. Sullivan: This not only validates the safety and efficacy of Neurostar, but also allows us to help clinicians provide better care to the growing population of 15% to 21 year olds suffering from MTBE.
Keith J. Sullivan: We also made progress in expanding commercial partnerships agreements and increasing access to care with Neurostar.
Keith J. Sullivan: We are incredibly excited about the future at neuro networks with that I'd like to turn the call over to Steve.
Stephen J. Furlong: Thank you Keith unless otherwise noted all performance comparisons are being made for the first quarter of 2024 versus the first quarter of 2023.
Stephen J. Furlong: Total revenue was $17 4 million, an increase of 12% over prior year revenue of $15 5 million.
Stephen J. Furlong: Primarily driven by increased treatment session sales in the quarter.
Stephen J. Furlong: U S. Neurostar advanced therapy system revenue was $3 $3 million and we shipped 41 systems in the quarter.
Stephen J. Furlong: U S treatment session revenue was a record for the company at $13 million.
Stephen J. Furlong: An increase of 22% year over year.
Stephen J. Furlong: The revenue growth was primarily driven by continued strong performance within our local consumable customer segment.
Stephen J. Furlong: Revenue per active site was approximately $11300 in the quarter compared to approximately $9700 in the prior year quarter.
Stephen J. Furlong: This double digit increase in revenue per active site is due to the ongoing success of our commercial education and awareness initiatives.
Stephen J. Furlong: As well as the fact that we are continuing to see an increasing percentage of systems shipped per quarter going into existing customer sites, where they're at now operating multiple neurostar.
Stephen J. Furlong: Gross margin was 75, 1%.
Stephen J. Furlong: Compared to 73, 3% in the prior year quarter up 180 basis points from the prior year driven by a higher mix of treatment session revenue.
Stephen J. Furlong: We plan to continue this consistent improvement in gross margin as we work towards our longer term target of being above 80%.
Stephen J. Furlong: Operating expenses during the quarter were $20 million, a decrease of $1 4 million or 7% compared to $21 $3 million.
Stephen J. Furlong: In the first quarter of 2023.
Stephen J. Furlong: This year over year.
Stephen J. Furlong: Sequential reduction in operating expenses comes directly as a result of our ongoing prudent cost management efforts.
Stephen J. Furlong: During the quarter, we incurred approximately $1 $3 million of noncash stock based compensation expense.
Stephen J. Furlong: Net loss for the first quarter was $7 $9 million or 27 per share as compared to a net loss of $10 $5 million or <unk> 38 per share in the prior year quarter.
Stephen J. Furlong: EBITDA was negative $6 $3 million as compared to negative $9 $4 million in the prior year quarter.
Stephen J. Furlong: This significant reduction in EBITDA loss reflects our continued success in creating operational leverage through strong topline growth and prudent expense management.
Stephen J. Furlong: As of March 31, 2024, cash and cash equivalents were $47 $7 million.
Stephen J. Furlong: Cash collections in the quarter would have been higher absent the cyber security issues experienced by changed health care, which.
Stephen J. Furlong: Which in addition to delaying some customer purchases also delayed some customer payments.
Stephen J. Furlong: As a reminder, Q1 is typically our highest cash burn.
Stephen J. Furlong: Order of the year, we continue to remain confident in our path to profitability and we continue to expect to be cash flow positive in the fourth quarter of 2024.
Stephen J. Furlong: Now turning to guidance for the second quarter, we expect revenues of 18 million to $19 million.
Stephen J. Furlong: In the quarter, we anticipate that we will continue to see revenues modestly impacted by the change healthcare issue.
Stephen J. Furlong: When this issue was resolved we expect that revenues in cash collections will rebound.
Stephen J. Furlong: As a result, we continue to expect full year revenue in the range of $78 million to $80 million.
Stephen J. Furlong: We expect total operating expenses for the full year range to be in the range of $80 million to $84 million.
Stephen J. Furlong: I would now like to turn the call back over to Keith.
Keith J. Sullivan: Thank you Steve.
Keith J. Sullivan: In conclusion, the momentum we built in the first quarter positions us very well for the remainder of 2024, our commercial initiatives are clearly working driving increased adoption and utilization of neurostar therapy across our installed base.
Keith J. Sullivan: We expect these programs and to better meet guarantee provider program in particular to continue yielding strong results as we systematically roll them out more broadly.
Keith J. Sullivan: Looking ahead.
Keith J. Sullivan: We have several key growth catalysts, most notably our recent adolescent indication approval represents a significant market expansion opportunity that we are just beginning to unlock.
