STIM - Earnings call transcript Q3 2019

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Operator

Good morning, ladies and gentlemen, and welcome to the Q3 2019 Neuronetics, Inc. Earnings Call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session and instructions will follow at that time.

As a reminder, this conference call is being recorded.

to conference like host, to now Mr. would turn over the your I Partners. from Klausner Westwicke

Mark Klausner

this operator. you, us XXXX replay days. on third joining and for site for quarter be XX of our A Web call. Thank conference morning Neuronetics Good thank will available call you for

Joining Steve Officer, Furlong. Thatcher; me are its and Executive today’s Chief call Chief on Neuronetics’ Chris Financial Officer,

forward-looking forward-looking information statements like business, our Act due discussed I under Securities uncertainties Before and with would to call caution could to will operational that Private materially conference we to issues Harbor the include revenue metrics. management associated company's strategy, by related these guidance differ of Safe certain and or other covered statements during the statements financial the provisions this begin, and stated from listeners XXXX, risks of results Actual including those business. Reform Litigation and by implied

obligation March business, made and Exchange update For you by Commission, a and the on risks company's X, the of including Securities to Form discussion expected with the uncertainties on any annual XX-Q be I any filings later except XXXX, the filed law. review report today. of disclaims company forward-looking Form filed statements this course during The required the encourage to company's with call XX-K and Neuronetics' associated to as

of by operating basis non-cash that provide in management Management core other During the excluding investors EBITDA. conjunction non-GAAP measures, GAAP call, we'll not financial that includes U.S. are and for useful financial a also discuss that certain both indicative expenses on information, with our non-GAAP certain and results. believes information financial taken information

site. certain viewed measures in relative release, benchmark results decisions. which be and presented compare on non-GAAP are can Web compensation to plans for Reconciliations tables against externally to Management press accompanying to forecast competitors U.S. between and our performance and non-GAAP GAAP uses our performance strategic our our

With Chief it's over Thatcher. my to Neuronetics' that, the turn Chris call Officer, Executive pleasure to

Chris Thatcher

over on Good today's on morning, everyone, quarter, I’ll us I call, today’s guidance operational our call joining performance opening business. provide a followed to up update QX full the by on On through year, will call. the and the of walk during before which line our provide aspects remarks third performance and thank you hand an update financial Steve your and to few our to take for for then after questions. an we will updated closing the the

primarily the low base. the XX% the XX% the Total prior revenue Advanced Results our year, in lower growth due of by end and Therapy treatment to our customer million, XX% of the session slightly increase revenue. in in driven growth an quarter were expectations productivity U.S. during legacy quarter an over was in XX U.S. NeuroStar revenue at

significant potential very another XX% market. ability our This in was the Therapy sixth and for that in approximately the the quarter. quarter positive by our quarter active to consecutive relatively the quarter demonstrates is strategy NeuroStar a a execute base increased This Advanced installed year consistently untapped was our system prior still over what and row

we’re customers Advanced expand On expansion new to to forces; depressive the designed progress raise Therapy; of initiatives today’s focus providers; my indications call, I’d remarks marketing CPC and of following our CTC major and in plan among on seeing field like topics. The the BDM, beyond trends disorder. the Japan to early HVT awareness into TMS-only ongoing NeuroStar in sales particular, and

force. our BDM on update sales an with Starting

current territories we In end count of have and expansion additional BDM third now Our our XX the goal to to territories total territories XX BDM quarter, year-to-date, filled of remains the bring the of our bringing an year-end, XX. XX by which be eight increase to XX territory an would XXXX. new versus filled

an We line consultants, in of practice training the and have to or our to that consultants, practice growth in CTCs, NeuroStar building also of supported to number are the continuing clinical customers we the the maximize clinical teams a with ensure part proposition Therapy and are training offer or build that CPCs, customers installed of of been important utility a base. value system. These Advanced

these As with and of the of in end of groups in XX XXXX. our quarter, size and there CPCs expectations are CTCs field, both the for end line cohorts are of the these XX the the of at

customer. they forward, to customers them the NeuroStar volumes. working team’s referred Practice or treatment recognizing to our drive primary CPC our This focus as a is help session Going bring value will Consultant, with better the be NPC, to

