Q1 2020 Earnings Call
[music].
Lines have been placed on the listen only mode and the floor will be open for your questions and comments following the presentation.
If you should require assistance throughout the conference. Please press star zero on your telephone keypad to reach alive. Operator at this time. It is my pleasure to turn the floor or to your host Kim Golodetz ma'am the floor is yours.
Thank you operator this is Kim Golodetz with L.A.J.. Thank you also participating in today's call. Joining me from census, health care, all right, Joe Sardano, Chief Executive Officer, and hobby around Paula Chief Financial Officer.
As a reminder, some of the matters that will be discussed during today's call a forward looking statements within the meaning of federal securities laws. All statements other than historical facts that addressed activities since its health care assumes plans expects believes in tens or anticipates and other similar expressions well. She had one may occur in the future.
There are forward looking statements.
Forward looking statements are managements belief based on currently available information Genesis healthcare undertakes no obligation to update or revise any forward looking statements, except as required by law. All forward looking statements are subject to risks and uncertainties, including the continuation in severity of the cobot 19 pandemic and its impact on sales.
The marketing and those risk factors described in the company's forms 10-K in 10-Q as filed with the FCC. All forward looking statements are subject to risks and uncertainties, including those risk factors described in the company's forms 10-K, and 10-Q as filed with the FCC during the during today's call. They will also be referenced.
Certain non-GAAP financial measure census believes these measures provide useful information for investors it should not be considered to substitute for gap that should they be reviewed beat the viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in today's financial results press release.
With that said I'd like to turn the call lever to Joe Sardano John.
Thank you Kim and good afternoon, everyone before we get into our Q1 results I want to thank all of the physicians nurses lab technicians, everyone on the front lines of this pandemic, which has impacted all our lives I want to thank all of our employees, who work with our customers and their patients during this time period.
Our applications and services team our manufacturers, especially those that have converted their normal line of manufacturing into manufacturing ventilators math gallons et cetera for the very nearly at this time and supply chain teams for making it all happen I want to thank all our customers who continue to treat skin cancer patients while most.
Surgeries were postponed for many weeks I want to thank all the people in the delivery services and all the truckers you continued to do their jobs. During this time and all of these folks who will continue to do so in the future as we all figure out whatever that you standards will be the mouth I generally hold no update you on your loved ones are well.
As we continue to look out for one another during the cold was 19 pandemic.
I'm still very proud of the census team and how together, we're navigating these challenges which significantly impacted our first quarter's financial results.
Our intra quarter sales historically, you have skewed toward the very end of the quarter and that is the time period in Q1. When depends then make began closing the U.S. economy. As a result, our sales of 1.7 million during the quarter were lower than we had anticipated when we spoke to you in February when reporting our fourth quarter result.
At that time, we didnt yet know what was immediately ahead, while we wait for economies to reopen we've been taking multiple actions to prepare for the resumption of post them pandemic delayed lot daily life. We continue our work to expand awareness of SRT and its utility in treating nonmelanoma.
In cancer, while supporting our physician customers and protecting cash so we emerge from this crisis ready to do business. We've been we have use this time social this is thing as an opportunity to reach out to customers on a personal level as never before census has built an impressive network of contacts.
Over many years and we are leveraging our contacts to help customers as much as possible, including sourcing and providing items such as protect the mass and critical medicines. We also are sponsoring a series of online programs for dermatologist during which they share information practice regimens with one another the theme.
Back from these programs has been outstanding and they've been very helpful and keeping senses in front of both key opinion leaders any broader customer base.
We are planning our third zoom presentation led by industry leaders, who will share their experience with treating patients. During this time and discuss how they're preparing to fully open their practice.
SRT trees, nonmelanoma skin cancer, and although surgical treatments were put on hold for the majority of patients SRT treatments became the lifesaver for many practices on that note. The market is learned that our programs are affirming the use of SRT as an alternative to most surgery as during this time physicians.
Our particularly reluctant to encourage the risk of infection and adverse events associated with a surgical procedure.
We are convinced that SRT will continue to grow as the number one nonsurgical choice for skin cancer treatment as physicians and patients alike see the excellent curative results and the ease of use a best started tea, we know for a fact that when it was time to shutdown practices. The SRT system was the last unit in the practice to be.
Turned off now we're seeing some practice is beginning to open and we are seeing that SRT on it is the first device to be turned down as these practices begin to reengage. Their patients. We all know that skin cancer is not going away anytime soon and during this time the census, SRT technology is becoming a.
More valuable tool in treating skin cancer.
No anesthesia no pain, no cutting no bleeding no stitching and no scar. These are the benefits that patients will experience, especially those with the pre existing conditions. We are learning during this pandemic that elderly patients with diabetes heart conditions hypertension, our most vulnerable.