Keith J. Sullivan: With our focused education and awareness efforts ramping up we anticipate interest and demand from the adolescent psychiatric community to ramp up over the course of the year with even more material impact in 2025.
Keith J. Sullivan: Additionally, our robust clinical data pipeline and collaborative partnerships.
Keith J. Sullivan: Further increase neurostar is applicable across mental health condition.
Keith J. Sullivan: Our financial outlook remains strong and we are on a clear trajectory towards profitability and cash flow positivity.
Keith J. Sullivan: With our comprehensive commercialization strategy and expanding treatment indications narrow networks is uniquely positioned to drive long term sustainable growth.
Speaker Change: Before we open up the line for questions I'd like to thank everyone throughout the neural networks organization for their dedication and tireless work towards our mission of helping those suffering from mental health disorders. I'd also like to take a moment to thank three members of our board of directors Joe Capper.
Speaker Change: John Bakewell and Wolf Yeager.
Keith J. Sullivan: For their dedication and contribution to <unk> and me personally.
Keith J. Sullivan: They will not be standing for reelection.
Speaker Change: We wish them the best as they move on to their next ventures with that I'd like to open the line for questions.
Speaker Change: Thank you at this time, we will conduct a question and answer session to ask a question you will need to press Star One line on your telephone and wait for your name to be announced to withdraw. Your question. Please press star one line again.
Speaker Change: Please standby, while we compile the Q&A roster.
Speaker Change: Yes.
Speaker Change: Our first question comes from Danielle <unk>.
Danielle: Canaccord. Please go ahead now.
Keith J. Sullivan: Hi, David It's John on for Bill. This morning, Thanks for taking my question and congrats on the quarter.
John Bakewell: I just wanted to first touch on guidance.
John Bakewell: <unk> guidance by Youre still expecting the fall 200 system sales.
John Bakewell: You saw the strength in treatment revenues in Q1, despite all the headwinds that you highlighted on the call and and also you still have that talent now from the adolescence.
John Bakewell: Contribution in the second half.
Speaker Change: Want to understand it.
Speaker Change: Methodology, keeping guidance flat there.
Speaker Change: Yes, John Thanks for that question it really comes down to the uncertainty due to the cyber breach.
Speaker Change: As we indicated it did impact system sales in the quarter and although although we do think it will rebound in Q2 and Q3 and just felt like we'd be getting ahead of ourselves if we increased guidance at this point.
Speaker Change: The impact on adolescence. This year is still unknown, it's still very early.
Speaker Change: As a reminder, many of the private payers were already reimbursing for adolescent Tms down to either 2017 or 18 years of age so.
Speaker Change: It is a nice tailwind, but we think the most significant impact of that is going to be in 'twenty five and 26.
Speaker Change: Okay.
Speaker Change: Okay. Thanks, and then just for the Q2 guidance a little bit below the street.
Speaker Change: Assuming most of them probably need capital that being pushed out but I forgot the motor threshold attached chart and look at really strong towards the end of this quarter, but maybe just some puts and takes for what you expect for Q2. Thanks again.
Speaker Change: Yeah again, the capital equipment market is impacting all of med devices and.
Speaker Change: And it's not that lenders are denying credit, but they're doing a lot more diligence and so its taking longer to get our transactions funded.
Speaker Change: One of the reasons why we continue to schedule our summits earlier in the quarter.
Speaker Change: Our first summit was schedule four weeks before quarter end and now we're scheduling them between seven and eight weeks before quarter end.
Speaker Change: And so yes.
Speaker Change: We do forecast to rebound from Q1 for the Neuro Star sales.
Speaker Change: But again.
Speaker Change: 60% of our customers or even slightly higher.
Speaker Change: Really.
Speaker Change: Single office doctors and they are impacted by cash flow and so.
Speaker Change: Not only other claims being held up by prior authorizations for new patients are also being held up and so.
Speaker Change: Again, we do think it's going to recover but some of the statistics that Keith mentioned.
Speaker Change: Previously there is still some wood to chop before they fully recover.
Speaker Change: And then regarding <unk> you are right.
Speaker Change: That's a significant metric for us to watch.
Speaker Change: It was up nicely in the corner and quite frankly, it was very strong in April as well.
Speaker Change: Again, I think it's just more of a timing thing, which is why we are comfortable maintaining the full year guidance at this point.
Speaker Change: Got it thank you again.
Speaker Change: Thanks, Sean one moment for our next question.
