Madryn Asset Management Supports Greenbrook TMS with $75MM Credit Facility

Greenbrook TMS, a provider of Transcranial Magnetic Stimulation (TMS) therapy in the United States, closed its acquisition of Check Five, a Delaware limited liability company (dba Success TMS). In addition, Greenbrook entered into a credit agreement for a $75 million secured credit facility with Madryn Asset Management and its affiliated entities.

Key acquisition and credit facility highlights:

• Adding significant operating scale, top-line growth and expected to accelerate the path to profitability

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• The company believes the acquisition of Success TMS’ 47 TMS centers in the states of Florida, Pennsylvania, Illinois, New Jersey, Nevada and Wisconsin is highly complementary to Greenbrook’s existing management regions.

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• The company expects that the acquisition has the potential to add more than $30 million in consolidated revenues to the combined company on a full-year basis, representing significant growth over Greenbrook’s current fiscal 2021 revenues of approximately $52 million.

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• The company anticipates that near term post-acquisition synergies may be able to produce EBITDA positive operations for the combined company and accelerate the company’s timeline to profitability.

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• The company believes it has the ability to layer on its existing Spravato program across the Success TMS footprint to drive further growth.

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• Recapitalization of the combined business through the credit facility

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• The credit facility provides Greenbrook with immediate access of up to $55 million in term loans and the potential to access up to an additional $20 million in loans exclusively for expansion purposes.

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• The company believes the credit facility sufficiently capitalizes the business to serve its general working capital needs and to execute on its growth strategy.

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• The company believes the credit facility represents a significant vote of confidence by a leading healthcare investor.

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• Well-established payor contracting and access to robust physician networks

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• The company believes that Success TMS’ affiliated medical practices benefit from strong reimbursement and provides access to a reputable physician network, which removes the need to establish new contractual relationships with payors in the regions in which Success TMS currently operates, eliminating a process which is a key barrier to expansion.

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• Provides proven regional management team and potential synergies

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• Success TMS has an experienced management and operations team.

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• Success TMS’ CEO, Benjamin Klein, has joined the company as chief operating officer and a member of the company’s board of directors, deepening Greenbrook’s managerial expertise and combining best practices of Greenbrook and Success TMS.

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• All equity transaction to build value together

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• Purchase price consideration for the acquisition payable entirely in common shares of Greenbrook which is intended to align the interests of the Success TMS team with those of Greenbrook and promote the shared goal of building value together under the Greenbrook brand.

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“We are very excited to announce the closing of the acquisition and the credit facility today as we believe this to be transformational for the company,” Bill Leonard, president and CEO of Greenbrook, said. “We believe these transactions accelerate Greenbrook’s ability to grow and gives us the needed capitalization to further expand on our mental health platform, through our base TMS business, expanding Spravato program, and other future treatment modalities and indications. We are excited to begin working with Ben Klein as our new COO and our new colleagues at Success TMS who share our passion for TMS therapy and delivering exceptional patient care to those suffering from mental health disorders. We believe our business is a needed one in a time of heightened demand for mental health support.”

“We believe Greenbrook’s innovative approach to treating mental health can help the millions of individuals who suffer from Major Depressive Disorder yet struggle to benefit from traditional treatment modalities,” Dr. Avinash Amin, managing partner of Madryn, said. “We are excited to support Greenbrook and look forward to a collaborative partnership with their management team as they continue to revolutionize the treatment of mental health disorders and expand the TMS footprint.”

The credit facility provides Greenbrook with a $55 million term loan, which was funded on closing. In addition, the credit facility permits Greenbrook to incur up to an additional $20 million in a single draw at any time on or prior to Dec. 31, 2024 for purposes of funding future M&A activity. All amounts borrowed under the credit facility will bear interest at a rate equal to the three-month LIBOR rate plus 9.0%, subject to a minimum three-month LIBOR floor of 1.5%. The credit facility matures over 63 months and provides for four years of interest-only payments.

The credit facility also provides Madryn with the option to convert up to $5 million of the outstanding principal amount of the loan into common shares at a price per share equal to a 15% premium to the 30-day volume weighted average trading price of the common shares as of the closing date of the transaction, subject to customary anti-dilution adjustments and approval of the Toronto Stock Exchange prior to each such issuance. The company has notified The Nasdaq Stock Market in accordance with the rules of that exchange.

Greenbrook has used approximately $10.1 million of the proceeds from the credit facility to repay in full the outstanding balance owing under the company’s existing term loan with Oxford Finance and has terminated the facility.

Bloom Burton Securities acted as the company’s sole financial adviser in connection with the debt financing.