Kogas 19. These same patients are also a greater risk with surgery SRT from senses is a more cost effective and safer way to treat skin cancer. We've also stepped up what we call our senses University programs, where we provide application training for the started T systems, we are finding.
That refresher courses are proving to be popular so that positions on their assistance and keep their skills sharp during this time when you're not seeing patients. However, we are now beginning to receive confirmation of dermatology clinics reopening as we speak the timing of this focus back to the fundamental features as Ben.
Because of SRT is four to fortuitous with our main reimbursement code expected to be revalued upward by the centers for Medicare and Medicaid services. This summer and most of surgery reimbursement expected to be revalued downward. We believe that started t. will make significant market inroads once.
The expected new rates go into effect on January 2nd 2021, we'll learn what those new rates are this summer then there will be a public comment period and then the final rates will be set in November we believe the new rates will put SRT and a compelling competitive position.
Today, we have penetrated only about 2% of the U.S. market. So clearly there is plenty of opportunity the American Academy of Dermatology annual meeting in late March was virtual this year, but we did have the opportunity to showcase our MSR T 100 vision and the S. R. T 100, plus systems remotely to more than a lot.
7000, dermatologists, although we were not able to follow up on the leads we generated in person we have reached out telephonically and our assembling a list of interested customers the call upon when regional economies open up and practices are back to more normal activity. We've also been advised that this year's Astro meeting scheduled.
For October 25th 28 in Miami is now a virtual meeting as well we will pursue all possible activities in order to maximize our opportunities during this meeting as well.
We are encouraged by the activity we are starting to see in Asia, as China, and South Korea, where the first countries to be impacted by covert 19, and they're also the first the turned the corner and add back to normalcy. We have received a few inquiries from potential customers in China, and if our trade relations remain stable we believe.
We will resume modest sales later on this year.
Now I'd like to talk briefly about spoke tour, our anacetrapib radiation therapy system with beams sculpting capabilities and robotics respiratory attracting.
This system has utility in as many as 17 different oncology indications.
However, this coven 19 pandemic is impacting research work with sculptor at luminary hospitals, including the University of Pennsylvania. So we won't have the benefit of supportive research during the near term given current treatment constraints at hospitals are sculpt tourists sales forecasts are guarded this year, albeit.
Interest has been very high we believe sales of these systems will largely be pushed into 2021.
Before I turn the call over to Javier to drill down into the financial results I want to mention that during the fourth quarter of 2019, we reduced expenses, including Rightsizing, our team and expenses given these actions along with our cash position and revolving line of credit I'm confident we're well prepared for the resumption of sales.
As geographies opened up already we are seeing a return to economic activity in much of Florida, except for Dade Broward and Palm Beach counties, which we expect to come back in the next week. The 10 days, so while sales and earnings will not be what we had hoped for this year. We do think that there will be improvement later in the year.
Now I'll turn the call over to Javier Javier Thanks, Joan is our pleasure to be speaking with you all this afternoon.
Revenues for the first quarter of 2020 were 1.7 million compared with 5.4, meaning for the first quarter of 2019.
Joe Joe mentioned revenues were up there is really impacted by probably 19 right near the end of the core of social decency forecast stations that then probably closer practices. During Q1, and we sold three its RG 100 assist them I want to 3100 vision system direct sale.
Gross profit for the first while 2000 21.7 million or 42.2% of revenue compared with 3.3 million or 61% or revenues for the first quarter of 2019. The decrease was primarily due to their lower sales previously mentioned.
In the marketing expense for the first quarter of 2020 was 1.8 nailing down from 2.5 made up for the first water up about 19 did decrease was primarily attributable to lower TCE ratio expense due to cancellations related to drop in 19 decreased commission expense due to lower sales and lower overall spend on marketing activity.
General and administrative expense for the first quarter of 2020 was 1.3 million compared with one megan's when it first quarter of 2019. The increase was primarily due a onetime seven on expands our related legal fees.
Although again expense going forward is expected to be around 1 million per quarter as we continue with that cost cutting measures during 2020.
Research and development expense for the first quarter. After dominance one was 1.2 meeting on the compared with 2 million. When it first floor of 2019 did decrease was primarily due to reduction of research and development related to this ultra system.
Offensive report that up net loss of 3.6 million or 22 cents per share for the first quarter of this year compared with a net loss of 2.1 million more 13 cents per share for the first quarter off last year.
Adjusted EBITDA, which is defined earnings before interest taxes, depreciation amortization and stock compensation expense was negative 3.3 million and for the first quarter of 2020 compared with a negative 1.9 million for the first quarter of 2019, we had an increase in our cash position of 300000 rooms at war with.
