Earnings call transcript Q3 2022

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Operator

Welcome to the Greenbrook TMS, Inc. Q3 2022 Results Conference Call and Webcast. [Operator Instructions] I would like to remind you that this call -- conference call is being recorded today and is also being webcast on the company's website at www.greenbrooktms.com under the Investors section, Events. [Operator Instructions].

Analysts and investors are reminded that any additional questions can be directed to the company at investorrelations@greenbrooktms.com. cause statements, company the information, materially based and that forward-looking beliefs expectations forward-looking from contains of uncertainties the results the of on may those call discussed which to forward-looking current reflect or risks the in This company actual statements. differ the currently available

year are company's available discussion could Risk for fiscal Exchange Factors the SEDAR cause to and December and authorities annual Factors for on and the and in company's website. and on XX, ended or that Securities the September XX-F differ materially in and and of the period and discussed Commission events XXXX, results from from management's report EDGAR the Form regulatory current the on Canadian company's analysis expectations section are Uncertainties the the time Securities XX ended section the Risk to U.S. in of which time,

speaks as update which forward-looking any Any to law. date unless company made forward-looking obligation and on is statement it required only any or the by statement disclaims intent of the

now go like Bill and Executive Loubser, over TMS; to Officer. of turn President Leonard. and I would Chief the Leonard, Officer Financial Chief Erns ahead, Greenbrook to Mr. Please meeting Mr.

Bill Leonard

our the quarterly growth date. and consolidated achieve the everyone The and Colin, XXXX for thank and Success joining you, QX line operating us consultations to as record business revenue and performed treatment Thank scale highest top and as significant quarterly a allowed volumes to call TMS added you well for company. to webcast busy conference quarter exciting today. to acquisition and our was very a

XXX% XX% treatment record Most strong in to new to high of in the X,XXX with Management. QX increased record performed fiscal XXXX. a provide Furthermore, increases fourth XXXX for XX% by of patient QX compared XXXX. million Asset by into by XXXX we Madryn compared XXXX to consultations as a compared increased $XX.X XXXX increased Quarterly exciting to to a X,XXX QX Revenue by believe to growth. XX,XXX performed revenue a recapitalized QX these quarter outpacing supportive high that to debt of volumes to compared QX as as business QX starts partner new in XX% and high increased while momentum in consultations QX the as starts of We record patient XXXX, XXXX. the

TMS utilizing of We are excited new also us the supports suffering Centers, continue Providing other to TMS Spravato leverage network treatments innovative thereby patients ongoing very enhancing TMS deliver and to QX from to centers our disorders. at The our through our of margin. our select existing in program Centers of enable rollout existing centers, capacity and plan business mental our profit excess about our MDD program XXXX. Spravato at health which long-term

As to TMS XX, across expanded from XX. company Centers June at as centers September the the XX has its of XX offering up Spravato TMS U.S.,

entered the million facility drawing secured XX, on into I'm agreement reviewing TMS Asset loan $XX that of I concurrently XXXX, highlights, TMS affiliated term Management down previously its with at $XX -- on completed announced XX, a will million we While our July repeat entities, closing Success Madryn and credit and July acquisition credit for XXXX.

from development TMS The centers XXX XXX XX, all our added a XXXX. XX to complementary XX footprint. Centers to Success at consisted September in From existing as of XX, perspective, network, footprint our our acquisition September XXXX, of TMS centers up states,

center to seven. reducing combined the integration of on footprint accelerating focused our included profitability company's execution the by operational management on of the quarter, TMS the business a with near-term line synergies During and focus time which

finished. pleased realized are to work not but date, synergies is and We integration our very of the progress with the

the And our and next Erns turn operating over see We over for detailed of advantage company's a to more now significant will that XX it synergies I CFO, review financial take months. performance, Loubser. of we the can

Erns Loubser

Thank you, Bill.

move results. We with of to synergies impact when progress cost the we've X I fledged businesses realize we results still time a had fully material executing can profile. Before the fully into to on us. have current significant consolidated believe a XXXX to although the to synergies, therefore, QX company's material includes detailed structures. profitability cost And removed, the independent The important available make structure, review, not we made which financial duplication it's solid on the costs, contextualize

