Neuronetics, Inc. (STIM) Q4 2019 Earnings Report, Transcript and Summary

Ladies and gentlemen, thank you for standing by, and welcome to the Fourth Quarter and Full Year 2019 Financial and Operating Results Conference Call. At this time, all participants’ lines are in a listen-only mode. After speakers’ presentation, there'll be a question-and-answer session. [Operator Instructions] Please be advised that today's conference is being recorded. [Operator Instructions] I will now hand the conference call over to your speaker today, Mark Klausner. Thank you, and please go ahead, sir.

Thank you, operator. Good morning, and thank you for joining us for Neuronetics fourth quarter and full year 2019 conference call. A replay of this call will be available on our website for 30 days. Joining me on today's call are Neuronetics' Chief Executive Officer, Chris Thatcher; and its Chief Financial Officer, Steve Furlong. Before we begin, I would like to caution listeners that certain information discussed by management during this conference call will include forward-looking statements covered under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995, including statements related to our business, strategy, financial and revenue guidance and other operational issues and metrics. Actual results could differ materially from those stated or implied by these forward-looking statements due to risks and uncertainties associated with the company's business. For a discussion of risks and uncertainties associated with Neuronetics' business, I encourage you to review the company's filings with the Securities and Exchange Commission, including the company's annual report on Form 10-K expected to be filed later today. The company disclaims any obligation to update any forward-looking statements made during the course of this call, except as required by law. During the call, we'll also discuss certain financial information on a non-GAAP basis that includes EBITDA. Management believes that non-GAAP financial information taken in conjunction with U.S. GAAP financial measures provide useful information for both management and investors by excluding certain noncash and other expenses that are not indicative of trends in our operating results. Management uses non-GAAP measures to compare our performance relative to forecast and strategic plans to benchmark our performance externally against competitors and for certain compensation decisions. Reconciliations between U.S. GAAP and non-GAAP results are presented in the tables accompanying our press release, which can be viewed on our website. With that, it's my pleasure to turn the call over to Neuronetics' Chief Executive Officer, Chris Thatcher.

Thanks, Mark. Good morning, everyone, and thank you for joining us. On today's call, I will provide an update on our performance during the fourth quarter, followed by an update on a few strategic aspects of the business. I'll then hand the call over to Steve to walk through our financial performance, after which I will provide an update on the business going forward including guidance for 2020. Then, we will open up the line to take your questions. Total revenue in the quarter was $17.4 million, an increase of 11% over the prior year primarily driven by 14% growth in the U.S. NeuroStar Advanced Therapy revenue and 13% growth in U.S. NeuroStar treatment session revenue. These results were in line with our expectations for the quarter and we continue to be pleased with the pace at which we've been able to consistently grow our installed base, with the fourth quarter representing the seventh consecutive quarter in which the active installed base has grown approximately 20% over the prior year quarter. Through the continued execution of our commercial strategy, we've been able to consistently penetrate and take advantage of the large untapped market that exists in the U.S. Starting with an update on business development managers or BDM sales force, as noted on previous calls, our goal for the year was to bring our total BDM territory to 59 by the end of 2019 and we met that goal. We also ended 2019 with 33 NeuroStar practice consultants and 15 clinical training consultants in line with the plan we laid out at the beginning of 2019. The NPCs and CTCs are an important part of the value proposition that that we offer to ensure that customers are supported in training and operationalizing NeuroStar in their practices. We continue to evaluate how to best resource our commercial team across BDMs, NPCs and CTCs to ensure the right balance between NeuroStar sales, driving system utilization and providing a high level of training and customer support. As I'll discuss later, we're going to make a modest shift in the focus of our commercial resources towards MPCs and CTCs in 2020. We had another quarter of strong system sales with our TMS-only providers. As a reminder, these are large businesses often having multiple sites across the country who either receive patient referrals from psychiatrists in the community that don't currently offer TMS or market directly to patients struggling with depression or both. We're thrilled at the pace at which we've been able to become a preferred partner to many of the country's largest TMS-only providers, and we will continue to focus on this attractive segment in the market as these providers are likely to drive consistently higher volumes of patients and make multiple new system purchases over time. On our last call, we mentioned a decline in system utilization amongst a subset of our legacy customer base. We did a thorough analysis of these accounts to determine the underlying cause of the slowdown and have worked with our sales and marketing teams to develop our strategy to reverse these trends. We found that there is room for improvement in utilization on a majority of these customers with the right combination of training and support. We did not expect to see a market improvement in the utilization of these systems in the fourth quarter as we're still in the process of working with these practices. However, we believe that we can deliver improved utilization in 2020. Shifting gears to our global expansion efforts. We continue to see solid early commercial traction in Japan following our positive reimbursement decision in June of 2019. We view Japan as a high potential geography and are very pleased with the work that our partner, Teijin, has done so far to develop the market. We expect revenues to be lumpy in the near-term as we work with Teijin to increase awareness, system installations, and psychiatrists training with a goal of driving both capital and treatment session revenues. Lastly, I'd like to discuss the future expansion of indications for use for the NeuroStar Advanced therapy system. We're very excited to announce that the company's recently received Breakthrough Device Designation in the U.S. from the FDA for NeuroStar Advanced Therapy treatment for bipolar disorder. Breakthrough Designation provides several potential advantages, including a proactive and faster dialogue with the FDA, the potential for innovative clinical trial design via the program's clinical protocol agreement process and an expedited review process of the company's submissions to the FDA. It also validates the need for an effective nonpharmaceutical treatment option for this disorder. We're working with the FDA to determine a specific clinical study design and expect to have some clarity on this later in the year, at which time, we'll share more details. Overall, we believe that we remain well positioned to continue to drive top line growth in the business and build upon our market leadership position over the long term. Despite some recent lumpiness and utilization among the small percentage of our customers, throughout the year, we have continuously demonstrated our ability to drive the adoption, utilization of NeuroStar Advanced Therapy. I'd now like to hand the call over to Steve to discuss our financial performance.

