Q3 2020 American Shared Hospital Services Earnings Call

Good afternoon, and welcome to the American shared hospital services third quarter 2020 earnings Conference call My name spread it didn't I will be your operator for today at this time all participants are in a listen only mode. Later, we will conduct a question and answer session.

During the <unk> session. If you have a question you can press star one on your telephone keypad. Please note that this conference is being recorded.

I'll now turn it over to Stephanie Prince PCG Advisory Stephanie you may begin.

Thank you Brandon and thank you to everyone joining us today before turning the call over to management I would like to make.

Make the following remarks concerning forward looking statements.

Please note that various remarks that may be made on this conference call about future expectations plans and prospects for the company constitute forward looking statements for the purposes, the safe Harbor provisions under the private Securities Litigation Reform.

Act of 1995.

Actual results may vary materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the Companys filings with the SEC.

This includes the company's annual report on form 10-K for the year and.

For December 31, 2019 point form 10-Q for the periods ended March 31, 2020, and June 30, 2020, and the definitive proxy statement for the annual meeting of shareholders that was held on June 26 2020.

The company assumes no obligation to update.

And the information contained in this conference call.

I would now like to turn the call over to race to Kodiak CEO of A.M.S. Ray.

Great.

Thank you Stephanie good.

Afternoon, everyone.

Thanks for joining us today for our field.

Water Twentytwenty earnings conference call.

I'll begin with some opening remarks, and then freight to Gallagher, our president COO and CFO will go through the business and operational results.

Alexis Wallace, our Chief Accounting Officer will then provide a financial review.

Following that myself, Craig a lexus.

In early Bates, our senior Vice President sales and business development <unk> International operations.

We'll open the call for your question.

In the third quarter, our revenues bounce back significantly from the low volumes that we experienced during the deepest days of the co goodnight.

16 pandemic in the second quarter.

Greg will discuss this in more detail in a few minutes.

In September I was pleased to be appointed by the board as a CEO in house.

At the same time all of corporate managers that many of you know.

I see well deserved promotions that are more reflective of their positions and responsibilities.

I believe we've got a great team in place.

Together, our goal is to reach sustained profitability.

We can do this by diversifying our business model in three.

These waves.

First we can expand our product offerings.

To include not only proton beams and gamma knives, but also our guided Linux and more advanced Linux.

Second.

We can expand geographically.

A great example of this is the recently completed acquisitions.

The only gamma knife center in the country of equity.

Yes.

Third we can continue to diversify by the different ways, we provide our solution.

We can provide.

Since directly to patients as in our retail operations in Peru and Ecuador.

Or we can provide equipment and services in a wholesale manner.

As we do in the United States.

I believe that and ask as many opportunities for future growth.

And we can provide tremendous flexibility to the marketplace and our clients with the many different ways, we can meet their needs.

I'm looking for together I'm looking forward to working together with the team.

To realize that.

I'll now turn the call over to Craig.

Sure for third quarter operational review.

Craig.

Thank you Ray and good afternoon, everyone as Ray mentioned in the third quarter, our volumes, but bounced back significantly.

Total revenue was up 17% sequentially from the second quarter and also.

Per cent the head of consumer revenue in the prepared demick first quarter of 2020 Euro.

Year over year total revenue declined to 11.9%.

Third quarter last year.

Have a nice revenue also declined year over year by 9.9%, but increased 15.2 per.

To that compared to the second quarter of 2020, the year over year decrease was due to lower average reimbursement.

The company's retail sites any positive contractual adjustment related to Medicare reimbursement at one of the company's sites recognized the prior years third quarter.

M&A procedures increased by 8.3% to 377 for the third quarter of 2020 from 348 in the same period, the prior year and increased 7.7% compared to 350 for the second quarter of 2020.

Gamma knife volumes.

For centers in operation.

Decreased 3.3 percentage points from gamma knife revenues volumes for those same centers during the same period of the prior year.

No time therapy was consistent with the third quarter of 2019 and increased 20.4% compared to the second quarter of 2000.

2020.

Total proton therapy fractions in the third quarter increased 12.4% compared to the third quarter of 2019, and the increased 20.8% compared to the second quarter of 2020.

Gross margin for the third quarter decreased to 24.4% of revenue.

Compared to gross margin of 34.2% of revenue for the third quarter of 2019 and decreased from 20.7% of revenue for the second quarter of 2020.

Net loss in the third quarter was 209000 compared to net income of 165000 for the.

In quarter of 2019, and a net loss of 483000 for the second quarter of 2020.