TMS million As by XXXX Bill the year-to-date QX to $XX.X XXXX to a in as XX% year-to-date high XXXX TMS Success $XXX to as QX QX as XXXX. year-to-date to completion was compared mentioned, revenue revenue $XXX and XX% XXXX per $XX record and Average compared of XXXX. decreased QX acquisition XX% in acquisition treatment This East/Central predominantly to compared XXXX the to to decreased for QX by of in Achieve X% in year-to-date by to and QX by compared increased driven as XXXX. XXXX XXXX for million

of geographical We're mature primarily in the sales This happy XX.X% a result growth X.X% XX.X% The QX in a to decrease regions. result mature in environment. was at to the report with X.X% due inflationary regions. in the in that growth figure revenue. as came labor year-to-date to attributable the tight distribution in our XXXX growth year-to-date as XXXX coupled to in decrease as compared predominantly prevailing of was market, XXXX of XXXX region to QX growth our was in as compared same sales Same-region year-to-date

$X compared XXXX. of loss XXXX. operating in income compared was loss to year-to-date during entity-wide $X.X XXXX operating QX entity-wide resulted to million Entity-wide QX as XXXX as million during million of operating regional an year-to-date regional during $X.X $X.X million regional

as related million compared XXXX $X.X year-to-date the million QX the As XXXX, the Success to Corporate a mentioned compared period. environment as during associated economic QX earlier, increase challenging early to year-to-date XXXX the to with XX% XX% acquisition G&A XXXX. decrease predominantly duplicate $XX.X TMS to an by and costs in increased for to by

TMS very increases and instruments acquisition Credit that Madryn reflect the connection predominantly to Facility It's Madryn the to in conversion with important Credit Facility. and -- related the onetime equity-based note professional revaluation Success legal these the the and fees

still into Excluding believe execute even corporate was revenue, and the business business which conversion we illustrating bear equity-based of will further. scaling growth and XX% XX% onetime This Once costs G&A relatively QX cost infrastructure. can centralized that is growth rate and compared we on XXXX that structure mind, material in during we the synergies, the the growth again, rationalize believe to its lower a in instruments, increase in respectively. indicates year-to-date, as

revenue $XX.X acquisition TMS The near-term to loss XXXX. as the and year-to-date compared compared line during planned XXXX as operating from period and ramp during by XXX% to to year-to-date time XXXX loss Our the Success the QX XXXX increased QX million comprehensive leverage for XX% and supports profitability. to increased

was as from similarly assets, on the increased to operational costs predominantly yet mentioned, previously interest increase synergies business combined not This due expense, of after Success TMS executed, net loss the acquired depreciation duplicate amortization incurring on in the due to balance a also equity-based sheet revaluation arising conversion acquisition perspective, receivable QX of by the loans primarily compared balance and acquisition. XXXX in QX as role major played the million loss. a increased $X.X increased XXXX extinguishing and to of From instruments accounts of

$XX acquisition company down XX, completed and Bill of Success on company agreement million mentioned, affiliated the The entities, credit million XXXX. on secured loan at concurrently a previously entered its announced TMS previously As XXXX. drawing for Madryn as announced July credit Management XX, facility also its closing with $XX the into Asset July term

credit the new $X.X to cash TMS of previously TMS million in $XX.X from Facility, and by the million. resulting the were sheet management $XX.X -- aging remaining locations Facility to proceeds cash to from proceeds leaving facility central repay Credit respect on the held million TMS, September $X.X $X.X XXXX. Success suppliers side, the The million balance as Success follows: Oxford at Madryn normalize XX, repay balance vendor finance, million on $XX.X at our strengthening practice cash to of in the Importantly, to balance $XX.X used in Credit million million payment loans as a with investment

core our to Moving operating metrics.