Thanks, Chris. Before I provide a review of our fourth quarter financial performance, I would like to bring your attention to a change in the way we are going to report our U.S. revenues. As our business has evolved, as a result of the increased usage of sales-type leases as well as fixed price treatment session contracts, the composition of our U.S. revenue has shifted. In an effort to provide investors with the most useful information on our business, we have changed how we present our U.S. revenue. Under the new reporting structure, U.S. NeuroStar Advanced Therapy system revenue will be reported as three separate items. NeuroStar capital revenue the significant majority of system revenue, which consists of revenue from capital sales and revenue from sales-type leases; operating lease revenue, which consists of revenue recognized from units previously rented; and other revenue, primarily revenue generated from the sale of treatment coil upgrades. In addition to providing a breakout of these three items within U.S. NeuroStar Advanced Therapy system revenue, we will be providing a number of new systems installed in the U.S. during the quarter. This number represents the total number of units sold in the U.S. as either a capital sale or a sales type lease. Total U.S. treatment session revenue is comprised of all U.S. treatment session revenues from both our per click business as well as our fixed-price contracts. Going forward, we will provide an average revenue per active system metric defined as total U.S. treatment session revenue divided by the U.S. active installed base at the end of the prior quarter. We will be providing a supplemental disclosure document on the IR portion of our website, which includes a quarterly historical breakout of the new U.S. revenue reporting structure for 2018 and 2019. Turning to the quarterly results. Total revenue for the quarter was $17.4 million, an 11% increase over the prior year quarter. U.S. revenue was $17 million, an increase of 13% over the fourth quarter of 2018. International revenue was approximately $325,000, a decrease of approximately $220,000 versus the prior year quarter. The year-over-year decrease was a function of the initial stocking order of systems placed by Teijin during the fourth quarter of 2018 that did not recur this year. U.S. NeuroStar Advanced Therapy system revenue for the fourth quarter of 2019 was $5.4 million, an increase of 14% over the fourth quarter of 2018 revenue of $4.8 million. In the fourth quarter of 2019, NeuroStar capital revenue was $5 million, an increase of 14% over the fourth quarter of 2018. In the quarter, a total of 78 units were sold compared to 65 units in the fourth quarter of 2018. As anticipated, blended average selling prices declined 11% as compared to the prior year due to a higher mix of sales-type leases versus capital sales and lower prices on capital sales. We expect that average selling prices will fluctuate based on the mix of capital sales and sales-type leases as well as underlying pricing trends. During the quarter, we saw our active installed base increase by 21% to 1,085 units, a net increase of 178 units from the fourth quarter of 2018 and a net increase of 53 units sequentially. As a reminder, the active installed base includes capital units sold, sales type leases and operating lease units. In the fourth quarter of 2019, U.S. operating lease revenue was $176,000, a decrease of 24% as compared to the prior year quarter. Due to the accounting change that went into effect in 2019, we don't currently expect to install any new systems under operating lease agreements. And thus, this revenue number will eventually go to zero. In the fourth quarter of 2019, other U.S. NeuroStar Advanced Therapy system revenue was $278,000, an increase of 50% over the prior year quarter as we saw an increase in the number of treatment coil upgrades compared to the prior year quarter. Turning to U.S. treatment session revenues. U.S. treatment session revenue was $11.2 million for the fourth quarter of 2019, an increase of 13% over the prior year quarter. The increase in treatment session revenue was driven by our larger customer base, purchasing more treatment sessions and a larger number of systems installed under fixed-price contracts During the quarter, average revenue per active system was approximately $10,900, a decrease of 5% from the prior year quarter, primarily due to the substantial number of new systems sold in the last 18 months that have not yet ramped up to steady state utilization and price declines for per click treatment session. The U.S. service and other revenue was approximately $376,000, a 12% decline over the prior year. Gross profit for the fourth quarter of 2019 was $13.1 million, an increase of $1.2 million from $11.9 million during the fourth quarter of 2018. We continue to generate very strong gross margins in the fourth quarter of 2019 at 75.7%, down just a bit from the fourth quarter of 2018 gross margin of 76.3%. This small decrease in gross margin resulted from a higher mix of sales-type leases and lower average selling prices on capital system sales. Sales and marketing expenses for the fourth quarter of 2019 were $11.5 million, an increase of approximately $825,000 over the prior year. This increase was primarily due to the increased size of our sales force. General and administrative expenses were $4.3 million, a decrease of approximately $385,000 compared to the prior year. This decrease was primarily driven by the year-over-year timing of public company costs. Research and development expenses for the fourth quarter of 2019 were $4.2 million, an increase of approximately $2 million from the prior year period. The increase was primarily due to product development costs related to the continued development of our next-generation platform, and higher personnel costs in preparation for clinical trials. Net loss for the fourth quarter was $7.6 million compared to a net loss of $6.1 million in the fourth quarter of 2018. EBITDA, which is a non-GAAP financial measure for the fourth quarter of 2019 was a loss of $6.3 million compared to an EBITDA loss of $5 million in the fourth quarter of 2018. Moving to the balance sheet. We ended the year with cash and cash equivalents of $75.7 million compared to $104.6 million at the end of 2018. We are pleased to announce we just closed on a $50 million term loan with Solar Capital, which allows us to repay the $30 million currently outstanding on our prior debt facility within the interest-only period and provides for additional capital to bolster our balance sheet at favorable terms. The debt is available in two tranches, which would be funded as follows: tranche one, $35 million, funded yesterday; tranche two, $15 million will be available to be funded on or before December 15, 2021, at our request and within 30 days of our achieving a net product revenue milestone measured on a trailing 12-month basis, measured on or before November 30, 2021. The interest-only period on the initial tranche is 24 months, but can be extended by an additional 12 months on our achieving a net product revenue milestone measured on a trailing 12-month basis, measured again on or before November 30, 2021. I'll now turn the call back over to Chris. Chris?

