Greenbrook Tms Inc (GBNH) 2021 Q3 法說會逐字稿

Welcome to the Greenbrook TMS Incorporated third-quarter 2021 results conference call and webcast. (Operator Instructions)

I would like to remind you that this conference call is being recorded today and is also being webcast on the company's website, www.greenbrooktms.com under the Investor section, Events.

After the speakers' remarks, there will be a question-and-answer session. Analysts and investors are reminded that any additional questions can be directed to the company at investorrelations@greenbrooktms.com.

This call contains forward-looking statements which reflect the current expectations or belief of the company based on the current available information. Forward-looking statements are subject to a number of risks and uncertainties that may cause the actual results of the company to differ materially from those discussed in the forward-looking statement.

Factors that could cause actual results or events to differ materially from current expectations are disclosed under the heading Risk Factors in the company's annual information form dated March 30, 2020, and in the company's MD&A for the period ended September 30, 2021, which are available on SEDAR, EDGAR, and on the company's website.

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

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

Go ahead, Mr. Leonard.

Thank you, Suzanne. Good morning and thank you to everyone for joining our conference call and webcast today. Q3 2021 presented a challenging quarter, with a more prominent seasonal factor than usual, with patients delaying treatment during the first open summer season since the onset of COVID-19.

The surge in the COVID-19 Delta variant during the summer season also created caution among patients and referring physicians, especially in late August and September.

Despite these challenges, we saw continued growth with quarterly revenue increasing by 9% in Q3 2021 as compared to Q3 2020, and by 15% year-to-date 2021 as compared to year-to-date 2020.

We believe the exaggerated seasonal effect and adverse market conditions were experienced industry-wide and represents a temporary downturn. And we saw a strong bounce back in patient volumes in October 2021, tracking toward record volumes that we experienced last quarter.

We are excited about the rollout of our Spravato program at select TMS centers, which continue through Q3 2021, building on our long-term business plan of utilizing our TMS centers as platform for delivery of innovative treatments to patients suffering from major depressive disorder, OCD, and other mental health disorders.

Spravato enables us to leverage capacity in our existing platform, which effectively enhances profit margins at TMS centers where Spravato is offered.

We're excited about the prospect of expanding this offering to an additional 14 TMS centers, bring our total to 23 TMS centers offering Spravato in early fiscal 2022.

With this anticipated expansion, we believe our Spravato program has the potential to grow up to as much as 10% of our total revenue by the end of fiscal 2022.

During the quarter, we also completed a bought deal public offering, an offering price of CAD7.75 per common share for aggregate gross proceeds of approximately CAD13.2 million. The proceeds were used to fund the acquisition of Achieve TMS East and Achieve TMS Central on October 1, 2021.

This raise, paired with forgiveness of the PPP loan, also strengthens our balance sheet position.

From a development perspective, we expect to add a total 25 TMS centers in 2021, bringing the total to 150 Greenbrook centers by year end.

We organically added two TMS centers in Q3 2021. And as I mentioned, we acquired Achieve TMS East and Central subsequent to the end of the quarter, which represented 17 additional TMS centers.

We are very excited about this acquisition as it strengthens our presence in New England and in the Central United States. The acquisition also secures robust payer contracts, brand recognition, physician reputation, and a strong management team within these regions.

We also expect the acquisition to serve as a foundation for continued growth within these regions and to realize operational synergies through leveraging our established infrastructure in adjacent regions. Our footprint now consists of 148 centers in 17 states.

And now for a more detailed review of the company's financial and operating performance, I will turn it over to CFO, Erns Loubser.

Thank you, Bill. As Bill mentioned, quarterly revenue increased by 9% to CAD13.1 million as compared to Q2 2020 and year-to-date 2021. Revenue increased by 13% to CAD38.2 million as compared to year-to-date 2020.

Revenue, however, decreased by 4% compared to Q2 2021 predominantly due to the adverse market conditions as described by Bill.

