Q2 2024 Neuronetics Inc Earnings Call

August 12, 2024

Okay.

Operator: Good day, and thank you for standing by. Welcome to the Neuronetics Second Quarter 2020 Financial and Operating Results Conference.

Operator: Good day, and thank you for standing by. Welcome to the Neuronetics Second Quarter 2024 Financial and Operating Results Conference. At this time, all participants are in a listen-only mode.

Operator: Good day, and thank you for standing by.

Speaker Change: Good day and thank you for standing by welcome to the Neuro networks second quarter 2024 financial and operating results conference call.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised.

Operator: Welcome to Neuronetics' second quarter, 2024 financial and operating results conference call. At this time, all participants are in a listen-only mode.

Operator: At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star 1 1 on your telephone. You will then hear an automated message advising that your hand is raised. To withdraw your question, please press star 1 once again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mark Klausner. Please go ahead.

Speaker Change: At this time all participants are in a listen only mode.

Operator: After the speaker's presentation, there will be a question-and-answer session. To ask a question during this session, you'll need to press star-1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star-1-1 again.

Speaker Change: After the Speakers' presentation, there'll be a question and answer session.

Speaker Change: To ask a question. During this session you will need to press star one on your telephone.

Speaker Change: You will then hear an automated message advising your hand is raised.

Speaker Change: Your question. Please press star one again.

Operator: Please be advised that today's conference is being recorded.

Speaker Change: Please be advised that today's conference is being recorded.

Mark Klausner: I would now like to hand the conference over to Mark Klausner. Please go ahead.

Operator: To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Mark Klausner. Please do so.

Speaker Change: I would now like to hand, the conference over to Mark Klausner. Please go ahead.

Mark Klausner: Good morning, and thank you for joining us for the Neuronetics second quarter 2024 conference call. Joining me on today's call are Neuronetics President and Chief Executive Officer Keith Sullivan and Chief Financial Officer Steve Furlong. Today's call features a live webcast, which includes a slide presentation. There is a short delay between the audio over the phone and the slides being shown on the webcast. If you are listening over the phone, we would recommend downloading the slide presentation from our website and following along independently.

Mark Klausner: Good morning, and thank you for joining us for the Neuronetics' second quarter 2024 conference call. Joining me on today's call are Neuronetics' President and Chief Executive Officer, Keith Sullivan, and Chief Financial Officer, Steve Furlong. Today's call features a live webcast, which includes a slide presentation. There's a short delay between the audio over the phone and the slides being shown on the webcast. If you are listening over the phone, we would recommend downloading the slide presentation from our website and following along independently.

Mark Klausner: Good morning, and thank you for joining us for the Neuronetics Second Quarter 2024 conference call. Joining me on today's call are Neuronetics President and Chief Executive Officer Keith Sullivan and Chief Financial Officer Steve Furlong. Today's call features a live webcast, which includes a slide presentation. There is a short delay between the audio over the phone and the slides being shown on the webcast.

Mark Klausner: Good morning, and thank you for joining us for the neuro networks second quarter 2024 conference call.

Mark Klausner: If you are listening over the phone, we would recommend downloading the slide presentation from our website and following along independently. 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 the proposed transaction with Greenbrook TMS, our business, strategy, financial, and revenue guidance, and other operational issues and metrics.

Speaker Change: Joining me on today's call are <unk>, President and Chief Executive Officer, Keith Sullivan, and Chief Financial Officer, Steve Furlong.

Speaker Change: Today's call features a live webcast, which includes a slide presentation. There was a short delay between the audio over the phone and the slides are being shown on the webcast. If you are listening over the phone we would recommend downloading the slide presentation from our website and following along independently.

Mark Klausner: 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 the proposed transaction with Greenbrook TMS, our business, strategy, financial and revenue guidance, and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business.

Mark Klausner: Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics' 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 later today, August 12th. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law.

Mark Klausner: 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 the proposed transaction with Greenbrook TMS, our business, strategy, financial, and revenue guidance, and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business.

Speaker Change: Before we begin I would like to caution listeners that certain information discussed by management during this conference call.

Speaker Change: We will include forward looking statements covered under the Safe Harbor provisions.

Speaker Change: Private Securities Litigation Reform Act of 1995, including statements related to the proposed transaction with Green Brook, Tms, our business strategy financial and revenue guidance and other operational issues and metrics.

Speaker Change: Actual results can differ materially from those stated or implied by these forward looking statements due to risks and uncertainties associated with the company's business.

Mark Klausner: For discussion of risks and uncertainties associated with Neuronetics' business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's Form 10-Q, which we filed later today, August 12th. The company just claims any obligation to update any forward-looking statements made during the course of this call, except it's required by law.

Mark Klausner: For a discussion of risks and uncertainties associated with Neuronetics' 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 later today, August 12th. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we'll also discuss certain information on a non-GAAP basis, including EVA-DOT. Management believes that non-GAAP financial information taken in conjunction with U.S. GAAP financial measures provides useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results.

Speaker Change: For a discussion of risks and uncertainties associated with narrow networks 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 later today August 12.

The company disclaims any obligation to update any forward looking statements made during the course of this call except as required by law.

Mark Klausner: During the call, we'll also discuss certain information on a non-GAAP basis, including EBITDA. Management believes that non-GAAP financial information taken in conjunction with U.S. Gap financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results. Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions. Reconciliation between U.S.

Speaker Change: During the call, we'll also discuss certain information on a non-GAAP basis, including EBITDA.

Speaker Change: 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.

Speaker Change: Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions.

Speaker Change: 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 with that it's my pleasure to turn the call over to neuro <unk>, President and Chief Executive Officer, Keith Sullivan.

Mark Klausner: Gap and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website.

Mark Klausner: Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans, to benchmark our performance externally against competitors, and for certain compensation decisions. 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. With that, it's my pleasure to turn the call over to Neuronetics President and Chief Executive Officer Keith Sullivan.

Keith Sullivan: With that, it's my pleasure to turn the call over to Neuronetics President and Chief Executive Officer, Keith Sullivan. Mark, thanks for the introduction. Good morning, and thank you all for joining us today. I'll begin by providing an overview of recent performance, followed by an operational update. Steve will then review our financial results, and I'll conclude with a discussion of our merger with Greenbrook TMS. I'd like to start by saying that our financial performance during the quarter was below our expectation. with revenue of $16.5 million, which was down 7% year over year. The impact of Change Healthcare, cybersecurity breach still lingers.

Mark Klausner: Management uses non-GAAP financial measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. 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. With that, it's my pleasure to turn the call over to Neuronetics President and Chief Executive Officer Keith Sullivan. Mark, thanks for the introduction. Good morning, and thank you all for joining us today.

Keith Sullivan: Mark, thanks for the introduction. Good morning, and thank you all for joining us today.

Keith Sullivan: Mark Thanks for the introduction.

Keith Sullivan: I'll begin by providing an overview of recent performance followed by an operational update. Steve will then review our financial results, and I'll conclude with a discussion of our merger with Greenbrook TMS. I'd like to start by saying that our financial performance during the quarter was below our expectations, with revenue of $16.5 million, which was down 7% year over year. The impact of changing health care and the cybersecurity breach still lingers.

Keith Sullivan: Good morning, and thank you all for joining us today I'll begin by providing an overview of recent performance followed by an operational update and Steve will then review our financial results and I'll conclude with a discussion of our merger with Green broke Tms.

Keith Sullivan: I'll begin by providing an overview of recent performance, followed by an operational update. Steve will then review our financial results, and I'll conclude with a discussion of our merger with Greenbrook TMS. I'd like to start by saying that our financial performance during the quarter was below our expectations, with revenue of $16.5 million, which was down 7% year over year. The impact of Change Healthcare's cybersecurity breach still lingers. Our utilization in our local consumable segment was up 18 percent and would have been higher had there not been the related bottlenecks impacting prior authorization caused by changed healthcare.

Steve Furlong: I'd like to start by saying that our financial performance during the quarter was below our expectations.

With revenue of $16 $5 million, which was down 7% year over year, the impact of change healthcare cyber security breach still lenders.

Keith Sullivan: Our utilization in our local consumable segment was up 18%, and would have been higher had there not been the related bottlenecks impacting prior authorization caused by Change Healthcare. Despite the positive underlying utilization trends, treatment session revenue was down 5% as our customers were forced to allocate cash to support their operations rather than purchasing new treatment sessions in line with historical patterns. This redevelopment of cash is a result of continued delays and payments from Change Healthcare. We believe that the negative headwinds from Change Healthcare are transient and our revenue patterns will return the normal over the balance of the year.

Keith Sullivan: Our utilization in our local consumable segment was up 18% and would have been higher had there not been the related bottlenecks impacting prior authorization caused by changing healthcare. Despite the positive underlying utilization trends, treatment session revenue was down 5% as our customers were forced to allocate cash to support their operations rather than purchasing new treatment sessions in line with historical patterns. This redevelopment of cash [inaudible] is a result of continued delays and payments from change healthcare.

Speaker Change: Our utilization and our local consumable segment was up 18% and would have been higher had there not been the related bottlenecks impacting prior authorization caused by change healthcare despite.

Keith Sullivan: Despite the positive underlying utilization trends, treatment session revenue was down five percent as our customers were forced to allocate cash to support their operations rather than purchasing new treatment sessions in line with historical patterns. This redevelopment of cash is a result of continued delays in payments from Change Healthcare.

Speaker Change: Despite the positive underlying utilization trends treatment session revenue was down 5% as our customers were forced to allocate cash to support their operations rather than purchasing new treatment sessions in line with historical patterns.

This redevelopment of cash is a result of continued delays in payments from change healthcare.

Keith Sullivan: We believe that the negative headwinds from James Healthcare are transient, and our revenue patterns will return to normal over the balance of the year. Based on the trends we are seeing in motor threshold determinations and treatment session utilization, we continue to see strong underlying demand, and through the continued execution of our commercial strategy, we will drive sustainable long-term growth once we move past this macro challenge. On the capital side of the business, as noted last quarter, our customers experience challenging, securing financing for capital equipment purchases. The process now takes weeks instead of days.

Keith Sullivan: We believe that the negative headwinds from changed healthcare are transient, and our revenue patterns will return to normal over the balance of the year. Based on the trends we are seeing in motor threshold determinations and treatment session utilization, we continue to see strong underlying demand, and through the continued execution of our commercial strategy, we will drive sustainable long-term growth once we move past these macro challenges. On the capital side of the business, as noted last quarter, our customers experience challenges securing financing for capital equipment purchases.

Speaker Change: We believe that the negative headwinds from change healthcare are transient.

Speaker Change: And our revenue patterns will return to normal over the balance of the year.

Keith Sullivan: Based on the trends we are seeing in motor threshold determinations and treatment session utilization, we continue to see strong utilizing underlying demand, and through the continued execution of our commercial strategy, we will drive sustainable long-term growth once we move past these macro challenges. On the capital side of the business, as noted last quarter, our customers experience challenging securing financing for capital equipment purchases. The process now takes weeks instead of days. We address these headwinds head-on by adjusting our narrow-star summit timing and engaging the financing companies earlier in the process. As a result of our actions, despite the continuation of high interest rates and increased diligence requirements, we were able to recognize revenue on 50 narrow-star systems, which is at the high end of our quarterly guidance of 45 to 50 systems. This highlights the continued demand for narrow-star and our ability to adjust our strategy to execute regardless of prevailing headwinds.

Speaker Change: Based on the trends, we are seeing in motor threshold determinations and treatment session utilization, we continue to see strong utilizing underlying demand and through the continued execution of our commercial strategy, we will drive sustainable long term growth once we move past these macro challenges.

Yes.

Speaker Change: On the capital side of the Physicals as noted last quarter, our customers experienced challenging securing financing for capital equipment purchases.

Keith Sullivan: The process now takes weeks instead of days. We've addressed these headwinds head on by adjusting our Neurostar Summit timing and engaging the financing companies earlier in the process. As a result of our actions, despite the continuation of high interest rates and increased diligence requirements, we were able to recognize revenue on 50 Neurostar systems, which is at the high end of our quarterly guidance of 45 to 50 systems. This highlights the continued demand for Neurostar and our ability to adjust our strategy to execute regardless of prevailing headwinds.

Speaker Change: The process now it takes weeks instead of days, we've addressed these headwinds head on by adjusting our Neurostar summit timing and engaging the financing companies earlier in the process as a result of our actions. Despite the continuation of high interest rates and increased diligence requirements we were.

Keith Sullivan: We've addressed these headwinds head-on by adjusting our Neurostar Summit timing and engaging the financing companies earlier in the process. As a result of our actions, despite the continuation of high interest rates and increased diligence requirements, we were able to recognize revenue on 50 Neurostar systems, which is at the high end of our quarterly guidance of 45 to 50 systems. This highlights the continued demand for Neurostar and our ability to adjust our strategy to execute regardless of prevailing headwinds. We continue to be bullish on the future of Neuronetics based on the results we are seeing from our Better Me program. In July, we fully launched the program nationwide after a tremendously successful pilot.

Speaker Change: To recognize revenue on 50, Neurostar systems, which is the high end of our quarterly guidance of 45 to 50 systems. This highlights the continued demand for neurostar and our ability to adjust our strategy to execute regardless of prevailing headwinds.

Keith Sullivan: We continue to be bullish on the future of analytics based on the results we are seeing from our Better Me program. In July, we fully launched the program nationwide after a tremendously successful pilot. Let me share with you some of the results. Participating practices improved their 24-hour follow-up rates by 6.4 times compared to non-participating providers. Through a narrow-star university at which attendance is a requirement for customers to participate in the program, providers who received advanced clinical training, on average, treated 61 percent more patients in need. We've also significantly reduced the time from initial patient interest to first treatment, leading to a 3.7 times more motor-fresh-hole determinations.

Keith Sullivan: We continue to be bullish on the future of Neuronetics based on the results we are seeing from our Better Me program. In July, we fully launched the program nationwide after a tremendously successful pilot. Let me share with you some of the results.

Speaker Change: We continue to be bullish on the future of knowing that it's based on the results we're seeing from our bedroom D program.

Speaker Change: In July we fully launched the program nationwide after a tremendously successful pilot.

Keith Sullivan: Let me share with you some of the results. Participating practices improved their 24-hour follow-up rates by 6.4 times compared to non-participating providers. Through Neurostar University, at which attendance is a requirement for customers to participate in the program, providers who received advanced clinical training on average treated 61% more patients in need. We've also significantly reduced the time from initial patient interest to first treatment, leading to 3.7 times more motor threshold determination.

Keith Sullivan: Participating practices improved their 24-hour follow-up rates by 6.4 times compared to non-participating providers. Additionally, through Neurostar University, at which attendance is a requirement for customers to participate in the program, providers who received advanced clinical training on average treated 61% more patients in need. We've also significantly reduced the time from initial patient interest to first treatment, leading to 3.7 times more motor threshold determination. These improvements are making our life-changing Neurostar treatment more accessible to millions of suffering patients from MDD, OCD, and anxious depression. Nevertheless, despite these outstanding results, we believe there is still room for improvement.

Speaker Change: Let me share with you some of the results.

Participating practices improve their 24 hour follow up rates by six four times compared to non participating providers.

Speaker Change: For Neurostar University at which attendance as a requirement for customers to participate in the program.

Speaker Change: Fighters, who received advanced clinical training on average treated 61% more patients in need.

Speaker Change: We've also significantly reduce the time from initial patient interest to first treatment.

Speaker Change: Leading to a three seven times more motor threshold determinations.

Keith Sullivan: These improvements are making our life-changing narrow-star treatment more accessible to millions of suffering patients from MDD, OCD, and anxious depression. Despite these outstanding results, we believe there is still room for improvement. With the expansion of the BMP program, we now have a critical mass of participating customers within many of our key markets throughout the U.S. This increases our confidence that providers will respond in a timely manner to focused investments in growing patient awareness and education for Neurostar.

Keith Sullivan: These improvements are making our life-changing Neurostar treatment more accessible to millions of suffering patients from MDD, OCD, and anxious depression. Nevertheless, despite these outstanding results, we believe there is still room for improvement. With the expansion of the BNP program, we now have a critical mass of participating customers within many of our key markets throughout the U.S. This increases our confidence that providers will respond in a timely manner to focused investments in growing patient awareness and education for NeuroSTAR. So, during the second half of this year, we will be piloting a TV advertising campaign in Tampa, Florida.

Speaker Change: These improvements are making our life changing neurostar treatment more accessible to millions of suffering patients from M. D D OCD and anxious depression <unk>.

Speaker Change: Despite these outstanding results. We believe there is still room for improvement.

Keith Sullivan: With the expansion of the BNP program, we now have a critical mass of participating customers within many of our key markets throughout the U.S. This increases our confidence that providers will respond in a timely manner to focused investments in growing patient awareness and education for NeuroSTAR. So, during the second half of this year, we will be piloting a TV advertising campaign in Tampa, Florida. This TV campaign will supplement our existing digital advertising campaigns that have proven to be highly effective. We chose Tampa because it has a high concentration of BMP accounts, and we are confident this group of providers will be representative of the other BNP accounts across the country.

Speaker Change: With the expansion of the BMT program, we now have a critical mass of participating customers within many of our key markets throughout the U S.

Speaker Change: This increases our confidence that providers will respond in a timely manner to focused investments and growing patient awareness and education for neurostar. So.

Keith Sullivan: So, during the second half of this year, we will be piloting a TV advertising campaign in Tampa, Florida. This TV campaign will supplement our existing digital advertising campaigns that are proven to be highly effective. We chose Tampa because it has a high concentration of BMP accounts, and we are confident this group of providers will be representative of the other BMP accounts across the country. This campaign seeks to test the effectiveness of using TV as a medium to increase awareness of Neurostar TMS and facilitates new patients to connect with BMP practices in a specific market. We held a kickoff event in Tampa earlier this month for our BMP providers and other customers wanting to get into the program.

Speaker Change: During the second half of this year, we will be piloting a TV advertising campaign in Tampa, Florida.

Keith Sullivan: This TV campaign will supplement our existing digital advertising campaigns that have proven to be highly effective. We chose Tampa because it has a high concentration of BMP accounts, and we are confident this group of providers will be representative of the other BNP accounts across the country. This campaign seeks to test the effectiveness of using TV as a medium to increase awareness of Neurostar TMS and facilitate new patients to connect with BMT practices in a specific market.

Speaker Change: This television campaign will supplement our existing digital advertising campaigns that have proven to be highly effective.

Speaker Change: We chose Tampa because it has a high concentration of BNP accounts and we are confident this group of providers will be representative of the other b M. P accounts across the country.

Speaker Change: This campaign seeks to test the effectiveness of using television as a medium to increase awareness of Neurostar, Tms and facilitates new patients to connect with BMT practices in a specific market.

Keith Sullivan: This campaign seeks to test the effectiveness of using TV as a medium to increase awareness of Neurostar TMS and facilitate new patients connecting with BMT practices in a specific market. We held a kickoff event in Tampa earlier this month for our BMP providers and other customers wanting to get into the program. They came out of the event very excited to participate in this pilot as we seek to deliver even more value to BMP practices and help even more patients receive the life-changing benefits of Neurostar.

Keith Sullivan: We held a kick-off event in Tampa earlier this month for our BMP providers and other customers wanting to get into the program. They came out of the event very excited to participate in this pilot as we seek to deliver even more value to BMT practices and help even more patients receive the life-changing benefits of Neurostar. Another highlight in the quarter was the launch of Neurostar TMS therapy for adolescents. Physicians are responding positively to this new option, recognizing the critical need for effective treatments in this age group.

We held a kickoff event in Tampa earlier, this month for our BMP providers and other customers wanting to get into the program.

Keith Sullivan: They came out of the event very excited to participate in this pilot as we seek to deliver even more value to BMP practices and help even more patients receive the life-changing benefits of NeuroStar.

Speaker Change: They came out of the event very excited to participate in this pilot as we seek to deliver even more value to BNP practices and help even more patients received a life changing benefits of neurostar.