XXX% by total from performed by ago. fourth increased the XXXX, increased a significant starts increased will by QX XXX believe year consultations of the a the number to to to As QX XX% patients the a centers XXXX, end new into record XXX the of , of to while number of Compared TMS fiscal X,XXX we XX% strong XXXX. momentum which X,XXX, quarter provide of

rollout acquired TMS XXXX. well increased performed by predominantly to compared TMS a treatments due and as for future consultations additional the quarterly in in success highs record QX starts, of connection our program These that with by increases changes acquisition of with be patient XX% anticipate as as operational accelerated to Back the We continued to company coupled acquisition Bill. record our TMS Success XX,XXX catalyst a the to process. Number intake were you, Spravato to Centers the our and to treatment growth. the

Bill Leonard

reach We're and have accelerating strong new combined and Thank you, to our profitable in operations. health scale management, further ability excited move Greenbrook's mental of will we expand a about to which In as our the partner, grow we Erns. platform. very strategic expect platform we help

Our all-stock and acquisition aligns strategically both shareholder interest, financially.

depressive platform utilizing program as to treatments plan its patients available. treatments our long-term building of from adds innovative other best major Spravato to the disorders health disorder, OCD network mental making and company's of on repertoire Our business suffering serve a center the

be to going growth a this driver core forward. expect We

and the business us mental of those highs our program, exceptional revenue, patient in to from record Our care deliver quarterly suffering treatment Spravato disorders. and with growth our coupled continued health value perform, strategy, role demonstrate allowing of the to model consultations volumes

of cash Over couple focus synergies on the with combined will quarters, on and flow. integration continue our to near-term focus the positive our we business of next the

team. I to to would ending, moment a our amazing Before like thank take

as deliver we that of are extremely making are care. Most continue them proud of the know difference. level importantly, highest a we We to

as demand high in disorders are mental are levels. services Our unprecedented at health

treatments the for amazing the over physicians, We treated XX,XXX performed, milestone entire industry. and TMS have our million company, our patients now an with over X staff

on a impact for so disorders. suffering Thank positive the you lives keeping forward the the health of progress company. people today. time We to you of your look significant updated from are mental We many having on

will Collin, that, questions. we with take And now

Operator

Instructions]. [Operator

Your Noel first from Atkinson question Clarus comes Securities. from

Noel Atkinson

Well done QX. in

of end there Ian if the Florida revenue the Hurricane of any quarter. through just off, First at impact was wondering there. was on I rolled kind

Bill Leonard

people There It to terms revenue still probably in was it. hit an of go timing of to $XXX,XXX $XXX,XXX between hurricane Florida. definitely impact, somewhere the had was and to through unfortunate bad the

back into the patients those system. of Some came

Our X- them of impact of But on around our a patients their an amazing terms did and staff some personal to to of a within X-day obviously, in the due period. family. were centers job turning house lost level

on that in us to So it impact late the definitely had an quarter.

Noel Atkinson

wondering was rate about mechanism. corporate that? if able to how of provide XX to able I Okay. that you any provide Spravato, growing details of you've detail or average or to the deployment your it's quite now at quickly your is on centers, percentage treatments total some anything treatment you'd be terms relative average in been activity Spravato of like Are

Bill Leonard

treatment time, in that patient Absolutely. per seeing standpoint, revenue to as From for X a maintenance treatments a Again, program at for north X per month, is well $XXX. staying months. you're Spravato less same is but the -- company in session of the

with about have therapy modalities, back started thus half treated far in they Interestingly, that our the revenue. consistent TMS have it's whether we've Spravato. patients past in both come and out utilized So

their is of very So treatment. one the on kind it's other. really and they giving care of their Greenbrook you complementary It initial in reflection got and

about Just modalities. are of cases, XX% in that some And do shy moved patients having to Spravato have from we of have both our some patients TMS.

throughout see continue area, grow XX-plus continue don't being in what like XX us which We're grow of that seeing ending about of terms focused growth. we TMS on it only truly But in keep I revenue centers. represents And in leader percent Spravato QX. we're to that still in therapy to So that with and represents of the I'll see our our mind, in lastly, X% at business. QX. about the year

Noel Atkinson

Okay.

doesn't think QX. I run of Success get X% at of combined rate business to Spravato a the you folks So of do X% hoping already to at the XXXX though XX% treatments, in you any Spravato. exiting for on revenues And were were end to even

Erns Loubser

That's And... within and to that correct. well there. We're range stay expect

Noel Atkinson

give the you any the last one provided don't know memories then folks I QX? just thing then targets ultimate just provided through And And here. QX -- you what if you before. versus Okay. savings for for Could of sense Success if have feeling could our us a integration? quick or potentially cost refresh this that, synergies you are

Erns Loubser

Yes.

guidance say we've out I take of X the So ultimate -- costs percentage What we million structures as the businesses you in versus $X.X can roughly those and materials. managed recurring take business. cost is separate the if to business, haven't of the given on combined the out

So just started relates it only of We've annualized costs. surface represents in that as north $X scratching million to the that.