Average revenue per treatment increased by 2% to CAD241 million in Q3 2021 compared to Q3 2020, and decreased by 1% to CAD231 million in year-to-date 2021 compared to year-to-date 2020.

The increase was primarily attributable to three key factors: normalization of the adjustment of two variable consideration estimates; favorable rates negotiated in established markets, especially Maryland, Delaware, and Virginia; and collections on older accounts previously adjusted for.

Same-region sales growth was 9% in Q3 2021 and 15% year-to-date 2021, as compared to 2% in Q3 2020 and 2% in year-to-date 2020. Those same-region sales growth measure essentially mirrors aggregate growth as a result of the slow development during the pandemic.

Entity-wide regional operating income was CAD0.2 million in Q3 2021 as compared to CAD1 million in Q3 2020. Year-to-date 2021 resulted into the entity-wide regional operating loss of CAD0.3 million as compared to the entry-wide regional operating income of CAD1.5 million in year-to-date 2020.

This is the result of lower revenue during the pandemic relative to existing center and regional cost structure pointing to the capacity in our platform. We believe we are very well positioned to utilize this capacity through our Spravato program and growth in our TMS business as market conditions normalize.

Corporate G&A for Q3 2021 increased 45% to CAD5.1 million, and by 49% to CAD15.7 million in year-to-date 2021, predominantly due to the normalization of spending in Q3 2021 and year-to-date 2021, coupled with an increase in one-time costs.

Corporate G&A for Q3 2020, excluding one-time costs, increased by only 33% from Q3 2020, but decreased 12% from Q2 2021, representing a stabilization and spend in corporate G&A.

Loss for the period and comprehensive loss decreased by 55% in Q3 2021 to CAD3.5 million as compared to Q3 2020, and decreased by 17% to CAD18 million during the year-to-date 2021 as compared to year-to-date 2020. The decrease was predominantly driven by the forgiveness of the PPP loan and the lack of earn-out consideration expenses in 2021.

From a balance sheet perspective, the accounts receivable balance remained stable. And we strengthened our balance sheet through the completion of a public offering for net proceeds of approximately CAD12.2 million and the forgiveness of the PPP loan. As of September 30, 2021, we had approximately CAD26.1 million in cash on hand.

Moving to our core operating metrics. As of the end of Q3 2021, the total TMS centers increased by 5% to 131 from 125 a year ago.

Keep in mind, this does not include the Achieve East and Achieve Central acquisition that added 17 TMS centers immediately after the end of the quarter.

Compared to Q3 2020, the number of consultations performed increased 5% to 1,520. The number of TMS treatments performed increased by 7% to 54,525, and new patient starts increased by 3% to 1,520.

As Bill mentioned, market conditions were challenging during Q3 2021, which temporarily depressed some of these key metrics. But we remain optimistic as these forward-looking indicators bounce back very strongly, trending toward record levels experienced in Q2 2021.

Back to you, Bill.

Thanks, Erns. As I mentioned, Q3 2021 presented specific challenges early in the quarter with patients delaying treatment during their first open summer season since the onset of COVID-19 and a surge in the Delta variant late summer. Despite these challenges, we saw continued growth in both our consolidated revenue and patient treatments.

We're very pleased with the results of the Spravato program, and I look forward to expanding this offering. We believe we can enhance profit margin by optimizing the utilization of our current TMS centers.

This move also builds on our long-term strategy of utilizing our growing network of TMS centers and affiliate position as a services platform to deliver innovative treatments to patients suffering from mental health disorders.

At this time, we continue to collaborate with device manufacturers to expand the range of indications for TMS.

Most importantly, mental health remains a key focus in the US, with the unmet need for treatment at an all-time high. Our business fundamentals remain sound, and we are positioned better than ever to serve the need for the mental health support across the country.

We have now treated over 20,000 patients with over 730,000 treatments performed, a significant positive impact on the lives of so many patients suffering from mental health disorders.