Keith Sullivan: Another highlight in the quarter was the launch of the NeuroStar TMS Therapy for adolescents. Physicians are responding positively to this new option, recognizing the critical need for effective treatments in this age group. We are seeing encouraging adoption rates and positive feedback from providers highlighted by over 425 adolescent patients having been treated since April. With an estimated 4.3 million adolescents in the U.S. impacted by depression, many of whom are poorly served by the limited number of approved antidepressants. Our FDA-cleared treatment for ages 15-21 represents a paradigm shift in addressing this growing mental health crisis. Following our FDA clearance, we've made significant strides in expanding insurance coverage for adolescents ages 15-21.

Keith Sullivan: Another highlight in the quarter was the launch of Neurostar TMS therapy for adolescents. Physicians are responding positively to this new option, recognizing the critical need for effective treatments in this age group. We're seeing encouraging adoption rates and positive feedback from providers, highlighted by over 425 adolescent patients having been treated since April. With an estimated 4.3 million adolescents in the U.S. affected by depression, many of whom are poorly served by the limited number of approved antidepressants.

Speaker Change: Another highlight in the quarter was the launch of the Neurostar Tms therapy for adolescents.

Speaker Change: Physicians are responding positively to this new option recognizing the critical need for effective treatments in this age group.

Keith Sullivan: We're seeing encouraging adoption rates and positive feedback from providers, highlighted by over 425 adolescent patients having been treated since April. With an estimated 4.3 million adolescents in the U.S. affected by depression, many of whom are poorly served by the limited number of approved antidepressants.

We're seeing encouraging adoption rates and positive feedback from providers highlighted by over 425 adolescent patients having been treated since April.

Speaker Change: With an estimated $4 3 million in adolescence in the U S impacted by depression, many of whom are poorly served by the limited number of approved anti depressants are FDA cleared treatment for ages 15 to 21 represents a paradigm shift in addressing this.

Keith Sullivan: Our FDA-cleared treatment for ages 15 to 21 represents a paradigm shift in addressing this growing mental health crisis. Following our FDA clearance, we've made significant strides in expanding insurance coverage for adolescents ages 15 to 21, with major providers, including Blue Cross Blue Shield of Michigan and Cambia Health Solution. Primera, Blue Cross, Blue Shield, California Medicaid, and Etna, covering over 27.4 million lives nationwide combined, have updated their policies to include adolescents as young as 15.

Keith Sullivan: Our FDA-cleared treatment for ages 15 to 21 represents a paradigm shift in addressing this growing mental health crisis. Following our FDA clearance, we've made significant strides in expanding insurance coverage for adolescents ages 15 to 21, with major providers, including Blue Cross Blue Shield of Michigan and Cambia Health Solution. Primera, Blue Cross Blue Shield, California Medicaid, and Aetna, covering over 27.4 million lives nationwide combined, have updated their policies to include adolescents as young as 15. Our dedicated health policy team continues to advocate for further policy updates and providers with providers and payers.

Speaker Change: Growing mental health crisis.

Speaker Change: Following our FDA clearance, we've made significant strides in expanding insurance coverage for adolescents ages 15 to 21.

Keith Sullivan: Major providers including Blue Cross, Blue Shield of Michigan, Cambia Health Solutions, Primera Blue Cross, Blue Shield, California Medicaid, and Aetna covering over 27.4 million lives nationwide combined have updated their policies to include adolescents as young as 15. Our dedicated health policy team continues to advocate for further policy updates and providers with providers and payers. At the first and only TMS company with FDA clearance for adolescent treatment, we're at the forefront of expanding access to this vital therapy for particularly at-risk and underserved patient population.

Speaker Change: Major providers, including Blue Cross Blue Shield of Michigan can be a health system solutions Primera Blue Cross Blue Shield, California, Medicaid and Aetna.

Speaker Change: Covering over $27 4 million lives nationwide combined have updated their policies to include adolescents as young as 15.

Keith Sullivan: Our dedicated health policy team continues to advocate for further policy updates and providers with providers and payers. As the first and only TMS company with FDA clearance for adolescent treatment, we're at the forefront of expanding access to this vital therapy for a particularly at-risk and underserved patient population. To highlight the benefits NeuroSTAR can have on adolescents, I wanted to share a note we received from a patient who recently completed a course of treatment.

Speaker Change: Our dedicated health policy team continues to advocate for further policy updates and providers.

Speaker Change: With providers and payers.

Keith Sullivan: As the first and only TMS company with FDA clearance for adolescent treatment, we're at the forefront of expanding access to this vital therapy for a particularly at-risk and underserved patient population. To highlight the benefits that NeuroSTAR can have on adolescents, I wanted to share a note we received from a patient who recently completed a course of treatment. And I quote, I started TMS when I was 16 and a half. Before then, I felt hopeless. I had been on too many medications to count, and none of them worked for my depression or anxiety. I had no hopes or dreams in life or for my future.

Speaker Change: As the first and only Tms company with FDA clearance for adolescent treatment. We're at the forefront of expanding access to this vital therapy for particularly at risk and underserved patient population.

Keith Sullivan: To highlight the benefits of Neurostar can have on adolescent patients, I wanted to share a note we received from a patient who recently completed a course of treatment, and I quote, I started TMS when I was 16-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1-1- before then I felt hopeless. I had been on too many medications to count, and none of them worked for my depression or anxiety. I had no hopes or dreams in life or for my future. My depression was so bad I dropped out of high school, stopped socializing, lost friends, and isolated myself. At first, I was scared about starting TMS. I didn't want to get my hopes up because nothing else had worked for my depression.

Speaker Change: To highlight the benefits of Neurostar can have an adolescent patients I wanted to share a note. We received from a patient who recently completed a course of treatment and I quote I started Tms when I was 16 and a half.

Keith Sullivan: And I quote: I started TMS when I was 16 and a half. Before then, I felt hopeless. I had been on too many medications to count, and none of them worked for my depression or anxiety. I had no hopes or dreams in life or for my future.

Speaker Change: Before that I felt hopeless I had been on too many medications to count and none of them work from my depression or anxiety.

Speaker Change: I had no hopes or dreams in life or for my future. My impression was so bad I dropped out of high school stopped socializing lost friends and isolated myself.

Keith Sullivan: My depression was so bad that I dropped out of high school, stopped socializing, lost friends, and isolated myself. At first, I was scared about starting TMS. I didn't want to get my hopes up because nothing else had worked for my depression. It was hard at first, but over the span of a few weeks, I started to feel less anxious all the time and happier. It became easier for me to do the things I used to love.

Keith Sullivan: Towards the end of TMS, even other people started to notice how happy I was. I could finally laugh, make jokes, and enjoy every moment. I am so much happier now, and I am making plans for my future and have real ambitions and goals in my life. TMS helped me truly realize that things could get better." It is because of patient results like this that we worked so hard at Neurostar to bring this therapy to patients suffering from mental health conditions. I would now like to turn the call over to Steve to provide an update on our financial performance. Thank you, Keith.

Speaker Change: At first I was scared about starting Tms I didn't want to get my hopes up because nothing else had worked for my depression.

Keith Sullivan: It was hard at first, but over the span of a few weeks I started to feel less anxious all the time and happier. It became easier to do the things I used to love. Towards the end of TMS, even other people started to notice how happy I was. I could finally laugh, make jokes, and enjoy every moment. I am making plans for my future and have real ambitions and goals in my life. TMS helped me truly realize that things can get better. Because of patient results like this, we worked so hard at NeuroStar to bring this therapy to patients suffering from mental health conditions.

Speaker Change: It was hard at first but over the span of a few weeks I started to feel less anxious all the time and happier.

Speaker Change: It became easier to do the things I used to love.

Keith Sullivan: Towards the end of TMS, even other people started to notice how happy I was. I could finally laugh, make jokes, and enjoy every moment. I am so much happier now, and I am making plans for my future and have real ambitions and goals in my life. TMS helped me truly realize that things could get better." It is because of patient results like this that we have worked so hard at Neurostar to bring this therapy to patients suffering from mental health conditions.

Speaker Change: Towards the end of Tms, even other people started to notice how happy I was.

Speaker Change: I could finally, lasse make jokes and enjoy every moment I am so much happier now and I am making plans for my future and have real ambitions and goals in my life.

Speaker Change: S helped me truly realize that things can get better end quote.

Speaker Change: Because of patient results like this that we worked so hard at neuro star to bring this therapy to patients suffering from mental health conditions.

Stephen Furlong: I would now like to turn the call over to Steve to provide an update on our financial performance. Thank you, Keith. Unless otherwise noted, all performance comparisons are being made for the second quarter of 2025 or versus the second quarter of 2023. Total revenue was $16.5 million, a decrease of 7%. Primarily impacted by lower treatment session revenue in the quarter. U.S. NeuroStar Advanced Therapy System revenue was $4 million. In the quarter, we recognized revenue on 50 systems in line with our expectations. U.S. treatment session revenue was $11.7 million, a decrease of 5% year over year.

Keith Sullivan: I would now like to turn the call over to Steve to provide an update on our financial performance. Unless otherwise noted, all performance comparisons are being made for the second quarter of 2025-4 versus the second quarter of 2023.

Speaker Change: I would now like to turn the call over to Steve to provide an update on our financial performance.

Steve Furlong: Thank you Keith.

Stephen Furlong: Unless otherwise noted, all performance comparisons are being made for the second quarter of 2025-4 versus the second quarter of 2023. Total revenue was $16.5 million, a decrease of 7%, primarily impacted by lower treatment session revenue in the quarter. U.S. Neurostar Advanced Therapy System revenue was $4 million. In the quarter, we recognized revenue on 50 systems, in line with our expectations. U.S. treatment session revenue was $11.7 million, a decrease of 5% year over year.

Steve Furlong: Unless otherwise noted.

Steve Furlong: Performance comparisons are being made for the second quarter of 2025 or versus the second quarter of 2023.

Stephen Furlong: Total revenue was $16.5 million, a decrease of 7%, primarily impacted by lower treatment session revenue in the quarter. U.S. Neurostar advanced therapy system revenue was $4 million. In the quarter, we recognized revenue on 50 systems, in line with our expectations. U.S. treatment session revenue was $11.7 million, a decrease of 5% year over year.

Steve Furlong: Total revenue was $16 $5 million a decrease of 7%.

Speaker Change: Primarily impacted by lower treatment session revenue in the quarter.

Speaker Change: U S Neurostar advanced therapy system revenue was $4 million.

Speaker Change: In the quarter, we recognized revenue on 50 systems in line with our expectations.

Speaker Change: U S treatment session revenue was $11 $7 million, a decrease of 5% year over year.

Stephen Furlong: Revenue per active site was approximately $10,000 in the quarter, compared to approximately $11,400 in the prior year quarter. Due to the unfavorable impacts on treatment session ordering patterns that Keith discussed. Gross margin was 74%. An increase of approximately 150 basis points from the second quarter of 2023 gross margin of 72.5%. Due in part to the positive impact of our shift to a new contract manufacturer. Operating expenses were $20.7 million. An increase of $600,000 or 3%. Compared to $20.1 million in the second quarter of 2023. The slight increase was primarily due to expenses related to the expanded utilization of NeuroStar University.

Stephen Furlong: Revenue per active site was approximately $10,000 in the quarter, compared to approximately $11,400 in the prior year quarter, due to the unfavorable impacts on treatment session ordering patterns that Keith discussed. Gross margin was 74%, an increase of approximately 150 basis points from the second quarter of 2023 gross margin of 72.5%, due in part to the positive impacts of our shift to a new contract manufacturer. Operating expenses were $20.7 million, an increase of $600,000, or 3%, compared to $20.1 million in the second quarter of 2023.

Speaker Change: Revenue per active site was approximately $10000 in the quarter compared to approximately $11400 in the prior year quarter.

Speaker Change: Due to the unfavorable impact on treatment session ordering patterns that Keith discussed.

Speaker Change: Gross margin was 74% an increase of approximately 150 basis points from the second quarter of 2023 gross margin of 72.5%.

Keith Sullivan: Due in part to the positive impact of our shift to a new contract manufacturer.

Keith Sullivan: Operating expenses were $27 million, an increase of $600000 or 3% compared to $21 million in the second quarter of 2023.

Stephen Furlong: The slight increase was primarily due to expenses related to the expanded utilization of Neurostar Universe. During the quarter, we incurred approximately $1.6 million of non-cash, stock-based compensation expense. The net loss for the quarter was $9.8 million, or $0.33 per share, as compared to a net loss of $4.9 million, or $0.17 per share, in the prior year quarter.

Keith Sullivan: The slight increase was primarily due to expenses related to the expanded utilization of Neurostar University.

Stephen Furlong: During the quarter, we incurred approximately $1.6 million of non-cash stock-based compensation expense. Net loss for the quarter was $9.8 million, or $33 per share, as compared to a net loss of $4.9 million, or $17 per share, in the prior year quarter. During the second quarter of 2023, we benefited from a $3.6 million employee retention credit, which did not recur in 2024. EBITDA for the second quarter of 2024 was negative $8.1 million as compared to the second quarter of 2023 EBITDA of negative $3.3 million, which similarly benefited from the ERC credit in 2023. Turning to the balance sheet as of June 30, 2024, cash and cash equivalents were $42.6 million.

Keith Sullivan: During the quarter, we incurred approximately $1 $6 million of noncash stock based compensation expense.

Keith Sullivan: Net loss for the quarter was $9 $8 million or <unk> 33 per share as compared to a net loss of $4 $9 million or <unk> 17 per share in the prior year quarter.

Stephen Furlong: During the second quarter of 2023, we benefited from a $3.6 million employee retention credit, which did not recur in 2024. EBITDA for the second quarter of 2024 was negative $8.0 million as compared to the second quarter of 2023 EBITDA of negative $3.3 million, which similarly benefited from the ERC credit in 2023. Turning to the balance sheet, as of June 30, 2024, cash and cash equivalents were $42.6 million. In late July, we entered into a new debt facility of up to $90 million with Perceptive Advisors, a leading healthcare investment fund.

Keith Sullivan: During the second quarter of 2023, we benefited from a $3 6 million dollar employee retention credit, which did not recur in 2024.

Keith Sullivan: EBITDA for the second quarter of 2024 was negative $8 million as compared to the second quarter of 2023 EBITDA of negative $3 $3 million.

Keith Sullivan: <unk> Similarly benefited benefited from the ERC credit in 2023.

Keith Sullivan: Turning to the balance sheet as of June 32024, cash and cash equivalents were $42 $6 million.

Stephen Furlong: In late July, we entered into a new debt facility of up to $90 million with Perceptive Advisers, a leading healthcare investment fund. The agreement provided an initial tranche of $50 million at closing, with two additional tranches of $15 million and $25 million available upon meeting certain conditions. This new facility allowed us to pay off in full the existing SLR capital term loan, reducing our total debt and also providing additional financial flexibility. This additional funding is available to support Neuronetics' ongoing investments in commercial initiatives, clinical indication expansion, and efforts to drive adoption of Neurostar. 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 Furlong: In late July, we entered into a new debt facility of up to $90 million with Perceptive Advisors, a leading healthcare investment fund. The agreement provided an initial tranche of $50 million at closing, with two additional tranches of $15 million and $25 million, available upon meeting certain conditions. This new facility allowed us to pay off in full the existing SLR Capital term loan, reducing our total debt and also providing additional financial flexibility.

Keith Sullivan: In late July we entered into a new debt facility of up to $90 million with perceptive advisors, a leading healthcare investment fund.

Stephen Furlong: The agreement provided an initial tranche of $50 million at closing, with two additional tranches of $15 million and $25 million, available upon meeting certain conditions. This new facility allowed us to pay off in full the existing SLR Capital term loan, reducing our total debt and also providing additional financial flexibility. This additional funding is available to support Neuronetics' ongoing investments in commercial initiatives, including clinical indication expansion, and efforts to drive adoption of Neurostar. 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. Now, turning to guidance.

Keith Sullivan: The agreement provided an initial tranche of $50 million at closing with two additional tranches of $15 million and $25 million.

Keith Sullivan: Available upon meeting certain conditions.

Keith Sullivan: This new facility allowed us to pay off and for the existing SLR capital term loan, reducing our total debt and also providing additional financial flexibility. This.

Stephen Furlong: This additional funding is available to support Neuronetics' ongoing investments in commercial initiatives, such as Clinical Indication Expansion and Efforts to Drive Adoption of Neurostar. 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. Now turning to guidance. For the third quarter, we expect revenue of $18.5 million to $19.5 million. We continue to expect full-year revenue in the range of $78 million to $80 million.

Keith Sullivan: This additional funding is available to support narrow networks ongoing investments and commercial initiatives clinical indication expansion and efforts to drive adoption of Neurostar.

Keith Sullivan: 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 Furlong: Now turning to guidance. For the third quarter, we expect revenue of $18.5 million to $19.5 million. We continue to expect full-year revenue in the range of $78 million to $80 million. Revenue guidance for the third quarter in full-year assumes a return to normalize treatment session ordering patterns and customer inventory management during the back half of the year. We continue to expect total operating expenses for the full year to be in the range of $78 million to $80 million.

Now turning to guidance for the third quarter, we expect revenue of $18 $5 million to $19 $5 million.

Stephen Furlong: For the third quarter, we expect revenue of $18.5 million to $19.5 million. We continue to expect full-year revenue in the range of $78 million to $80 million. Revenue guidance for the third quarter and full year assumes a return to normalized treatment session ordering patterns and customer inventory management during the back half of the year. We continue to expect total operating expenses for the full year to be in the range of $78 million to $80 million.

Keith Sullivan: We continue to expect full year revenue in the range of $78 million to $80 million.

Stephen Furlong: Revenue guidance for the third quarter and full year assumes a return to normalized treatment session ordering patterns and customer inventory management during the back half of the year. We continue to expect total operating expenses for the full year to be in the range of $78 million to $80 million.

Keith Sullivan: Revenue guidance for the third quarter and full year assumes a return to normalized treatment session ordering patterns and customer inventory management during the back half of the year.

We continue to expect total operating expenses for the full year to be in the range of $78 million to $80 million I would now like to turn the call back over to Keith.

Keith Sullivan: I would now like to turn the call back over to Keith. Thanks, Steve. As mentioned in our press release earlier today, we are excited to announce that we have signed a definitive agreement to acquire Green Brook TMS. If you have followed Neuronetics in the past, you will be aware that Green Brook is the nation's largest TMS provider and the largest user of Neurostar systems. This acquisition brings together two of the leaders in the mental health industry, creating a unique vertically integrated company with a significant footprint to bring the benefits of cutting-edge mental health therapies to as many patients as possible.

Keith Sullivan: I would now like to turn the call back over to Keith. Thanks, Steve.

Keith Sullivan: Thanks, Steve. As mentioned in our press release earlier today, we are excited to announce that we have signed a definitive agreement to acquire Green Brook TMS. If you have followed Neuronetics in the past, you will be aware that Greenbrook is the nation's largest TMS provider and the largest user of Neurostar systems. This acquisition brings together two of the leaders in the mental health industry, creating a unique vertically integrated company with a significant footprint to bring the benefits of cutting-edge mental health therapies to as many patients as possible.

Keith Sullivan: Thanks, Steve.

Keith Sullivan: As mentioned in our press release earlier today, we are excited to announce that we assigned a definitive agreement to acquire Greenbrook TMS. If you have followed Neuronetics in the past, you will be aware that Greenbrook is the nation's largest TMS provider and the largest user of Neurostar systems. This acquisition brings together two of the leaders in the mental health industry, creating a unique, vertically integrated company with a significant footprint to bring the benefits of cutting-edge mental health therapies to as many patients as possible. Before diving into the transaction, we wanted to review the significant opportunities that exist for innovative solutions for the treatment of mental health conditions within the U.S.

Keith Sullivan: As mentioned in our press release earlier today, we are excited to announce that we assigned a definitive agreement to acquire Green Brook Tms.

Speaker Change: If you have followed neuro networks in the past you'll be aware that green brick is the nation's largest tms provider and the largest user of Neurostar systems. This acquisition brings together two of the leaders in the mental health industry, creating a unique vertically integrated company with a significant footprint to bring.