found While we a have that are spend expected. legacy we time providers with they with performing as we are bit growth, provider need as not to new more as volume well trending our well

cycles call will optimize. anticipate We time point and this are revisiting our take some to

few I trends HVT we of now our to some accounts. larger a would like observed at discuss

offer press do through have rapid They with efforts. DTC local TMS-only from our As patient efficiently own who community the convert you recent don’t and we’re seen their that releases, may currently TMS. providers in experiencing referrals take growth psychiatrists marketing

preferred centers we that Greenbrook October, we we technology over Advanced across XX that have the Success TMS with locations Therapy announced across installed system with provider September, a the XX be our to XX In with TMS XXXth announced U.S. to TMS, was NeuroStar agreed treatment In states.

large choosing other these with which companies multimillion are TMS business that to space. providers, us entities, pleased We’re over partner are the in dollar

these they multiunit place significant As a other would which often expand, providers outlay. require and orders, large cash

has in rent-to-own them rent-to-own Advanced quarter. more over are customers This lower quickly. ASP have leases a other to a a a the significant time which allows outlay traditional capital cash NeuroStar for sale. led to choosing than for and as and increase agreements during accounted revenue As expand utilize systems system the Therapy are sales-type spreads result, NeuroStar to these These

systems HVT in centers, customers high primary The we’ll a that which being treatment increase positive quarter, revenue. During practices. fixed over significant uptick price is new the opportunistically for we to utilize view this thus can patients We driver our session rapid saw volume through a time activated of the of and who a purchase number agreements. also purchases this other as in among their multiple of they feel to therapy volumes model and indicator who system new drive pricing customers high demand these continue for offer the

HVT pleased how strategy playing our We’re with out. is

allow to our Our and successfully ability to providers expand base partner predictable, treatment larger drive session with high-margin revenue. will us to installed continue

with To Month spotlight to Therapy patients Therapy. a in around ran are Advanced on NeuroStar to We help increase Depression leverage utilization, DTC NeuroStar utilize Advanced the practice help who awareness national to National MDD of Awareness continuing how the we can support recently ad we’re campaign suffering. conjunction expand campaigns to and marketing awareness TV

reminder, million adult there over over a are are Americans XXX and worldwide As million XX people depressed. that

the seek increasing critical. depression awareness than options and treatment, treatment will which However, less of is why half is

one our The October physician XXXX our and campaign May XX% campaign. located increased increased successful most to was of over date. searches requests Appointment XX%

While financial thrilled with these results, continue return are optimize ways campaigns. we we the these for to of look to

year. mid-November DTC and embark take through We’re of pilot from tests expanded learnings those about January next on to

determined we commercial good pilot candidate test to You be call The May, a that appointment determine patient how the a so, consultants nearby of a component the patient NeuroStar Advanced a were deciding pilot center. at purpose to center before very DTC where potential directed will forward. if would a in recall who for clinical book patients Therapy, psychiatrist. call to ran the this with may and with ROI on The if successful an we center call best responded our the directly new NeuroStar be the campaigns move

update to on you expansion like footprint. of our I’d the global

went on Japan, Xst. June As year, reimbursement this effect earlier received we national into Advanced announced Therapy NeuroStar in which

in beginning The placed in good early up get the commercial July. first Therapy with have running. NeuroStar treated was to multisystem we that, another quarter as they’re adopters Subsequent Teijin patient to early and traction. Advanced had order

The additional We were built sales system the outlook sale sure in for guidance fourth factored occur our the whether quarter. sales Japan. systems not or our would into these fourth year, the currently of don’t we third was in quarter have any although the for into

revenue a to not with revenues installed high work as increase We partner, and the get revenue. psychiatrists treatment systems term, ultimately near view to potential drive system, expect we expect our do geography, over Teijin, but Japan continue lumpy awareness, as get trained – session the to be but do on

use like I’d system. for Lastly, to discuss future of for expansion indications Therapy the Advanced the NeuroStar

our FDA We’re best currently indications to regulatory forward working determine and expand to bipolar include PTSD. with the path to the

expect We be able we’ll in pathway share clarity that this on early at XXXX, some time. to and more to have

healthcare gain providers nascent is TMS and stages, its still among market the popularity The patients. and psychiatrists, technology continues to in

continue rapidly and upon our that success expanding remain we installed the to line we having we’re positioned in about the well build growth market HVT enthusiastic their over drive base. business with the in strategy to long position top term. leadership Overall, believe active our We’re

now our I’d call over to performance. Steve hand discuss to financial to the like

