Neuronetics, Inc. (NASDAQ:STIM) Q3 2023 Earnings Call Transcript

Margaret Kaczor: Okay. So no commentary in terms of the treatment. So that’s fine enough. On the utilization side as well, obviously, that was encouraging commentary. An 18%, I think, I heard for usage in the field. How strong of a leading indicator, I guess, is this going into 2024? And can we assume or think of kind of that treatment growth potentially being in that mid-teens or high-teens or better, especially with all these investments? Thank you, guys.

Keith Sullivan: I think we’re banking on the growth of our per-click, what we used to refer to as per-click business continuing to grow in the upper teens. And I think all of our programs are taking effect. And the BMG program actually pulls them all together and gives the account the reason for them implementing all of our programs within their practice. So our plan incorporates a upper teens growth for all of our per-click accounts.

Margaret Kaczor: Great. Thank you very much, guys.

Operator: Thank you very much. One moment for our next question. Our next question comes from the line of Adam Maeder of Piper Sandler. Your line is open.

Adam Maeder: Hi Keith and Steve. Good morning, and thank you for taking the questions here. I wanted to, I guess, try and follow up on some of the questions that were already asked. The first one just on Greenbrook, are you able to kind of – I heard positive utilization trends in the prepared remarks. Can you flesh that out for us a little bit and talk about how the Greenbrook centers kind of fared versus the non-Greenbrook centers? I guess that’s the first question. Then a follow-up or two. Thanks.

Steve Furlong: Adam, it’s Steve. Yes, if we look at the two entities separately, Greenbrook I think has recovered quicker than the Success side of the business. There were certainly some operating philosophy differences between the two companies when they were integrated. And I think pulling the two companies together – and I don’t want to speak for Greenbrook since they are a publicly traded company. It did require some work and some education as to why the Greenbrook way was preferred. And so from a high-level perspective, Greenbrook is operating at pre-transaction levels, and I would say Success is making improvements and is gradually getting to those pre-transaction levels. So we’re very bullish on the company and our go-forward partnership. Again, we’re 100% aligned from a management philosophy, sales and marketing. Again, they’re really fully taking advantage of co-op marketing and driving utilization. So we’re very confident in our go-forward partnership.

Adam Maeder: Got it. Okay. That’s helpful color, Steve. Thank you for that. And then maybe just to switch over to the capital side. I know we’ve had some discussion there. But 200 to 250 systems per year, I think that’s kind of the framework you’ve given us in the past. Is that still a good framework for models in 2024?

Steve Furlong: I mean, we’ve been communicating between 45 and 50 systems a quarter. So I would say 250 would be a stretch for next year. So I would say a better target is somewhere between 200 and 225 at this point.

Keith Sullivan: We want to make sure that we can train these accounts and get them up and running so that they don’t have boxes that are just sitting in the corner. So the 200 to 220 is a good number for us.

Adam Maeder: Okay. Thank guys for the clarification there. And then just the one last one for me would be on gross margin trajectory as we think about Q4 and next year. We had some one-timers that weighed on gross margin in Q3. But if you adjust for those, your gross margin number is pretty good and better than what we modeled. And perhaps that’s a reflection of revenue mix this quarter. But Steve, how do we think about gross margin going forward? And any color you can provide there would be great. Thank you.