Neuronetics(US:STIM)2020-11-03 10:19Financial Data and Key Metrics Changes - Total revenue for Q3 2020 was $12.4 million, up 28% sequentially from Q2 2020, but down 22% year-over-year due to COVID-19 impacts [8][24] - US Neurostar Advanced Therapy system revenue was $2.5 million, up 9% sequentially but down 45% year-over-year, with 39 systems sold compared to 68 in Q3 2019 [24][25] - US treatment session revenue was $9.1 million, up 39% sequentially and down only 11% year-over-year, with average revenue per system at approximately $8,100 compared to $10,500 in the prior year [26] - Gross margin increased to 78.7% from 73.8% year-over-year, attributed to a higher mix of treatment session revenue and reduced field service costs [26] - Operating expenses decreased by 33% year-over-year to $12.2 million, with a net loss of $3.4 million or $0.18 per share, improved from a net loss of $6.9 million or $0.37 per share in Q3 2019 [27] Business Line Data and Key Metrics Changes - Capital equipment revenue grew by 11% sequentially, indicating a recovery in system sales as restrictions eased [10] - Treatment session revenue showed strong recovery, with 90% of customer offices open and utilization approaching pre-COVID levels [11] Market Data and Key Metrics Changes - Approximately 10% of customers' offices were still not seeing patients in person, while the remaining 90% were starting to see utilization levels rise [11] - The market for Neurostar Advanced Therapy remains underserved, with only 800 out of over 26,000 psychiatrist practices in the U.S. utilizing the system [13] Company Strategy and Development Direction - The company is focused on increasing awareness of Neurostar Advanced Therapy as a non-drug treatment for depression and optimizing treatment session revenue [12] - Plans to expand clinical evidence and indication expansion strategy are underway, leveraging data from the TrakStar cloud management tool [15] - The company aims to redefine its sales organization and optimize territories to enhance efficiency and drive patient volume [32] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the recovery trajectory, expecting continued sequential improvement in Q4 2020 and into 2021 [29][35] - The ongoing pandemic has heightened the need for effective treatment options for mental health conditions, presenting a significant opportunity for Neurostar Advanced Therapy [36] Other Important Information - As of September 30, cash and cash equivalents were $15.7 million, providing necessary capital to reach breakeven [28] - The company anticipates Q4 2020 revenue in the range of $13 million to $13.5 million, with total operating expenses projected between $59 million and $61 million for the full year [29] Q&A Session Summary Question: Can you discuss the realignment plans on the PDM and NPC side? - Management indicated that the sales organization is being restructured to balance territories and improve efficiency, with training planned for January [42][44] Question: What is the guidance for Q4 and the first half of next year? - The company is budgeting for a rebound in 2021, aiming to return to or exceed 2019 levels, contingent on economic conditions and pandemic developments [46] Question: What steps are needed for Neurostar Advanced Therapy to become a first-line treatment? - Management is analyzing data from the TrakStar registry to support discussions with payers, but the timeline for payer response remains uncertain [48] Question: How is the commercialization going in Japan? - The company has reimbursement in Japan and is conducting a post-market study in 20 hospitals, with controlled system placements ongoing [75] Question: How has COVID impacted the new account strategy? - Management noted that individual psychiatrists have adapted to COVID protocols, and system sales are returning to historical levels [59][61]