Q3 2020 Sensus Healthcare Inc Earnings Call
This expectation further supports the formation of the new mobile laser services Division, we announced in August in conjunction with the two acquisitions, which gave us immediate access to new customers throughout Florida. As you. All know we have lobbied members of Congress incented for years to gain awareness support and better.
Reimbursement for SRT and various state regulatory agencies to get clearance for SRT as we have just announced today with the addition of Ms. Megan Cornish to our board. We will continue to work. This initiative as we continue to make SRT a main stream treatment Megan will certainly help us expand that footprint based on.
Her experience and expertise she has consulted for sensus from time to time, particularly in the state regulatory front and we were very pleased to have her join our distinguished Board as many of you know we have been working to add opportunities for recurring revenues are Sentinel IP solutions software provides asset management.
And HIPPA compliant patient data and storage capability, and we're particularly pleased Sentinel IP has started to generate high margin recurring revenue. Although early in its lifecycle Sentinel holds significant promise as an integrated feature of the EPS. Our T 100 vision and the new lasers, we anticipate launching early next.
Here in the meantime, we also generated modest revenue from our new mobile laser business. During the six weeks since their acquisition, we plan new laser rental programs for 2021, including a monthly rental program, which we are expected to grow this business into a meaningful recurring contributor I want to turn.
Back to the discussion of China now, while the US has been struggling to reopen safely in the midst of COVID-19, Chinas economy has largely been returning to a pre pandemic level, we are making solid headway in China helped by our newly hired Vice President of International sales Benson swim as you sold two SRT.
Systems during the third quarter, we believe we will sell a couple of more systems to the public hospitals in China. During the fourth quarter, we are optimistic about our prospects elsewhere in China and Asia as well and we are working to complete regulatory filings in India, while finalizing distribution in Taiwan and elsewhere.
In the region.
We had been making solid progress with the scope tourists system and showcasing its unique technology capabilities when the pandemic stopped us in our tracks also research by our luminary hospitals engaged to provide data to support our marketing efforts for the sculptor it came to a standstill because of the enormous focus placed on the pandemic.
I'm delighted that this work is now poised to resume in the fourth quarter. We also are speaking with at least 10 more hospitals that have shown interest in sculptor while breast cancer appears to be the main focus of these cancer centers, we expect sculptor ultimately to be used for up to 17 different oncology into.
Patients we are hopeful sales will begin again in 2021.
Now I would like to turn the call over to Javier around Paul Our CFO, who will go over our financial results in more detail Javier. Thank.
Thanks, Joe is a pleasure to be speaking with all of you. This afternoon.
Revenues for the third quarter of 2000, and twinning, where $1.6 million compared with 5.8 million for the third quarter of 2018.
You are all aware revenues were slightly impacted by lower unit sales that will require you to that COVID-19 pandemic revenues were derived from service contract, our new mall by laser business and the sale of two SRT 100 systems to customers in China.
Gross profit for the third quarter of 2000, 21.7 million or 41.5% of revenues compared with 3.8 million or 65.8% of revenues for the third quarter of 2000 I maintain gross profit for the third quarter 2000, 21.7 million or 41.5.
Percent of revenue compared with 3.8 million or 65.8% of revenue for the third quarter of 2019.
The overall decrease in gross profit was mostly due to the increase in units sold after we sold the company to 19 outbreak, while still ensuring fixed cost depreciation and amortization expenses.
Selling and marketing expense for Q3 of 2020 was 1 million compared to 2.1 million for the third quarter of 2019. The decrease was primarily attributable to constellation of off in Paris on freight shows year to COVID-19, a decrease in commission expense due to lower sales and reduced spending on marketing activities.
General and administrative expense for the third quarter of 2000 $21 million relatively unchanged from the third quarter of 2019.
Research and development expense for the third quarter of 2000 21.9 million compared with $1.6 million for the third quarter of 2019. This decrease was primarily due to a reduction in expense related to the development of this call to our system.