I'm out our costs not myself there number, to to a as that there's we disclosures. public although of going referenced relates to still duplicate multiples And put in as it specific

Bill Leonard

to to think really is add I onset synergies tackle Just the Noel, initial our that, we low-hanging of fruit.

company management more you area, us, marketing really area. first in the Erns vendors, of sure to to. up took merged cycle contracts you synergies over sure X and area, covered off want companies is to to everything sure as changes take to create the a want You the revenue of cycle you you make available size the different that line X with Success, make in a Obviously, terms alluded that that management make revenue synergies the In when material side. those and

intake significant which system, intake addition, highlighted their the response in we side, the and we're opportunities expertise. In in successful seeing

in to we We the of more advantage fruit took kind of go. material have first So synergies quarter. low-hanging plenty the

Operator

Instructions] [Operator question from Frank Lake Street from Capital next Takkinen Markets. Your

Frank Takkinen

the be strong, contribution. to looked the isn't consultation with disproportionately inclusive start I Success, on considering Success wanted given even more disproportionately number the number Congrats strong. year-on-year number. that progress. it's Obviously, That all of looked perfect comp to but even the

just that that going a in QX? little does And maybe bit, potentially what how provide into you the occurred guys So unpack confidence quarter?

Erns Loubser

same Well, in growth revenue, XX% and the I think, growth and consultations say, yes, as XXX% you in there. time at we consolidated

We is platform very did on like. that pleased looks side. forward-looking what potential we're said pipeline So the intake things really pipeline that that and the think that, result. very of one a I is -- well with Success of always patient indicator that And is a the kind

yield that And it I translate consult forward-looking to we've going synergies integrating obviously executing -- took patient And started certainly to as results the some the the think provides QX. a integrate, indicator to side in now on from it to time still results to and provides but that seen think that. that obviously conversions, business, but we I strong needs

Frank Takkinen

it. Got

your heard one the top as optimization, a But couple just far of thoughts maybe months with business expansion. it, then Spravato looking development as the a the current and maybe there just side, development thinking on consolidation, closure, had question around out that you have comments And network helpful. at now? maybe just you're continued right That's Okay. give on renewed broader the network new you've down. I us now how business about

Bill Leonard

Yes.

the new open So of centers time ramp we side Success did a give to the this on up. of to quarter up We're platform. going lot those

and of go ramp new quick we a expect We kind year. into the as

take we to new come were way, look ramp go, new that a We centers continue opportunities also have of going at as kind we'll doctors to with development. potential our partner to both by underperforming always impacted and the areas COVID. believe to far As great are opportunities

our Spravato, as centers, a we're other fact we the the And by the then will to to number lastly, criteria evaluate of always I to whether -- that performance close grow centers. of we year the team, end impacted as into or expect said, going XXXX. they're by management payer then too and

continue Spravato. ramp-up a areas, quarter. underperforming So and to we Success in going both and look now, also comfortable Right that's are, theme throughout with be to consistent for we're where each we'll the

Frank Takkinen

then me. And one for last Okay.

line to of color the near-term provide time further was think, your commentary around you something I profitability. Can any bridge along profitability? the specific to lines Erns,

Erns Loubser

Yes.

important usage. side. used So I cash new to was invest lot Obviously, outlined, as a up of kind it's and catch debt, transaction on the Success very settle on contextualize of in costs cash the also centers to the

costs of actually glance, $X.X significantly was operational million And of kind $X.X as at we million. we business. actual illustrated as in said, the taken the $X have recurring I've So out burn, million to it's already lower first

ramp in out revenue expect Bill and the business. while taking that the We cost for the reasons mentioned

we've at that we year, exit so. do we on kind at reduced to as burn. of translates least pretty the and move what that an be And said and we positive said, by confident adjusted And already EBITDA in we the run to we of kind as to early want breakeven significantly rate XXXX. end always flow then that And of focused cash can executing laser seen

Operator

AWM question from [Operator comes Silverman Alex next Instructions] Your Investment. from