Speaker Change: Okay.
Speaker Change: Our next question comes from Adam Nadir of Piper Sandler. Please go ahead.
Adam Carl Maeder: Hi, Keith and Steve Thanks for taking the questions here solid start to the year end and very nice U S. Treatment sessions number I wanted to follow up on John's question, and then I guess just kind of wanted to see if we could get a little bit more granular with.
Adam Carl Maeder: The temporary headwinds that arose in Q1.
Adam Carl Maeder: Okay.
Speaker Change: From from change the cyber security issue.
Speaker Change: <unk> securing credit.
Speaker Change: Maybe just talk about kind of the impact in Q1 that you saw both from a system revenue in treatment session revenue standpoint, and then are you able to give us.
Speaker Change: Any numbers around kind of anticipated headwind in Q2, I think I heard modest impact and then what's kind of baked into the full year guide for those.
Speaker Change: Transient headwinds.
Speaker Change: Okay.
Speaker Change: Thanks, Adam Yes.
Adam Carl Maeder: Do estimate that the Q1 impact was about 500000 and that was primarily capital equipment sales and again with the reaffirmation of doing approximately 200 systems in the year, we do think theres going to be a recovery.
Speaker Change: In Q2 through Q4.
Speaker Change: Not a big impact and treatment sessions.
Speaker Change: Yes, I would say the most significant impact that we saw was on collections.
Speaker Change: And so.
Speaker Change: We had $20 million in U S revenue and Q4 of 23, you would like to think you'd be able to collect the lion's share of that and your first quarter and we didn't and so.
Speaker Change: We estimate that we were probably short paid about 3 million.
Speaker Change: Again, we do forecast that to recover.
Speaker Change: As.
Speaker Change: The security issue was fixed but it did have.
Speaker Change: <unk> on our balance sheet.
Speaker Change: Okay.
Speaker Change: Keith Please I will just add one piece to it.
Keith J. Sullivan: The capital equipment side, as Steve said earlier.
Keith J. Sullivan: <unk>.
Keith J. Sullivan: It's really getting the financing through and it used to be that we could get financing done in 10 business days and now we're looking at several weeks. So we do have a summit coming up.
Speaker Change: Arizona, we have 75.
Speaker Change: Providers coming to that summit.
Speaker Change: So it's the.
Speaker Change: The interest is certainly there it's just now with seven weeks before the end of the quarter.
Speaker Change: Are we able to get those systems through the financing process.
Speaker Change: That's good color guys. Thanks, Thanks for all that and.
Speaker Change: I'll follow up on the Q2 guidance and sorry for the near term focused question.
Speaker Change: The sequential quarter over quarter step up is smaller than in past years.
Speaker Change: Certainly it sounds like you guys anticipate again, some kind of carryover impact from the temporary headwinds.
Speaker Change: But I guess im still kind of.
Speaker Change: Trying to just.
Speaker Change: Square, the $18 million to $19 million guidance rate range for Q2.
Speaker Change: Any color that you can give us thus far on the trends in the business in Q2 and kind of how that's.
Speaker Change: May or may not be informing the Q2 outlook and then I had one follow up thanks.
Speaker Change: Yes again.
Speaker Change: Metrics that we view as a team and a continued to be strong.
Speaker Change: But again.
Speaker Change: As I said to John <unk>.
Speaker Change: We already have our patients our single site offices and they are very dependent upon reimbursement.
Speaker Change: And if they can't get if they can't get cash in it is difficult for them to spend money and so again, we believe we took a responsible approach to setting guidance, where it was but it's by no means an indication that.
Speaker Change: We're sensing weakness out there.
Speaker Change: This issue was out of our control until its facts regretfully. It will have some impact near term on our business.
Speaker Change: Again, I think our.
Speaker Change: Affirmation of full year.
Speaker Change: At this point I mean, we're still only into early may.
Speaker Change: As you that.
Speaker Change: It's going to be a good year.
Speaker Change: And it's Adam Keith again, you also said that our motor thresholds look strong and they continue to be strong we just.
Speaker Change: In speaking with several of our accounts and some of the big ones there.
Speaker Change: Their prior authorizations are taking longer to come through as a result of change healthcare so.
Speaker Change: We're seeing the activity out there, but we have to be sensitive to the situation with change healthcare.
Speaker Change: Sure.
Speaker Change: Makes sense and if I can squeeze in one more just on the adolescence approval. Congratulations I think I heard Keith you mentioned that this is the most newsworthy events original FDA clearance.