Thanks, Steve. As we move into 2020 and beyond, we'll be putting an increased focus on accelerating our pathway to profitability. As a result, we'll be taking some actions with their spending and strategic initiatives this year, focusing on a path to EBITDA positive in late 2022 to early 2023. We also would note that we believe that cash on hand combined with credit available to us is sufficient to get us to EBITDA positive. Starting with the sales force. Over the last couple of years, we've gone through a period of rapid expansion, and we currently believe that BDM territories in the mid-50s is the most appropriate and optimal number of territories that cover the U.S. at this time. Despite the slight decline in the total number of territories versus where we ended 2019, we believe that we can continue to drive growth in new system installations as a number of BDM full-time equivalents or FTEs will actually be higher in 2020 than 2019 due to the cadence of hiring throughout the year. We've also expanded our HVT targeted universe to the top 5,700 solo and group practices in the U.S. that treat 60% of the MDD patients in these types of practices. This gives the BDMs more accounts to prospect and optimizes the BDMs productivity at this juncture. In order to keep up with our growing installed base, we will add NPCs and CTCs to drive new system ramp up and facilitate ongoing utilization. Thus, in 2020, we expect to hire seven NPCs as well as a regional manager along with two additional CTCs. Another area of the business we're adjusting is our international expansion efforts. In the past, we have considered entering a number of incremental geographic regions in Western Europe and Asia. However, given the large greenfield opportunities in both the U.S. and Japan that still exists, we will remain focused on these regions exclusively for the time being. I would now like to discuss our product and clinical development efforts. As noted earlier, we just received Breakthrough Device Designation for bipolar disorder from the FDA. So we decided to concentrate our near-term efforts on this indication. Bipolar disorder by definition is someone that has undergone episode of depression followed by an episode of mania. We're going to focus on the greatest unmet need, which is the episode of depression. We remain interested in pursuing a PTSD indication as well, but I think it's prudent from a cash management and profitability perspective to prioritize our clinical development activities first on the bipolar disorder. We are also continuing development of our next-generation NeuroStar Advanced Therapy system with an eye on improved usability, precision and reproducibility. Turning to guidance for the full year 2020. We're setting guidance of total worldwide revenue to between $69 million and $71 million, representing approximately 10% to 13% year-over-year growth, respectively. For the first quarter of 2020, we expect worldwide revenue of between $13.5 million and $14 million, representing 6% and 10% year-over-year growth, respectively. For the full year 2020, we expect to generate strong gross margins to remain in the mid-70% range, and we expect operating expenses to between $76 million and $78 million. We're very excited about the opportunity for NeuroStar Advanced Therapy to help a significant number of patients who suffer from major depressive disorder. We intend to maintain our market share leadership position in the category by offering the most advanced and effective technology and the best customer support to the largest and most sophisticated commercial team in the industry. We plan to leverage this team to continue to expand our installed base at an impressive rate, drive system utilization and provide best-in-class customer support and training. Our commercial strategy remains consistent as we continue to focus on both the TMS-only and HVT providers, and we will continue to invest prudently in marketing programs to drive awareness of our therapy with patients and increased systems use at customers' practices. We look forward to updating you on our progress during the year. With that I’d like to open up the lines for questions.