Steve Furlong

Thanks, third an prior Chris. of the year $XX.X quarter. million, XX% was over Total the increase U.S. revenue the was XXXX. for increase over $XX a quarter million, revenue quarter XX% of

$X.X $XXX,XXX U.S. U.S., XX% prior was third $XXX,XXX, year $X.X of Outside third the of of NeuroStar increase of was approximately the million, an revenue revenue over quarter Therapy versus quarter for an quarter. the revenue increase Advanced approximately XXXX system XXXX million.

sold of NeuroStar other X.X capital revenue revenue which As revenue revenue, and three revenue treatment components; coil. which line a systems NeuroStar and primary revenue, to this sales-type comprised revenue, reminder, upgrades has from from is lease operating lease the is

there XXX% NeuroStar in system approximately approximately Therapy discussed, the quarter representing other of number led revenue third growth. of $X.X quarter the Chris Advanced quarter, XXXX, during were to leases compared sales-type as As during which million $XXX,XXX significantly to higher the of

the sold basis, in XX% by and selling as quarter a sequential NeuroStar units a a year. prices in On capital driven by capital selling declined decrease average X%. compared revenue to last in decline prices was average X%

active increase increase a we XX X,XXX saw from increase to the During the and net of XXXX of installed a quarter units base units our XXX XX% third sequentially. net of or units, quarter,

active leases units reminder, leases. a As sold, the operating includes installed sales-type capital base and

of revenue year treatment for represents the in was The an the third quarter. primarily quarter U.S. to session due increase XX% our which revenue, price an other XXXX, increase session session increase treatment prior over fixed revenue. $XX.X treatment of million was

was increase approximately customer predetermined to decline volume This in in discounts partially Per by treatment sessions ASPs our offset base. the grew click quarter due within session X% purchased pricing a by X%. existing treatment

during quarter, revenue increase XXXX, other $XXX,XXX, was representing $XXX,XXX of approximately up U.S. growth. over other a X% $X.X third quarter million, year. the XXX% and session was service prior revenue the During from treatment the over

was gross which portion a selling $XX.X a third XXXX. third third Advanced the than for of Gross third during of quarter sales-type The gross for of margin million $XX.X XXXX from lower was in XX.X%. was result increase prices million, the the XX.X%, the margin quarter million Therapy result XXXX of of a was revenue as higher decrease margin NeuroStar XXXX mix $X.X average lower an profit of of systems leases. new of Gross the of quarter placed as higher and quarter

third due of to the million, Sales expenses marketing were prior marketing and as related spend over $XXX,XXX increase increase force approximately the the increased quarter an campaigns. size $XX.X sales of primarily year. of our This well XXXX as to for was

and $X million year. increased by prior increase primarily million, the approximately increase $X.X This General were to was administrative of expenses. expenses compensation-related driven an compared

the of preparation approximately costs and personnel quarter the of our increase expenses XXXX was million, related year $X.X of development the period. trials. to to clinical prior Research of in The product higher costs due third for development development were and from increase continued the platform an million primarily next-generation $X.X

to was of EBITDA, loss the third in the was an compared the million of for $X.X compared million of the XXXX, $X of XXXX. quarter in which quarter is non-GAAP third loss third quarter measure to of million Net a XXXX. quarter EBITDA loss loss a $X.X million of net $X.X third for a

of cash Moving at $XXX.X to million compared the balance equivalents million with to and XXXX. cash year-end the $XX.X sheet. quarter We ended

to Turning guidance.