Speaker Change:
Speaker Change: Maybe just talk about the strategy.
Speaker Change: To kind of.
Speaker Change: Guess.
Speaker Change: Pursued this new patient population.
Speaker Change:
Speaker Change: Pursuing a new clinician base.
Speaker Change: Which practices will you target.
Speaker Change: How do you grow the customer base, but not at the same but at the same time not lose focus on the existing customers, which have seen some pretty good utilization trends. So just talk about kind of.
Speaker Change: The strategy and approach there thanks for taking the questions.
Speaker Change: Thanks, Adam.
Speaker Change: We submitted for this five 10-K approval back in June of last year, and we the soonest that we expected that approval was September 28.
Speaker Change: We have been geared up for it since that time and.
Speaker Change: Have a PR firm lined up have a marketing plan all put together and have been adjusting it for the last nine months.
Speaker Change: No.
Speaker Change: We are ready to go to talk to adolescent psychiatrist with the adolescent nurse practitioners.
Speaker Change: And we have a marketing campaign directed at the parents of the adolescence. So all of that.
Speaker Change: Will be kicked off on May 15th in New York City with with our press event. So.
Speaker Change: We think that there is significant interest and as we said in the script, we have already seen it and at our summit, we have about 15 physicians that.
Speaker Change: Prior to the clearance had.
Speaker Change: No knowledge of Tms in their practice and no thought that they would be able to use it to help the adolescents that theyre treating so I think this is a good opportunity for us.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Okay.
Speaker Change: Our next question comes from Margaret teaser at William Blair. Your line is now open.
Margaret Teaser: Hey, good morning, everyone. Thanks for taking my question.
Speaker Change: Yes.
Margaret Teaser: Do you focus on treatment sales in yesterday.
Margaret Teaser: Growth I mean, we're seeing an acceleration.
Margaret Teaser: Slightly tougher comp on a year over year basis relative to what we saw in Q4, you've got two quarters now, 20% plus but I understand part of that is comps and so on but.
Margaret Teaser: <unk> seen pretty powerful and then to the extent that youre talking about average local treatment growth over 30% I mean, those are numbers that appears back I'm not sure anyone would've expected so.
Speaker Change: I don't know if thats better me guarantee that's an issue.
Speaker Change: All of it all combined obviously, but.
Speaker Change: I guess, yes.
Speaker Change: I'm, just trying to dive into that a little bit more it seems like if the average is over 30%.
Speaker Change: Folks in better me or an issue should be much higher than that.
Speaker Change: So one is that the right assumption to be had and then too.
Speaker Change: What does that mean for sustainable growth because that doesn't have an upfront. It doesn't it assumes couple of hundred folks right now and better meet guarantee so just trying to as we look towards 2025 understand what this could mean.
Speaker Change: Thanks, Margaret this is Keith.
Keith J. Sullivan: The better me guarantee program is working exactly as we had hoped.
Keith J. Sullivan: We think it's better than we had thought with 204 sites in the programme now.
Speaker Change: We are actually <unk> rating the access to the program. So we are going to add <unk>.
Keith J. Sullivan: <unk> new sites on May 15th and 50 more on June 3rd.
Keith J. Sullivan: Yes.
Keith J. Sullivan: We are seeing that.
Keith J. Sullivan: A.
Keith J. Sullivan: Site is.
Keith J. Sullivan: Not in the program on average they do about three patients a quarter.
Keith J. Sullivan: If if a.
Keith J. Sullivan: Site has committed to be in the program is working towards.
Keith J. Sullivan: Get it.
Keith J. Sullivan: Meeting all five of our standards they treat about $6 two patients a quarter.
Keith J. Sullivan: But if they are in the program and they've met all the standards and they're keeping up with with all of them and we have to monitor them on a monthly basis.
Keith J. Sullivan: They are trading 10, seven patients a quarter.
Keith J. Sullivan: So we are doing everything we can right now to accelerate access into the program for the accounts that.
Keith J. Sullivan: <unk> are trying to meet the standards. So I think now that we have a program that does incorporate neurostar University, which I would say probably has the greatest impact.
Keith J. Sullivan: On the success of BMG P.
Keith J. Sullivan: I think we are demonstrating to these accounts that if they follow the steps they will be successful in treating more patients and educating them and then getting them into treatment. So I think it is sustainable growth.
Keith J. Sullivan: Okay.
Keith J. Sullivan: And maybe I'll keep going on that because it seems like a key topic, but now that you've had.