[Operator Instructions] And our first question comes from the line of Malgorzata Kaczor with William Blair. Your line is now open.

Hey good morning guys. Thanks for taking the questions.

Good morning.

The first one for me maybe is just to start on guidance. So in terms of the 2020 guidance, can you give us a sense of what you're modeling for average treatment revenue per system? And what does that assume for some of the legacy accounts, maybe that you guys are trying to put some new strategies around reaccelerating?

So when we talk about average revenue per active system, so we see that there's a bit of seasonality and we would expect in Q1 slightly lower average revenue per active system. And then it generally increases across the year to high typically in the back half. We believe it will be flat to slightly down because of higher installed base with slightly lower ASPs over the full year.

Okay. And the impact of those legacy accounts, maybe both for the second half of 2019, so we can get a sense of that headwind. And then what that could be over a matter of two or four quarters whenever you think that you can see some improvement there?

Yes, so we're monitoring that. We've been in and we've assessed those accounts. We understand what's attributing to the decline and the primary operational issues, Margaret, such as staff turnover, training new staff and one-off reimbursement challenges. The sales force has identified what those are. And over a period of time, we're tracking what we think our impact is going to be in those accounts. The thing that's going to drive most of our increased utilization or our average revenue per active system in 2020 is really our ability to scale our most recent customers that will have the greatest impact on that number, as in all years. So the systems that we put in last year will have the greatest impact on utilization across 2020.

Okay. And just one last question for me. In terms of kind of those focus in terms of the bigger physician accounts and kind of the TMS-only centers. Is there anything that has surprised you over the last few quarters? And what do you think they can do and what can you do for them to continue to help scale going into 2020? Thanks guys.

So the TMS-only accounts, just to give everyone a sense of where TMS-only fits in, there's about five companies out there, maybe several of those emerging. Of the five that are out there, we believe that we know we have the primary market share within those accounts. To give you a sense of the TMS-only. TMS-only really provides patient referrals to accounts that don't have a TMS system. So our market focus right now is on 22% of the solo improved practices, which is about 5,700 of the 25,000 accounts that exist, and that's about 67% of the MDD patients in the segment. And really, with the TMS-only providers, our playing is in the 78% of the accounts that we're not targeting that have about 40% of the MDD patients. So this is how we address the entire market. We are the primary partner for TMS-only. And then we have our sales force, our BDM team selling on and selling into the highest potential single and group practices in 2020.

Got it. Thanks Chris.

Thanks Malgorzata.

And our next question comes from the line of Jason Mills with Canaccord Genuity. Your line is now open.

Hi good morning. This is actually Cecilia on for Jason. And I just wanted to ask about your recent strategy, shifting the focus from growing the BDM force and just your outlook beyond 2020. I know you talked about mid-50s being kind of a target range for now. But beyond 2020, as you expand indications, does this seem like the right size? Or will you continue to evaluate that? And just from an SG&A standpoint in 2020, can you talk about the impact of really growing your force rather than the BDM size sales team? Thank you.