million existing year worldwide revenue XX% revenue year-over-year of are million For down year full XX% and guidance between lower we volumes in and in is certain from $XX The customers. $XX primary guidance growth, $XX selling XXXX, total and than to expected than approximately of expected $XX average the million. driver our respectively, and million, our guidance representing prior lower reducing prices the of reduction full

revenue worldwide representing For of $XX.X million expect the XX% $XX.X X% quarter fourth XXXX, and and total we year-over-year respectively. growth, of between million,

previous For guidance. in to the XXXX, full to our continue expect the margins year be we gross with mid-XXs line in range,

to expenses be now For XXXX, $XX.X full expect previous between guidance million. the $XX million from to million, of $XX.X we $XX.X slightly million year down operating and our

call the turn to Chris. Chris? now back over I’ll

Chris Thatcher

Steve. Thanks,

opportunity Advanced be significant major number from Therapy by We to worldwide depressive suffer for who the excited very of a continue to help NeuroStar patients disorder.

with our about with our the providers position. leadership this success some of the We’re largest pleased segment of HVT partnering and in and market enthusiastic

We treatment our our number and continue depression. support term, we’re for optimize expanding expand to from to a our ability to customer commercial Longer awareness suffering efforts enthusiastic our to from disorders. even industry-leading relief to bring infrastructure as marketing of an suffering about TMS raise psychiatric those greater indications patients to of base

With up the like now I’d that, line open questions. to for

Operator

Kaczor question And comes Margaret from Blair. first [Operator Instructions]. William your with

Margaret Kaczor

Good morning, taking guys. the Thanks for questions.

Chris Thatcher

morning. Good

Margaret Kaczor

morning. Good

you guess XXXX. But we along provide lines that half similar this and a utilization, second than sense you what it’s pieces assume is dynamics, of whether cetera? I’m the guidance. is of you et the growth a seeing is of you’re kind of for us us in Should leasing, me into the as bit through moving little year, I for go guidance. that, the better of aren’t to know I can hoping question guys XXXX providing what moving First walk

Chris Thatcher

thanks for question. the Margaret, Yes,

guidance to on not your point, any going So we’re provide to QX.

So come legacy of we NeuroStar in volume we’re the bit QX I’m going and next to can year. not we a rent-to-owns the about are our the expect issue is, We little our lower our and But as function system bit ASP. of we to more expected to are you softening more those some a But in can as a QX, – like. is little primary that guidance. about talk talk significantly in is lower talk rates utilization higher, at customers, sorry,

sorry, for taking I’m guidance year. So down QX this – fundamental next us the those are year the drivers in

Margaret Kaczor

it. Got

bit. hit maybe a those on let’s So two items

or legacy that QX that reasons what from expected. quarter, Have assume the a consistent you sense of legacy improves accounts, why you’ve or maybe you’re you utilization And accounts same, you seen first all, does NeuroStar seeing or stay within scale? gets third seen some referenced given So than productivity then maybe lower profile the of guidance these in any that worse?

Chris Thatcher

Yes. Right.

utilization lower the result recently really a of of So over-indexed the is sold the team our NPC towards shift systems.

we’re – now call quarters. seven new systems and If in the customer you has those cycle XX long-term need experienced shifted think revisiting and the revisit installed review a we’ve go XXX right XXX last systems development don’t utilization. and NPC is we towards being we need been about over XXX it, users systems last months to the their plans. practice And I and this back These are re-circle on issue. who our legacy see to what

Margaret Kaczor

one last just the then And dynamic. one terms in Okay. of leasing

and at increasing do out, should you these versus going sales As of sales-type we of how forward? leases Thanks. leases really look we look see And investments? the mix the those ROI

Steve Furlong

Yes.

is barriers to minimize larger for flexibility to accounts. So rent-to-own the of the these reasons these option we offer a upfront

faster QX this that forward validates new not fundamental continue ultimately more and continue expand gets into trend strategy. to shift can would we so a our can a move partner the It’s to – segmentation our would to further can – this continue which We categorize to really this strategy. this sooner. sites treatment and they existing in to us session strategy. expect customer I to and expect execution But think I as you of beyond. So

Margaret Kaczor

Thanks, guys.