We had other income of points to complete ending the third quarter of 2020, compared with 8.1 million for the third quarter of 2019. The net increase was primarily attributable to a bargain purchase gain recorded as a result of the two acquisitions offset by interest expense in connection with the company's glow under this small business administration.
Paycheck protection program.
Net loss for the third quarter of 2020 was $1.7 million or 10 cents per share compared with a net loss of $1.7 million or four cents per share for the third quarter of 2019.
Or 17 cents per share for the nine month off the top of my team.
Adjusted EBITDA for the nine months ended September 32020 was a negative 7.1 million compared with a negative 2.1 million for the nine months ended September 32019 cash.
Cash cash equivalents and investments were $16.1 million as of September 32020, compared with 50.5 million as of December 31, 2019 at quarter end. The company had no long term debt and no outstanding borrowings on its revolving line of credit.
We're confident that with our continued attention to expenses along with the current cash access to the revolving credit agreement on the PPD loan we continue to be financially well positioned to support our expected growth during the fourth quarter and especially in 2021.
I have a question. Please press Star then one on your telephone keypad to join the queue, if you're using a speaker phone. Please pick up your handset to provide the best sound quality again, ladies and gentlemen, if you do have a question or comment. Please press Star then one on your telephone keypad at this time and we're pause briefly to assemble the queue.
And our first question comes from Ben Hey, Hainer with Alliance Global Partners. Please go ahead.
Good afternoon gentlemen.
Good afternoon better.
Excellent.
Just.
On the New Board member it looks like she's joining effective January 1st.
And you have used her as a consultant it sounds like in the past.
Or potential acquisitions, there can you give any more color on on how thats going thus far and just anything on that front would be helpful.
Well, we're we're very excited for the opportunity that we have we see a lot of opportunities in this market.
We're looking for a lot of growth in our own market within the state of Florida, I think the combination of sensus, along with the new team and the company. The companies that we've acquired are going to give us access to a much bigger market with a lot more flexibility and opportunity to provide services to.
A growing base of customers in the state of Florida, So I would say that it's something that we're expecting at some point in the fourth quarter too.
At least some light at the end of the tunnel.
Although we are seeing the covid pandemic starting to come back to us here in the fall as the colder weather. It comes in we're still seeing some good signs of opportunity for the fourth quarter, we're still expecting the fourth quarter to be a decent quarter for us, it's not going to be anything compared to the quarters that we experienced last year, but I think that we're going to.
To see a significant increase in revenues in the fourth quarter.
As our prospects are starting to loosen up and believing in their own practices. So.
We're excited for the fourth quarter, and especially for the beginning of.
Of 2021, and a lot of that has to do with once we get CMS to announce what the what the new reimbursement is going to be I think that that's going to excite everybody and get things going as well.
Okay.
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For Q3 can you give us any color around the mix of revenues I guess.
Factor in three SRT machine.
And then I guess, probably mostly service contracts and I think he said a modest amount in the laser service business.
Correct, Alright, correct, I mean, the product mixes products about 30% of the revenue and.
And service about 70%.
And in the survey too.
The laser businesses within the serviced around number.
Okay great.
Thinking.
The cat higher cash.
What drove the cash higher given.
Well I guess, you're comparing it is that mostly working capital accounts receivable.
It's driving that cash positive over the nine months.
Colorado, we in queue toy collector receivables that on we have been keeping for operations.
We haven't we haven't gone away and Emma.
And then.
Joe You mentioned.
Profitability in 2021.
How do you define profitability I mean are we are we talking basically cash flow positive that that would be my assumption cash flow positive not EPS positive.
Is that where which kind of think the bar.
If we if we recall we finished Q4 2019 with positive cash flow and we were expecting continue that through a 2020 that was the whole basis for are moving ahead. In 2020, we were excited for that opportunity until covid hit towards the middle of February when I think everybody.
We became aware of it and then all the shutdowns follow up.
So we clearly are feeling that we are ahead of the game as we go into 2021, because I think everybody in the company has done such a great job and cutting down on expenses.