We look forward to keeping you updated on the progress of the company. Thanks for your time today. And operator, we'll now take questions.

(Operator Instructions) Frank Takkinen, Lake Street Capital.

Bill, Erns, thanks for taking my questions. A couple from me today. I wanted to start on the October commentary you provided of getting back to record volumes you experienced last quarter.

How should we extrapolate this commentary plus the Achieve acquisition into the expectations around Q4 revenue?

And so in terms of forward-looking indicators, we saw a significant bounce back in October, kind of back to Q2 2021 levels and that was in patients start. Obviously, treatments take some time to follow. So we expect a pretty strong November and December.

And as I said, it tracked towards the Q2 2021 levels. So we're pretty bullish about Q4. And then we obviously layer on some additional treatments from Achieve TMS East and Central.

Got it. That's helpful. Now I want to take a little bit deeper dive on Spravato. Can you walk us through what exactly the model looks like here? How should we expect this to impact margins?

And then just lastly on that, 5% to 10% contribution by year end, how -- what is this baking in as it relates to per site mix between your traditional TMS offering versus Spravato?

Yes. I'll take the last two questions there, and I'll take the first one first. And from a margin profile perspective, as we mentioned before, kind of the variable margin on TMS and Spravato is very similar. So you essentially layer on Spravato and leverage our semi-variable and fixed costs in a center, effectively enhancing that margin. So we're very excited to layer that on.

And as we said, that can represent up to 5% to 10% of our business by year end. And also points to a nice lift in margin to trend towards profitability.

So that's really where we -- again, you have a -- you have a variable margin that's very similar to GMS, which essentially drops trades to the bottom line as you utilize your technicians, your real estate, and your existing infrastructure. So that's part one.

Frank, could just repeat the second part of the question in terms of the 10%?

Yeah. So if you think about 10 -- 5% to 10% by year end for those 23 sites offerings Spravato, what does the mix look like between Spravato and traditional TMS?

So that's going to vary. There's obviously -- they are not all going to be in place immediately in January.

So you have centers that operate, it's kind of a 50-50 mix down on St. Louis at the moment. I think the high end will be kind of a 50-50 split.

And then obviously, as we ramp the ones through the year, they'll be kind of lesser split for those.

But a 50-50 split is where we're at in kind of some of our highest provider centers at the moment.

Yeah, Frank, let me just add to that in terms of what Spravato actually does to us as a company. One is the fact that it really allows us to capture a wider range of patients suffering from depression, patients that may not qualify for TMS or are too far down the depression scale.

So for us, we're seeing what I would now say our pilot. We're moving as an actual offering. Our Spravato isn't a pilot. Probably 30% of those patients were patients who initially had treatment for TMS therapy, fell on a remission, and they really were a great candidate for Spravato.

So we're seeing a very complementary relationship between TMS and Spravato. Spravato getting patients the baseline to move them over to TMS and then vice versa.

So we're pretty excited. We're pretty excited about the opportunity to expand on that platform and just be able to provide a treatment that is customized especially for that particular patient suffering from depression.

Got it. That's really helpful. And then just last one for me. You alluded to it, Bill, a little bit, but maybe talk to some of the rough sketches you've gone through as far as the new center opportunity on a greenfield basis around the 17 newly acquired clinics with the Achieve acquisition?

Sure. I mean, if you look at the Achieve business, first, let's deal with the East. The East was a little bit more established from a kind of provider standpoint in getting in there and starting to dig in with the management team up there. There are some unique opportunities to continue expand on that platform, probably closer to the actual city of Boston.

And then if you shift over to TMS Central, TMS Central is really a brand-new footprint for us and for them. There were three centers in play in the kind of Midwest, the Iowa marketplace.

We will have opportunities to expand not only within the Iowa, but start to drift closer to kind of some unmet needs in the South Dakota area.

So one is a little bit more established that has some unique plug-ins that are kind of needed and will be a great opportunity. And the other one is really a platform in a new region.