Cash cash equivalents and investments of 15.8 Needham as of March that are forced to doesn't swing up from 15.5 million as of December 31st about for making the higher cash position is the result of the low what expenses and improved working capital.
At quarter end stances had no long term and no outstanding borrowings on our revolving line of credit.
I'm very pleased that subsequent to the close of the first before we were able to expand our revolving credit agreement with Silicon Valley Bank.
10 million up from by means of previously in addition sensors receive alone on the small business administration basic protection program enabled by the cares ACO claim claim to be used for employee compensation, but still it is cost.
We're confident that the with the cost cutting would affect that along with the current cat assets that are revolving credit agreement on the PBB long, we're financially well positioned to come through their core nobody has been damning tax I'm ready to do business with that I'll turn the call back over to John.
Thank you obviously are obviously a lot changed very quickly since our fourth quarter financial results conference call and it goes without saying that our plans for profitability. This year are unlikely to be met. However, we are looking forward to an excellent 2021 with expected higher reimbursement amounts for SRT and increased work with Scott.
Tiro, along with commercial sales as a reminder, our products have enormous room to grow as I've been saying for some time RSR T systems are well positioned in a large market consisting of some 14000 dermatologists 1000, most surgeons in the U.S., representing more than 7500 offices and growing.
Not to mention a further 6500 plastic surgeons and 5500 radiation oncologists and we provide a compelling alternative to surgery for millions of patients and arguable arguably the only solution for the treatment of keywords as a reminder, a five year retrospective study with us start T showed.
A cure rate of 98.9%, which exceeded the most cure rate for non melanoma skin cancer the market for key Lloyd treatment with SRT is growing and has the data to back it up with the study showing only a 3% recurrence rate after treating keyboards with SRT with an installed base of 470 for you and.
As we've barely scratched the surface and with more most surgeons turning to SRT. During the time of Cobas 19, we believe many of them will even be more convinced of the benefits. Thank you for your time and attention and now operator, we're ready to take questions.
[noise]. Thank you if you have a question. Please press star one on your telephone keypad at this time if at any time. Your question has been answered you can remove yourself from the Q by pressing one again, ladies and gentlemen, if you have a question or comment. Please press star one on your telephone keypad at this time one more.
Well, we pull for questions.
And our first question is from.
Andrew Dsilva. Please go ahead Andrew.
Good afternoon, Thanks for taking my questions and I'm very glad to hear but he sounds healthy.
We see cobot 19 has had a a dramatic impact across the industry. So.
This is not any fault of your own but I'm just curious when when looking at maybe second or third quarter do you think that feed.
Change inpatient volume.
That's taken place thus far.
Good.
Limit the amount of orders that could take place or do you expect there to be some sort of a bolus. It at some point get patients eventually are going to have to come back and get treated.
And when that is about to happen you would expect that.
Packages of at least need to have some equipment in place to be able to take care of that just going to kind of curious how you.
Way that.
Sure Andrew Good to hear your voice and thank you for being on today.
I think that what we're seeing right now is that doctors, who are most surgeons that have had our equipment used the equipment all the way to the very end until they had the close their practices they delayed and postpone most surgery for up to four to eight weeks and we've talked to some most surgeons currently who are back on.
Track with opening their their offices, saying that they're only going to treat with SRT because it's too early to get involved with most surgery and exposing those patients during the pandemic. So from our perspective, we're seeing some very strong business people running these medical practices, where you have to figure have lost a million.
$2 million during this closure during this time, they've got to recoup those funds to keep everything going to keep there's their salaries to keep their premises going and I think one of the things that we've identified here from all of the doctors is the fact that SRT was really a game changer for them in a lifesaver as they were able to continue to treat their skin cancer patients.
We continue to work on the backlog of skin cancer patients and then also.
Continue with their productivity and most importantly, with their cash flow using the SRT moving ahead, I think it's going to be even more significant I think you're going to have a significant number of patients who are on backlog. If you will waiting for their most surgery and if there of the Asian of which we know better than 95% of these patients with skin.
Cancer are over 65, I think that they're going to want to minimize the risk I think the doctors are going to want to minimize the risk and I think surgery is going to be questionable. So I think that more and more we're going to see the use of SRT and I think that will drive demand up and then when you're looking at the second half of the year, where at some point in June.
July we're going to see CMS, making it clear as to what this new reimbursement is going to be I think that's going to help us as well. So I think that we're standing in good position I think it's going to help the patients identify with Src, it's going to help the physicians identify with SRT and we all know for instance, what.
What a restaurants are gonna have to do their cutting the number of patients that are a number of customers that they have in their stores by a quarter, they're going to separate the tables are going to have 25% of their other maximum capacity before cut to the 25% well it's going to be the same thing with most surgery because most of these most patients have to come in.
