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Good day, and thank you for standing by. Welcome to the Neuronetics First Quarter 2025 Financial and Operating Results Conference Call. At this time, all participants are in a listen-only mode. After the speaker’s presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. I would now like to hand the conference over to your first speaker today, Mark Klausner. Please go ahead.

Good morning, and thank you for joining us for the Neuronetics first quarter 2025 conference call. Joining me on today’s call are Neuronetics’ President and Chief Executive Officer, Keith Sullivan; and Chief Financial Officer, Steve Furlong. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance, the Greenbrook acquisition 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. 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 annual report on Form 10-K, which will be filed later in March. 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 EBITDA. 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. 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, everyone, and thank you for joining the call today. Let me start with our performance in the quarter, which represents our first full quarter inclusive of Greenbrook's financial results. Total revenue was $32 million an increase of 84% over the first quarter of 2024. On a pro form a basis, total revenue increased 7% over pro forma revenue of $29.8 million for the first quarter of 2024. During the quarter, NeuroStar system revenue was $2.8 million with 31 systems shipped. U.S. treatment session revenue was $9.6 million and U.S. Clinic revenue, which represents Greenbrook revenue, was $18.7 million. Reflecting continued positive momentum following our transformative 2024. I'd like to give you an overview of our strategic priorities for 2025 and our progress on them in the first quarter. As we move through 2025, we are focused on two clear strategic priorities: Number one, executing our Greenbrook integration and growth strategy and number two, continuing to scale our Better Me Provider or BMP program. Beginning with Greenbrook, we are focused on three key initiatives. First, the optimization of our regional account manager or RAMs. Following their comprehensive training at NeuroStar University in November, our RAM team is successfully implementing the new automated patient transfer process. The educational tools, QR codes and coordinated intake team are allowing us to connect with patients more effectively while they are still at their referring physician's office, significantly improving conversion rates. Second, the rollout of SPRAVATO. SPRAVATO is now offered as a treatment option in 75 of our 95 Greenbrook clinics, up from 35 clinics at the beginning of the quarter. This represents 75% of the Greenbrook network with implementation progressing on schedule. In 42 of these clinics, we have begun treating patients using the Buy & Bill model, which is already delivering the expected revenue improvements. Buy & Bill treatments are generating approximately 3x the revenue compared with the administer and observe model. We remain on track to offer Buy & Bill SPRAVATO in all appropriate Greenbrook clinics by the end of 2025. Third is the standardization of operations across the Greenbrook network. We have continued to execute well against this objective, with patient coordinators now placed in the majority of our clinics, enabling more effective in-person consultations. These coordinators are crucial in educating patients on the benefits of NeuroStar TMS and SPRAVATO treatments. Our training programs to ensure consistent patient experiences continue to show positive results. We have also made significant improvements to Greenbrook's revenue cycle management, including changes in leadership and transitioning to AdvancedMD patient record billing platform, which is already enhancing our operational efficiency. Within our Greenbrook network, total clinic revenue was approximately $196,000 in Q1 of 2025 compared to approximately $139,000 in Q1 of 2024, a 41% increase. This increase was driven by optimization of our clinic footprint and strong NeuroStar TMS performance at the Greenbrook Clinic in the quarter. On the same clinic basis, NeuroStar TMS revenue increased 8% versus last year as a result of the actions described above. Our combined company cost synergy realization remains on track. As we integrated the Greenbrook operations, we have continued to identify and realize synergies. When we initially announced the transaction, we had identified $15 million of expected annualized synergies. After closing, by the end of 2024, we had identified approximately $22.5 million of annualized synergies. I'm pleased to report that 95% of these were realized by the end of 2024. As we continue to integrate operations, we are actively looking for additional synergy opportunities and currently believe that total realized synergies will exceed $23 million. These efficiencies, combined with our revenue growth initiatives, keep us on path towards achieving cash flow positivity in the third quarter of this year as we have previously guided. Our second strategic priority is the ongoing expansion of our BMP program across our customer base. As a reminder, BMP sites are those who agree to meet our patient responsiveness and educational standards. The program continues to gain momentum. We currently have over 