Operator

question Mills Canaccord Genuity. Jason comes Your next with from

Jason Mills

market the a whether talk Has been your the had We’ve all? so. coming taking we’ve business one any landscape. here. to reasons growth hires Hi. growth? wins or over seen losses and Several in I’ll slowing to or this impact months XX you or the about at little we’ve large not the questions. seen departures And regrettable or impact limit on of Thanks any try Chris, or slow any comment last new seen about of competitive you’ve that seen but bit. competitors also for Could customers it having the questions, competitive just space

Chris Thatcher

Jason. Good question. for Thanks Yes. the morning,

much hasn’t our I of base by consecutive installed we quarter this look really very really in the sixth marketplace. where we’ve increased that’s fundamental how at we’re – as indicative changed performing now And the XX%. competitive think the So dynamics is

it’s pretty ASP we’re the we to QX The drivers the function systems existing of so around in primary our well And of customers. the lower in feel expected a those and like really the softening marketplace. operating not guidance systems into in just market lower a the and in market, than sold placed around is

you seven that’s behaviors. we of you starting the the And that forward. our when is is sales existing rotation get between It’s moving we just we’ll over – expect would point growing moment. new on we’re and is installed and and would is has untapped in as we’re issue. fundamentals and – customers, growth right market, the better this you customers increased need nascent grown new demand to businesses, call still we’re last with expanded out a quarters, penetrated at your to you I lot we that the call really is moving in XX. this have had about were not little a The particularly and placed, ratio rapidly more a reps just this how we reinforcing think customers And to pharmaceutical when our have team XXX that bit keep the customers. the and performance our existing strong. customer the and for rate things plays not NPC business, a we’ve and off in systems say a And base group. what got business, that an our NPCs. within competitive a putting But get see under-indexed QX, of base We to it cycle on legacy with look call recognize clinical And lot this at

Jason Mills

some Okay. Chris. That makes sense,

it they But do push long see because for otherwise give not you’re yourself just north expect in grower me quarter you maybe curtain to I way a does these what model official XXXX, with you term. of your you And for the once longer which lower being I’m you little could but sales the and business perspective accelerating how those guidance. to NPCs? the and the need of handholding, XX% it’s from that grower And legacy in sort are on going little you something fourth least to guidance, way is is didn’t how think material at you over were the this guidance dynamics a to sort those overall changes of a give lack sounds is a change reflective sort the business, at more point I Perhaps us of XX% behind own as but directionally. fall business expect those a like their a growth behooves instituted to takes. a are It I about to relatively is force franchise the little model not customers, a a which your it adapt So And take you changing. slowed long growth still customers, near within to you down. of to in – to given prudent The support and is, see it that the talk bit bit bit ready of about legacy better guess providing they more question like going it in the model’s XXXX as given down, piece a Street the better it. the sounds but And time, they value peek could talk in why like volition bit. a you puts And talk put left providers term. you and sounds on model understand

Chris Thatcher

Right.

can, So I’m as out try let me Jason. going help if best to – I see to you

going of as are And plan So know NPC process. what one we add of for we’re of doing rep to deployment we’re some in part sure rebalance right this operating of to got we now? going year into territories. every versus annual number assessing XXXX, We unequal and another. our new our because do So system that disproportionate our we – sales

because add We CTCs to year, more to next past base balance. that means base going is XX%, it year. at think we’re year-over-year. year-over-year is and the when that NPCs did adding as need systems definition And increasing either selling I better So more thing find this NPCs we by other increasing we’re you And the we and more know. XX% is just to look a got installed

thoughtful, very as we’re So you know.

the here several down. news going on customers process And going have and just it. They committed reengage weeks then test and They’re system. call it. to there is, The we’re lost. revisit move. retest So trended and plans is development can to a This back And and and our and to good that got over get to their them. not we we’ve practice in we this review have the is see frequency that much cycle have through a last we’re we move fast how understand needle to how customers is

XXX a So customers, these we’ve what this business. issue environmental more is we would new versus cycle. I growing would what around the call and revisit call just potentially behavior new the I team to of the customers, got This shift things. a these hard And is call to material too

some and this clear. time and to let’s give take we’ll a So retest, you is us for and into insight better be going it. figure test But out to

And history the systems that away. of and fast of a We to a have ever in customer grower, in company. to not right? The going we’ve as be and XX% compare just had that’s is going we’re market. business the segment adding one revenues that You the QX QX can project current as and our softening QX can you not see

So the strong. underlying are fundamentals

Jason Mills

easier so your on you’re a lastly, that just going levels like it push sounds sounds half that of comps improve even in And are as the sounds versus 'XX systems, see fourth improvement it hearing little new it you the relative to and the that more, sequential – second half, half year. first bit moving first with addition second expecting improvement modestly you’re through like to XXXX. of so be like to of year Am of the to And great. the these might half quarter I Okay, right?