Speaker Change: The benefits of cutting edge metal health therapies to as many patients as possible.

Keith Sullivan: Before diving into the transaction, we wanted to review the significant opportunities that exist for innovative solutions for the treatment of mental health conditions within the US. There are currently over 29 million patients, including adults and adolescents who suffer from depression, anxious depression, and OCD. Within that massive patient population, more than 4.4 million people are being treated with medication and are poorly served as they are not finding the relief they desperately need. This represents a large opportunity for businesses like Neuronetics and Greenbrook, as just a fraction of patients who qualify for TMS are currently being treated with non-drug alternatives. Let me walk you through some key points of the transaction. Prior to the merger, all of Greenbrook's existing long-term debt will be converted to Greenbrook TMS common shares.

Speaker Change: Before diving into the transaction, we wanted to review the significant opportunities that exist for innovative solutions for the treatment of mental health conditions within the U S.

Keith Sullivan: There are currently over 29 million patients, including adults and adolescents who suffer from depression, anxious depression, and OCD. Lee. Within that massive patient population, more than 4.4 million people are being treated with medication and are poorly served as they are not finding the relief they desperately seek. This represents a large opportunity for businesses like Neuronetics and Greenbrook, as just a fraction of patients who qualify for TMS are currently being treated with non-drug alternatives.

Keith Sullivan: Within that massive patient population, more than 4.4 million people are being treated with medication and are poorly served as they are not finding the relief they desperately seek. This represents a large opportunity for businesses like Neuronetics and Greenbrook, as just a fraction of patients who qualify for TMS are currently being treated with non-drug alternatives. Let me walk you through some key points of the transaction.

Speaker Change: There are currently over 29 million patients, including adults and adolescents, who suffer from depression anxious depression and OCD.

Speaker Change: Within that massive patient population more than $4 4 million people are being treated with medication and are poorly served as they are not finding the relief they desperately seek.

Speaker Change: This represents a large opportunity for businesses like neuro medics and Green Brook as just a fraction of patients who qualified for Tms are currently being treated with non drug alternatives.

Keith Sullivan: Let me walk you through some key points of the transaction. Prior to the merger, all of Greenbrook's existing long-term debt will be converted to Greenbrook TMS common shares. On a pro-forma basis, Neuronetics shareholders will own approximately 57% of the is expected to convert into 0.01149 shares of Neuronetics common stock, subject to adjustment prior to closing. Our existing Neuronetics management team will remain in their leadership roles, and key members of Greenbrook TMS management team, including Bill Leonard, Greenbrook's and Dr. Jeffrey Brammer, Greenbrook's chief medical officer, among others, will join the Neuronetics management team. The combined company will continue to operate as Neuronetics Inc.

Keith Sullivan: Prior to the merger, all of Greenbrook's existing long-term debt will be converted to Greenbrook TMS common shares. On a pro forma basis, Neuronetics shareholders will own approximately 57% of the combined entity, with Greenbrook owning the remaining 43%. Each share of Greenbrook is expected to convert into.01149 shares of Neuronetics common stock, subject to adjustment prior to closing. Our existing Neuronetics Management Team will remain in their leadership roles, and key members of Greenbrook TMS's Management Team, including Bill Leonard, Greenbrook's President and Chief Executive Officer, Peter Willett, Greenbrook's Chief Financial Officer, and Dr. Jeffrey Gramer, Greenbrook's Chief Medical Officer, among others, will join the Neuronetics Management Team.

Keith Sullivan: On a pro forma basis, Neuronetics shareholders will own approximately 57% of the combined entity, with Greenbrook owning the remaining 43%. Each share of Green Brook is expected to convert into 0.01149 shares of Neuronetics common stock, subject to adjustment prior to closing. Our existing Neuronetics Management Team will remain in their leadership roles, and key members of Greenbrook TMS's Management Team, including Bill Lehner, Greenbrook's President and Chief Executive Officer, Peter Willett, Greenbrook's Chief Financial Officer, and Dr. Jeffrey Gramer, Greenbrook's Chief Medical Officer, among others, will join the Neuronetics Management Team. The combined company will continue to operate as Neuronetics, Inc., and will maintain its listing on NASDAQ under the ticker symbol STEM.

Speaker Change: Let me walk you through some key points of the transaction.

Speaker Change: Prior to the merger all of Green Brooks existing long term debt will be converted to green broke Tms common shares.

Speaker Change: On a pro forma basis, narrowing <unk> shareholders will own approximately 57% of the combined entity.

Speaker Change: With Green Brook owning the remaining 43%.

Speaker Change: Each share of Green Brook is expected to convert in 2.01149 shares of narrow networks common stock subject to adjustment prior to closing.

Speaker Change: Our existing <unk> management team will remain in their leadership roles and key members of Green broke Gms management team, including <unk>.

Bill Leonard: Bill Leonard Green Brooks, President and Chief Executive Officer, Peter will it Green Brook.

Operator: Good day, and thank you for standing by. Welcome to Neuronetics' second quarter, 2024 Financial and Operating Results Conference call. At this time, all participants are in a listen-only mode.

Bill Leonard: Chief Financial Officer, and Dr. Jeffrey Grammar Green Brooks, Chief Medical Officer, among others will join the neuro networks management team that.

Operator: After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you'll need to press star-1-1 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star-1-1 again.

Keith Sullivan: The combined company will continue to operate as Neuronetics, Inc., and will maintain its listing on NASDAQ under the ticker symbol STEM. As with any merger of this scale, the deal is subject to customary closing conditions, including approval by shareholders of both Neuronetics and Greenbrook TMS. We anticipate the closing to take place in the fourth quarter of 2024.

Bill Leonard: The combined company will continue to operate as narrow networks, Inc. And we will maintain its listing on NASDAQ on the.

Keith Sullivan: and will maintain its listing on NASDAQ under the ticker symbol STEM. As with any merger of this scale, the deal is subject to customary closing conditions.

Bill Leonard: Under the ticker symbol <unk>.

Keith Sullivan: As with any merger of this scale, the deal is subject to customary closing conditions, including approval by shareholders of both Neuronetics and Greenbrook TMS. We anticipate the closing to take place in the fourth quarter of 2024.

Bill Leonard: As with any merger of this scale the deal is subject to customary closing conditions.

Operator: Please be advised that today's conference is being recorded.

Keith Sullivan: This includes approval by shareholders of both Neuronetics and Greenbrook TMS. We anticipate the closing to take place in the fourth quarter of 2024.

Bill Leonard: This includes approval by shareholders of both pneumatic and Greenberg Tms, we anticipate the closing to take place in the fourth quarter of 2024.

Mark Klausner: I would now like to hand the conference over to Mark Klausner. Please go ahead.

Keith Sullivan: Good morning, and thank you for joining us for the Neuronetics' second quarter, 2024 conference call.

Keith Sullivan: Now for an overview of Greenbrook TMS: they are the largest provider of TMS therapy in the United States, operating approximately 120 treatment centers across 18 states in the US. This extensive network allows them to reach a wide range of patients in need of mental health services in some of the country's largest markets. Greenbrook offers three distinct services for patients: Med Management, Neurostar TMS therapy, and Spurbato treatment. This comprehensive approach allows them to address various aspects of mental health care through a broad spectrum of the continuum of care. Greenbrook has been prolific in treating patients suffering from mental health disorders, with over 47,000 patients having been treated, which speaks to the scale of their operation and the growing demand for these services.

Mark Klausner: Joining me on today's call are Neuronetics' president and chief executive officer, Keith Sullivan, and chief financial officer, Steve Furlong. Today's call features a live webcast, which includes a slide presentation. There's a short delay between the audio over the phone and the slides being shown on the webcast. If you are listening over the phone, we would recommend downloading the slide presentation from our website and following along independently.

Keith Sullivan: Now for an overview of Green Brook TMS. They are the largest provider of TMS therapy in the United States, operating approximately 120 treatment centers across 18 states in the U.S. This extensive network allows them to reach a wide range of patients in need of mental health services in some of the country's largest markets. Greenbrook offers three distinct services for patients, medication management, Neurostar TMS Therapy, and Spermato Treatment.

Keith Sullivan: Now for an overview of Greenbrook TMS [inaudible]. They are the largest provider of TMS therapy in the United States, operating approximately 120 treatment centers across 18 states in the U.S. This extensive network allows them to reach a wide range of patients in need of mental health services in some of the country's largest markets. Greenbrook offers three distinct services for patients: medication management, Neurostar TMS Therapy, and Spermato Treatment.

Bill Leonard: Now for an overview of Greenberg Tms.

Speaker Change: They are the largest provider of Tms therapy in the United States operating approximately 120 treatment centers across 18 states in the U S.

This extensive network allows them to reach a wide range of patients in need of mental health services and some of the country's largest markets.

Speaker Change: Framework offers three distinct services for patients Med management.

Mark Klausner: 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 state armor provisions of the Private Security's litigation reform act of 1995, including statements related to the proposed transaction with Greenbrook TMS, our business, strategy, financial and revenue guidance, and other operational issues and metrics. Actual results can differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business.

Neurostar Tms therapy and provide a treatment.

Keith Sullivan: This comprehensive approach allows them to address various aspects of mental health care through a broad spectrum of the continuum of care. Greenbrook has been prolific in treating patients suffering from mental health disorders, with over 47,000 patients having been treated, which speaks to the scale of their operation and the growing demand for these services. We strongly believe that the combination of the nation's leading developer of TMS technology and the nation's largest provider of Neurostar therapy creates a single organization that will have the ability to advance the care of patients suffering from mental health disorders to levels not seen before in this industry.

Keith Sullivan: This comprehensive approach allows them to address various aspects of mental health care through a broad spectrum of the continuum of care. Greenbrook has been prolific in treating patients suffering from mental health disorders With over 47,000 patients having been treated, which speaks to the scale of their operation and the growing demand for these services. We strongly believe that the combination of the nation's leading developer of TMS technology and the nation's largest provider of Neurostar therapy creates a single organization that will have the ability to advance the care of patients suffering from mental health disorders to levels not seen before in this industry.

Speaker Change: This comprehensive approach allows them to address various aspects of mental health care through a broad spectrum of the continuum of care.

Speaker Change: Green broke has been prolific in treating patients suffering from mental health disorders with over 47000 patients having been treated which speaks to the scale of their operation and the growing demand for these services.

Keith Sullivan: We strongly believe that the combination of the nation's leading developer of TMS technology and the nation's largest provider of NeuroStar therapy creates a single organization that will have the ability to advance the care of patients suffering from mental health disorders to levels not seen before in this industry. First and foremost, this merger creates a vertically integrated organization capable of providing access to a broader array of mental health therapies, including Med Management, Neurostar, and Spurbato, with significant scale in the U.S. This integration allows us to optimize every step of the patient journey from awareness to treatment, which has a variety of downstream benefits.

Speaker Change: We strongly believe that the combination of the nations, leading developer of Tms technology, and the nation's largest provider of Neurostar therapy creates a single organization that will have the ability to advance the care of patients suffering from mental health disorders two levels.

Mark Klausner: For discussion of risks and uncertainties associated with Neuronetics business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's Form 10Q, which we filed later today, August 12th. The company just claims any obligation to update any forward-looking statements made during the course of this call, except it's required by law.

Speaker Change: Not seen before in this industry.

Keith Sullivan: First and foremost, this merger creates a vertically integrated organization capable of providing access to a broader array of mental health therapies, including medication management, Neurostar, and Spravato, with significant scale in the U.S. This integration allows us to optimize every step of the patient journey from awareness to treatment, which has a variety of downstream benefits. In addition, it gives us the ability to drive increased awareness of Neurostar therapy through a single, unified brand.

Keith Sullivan: First and foremost, this merger creates a vertically integrated organization capable of providing access to a broader array of mental health therapies, including medication management, NeuroStar, and Spravato, with significant scale in the U.S. This integration allows us to optimize every step of the patient journey from awareness to treatment, which has a variety of downstream benefits. In addition, it gives us the ability to drive increased awareness of Neurostar therapy through a single unified brand.

Speaker Change: First and foremost this merger creates a vertically integrated organization capable of providing access to a broader array of mental health therapies, including Med management neuro star and to provide us with significant scale in the U S.

Mark Klausner: During the call, we'll also discuss certain information on a non-gap basis, including EBITDA. Management believes that non-gap financial information taken in conjunction with U.S. Gap financial measures provide useful information for both management and investors by excluding certain non-cash and other expenses that are not indicative of trends in our operating results. Management uses non-gap financial measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliation between U.S. Gap and non-gap results are presented in the tables accompanying our press release, which can be viewed on our website.

Speaker Change: This integration allows us to optimize every step of the patient journey from awareness to treatment, which has a variety of downstream benefits.

Keith Sullivan: In addition, it gives us the ability to drive increased awareness of Neurostor therapy through a single unified brand. As it sits today, the market is relatively fragmented and highly focused on the reputations and capabilities of small businesses to educate patients on TMS and NeuroStar. This consolidated marketing approach will be more efficient and effective, reaching more patients who could benefit from this treatment. Specific to Greenbrook, this merger allows for consistent delivery of best practices across the nation's leading TMS provider network. We can ensure that patients receive the highest quality care regardless of which treatment center they visit.

Speaker Change: In addition, it gives us the ability to drive increased awareness of Neurostar therapy through a single unified brand as it sits today the market is relatively fragmented and highly focused on the reputations and capabilities of small businesses to educate patients on Tms and <unk>.

Keith Sullivan: As it sits today, the market is relatively fragmented and highly focused on the reputations and capabilities of small businesses to educate patients on TMS and Neurostar. This consolidated marketing approach will be more efficient and effective, reaching more patients who could benefit from this treatment. Specific to Green Brook, this merger allows for consistent delivery of best practices across the nation's leading TMS provider network. We can ensure that patients receive the highest quality care regardless of which treatment center they visit.

Keith Sullivan: With that, it's my pleasure to turn the call over to Neuronetics President and Chief Executive Officer Keith Sullivan. Mark, thanks for the introduction. Good morning and thank you all for joining us today. I'll begin by providing an overview of recent performance followed by an operational update.

Speaker Change: Star.

Speaker Change: This consolidated marketing approach will be more efficient and effective reaching more patients who could benefit from this treatment.

Speaker Change: Specific to Green Brook. This merger allows for consistent delivery of best practices across the nations, leading Gms provider network.

Keith Sullivan: Steve will then review our financial results, and I'll conclude with a discussion of our merger with Greenbrook TMS. I'd like to start by saying that our financial performance during the quarter was below our expectation, with Revenue of $16.5 million, which was down 7% year over year. The impact of change healthcare, cybersecurity breach still lingers. Our utilization in our local consumable segment was up 18% and would have been higher had there not been the related bottlenecks impacting prior authorization caused by change healthcare.

Speaker Change: We can ensure that patients.

<unk>, the highest quality care, regardless of which treatment center they visit.

Keith Sullivan: Importantly, this transaction provides a variety of positive benefits for our entire customer base, including increased brand recognition, the potential to improve customer business operations by providing centralized services, and the ability to expand training opportunities on how to incorporate additional patient offerings in addition to neurostar into their practices. I will cover each of these opportunities shortly. From a financial perspective, this merger transforms the profile of the combined entity. With a significantly larger revenue base, increased resources, and a diversified model, we will be able to take advantage of opportunities not available to either company separately.

Speaker Change: Importantly, this transaction provides a variety of positive benefits for our entire customer base, including increased brand recognition.

Speaker Change: Potential to improve customer business operations by providing centralized services.

Speaker Change: And the ability to expand training opportunities on how to incorporate additional patient offerings.

Keith Sullivan: Despite the positive underlying utilization trends, treatment session Revenue was down 5% as our customers were forced to allocate cash to support their operations rather than purchasing new treatment sessions in line with historical patterns. This redevelopment of cash is a result of continued delays and payments from change healthcare. We believe that the negative headwinds from change healthcare are transient and our revenue patterns will return the normal over the balance of the year.

Speaker Change: In addition, Genero star into their practices I will cover each of these opportunities shortly.

Keith Sullivan: I will cover each of these opportunities shortly. From a financial perspective, this merger transforms the profile of the combined entity with a significantly larger revenue base, increased resources, and a diversified model. We will be able to take advantage of opportunities not available to either company independently. In addition, we see substantial opportunities to take advantage of cost synergies, which we will discuss in more detail shortly. Lastly, and crucially, this merger accelerates our pathway to profitability. The combined strength of our two companies puts us in a much stronger financial position and brings forward our timeline for achieving substantial profitability.

Keith Sullivan: From a financial perspective, this merger transforms the profile of the combined entity. With a significantly larger revenue base, increased resources, and a diversified model, we will be able to take advantage of opportunities not available to either company separately. In addition, we see substantial opportunities to take advantage of cost synergies, which we will discuss in more detail shortly. Lastly, and crucially, this merger accelerates our path to profitability. The combined strength of our two companies puts us in a much stronger financial position and brings forward our timeline for achieving substantial profitability.

Speaker Change: From a financial perspective, this merger transforms the profile of the combined entity.

Speaker Change: With a significantly larger revenue base increased resources and a diversified model, we will be able to take advantage of opportunities not available to either company independently.

Speaker Change: In addition, we see substantial opportunities to take advantage of cost synergies, which we will discuss in more detail shortly.

Keith Sullivan: In addition, we see substantial opportunities to take advantage of cost synergies, which we will discuss in more detail shortly. Lastly, and crucially, this merger accelerates our path to profitability. The combined strength of our two companies puts us in a much stronger financial position and brings forward our timeline for achieving substantial profitability. In essence, this merger is about creating a stronger, more efficient, and more effective organization that can better serve patients and Neurostar providers alike.

Speaker Change: Lastly, and crucially this merger accelerates our pathway to profitability the combined strength of our two companies puts us in a much stronger financial position and brings forward our timeline for achieving substantial profitability.

Keith Sullivan: In essence, this merger is about creating a stronger, more efficient, and more effective organization that can better serve patients and Neurostor providers alike. It positions us to be the clear leader in the TMS therapy space and sets the stage for significant growth and value creation in the years to come. With approximately 1,200 Neurostor sites across the U.S., we would not be pursuing this transaction if it would negatively impact our customers' businesses. As a matter of fact, I'm enthusiastic about the scale of the new organization will provide the opportunity to deliver a variety of positive benefits across our entire customer base.

Keith Sullivan: In essence, this merger is about creating a stronger, more efficient, and more effective organization that can better serve patients and Neurostar providers alike. It positions us to be the clear leader in the TMS therapy space and sets the stage for significant growth and value creation in the years to come. With approximately 1,200 Neurostar sites across the U.S., we would not be pursuing this transaction if it would negatively impact our customers' businesses.

Speaker Change: In essence this merger is about creating a stronger more efficient and more effective organization that can better serve patients and neurostar providers alike.

Keith Sullivan: It positions us to be the clear leader in the TMS therapy space and sets the stage for significant growth and value creation in the years to come. With approximately 1,200 Neurostar sites across the U.S., we would not be pursuing this transaction if it would negatively impact our customers' businesses. As a matter of fact, I'm enthusiastic about the scale of the new organization we'll provide the opportunity to deliver a variety of positive benefits across our entire customer base. Firstly, through new marketing under development, we will significantly increase brand recognition for Neurostar.

Speaker Change: It positions us to be the clear leader in the Tms therapy space and set the stage for significant growth and value creation in the years to come.

Keith Sullivan: As a result of our actions, despite the continuation of high interest rates and increased diligence requirements, we were able to recognize revenue on 50 narrow-star systems, which is at the high end of our quarterly guidance of 45 to 50 systems. This highlights the continued demand for narrow-star and our ability to adjust our strategy to execute regardless of prevailing headwinds. We continue to be bullish on the future of analytics based on the results we are seeing from our Better Me program.

Speaker Change: With approximately 200 neurostar sites across the U S. We would not be pursuing this transaction if it would negatively impact our customers' businesses as a matter of fact I'm enthusiastic about the scale of the new organization will provide the opportunity to deliver.

Speaker Change: Variety of positive benefits across our entire customer base.