Alex Silverman

asked the different so going you sort what's ask of same like? look regional be of spend, like. might Congrats breakeven -- other us business? give to it look to wondering In help a the what here what question. number if us to need terms line I'm what model of on might way. the about other breakeven you a of folks level progress A what a -- thinking far. in might the sense just as But in below words, Or generate at that with you are a and that center Wondering

Erns Loubser

So haven't business of we have -- if but -- as you historically Alex, given we always million. generated terms combination. kind We in of $XX.X that guidance, essentially, referenced we what

so model quarter, consolidate a you full our million the and $XXX would at of what of synergies, breakeven the $XX kind be looks run $XX the essentially kind need success to If level that's called million and it on million, rate. be for execute like. an a We

-- business, here $XXX a kind million scenario. breakeven the become to real the is threshold and of that's So the

Alex Silverman

a XX% margin? regional maybe With

Erns Loubser

Yes.

is that and margin then the XX% from kind regional the cause be guided at XX% will that of of perspective, terms it we've being breakeven, G&A kind needs to to of breakeven be ultimate XX% core yes. obviously In like, as about before, optimal a

Operator

Your comes Justin next Keywood from from question Stifel.

Justin Keywood

services, gross on versus Just the the regular margins Spravato of what's TMS difference?

Erns Loubser

similar higher because side Spravato profile, So the you've the got on margins, a gross very slightly reimbursement rate. higher

As north the you is of mentioned, there you typical you it's on just flows -- treatment, don't obviously spend more the time. treatment. for device and And Bill $XXX require provider that but ebbs Spravato spend cost

that very of you to the margin profile, call target of that XX%. of similar kind washes margin kind a center it of So out if

can at closer full a XX%. You center Spravato run probably to

Justin Keywood

clinics? And any expanding for Spravato's material are there costs setup new

Erns Loubser

it's material, center we're through if of room. So going a without development not the repurposing no, because development but costs our plan look at heavy is you That's there retrofitting for kind that's that's be And of kind the few chairs. for going and nominal the a of not in costs, foreseeable it's future Spravato, kind -- forward dividers majority going be to the of aggregate. going center to the

Bill Leonard

to -- we to just clinic to X have chairs it's X that, Spravato our in roughly Yes, look across platform. add each to

Justin Keywood

I it's Spravato operating but with be that? -- been with only, relatively for a some had. difference leverage early, I is TMS to far revenue, clinic -- operating greater then in Right. there as there has margins And a assume there's know plus as TMS the versus

Erns Loubser

No, for Yes. sure.

So network that not [indiscernible] of in Spravato our the terms of would XX% is is the we entire of a reflective centers, above obviously our at -- but that regional case And launched of margin. operating kind where operates be study location program.

Justin Keywood

that? Got operations, what's of And breakeven then just for the for timing consolidated finally, EBITDA target it. the the for pursuits

Erns Loubser

the bit growth get want be we want So to some self-sufficient, up as we to really ramp in the the the obviously, to a centers and for to Success mentioned, Bill things underperforming level. kind there. there EBITDA from a to new adjusted and doing what enhance QX breakeven breakeven into platform flow as to of plus Spravato have push to We of regions. we're is EBITDA cash then always do And ramp going little hope that XXXX. we And we've through, said,

Operator

from Your next David Bloom question Martin from comes Burton.

David Martin

problems I some for things. and have missed may questions in pulling had some

you the new covered. need Do through debt million with Or you they've if network you for that been apologize can But you to the now? and that? $XXX have I breakeven centers mentioned achieve So profitability.

Erns Loubser

once again, as growth. I terms of [indiscernible] said in No, fairly Bill think we're for confident,

since to with It's we locations. from gone established. centers they've New essentially engaging started to the time Success now, XX XX

our into network the management to maturing investment a there's of have centers fact underperforming our Spravato get increased and then should lot just some in new regions changes able gone by those, in growth that's existing that, virtue region there. we've be of So and made

breakeven a where reiterate that to. That's in synergies we to when in want $XXX state million want for kind the benchmark of is scenario, obviously, get terms I executed a the And aim to but of, is the really business. that steady we've for and

David Martin

sufficient And to is you Okay. you the that balance get now cash do point? believe to on the breakeven sheet

Erns Loubser

Yes.

on targets, top mentioned those We based things, on speak, our there's on I executing laser-focused are executing reasons where for that still we And growth -- we doing on terms and still the we those. in the synergies as are significant line of executing opportunity. two are

enormous we can of believe cash obviously there. have -- get the yes, in we amount execution through laser So don't still we

David Martin

Okay.

in treatment second quarter, $XX and per revenue in cost $XX direct about Your lower center care the per patient but lower. was treatment quarter than third was the

changes to or as go you in forward? per you're treatment any due $X to do and factors more these in structure expect up cost this Do mainly making treatment. seasonality? per the to the revenue going you differences up treatment levels go other or or So And per cost such down Success' Was profit expect down?