The decrease in the Q3 net income compared to the prior year was primarily due to the decrease in cameras knife revenues caused by a decrease in the average reimbursement rate the company's retail sites and.

The legal and other professional fees and transaction costs from the June acquisition of the game They center in Ecuador, which totaled 69000.

We ended the quarter with a strong cash position of 3.6 million during the third quarter. We completed the upgrade of the gamma knife perfexion to the icon platform at the Loveless medical.

Inliner.

We have several other upgrades pending in our pipeline, including again, they center, Ecuador, which will be one of the few in all of South America.

Other discussions with potential clients for our expanded product line as Ray spoke about our continuing.

Looking ahead with COVID-19 cases racing around the world.

So we're closely monitoring for any future potential impact on our operations.

The recently released early P M Orlando Health PBR Tech T. Center was not selected to be included in the Aro APPM announced by CMS.

Additionally, we believe that the Aro ATM will have no significant.

On the reimbursement of our gamma knife services at four versus centers that were included in the new reimbursement model we.

We've also begun taking a hard look at our expenses, especially with our vendors and expect to initiate selling and administrative cost savings in 2021 with that I'll now turn the call over to Alexis.

MBR detailed financial discussion Alexis.

Thank you Frank and good afternoon, everyone before I begin my prepared remarks, I'd like to client hankinson arent to our 2023rd quarter earnings press release that was issued earlier. This morning, if you need a copy it can be accessed on our website at <unk> Dot Com I certainly says.

Under the investors tab.

Now turning to our third quarter results for the three months ended Septemberthirty EPS 2020, total revenue decreased 11.9% to 4.670 million compared to telegraph any 593 hundred 1000 in the third quarter of 2019 and increased 17% compared to total revenue a three.

For 991000 at the site.

Second quarter of 2020.

The company recorded no revenue from its IDR GE equipment in the current quarter compared to 314000 and that third quarter 2019.

Right and that was probably the pic fully depreciated and sold in July after expiration of the Companys contract.

Third quarter.

<unk> revenue for the company's proton therapy system installed that Orlando House in Florida increased 0.6% to 196 hundred 87000 compared to revenue for the third quarter of 2019 at why Ninesix hundred 77000, and increased 20.4% compared to revenue on line nine 401000 in the second quarter of 2020.

20.

The year over year increase is due to higher volumes offset by lower average reimbursement for fraction.

Average reimbursement for a fraction of that is consistent with the second quarter of 2020.

Total front proton therapy factions in that third quarter by 1632, an increase of 12.4% compared to 1000.

Hundred 52 proton therapy fractions in the third quarter of 2019, and an increase of 20.8 compared to 1351 in the second quarter of 2020.

Revenue for the company's gamma knife operations decreased 9.9% to 2.983 million for the third quarter of 2020.

Paired to 3.310 million for the third quarter of 2019 and increased 15.2% compared to 2.590 million for the second quarter of 2020.

The year over year decline was due to lower average reimbursement at the company's retail sites and the positive contractual adjustment related to Medicare reimbursement headwinds accompany sites.

It's recognized in the prior year's third quarter.

Gamma knife procedures increased by 8.3% to 377 for the third quarter of 2020 and 340 in the same period of the prior year and 7.7% compared to 350 for the second quarter of 2020.

The increase from the second quarter reflects the Aquas.

Acquisition of Gamma Knife Center Ecuador.

Demonised Lions for centers and operations decreased 3% from gamma knife volumes for the same centers during the same period of the prior year.

Gross margin for the gross margin for the third quarter of 2020 decreased to 1 million and 138000 or 24.4.

A percent of revenue compared to gross margin of $1.813 million or 34.2% of revenue for the third quarter of 2019, an increase from $907000 or 22.7% of revenue for the second quarter of 2020.

Selling and administrative costs increased by 70000 or 6.6%.

To 1 million to 135000 for the third quarter compared to $1.065 million for the third quarter of 2019.

And a decline of 6.2% compared to 1.210 million for the second quarter of 2020.

The year over year increases due to tax legal and consulting fees of 69000 related.

As to the Companys acquisition of GK CE.

Net loss for the third quarter of 2020 was $209000 or three cents per diluted share. This.

This compares to net income for the third quarter of 2019, as a 165000 or three cents per diluted share and a net loss of 483000 or eight cents per diluted.

Sure for the second quarter of 2024.

Fully diluted weighted average common shares outstanding were $6 million 49000, and 5.908 million for the third quarter of 2020 and 2019, respectively.

Adjusted EBITDA, a non-GAAP financial measure was 1.979 million for the third quarter of 2020.