Got it. I'll stop there. Congrats on the progress in the quarter. Thanks.

Great to have you on the call.

Chi Le, Desjardins.

Hi, good morning, Bill and Erns. My first question will be from -- so you are targeting 150 centers by the end of 2021, which would imply a bit of a pause on the center development as you're digesting Achieve East rates. And at a high level, are you rethinking your organic center development strategy given the profitability is more elusive or deferred as you open them organic center?

Yeah, I think it's -- from our standpoint, as we talked about on our prior call, in some case, we really substituted a more mature marketplace, especially during the time of COVID versus kind of greenfield organic growth.

But at the end of the day, we're still going to grow roughly 20% from prior year with 25 new centers added.

When we look at growth next year, it really is two things. One, from a new center number for TMS centers, we're in the middle of our annual planning session with our team, and we don't expect to finalize that budget for 2022 in the near future. So it's a little early for me to comment on new centers for next year.

But from a growth standpoint overall, we have done a great job of growing the TMS footprint. We put ourself in position to continue to grow and build upon a mental health platform to meet the needs of an underserved marketplace that became even greater due to the pandemic.

So for us, a key initiative for our team is not only to continue to grow our footprint, but leverage our footprint and increase utilization at the center level through TMS and now with Spravato.

So we're extremely excited about the opportunity to expand Spravato into more centers, building on our long-term plan.

So it's not that we're pausing development; we just focused on a more of an acquisition, more mature market versus pausing completely from an organic standpoint.

Thank you. And just a follow-up on that. So as you're focusing on driving modularization like layering of Spravato and acquiring more profitable, smaller networks, do you feel more confident on a path to profitability? And perhaps could you provide a roadmap to a profitable EBITDA?

Yeah. I think with the continued rollout of Spravato, we have the ability to capture a wider range of patients, provide a treatment that best fits the patient needs, and we believe the Spravato offering will enhance profit margin by optimizing utilization of the current centers. So it is, for us, a path towards profitability.

Thank you. And the last one for me. So on the revenue per treatment side, given Achieve TMS East and Central is established -- is operating in more established regions with perhaps favorable reimbursement, how should we think about that for the following quarters?

So good question. There's three things at play there. We had some wins kind of midyear with some of the bigger payers in established regions, which up reimbursement. And you see that in CAD241 million versus the CAD231 million year to date.

We've got a normalization in collections. So adjustments for variable consideration has normalized, which also helps us. Because we threw the whole re-credentialing and term conversion process.

And then there's, as you mentioned, in terms of the mix of business, we acquired TMS Achieve Central, especially on the East side that has a higher average reimbursement than what we're operating at.

So you'll see, as that becomes a bigger mix of our business and as we explained the California market, you should see a slight upward trend in average reimbursement.

I'm cautiously optimistic about that. That always depends on the mix of business, but we see a positive trend in that.

Thank you.

Noel Atkinson, Clarus Securities.

Good morning, Bill and Erns. Lots of progress since the last quarter. So well done on that. Just a quick view from me.

So in terms of the activity in October, you mentioned patient volumes were back up near record levels. How about patient starts? Is that also following through?

Sorry. So yeah, I think what you're seeing, as Erns alluded to earlier, is we had nice month of solid bookings for October, and those patients are kind of starting, too.

And as we talked about, you have the patient start and then that kind of six-week process. So you'll see those treatments in play for both November and into December. And we continue on with our strong bookings.

The good news is the fact that the patients kind of returning to normalcy in the sense that they're taking care of their depression needs. They're taking care of their mental health needs and are settling into a schedule. That's -- we're happy to see the work we've done.

And like you said, we were a little bit disappointed in what happened in the summer in terms of patient volume. But we are pretty thrilled with the fact that during that quarter, we also strengthened the balance sheet with the financing and put a great acquisition play and really build our platform for a strong end of the year and also into 2022.

Okay. In terms of the expansion of Spravato delivery to the 23 locations, how are you using these -- sorry, how are you choosing these locations?