Chris Thatcher

year process can’t we’re Yes. and on Jason, at get creating finishing really of focused we’re in this point the a into in our around I operating XXXX plan. specifics the time.

installed some again, take, lower in of indicated to to group, primary on that our our of of customer then guidance a we’ve number our away. think which ASPs how QX are associated to not as install but taking QX sure that line got, it’s of time And expect beyond customers. we NeuroStar of QX I systems bigger that’s it’s then a quite because I’ve those strong away. systems to XX, and is to probably prior going these into square in going legacy square but we guidance take sub-segment softening XX with I’m further us shortfall take long going And in base. our get with that we’re the NeuroStar down to to that accounts, the

Jason Mills

hop I’ll in Chris. queue. back Thanks,

Chris Thatcher

welcome. You’re

Operator

comes Matthew Jaffray. Piper Your next question O’Brien with from

Matthew O’Brien

guys – a it as you think competitive is it do or account what if acquired what about more opportunity Thanks they’ve have bought Is do legacy How as morning. qualify you little those these taking visibility for how how something a you you what can product really have about you is? three a you can two, my kind and you accounts? and years far Good on? legacy Chris, or bit questions. do quickly have of turn back there talk

Chris Thatcher

Yes.

have acquired think customer is because years companies device about we most versus through cloud. group, and treatment medical about transparency of one the of up session they’re maybe other the good our customers three we And we legacy running. that the is we that systems beyond think have advantages some when pretty So done volume NeuroStar and

actual trends So their a time. utilization their their see we period real utilization purchases see They’ll time real see purchases. versus of and can time over

doing, So Matt, just back. what we’re is going we’re

at looking back fall expectations are trending highest impact into at number and customers. above. to. is NPCs our our the these The have what product. customers groups; of below to three volume. customers people we product are where that a below is our competitive We’re circling hybrid trending And every we’re we’re always expectations, that that They year going our back We and in factor highest have what call the customers, that

installed that is customer that And lost class this docs, on We say to shifted the but just the we and quarters, business. you’ve I’ll in metrics in days we again, recent in This XXX units got we and last just – to two factor off. also go feel back my of that seen pharmaceutical too don’t and seven those and those you function far can are towards before we’ve continue think most is that to need high-volume maintain, over a we’ve call and put your I spend them. is accounts. reason right? it need those because that keep moving the time early why higher that’s these and they target group to effort we typically difference And our accounts to legacy the targets makes high-value in customers group, can smaller with a on this this operationally, bit the not And bit and – rolling time with we’re just more customer and volume that these are time another are spend These brought remember, days, group. in we a a just we more

Matthew O’Brien

been year maybe little bit last differently, this Okay, over the maybe the slicing years. that talk you that’s year a added three to then when accounts a maybe to for helpful. using up about, And they you’ve have

maybe would focused do, teens, Has kind the a and over Do high growth done in side. kind seen any you the given what group, I cloud, XX% you so? all imagine out the accounts it’s session it bit on year or on growth of little of side? So have been of that the last NPC those that more you’ve sense, from

Chris Thatcher

Yes.

that on fixed calls. step performing you you tell those they’re utilization. customer that terms contracted haven’t average will will guidance, price customers significantly groups. and We to in tell we relative further our than But our as I disaggregated go of a expected, that these are growing faster I

Matthew O’Brien

then the for of pricing me Jason more market do falling some becoming that public that I was the increasing the forward? out you the But and you Steve. from evolving And and here. model would gross some thought certainly And that do is last bit, pressure going guys public, Thank a a Okay. leases metric and were of think different. how one won’t something coming think how we with into actually [indiscernible] go became one dynamics, we more would got I sales-type future? so there you. of When think little and be we be about about we’ve in potentially or as seen, margins This these