Cutting a lot of the fat out of our business, which we had before and I think it's making as much more diligent with Javier is helping the whole team from finance as well as the management team, which is recognized how we're able to become more efficient and spend less money and still drive revenues now again.
Driving revenues is going to be key, but we think that we can have significant revenues in 2021 and become profitable with with a positive casual no question about.
Okay and Joe.
It seems an observation that COVID-19 is obviously made it very hard.
Sell equipment and it appears like you're making a conscious effort to generate more recurring revenue streams to perhaps stabilize the income statement and good times and bad.
Is that a fair assessment or is that just by chance, that's where you see the opportunities no no you're absolutely right as a matter of fact, we had planned this coming into this year by making our service revenues more significant the Sentinel.
Solutions software revenues more significant those were all major components and initiatives that we had to start the year, we have a lot of conversations over the past several years with a lot of you guys that talked to us about.
Recurring revenues and I think that we're in a position now, especially with laser technology that we're bringing to the market, especially with our mobile laser in the census laser aesthetic services. This gives us a great opportunity to start developing those recurring revenues, which we didn't think was appropriate at the time for SRT at the Pat.
In the past as we were developing a solid base of customers. So I think that going into.
2021, we're seeing signs of developing that recurring revenue and quite frankly, some of that recurring revenue can seep over to SRT distribution and installations. So.
We're we're pursuing a lot of those things and a lot of those issues initiatives and along without right sales I think that the revenue in the.
The positive cash flow is going to be significant.
Okay, great and.
Sentinel solutions still trying to figure out what that is.
Hey, he said basically.
A service contract it only pertains to your own.
All of these things it provides them with a tremendous asset management tool as well as a patient data accumulation tool for storing patient data on the cloud using it for billing and reimbursements and things like that.
I think that it really is a productive tool for our customers that has not been seen in the dermatology space. So we think that theres a huge opportunity for us in this market.
That their interest has been peaking over this time because.
Although a lot of these community hospitals and research teaching hospitals are more focused on the cobot environment, you still have a lot of people.
For your inner operative break you said Reid of radiation therapy have been remaining consistent it's one of the components that we have not found CMS cutting back on reimbursements as they have been across the board with linear accelerators and so on and so as you cut back in some of the other modalities.
Even in breast cancer for instance.
The American Academy of the Srs Astro people came out about now a year ago that talked about anywhere between one and five treatments for breast cancer was appropriate prior to that it was believed that you had to go through those six to 10 weeks whatever those protocols work, but they have relegated now back down to the one.
One to five treatments as being very viable and a lot of it has to do with the cutbacks in.
I believe someone is approached you in that in the past and you said that the terms were not.
No the valuation that you would wanted.
And it's cold and continues to put pressure on certain entities.
Do you see are you hearing thoughts from where you are and maybe some consolidation within the radiation oncology space.
Patients the patient profiles.
They're the same profiles as the skin cancer patient Covid patient is so this'll.
This awareness is becoming.
Stronger and better as we speak and I think that it bodes well for the future.
If we have opportunities, we're definitely going to listen if we have opportunities to acquire we're definitely going to listen.
And how.
Have we been talking.
The discussions never stopped but we have a focus we have a target we want to move forward and gain a certain point in our in our lives. If you will and a certain valuation with the company before we consider anything we don't want to we don't want to go out too soon we don't want to do anything too. Soon we think we still have a lot of things to.
Pushing I think that we're going to get recognized for it.
And the year trade shows that we want to be present at hopefully we'll be able to be.
Real lot real time versus virtual first one in April and February sorted. The next one in March So we definitely want these products before the end of the year and we're working on them and we feel that we're on track for that of course, the biggest component the biggest opportunity and the biggest differentiator that we're going to bring is the fact that sentinel will be <unk>.
For the acquisition and we expect to expand on that.
Word on multiple fronts and are optimistic about our prospects when we return to a more typical business pattern I want to mention that we plan to participate in AG piece.