Who is into a surgical area of the dermatologists practice and they have their own waiting room, you're not going to be able to have 3456 patients sitting in that small waiting room as they're getting cut upon and going in and out of the surgical suite. So that's going to be minimize they're not going to be able to do the same number of most search.
Trees as they've done in the past, but if they want to maintain their productivity if they want to maintain their cash flow SRT is the best answer for these doctors to get back in the swing when they're coming back online with a post the post the Kobin 19, So I think it's a great opportunity for US now it's going to require a lot of a lot of co.
Looking a lot of training, but we're prepared to do it and I think the zoo meetings that we've had the last two zoom meetings, where we've had in excess of 100 people on each one of the calls with a third one set up in the next few weeks I think it's helped us tremendously with doctors talking to each other as to why SRT has done so great in their practice, even though there are most surge.
Yeah.
That's interesting and actually makes a lot of sense.
How about from a mobile standpoint.
Could you you have a turnkey partner, you're implementing similar kind of turn key initiatives in Florida, I wish kind of curious one from a turnkey standpoint, how impacted do you think the industry is banned from.
Cash standpoint are working capital standpoint, and ability to just to fund operations.
Going forward and then too is there an ability to transition.
From maybe Innophos model too.
At home model or mobile model.
Listen I I wish that we had a drive through capability, where we can just have a patient stick their head out the window and we can treat something on their faced by putting the are about the the drive through window, but I don't I don't think that that's going to be a solution I think in any case. When these patients are told that they have skin cancer to them. They remember the word cash.
Answer it doesn't matter, where it is it doesn't matter if its breast or long cancers cancer and they're worried about it and I have to wait for treatment is a problem for them and so if they are able to get into a treatment where they don't have to get cut literally when you're looking at SRT. There's nobody that even has to place a hand on the patient.
The people that are setting up the certainty they don't even touch a patient and so this is a great opportunity versus having to provide anesthesia to a patient and then put the gloves on with two or three people surrounding that patient and with a a surgical instruments that cuts that patient open and then how many more times than they have to go back for wound care or.
For taking care to stitching whatever that is I mean, this is a much safer easier way to do it even though there's multiple trips it's safer for the patients I think that everybody's going to acclimate themselves to that now when you mention mobile I think of we have several doctors that have our machine in the truck.
And they bring that that sprinter van with the machine in it and they can bring patients out of an assisted living facility and treating those patients in the trial are in the van because it's all set up at shielded all the specs are available for them that could be an opportunity for us in the future because a lot of these patients.
To exist in assisted living facilities.
I don't think that they're going to want to go to anywhere to too fast and I don't think that anybody wants to go into those facilities to treat them. So this is a way of bringing those patients to a van where they can be treated for their skin cancer I know that the two groups that we have running those mobile bands are doing very very well.
Quickly, Andy probably our processing and treating more patients than the stationary units. So I think theres going to be several doctors that are going to maybe look into this a little further as we speak.
Okay, Great and then moving over to Scopes Torah.
Just broadly and radiation oncology it seems like physicians were making a move towards using a SPR ti as a treatment of choice because of the limited amount of fraction is that it required versus a traditional external beam radiation therapy.
It seems like.
IR team has.
Kind of similar benefit although there is a surgery involved.
One.
Do you think.
It will be.
Normal versus expectations.
Prior to to this happening or do you think you have to kind of build momentum up again, meaning you know obviously 2020 is heavily impacted.
But then do you snap all the way back to where you were or do you just started growing again I mean as it is it a strong just trying to get how you think of 2021 and in the rebound what what that looks like well. If you recall I think most of you will remember that in during the call and the first fourth quarter.
I said to everybody that you know we're we're just we're planning on being profitable for the year and we're looking forward and just getting 2020 out of the way we wanted to get 2020 out of the way because of what was happening.
With announcements that we were expecting from C.M.S.
I think that is even more important today based on the consequences of what we're facing today with.
The virus and so for me I believe the you know there's going to be a lot of build up between now and the end of the year I think that there's going to be a lot of positive things that come out of patients being treated with assorted tea and not as many patients being treated with most and I think practices realizing that.
This is the time to get into S.R.T., because it's probably the the device the only device out there that can pay the money for existing patients that have skin cancer and that skin cancer is not going to go down and volume it's going to continue to rise. So there's going to be a tremendous backlog as we come out.
This year going into 2021, and I think that it once it is known as to what C.M.S. is going to do and where are reimbursement is gonna be I think that our base is going to get a very very excited and I think it's going to accelerate demand for S.R.T. I really believe that we believe that before the pandemic and that's why we said.
Back then that we just can't wait to get 2020 out of the way.
Okay and then.
Just reading in in the press really.
It sounds like sculptor.
<unk>.
If it's going to be more of a 2021 event now do you think your place vending machines and 2020.
We have possibilities because we have prospects that are still looking at the machine very very seriously and we've come very close with negotiations with some of the facilities, but you know there's such a distraction with a lot of these hospitals and you can only imagine those losses that are being incurred.
By so many hospitals, including the teaching facilities I mean, they have to read the rest and refocus where they want those funds to go and I just have a tough time seeing a C.E.O. So you know thinking of how much money he's going to spend on various things when they have to recoup what's going on with the pandemic I think this pandemic is going.
The affects the hospital market for a longer period of time, that's impacting the dermatology market. So do I.C.S. with an opportunity here and there yes, I see this with an opportunity because we're that close to some of those customers would I be disappointed or perturbed. If it went into 2021, yes, but I don't.
I expect to lose those orders eventually they'll come in we just want them to come in now, but if they don't I expect those orders to be in and 2021.
Okay and then on Q1 did you give us the service contracts revenue how much was that.
Oh I believe it up the Javier.
No service was six on this.
Okay and.
Since I got Javier.
Question that that the the triple P. money that you got.
You think you're going to have to pay that back I mean that kind of blurry. These days for public companies, Yeah, <unk> listen to these the rules regarding and surrounding that are you have to maintain your staff. We cherish the people that we have working for this company, they're great people. They do a lot of work.
And so this is able to cover all of the expenses for maintaining our people for the next eight weeks as well as all the facilities expenses. So we're very very comfortable with and we think that you know by the time this expires I without having to lay anybody off worst case is you've got 10 years at 4% to pay it off.
It's not a whole lot of money, we can pay it off right away, but the big opportunities that it could go away entirely as long as we don't lay anybody off and that's where we expect.
Fair enough and then <unk>.
The reimbursement changes on the horizon.
<unk>, what's your confidence level and those is that is that 100% or what.
Just one you know revisit that.
<unk> I would say this nothing with that pertains to the government is on a per cent.
So you know when when you don't have it in your control you're always worried and that's you know if anybody asked me what keeps me up awake <unk> keeps me up at night, It's always government regulation. So all I can tell you is that the process is going through its paces and it's going according to.
What we feel it should do and how it should be now we've been exposed why can't say about it but we've been exposed to the numbers.
That have been presented by the A.M.A. to C.M.S.
And so we have confidence in the fact that we've got a relationship and working with C.M.S. over the last five six years to try to achieve those goals and we don't anticipate that there would be any problem with C.M.S. whatsoever, and I think it would make it an extremely favorable reimbursement for all of our doctors compare.
To where we've been and so as long as we continue to <unk> the process as long as we continue to see that progress as we go along and we're monitoring it I would tell you on a daily basis.
We're happy with where things are going up can anything happened of course, it can't of course, it can't but we don't hang. So this was something that they're they're very interested in as well.
Okay Fair enough final question I know of asked a lot.
Well it just when I do the math it seems like pricing has to be a little higher in the quarter to get to that number what is pricing higher it might do in the mathrani.
No <unk> yeah, the with product mix showed that we had a higher average selling price from that first quarter Javier <unk> alright, we we start off on a horse system and one of them with a vision system soul directly.
So is the front on makes basically I'm doing that.
Okay, Alright, great. Thank you for taking the question.
Oh God to stay healthy.
[noise]. Our next question is from.
<unk> Benedetti. Please go ahead Anthony.
Sure Hey, Joe How're you doing.
Good Anthony how are you.
Alright, alright.
So on the I'm sculpture I know you mentioned at the beginning.
The called it that you're pretty much protecting that it'd be a 820 21.
Events in terms of in terms of selling the actual systems.
And and I think that's probably the right the right approach but.
<unk>.
If we do start reopening.
And even even if hospitals take awhile to get back you expect the pipeline to build so that.
Even if you don't take deliveries.
Oh, you know for hospitals don't accept deliveries before the end of the year that you should build a a pretty healthy pipeline. If you. If you still have all the.
Sports in place.
For this particular for this particular product yeah.
I don't think Anthony that we're seeing any less interest in the pipeline that we haven't we continue to grow that and I think the exposure as little or as great. As we can access during the virtual Astro meeting will continue to grow for us So I don't see anybody.
Backing off of their interest they all seem to want more and more.
Data and information regarding sculpt or I, just see it being delayed.
Into 2021 versus what we were trying to achieve in 2020 because of the distractions that the hospitals have faced but I don't see a slowing down in the prospect base at all.
Okay. That's good and then just just remind me how many south people you have and it sounds like.
You're doing Jim cause it's.
Wait wait prospects for not just sculpture or but but obviously has turkey. The yesterday C. 100, though.
And so forth.
How does that how does that pipeline look for for the vision.
Then if you can just talk a little bit about assuming you do get a high reimbursement assuming most does come down.
Are you expecting a a significant acceleration.
For the for the S.R.T. systems as we move towards the back half of this year I'll work Porter generally the strongest border it it.
Yeah. The cold in 19 situation is somewhat under control and we don't see a a resurgence in the fall.
Is it possible you could yeah.
<unk> back here in the fourth quarter.
We're anticipating a bounced back in the fourth quarter understanding that the code is on its way down I think that again doctors in the dermatology space or business people and they've got to find a way to recoup lost revenues from the time that they were shut down. This is one of the fastest ways to do and whether you're in a step.
Physician or a most surgeon and again, there's many plenty of patients out there to fill that backlog and they're going to be in a hurry to want to get treated one way or another and again being in that age bracket oh of skin cancer as well as <unk> vulnerability. They don't want to have surgery, if they can avoid.
So I think that this is going to bode well for existing customers I think they're volumes are going to go up but I think that the doctors that don't have it are going to adapt to it very very quickly because it's really the best way to get their practice back in shape.
Sure sure and I know, we we've talked about the reimbursement and I know was brought up on on something something apart questions but.
As best you can best you can tell at this point, obviously nothing's 100 per se, but based on all the conversation.
Oh, what the regulators routine attack.
We we would you say that that the likelihood as it is greater than 50 per cent.
But.
Reimbursement for S.R.T.
Goes reimbursement for both goes down.
And if that's the case, even if it that obviously doesn't get implemented until January 2nd of 21.
That could that could also contribute to an acceleration I've settled at at the end of the year.
I'm not going to speculate on the percentages, but I think that they're very very good and I think that everybody will be happy I know that the physician's were involved in the revaluation process, which took place in January in a meeting in Arizona, we're very satisfied with the outcomes.
I'm done process in evaluating are reevaluating that code. It also impacts some other codes that we've seen and we've been told the are increasing that are applicable to treating skin cancer with S.R.T. So the combination of the two will provide physicians with a very very <unk>.
Wrong economic model to wanting to have S.R.T. in their practice into making it have sense.
Of of doing it so I can accelerate in the third quarter, you know anytime C.M.S. has to announce things and any time you go into a market I always look at a period of time, where we have to personally to get involved in the training educating and then you have to work with U.K.O. wells to be on the podiums to talk about it.
And you know, we don't know where those podiums aren't going to go because all of our meeting this year for dermatologist been cancelled, but we're we upping those types of meetings through the zoom presentations as well as doctors were doing their own zoom presentations. So we're getting a lot of notoriety based on that and I think that that information.
In today's internet can be spread very very quickly, especially when the government says something and once they say so that's something that you guys will know right away 'cause will tell you is what our customers will know right away because we'll tell them and now they have to start thinking in the process what are they going to do to buy it and we just want to get them to to buy it as soon as possible, but you know the big.
Opportunity that we have Anthony as you knows where we're not even quite a 2% of the total market capabilities are opportunities. So all over the best of us as as much as we've grown in the past 10 years. The best is ahead of us and so I think that we can capture a lot of market share post announcement from C.M.S.
Post all of this time and like I said get get 2020 behind this and this is going to help us tremendously. So my expectations are great.
Okay and then just last question on the on all the phone calls itself people I've been doing it would you say that at this point all of your sales people are.
Are are doing the zoom calls and and.
What are the zoom calls for G.
You're saying.
About the same number of.
Point or is it more touch points because obviously.
Call can be set up <unk>.
Once you figure out how to do it didn't cost can be set up much faster sure.
Right.
That's a tough more people to resume.
Yep, and you can buy by going out and visiting them face to face.
Now that that's happened topic than forth honest like Psycho could 19.
Is it possible that that gets integrated part of the overall, south top that and and the ability to to reach out to more dermatologist plastic surgeon.
During this process has has has begun to increase and could be could be a way to reach more of them going for.
A couple of things first of all when this started we sent out a a message to the sales organization and everybody, including application service, everybody, who touched customers on a daily basis, including the management team that this was the time to develop relationships and partners partnerships that wasn't a time.
Time to do selling and do all this other stuff of course, we stay close to our prospects into our customers, but it was more important to develop a relationship and to be available when they needed as if they need to this and to let them know that we were there to help them any way that we can their entire staff and offices. So I think the sales team and everybody touches the customer.
Within the organization has done a great job in doing that so we stayed very very close now the zoom just to give you an idea when we first set up the zoom as anybody would expect we don't know what to expect okay. So we set it up and there's certain costs that are involved she set it up for 100 people to join Zoom and then you know that the.
Number of people that you have a lot of to to join so we set it up for the first one for 100 people and we were oversubscribed by about 35 people.
So there was plenty of interest there and people wanted to get on but we were already locked in at 100. So the next zoom meeting that we had we said well, let's up and so we opted to 500 and of course, there's a cost involved in that but we had about 140 customers involved in that I think you know it's all based on on available.
Realty, it's all based on knowledge those types of things. So we had to most surgeons who are first hosts who talks about S.R.T. and how in the men what is meant for them in their practices and they're the ones, who told everybody else [laughter] Y.S.R.T. was so valuable because they cut off most surgery and they did everything was that started to the next.
Two positions that we had were also in lowest surgeons. They were a lady most surgeons and we wanted a different perspective, because most of their business is in the aesthetic world, even though they do most surgery and their habit than most surgeons and they had the same answer that if they were coming out of this they know that they're studying business is going to be very low.
There's going to be some people that pay cash for the business that they want to you know cutting back on the wrinkles around the riser cheeks are there <unk> and things like that but skin cancer is still there and it's not going away and they have a bunch of patients that they have to treat and they're not going to treat him was most surgery, except for the exception and when Dr. Frederick mode to develop this.
Back in the late fifties early sixties. It was the exception versus the rule that to do most surgery, they use everything else, including including Orson voltage units, which were.
Prescribed to what we're doing with S.R.T. today, and we know that in the mid seventies more than 55% dermatology offices used or the voltage. So we think that this might be an opportunity or a change. We're we're going to see most surgery, because <unk> and all the other potential.
Problems with surgical surgeries on elderly patients that it could turn back into a or something that's not the regular thing S.R.T. can be read the regular way of treating and this could be the alternative so there's a good chance that that could happen, we've got to push hard as hell to make it happen.
C.M.S. numbers will help us tremendously make that happen because we know the doctors will will follow the money.
Okay that makes sense I had very helpful. Thanks to college appreciate it.
Thank you Anthony.
Our next question is from Alex <unk>. Please go ahead Alex.
Very good afternoon, everyone. This is actually will on for Alex. Thanks for taking her questions and you know hope everyone is well.
Just to start Joe could you talk more on you know what a typical quarter looks like in the first two versus the final third month. If you. If you could just briefly speak to the dynamics of wife systems are typically place that quarter and you know a that'd be helpful. Thanks, sure well I'll related to how we transition from Q. for into Q1.
If you look at Q4, we had what about 20 some systems that were delivered in installed so everybody spend their money. They took advantage of the various coding that help them with with the I.R.S. and everything else. They were able to save some dollars. So they took advantage of that an accelerated the the.
The reason why they bought too early versus late or whatever so that was that was good for US now we transition into the first quarter, where you had a a large number of sales I went into the fourth quarter and now you're trying to revamp your prospects base. So you get into more operating numbers.
That you're trying to look for for the second quarter and keep in mind that we're preparing for major trade shows like we have the for the or the South beach than posing which took place in early February we were able to get that done there was about a thousand doctors there and then you're lining up to get everything going for the A.D. in early March.
Search where a lot of the doctors are looking to make their decisions. We haven't doctors that are lined up coming to our ooh and we're trying to close the deal is based on what they see and what they here at the A.D. when when that cancelled and then of course offices shut down you can see where from the time the first meeting towards the end of the beginning of.
February to where we came in at the end of March where a lot of that a business did not happen. It didn't go away. It just didn't happen people put their decisions on old. So if I look at what happened after the fourth quarter and to have four systems already sold by the time, we had her earnings call and then to get.
Broccoli turned off you know before a lot of things were able to get started that that was hurtful. So now you go through that same cycle, each and every poorer it's more impactful in the fourth quarter because of all of the other ramification surrounding it but as close a one quarter you're now ramping up.
For another quarter and it starts from day, one and you start ramping up and you started selling and you're selling cycle is a little longer some of that overlaps from the previous quartering, we get those orders early but that's pretty much how the sales have a sales cycle goes so it's almost like after one quarter everybody sits back takes the bread.
A fresh air and and says here. We go again and now you start all over so it's just a normal cycle I think you see it an almost everything in healthcare again spent a lot of years at G. medical systems and it was exactly the same thing there is something like we program our customers to buy during those periods because those are the most <unk> most most import.
Periods and their deadlines that we establish Ah for purchasing so it just happens to be disciple.
Right no understood. Thanks for all the color of their appreciate it and then you know just a second question could you just talk at a higher level, but what you're seeing with your D. just seen accounts and just you know if you can comment on the appetite that dermatology clinics have right now for looking at new technology.
<unk>. Thanks.
Appreciate it the existing customers that we have our related with the fact that they have that started t. and I want to.
Tell you know the story the other unit that we sold.
In early March.
In Tennessee.
Two and a static dermatologist, who was surrounded by most surgeons, whose patients have been told that they're not going to be treated.
For the next six to 10 weeks until they come out of us.
And he looked at it as an opportunity for himself to install the S.R.T. as quickly as possible and I want to remind everybody that may is a skin cancer awareness month. He wanted to take advantage of that fact and started advertising to his community that he can start treating now patients with skin cancer don't have to wait and they can get.
Treated now non surgically and he's been installed for a few weeks. He's he's very very busy as we speak and I think he's only gonna getting more busy as time goes on so I think that's the opportunity a lot of dermatologists are looking at they're not going to be able to clear out there backlog of skin cancer.
Your patients using surgery, only they're going to happen instead of spending that one day, a week, where they designate surgery that day doing eight to 10 or 12 patients, they're not going to be able to have eight to 10 to 12 patients in their little surgical sweet all of the same time with the amount of you know disinfect.
So if they have to apply and all of the things that they have to use you can't have patience sitting there for that long that that close together. So I think just like restaurants their business from the most surgery standpoint, there's gonna be cut by 75%.
So how did they make up that money they have to make it up in other ways. They have to treat the S.R.T.P. or the with S.R.T. treating those skin cancer patients because nothing touches the body.
So they can make up that revenues with S.R.T.. They don't have to sit back and lose those patients to anybody else. They can do that so I think that the appetite there's gonna be there plus they have to make up the money that they've lost during this time of closure and you know.
You make that off the better off you are you can't wait six months from 12 months to make it up I think that they can make that I'm very quickly with a with S.R.T. and especially if the M.S. comes through with that announcement I think they'll all want to catch up a whole lot sooner.
No understood. Thanks for all the polar there and that's it from us basketball or thanks, well and get my best salary.
Next question is from you eat Chen Please go ahead and <unk>.
Hi, this is bothering dining in or H. and I'm thankful, taking my question.
Assuming that the corporate 1940 minutes to log the or how many then would you expect to shipping tiny tiny.
Say that again, if it is called good existed or continued for the for the balance of the year.
Yeah, I stealing the call. It 19 continue to have the or how many <unk> would you expect to ship in tiny tiny.
Not a whole lot.
How are you going to ship systems, and who's going to make a decision as they have to shut their offices.
So we have to assume that they're opening up their offices right.
Yeah.
So in your question is the are the offices opening or are they remaining close like we're saying.
Partially open you know some states or.
Not for instance, in New Jersey, I don't think there's a lot of planning to open but I'm. Just curious you know I feel mean, you know the digits.
Oh the economy is like partially open so I'm, just curious like but they have any predictions.
Yeah, it's it's difficult to predict those numbers, if you're considering that you know a majority are half of the areas are going to be close keep in mind. The areas that are that are the most hit or the big centers like a New York Chicago, California, I mean, Florida's is opening up a as we speak so.
You know that continues to be a hotbed of Texas continues to be a good market for US Arizona continues to be a good market force. So it's tough to predict how many units we're gonna sell when you're still might have a quarter a half a third of the country closed.
Don't think that we can answer that question honestly.
Okay.
<unk> How'd, you should benefit tend to China in one Q. 20.
Pennsylvania estimating thinking between the two dollar men do anything to trade dispute in <unk> in coming months.
Well <unk> based under that scenario I don't expect to send anything to China.
If you know, China, and Korea, or both opening up as we speak as well their way ahead of the curve because it hit them first no. We've had interest from China for products for a long time, we have about 40 systems installed in China, I think that that volume can be increased access.
Significantly, but I think that there's a lot of things that has to happen over the next several months, but we feel that there's opportunities in Asia, we have sold equipment in Vietnam in Korea.
We have opportunities in Thailand, we have opportunities in China itself. So we continue to work on market. It because of the large opportunities that we have so I don't know how many units.
But if we sold one unit, it's one more than we sold last quarter and try it.
Okay. Thank you so that's it from me.
Thank you.
There are no more questions.
Okay.
So in closing I want to thank you all for your time this afternoon and for your interest Incenses.
Like so many companies in most every industry sector. Our business was hit hard by covert 19, but we're using this time as productivity as we can as productively as we can and our optimistic about our prospects when we return to a more typical business pattern.
Thanks, again and May you and your family friends and associates remain safe unhealthy. During this time and look forward to talking to you all after the next quarter. Thank you so much.
Thank you. This concludes today's teleconference. We thank you for your participation you made this country lines at this time and have a great day.
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