Compared to 2.445 million for the third quarter of 2019, and 1 million 437 for the second quarter of 2020.

The year over year decline was primarily due to the reduction in overall income.

Turning to the balance sheet cash cash equivalents and restricted cash was 3.983 million.

At September Thirtyth 2020, compared to 1.779 million at December 30, Onest 2019.

This concludes concludes the formal part of our presentation branded we now like to turn the call back over to you for questions. Thanks.

Thank you and we'll now begin the question of this recession. If you have a question. Please press star one.

And we will keep it if you'd like to be removed from the queue. Please press the pound sign for the Heskey there may be a delay before the first question just announced is trying to speakerphone. Please pick up your headset first before dialing.

Once again, if you have a question. Please press star one on your telephone keypad.

We are standing by for questions.

We have what are you doing please go ahead.

Yes.

During the quarter.

Okay.

Ordinary course.

Yes.

Obviously.

No.

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Kurt Cobain.

Yes.

It does look like we have seen.

We certainly have the.

The ability now to.

Contained.

It's better or worse.

So.

You know I would.

Guestimate.

After the first calendar quarter of next.

Sure.

And it will still be a problem, but that is a major one like it is now.

Are you finding.

Any problems with.

Getting people to show up in the hospital for the procedures.

Right now.

Mhm.

Okay.

Craig would you like to take that question.

Sure.

Lenny <unk>.

It really depends on the location.

Whether people are fully coming back yet so it's and with the current spiky of COVID-19, that's it.

It's going to be hard to tell us to work with.

We still have a disruption going into it but to like.

Like you said.

With the.

The promising vaccines coming now.

We should see some easing of that so.

Probably by sometime during.

Mid to late latter part.

2021 would be my guess.

They don't people, who get gamma knife treatment really need them.

So lets say both sold them for a while they probably don't want to postpone them indefinitely.

Because the alternative is.

Good.

Good.

Yes, I think for people that.

The static brain tumors that but that is the case.

The people that have benign tumors or CRO jumbo rolls.

They may choose to delay for a period of time.

But as you said they can't delay forever, otherwise they will become a ineligible for the <unk> the gamma knife treatment because their tumors may become too large sales.

Okay, well just like this.

It is a balance here were probably.

Probably because of the book.

Earlier this year.

People in that category.

That would offset some of the newer people should be category. So.

Yeah.

Things may get better.

Do you.

How far in advance to people after books.

Of these it's not a a great deal of time in advance is that mainly a getting into see their physicians and the physicians reviewing their.

Mm arise and say that it is a gamma knife treatable indication.

So it's a matter of just getting.

To their physicians and then getting the sky.

Schedule for the gamma knife treatment.

Okay and.

Tim.

The other question I have.

Is it you know weve.

Waiting I'm sure you will because it's the same way.

And we will.

Hi.

Get another.

You know town center.

Going.

Right at the end of the federal there.

[noise] Lenny Thanks for your question.

We are continuing to pursue proton opportunities.

That you know as we mentioned in the past at least.

Very well.

Sales cycle items.

And.

We are continuing to pursue those opportunities, but we do feel that.

The best route for the company is not to have all its eggs in one basket so to speak and we are uniquely position.

Sure.

For other products that provide radiation treatments for cancer patients.

And there's lots of different products, such as an M. Our guided went out.

That we can provide to the marketplace as well that that's fits in our overall mission out.

To provide these therapies and treatments.

At all as you know or as we mentioned in the past, perhaps they are guided lit actually is the cost structure.

More expensive than a gamma knife, but significantly less expensive than a proton beam system.

Yeah.

Yeah.

Yes.

It's good to have.

Different streams of income are we close to getting those type of deals.

You know, it's hard to say I would I will say that weve had more sales activity I'll say in the third quarter.

Activity.

On the sales side has ticked up I'll say versus the first and second quarter sales this year. So.

So I think that's a good sign.

Okay.

We look forward to.

A better quarter.

Yeah.

Sure.

Somebody else ask questions if they haven't.

Of course.

Shareholders.

It would be nice.

See some good results.

It's nice to hear from you again, let me <unk>.

Thank you.

And once again, if you do have a question. Please sales star one on your phone keypad, we'll stand by for any further questions.

Okay. It looks like no further questions at the moment I will now turn it back to race to compete for closing remarks.

Well, thank you everyone.

Thanks for.

For joining us today.

Feel free to contact US directly if you have any questions before the fourth quarter and before our 2020 year.

Half of small and mid March.

They say stay well and have a great day.

Goodbye.

Thank you ladies and gentlemen. This concludes today's conference. Thank you for joining you may now disconnect.

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