Steve Furlong

Yes.

lot to service over a aspect. we’re able in control And couple will really something control change a perspective. a dynamics perspective. don’t really But The puts have over. infrastructure do will of from will have continue. we mid-XX of much we guidance the where takes the have of that that margins and be and our think the our It’s gross sales-type we function we point growth But there’s partner at see future, I support leases expense impact from leverage don’t going and forward. a we

will decline leverage. ASP able the by be the feel be we offset to So P&L

come mid-XX guidance. that So off I wouldn’t

Matthew O’Brien

you. Thank

Chris Thatcher

couple as last a of move around is, And the Just of NeuroStar move a add margin business see it’s time this kind and sessions the NeuroStar just that this know were be gross sensitivity our size, little well little quarter-to-quarter. you shift a you the that’s our from percentage revenue gross when lower and margin and a when NeuroStars year, happens, on sessions sales percentage of XXX and points bit of difference of can to a see higher. then quarter, because this up where this going between they that sales NeuroStar points. also the international it further treatment us lumpy And international that you large slightly in shift couple and up like are can can bit And are is down. basis than at compounded treatment was

So there. price well. kind key bit the our drivers a are we then talked those as And about of little

Matthew O’Brien

Thanks. Okay.

Operator

next Securities. Dave Turkaly Your comes JMP from with question

David Turkaly

Good Hi. morning.

the long Just be with customers, analysis, competitive any on based has you really, clear. to I U.S., and to there’s geography don’t think specific impact do again, Not the to on want just any legacy your they’ve it said had them. that how in you

that So your as fair? longer, not for had if Is them they’ve seeing they’re often. reps

Chris Thatcher

more is Yes, is, And morning, there’s that what to maintain that we Good customers a we’re little time seeing Dave. bit than anticipated. is fair. those

David Turkaly

this of of business part do see even Are to love a Got mentioned more of And we as several over Any then a there you significant us is give is these, don’t there? maybe can moving be percent XX% color that just today XX%, you I that? more that know, covered time? becomes, going? you it. Greenbrook going your What business, well. and do where your groups maybe Success And to by take think I’d forward? like guess you at

Chris Thatcher

Yes.

So think the – business we fixed-price about about – when really about think you contracts, growing. our that talked haven’t see of can how aspect fast is we when specifically, you but that number

installed it’s We over the there XX% this bit systems or current total a but number in systems of that’s fixed-price contract of a provided little haven’t base. And out or our base, of installed specific component. number

David Turkaly

over think to that you company’s that I years Got build the imagine the as of it. continues couple growing? And next

Chris Thatcher

Yes.

refer that’s that given to have has largest, provider rise orthopedic with surgeon customer needs to this the the top leaves to service of patients. third they call XX – somewhere. a this market And MRI Well, other segmentation refer about an points and that that to centers refer calling a And XX% an largest doesn’t doctors really or to like we’re they that really Our is where the where of refer these orthopedic of So of those market XX% surgeon it, doctor small many that, need of It’s on kind focused that x-ray. – concept the place strategy think can not TMS-only radiology treats orthopedic to. actively group. right? on

to for don’t into psychiatrists back, significantly have within an they is go the psychiatrists their And treated we just way, corollary they’ll – they they service creating TMS, underpenetrated. they is opportunity providers get don’t these this practice. an meaning in of into and to just TMS-only a it So to come is create get create there are really facility, you CVT they’re efforts, written our these treatment. go these as function and providers this we have direct-to-consumer the an how depressed, to prescription. really option also a for care service get they’ll see looking market or and get a country patients psychiatrist, and that around advertised, And all a therapy of moving And existing really option to right, when NeuroStar go continuum they’re their this understand to patient seeing their

David Turkaly

you. Thank

Chris Thatcher

Dave. Thanks,

Operator

session for for call will remarks. I Thatcher the back closing now turn question-and-answer our concludes That to today. Mr.

Chris Thatcher

joining our call. quarterly to you this us for forward Thanks morning. on updating We look next

Operator

for your concludes today’s you conference. participation. Thank That

You may now disconnect.

Neuronetics (STIM) 9 Nov 192019 Q3 Earnings call transcript