You know, that 23 we talked about was really the centers that have the shortest timeline to ramp up due to physician coverage and footprint.

But I would tell you that throughout 2022 and beyond, we will continue with the pieces in place for additional expansion.

But that first 23 we announced were really kind of the shortest timeline and ramp to kind of get up and running, especially with physician coverage.

Okay. So in theory, you could be well beyond 23 clinics by the end of 2022?

We will continue to work towards expanding the offering.

Okay. And then in terms of reimbursement and billing, are you doing any buy-and-bill yet? And is that something that you would be looking at for 2022? And if so, what does that do for revenue and margin profile?

I think Erns will weigh in on this a little bit, but I'll start. In terms of what we're seeing from the billing side right now, we're pretty comfortable in offering it in the administer-and-observe methodology, in terms of not taking on the cost of the drug at this time.

There is a little bit of margin difference on the buy-and-bill. You're probably going to see a little bit higher revenue, but you're also going to see a higher cost structure.

And in some cases, I think what we'll do, Noel, is we may have a specific market where you have to be in a buy-and-bill situation to acquire kind of type patients with a -- for example, in St. Louis. But I don't know if it's something we're going to demand, we roll out throughout all centers in 2022.

Erns, anything to add?

No, I think that captured it. It adds contribution; it's obviously -- you essentially buy the drug wholesale and get reimbursed for it. It's a thinner margin, but an absolute contribution from a revenue standpoint increases.

But as Bill said, the focus is on administer and observe, Noel. But in certain markets, you obviously -- you have to follow the buy-and-bill. And there's an opportunity to capture a wider range of patients for specific insurance that require that.

Okay, great. So thanks very much. Appreciate the color.

Thanks, Noel.

David Martin, Bloom Burton.

Hi, good morning, Bill and Erns. First question goes back to one of your earlier questions. When you say 50-50 at the high end TMS/Spravato, is that on the basis of revenue, sort of the number of treatments in that clinic, or the number of patients that are treated?

Purely on the revenue base. And to reiterate that, it's kind of on the high end. We don't expect in terms of opening new centers going to be 50-50. There's specific locations that has a greater opportunity and that's on a revenue a revenue basis.

Just to add to that, there's -- you can treat many more TMS patients than you can do with Spravato. So you have a two-hour observation period with Spravato. So your utilization capacity is based on the number of chairs you have in your center and number of patients you see.

So you're always going to have the ability to treat more Spravato patients from a pure -- I mean, more TMS basis from a more patient number standpoint.

Okay. What are the factors driving the choice of the patient to either TMS or Spravato?

Good question. I think one of it, as I talked about earlier, is you have patients who were initially involved in TMS therapy, had a good result, might have fell out of remission, and wanted to choose Spravato.

We also have a culture in the US that kind of likes immediate gratification. So some patients just really want a chance and are in need of having a quicker onset of action.

And I think from a Spravato standpoint, you do get the quicker onset of action. From a durability standpoint, I really like the outcomes of TMS therapy. So I think you're getting the best of both worlds.

Again, as I said, very complementary of one another, and the patient has fit well in our centers. Our staff has been able to handle both Spravato and TMS, and we will continue to look to grow both sides of that business.

Okay. And my last question -- I'll jump back in the queue -- you were -- and I think you were expecting a surge of patients who were depressed because of COVID. And obviously, they have to work through their first or second lines of therapy.

Are you seeing signs that the surge is coming your way? Or is this maybe we shouldn't be anticipating as much as we were?

Yeah. I mean, I think from a macro standpoint, the entire mental health marketplace has gotten bigger. I think the reality is it kind of had a domino effect. I definitely think we'll continue to see additional patients in the pipeline.

But the reality is you have a lot of doctors who are not seeing patients as much. Some have pulled back because of COVID. So patients are having a harder time getting into see their doctor to discuss their mental health disorders. And so you are delayed in terms of starting that med trial, and you've got to sell few.