Okay Cecilia, so to give you a sense of where we are with the BDM team in 2020. On a weighted average in 2020, we had about in the high 40s of full-time equivalents for BDMs, and we believe, this year, we'll have BDMs in the mid-50s. We also think that with the increase in the number of new accounts per rep, plus, we also are forecasting a slight increase in the number of second system sales. For the last 24 months, we've been getting into larger accounts, and we are seeing higher rates of second system sales. So we believe that with this modest increase year-over-year in BDMs with a slightly higher productivity rate, that we'll have a record 2020 in terms of new system sales for the year. As it relates to beyond 2020, we're going to monitor and manage the business appropriately. And we'll guide on 2021 in the future. That said, we are shifting more resources to NPCs and CTCs to bring and improve our average revenue per active system and bring that metric more in line with our unit sales of 20%. So that's the real big thrust for us here. We'll chart the progress of those new NPCs and CTCs on impacting pull-through at the account level. And then at the end of the year, we'll be really thoughtful and assess and then decide what we're going to do in 2021 and beyond.

Okay, great. Thank you. And then, I guess, just also turning to revenue guidance. Just what are you thinking in terms of capital ASP trends in 2020 as well as installed base growth that's factored into your guidance, especially as we continue to target these high-volume accounts? And just how you're thinking about the mix in these accounts between sales and sales-type leases?

Okay. So the question is, how are we thinking about top line growth. So well, we think about it in two parts. So as I mentioned, we think the productivity of BDMs will remain constant to slightly up. So we expect a record-breaking year on the capital unit sales in 2020. That said, we expect a slightly lower blended ASP which is a function of the capital sales and the sales-type leases in 2020. So the combination of those will create a little bit of downward pressure on ASPs for 2020. And we're not going to break out the mix between that. We are giving you the total unit sales each and every quarter. And as I mentioned, we've sold a significant number of systems over the last year. And these systems have not ramped up to a steady state. We know we have a much higher percentage year-over-year in systems that are less than 18 months. So this lowers our overall average revenue per active system each and every quarter. So while we're treating more – and selling more treatment sessions year-over-year, the U.S. treatment session revenues are not growing in line with the active installed base because of that reason. And we're looking to add NPCs and CTCs to close the gap on that. We also expect slightly – some slight downward pressure on our per click treatment sessions, ASPs to continue in 2020 as well.

Great. Thank you for all the color.

You’re welcome.

Great, thank you. And our next question comes from the line of Matt OBrien with Piper Sandler. Your line is now open.

Hi guys good morning. This is Drew on for Matt. Thank you for taking my questions. I just kind of wanted to go back to some of the utilization in the legacy accounts that impacted you last quarter. It sounds like it didn't bounce back by too much in Q4 as you had expected. But I guess the question is, did you see any improvement as the quarter went on in those accounts? And then sort of what gives you confidence that it can improve going forward? And then I guess, lastly, on that, I mean, mainly, can you give us a feel for what level of rep expansion to address this issue specifically has been incorporated into your OpEx guide?

Sure. So good morning Drew thanks. So for Q4 we did not expect to see any change in utilization in those accounts. We are basically in there diagnosing and trying to understand what the circumstance is. The good news is that most of this has been attributed to operational issues, as I just explained. And these are well within the bailiwicks of the NPC, CTC and reimbursement team to resolve. Short term, what we did is – and is currently doing is shifting the cull patterns of the NPCs that we have in the company now to spend more time on this group of customers. And as you heard, what we plan to do is to address this longer-term is we're increasing the number of NDCs to seven and the number of CTCs to two to provide more touches to the existing customers while at the same time, being able to scale our ever-expanding and growing installed base. So overall, that's how we're addressing that customer group.

Okay, that’s helpful. And then just on the international side, I guess, especially in Japan. I know you're just getting started there, yet you had a difficult comp in Q4 of 2018. But obviously, a pretty large opportunity. And it just kind of seems to be moving a little bit slow. Are you making any additional investments to kind of speed up the process there? And then, I guess, any impact from the corona ?