Erns Loubser

got Success these bit little results, That to presence X kind reimbursement a have right, purely you the things That's traditionally jurisdiction businesses. in So play there. first. yes, treatment address of has based, that of like a cost per a of combining is of you're reimbursement Florida. a I lower the a it's in product rates, kind there's revenue said, purely kind The contextualize obviously, of and of I'll of as And treatment rate. movement couple

summer softer we a months folks played vacation, reversed. taking We also bit that's a the that's factor look of another we back, during -- if with always see see And little role, you collections. -- payer and there's

an variable again. higher And a reverse for that that's little rate that reimbursement pick So uptick. business, expand we higher, our consideration so our as up a will bit Spravato then probably adjustment was will

confident a will I'm operates see lower bit the little So of reversion where at little a in they though TMS even were. of because just we a Success purely a fairly back to bit a will -- we where slightly see aggregate, business operate, we reimbursement

Bill Leonard

David, we And deliver year that, a believe to back and of or to show just ability to to our and rates rates. opportunity that, to the value therapy our we X, with to add have reimbursement have get to increase. the Again, every negotiate try go payers to increase we treatment we Spravato TMS reimbursement more and kind in good patients

David Martin

Okay. center expect higher center the the side their cost treatment, is at treatment that care that lower cost at level And capacity things, has low? of per and centers remain utilization on because per patient to Success we other should and direct the

Erns Loubser

Absolutely.

of some fixed So synergies reasons aggressive why on well acquisition, and Success more some those utilization. capacity the the kind intake was using They leveraging made to and really we process. things I that of also -- leverage say, relates to of speaks and as the you did specifically and think costs that the

and cost a kind to of absolutely breed So to lower best putting operate treatment. per with goal combining of at together, is the businesses the continue

David Martin

Once question. do dust last to costs to? then And Okay. quarterly expenses regional and you has corporate expect settled, where track G&A the

Erns Loubser

in level X.X% question. what quarter. G&A, revenue was mean the our is at that, current normalize I you kind it of the if terms of In of

We you out, a If that normalize running still out. X%. that chunk want to of it's take around

terms that million the you revenue So a that in to of, it, range with ramp. call $XX $XX gives sense between million

David Martin

where that Success. bought G&A? Doesn't normalize corporate you back the before to Sorry, to adds you were take what X%, Success some said -- would at it you

Erns Loubser

add this does. our core It huge core will -- as fully structures But taking duplication costs value here we of as G&A. a And synergistic kind were but said, individual we an kind large G&A. taking of core of rationalizing of little a out we've part is cost G&A, a put X and of are business yes, is And bit that duplication the it eliminating together. business, -- of out were, -- Success fledged

high that to towards it take the the million. $XX So of end that,

David Martin

Okay. regional that can And forward? Or $X.X stable expected is be of costs, to get the then going you synergies... million

Erns Loubser

There's in that. -- There's there, ramp to be relates your the revenue operating significantly going to leverage structure. more it to some that's so But be scale you're going it's to intake less ramping as cost going synergies without synergies process. your

David Martin

Okay.

So expect but start regional at -- to per million the to structure stay costs the growing. revenues cost about the quarter, $X.X

Erns Loubser

Yes, give take. or

Operator

have to Instructions] questions I'll turn this [Operator time. no We at back further you. it

Bill Leonard

thank in This to to want year. I the everyone the before end participating speak last for opportunity you to today's call. is our of

the healthy, much. look So a you we holiday stay season. and happy so Thanks next next year on wishing forward to to having safe, look Stay you again all progress call. and forward sharing the with you early

Operator

today. call this conference disconnect that ask you your and please and Ladies lines. for We gentlemen, concludes your participating for thank you

Greenbrook TMS (GBNHF) 9 Nov 222022 Q3 Earnings call transcript