So from us, from a macro standpoint, we love the fact that the pipeline is still there; they're still extremely underserved marketplace. We expect patients to eventually come in for services with Spravato or TMS because they failed drug therapy 50% of time.

So we just -- we don't think it's gone away. It's still there. It's still a huge market. And we're in great position to kind of take advantage of that opportunity.

Okay. Thank you.

Tania Gonsalves, Canaccord Genuity.

Good morning, Bill and Erns. Thanks for taking my questions. First off, I'm wondering if you can tell us how many new -- both regional and corporate -- personnel you onboarded as part of the Achieve East/ Central acquisition.

So from a -- sorry, is the question what's the increase in corporate G&A as a result from Achieve East and Central? Did I understand that correctly?

Sure. Or the number of people that you brought onboard from there.

From a corporate perspective, very little. You can think of the Achieve East and Central as an additional region. So we bought regional -- certainly regional personnel and a strong regional management team and technicians on.

But from a corporate perspective, we can really leverage our platform to service that. So kind of back office, compliance, finance, everything we can service from our established corporate platform.

Okay, excellent. On a blended basis then with Achieve, can you talk to where company-wide utilization is today in terms of max volume per center?

So I mean, we're always at a -- target of 70%. This was -- as you saw, we dropped from CAD13.7 million to CAD13.1 million. So utilization is probably hovering a little low below that 70% margin. So that's really the opportunity of the platform.

As market conditions normalize, there were specific constraints in this quarter, so not only on the TMS business. As market conditions normalize, we will utilize that capacity in the business without increasing costs.

And then we also layer on Spravato, which is an opportunity to increase that utilization.

Thanks. And just lastly for me, can you provide an update on how you expect that reversal of the Q4 provision you took to track over the coming quarter?

So I think you've taken the adjustment variable consideration in the past couple of quarters. How is that going to continue on over the next two to three quarters?

So as you've seen kind of as a percentage of revenue, that decreased steadily. We -- they will continue to be an adjustment variable consideration into Q4.

But we will stabilize at a level with the target of ultimately getting to about 3%, if you can call it, gross revenue or kind of allowable. So 3% is the target ultimately, and we're trending towards that.

Okay. Well, I think before, we had talked about that being complete -- if there wasn't any reversal as being complete by the first half of 2022. So it's going to be complete earlier than expected.

Yeah. So I mean, the reversal -- as you see in our average revenue per treatment -- has gone pretty well.

I mean, like I said, there will be continued adjustments to variable consideration, but that should stabilize into 2022.

Okay. Well, that's all for me. Thank you, Erns.

Thanks.

Justin Keywood, Stifel GMP.

Hi, good morning. Thanks for taking my call. I was just hoping to dive in on Spravato a bit more. Are you able to describe the competitive landscape for Spravato? Like are there other pure-play Spravato clinics out there that you be potentially competing against? Or is this more offered as part of a more broadly integrated health services types of organizations out there?

And then also just on the expansion, if there are these clinics that just provides Spravato, would there be some opportunity to acquire them?

Good question, Justin. Great to hear from you. I'll take this one. Let's start at the top level.

Obviously, with the TMS market of 2,600/ 2,700 devices installed, we're pretty used to being in a competitive environment.

With Spravato, we're not seeing any specific Spravato-only type centers. What you see with Spravato is individual practitioners who offer this within our office place.

As we've talked about before, just like with TMS therapy, we think we have a distinct advantage in how we adapt patient experience and how quickly we get back the patients. We're unlike other mental health providers, and that's what makes Greenbrook special.

So we know it's a competitive environment, but I think our early pilot proved that we're able to attract patients.

And keep in mind, I think it's important to note on the call that this initial pilot we did with Spravato did not layer on any direct consumer marketing or any of our sales team in the field educating doctors.

So we have yet to turn on the faucet with it. It's a great opportunity for us to begin to kind of provide -- branding Greenbrook with both Spravato and TMS therapy. So we're -- we have considerable upside in kind of tracking patients.