Okay, great. So last year was a start-up year, right? It's really the building and the beginning of the foundation. We got approved in June. And the purchases last year was really to create inventory for both NeuroStar and new NeuroStar treatment session. This year is really all about the pull-through of that inventory and replacing an inventory and we'd expect to see orders of capital equipment across the entire year. And then we gradually see increasing in NeuroStar treatment session purchases. So this is really going about as planned, we're pretty impressed with their early sales they've gotten in Japan. They've gotten the leading key opinion leaders to purchase at their universities over there. We're getting some really good national publicity over there. So I think we're growing as we expect it to grow in that market. That said, is we're not expecting significant growth in Japan based on what I just said. Most of the inventory that was sold, most of the sales last year was to build inventory, it wasn't the pull-through of inventory. And then this year, we'll see that pull-through of inventory. They have added incremental sales reps to the organization in the back half of last year, and that looks promising as well. And remember, we do not fund any of the SG&A for this operation in Japan. Teijin is responsible for that part of the business planning and investment.

Okay, thank you.

You are welcome, thanks Drew.

Thank you. And our last question comes from the line of Dave Turkaly with JMP Securities. Your line is now open.

Hi thanks. Just going back to the legacy account, the 100 or so we talked about last quarter. It looked like the attrition was something like 25 in this quarter, fourth quarter. And I was wondering if you could just comment on – are you culling some of those older accounts? And what you expect that it's a little higher than, say, what you've averaged in the past. Just maybe color on what you expect in 2020 for that?

Right. So it was a little higher in the fourth quarter, and it's typically a little bit higher in the fourth quarter for the last several years. And remember, when an account goes inactive, that means they haven't bought a treatment session from us in 12 months. So these are usually decisions that happened in the fourth quarter of the prior year. So it seems that there's a little bit or slightly higher business decisions are made about closing a practice, stop providing TMS as a service line and/or moving to a competitive system. Those seem to happen more often at the end of the fourth quarter. So it's slightly higher this quarter than our prior three quarters. We don't anticipate that run rate to continue. We believe it will go down to probably somewhere around 1.5% a quarter, somewhere in that range. Give or take, a quarter or a half each and every quarter. So we're not proactively culling it. And remember, this is – most of these are people that are getting out of practice or can't make TMS work. And that's one of the reasons why we've evolved our strategy in the last 24 months to get into higher volume accounts that have more back half office capabilities and greater capacity to operationalize a NeuroStar in their practice. And most, if not, many of these are legacy customers that have decided not to continue with the NeuroStar Advanced Therapy or have gone out of practice.

Got it. And then just looking to the guidance, actually, the revenue commentary, the breakout. Just curious to break out operating lease but not the sales-type that's now included in the capital. I guess, the logic there, I'm just curious if you would even comment sort of on how sizable that sales-type lease could be in that capital sales and why break out operating if you think that's trending towards zero? Thanks.

Yes, Dave. We're trying to move away from the financing differentiation of systems sold. So going forward, we're going to report systems sold and the total revenue for those systems. And really get away from differentiating between sales-type lease and traditional capital sales. It really is just, really, capital acquisition strategies for our customers. And as a reminder, we only offer sales-type leases to our large TMS-only service providers. Our strategy is to free up their capital so they can continue on with their expansion plans and not have their monies tied up with the system acquisition costs. And so those – that subsegment will continue to grow and will grow at a higher rate than traditional capital equipment sales in 2020, somewhere north of 30%. And that you'll see some fluctuation in the ASPs as that mix changes quarter-to-quarter. But again, we feel it's more important to get installed base growing north of 20% like we've done in the past # quarters. And ultimately, the treatment session volumes will catch up.

Got it. Thank you for that. And I think last quarter, you gave sort of an update on Greenbrook, Success, some of the others. Just curious if you could provide any update on sort of the mix for the TMS-only providers today? I mean, I imagine it increased again, but just directionally, I imagine that continues in 2020, but any update on the size of those guys for you today? Thanks a lot.

Yes thanks Dave. So as it relates to some of these large TMS-only accounts like Greenbrook and Success TMS. We prefer for them to comment on their earnings calls as it relates to their performance in the marketplace. But we're delighted to partner with these groups. We think that our value proposition really resonates with this group. We have significant investments in field service engineering, tech support, and our Track Star system provides them real-time insights into their locations, utilization of their systems. So we think our value proposition on many fronts really resonates with this group. We're not going to be breaking them out on a go-forward basis. And they'll be part of overall NeuroStar treatment session revenue and our NeuroStar capital revenue.

Got it. Thank you.

Thanks Dave.

Thanks Dave.

Thank you. And this concludes today's question-and-answer session, I would now like to turn the call back to Chris Thatcher for closing remarks.

Thank you for joining the call today. We look forward to updating you on our progress on our next quarterly earning call. Thank you.

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