385 active sites with another 110 sites currently working to achieve the program standards. Our practice development manager team, or PDMs, are making significant progress in teaching these sites how to meet the remaining standards needed to qualify for the program. As a result, we expect a steady flow of new sites to enter the program over the coming enrollment periods this year. The performance metrics of BMP sites continue to validate the efficacy of the program, with these locations consistently helping more patients and delivering care faster. Once practices are fully in the BMP program, they treat three times more patients per site per quarter than practices who are not in the program. On average, these BMP sites go from treating three patients per quarter to over 10 patients per quarter. In addition, customer sites that participate in the BMP program are addressing patient needs about two times faster when comparing results of Q1 2025 to Q1 2024. The outcomes demonstrated by BMP validate the lasting benefits of our model for teaching practices and better serve their patients with NeuroStar. Accordingly, we continue to focus our efforts supporting these BMP practices based on their commitment to patient responsiveness and advanced training. Importantly, we have observed that treatment session utilization is outpacing purchases at these sites, indicating strong patient flow and utilization of existing equipment. Based on Greenbrook's success in educating primary care physicians and non-interventional psychiatrists about our advanced treatment options, we have recently launched the NeuroStar Connection Network, through which our PDMs are building awareness of the NeuroStar TMS among 69% of patients with depression being treated within primary care. In these conversations, we give primary care physicians the option of working with our NeuroStar provider in their area, including our BMP sites. This is a critical development in our strategy to expand patient access to NeuroStar TMS treatment. It should be no surprise that primary care providers prefer BMP sites, who are committed to our patient responsiveness and education standards. So we have quickly seen BMP providers form the backbone of this program. The standard protocols and consistent patient experience at BMP sites give referring physicians confidence that their patients will receive high-quality care and remission rates that are unachievable with antidepressants. Early data indicates that practices participating in the BMP program are seeing a meaningful increase in patients from local primary care networks, further validating the value of the comprehensive approach to patient care. Now for some updates on other marketing initiatives. Starting with our targeted TV marketing campaigns. In the fall of 2024, we ran a successful campaign in Tampa, Florida that doubled awareness despite being interrupted by two hurricanes that hit the area during the campaign. Our mission to elevate consumer awareness of the NeuroStar brand continues to gain momentum through the targeted offline media programs, which include radio, TV and billboards. In late March, we launched a six-week TV campaign in the Baltimore area, reaching over a million viewers and laying the groundwork for broader market impact. Within the first two weeks of the campaign, preliminary results have been very encouraging as we are seeing 2.5 times more NeuroStar brand search impressions on Google and neurostar.com compared to the searches prior to the start of the campaign. Over 100 potential patients have requested consultations, and we expect this number to grow as the campaign reaches more viewers in the coming weeks. Additionally, our co-op marketing program continues to drive measurable results. Accounts who participated in co-op in the prior two consecutive quarters showed a 20% uplift in utilization and an 18% uplift in motor thresholds in Q1 of 2025 compared to Q1 of 2024. Another key growth driver continues to be the adolescent treatment capability. Since receiving FDA clearance in March of 2024 as the first CMS treatment approved for depression in adolescents aged 15 to 21, we have seen meaningful traction in this segment. The number of adolescent patients receiving treatment has grown 38% in the first quarter of 2025 versus the first quarter of 2024. With the total number of adolescent patients aged 15 to 17 treated in Q1 of 2025, exceeding all the patients treated in the full year of 2023. We are seeing encouraging adoption rates across our provider network and insurance coverage for the adolescent NeuroStar TMS treatment continues to improve significantly with EverNorth Health Services, a Cigna Group subsidiary, recently expanding NeuroStar TMS coverage to include adolescents 15 and older with MDD. Joining our major insurers like Humana, Aetna and several Blue Cross Blue Shield entities that have updated policies since our FDA clearance as the first first-line add on treatment for adolescent MDD. In summary, our first quarter performance demonstrates that strategic initiatives we implemented through 2024 are driving tangible results. Our integrated business model, combining innovative technology with a robust care delivery network, positions us to expand access to effective mental health treatments, while improving our growth trajectory and financial performance. I will now turn the call over to Steve to review our financial results.