But it's going to be a competitive landscape, but we are comfortable in our delivery care model as it exists today. And we've shown -- we've proven it in the past with TMS therapy that is also extremely competitive.

Got it. That's helpful. And then as far as the staff that administers Spravato, is there an additional type of training that's needed? Could it be accomplished with the same practitioners that you have offering TMS therapy?

Yes, there is a training, and Janssen does a great job with that. But it's no additional staff in terms of -- that's the beauty of the layering on Spravato to our current footprint of Greenbrook centers.

Today, we have great doctors, great technicians who deliver a wonderful patient experience. That's the same staff we're using.

And so just like they had to learn how to do TMS therapy, there's a training for Spravato that our -- and our staff has done a great job of getting comfortable with Spravato and layering that on.

So again, it's an opportunity for us to capture a wider range of patients and continue to utilize the center with the current staff and doctors even more to drive towards profitability.

Okay. And then just finally, on the 148 TMS centers, would all these be potential Spravato locations? Do they all lend themselves to the criteria that you're looking for? Or would there only be a percentage of those centers in the network?

Yeah, I think that's a -- in theory, they can all eventually be Spravato centers, but obviously you have to layer in the physician coverage and the footprint.

And as I talked about on prior calls, I don't know if I need two Spravato centers 15 minutes apart from one another, but they are an opportunity.

And we do expect to begin to put the key pieces in place to go beyond 23. For now, we're focused on getting that 23 up and running as early as possible in 2022.

That's helpful. Thank you for taking my questions.

Thanks.

Nate Nahirny, ThinkEquity.

Hi, Bill. Congratulations on the quarter. This question may have been touched a little bit earlier. But in regards to your growth, you're continuing to expand your clinic footprint, obviously through acquisition. But what is the plan for organic growth within the current clinics you operate, maybe besides the Spravato rollout?

Yes. So again, thanks. It's great to hear from you, Nate. When we look at growth, obviously, it's growth within our product offering at the center. But it's also growth on actual footprint.

And our footprint, we have not decided -- as I said earlier, we're in a budget season and we'll comment on that the next call.

But we tend to look at growth from a footprint standpoint, both through acquisition and organic.

And as we talked about earlier, we have significant opportunity to expand organically in both our new acquisition on the Central -- Achieve Central platform and the Achieve East. And we have some centers we've had to fill out some space in as well that are existing within Greenbrook.

So again, historically, we've always done a great job of adding centers to our platform. And it will be a methodology through, not only just acquisition potentially or organic, but also through product diversification.

And adding to Bill, that from the core TMS business, obviously, we had some constraining factors in Q2 2021. When market conditions normalize, we believe we can increase the throughput in our TMS business also.

So we've got capacity in the platform, operating leverage there. And we can utilize that not only through product diversification, but also kind of boosting our core TMS business as market conditions normalize.

Got it. Thank you for taking the question.

Thanks, Nate.

Chi Le, Desjardins.

Hi, just a quick follow-up from me. So as you see reduced stigma in mental health experience in the US plus you're casting a broader net and consultation continue to increase, when do you anticipate the conversion rate to increase back to the pre-pandemic level?

So when do we expect the market conditions normalizing? That's -- we were going through our budgeting process now. We are obviously evaluating our market factors at play.

The good news is we saw a bounce back in forward-looking indicators early in Q4 in October. So it's difficult to predict in terms of exactly when the market conditions normalize to pre-pandemic levels. But we saw -- we've seen some positive trends recently.

Yes. Chi, the only thing I'd add to that is the fact that -- again, as we talked about earlier from a previous question, we do expect those patients in that pipeline who have never -- first time experienced depression. They may be calling our ads based on us reaching them and creating awareness. They may have to kind of start going through that kind of first drug med trial.

So I think while they may not kind of become a patient in that initial couple months or first hearing us, they're still in the pipeline and may come to us later in the year. So you've got some new patients suffering from depression early on now in the system.