Keith Sullivan: Firstly, through new marketing under development, we will significantly increase brand recognition for Neurostor. This enhanced visibility will help educate more patients about the benefits of our therapy space. which we expect will drive increased patient volume to our customer's practices. What is unique about this transaction is that it gives us the ability to expand training opportunities for our current customers on additional services we will now have the expertise to help operationalize within their practices. This training will be through NeuroStar University and hands-on partnership through our practice development managers. This includes comprehensive programs on how to effectively educate patients on medication management and Spervato treatment alongside their existing TMS offering and incorporate these into their practices.

Speaker Change: Firstly.

Speaker Change: Through new marketing under development, we will significantly increase brand recognition for Neurostar.

Keith Sullivan: In July, we fully launched the program nationwide after a tremendously successful pilot. Let me share with you some of the results. Participating practices improved their 24-hour follow-up rates by 6.4 times compared to non-participating providers. Through a narrow-star university at which attendance is a requirement for customers to participate in the program, providers who received advanced clinical training on average treated 61 percent more patients in need. We've also significantly reduced the time from initial patient interest to first treatment, leading to a 3.7 times more motor-fresh-hole determinations. These improvements are making our life-changing narrow-star treatment more accessible to millions of suffering patients from MDD, OCD and anxious depression.

Keith Sullivan: This enhanced visibility will help educate more patients about the benefits of our therapy, which we expect will drive increased patient volume to our customer's practice. What is unique about this transaction is that it gives us the ability to expand training opportunities for our current customers on additional services we will now have the expertise to help operationalize within their practices. This training will be through Neurostar University and hands-on partnership through our practice development manager.

Speaker Change: This enhanced visibility will help educate more patients about the benefits of our therapies.

Speaker Change: Which we expect will drive increased patient volume to our customers' practices.

Speaker Change: What is unique about this transaction is that it gives us the ability to expand training opportunities for our current customers on additional services. We will now have the expertise to help operationalized within their practices.

Speaker Change: This training will be through Neurostar University and hands on partnership through our practice development managers.

Keith Sullivan: This includes comprehensive programs on how to effectively educate patients on medication management and sperma treatment alongside their existing TMS offering and incorporate these into their practices. This approach can help our customers provide more comprehensive care and potentially increase their revenue while working with a trusted partner who is already intimately familiar with their operation. With the ability to offer expanded care solutions to our customers, we can also provide a number of other solutions to improve their business operations. Number one, payer contract.

Speaker Change: This includes comprehensive programs on how to effectively educate patients on medication management and to provide a treatment alongside their existing Tms offering and incorporate these into their practices.

Keith Sullivan: This approach can help our customers provide more comprehensive care and potentially increase their revenue while working with a trusted partner who is already intimately familiar with their operations. With the ability to offer expanded care solutions to our customers, we can also provide a number of other solutions to improve their business operations.

Speaker Change: This approach can help our customers provide more comprehensive care and potentially increase their revenue while working with trust a trusted partner who is already intimately familiar with their operations.

Keith Sullivan: Despite these outstanding results, we believe there is still room for improvement, with the expansion of the BMP program, we now have a critical mass of participating customers within many of our key markets throughout the U.S. This increases our confidence that providers will respond in a timely manner to focused investments in growing patient awareness and education for Neurostar.

Speaker Change: With the ability to offer expanded care solutions to our customers. We can also provide a number of other solutions to improve their business operations.

Keith Sullivan: Number one: pay-or-contracts. With the scale of Greenbrook and our BMP network, which collectively represents approximately 350 customer sites, we'll have more leverage in negotiations with insurance companies to develop more favorable regional and national contracts, which we would extend to our customer base. This could lead to greater reimbursement rates, potential improvement in the economics of TMS, which would lead to increased practice profitability for our customers. In addition, this contracting leverage will apply to both mid-management and spervato, which makes it easier for our customers to incorporate these into their practices.

Keith Sullivan: With the scale of Greenbrook and our BNP network, which collectively represents approximately 350 customer sites, we'll have more leverage in negotiations with insurance companies to develop more favorable regional and national contracts, which we would extend to our customer base. This could lead to greater reimbursement rates. Possible improvement in the economics of TMS, which would lead to increased practice profitability for our customers. In addition, this contracting leverage will apply to both med management and spravato, which makes it easier for our customers to incorporate these into their practices. Number two, reimbursement processing and billing.

Speaker Change: Number one payor contracts.

Keith Sullivan: With the scale of Greenbrook and our BNP network, which collectively represents approximately 350 customer sites, we will have more leverage in negotiations with insurance companies to develop more favorable regional and national contracts, which we would extend to our customer base. This could lead to greater reimbursement rates and a potential improvement in the economics of TMS, which would lead to increased practice profitability for our customers. In addition, this contracting leverage will apply to both med management and spravato, which makes it easier for our customers to incorporate these into their practices.

Speaker Change: With the scale of Green Brook, and our BMP network, which collectively represents approximately 350 customer sites.

Speaker Change: We will have more leverage in negotiations with insurance companies to develop more favorable regional and national contracts, which we would extend to our customer base.

Speaker Change: This could lead to greater reimbursement rates.

Speaker Change: Potential improvement in the economics of Tms, which would lead to increased practice profitability for our customers. In addition, this contracting leverage will apply to both med management and provider, which makes it easier for our customers to incorporate these into their practices.

Keith Sullivan: Number two, reimbursement processing and billing. We'll also be able to offer more robust support in navigating the complex landscape of insurance reimbursement by providing billing services to our customers, which could speed up payment processing and reduce denied claims, allowing our customers to focus on what they do best, treating patients. Number three, improving revenue cycle management. By leveraging our combined expertise and resources, we can help our customers optimize their billing and collection processes, potentially improving their cash flow and profitability. As an example, most current Greenbrook contracts require payment within 30 to 45 days, rather than the typical 90 days that most customers are forced to tolerate.

Keith Sullivan: We'll also be able to offer more robust support in navigating the complex landscape of insurance reimbursement by providing billing services to our customers, which could speed up payment processing and reduce denied claims, allowing our customers to focus on what they do best, treating patients. Number three, improving revenue cycle management. By leveraging our combined expertise and resources, we can help our customers optimize their billing and collection processes, potentially improving their cash flow and profitability. As an example, most current Greenbrook contracts require payment within 30 to 45 days rather than the typical 90 days that most customers are forced to tolerate.

Speaker Change: Number two reimbursement processing and billing.

Speaker Change: We will also be able to offer more robust support in navigating the complex landscape of insurance reimbursement by providing billing services to our customers, which could speed up the payment processing and reduce denied claims, allowing our customers to focus on what they do best treating patients.

Keith Sullivan: We held a kickoff event in Tampa earlier this month for our BMP providers and other customers wanting to get into the program. They came out of the event very excited to participate in this pilot as we seek to deliver even more value to BMP practices and help even more patients receive the life-changing benefits of Neurostar.

Keith Sullivan: Number three: improving revenue cycle management. By leveraging our combined expertise and resources, we can help our customers optimize their billing and collection process, potentially improving their cash flow and profitability. As an example, most current Greenbrook contracts require payment within 30 to 45 days, rather than the typical 90 days that most customers are forced to tolerate.

Speaker Change: Number three improving revenue cycle management by leveraging our combined expertise and resources, we can help our customers optimize their billing and collection process potentially improving their cash flow and profitability.

Keith Sullivan: Another highlight in the quarter was the launch of the Neurostar TMS Therapy for adolescents. Physicians are responding positively to this new option, recognizing the critical need for effective treatments in this age group. We are seeing encouraging adoption rates and positive feedback from providers highlighted by over 425 adolescent patients having been treated since April. With an estimated 4.3 million adolescents in the U.S, impacted by depression, many of whom are poorly served by the limited number of approved antidepressants.

Speaker Change: As an example, most current green broke contracts require payment within 30 to 45 days rather than the typical 90 days that most customers are forced to tolerate.

Keith Sullivan: Number four, access to a centralized call center. By leveraging Greenbrook's existing call center operation, we can help manage patient calls and education more efficiently, potentially increasing conversion rates and reducing the administrative burden required to meet the demand for TMS. This merger isn't about growing a stronger Neuronetics; it's about creating an even more powerful ecosystem to enable our customers to provide better care, run more efficient practices, and ultimately treat more patients in need of mental health support.

Keith Sullivan: Number four: access to a centralized call center. By leveraging Greenbrook's existing call center operation, we can help manage patient calls and education more efficiently, potentially increasing conversion rates and reducing the administrative burden required to meet the demand for TMS. This merger isn't about growing a stronger Neuronetics; it's about creating an even more powerful ecosystem to enable our customers to provide better care, run more efficient practices, and ultimately treat more patients in need of mental health support.

Speaker Change: Number for access to our centralized call center by leveraging Green Brooks existing call Center operation, We can help manage patient calls and education more efficiently potentially increasing conversion rates and reducing the administrative burden required to meet the demand for <unk>.

Keith Sullivan: Our FDA cleared treatment for ages 15-21 represents a paradigm shift in addressing this growing mental health crisis. Following our FDA clearance, we've made significant strides in expanding insurance coverage for adolescents ages 15-21. Major providers including Blue Cross, Blue Shield of Michigan Cambia Health Solutions, Primera Blue Cross, Blue Shield, California Medicaid, and Etna covering over 27.4 million lives nationwide combined have updated their policies to include adolescents as young as 15. Our dedicated health policy team continues to advocate for further policy updates and providers with providers and payers. At the first and only TMS company with FDA clearance for adolescent treatment, we're at the forefront of expanding access to this vital therapy for particularly at risk and underserved patient population.

Speaker Change: Yes.

This merger isn't about growing a stronger neuro Aneth X, it's about creating an even more powerful ecosystem to enable our customers to provide better care run more efficient practices and ultimately treat more patients in need of mental health support.

Keith Sullivan: It's about creating an even more powerful ecosystem to enable our customers to provide better care, run more efficient practices, and ultimately treat more patients in need of mental health support. Beyond the compelling strategic benefits this transaction offers to existing customers, there are compelling financial benefits for the combined company. Number one, increased revenue scale and strong growth trajectory. In fiscal year 2023, the pro forma revenue of the combined company would have been approximately $145 million, effectively doubling the scale of the standalone businesses.

Keith Sullivan: Beyond the compelling strategic benefits this transaction offers to existing customers, there are compelling financial benefits for the combined company. Number one, increased revenue scale and strong growth trajectory. In fiscal year 2023, the pro forma revenue of the combined company would have been approximately $145 million, effectively doubling the scale of the standalone businesses. Additionally, the combined company expects mid-team year-over-year revenue growth in fiscal years 2025 and 2026. Number two, material cost synergies

Speaker Change: Beyond the compelling strategic benefits. This transaction offers to existing customers. There are compelling financial benefits for the combined company number one increased revenue scale and strong growth trajectory.

Keith Sullivan: Additionally, the combined company expects mid-team year-over-year revenue growth in fiscal years 2025 and 2026. Number two, material cost synergies. Through the optimization of marketing spend as well as back-office functions, the combined company expects to be able to realize at least $15 million of annual cost savings, the majority of which will come in fiscal year 2025.

Speaker Change: In fiscal year 2023, the pro forma revenue of the combined company would have been approximately $145 million effectively doubling the scale of the standalone businesses. Additionally, the combined company and expect mid expects mid teen year over year revenue growth in fiscal.

Speaker Change: The years 2025 and 2026.

Keith Sullivan: Through the optimization of marketing spend as well as back office functions, the combined company expects to be able to realize at least $15 million of annual cost savings, the majority of which will come in fiscal year 2025. Number three, an accelerated path to profitability coming as a result of strong expected revenue growth and the realization of cost synergies, the combined company anticipates being both adjusted EBITDA positive and cash flow positive for full fiscal year 2025, and lastly, a bolstered balance sheet as a result of the pre-transaction conversion of Greenbrook's debt into common shares.

Keith Sullivan: Number two, material cost energies. Through the optimization of marketing spend as well as back office functions, the combined company expects to be able to realize at least $15 million of annual cost savings, the majority of which will come in fiscal year 2025. Number three, accelerated path to profitability, coming as a result of strong expected revenue growth and the realization of cost energies that combined company anticipates to be both adjusted EBITDA positive and cash low positive for full fiscal year 2025.

Speaker Change: Number two material cost synergies through the optimization of marketing spend as well as back office functions. The combined company expects to be able to realize at least $15 million of annual cost savings the majority of which will come in fiscal year 2025.

Keith Sullivan: To highlight the benefits of Neurostar can have on adolescent patients, I wanted to share a note we received from a patient who recently completed a[inaudible] before then I felt hopeless. I had been on too many medications to count and none of them worked for my depression or anxiety. I had no hopes or dreams in life or for my future.

Keith Sullivan: Number three, an accelerated path to profitability coming as a result of strong expected revenue growth and the realization of cost synergies, the combined company anticipates being both adjusted EBITDA positive and cash flow positive for full fiscal year 2025. And lastly, a bolstered balance sheet, as a result of the pre-transaction conversion of Greenbrook's debt into common shares, in combination with the scale of the business post acquisition. The Consolidated Company will be able to leverage an improved balance sheet to execute on its long-term growth strategy. I am really excited about what Neuronetics and Green Brook can accomplish together.

Speaker Change: Number three accelerated path to profitability coming as a result of strong expected revenue growth and the realization of cost synergies.

Speaker Change: Find company anticipates to be both adjusted EBITDA positive and cash flow positive for full fiscal year 2025.

Keith Sullivan: My depression was so bad I dropped out of high school, stopped socializing, lost friends and isolated myself. At first I was scared about starting TMS. I didn't want to get my hopes up because nothing else had worked for my depression. It was hard at first, but over the span of a few weeks I started to feel less anxious all the time and happier. It became easier to do the things I used to love. Towards the end of TMS even other people started to notice how happy I was. I could finally laugh, make jokes and enjoy every moment.

Keith Sullivan: And lastly, a bolstered balance sheet as a result of pre-transaction conversion of Greenbrook's debt into common shares. In combination with the scale of the business post acquisition, the consolidated company will be able to leverage and improve balance sheet to execute on a long-term growth strategy.

Speaker Change: And lastly, our bolstered balance sheet.

Speaker Change: As a result of pre transaction conversion of Green Brooks debt into common shares in combination with the scale of the business post acquisition.

Keith Sullivan: In combination with the scale of the business post-acquisition, The Consolidated Company will be able to leverage an improved balance sheet to execute on its long-term growth strategy. I am really excited about what Neuronetics and Green Brook can accomplish together; we will be able to amplify brand awareness and, with this unified approach, boost brand recognition with the goal of making Neurostar the household name for TMS therapy. What this means is that all the Neurostar systems inside our customers' practices will become even more recognizable to their patients, making it easier to treat patients in need.

Speaker Change: Consolidated company will be able to leverage and improved balance sheet to execute on its long term growth strategy.

Keith Sullivan: I am really excited about what Neuronetics and Greenbrook can accomplish together. We will be able to amplify brand awareness, and with this unified approach boost brand recognition with the goal of making Neurostar the household name for TMS therapy. What this means is that all the Neurostar systems inside our customers' practices will become even more recognizable to their patients, making it easier to treat patients in need. We believe this transformative transaction brings together two of the leading mental health companies to create an organization with the ability to leverage its scale and capabilities to become the organization to provide innovative care.

Speaker Change: I am really excited about what neuron networks and Greenberg can accomplish together.

Keith Sullivan: We will be able to increase brand awareness and, with this unified approach, boost brand recognition with the goal of making Neurostar the household name for TMS therapy. What this means is that all the Neurostar systems inside our customers' practices will become even more recognizable to their patients, making it easier to treat patients in need. We believe this transformative transaction brings together two of the leading mental health companies to create an organization with the ability to leverage its scale and capabilities to become the organization to provide innovative care, solutions for practices looking to treat patients suffering from mental health conditions, and ultimately deliver value to shareholders. With that, I would like to open the line for questions.

Speaker Change: We will be able to amplify brand awareness and with this unified approach boost brand recognition with the goal of making Neurostar. The household name for Tms therapy.

Keith Sullivan: I am making plans for my future and have real ambitions and goals in my life. TMS helped me truly realize that things can get better. Because of patient results like this, we worked so hard at Neurostar to bring this therapy to patients suffering from mental health conditions.

Speaker Change: What this means is that all the neuro star system inside our customers practices will become even more recognizable to their patients, making it easier to treat patients in need.

Keith Sullivan: We believe this transformative transaction brings together two of the leading mental health companies to create an organization with the ability to leverage its scale and capabilities to become the organization to provide innovative care, solutions for practices looking to treat patients suffering from mental health conditions, and ultimately, deliver value to shareholders. And with that, I would like to open the line for questions. As a reminder, if you'd like...

Speaker Change: We believe this transformative transaction brings together two of the leading mental health companies to create an organization with the ability to leverage its scale and capabilities to become the organization to provide innovative care solutions for practices looking to treat patients.

Keith Sullivan: Solutions for practices looking to treat patients suffering from mental health conditions and ultimately deliver value to shareholders.

Speaker Change: <unk> for mental health conditions, and ultimately deliver value to shareholders.

Operator: And with that, I would like to open the line for questions.

Keith Sullivan: As a reminder, if you'd like to ask a question at this time, please press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again.

Speaker Change: And with that I would like to open the line for questions.

Operator: As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by where we compile the Q&A roster.

Operator: As a reminder, if you'd like to ask a question at this time, please press star 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A list. Thank you. Our first question will come from the line of Margaret Andrew with William Blair.

Speaker Change: As a reminder, if you'd like to ask a question at this time. Please press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.

Stephen Furlong: U.S. Neurostar advanced therapy system revenue was $4 million. In the quarter, we recognized revenue on 50 systems in line with our expectations. U.S, treatment session revenue was $11.7 million, a decrease of 5% year over year. Revenue per active site was approximately $10,000 in the quarter, compared to approximately $11,400 in the prior year quarter. Due to the unfavorable impacts on treatment session ordering patterns that Keith discussed. Gross margin was 74%. An increase of approximately 150 basis points from the second quarter of 2023 gross margin of 72.5%.

Operator: Please stand by while we compile the Q&A roster. Our first question will come from the line of Margaret Andrew with William Blair. Hey, good morning, everyone.

Speaker Change: Please standby, while we compile the Q&A roster.

Malgorzata Andrew: Our first question will come from the line of Margaret Andrew with William Blair. Hey, good morning, everyone. Thanks for taking the questions.

Speaker Change: Our first question will come from the line of Margaret Andrew with William Blair.

Speaker Change: Yeah.

Malgorzata Andrew: Hey, good morning, everyone. Thanks for taking the questions. Maybe two for me, one on the acquisition and one on the changing healthcare dynamics. Maybe I'll start with Change Healthcare.

Malgorzata Andrew: Thanks for taking the questions. Maybe two for me, one on the acquisition and one on the changing healthcare dynamics. I'll start with Change Healthcare. Can you provide us with any additional metrics to support that this is, in fact, an isolated event, and that other centers, maybe that weren't impacted by Change, are continuing to grow? And then as we think about Q3, going forward, you know, when is that turn expected to happen? It's lingering maybe a little bit longer than we expected, and may be useful. Thanks Margaret, this is Keith.

Margaret Andrew: Hey, good morning, everyone. Thanks for taking my question.

Keith Sullivan: Maybe two for me, one on the acquisition and one on the change health care dynamics. Maybe I'll start with Change Health Care. I guess can you provide us any additional metrics to support that this is in fact an isolated event and that other centers maybe that weren't impacted by change or continuing to grow? And that is we think about Q3 going forward. When is that turn expected to happen? And it's lingering maybe a little bit longer than certainly we expected, and maybe use. Well.

Speaker Change: Maybe two for me one on the acquisition of one one on the change health care dynamics.

Malgorzata Andrew: I guess, can you provide us with any additional metrics to support that this is, in fact, an isolated event, and that other centers maybe that weren't impacted by the change are continuing to grow? And then, as we think about Q3, going forward, when is that turn expected to happen? And it's lingering maybe a little bit longer than certainly we expected, and maybe used

Speaker Change: Maybe I'll start with change healthcare and I guess can you provide us any additional metrics to support that this is in fact, an isolated event.

Speaker Change: And that out of their centers, maybe that weren't impacted by change or continuing to grow and that as we think about Q3.

Stephen Furlong: Due in part to the positive impact of our shift to a new contract manufacturer. Operating expenses were $20.7 million. An increase of $600,000 or 3%. Compared to $20.1 million in the second quarter of 2023. The slight increase was primarily due to expenses related to the expanded utilization of Neurostar University. During the quarter, we incurred approximately $1.6 million of non-cash stock-based compensation expense. Net loss for the quarter was $9.8 million or $33 per share as compared to a net loss of $4.9 million or $17 per share in the prior year quarter.

Speaker Change: Going forward you know what is that churn expected.

Speaker Change: Happened lingering, maybe a little bit longer than certainly we expected and maybe as well.

Keith Sullivan: Thanks, Margaret. This is Keith. So, as you know, we look at metrics each week in my staff call, and we can see the utilization as it continues to grow. We also can look at the inventory that each of our customers has. And so, we are seeing positive trends in both of those, and feel comfortable that Q3 will hit the guidance that we have laid out. So, I think, you know, the information that we get on Change Healthcare is that they focus first on the pharmacy, then the hospitals, then large groups, and then private physicians. And, you know, our information is that they are working their way to the private physicians.

Keith Sullivan: Thanks, Margaret. This is Keith.

Speaker Change: Thanks, Margaret this is Keith.

Keith Sullivan: So, as you know, we look at metrics each week in my staff call, and we can see utilization as it continues to grow. We also can look at the inventory that each of our customers has, and so we are seeing positive trends in both of those, and feel comfortable that Q3 will hit the guidance that we have laid out. So, I think, you know, the information that we get on changing health care is that they focus first on the pharmacy, then the hospitals, then large groups, and then private physicians. And, you know, our information is that they are working their way to private physicians, so we anticipate over the next few months, by the end of the year, it will be back to normal. Okay.

Keith Sullivan: So we, as you know, we look at metrics each week in my staff call, and we can see the utilization as it continues to grow. We can also look at the inventory that each of our customers has. And so we are seeing positive trends in both of those and feel comfortable that Q3 will hit the guidance that we have laid out. So I think, you know, the information that we get on Change Healthcare is that they focus first on the pharmacy, then the hospitals, then large groups, and then private physicians. And, you know, our information is that they are working their way to private physicians. So we anticipate that, over the next few months, by the end of the year, it'll be back to normal.

Keith Sullivan: So we as you know we look at metrics each week and my staff call and we can see the utilization as it continues to grow. We also can look at the inventory that each of our customers had and so we have we are seeing positive trends in both of those.

Keith Sullivan: And feel comfortable that Q3 will hit the guidance.

Keith Sullivan: Our guidance that we have laid out.

Keith Sullivan: So I think.

Speaker Change: The information that we get on change healthcare is that they focus first on the pharmacy than the hospitals that large groups and then private physicians.

Stephen Furlong: During the second quarter of 2023, we benefited from a $3.6 million employee retention credit which did not recur in 2024. EBITDA for the second quarter of 2024 was negative $8.1 million as compared to the second quarter of 2023 EBITDA of negative $3.3 million, which similarly benefited from the ERC credit in 2023.

Speaker Change: And.

Speaker Change: Our information is that they are working their way to the private physicians. So we anticipate over the next few months by the end of the year it will be back to normal.

Keith Sullivan: So, we anticipate over the next few months, by the end of the year, it will be back to normal. Okay.

Malgorzata Andrew: Okay. And then, you know, as we think about the merger, I guess why is this the right time versus waiting another year or so? And then, you know, as we think about capital allocation opportunities between the two companies, will you continue to spend equally on the core neuronetics franchise, especially with kind of the move towards the adolescent opportunity? Are you going to keep building out or acquiring new clinics? I'm just trying to get a sense of what we expect from both the growth profile of the two franchises and, like I said, capital allocation. Thank you.

Keith Sullivan: And then, you know, as we think about the merger, you know, I guess, Why is this the right time versus waiting another year or so? And then, you know, as we think about capital allocation opportunities between the two companies, will you continue to spend equally on the core neuronetics franchise, especially with kind of the move towards the adolescent opportunity? Are you going to keep building out or acquiring new clinics? I'm just trying to get a sense of what we expect from both the growth profile of the two franchises and, like I said, capital allocation. Thank you. So I'll take the Neuronetics side first.

Speaker Change: Okay, Yeah and then.

Keith Sullivan: And then, you know, as we think about the merger, I guess, why is this the right time versus waiting in other years? So, and then, you know, as we think about capital allocation opportunities between the two companies, will you continue to spend equally kind of on the corner or not franchise, especially with kind of move towards the adolescent opportunity? Are you going to keep building out or acquiring new clinics, just trying to get a sense of what we expect from both the growth profile from the two franchises, and then, like I said, capital allocation.

Speaker Change: We think about the merger.

Speaker Change: Yes.

Speaker Change: Why is this the right time versus waiting another year or so.

Stephen Furlong: Turning to the balance sheet as of June 30, 2024, cash and cash equivalents were $42.6 million.

And then you know as we think about capital allocation.

Speaker Change: Opportunities between the two companies will you continue to spend equally to have on our coronary franchise, especially with kind of a move towards towards the Seattle, that's an opportunity.

Stephen Furlong: In late July, we entered into a new debt facility of up to $90 million with perceptive advisers, a leading healthcare investment fund. The agreement provided an initial tranche of $50 million at closing with two additional tranches of $15 million and $25 million available upon meeting certain conditions. This new facility allowed us to pay off in full the existing SLR capital term loan, reducing our total debt and also providing additional financial flexibility.

Speaker Change: Or are you going to keep building out or acquiring new clinics I'm, just trying to get a sense of what.

Speaker Change: What we expect from a both a growth profile from the two franchises and then like I said capital allocation. Thank you.

Keith Sullivan: Thank you.

Keith Sullivan: So, I'll take the Neuronetic side first. We will continue to sell capital equipment and expand our customer base. I believe that through the Neuronetic Greenbrook TMS combination, we can now solve some of the problems that our customers have had all along. You know, we're able to teach them how to answer the phone, how to patient consult, how to do billing, how to get better reimbursement. But those teachings are ongoing and constantly being done over and over and over through our reimbursement policy team as well as our PDMs. With the combination of Neuronetics and Greenbrook, we can actually help our accounts further by actually doing some of these things, doing billing for them, helping them answer their phones by offering the call center service, and it would be transparent to them answering the phone as though we're their own office.

Keith Sullivan: So I'll take the Neuronetics side first. We will continue to sell capital equipment and expand our customer base. I believe that through the Neuronetics, Greenbrook, and TMS combination, we can now solve some of the problems that our customers have had all along. You know, we're able to teach them how to answer the phone, how to do patient consultations, how to do billing, how to get better reimbursement. But those teachings are ongoing and constantly being done over and over and over through our reimbursement policy team as well as our PDM.

Speaker Change: So I'll take I'll take the pneumatic side first we will continue to sell capital equipment and expand our customer base.

Keith Sullivan: We will continue to sell capital equipment and expand our customer base. I believe that through the Neuronetics Greenbrook TMS combination, we can now solve some of the problems that our customers have had all along. You know, we're able to teach them how to answer the phone, how to do patient consultations, how to do billing, how to get better reimbursement. But those teachings are ongoing and constantly being done over and over and over through our reimbursement policy team, as well as our PDM.

Speaker Change: I believe that through the neuro networks Green Brook Tms combination.

Stephen Furlong: This additional funding is available to support Neuronetics ongoing investments in commercial initiatives, clinical indication expansion, and efforts to drive adoption of Neurostar. 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.

Speaker Change: We can now solve some of the problems that our customers have had all along.

Speaker Change: We're able to teach them how to answer the phone how to Ah patient consult.

Speaker Change: How to do billing how to get better reimbursement.

Speaker Change: But those teachings are ongoing and constantly being done over and over and over through our through.

Speaker Change: Through our reimbursement policy team as well as our Pds.

Keith Sullivan: With the combination of Neuronetics and Greenbrook, we can actually help our accounts further by actually doing some of these things, doing billing for them, helping them answer their phones by offering the call center service. And it would be transparent to them, answering the phone as though it were their own office. So I think, you know, we have evolved the business to the point where we have identified all the pain points in the industry that our customers experience on a daily basis. And now we can not only teach them how to solve those problems, but for those who want further help, we can do it for them.

With the combination with AV neuro networks and Green Brook, we can actually help our accounts further by actually doing some of these things doing billing for them helping them.

Stephen Furlong: Revenue guidance for the third quarter in full-year assumes a return to normalize treatment session ordering patterns and customer inventory management during the back half of the year. We continue to expect total operating expenses for the full-year to be in the range of $78 million to $80 million.

Speaker Change: Answer their phones by offering the call Center service.

Speaker Change: And it would be transparent to them answering the phone as though where their own office. So I think.

Keith Sullivan: So I think, you know, we have evolved the business to the point where we have identified all the pain points in the industry that our customers experience on a daily basis. And now we can not only teach them how to solve those problems, but for those who want further help, we can do it for them. Okay, and the capital allocation part on behalf of Greenberg. Hi Margaret. It's Steve.

Keith Sullivan: So, I think, you know, we have evolved the business to the point where we have identified all the pain points in the industry that our customers experience on a daily basis, and now we have, cannot only teach them how to solve those problems, but for those who want further help, we can do it for them.

Speaker Change: We have evolved the business to the point, where we have identified all the pain points in the in the industry that our customers are experience.

Keith Sullivan: I would now like to turn the call back over to Keith. Thanks, Steve.

Speaker Change: Experience on a daily basis, and now we have cannot only teach them how to solve those problems, but for those who want further help we can do it for them.

Keith Sullivan: As mentioned in our press release earlier today, we are excited to announce that we assigned a definitive agreement to acquire Greenbrook TMS. If you have followed Neuronetics in the past, you will be aware that Greenbrook is the nation's largest TMS provider, and the largest user of Neurostar systems. This acquisition brings together two of the leaders in the mental health industry, creating a unique, vertically integrated company with a significant footprint to bring the benefits of cutting-edge mental health therapies to as many patients as possible.

Stephen Furlong: Okay, and that's the capital allocation part on behalf of Greenbrook.

Malgorzata Andrew: Okay, and the capital allocation part on behalf of Greenberg.

Speaker Change: Okay, and then capital allocation part on behalf of the Greenberg.

Stephen Furlong: Hi, Margaret. I think the critical answer to why I do it now was really Greenbrook's lenders' willingness to convert their roughly $140 million in debt to common shares. Obviously, with our debt load of just $50 million now, supporting the combined companies, it's really a financial game change for us. Obviously, the revenue ratio is much stronger, and with perceptive, we do have the ability for additional branches if necessary. But again, from my perspective, it was really that variable which turned the tables and really changed our minds to do this now as opposed to waiting another year or another two.

Speaker Change: Okay.

Stephen Furlong: Hi Margaret. It's Steve.

Steve Furlong: Hi, Margaret it's Steve.

Margaret Andrew: I think the critical answer to why do it now.

Margaret Andrew: Really green books lenders willingness to convert there.

Margaret Andrew: In a roughly $140 million in debt to common shares.

Keith Sullivan: Before diving into the transaction, we wanted to review the significant opportunities that exist for innovative solutions for the treatment of mental health conditions within the U.S. There are currently over 29 million patients, including adults and adolescents who suffer from depression, anxious depression, and OCD. Lee. Within that massive patient population, more than 4.4 million people are being treated with medication and are poorly served as they are not finding the relief they desperately seek. This represents a large opportunity for businesses like Neuronetics and Greenbrook as just a fraction of patients who qualify for TMS are currently being treated with non-drug alternatives.

Margaret Andrew: Obviously with our debt load of.

Margaret Andrew: $50 million now.

Margaret Andrew: Supporting the combined companies.

Margaret Andrew: It's really a financial game changer for us and so obviously that that test revenue ratio is much stronger.

Margaret Andrew: And with perceptive, we do have the ability for additional tranches if necessary.

Stephen Furlong: And with Perceptive, we do have the ability for additional tranches, if necessary. But again, from my perspective, it was really that variable that turned the tables and really changed our minds to do this now as opposed to waiting another year or another two. So we're, Margaret, our initial focus with Green Brook, and this has been the discussion with Bill Leonard and his team, is to expand utilization in each one of their existing centers.

Stephen Furlong: You know, I think that the critical answer to why do it now was really Greenbrook's lenders' willingness to convert their, you know, roughly $140 million in debt to common shares. You know, obviously, with our debt load of just $50 million now supporting the combined companies, it's really a financial game changer for us. And so, you know, obviously, the debt-to-revenue ratio is much stronger, and with Perceptive, we do have the ability for additional tranches if necessary. But again, from my perspective, it was really that variable that turned the tables and really changed our minds to do this now as opposed to waiting another year or another two. So, we're, uh...

Margaret Andrew: But again from my perspective, it was really.

Margaret Andrew: That variable.

Margaret Andrew: Turning the tables and really.

Margaret Andrew: Changed our minds to do this now as opposed to waiting another year or another two.

Margaret Andrew: So.

Keith Sullivan: So Margaret, our initial focus with Greenbrook, and this has been the discussion with Bill Leonard and his team, is to expand utilization in each one of their existing centers. So at this point, there isn't a plan to build additional brick-and-mortar or to buy other sites. It's really to be able to take them from where they are today and get their current stores and systems up to full utilization.

Keith Sullivan: So Margaret, our initial focus with Green Brook, and this has been the discussion with Bill Leonard and his team, is to expand utilization in each one of their existing centers. So at this point, there isn't a plan to build additional brick and mortar or to buy other sites. It's really to be able to take them from where they are today and get their current stores and systems up to full utilization.

Margaret Andrew: So Margaret our initial focus with with Green Brook, and this has been the discussion with Bill Leonard and his team is to it.

Keith Sullivan: Let me walk you through some key points of the transaction. Prior to the merger, all of Greenbrook's existing long-term debt will be converted to Greenbrook TMS common shares. On a pro-forma basis, Neuronetics shareholders will own approximately 57% of the is expected to convert into 0.01149 shares of Neuronetics common stock subject to adjustment prior to closing. Our existing Neuronetics management team will remain in their leadership roles and key members of Greenbrook TMS management team, including Bill Leonard, Greenbrook's and Dr. Jeffrey Brammer, Greenbrook's chief medical officer, among others, will join the Neuronetics management team. The combined company will continue to operate as Neuronetics Inc, and will maintain its listing on NASDAQ under the ticker symbol STEM. As with any merger of this scale, the deal is subject to customary closing conditions.

Speaker Change: Expand utilization in each one of their existing centers. So at this point there isn't a plan to to.

Stephen Furlong: So at this point, there isn't a plan to build additional brick and mortar stores or to buy other sites. It's really to be able to take them from where they are today and get their current stores and systems up to full utilization. Okay, I'll leave it there for now. Thanks, guys. Thanks, Margaret.

Speaker Change: To build additional brick and mortar or to buy.

Speaker Change: Other sites, it's really to be able to take them from where they are today and get get their current stores and systems up to full utilization.

Malgorzata Andrew: Okay, I'll leave it there for now.

Malgorzata Andrew: Okay, I'll leave it there for now. Thanks, guys.

Speaker Change: Okay.

Malgorzata Andrew: Thanks, guys.

Speaker Change: I'll leave it there for now thanks guys.

Operator: Thanks, Margaret. Our next question will come from the line of Adam Mayter with Piper Sandler. I keep these things for taking the questions, and congrats on the Greenbrook merger. Just one quick one for me, I guess, to start would be, are you able to quantify the impact in the quarter from the Change Healthcare cyber security issue? I mean, yes, it was pretty much all of the mess. So we would say in that two million dollar range, Adam, what we saw is during the quarter, our utilization across all of our customer segments was up nicely, you know, high double-digit teens to low 20% year over year.

Margaret Andrew: Thanks Margaret.

Operator: Our next question will come from the line of Adam Maeder, with Piper Sandler.

Operator: Our next question will come from the line of Adam Maeder, by percent. Hi Keith and Steve, thanks for taking the questions and congratulations on the Greenbrook merger. Just one quick one for me, I guess to start would be, are you able to quantify the impact in the quarter from the changed healthcare cybersecurity issue? I mean, yes, it was pretty much all of the myth, so we would say in that $2 million range.

Speaker Change: Our next question will come from the line of Adam Nader.

Adam Nader: With Piper Sandler.

Adam Maeder: Hi Keith and Steve, thanks for taking the questions and congrats on the Green Brook merger. Just one quick one for me, I guess to start would be, are you able to quantify the impact in the quarter from the change healthcare cybersecurity issue?

Adam Nader: Thank you Steve Thanks for taking the questions and congrats on the green brick merger.

Adam Nader: Just one quick one for me I guess to start would be are you able to quantify the impact in the quarter from.

Speaker Change: Change healthcare cyber security issue.

Speaker Change: Yes.

Stephen Furlong: I mean, yes, pretty much all of them were in that $2 million range. Adam, what we saw is that during the quarter, our utilization across all of our customer segments was up nicely, high double-digit teens to low 20% year over year. What we found is that with the cash flow issues our customers had, where they would traditionally place a medium to large size order at quarter end to support the next quarter's patient flow, there was a purchasing pattern change where they held off and really just worked through some of the inventory that they had on the TRACSTAR and really, I would say, depleted what would be their normal inventory levels.

Speaker Change: Yes, it was pretty much even.

Speaker Change: All of them and so we would say in that $2 million range.

Keith Sullivan: Adam, what we saw is during the quarter, our utilization across all of our customer segments was up nicely, you know, high double digit teens to low 20 percent year over year. What we found is, you know, with the cash flow issues our customers had, where they would traditionally place a medium to large size order at quarter and to support the next quarter's patient flow, there was a purchasing pattern chain where they held off and really just worked through some of the inventory that they had on the track star and really, I would say, depleted what would be their normal operating inventory levels. And so that really impacts revenue, but to my earlier point, utilization is still up significantly year over year. And so that's why we left the year in guidance alone. The patients are still there.

Speaker Change: Adam we saw during the quarter, our utilization across all of our customer segments was up nicely.

Speaker Change: High double digit teens to low 20% year over year, what we found is with the cash flow issues our customers had.

Keith Sullivan: This includes approval by shareholders of both Neuronetics and Greenbrook TMS. We anticipate the closing to take place in the fourth quarter of 2024.

Adam Maeder: What we found is, you know, with the cash flow issues our customers had, you know, where they would traditionally place a medium to large size order at quarter and to support the next quarter's patient flow, there was a purchasing pattern change where they held off and really just, you know, worked through some of the inventory that they had on the track star and really I would say depleted what would be their normal operating inventory levels. And so that really impacts revenue. But, you know, to my earlier point, the utilization, you know, is still, you know, up significantly year over year.

Adam Nader: Where they would traditionally place a medium to large size order at quarter end to support the next quarter's patient flow.

Keith Sullivan: Now for an overview of Greenbrook TMS, they are the largest provider of TMS therapy in the United States, operating approximately 120 treatment centers across 18 states in the US. This extensive network allows them to reach a wide range of patients in need of mental health services in some of the country's largest markets. Greenbrook offers three distinct services for patients, Med Management, Neurostar TMS therapy and Spurbato treatment. This comprehensive approach allows them to address various aspects of mental health care through a broad spectrum of the continuum of care.

Speaker Change: That was a.

Speaker Change: Yeah.

Speaker Change: Purchasing pattern change where they held off.

Speaker Change: And really just walk through some of the inventory that they had on the track star.

Speaker Change: And really I would say depleted.

Speaker Change: What would be their normal operating inventory levels.

Stephen Furlong: And so that really impacted revenue, but, you know, to my earlier point, the utilization is still, you know, up significantly year over year. And so that's why, you know, we left the year-end guidance alone. The patients are still there. You know, they may have been slowed down a little bit with the prior cancellations, but, you know, from what we're hearing from our customers, the queue is full, and, you know, ultimately, the historic purchasing patterns will, you know, will continue, and will come back into play.