Thank you, Keith. Unless otherwise noted, all performance comparisons are being made for the first quarter of 2025 versus the first quarter of 2024. Total revenue was $32 million an increase of 84% compared to the revenue of $17.4 million in the first quarter of 2024, primarily driven by the Greenbrook acquisition. U.S. NeuroStar Advanced Therapy System revenue was $2.8 million and we shipped 31 systems in the quarter. U. S. Treatment session revenue was $9.6 million a decrease of 26% year-over-year, primarily due to the elimination of Greenbrook revenue in our 2025 results. U.S. Clinic revenue, which represents revenue generated by treatment centers from the Greenbrook acquisition, was $18.7 million for the three months ended March 31, 2025. Gross margin was 49% compared to 75% in the prior year quarter. This change in gross margin was primarily a result of the inclusion of Greenbrook's clinic business, which operates at a lower margin and the elimination of Greenbrook treatment session revenue. Operating expenses during the quarter were $26.8 million an increase of $6.9 million or 35% compared to $19.9 million in the first quarter of 2024. The change was mainly attributable to the inclusion of Greenbrook's operating expenses of $9.5 million. During the quarter, we incurred approximately $1.4 million of non-cash stock-based compensation expense. Net loss for the quarter was negative $12.7 million or negative $0.21 per share as compared to a net loss of negative $7.9 million or negative $0.27 per share in the prior year quarter. EBITDA was negative $10.1 million as compared to negative $6.3 million in the prior year quarter. As of March 31, 2025, cash and cash equivalents were $20.2 million. This compares to cash and cash equivalents of $18.5 million as of December 31, 2024. Our capital position was strengthened by our successful public offering in February, which raised $18.9 million in net proceeds. This financing has provided us with enhanced flexibility to execute on our growth initiatives, while maintaining our path to cash flow breakeven in the third quarter of 2025. As a result, in the increased strength of the balance sheet due to the follow-on offering, we proactively took steps to settle Greenbrook's legacy vendor payment plans and pull forward certain expenses in order to secure favorable vendor concessions by paying them early. While this increased our cash burn to levels above what would typically be seen in the first quarter, this decision will ultimately reduce our overall net spend with those vendors during 2025. We also realigned Greenbrook's bonus payout and merit cycles and experienced a temporary lag in Greenbrook collections as we integrated the new AdvancedMD software into our revenue cycle management. We are already seeing marked improvements in collections over the past two weeks as the new systems become fully operational. Due to these measures, cash used in operations for the first quarter was $17 million. We expect cash used in operations for the second quarter to be less than $5 million. And after the end of the year, we anticipate cash on the balance sheet to be greater than $20 million. Now turning to guidance. For the second quarter, we expect revenue of $36 million to $38 million. We are narrowing our full year revenue guidance to be in the range of $149 million to $155 million compared to prior guidance of $145 million to $155 million. For the full year 2025, we continue to expect gross margin to be approximately 55% as a result of the inclusion of the Greenbrook Clinic business and the elimination of Greenbrook Treatment session purchases. We continue to expect total operating expenses for the full year to be in the range of $90 million to $98 million. I am pleased to report that the current macro environment will have a negligible impact on the business. We anticipate a limited impact from tariffs as the majority of our sourcing is inside the U.S. and our manufacturing is based in San Diego. We do source some plastic components from outside the USA along with the NeuroStar share, but we estimate the net impact to be about $500 per NeuroStar system, which is very manageable within our overall cost structure. From a treatment session standpoint, we sourced the treatment packs out of China and would estimate that the impact from the current tariffs of 145% would be less than $250,000 for the balance of the year. Moving through Q2, we continue to focus on execution of our expansion of our SPRAVATO rollout, the implementation of buy and bill, optimization of our revenue cycle processes and remaining cost synergies. These efforts, along with our planned revenue growth, support our path to become cash flow positive in Q3. I would now like to turn the call back over to Keith.