Keith J. Sullivan: The 10 year folks going out a few but not the first tranche of BMT.
Keith J. Sullivan: Correct me, if I'm wrong I think at least six months at this point. So are you seeing some of the trends and statistics that you had referenced get even better the longer that they are a part of it and ultimately where can you go.
Keith J. Sullivan: 200, <unk> 300 by mid year.
Keith J. Sullivan: At least the BMT program.
Keith J. Sullivan: PMT piece sorry.
Keith J. Sullivan: Of the 1100 to 1200 accounts that are out there still seems like that.
Keith J. Sullivan: Sizable multiyear opportunity can you get most of them in there.
Keith J. Sullivan: Our goal is by June 30, we will have a little over 300 into the program.
Keith J. Sullivan: And I think that as we continue to get momentum we will have.
Keith J. Sullivan: Somewhere $303 50 to $4 50 in the program by the end of the year.
Speaker Change: Okay and kind.
Keith J. Sullivan: Tranches. They are 10 years of thoughtful within these programs in NFC or do their statistics continue to get better or do they top out at some point.
Keith J. Sullivan: Now they get better and better honestly.
Keith J. Sullivan: Their motor thresholds on the people in the program continue to go up there we monitor whether they follow up with patient leads and follow up with peak phe tens.
Keith J. Sullivan: And continue to.
Keith J. Sullivan: Be responsive to patients on the phone.
Keith J. Sullivan: And all of them are doing exactly what we need them to do.
Keith J. Sullivan: Their business continues to grow and now with adolescence I think it is another opportunity for all of these accounts to be able to communicate with.
Keith J. Sullivan: The parents of the adolescence.
Speaker Change: Okay. It sounds good I appreciate it guys congrats.
Keith J. Sullivan: Thanks.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our final question comes from.
Speaker Change: Danny Stonner citizen JMP. Your line is now open.
Daniel Walker Stauder: Yeah, great. Thanks.
Daniel Walker Stauder: I just wanted to ask quickly on average revenue per active site.
Daniel Walker Stauder: Nice to see another quarter of double digit growth.
Daniel Walker Stauder: Stepped down a bit sequentially. So I was just curious if this was more a factor of normal seasonality.
Daniel Walker Stauder: And then how should we think about this metric for the rest of the year, especially given the longer capital sales cycle, we saw in first.
Daniel Walker Stauder: First quarter, and what's maybe items second quarter. Thanks.
Stephen J. Furlong: Hey, Danny its Steve.
Stephen J. Furlong: There was some seasonality.
Stephen J. Furlong: The analogy that impacted that.
Stephen J. Furlong: And then also there's.
Stephen J. Furlong: A bit of variability in our overall site count.
Stephen J. Furlong: And so.
Stephen J. Furlong: We are forecasting that metric to continue to improve.
Stephen J. Furlong: Again with the increase in treatment session revenue and utilization.
Stephen J. Furlong: Again I think.
Stephen J. Furlong: Double digit growth throughout the rest of the year and that metric is not.
Stephen J. Furlong: Out of the realm of possibility.
Speaker Change: Great and then just one follow up touching back on the clearance in adolescence.
Stephen J. Furlong: Really good to see and you gave some great detail on how youre approaching patient education education and outreach here.
Stephen J. Furlong: But just wanted to clarify how should we be thinking about the impact of overall marketing spend is this already in your planned budget shifting more dollars to this area or will it increase or will it increase the total just any more color. There you could give would be great. Thank you.
Stephen J. Furlong: Thanks, Danny this is Keith.
Keith J. Sullivan: Our marketing spend has been consistent for the last three years with the better me guarantee program. We are able to make those same dollars that we have been spending more efficient. So we're able to market directly around the better meet guarantee providers.
Keith J. Sullivan: And be able to monitor the patients as they go through the system.
Keith J. Sullivan: Into their practices and then whether they get treated or not so R. R.
Keith J. Sullivan: Spend will be.
Keith J. Sullivan: We'll be consistent with last year and there is no plan to increase that budget.
Speaker Change: Great. Thank you very much.
Speaker Change: Thank you.
Keith J. Sullivan: This concludes the question and answer session I would now like to turn it back to Keith Sullivan for closing remarks.
Keith J. Sullivan: Thank you for your interest in Neuro index, and we look forward to updating you on our next quarterly call.
Keith J. Sullivan: Thank you for your participation in today's conference. This does conclude the program you may now disconnect.
Keith J. Sullivan: Okay.
Keith J. Sullivan: [music].