Speaker Change: And so that really impacted revenue, but to my earlier point the utilization is still.

Speaker Change: Up significantly year over year.

Stephen Furlong: And so that's why, you know, we left the year in guidance alone. The patients are still there; you know, they may have been slowed down a little bit with the prior off. But, you know, from what we're hearing from our customers, you know, the QIS poll and, you know, ultimately the historic purchasing patterns will. and come back into play.

Speaker Change: And so that's why we left the year end guidance alone. The patients are still there. They may have been slowed down a little bit with the prior off but.

Keith Sullivan: Greenbrook has been prolific in treating patients suffering from mental health disorders, with over 47,000 patients having been treated which speaks to the scale of their operation and the growing demand for these services. We strongly believe that the combination of the nation's leading developer of TMS technology and the nation's largest provider of Neurostar therapy creates a single organization that will have the ability to advance the care of patients suffering from mental health disorders to levels not seen before in this industry.

Stephen Furlong: They may have been slowed down a little bit with the prior off, but from what we're hearing from our customers, the queue is full, and ultimately, the historic purchasing patterns come back into play. That's helpful, Steve. And, you know, a good kind of segue into the next question, which is, you know, just wanted to ask a little bit more about the guidance and the back half outlook. And I, you know, I guess if I had heard.

Speaker Change: From what we're hearing from our customers the key with Paul.

And ultimately the the historic purchasing patterns well.

Speaker Change: Come back into play.

Adam Maeder: That's helpful, Steve, and you know, could kind of segue into the next question, which is, you know, just wanted to task a little bit more about the guidance and the back half outlook. And I guess if I heard Keith's comments earlier to Mark, this question, you know, as it relates to the Q3 guidance, you know, it sounds like you're pretty comfortable with the 18 and a half to 19 and a half million outlook that you've provided. And that's informed on kind of what you've seen thus far six weeks of the quarter. Just wanted to, I guess, ensure that I'm thinking about that correctly.

Adam Maeder: It's helpful, Steve, and a good kind of segue into the next question, which is, you know, just wanted to ask a little bit more about the guidance and the back half outlook. And I, you know, I guess if I had heard. Keith's comments earlier to Margaret's question, you know, as it relates to the Q3 guidance, it sounds like you're pretty comfortable with the 18.5 to 19.5 million outlook that you provided, and that's informed by kind of what you've seen thus far six weeks into the quarter.

Stephen: That's helpful. Stephen Good kind of segue into the next question, which is.

I just wanted to ask a little bit more about the guidance.

Speaker Change: Back half outlook, and I guess, if I heard.

Keith Sullivan: Keith's comments earlier to Mark Klausner's question, you know, as it relates to the Q3 guidance, you know, it sounds like you're pretty comfortable with the 18.5 to 19.5 million outlook that you provided and that's informed by kind of what you've seen thus far in the six weeks of the quarter. I just wanted to, I guess, ensure that I'm thinking about that correctly. And then, as it relates to Q4, the implied guide there is, you know, a pretty steep ramp. It's a sizable number. So, you know, I'm just, you know, even with normalized trends.

Speaker Change: <unk> comments earlier to Margaret's question.

Keith Sullivan: First and foremost, this merger creates a vertically integrated organization capable of providing access to a broader array of mental health therapies including Med Management, Neurostar and Spurbato with significant scale in the U.S. This integration allows us to optimize every step of the patient journey from awareness to treatment, which has a variety of downstream benefits. In addition, it gives us the ability to drive increased awareness of Neurostor therapy through a single unified brand.

Speaker Change: As it relates to the Q3 guidance it sounds like Youre pretty comfortable with the 18 five to $19 5 billion outlook that you provided and Thats informed on.

Speaker Change: Kind of what you've seen thus far six six weeks for the quarter just wanted to ask I guess.

Adam Maeder: Just wanted to, I guess, ensure that I'm thinking about that correctly. And then, as it relates to Q4, the implied guide there is, you know, a pretty steep ramp. It's a sizable number. So, you know, I'm just, you know, even with normalized trends. So, just wondering if there's anything that's contemplated there for adolescence, residual revenue contribution from Greenbrook, just, you know, help us get a little bit more comfortable with the outlook for Q3 and Q4. And then I have one follow-up. Thanks. Yeah.

Speaker Change: Ensure that I'm thinking about that correctly and then as it relates to Q4 the.

Adam Maeder: And then, as it relates to Q4, you know, the implied guide there is, you know, a pretty steep ramp. It's a sizable number. So, you know, I'm just, you know, even with normalized trends. So just wondering if there's anything that's contemplated there for adolescents, residual revenue contribution from Greenbrook. Just, you know, help us get a little bit more comfortable with the outlook for Q3 and Q4. And then I'd want to follow up. Thanks.

Speaker Change: Implied guide there is a pretty steep ramp it's a sizable number so yes.

Speaker Change: I'm just.

Speaker Change: Even with normalized trend. So just wondering if theres anything thats contemplated there for adolescents residual revenue contribution from Green Brook.

Stephen Furlong: So just wondering if there's anything that's contemplated there for adolescents, residual revenue contribution from Greenbrook, just, you know, help us get a little bit more comfortable with the outlook for Q3 and Q4, and then I'd want to follow up. Yeah, I would say, Adam, that we're very comfortable with Q3, and there is a balance between, you know, the Q3 expectation and, you know, what's implied We did want to get ahead of ourselves with the Q3 number, but again, I would say we're very comfortable with that.

Keith Sullivan: As it sits today, the market is relatively fragmented and highly focused on the reputations and capabilities of small businesses to educate patients on TMS and Neurostor. This consolidated marketing approach will be more efficient and effective reaching more patients who could benefit from this treatment. Specific to Greenbrook, this merger allows for consistent delivery of best practices across the nation's leading TMS provider network. We can ensure that patients receive the highest quality care regardless of which treatment center they visit.

Speaker Change: Help us get a little bit more comfortable with the outlook for Q3, and Q4, and then I had one follow up thanks.

Stephen Furlong: Yeah, I would say, Adam, that we're very comfortable with Q3, and there is a balance between, you know, the Q3 expectation and, you know, what's implied for Q4. We didn't want to get ahead of ourselves with the Q3 number, but again, I would say we're very comfortable with that. You know, one key data point for us is collections, and we did see a pretty good rebound in the last couple weeks

Stephen Furlong: I would say, Adam, that we're very comfortable with Q3. And there is a balance between, you know, the Q3 expectation and, you know, what's implied for Q4. We didn't want to get ahead of ourselves with the Q3 number. But again, I would say we're very comfortable with that. You know, one key data point for us is collections. And we did see a pretty good rebound the last couple of weeks of June. My collection team was able to bring in an impressive amount of money. And then July was our highest collection month since 2023 in the fourth quarter.

Speaker Change: Yes, I would say Adam that we're very comfortable with Q3.

Speaker Change: There is a balance between the Q3 expectation.

Speaker Change: What's implied for Q4.

Speaker Change: We didn't want to get ahead of ourselves with the Q3 number but again I would say, we're very comfortable with that.

Stephen Furlong: You know, one key data point for us is collections, and we did see a pretty good rebound the last couple weeks of June. My collection team was able to bring in an impressive amount of money, and then July was our highest collection month since 2023 in the fourth quarter. And so that gives us, you know, some confidence that our customers are getting their claims reimbursed and that they do have cash coming into their business. So, you know, would I have liked to throw up $20 million in Q3 and then a little less in Q4?

Speaker Change: One key data point for us as collections and we did see a pretty good rebound in the last couple of weeks of June My collection team was able to bring in.

Stephen Furlong: My collection team was able to bring in an impressive amount of money and then July was our highest collection month since 2023 in the fourth quarter and so that gives us you know some confidence that our customers are getting their claims reimbursed and that they do have cash coming into their business so you know would I have liked to thrown up a 20 million dollar Q3 and then a little less on Q4 yeah but given that you know there's still time left in the quarter I think where we said it makes sense and again our comfort level is pretty strong.

Speaker Change: Impressive amount of money.

Speaker Change: And then July was our highest collection months.

Speaker Change: Since 2023 in the fourth quarter and so that gives us.

Stephen Furlong: And so that gives us, you know, some confidence that our customers are getting their claims reimbursed. And they do have cash coming into their business.

Speaker Change: Some confidence that our customers are getting their claims reimbursed and that they do have cash coming into their business. So.

Stephen Furlong: So, you know, what I like to throw it up at a $20 million Q3 and then a little less on Q4, yeah. But given that, you know, the still time left in the quarter, I think, will we set it? Make sense. And again, our comfort level is pretty strong. Thanks for the color there.

Speaker Change: What I would like to throw it up at $20 million Q3, and then a little less on Q4 yeah.

Stephen Furlong: Yeah. But given that, you know, there's still time left in the quarter, I think where we set it makes sense. And again, our comfort level is pretty strong.

Speaker Change: But given that there is still time left in the quarter.

Keith Sullivan: From a financial perspective, this merger transforms the profile of the combined entity with a significantly larger revenue base, increased resources and a diversified model. We will be able to take advantage of opportunities not available to either company independently. In addition, we see substantial opportunities to take advantage of cost synergies, which we will discuss in more detail shortly. Lastly, and crucially, this merger accelerates our pathway to profitability. The combined strength of our two companies puts us in a much stronger financial position and brings forward our timeline for achieving substantial profitability.

Speaker Change: Where we said it makes sense.

And again, our comfort level is pretty strong.

Adam Maeder: Thanks for the color there. And if I could squeeze in just one more, guys, just on Greenbrook. You know, the deal obviously makes sense strategically, but I was hoping you could maybe speak a little bit more about some of the deal synergies that you referenced, such as both the mid-teens revenue growth that you expect for the combined entity in 25 and 26. You know, that's an acceleration versus stand-alone neuronetics. We'd love to hear a little bit more about that and then just anything on the cost synergies that you'd like to touch on as well. Thanks for taking the question. Thanks, Adam. Yeah, this was a key point with our

Stephen Furlong: Thanks for the color there, and if I could squeeze in this one more guys, just done Greenbrook, you know, the deal obviously makes sense strategically but was hoping you could maybe speak a little bit more about some of the old synergies that you reference, you know, both the mid-teens revenue growth that you expect to combine entity in 25 and 26, you know, that's an acceleration versus standalone neuronetics. We'd love to hear a little bit more about that and then anything on the cost synergies that you'd like to touch on as well. Thanks for taking the time to answer the question. Thanks, Adam.

Speaker Change: Thanks for the color there and if I could squeeze in just one more guys just on Green Brook.

Adam Maeder: And if I could squeeze in just one more, guys, just on Greenbrook. You know, the deal obviously makes sense strategically. But was hoping you could maybe speak a little bit more about some of the deals, energies that you referenced. You know, both the mid teams, revenue growth that you expected to combine and be in 25 and 26. You know, that's an acceleration versus standalone or analytics. I would love to hear a little bit more about that and then just anything on the cost energies that you'd like to touch on as well. Thanks for taking the questions.

Speaker Change: The deal obviously makes sense strategically, but was hoping you could maybe speak a little bit more about some of the deal synergies that you referenced.

Speaker Change: Both the mid teens revenue growth that you expect for the combined entity in 'twenty five and 'twenty six.

Speaker Change: That's an acceleration versus Standalone pneumatics, so would love to hear a little bit more about that and then just anything on the cost synergies that you'd like to touch on as well thanks for taking the questions.

Stephen Furlong: Thanks, Adam.

Stephen Furlong: Thanks, Adam. Yeah, this was a key point with our board of directors. It's no surprise that both companies were losing money, but the $15 million that we stated is really the initial take on the synergies between the two companies. We have the obvious ones, the GNA, vendor spend, and systems.

Stephen Furlong: Yeah, this was a key point with our board of directors. You know, it's no surprise that both companies were losing money, but the $15 million that we stated is really, you know, the initial take on the synergies between the two companies. You know, we have the obvious ones, you know, the GNA, vendor spend, and systems.

Stephen Furlong: Yeah, this was a key point with our Board of Directors. You know, it's no surprise that both companies were losing money. But, you know, the $15 million that we stated is really, you know, the initial take on the synergies between the two companies. You know, we have the obvious ones, you know, the GNA, vendor spend systems, you know, the B-SIM synergies in marketing spend, you know, will become much more efficient under one leader. And so, you know, as we work through the integration, you know, the next couple of months will have that ability. And then, you know, many of us have been through these integrations before.

Speaker Change: Thanks, Adam Yes. This was a key point.

Speaker Change: With our board of directors.

Speaker Change: It's no surprise that both companies were losing money.

Keith Sullivan: In essence, this merger is about creating a stronger, more efficient, and more effective organization that can better serve patients and Neurostor providers alike. It positions us to be the clear leader in the TMS therapy space and sets the stage for significant growth and value creation in the years to come. With approximately 1200 Neurostor sites across the U.S., we would not be pursuing this transaction if it would negatively impact our customers' businesses.

Speaker Change: But the $15 million.

Speaker Change: That we stated is really.

Speaker Change: The initial take on the synergies between the two companies.

Speaker Change: We have the obvious ones.

Speaker Change: G&A vendor span systems.

Stephen Furlong: You know, there'll be some synergies in marketing spend; we'll become much more efficient under one leader. And so, as we work through the integration in the next couple months, we'll have that ability. And then, you know, many of us have been through these integrations before, so it's very important that on day one, you have your plan in place, and you take swift action to ensure that those synergies are realized as quickly as possible.

Stephen Furlong: You know, there'll be some synergies in marketing spend, you know; we'll become much more efficient under one leader. And so, you know, as we work through the integration, you know, in the next couple of months, we'll have that ability. And then, you know, many of us have been through these integrations before.

Speaker Change: Some synergies and marketing spend will become much more efficient.

Speaker Change: Under one leader.

Speaker Change: And so as we work.

Keith Sullivan: As a matter of fact, I'm enthusiastic about the scale of the new organization will provide the opportunity to deliver a variety of positive benefits across our entire customer base. Firstly, through new marketing under development, we will significantly increase brand recognition for Neurostor. This enhanced visibility will help educate more patients about the benefits of our therapy space, which we expect will drive increased patient volume to our customer's practices. What is unique about this transaction is that it gives us the ability to expand training opportunities for our current customers on additional services we will now have the expertise to help operationalize within their practices.

Speaker Change: Through the integration. The next couple of months, we will have that ability.

Speaker Change: And then.

Stephen Furlong: So it's very important that on day one, you have your plan in place, and you take swift action to ensure that those synergies are realized as quickly as possible. So we're confident in the early assessment that the teams have completed that we'll be able to get there. And you know, again, the conversion of debt is one thing. You know, that was a great load off the combined entity. But really, you have to take costs out.

Speaker Change: Many of US have been through these integrations before so it's very important that on day. One you have your plan in place and you take Swift action to ensure that those synergies are realized as quickly as possible. So we're confident in the early assessment that the teams have completed.

Stephen Furlong: So it's very important that on day one, you have your plan in place and you take swift action to ensure that those synergies are realized as quickly as possible. So we're confident in the early assessment that the teams have completed that we'll be able to get there. And, you know, again, the conversion of debt is one thing; you know, that was a great load off the combined entity. But really, you have to take costs out. And, you know, if you don't, you know, it's usually the death of putting companies together. So, you know, our board made it very clear what they're looking for, you know, as we exit 24 into 25.

Stephen Furlong: So we're confident in the early assessment that the teams have completed that we'll be able to get there. And you know, again, the conversion of debt is one thing, that was a great load off the combined entity, but really, you have to take costs out. And you know, if you don't, it's usually the death of putting companies together.

That will be able to get there and again.

Speaker Change: The conversion of that is one thing that was a great load off the combined entity.

Stephen Furlong: And, you know, if you don't, you know, it's usually the death of putting companies together. So, you know, our board made it very clear what they're looking for as we exit 24 into 25. And, you know, the management team understands our goal isn't 15 million. You know, that's probably closer to the 2025 target.

Speaker Change: Really you have to take costs out and if you don't.

Speaker Change: It's usually the death of.

Speaker Change: Putting companies together so.

Stephen Furlong: So you know, our board made it very clear what they're looking for, you know, as we exit 24 into 25, and you know, the management teams understand that our goal isn't 15 million. You know, that's probably closer to the 2025 target. But again, you know, we're about three weeks past our LOI. So... We'll have some time in Q3 and Q4 and then hit the ground running upon the close of the transaction.

Speaker Change: Our board made it very clear what they're looking for as we exit 'twenty four into 'twenty five.

Keith Sullivan: This training will be through Neurostar University and hands-on partnership through our practice development managers. This includes comprehensive programs on how to effectively educate patients on medication management and spervato treatment alongside their existing TMS offering and incorporate these into their practices. This approach can help our customers provide more comprehensive care and potentially increase their revenue while working with trusted partner who is already intimately familiar with their operations. With the ability to offer expanded care solutions to our customers, we can also provide a number of other solutions to improve their business operations.

Stephen Furlong: And, you know, the management teams understand, you know, our goal is not 15 million. You know, that's probably closer to the 2025 target. But again, you know, we're about three weeks past our L.O.I. So, we'll have some time in Q3 and Q4 and then hit the ground running upon close to the transaction.

Speaker Change: And the management teams understand.

Speaker Change: Our goal is it's not $15 million.

Speaker Change: <unk> closer to the 2025 target.

Stephen Furlong: But again, you know, we're about three weeks past our L.O.I., so... We'll have some time in Q3 and Q4, and then hit the ground running upon close of the transaction. Our next question will come from the line of Bill Plovanic with Canaccordia. Hi guys, it's John.

Speaker Change: But again.

Speaker Change: We're about three weeks past our LOI so.

Speaker Change: We'll have some time in Q3 and Q4, and then hit the ground running upon close of the transaction.

Speaker Change: Yes.

Operator: Our next question will come from the line of Bill Plovanic with Canaccord.

John Young: Our next question will come from the line of Bill Plovanic with Canaccord. Hi guys, it's John on for Bill this morning. Thanks for your own question. Hey, good morning. Just first on the guidance deal, I'll touch there and then move to the merger. But, you know, so are the guidance to first, are you sending receivables for customers? And also, are you expecting a bolus given the expected blind down inventory? See, they were just mentioning? And is that bolus more reflected than in the Q4 and blind guidance? Or are you just expecting this to return to the level, even though you know reordering patterns and just customer's will carry a lower level inventory going forward?

Speaker Change: Our next question will come from the line of Bill <unk> with Canaccord.

John Young: Hi guys, it's John on for Bill this morning. Thanks for taking our questions. Hey, good morning.

Operator: I'm for Bill this morning. Thanks for the question. Hey, good morning.

Speaker Change: Hi, guys. This is John on for Bill. This morning, Thanks for taking my question.

John Young: You know, just first on the guidance. I'll touch that and then maybe move to the merger. But, you know, sir, on the guidance, first, are you extending receivables for customers? And also, you know, are you expecting a bolus given the expected wind-down inventory that you're just mentioning?

John Young: You know, just first on the guidance, you know, I'll touch on that and then maybe move to the merger. But, you know, sir, on the guidance too, first, are you extending receivables for customers? And also, you know, are you expecting a bolus given the expected wind-down inventory, Steve, as you were just mentioning? And is that bolus more reflected than in the Q4 implied guidance? Or are you just expecting a return to normal seasonal, you know, reordering patterns, and customers will carry a lower level of inventory going forward?

Speaker Change: Hey, good morning.

Keith Sullivan: Number one, pay-or-contracts. With the scale of Greenbrook and our BMP network which collectively represents approximately 350 customer sites, we'll have more leverage in negotiations with insurance companies to develop more favorable regional and national contracts which we would extend to our customer base. This could lead to greater reimbursement rates, potential improvement in the economics of TMS which would lead to increased practice profitability for our customers. In addition, this contracting leverage will apply to both mid-management and spervato which makes it easier for our customers to incorporate these into their practices.

Speaker Change: Just first on that guidance.

Speaker Change: Sure.

Speaker Change: Yes.

Speaker Change: The merger, but sorry on the guidance Q first are you extending receivables for customers and also are you expecting a bullish given the expected wind down inventory fee that you were just mentioning and as that bolus more reflected that in the Q4 implied guidance or are you just expecting it to return to its normal even though reordering.

Speaker Change: <unk> customers will carry a lower level of inventory going forward.

Stephen Furlong: You know, so we track inventory by site and, you know, we were comfortable with the inventory levels prior to the change, how care breach. And so we do think customers will ultimately revert back to that level. You know, again, they really do stock up in advance of the next quarter. And so we do see that happening. As far as receivables, again, it's all of our customers that were impacted. So it's not, you know, it's not like underperforming customers are having trouble paying us. Customers weren't getting reimbursed. And so, you know, you can only push so hard.

Stephen Furlong: You know, we track inventory by site, and we were comfortable with the inventory levels prior to the recent healthcare breach. And so we do think customers will ultimately revert back to that level. You know, again, they really do stock up in advance of the next quarter. And so we do see that happening.

John Young: And is that bolus more reflected in the big Q4 implied guidance? Or are you just expecting just a return to normal seasonal, you know, reordering patterns, and just customers will carry a lower level of inventory going forward? You know, we track inventory by site, and we were comfortable with the inventory levels prior to the Change Healthcare breach. And so, we do think customers will ultimately revert back to that level. You know, again, they really do stock up in advance of the next quarter.

Speaker Change: So we track inventory by site and we were comfortable with the inventory levels prior to the change healthcare breach and so we do think customers will ultimately be verde revert back to that level.

Keith Sullivan: Number two, reimbursement processing and billing. We'll also be able to offer more robust support in navigating the complex landscape of insurance reimbursement by providing billing services to our customers which could speed up the payment processing and reduce denied claims, allowing our customers to focus on what they do best, treating patients. Number three, improving revenue cycle management. By leveraging our combined expertise and resources, we can help our customers optimize their billing and collection process, potentially improving their cash flow and profitability. As an example, most current Greenbrook contracts require payment within 30 to 45 days, rather than the typical 90 days that most customers are forced to tolerate. Number four, access to a centralized call center.

Speaker Change: Again, they really do.

Stock up in advance of the next quarter and so we do see that happening.

Stephen Furlong: And so, we do see that happening. As far as receivables go, again, it's all of our customers that were impacted. So, it's not.

Stephen Furlong: As far as receivables, again, it's all of our customers that were impacted. So it's not like underperforming customers are having trouble paying us. Customers weren't getting reimbursed, and so you can only push so hard. We have great relationships with all of our customers, so we're never threatening in nature. You have to be respectful and work with them, and we totally understand the predicament they're in. And so, you know, we are at their mercy, and again, having such a strong collection month in July, I think, indicates there's always a willingness to pay for what they have purchased.

Speaker Change: As far as receivables.

Speaker Change: Again, it's all of our customers that were impacted.

Speaker Change: No it's not.

Stephen Furlong: It's not like underperforming customers are having trouble paying us. Customers weren't getting reimbursed, and so you can only push so hard. We have great relationships with all of our customers, so we're never threatening in nature. You have to be respectful and work with them, and we totally understand the predicament they're in. And so, we are at their mercy, and again, having such a strong collection month in July, I think indicates there's always a willingness to pay for what they buy. But if you don't have any money, there's not a whole lot either one of us can do.

Speaker Change: It's not like underperforming customers are having trouble paying us customers weren't getting reimbursed and so.

Speaker Change: You can only push so hard we have great relationship.

Stephen Furlong: We have a great relationship with all of our customers. So, you know, we're never threatening in nature. You have to, you know, be respectful and work with them. And we totally understand the predicament they're in. And so, you know, we are at their mercy. And again, you know, having such a strong collection month in July, I think indicates there's always a willingness to pay, you know, for what they purchased. But if you don't have any money in, there's not a whole lot either one of us can do. And so, you know, again, like I told Adam, we are expecting a good rebound in Q3.

Speaker Change: With all of our customers so.

We're never threatening in nature, you have to be respectful and work with them and we totally understand that predicament there in and so we are at their mercy and again, having such a strong collection month in July I think indicates theres always a willingness to pay.

Keith Sullivan: By leveraging Greenbrook's existing call center operation, we can help manage patient calls and education more efficiently, potentially increasing conversion rates and reducing the administrative burden required to meet the demand for TMS. This merger isn't about growing a stronger neuronetics, it's about creating an even more powerful ecosystem to enable our customers to provide better care, run more efficient practices, and ultimately treat more patients in need of mental health support.

Speaker Change: For what they purchased.

Stephen Furlong: But if you don't have any money in, there's not a whole lot either of us can do. And so, you know, again, like I told Adam, we are expecting a good rebound in Q3, and then, yeah, hopefully, a return to those normal inventories in the fourth quarter, which is why we kept the full-year guidance where it was.

Speaker Change: But if you don't have any money and theres not a whole lot either one of us can do.

Stephen Furlong: And so, again, like I told Adam, we are expecting a good rebound in Q3, and then, yeah, hopefully, a return to those normal inventories in the fourth quarter, which is why we kept the full-year guidance where it was. Great, thanks. And, you know, maybe for Keith, too, I know this question has been asked a couple of different ways already, but maybe another. It's nice to see both the revenue and the cost synergies that are being assumed in the pro-forma forecast here, but any additional color on that revenue growth and the mid-teens you're growing to, and maybe just any color on what a start-up employee at the end of 2024 will look Thanks again.

Speaker Change: And so.

Speaker Change: Again like I told Adam we are expecting.

Adam Nader: A good rebound in Q3.

Stephen Furlong: And then, yeah, hopefully a return to those normal inventories in the fourth quarter, which is why we kept the full year guidance. Where was that?

Speaker Change: And then yes, hopefully a return to those normal inventories in the fourth quarter, which is why we kept the full year guidance, where it was at.

John Young: Great. Thanks.

John Young: Great, thanks. And, you know, maybe for Keith, too. I know this question has been asked, you know, a couple of different ways already, but maybe another way.

Great. Thanks, and then maybe for Keith I know this question has been asked a couple of different ways already but.

John Young: And, you know, maybe for Keith too. I know this question's been asked; you know, a couple of different ways of writing. But maybe another way to ask it, just, you know, it's nice to see both the revenue and the cost syringes. They're being assumed in the pro-former forecast here. But, you know, any additional color on that revenue grows and shakes back to the mid-teens they're growing too.

John Young: It's nice to see both the revenue and the cost synergies that are being assumed in the proforma forecast here, but any additional color on that revenue growth and the mid-teens you're going to, and maybe just any color on what the starting point at the end of 2024 looks like for the combined companies? Thanks again.

Speaker Change: Another.

Keith Sullivan: When you ask it.

Keith Sullivan: Beyond the compelling strategic benefits this transaction offers to existing customers, there are compelling financial benefits for the combined company. Number one, increased revenue scale and strong growth trajectory. In fiscal year 2023, the performer revenue of the combined company would have been approximately $145 million, effectively doubling the scale of the standalone businesses. Additionally, the combined company expects mid-team year-over-year revenue growth in fiscal years 2025 and 2026. Number two, material cost energies. Through the optimization of marketing spend as well as back office functions, the combined company expects to be able to realize at least $15 million of annual cost savings, the majority of which will come in fiscal year 2025.

Keith Sullivan: I see both the revenue and the cost synergies are being assumed in the pro forma forecast here, but any additional color on that revenue growth in chicken.

Keith Sullivan: Number three, accelerated path to profitability, coming as a result of strong expected revenue growth and the realization of cost energies that combined company anticipates to be both adjusted EBITDA positive and cash low positive for full fiscal year 2025. And lastly, a bolstered balance sheet as a result of pre-transaction conversion of Greenbrook's debt into common shares. In combination with the scale of the business post acquisition, the consolidated company will be able to leverage and improve balance sheet to execute on a long term growth strategy.

Keith Sullivan: And maybe just any color on what does the starting point at the end of 2024 look like to combine companies? Thanks again.

Speaker Change: They're going to you and maybe just any color on what the starting point at the end of 2024. It look like for the combined company. Thanks again.

Keith Sullivan: So, John, the combined company for 2025. I'm not sure we want to give out guidance for that yet, but we are anticipating a 15 mid-teens, but 15 percent growth between the two companies for next year. That growth is going to come from opening up additional opportunities for Spervato and the balance of the Greenbrook accounts and by having marketing synergies that would be more efficient and generate more patience under one brand name instead of two. So I think that we are pretty comfortable that we are going to get to be able to drive greater business within the Greenbrook stores, and we also mentioned that we would provide uniform training across all of those stores so that they get a uniform experience.

Keith Sullivan: So John, the combined company for 2025. Yes. I'm not sure we want to give out guidance for that yet, but we are anticipating a 15, mid-teens, but 15 percent growth between the two companies for next year. That growth is going to come from opening up additional opportunities for Spravato in the balance of the Greenbrook accounts and by having marketing synergies that would be more efficient and generate more patients under one brand name instead of two.

Keith Sullivan: So John, the combined company for 2025. Yes.

Speaker Change: So John the.

Speaker Change: The combined company for 2025.

Speaker Change: Well.

Keith Sullivan: I'm not sure we want to give out guidance for that yet, but we are anticipating a 15, mid-teens, but 15 percent growth between the two companies for next year. That growth is going to come from opening up additional opportunities for Spravato in the balance of the Greenbrook accounts and by having marketing synergies that would be more efficient and generate more patients under one brand name instead of two. So, I think that we're pretty comfortable that we're going to be able to drive greater business within the Greenbrook stores. And we also mentioned that we would provide uniform training across all of those stores so that they get a uniform experience.

Speaker Change: I'm not sure we would we want to give out guidance for that yet.

Speaker Change: But we are anticipating a 15 mid.

Speaker Change: Mid teens, but 15%.

Speaker Change: Growth between the two companies for next year.

Speaker Change: That growth is going to come from opening up additional.

Opportunities forced bravado and the balance of the green broke accounts and by having marketing synergies that would.

Speaker Change: Be more efficient and generate more patients under one brand name instead of two so I think that we're pretty comfortable that we're going to get be.

Keith Sullivan: So I think that we're pretty comfortable that we're going to get, be able to drive greater business within the Greenbrook stores. And we also mentioned that we would provide uniform training across all of those stores so that they get a uniform experience. Great, thank you again.

Speaker Change: Be able to drive greater business within the Green bookstores.

Speaker Change: And we also mentioned that we would provide uniform training across all of those stores, so that they get a uniform experience.

Speaker Change: Great. Thank you again.

Keith Sullivan: Thanks, Sean.

John Young: Thank you, John. Our last question will come from the line of Danny Stauder with Citizens JMP. Yeah, great. Thanks.

Chuck: Thanks Chuck.

Danny Stauder: Our last question will come from the line of Danny Stauder with Citizens' JMP. Yeah, great, thanks. So just first on Greenbrook, you gave some great color on the benefits there, including marketing, peer contracts, as well as those to the financials. But I got more on a high level. Could you give us some broad strokes on what we should be thinking about as far as a real map here. What's the immediate focus? What's phase one? What's phase two?

Operator: Our last question will come from the line of Danny Stauder with Citizens JMP.

Chuck: Our last question will come from the line of Danny Stauder with citizens JMP.

Keith Sullivan: I am really excited about what Neuronetics and Greenbrook can accomplish together. We will be able to amplify brand awareness and with this unified approach boost brand recognition with the goal of making Neurostar the household name for TMS therapy. What this means is that all the Neurostar systems inside our customers practices will become even more recognizable to their patients making it easier to treat patients in need. We believe this transformative transaction brings together two of the leading mental health companies to create an organization with the ability to leverage its scale and capabilities to become the organization to provide innovative care. Solutions for practices looking to treat patients suffering from mental health conditions and ultimately deliver value to shareholders.

Daniel Stauder: Yeah, great. Thanks. So just first on Greenbrook, you gave some great color on the benefits there, including, you know, marketing, payer contracts, as well as the financials. But I guess, you know, just more on a high level, could you give us some broad strokes on what we should be thinking about as far as a roadmap here, you know, what's the immediate focus, what does phase one look like, what does phase two look like, any sense of a pecking order would be great as you begin your integration.

Operator: So just first on Greenbrook, you gave some great color on the benefits there, including, you know, marketing, payer contracts, as well as the financials. But I guess, you know, just more on a high level, could you give us some broad strokes on what we should be thinking about as far as a roadmap here, you know, what's the immediate focus, what does phase one look like, what does phase two look like, any sense of a pecking order would be great as you begin your integration. Yeah, Hey Danny, it's Steve.

Danny Stauder: Yeah, great. Thanks, So just first on Green Brook, you gave some great color on the benefits, there, including marketing payer contracts as well as those of the financials, but I guess just more on a high level could you give us some broad strokes on.

Speaker Change: What we should be thinking about as far as the roadmap here whats the immediate focus what's phase one look like what it's phase II looked like any sense of a pecking order as you begin your integration would be great.

Speaker Change: Thanks.

Steve Furlong: Yeah, Danny, it's Steve. You know, again, the teams, I guess in total, really haven't had a lot of time to converse about the integration plan and what the priorities will be. It was done at a high level between the leadership teams of both companies. You know, our first priority is getting to that $15 million synergy number. Again, you know, we want to be cash flow positive in 2025. And we also want to hit the ground running as soon as the deal closes. After that, it's really, you know, increasing the efficiency and utilization in the 120 or so Greenberg stores.

Daniel Stauder: You know, again, the... The teams... The teams...

Stephen Furlong: Yeah. Hey Danny, it's Steve.

Speaker Change: Yeah, Hey, Dan its Steve.

Speaker Change: Again.

Stephen Furlong: You know, again, the team. I guess, in total, we really haven't had a lot of time to converse about the integration plan and what the priorities will be. It was done at a high level between the leadership teams of both companies. You know, our first priority is getting to that $15 million Synergy number. Again, you know, we want to be cash flow positive in 2025, and we also want to hit the ground running as soon as the deal closes.

Speaker Change: The teams.

Stephen Furlong: I guess, in total, we really haven't had a lot of time to converse about the integration plan and what the priorities will be. However, it was done at a high level between the leadership teams of both companies. You know, our first priority is getting to that $15 million Synergy number. Again, we want to be cash flow positive in 2025, and we also want to hit the ground running as soon as the deal closes.

Speaker Change: I guess in total really haven't had a lot of time to converse about the integration plan and what the priorities will be it was done at a high level between the leadership teams of both companies.

Speaker Change: Our first priority is getting to that $15 million synergy number.

Operator: And with that, I would like to open the line for questions. As a reminder, if you'd like to ask a question at this time, please press star 1-1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 1-1 again. Please stand by where we compile the Q&A roster.

Speaker Change: Again, what we wanted to be cash flow positive in 2025.

And we also want to hit the ground running as soon as the deal closes.

Stephen Furlong: After that, it's really increasing the efficiency and utilization in the 120 or so Greenberg stores. You know, we've seen the impact of our Neurostar University training and education efforts on the Greenberg stores that were part of the BMP pilot program back earlier in the year. And so we know that our training, when applied across the board to all the stores, will have a pretty significant impact on utilization and revenue.

Speaker Change: After that it's really increasing the efficiency and utilization in the 120 years, So greenberg stores.

Steve Furlong: You know, we've seen the impact of our NeuroStar university training and education efforts. You know, on the Greenberg stores that were part of the BMP pilot program back earlier in the year. And so we know that our trainings, one applied across the board to all the stores, will have a pretty significant impact on utilization and revenue. And again, you know, with the revised capital structure of the companies, you know, it will enable for Greenberg to continue with their provider rollout, which today has been very impressive. So, you know, cost synergies will be the top priority.

Speaker Change: We've seen the impact of our Neurostar University training and education efforts.

Malgorzata Andrew: Our first question will come from the line of Margaret Andrew with William Blair. Hey, good morning, everyone. Thanks for taking the questions.

Speaker Change: On the Greenberg stores that were part of the BMP pilot program.

Speaker Change: Earlier in the year.

Speaker Change: So we know that our trainings went.

Keith Sullivan: Maybe two for me, one on the acquisition and one on the change health care dynamics. Maybe I'll start with change health care. I guess can you provide us any additional metrics to support that this is in fact an isolated event and that other centers maybe that weren't impacted by change or continuing to grow? And that is we think about Q3 going forward. When is that turn expected to happen? And it's lingering maybe a little bit longer than certainly we expected and maybe use.

Speaker Change: When applied across the board to all the stores.

Speaker Change: Well have a pretty significant impact on utilization and revenue.

Stephen Furlong: And again... With the revised capital structure of the companies, you know, it will enable Greenbrook to continue with their bravado rollout, which today has been very impressive. So, you know, cost synergies will be the top priority. Second, there will be revenue synergies. And then, again, there is going to be the continued expansion of the BMP program. You know, we still only have, well, not only, but we have 300 sites in the program now.

Stephen Furlong: And again... With the revised capital structure of the companies, it will enable Greenbrook to continue with their bravado rollout, which to date has been very impressive. So, you know, cost synergies will be the top priority. Second, there will be revenue synergies. And then, again, there is going to be the continued expansion of the BMP program. You know, we still only have, well, not only, but we have 300 sites in the program now.

Speaker Change: And again.

Speaker Change: With the revised capital structure of the companies.

Speaker Change #100: It will enable to enable for green brick to continue with their <unk>.

Speaker Change: Provide a rollout.

Speaker Change: To date has been very impressive.

Speaker Change: Cost synergies will be the top.

Keith Sullivan: Second will be the revenue synergies. And then again, it's going to be the continued expansion of the BMP program. You know, we still only, well, not only, but we have 300 sites in the program now. And the goal continues to be to roll that out and make sure, you know, the customers that aren't in it realize the benefits behind being part of the program. You know, our partners in the BMP are just wildly successful and have really increased their utilization and overall business performance. And so I think it's those three priorities that, you know, will really create a successful company post-integration or post-close.

Speaker Change: Top priority second will be the revenue synergies.

Keith Sullivan: Well. Thanks, Margaret, this is Keith. So, as you know, we look at metrics each week in my staff call, and we can see the utilization as it continues to grow. We also can look at the inventory that each of our customers has. And so, we are seeing positive trends in both of those, and feel comfortable that Q3 will hit the guidance that we have laid out. So, I think, you know, the information that we get on change health care is that they focus first on the pharmacy, then the hospitals, then large groups, and then private physicians. And, you know, our information is that they are working their way to the private physicians. So, we anticipate over the next few months by the end of the year, it will be back to normal.

Speaker Change: And then again, it's going to be the continued expansion of the BMP program.

Speaker Change: We still only well not only but we have 300.

Stephen Furlong: And the goal continues to be to roll that out and make sure, you know, the customers that aren't in it realize the benefits of being part of the program. You know, our partners in the BMP are just wildly successful and have really increased their utilization and overall business performance. And so, I think it's those three priorities that will really create a successful company post-integration or post-close. Danny, on the commercial front, you know, I mentioned that the expansion of Spravato and the balance of the stores at Greenbrook is a key priority.

Stephen Furlong: And the goal continues to be to roll that out and make sure, you know, the customers that aren't in it realize the benefits of being part of the program. You know, our partners in the BMP are just wildly successful and have really increased their utilization and overall business performance. And so I think those three priorities will really create a successful company post-integration or post-close. Thank you.

Speaker Change: And the programme now and the goal continues to be to roll that out and make sure the customers that arent and realize the benefits behind being part of the program.

Speaker Change #101: Our partners in the BNP, just wildly successful and it really increased.

Speaker Change #101: Their utilization and overall business performance and so I think it's those three.

Priorities that.

Speaker Change #101: Well really create a successful company.

Danny Stauder: Post integration or post close Danny.

Keith Sullivan: Danny, on the commercial front, you know, I mentioned that the expansion of Spravado into the balance of the stores at Greenbrook is a key priority. But there are also some good learning that we have on both sales organizations. Greenbrook has done an excellent job of generating awareness within primary care and physicians' offices that treat patients with depression, but aren't willing or aren't interested in getting into the PMS treatment themselves. And they've been able to educate those offices and the patients, and then have them sent to the Greenbrook sites. We have that opportunity for our current customers also.

Keith Sullivan: Danny, on the commercial front, you know, I mentioned that the expansion of Spravato into the balance of the stores at Greenbrook is a key priority. But there are also some good learnings that we have from both sales organizations.

Speaker Change #102: The commercial front.

Speaker Change #103: I mentioned that the expansion of <unk> into the balance of the stores that Green Brook is a key priority, but there are also some good learnings that we have on our boat sales organizations Greenberg has done a.

Stephen Furlong: But there are also some good learnings that we have from both sales organizations. Greenbrook has done an excellent job of generating awareness within primary care and physician offices that treat patients with depression but aren't willing or aren't interested in getting into the TMS treatment themselves.

Keith Sullivan: Okay. And then, you know, as we think about the merger, I guess, why is this the right time versus waiting in other years? So, and then, you know, as we think about capital allocation opportunities between the two companies, will you continue to spend equally kind of on the corner or not franchise, especially with kind of move towards the adolescent opportunity? Are you going to keep building out or acquiring new clinics, just trying to get a sense of what we expect from both the growth profile from the two franchises, and then, like I said, capital allocation. Thank you.

Keith Sullivan: Greenbrook has done an excellent job of generating awareness within primary care and physician's offices that treat patients with depression but aren't willing or aren't interested in getting into the TMS treatment themselves. And they've been able to educate those offices and the patients and then have them sent to the Greenbrook site. We have that opportunity for our current customers also, so we will have learnings from the Greenbrook team on how we can educate our PDMs to do the same thing for our existing customers.

Speaker Change #104: An excellent job of generating awareness within primary care and physician offices that treat patients with depression, but.

Speaker Change #105: Aren't willing or arent interested in getting into the Tms treatment themselves and they've been able to Ajay.

Keith Sullivan: And they've been able to educate those offices and the patients and then have them sent to Greenbrook. We have that opportunity for our current customers, also. So, we will learn from the Greenbrook team on how we can educate our PDMs into doing the same thing for our existing customers. And it turns out to be not only a great source of patients that are looking for help, but they are also the patients that have the highest conversion rate within the Greenbrook system. So, I think, from a commercial standpoint with Bill and with Sarah Grubbs and her team, this is a huge opportunity for us to drive greater growth. No, that was great.

Speaker Change #105: Educate those offices and the patients.

Speaker Change #105: And and then have them sent to the Green Brook sites, we have that that opportunity for our current customers also so we will have learnings from the green brick team on how we can educate our pbms into doing the same thing for our existing.

Keith Sullivan: So we will have learnings from the Greenbrook team on how we can educate our PDMs into doing the same thing for our existing customers. And it turns out to be not only a great source of patients that are looking for help, but they are also the patients that have the highest conversion rate within the Greenbrook system. So I think, you know, from a commercial standpoint with Bill and with Sarah Grubbs and her team, this is a huge opportunity for us to drive greater growth. No, that was great.

Keith Sullivan: And it turns out that not only are patients looking for help, but they are also the patients that have the highest conversion rate within the Greenbrook system. So I think, you know, from a commercial standpoint with Bill and with Sarah Grubbs and her team, this is a huge opportunity for us to drive greater growth.

Speaker Change #105: <unk> and it turns out to be not only a great source of patients that are looking for help but they are also the.

Keith Sullivan: With the combination of Neuronetics and Greenbrook, we can actually help our accounts further by actually doing some of these things, doing billing for them, helping them answer their phones by offering the call center service, and it would be transparent to them answering the phone as though we're their own office. So, I think, you know, we have evolved the business to the point where we have identified all the pain points in the industry that our customers experience on a daily basis, and now we have, cannot only teach them how to solve those problems, but for those who want further help, we can do it for them. Okay, and that's the capital allocation part on behalf of Greenbrook.

Speaker Change #105: Patients that have the highest conversion rate within the green broker system.

Speaker Change #105: I think.

Bill Leonard: From a commercial standpoint, with bill and with Sarah Grubs and her team. This is a huge opportunity for us to drive greater growth.

Daniel Stauder: No, that was great. I appreciate all that extra color and commentary. Just just one follow-up for me, just in terms of average revenue per active site, it stepped down a little bit in the quarter. But obviously, that's due to some of that change in health care disruption. Could you just remind us of what you feel is your sustainable long-term level here, you know, excluding some of these headwinds? What's the level that you think about as far as just, you know, a normalized level here per site? Thank you.

Daniel Stauder: I appreciate all that extra color and commentary. Just one follow up for me, just in terms of average revenue per active site, step down a little bit in the quarter. But obviously, that's due to some of that change in health care disruption. Could you just remind us what you feel is your sustainable long-term level here, you know, excluding some of these headwinds? What's the level that you think about as far as just, you know, a normalized level here per site?

Danny Stauder: I appreciate all that extra color and commentary. Just one follow-up for me, just in terms of average revenue for active site, step down a little bit in the quarter, but obviously that's due to some of that change health care disruption.

No that was great I appreciate all that extra color and commentary just just one follow up for me just in terms of average revenue per active side stepped.

Speaker Change #106: Stepped down a little bit in the quarter, but obviously, that's due to some of that change healthcare disruption could you just remind us on what you feel is your sustainable long term level here. Excluding some of these headwinds what's the level that you would think about as far as system.

Keith Sullivan: Could you just remind us on what you feel is your sustainable long-term level here, excluding some of these headwinds. What's the level that you think about as far as just a normalized level here per site? Thank you.

Speaker Change #106: Normalized.

Speaker Change #107: Look your per site. Thank you.

Keith Sullivan: Our goal is to get all of our customers, Neurostars. You know, took capacity. So that would be roughly seven to eight patients per day. And so, you know, from a CFO perspective, I would like to see revenue per site, you know, 15 to 17,000 a quarter. Again, we're seeing those types of levels with our BMP part partners. So, you know, am I 100% confident? We'll get there. No, but I do think there's a lot of runway going from 10 to even 15. That is very possible.

Stephen Furlong: I mean, our goal is to get all of our customers, Neurostars, you know, to capacity, so that would be roughly seven to eight patients per day. And from a CFO perspective, I would like to see revenue per site at $15,000 to $17,000 a quarter.

Daniel Stauder: Thank you. I mean, our goal is to get all of our customers, Neurostars, you know, to capacity. So that would be roughly seven to eight patients per day. And so... From a CFO perspective, I would like to see revenue per site at $15,000 to $17,000 a quarter.

Speaker Change #108: I mean, our goal is to get all of our customers Neurostar is.

Speaker Change #109: To capacity, so that would be roughly seven to eight patients per day.

Speaker Change #109: So.

Speaker Change #110: From a CFO perspective, I would like to see revenue per site.

Speaker Change #109: No.

Speaker Change #111: 15 to 17000.

Speaker Change #111: <unk>.

Stephen Furlong: Again, we're seeing those types of levels with our BNP partners. You know, am I 100% confident we'll get there? No, but I do think there's a lot of runway going from 10 to even 15. That is very possible. And again, that's going to be our focus in 2025, to help our BNP customers and also the 120 Greenberg stores really increase their utilization.

Speaker Change #111: Again, we're seeing those types of levels with our BNP partners.

Speaker Change #111: So.

Speaker Change #111: 100% confident we will get there.

Speaker Change #111: No, but I do think there's a lot of runway going from 10 to even 15.

Keith Sullivan: Hi, Margaret. I think the critical answer to why I do it now was really Greenbrook's lenders willingness to convert their roughly $140 million in debt to common shares. Obviously with our debt load of just $50 million now, supporting the combined companies, it's really a financial game change for us. Obviously, the revenue ratio is much stronger and with perceptive, we do have the ability for additional branches if necessary. But again, from my perspective, it was really that variable which turned the tables and really changed our minds to do this now as opposed to waiting another year or another two.

Speaker Change #111: It's very possible.

Danny Stauder: And again, that's going to be our focus in 2025 is to help our BMP customers and also the 120 Greenberg stores really increase their utilization. Great. Thank you very much.

Stephen Furlong: And again, that's going to be our focus in 2025 to help our BNP customers and also the 120 Greenberg stores really increase their utilization. Great. Thank you very much. Thanks, Dan. That concludes today's question and answer session. I'd like to turn the call back to Keith Sullivan for closing remarks. Thank you, Operator, and thank you, everybody, for joining us today. We look forward to updating you on the progress or...

And again thats going to be our focus.

Speaker Change #111: In 2025 is to help our BMP customers and also the 120 Greenberg stores really increase their utilization.

Daniel Stauder: Great, thank you very much.

Speaker Change #112: Great. Thank you very much.

Danny Stauder: Thanks, Danny.

Thanks Danny.

Keith Sullivan: That concludes today's question and answer session. I'd like to turn the call back to Keith Sullivan for closing remarks.

Operator: That concludes today's question and answer session. I'd like to turn the call back to Keith Sullivan for his closing remarks. Thank you.

Speaker Change #113: That concludes today's question and answer session I would like to turn the call back to Keith Sullivan for closing remarks.

Keith Sullivan: Thank you, operator, and thank you everybody for joining us today. We look forward to updating you on the progress during our next quarterly call.

Keith Sullivan: Thank you, operator. And thank you, everybody, for joining us today. We look forward to updating you on the progress during our next quarterly call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Keith Sullivan: <unk> you operator, and thank you everybody for joining US today, we look forward to updating you on the progress during our next quarterly call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Speaker Change #114: This concludes today's conference call.

Speaker Change #115: Thank you for participating you may now disconnect.

Speaker Change #115: Okay.

Speaker Change #115: [music].

Keith Sullivan: So Margaret, our initial focus with Greenbrook and this has been the discussion with Bill Leonard in his team is to expand utilization in each one of their existing centers. So at this point, there isn't a plan to build additional brick and mortar or to buy other sites. It's really to be able to take them from where they are today and get their current stores and systems up to full utilization.

Malgorzata Andrew: Okay, I'll leave it there for now. Thanks, guys. Thanks, Margaret.

Adam Maeder: Our next question will come from the line of Adam Mayter with Piper Sandler.

Steve Furlong: I keep these things for taking the questions and congrats on the Greenbrook merger. Just one quick one for me I guess to start would be, are you able to quantify the impact in the quarter from the change healthcare cyber security issue? I mean, yes, it was pretty much all of the mess. So we would say in that two million dollar range, Adam, what we saw is during the quarter, our utilization across all of our customer segments was up nicely, you know, high double digit teens to low 20% year over year.

Steve Furlong: What we found is, you know, with the cash flow issues our customers had, you know, where they would traditionally place a medium to large size order at quarter and to support the next quarter's patient flow is, there was a purchasing pattern change where they held off and really just, you know, worked through some of the inventory that they had on the track star and really I would say depleted what would be their normal operating inventory levels. And so that really impacts revenue.

Steve Furlong: But, you know, to my earlier point, the utilization, you know, is still, you know, up significantly year over year. And so that's why, you know, we left the year in guidance alone, the patients are still there, you know, they may have been slowed down a little bit with the prior off. But, you know, from what we're hearing from our customers, you know, the QIS poll and, you know, ultimately the historic purchasing patterns will, and come back into play.

Steve Furlong: That's helpful, Steve, and you know, could kind of segue into the next question, which is, you know, just wanted to task a little bit more about the guidance and the back half outlook. And I guess if I heard Keith's comments earlier to Mark this question, you know, as it relates to the Q3 guidance, you know, it sounds like you're pretty comfortable with the 18 and a half to 19 and a half million outlook that you've provided.

Steve Furlong: And that's informed on kind of what you've seen thus far six weeks of the quarter. Just wanted to, I guess, ensure that I'm thinking about that correctly. And then as it relates to Q4, you know, the implied guide there is, you know, a pretty steep ramp. It's a sizable number. So, you know, I'm just, you know, even with normalized trends. So just wondering if there's anything that's contemplated there for adolescents, residual revenue contribution from Greenbrook.

Steve Furlong: Just, you know, help us get a little bit more comfortable with the outlook for Q3 and Q4. And then I'd want to follow up. Thanks. I would say Adam that we're very comfortable with Q3. And there is a balance between, you know, the Q3 expectation and, you know, what's implied for Q4. We didn't want to get ahead of ourselves with the Q3 number. But again, I would say we're very comfortable with that.

Steve Furlong: You know, one key data point for us is collections. And we did see a pretty good rebound the last couple weeks of June. My collection team was able to bring in impressive amount of money. And then July was our highest collection month since 2023 in the fourth quarter. And so that gives us, you know, some confidence that our customers are getting their claims reimbursed. And they do have cash coming into their business.

Steve Furlong: So, you know, what I like to throw it up at a $20 million Q3 and then a little less on Q4, yeah. But given that, you know, the still time left in the quarter, I think, will we set it? Make sense. And again, our comfort level is pretty strong. Thanks for the color there.

Keith Sullivan: And if I could squeeze in just one more, guys, just on Greenbrook. You know, the deal obviously makes sense strategically. But was hoping you could maybe speak a little bit more about some of the deals, energies that you referenced. You know, both the mid teams, revenue growth that you expected to combine and be in 25 and 26. You know, that's an acceleration versus standalone or analytics would love to hear a little bit more about that and then just anything on the cost energies that you'd like to touch on as well. Thanks for taking the questions. Thanks, Adam.

Steve Furlong: Yeah, this was a key point with our board of directors. You know, it's no surprise that both companies were losing money. But, you know, the $15 million that we stated is really, you know, the initial take on the synergies between the two companies. You know, we have the obvious ones, you know, the GNA, vendor spend systems, you know, the B-SIM synergies in marketing spend, you know, will become much more efficient under one leader.

Steve Furlong: And so, you know, as we work through the integration, you know, the next couple of months will have that ability. And then, you know, many of us have been through these integrations before. So it's very important that on day one, you have your plan in place and you take swift action to ensure that those synergies are realized as quickly as possible. So we're confident in the early assessment that the teams have completed that we'll be able to get there.

Steve Furlong: And, you know, again, the conversion of debt is one thing, you know, that was a great load off the combined entity. But really, you have to take costs out. And, you know, if you don't, you know, it's usually the death of putting companies together. So, you know, our board made it very clear what they're looking for, you know, as we exit 24 into 25. And, you know, the management teams understand, you know, our goal is it's not 15 million.

Steve Furlong: You know, that's probably closer to the 2025 target. But again, you know, we're about three weeks past our L.O.I. So, We'll have some time in Q3 and Q4 and then hit the ground running upon close to the transaction.

Bill Plovanic: Our next question will come from the line of Bill Plovanic with Canacord.

John: Hi guys, it's John on for Bill this morning, thanks for your own question. Hey good morning, just first on the guidance deal, I'll touch there and then move to the merger. But, you know, so are the guidance to first, are you sending receivables for customers? And also, are you expecting a bolus given the expected blind down inventory, see they were just mentioning? And is that bolus more reflected than in the Q4 and blind guidance?

John: Or are you just expecting this to return to the level, even though, you know, reordering patterns and just customer's will carry a lower level inventory going forward? You know, so we track inventory by site and, you know, we were comfortable with the inventory levels prior to the change, how care breach. And so we do think customers will ultimately revert back to that level. You know, again, they really do stock up in advance of the next quarter.

John: And so we do see that happening. As far as receivables, again, it's all of our customers that were impacted. So it's not, you know, it's not like underperforming customers are having trouble paying us. Customers weren't getting reimbursed. And so, you know, you can only push so hard. We have great relationship with all of our customers. So, you know, we're never threatening in nature. You have to, you know, be respectful and work with them.

John: And we totally understand the predicament they're in. And so, you know, we are at their mercy. And again, you know, having such a strong collection month in July, I think indicates there's always a willingness to pay, you know, for what they purchased. But if you don't have any money in, there's not a whole lot either one of us can do. And so, you know, again, like I told Adam, we are expecting a good rebound in Q3. And then, yeah, hopefully a return to those normal inventories in the fourth quarter, which is why we kept the full year guidance. Where was that? Great. Thanks.

Keith Sullivan: And, you know, maybe for Keith too. I know this question's been asked, you know, a couple of different ways of writing. But maybe another way to ask it, just, you know, it's nice to see both the revenue and the cost Syringes. They're being assumed in the pro-former forecast here. But, you know, any additional color on that revenue grows and shakes back to the mid-teens they're growing too. And maybe just any color on what does the starting point at the end of 2024 look like to combine companies?

Keith Sullivan: Thanks again. So, John, the combined company for 2025. I'm not sure we want to give out guidance for that yet, but we are anticipating a 15 mid-teens but 15 percent growth between the two companies for next year. That growth is going to come from opening up additional opportunities for Spervato and the balance of the Greenbrook accounts and by having marketing synergies that would be more efficient and generate more patience under one brand name instead of two.

Keith Sullivan: So I think that we are pretty comfortable that we are going to get to be able to drive greater business within the Greenbrook stores and we also mentioned that we would provide uniform training across all of those stores so that they get a uniform experience.

John: Great, thank you again. Thanks, Sean.

Steve Furlong: After that, it's really, you know, increasing the efficiency and utilization in the 120 or so Greenberg stores. You know, we've seen the impact of our neurostar university training and education efforts. You know, on the Greenberg stores that were part of the BMP pilot program back earlier in the year. And so we know that our trainings, one applied across the board to all the stores, will have a pretty significant impact on utilization and revenue.

Steve Furlong: And again, you know, with the revised capital structure of the companies, you know, it will enable for Greenberg to continue with their provider rollout, which today has been very impressive. So, you know, cost synergies will be the top priority. Second will be the revenue synergies. And then again, it's going to be the continued expansion of the BMP program. You know, we still only, well, not only, but we have 300 sites in the program now.

Steve Furlong: And the goal continues to be to roll that out and make sure, you know, the customers that aren't in it realize the benefits behind being part of the program. You know, our partners in the BMP are just wildly successful and have really increased their utilization and overall business performance. And so I think it's those three priorities that, you know, will really create a successful company post-integration or post-close. Danny, on the commercial front, you know, I mentioned that the expansion of Spravado into the balance of the stores at Greenbrook is a key priority.

Steve Furlong: But there are also some good learning that we have on both sales organizations. Greenbrook has done an excellent job of generating awareness within primary care and physicians offices that treat patients with depression, but aren't willing or aren't interested in getting into the PMS treatment themselves. And they've been able to educate those offices and the patients and then have them sent to the Greenbrook sites. We have that opportunity for our current customers also.

Steve Furlong: So we will have learnings from the Greenbrook team on how we can educate our PDMs into doing the same thing for our existing customers. And it turns out to be not only a great source of patients that are looking for help, but they are also the patients that have the highest conversion rate within the Greenbrook system. So I think, you know, from a commercial standpoint with Bill and with Sarah Grubbs and her team, this is a huge opportunity for us to drive greater growth.

Steve Furlong: No, that was great. I appreciate all that extra color and commentary. Just one follow-up for me just in terms of average revenue for active site, step down a little bit in the quarter, but obviously that's due to some of that change health care disruption. Could you just remind us on what you feel is your sustainable long-term level here, excluding some of these headwinds. What's the level that you think about as far as just a normalized level here per site?

Steve Furlong: Thank you. Our goal is to get all of our customers, Neurostars, you know, took capacity. So that would be roughly seven to eight patients per day. And so, you know, from a CFO perspective, I would like to see revenue per site, you know, 15 to 17,000 a quarter. Again, we're seeing those types of levels with our BMP part, partners. So, you know, am I 100% confident? We'll get there. No, but I do think there's a lot of runway going from 10 to even 15. That is very possible. And again, that's going to be our focus in 2025 is to help our BMP customers and also the 120 greenberg stores really increase their utilization. Great. Thank you very much. Thanks, Danny.

Operator: That concludes today's question and answer session.

Keith Sullivan: I'd like to turn the call back to Keith Sullivan for closing remarks. Thank you, operator. And thank you, everybody, for joining us today.

Keith Sullivan: We look forward to updating you on the progress during our next quarterly call.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect.

Q2 2024 Neuronetics Inc Earnings Call

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