Thank you, Steve. As we look ahead to the remainder of 2025, I am confident that we are well positioned to continue executing on our strategic initiatives and drive sustainable growth. For Greenbrook’s operations, we will continue the systematic rollout of SPRAVATO and the Buy & Bill model with an aim to complete implementation across all appropriate sites by the end of the year. We will continue to see a meaningful uplift in our NeuroStar TMS treatments and will continue to strive to increase our treatment sessions per system per day. In the coming quarters, we will continue advancing our operational improvement initiatives with plans to fully implement our revenue cycle management transition, finalize our patient coordinator initiative and standardize our training programs across the entire clinic network. The early results we are seeing affirm the substantial revenue opportunity this represents. Our BMP program continues to show positive momentum. The connections between primary care physicians and BMP locations are helping to expand patient access to treatment. As we progress through the year, this network is expected to grow its treatment session utilization and support controlled system sales. The performance data from BMP sites continues to reinforce the value of our approach to standardizing patient experience and practice operations. The adolescent opportunity continues to be a growth driver since our FDA clearance last year. Our recent NeuroStar Summit provided strong validation of this opportunity with three quarters of the attending practices already implementing or developing adolescent programs within their practices. This enthusiastic adoption reflects both the clinical need in this underserved population and the expanded insurance coverage we have secured. We are seeing providers eager to offer this treatment option to younger patients who have limited alternatives. Most importantly, we remain committed to being cash flow positive in the third quarter as previously guided. Our successful February raise has strengthened our balance sheet, giving us the resources needed to execute on these strategic initiatives while maintaining our path to profitability. Before we conclude, I'd like to share some news regarding our leadership team. After serving as our Chief Financial Officer since 2019, Steve Furlong has announced his intention to retire on March 31, 2026. Steve continues his current position until his successor is hired and will remain as an advisor until the March to ensure a smooth transition. We have initiated a comprehensive search process to identify his successor. In closing, the first quarter results demonstrate that our integrated business model is working, creating value for patients, providers and shareholders. We are excited about the remainder of 2025 and look forward to updating you on our progress in the quarters ahead. I'll now open the call for questions.

Thank you. [Operator Instructions] Our first question is from Margaret Kaczor Andrew with William Blair. Your line is now open.

Hey, good morning, everyone. Thanks for taking the questions. Maybe just to start out with -- maybe we can focus on the BMP sites on the Neuronetics side or the NeuroStar side, excuse me, more specifically. So the number of sites is growing, funnels maybe getting a little bit smaller at least versus last quarter. So just wanted to see, is this a onetime dynamic, should we assume that funnel increases again, are you reiterating that over 500 by end of the year and what causes that?

So we just had a influx of new accounts enter the program, Margaret. So there's a natural dip as that happens. So we will be building that pipeline back up right now. We have 113 sites that are working to get into the program. I expect that to grow with our next summit, which is actually this weekend.

Okay. That's helpful. And so as we look at that, maybe in more detail, kind of the progress of these BMP sites still this year. And then almost more importantly, as we go into 2026, the number of these sites continues to grow, but what drives utilization, I guess, at those sites in that mid-term outlook? And anything that you guys can provide around utilization trends both at those sites versus maybe non-BMP sites over the last few quarters? Thank you. All right. I know that was a lot. I can repeat any of that.

It's okay. I'll remember as much as I can. The BMP sites are our focus of our marketing efforts. And I think Lisa Rosas has done a fabulous job of monitoring our BMP sites and being able to utilize digital marketing as well as traditional marketing radio, TV and billboards to be able to drive awareness and educate those patients. So I think we are comfortable that we can continue to have utilization grow in those sites. But in the script, we also talked about our network connection. So we do -- we have asked our PDMs to go to primary care, non-interventional psychiatrists and, GYN physicians that are taking care of patients battling depression who can't get help elsewhere, educate them on the benefits of the NeuroStar treatment and have those physicians choose who they want to refer to. And as we said in the script, most are referring to our BMP sites. So I think that this new program that we have actually perfected on the Greenbrook side of the business will be a tremendous help in continuing to grow utilization in BMP sites.

Okay, great. And just last question maybe on the guidance. As we're looking at towards that, I guess, full year 2025, can you provide any breakdown between Greenbrook, maybe expectations for utilization at Greenbrook? And then same question on the NeuroStar side? Thank you. Appreciate it guys.

Welcome, Margaret. Steve. Yes, Greenbrook's performance in the first quarter was actually quite good relative to TMS improvements. Again, we're using our BMP accounts metrics as really measurement criteria for Greenbrook. And so they actually increased their utilization per NeuroStar chair to just under five patients per day. And so really off to a great start in 2025. Looking at guidance, again, the primary growth drivers are really going to be patient utilization in the Greenbrook chairs and also SPRAVATO. SPRAVATO did increase about 50% year-over-year. Again, that's natural given the low starting point in 2024, but also the pretty impressive rollout across all clinics and also the conversion to Buy & Bill. So I think as we go forward every increase that we will see going forward will be related to the Greenbrook side.

Thank you.

Thank you. Please standby for our next question. Our next question comes from William Plovanic with Canaccord Genuity. Your line is now open.

Great. Thanks. Good morning and congratulations on the solid top line. Just on the business itself, I think when you gave the 2025 guide, you had the legacy's Neuronetics business at $65 million to $70 million and the Greenbrook at $80 million to $85 million. Any change in that? And then just to dig into the Greenbrook outperformance, you mentioned SPRAVATO. If I kind of broke it up, how much was utilization versus how much of that year over year growth was for SPRAVATO? And then on the core Neuronetics business, I mean, that was off a lot more than we were expecting. How much of that was Greenbrook versus how much of that was kind of the legacy Neuronetics?

Yes. Again, Bill, the Q1 performance we thought was extremely strong on both sides of the business. And so again, Greenbrook's Clinic TMS business was up 8% year-over-year that we mentioned in the script and against SPRAVATO with 50%. Those figures are same-store clinics. So last year in Q1, we had 130 operating clinics. Now we have 95. Those growth rates are apples-to-apples with the 95. From a Neuronetics perspective, really the biggest variance was the $2.6 million in Greenbrook treatment session sales that we had last year that obviously don't recur since we're not one company and they get eliminated. Aside from that, we were, I would say, pretty spot on from a Neuronetics perspective, measuring Q1 actual performance to our plan. So again, we thought we got off to a great start. Again, the increased utilization at Greenbrook and CMS was great, as is the continued rollout of SPRAVATO.

And then on the spend, it looks like your G&A was maybe $4 million higher than what we were looking for. I know you've had the merger and a lot of things going on. Was there any one-time cost in there, and I'm trying to just titrate the model here, but what should we expect in kind of a Q2 G&A spend and how should that look going forward? I'm just trying to walk to the cash flow positive in Q3.

Yes. You won't see increases in G&A as we work through the balance of 2025. We pulled in approximately $5 million in Q1 from a cash perspective. And that was really just taking advantage of our $18.9 million follow on. And what we did is we pulled in expenses that were budgeted from either an expense or a cash flow perspective to really improve our vendor relations with some key vendors that Greenbrook had and they were put on payment plans because in fairness to them during 2023 and 2024 it's not like they were flushed with cash. So they were managing expenses really to the detriment of relationships. And so we pulled in software payments. We synchronized payroll. So Greenbrook's bonus and merit cycles, which were planned for later in the year were pulled into the quarter. We did pull in some marketing spend into Q1 and Q2. We did have increased auditing fees just related to the combined company in February and March. So again, I think from an expense perspective, with the increase, you'll notice that we did not change operating expense guidance for the year and still believe we'll be pretty much at that midpoint when we finish 2025.

Okay. But Steve, you did $27 million in OpEx in Q1. You're guiding $90 million $90 million to $98 million. You're annualizing at $104 million What is the normalized OpEx spend as we go into Q2?

It will be in the $23 million $24 million range.

Great. I'll circle back. Thanks.

Our next question comes from Adam Maeder with Piper Sandler.

A couple from me and kind of wanted to start with where Bill just left off around some of the puts and takes on the guidance front. Just the standalone revenue guidance for the year, is that still $65 million to $70 million or did that change? And then, yes, I have a follow-up or two. Thanks.

Yes. I mean, the split we communicated at the beginning of the year, again, in that $65 million to $70 million range for Neuronetics and $80 million to $85 million for Greenbrook is still I would say the current targets for the combined companies.

Okay. That's helpful Steve. Good to hear that. And just around the Q1 performance for the Greenbrook Clinics, good performance in the quarter. Are you able just to give us a little bit more insight around kind of the revenue mix between TMS, STRAVATO and other? I heard some growth rates thrown out, but I think it would be helpful just to kind of get a sense of the magnitude of revenue for each of those different products at Greenbrook as we think about that business kind of ramping throughout the remainder of the year?

Sure. And Adam, I think it's important to note that these ratios are going to change significantly as we continue to roll out SPRAVATO as well as Buy & Bill. And so for color, TMS performance was essentially double SPRAVATO, but that number will change pretty significantly as we work through Q2, Q3 and Q4. So maybe it's a nice starting point, but I'm not sure of the relevance when you're modeling for the remainder of 2025.

Okay. Okay. That's helpful. Appreciate the incremental color. And then maybe just one on the gross margin front. It looks like the gross margin guidance for the year 55% unchanged. Q1 did come in a little bit lighter than we are modeling, I think 49% or so. I'm assuming that's a function of mix, but would just love a little bit of detail there. And then as we think about kind of the cadence of gross margin in subsequent quarters, just any more color you can provide would be helpful. Thank you.

Yes. So Adam, once again, where we finished for the quarter was actually what we had planned. So we were pleased with the margin profile in the first quarter. You will see a nice improvement in Q2 and Q3 really related to the revenue scale. And so we go from $32 million to a $37 million midpoint guide for Q2 and Q3. And so we're going to get pretty close to that 55% number in the next couple of quarters. And that's additional improvement as we get to Q4. Q4 will have 28% of our annual revenue in that quarter. So it's just a natural function of being able to leverage the clinical cost foundations. And really the only variable cost within the clinic are doctor fees. And if they go up, our revenue goes up. So it's a good thing.

Thanks for the color, Steve. Helpful.

Thank you. One moment for our final question. Our final question comes from Danny Stauder with Citizens JMP. Your line is now open.

Yes, great. Thanks. So just following up on some of the SPRAVATO questions, specific to the buy and build transition. We appreciate the color there. It sounds like it's included in your guidance, but could you comment on any capital outlay this requires as we look at the cash flow statement and contemplate your plans for free cash flow in 2025? Are there any constraints to getting these conversions as just because I know there's an upfront cash expense? Just any more color there would be great.

Hey, Danny, it's Steve. Yes, so we did have higher SPRAVATO Buy & Bill expenses in the first quarter. But again, once we completed the follow on, we chose to continue to invest in the business. Again, it was a pull in in marketing, but also an acceleration of the conversion to Buy 7 Bill. I am in the process of increasing our credit line with an LOC to lessen the cash burn burden on the company. Again, it's a balance between the level of the LOC, the inventory requirement and just the overall impact on our cash flow. I will say our distributors are very good to work with. We do have 120-day payment terms. And so, once we get into a regular cadence of claim submission, collections and then the ultimate payment, it should not be a cash flow issue for us. We should collect in 60 days and I don't have to pay in until 120 days. So, again, we're working with different sources to secure that LOC and we'll be balancing that impact on cash as we continue that rollout.

Great. That's it for me. Thank you.

I'm showing no further questions at this time. I would now like to turn it back to Keith Sullivan for closing remarks.

Thank you, operator, and thank you all for joining us today for our first quarter earnings call. We appreciate your support, and we look forward to updating you on the next quarterly call.