Thank you. And maybe just an idea here. So to build on that, like reduce stigma, corporations are increasingly focusing on the employees' mental health, have you considered hooking into employers to maybe offer the employees under group health benefit or PAP programs with employer covering the costs?

Yes, that's a great point. And obviously, we have actually trialed that in a specific marketplace in Richmond in terms of a large banking institution. And, you know, just based on myself coming from the TLC, this is one of our programs in place with corporate advantage program. So I'm comfortable and have an understanding of that marketplace.

It is one of our next things that we will begin to look at, not only with kind of providing opportunities within the corporations that have our insurance coverage. Obviously, we work closely with the benefits group on it.

But we're also looking at opportunities to work closer with the actual payers directly and creating opportunities with them directly for their members.

Thank you for that.

David Martin, Bloom Burton.

Hi. Thanks for taking my second question -- set of questions. You outlined your organic and acquisitive growth intentions or desires. I'm wondering within that plan, is it possible to breakeven or reach profitability? Or is that something far off in the future, and we shouldn't expect that until once you've grown your network to a certain size?

Look, our outlook in terms of growing profitably and growing towards profitability has not changed. And as we've mentioned, we're going through the budgeting process now and there's a lot of variables at play.

But Spravato also gives us a really good tool to enhance profit margins at the regional level, which can help us drive to profitability.

In terms of -- I can't comment directly on 2022 quite yet. But it remains a key initiative of the business to grow towards profitability and self-sufficiency.

And would that be near-term profitability, intermediate term, or long term?

I mean, we haven't changed our outlook on that. Like we are kind of in medium term is what I can say now. Like I said, we're going through our strategic budgeting process at the moment.

Okay. And second question, what are the remission rates in your clinics that you're experiencing Spravato and TMS? Are they similar or different?

Yes. Spravato, I think we -- I alluded to this a little bit earlier, TMS therapy across the country, we have never published our data. We're closing in on a -- by far the largest data set in the US with over 720,000 treatments.

And with that, we've never published our data, so to speak. But we're having patients that meet remission just shy of 50%, which is above the FDA study lines.

I think with Spravato, you have a quicker onset, David. Some of those patients tend to fall out of remission later on, but they are also very quick to come back in for maintenance therapy because of the quicker onset of treatments.

So for us, you're probably going to see a patient be more long term, stable with TMS therapy. And from a Spravato standpoint, a quicker onset of action. But they may need more as provided in the future.

And do some of them start with Spravato and then go to TMS for the long-term maintenance?

Absolutely. So if you look at Spravato and their indications, you may have someone that's more suicide ideation. So you want to get that patient to baseline, and then potentially continue to treat them with Spravato or have the ability to move them over to TMS.

And that's where you find that kind of crossover, that complementary behavior that allows patients to start with Spravato and move into TMS therapy or even TMS therapy and actually be on Spravato. So they do very well work together.

Okay. And one last quick question. Were regions where you see higher reimbursement rates, are your costs also higher in those areas?

So there's some correlation. But in the California market, as we've said before, like that's disproportional. So you can generate higher margins there. Because your cost base is maybe slightly higher from a staffing perspective, but not significantly.

Similarly in the Texas market and the Massachusetts market, it's more favorable economics with higher reimbursement. You've got a slightly higher cost base, but it doesn't negate the high reimbursement and then the totality. So you've got opportunity to generate high margins there.

Okay, thanks. That's it for me.

There are no further questions.

Well, thank you, Suzanne. We appreciate the opportunity to talk to you today about the company. We're really excited about the position we're going to end up with at the end of the year and kind of going forward with the opportunity to expand our offering to patients and really run towards kind of utilization and profitability.

Look forward to talking to you again. And wishing everyone a happy holiday season as I won't speak to you until after the new year. So thanks for all your support and I will talk to you soon.

Thank you, everyone.

Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect.