Q1 2021 Sensus Healthcare Inc Earnings Call
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Good day, ladies and gentlemen, and welcome to the Sensus healthcare first quarter 2021 financial results conference call.
<unk> have been placed on a listen only mode and the floor will be opened for questions and comments. Following the presentation. If you should require assistance throughout the conference. Please press star zero to reach a live operator at this time. It is my pleasure to turn the floor over to your host Kim Gala deaths ma'am the floor is yours.
Thank you operator this is Kim gala, that's with L. A J. Thank you all for participating in today's call. Joining me from Sensus healthcare are Joe Sardana, Chief Executive Officer, and Javier run Polak Chief Financial Officer.
As a reminder, some of the matters that will be discussed during today's call contain forward looking statements within the meaning of federal securities laws. All statements other than historical facts that address activities Sensus healthcare assumes plans expects believes intends or anticipates and other similar expressions will should or may.
[noise] occur in the future are forward looking statements. The forward looking statements are management's beliefs based on currently available information Sensus 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 continued.
Asian, and severity of the COVID-19, pandemic and its impact on sales and marketing as described in the company's forms 10-Q and 10-K during today's call. There will also be reference to certain non-GAAP financial measures. Sensus believes these measures provide useful information for investors yet should not be considered as a substitute for GAAP.
Nor should they be 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.
With that said I'd like to turn the call over to Joe Giordano Joe.
Thank you Kim and good afternoon, everybody and thank you all for joining us.
Been quite a year and I hope that you all have continued to remain healthy now that fully half. The country has had at least one COVID-19 vaccine, perhaps before too long, we'll be able to move forward. Indeed, we are seeing significant improvements in economic activity, which is in Stark contrast to what I spoke with you one year.
Year ago, when sensus was so negatively impacted by the complete shutdown of the U S economy.
Our first quarter 2021 revenues of $3 1 million were significantly higher versus the prior year more specifically revenues were up 83% and refresh reflect progress and a return to normalcy revenues featured both domestic and overseas sales we are cautiously optimistic that the signs.
Market recovery will allow continued revenue growth as the year progresses, noting our historical seasonally during the seasonality during the summer months.
We're delighted to ship seven SRT systems during the quarter, including six domestic direct sales and want to China, We're particularly pleased that the SRT systems installed at customer sites are operating with good volumes. This is likely reflecting not only the safety and efficacy of using SRT treating non melanoma.
Skin cancer, but also a fair reimbursement environment as of January one 2021 as of that also.
Net data centers for Medicare and Medicaid services, or CMS revalued, our main procedure and other codes following years of lobbying by Sensus and a host of key opinion leaders, who went to bad forest with CMS, highlighting the efficacy and safety of SRT the.
The American cutaneous oncology Society is particular in particular was most helpful working alongside Sensus with the American Academy of Dermatology, we have a lot of people to thank for believing in us and our technology. As we had previously indicated Q1 has had us focused on helping the market better understand that.
New reimbursement coding we stated that this will be a major part of our activities throughout the first half of 2021, our sales force along with our field applications team has been engaged with customers and prospects and delivering this message and will continue to do so throughout the year.
Reimbursement increase not only for the main SRT code, but also increased for the evaluation and management codes. The combination of these increased value provides SRT users as much as 50% increase over the reimbursement values over the past several years. In addition codes were revalued upward.
For the ultrasound capability in our SRT 100 vision systems. This has caused a greater interest in our vision product by our existing customers and prospects alike since breakeven or improve it has also increased interest in shared revenue programs to date, we have penetrated only about two.
<unk> of the U S market. So clearly there is plenty of upside for growth customers.
Customers and prospective customers alike appear to be satisfied with the new reimbursement levels and we anticipate this acceptance will be reflected in our revenue during the second half of this year. In addition, we have developed a fair market value lease with our leasing resources, which provides another reason for our customer base and prospects.
Consider our higher priced SRT 100 vision product. The F&B program offers as much the same as on high line vehicles, whereby the monthly payment is much less than the capital lease which has a dollar buyout because of the higher residuals placed on our products, we see good interest with.
Specs beginning in Q2, we feel this program will grow in popularity as we lower payments for our customers while at the same time, helping them achieve breakeven sooner.
We were thrilled with the 500th installations since the formation of Sensus healthcare a decade ago, a sale was to the mid Atlantic skin surgery Institute in Maryland. It was their second purchase of an SRT system as they expand their practice to a second location. We're looking forward to the installation of the next 500 units and do <unk>.
As we mentioned we feel we can install our next 500 units in half the time during.
During the fourth quarter, we shipped an SRT system to Holy name Hospital in Teaneck, New Jersey for the use of superficial radiation therapy treating the lungs of hospitalized COVID-19 patients. This hospital has been at the forefront of treating patients from the early days of the pandemic being situated adjacent to New York City, which was impacted early.
During the first quarter of 2021 wholly named successfully treated its first patient with the patient, leaving the ICU Award the day after treatment.
Then a second patient has been treated and we will learn the outcome soon.
Hospitals are developing protocols for treatment and we continue to expect data on the efficacy of our system for this indication during the second quarter as a reminder, in evaluating this opportunity to help our frontline workers and patients history showed a very successful approach to treating pneumonia with radiation going back nearly 75 years.
We engaged an outside physics lab to evaluate our radiation and provide us with a non biased opinion on whether or not our radiation could have sufficiently penetrate the body to treat the lungs. They published a paper that provided us the confidence that our SRT technology was capable of doing so are.
<unk> systems are well suited for COVID-19, because they are portable and allow for bedside treatment in the ICU rather than transporting patients two of cancer treatment center for radiation therapy, possibly exposing vulnerable oncology patients to the virus.
Turning now to our aesthetic lasers, we are approaching the launch of our new aesthetic lasers and the integration of the Sentinel IP solutions software into the lasers phase. One is complete Sentinel provides asset management and HIPAA compliant patient data and storage capability and also contains the software necessary to support.
Shared service models, including direct patient billing, we expect the sale of aesthetic lasers will become a meaningful source of revenue in particular as we rollout disruptive rental strategies. These strategies are designed to generate consistent revenue for sensus, while providing physician customers with access.
Multiple lasers, we are also looking at expanding our mobile aesthetic laser business beyond Florida via strategic transactions, we will introduce our family of laser products with Sentinel known as smart lasers at the upcoming South Beach Symposium aesthetic laser symposium being held in September at the Miami diplomat.
It will be a live event is over 1000, dermatologists and plastic surgeons have already registered Sentinel has started to generate high margin recurring revenue, although still early in its lifecycle Sentinel hold significant promise as an integrated feature not only with the new lasers, but also with the <unk>.
T 100, plus and the SRT 100 vision.
Turning now to our international efforts.
And China looks very promising following the sale of three systems. There during the fourth quarter of 2020, we sold an additional system. This past quarter, we expect several more sales in the coming year as of the start of the first quarter, we engaged a new distribution partner for China and Hong Kong.
New VP of International sales has developed an extensive network of prospects in China, and we're optimistic that China represents an excellent growth opportunity in.
In preparation for growth growth, we will be engaged with the Chinese health authority and renewing our license for another four years. This will be an expensive endeavor and will require almost the entire year to accomplish this will be our third license renewal. In addition, we are finalizing a new distributor in Taiwan and are preparing sculpt tourer for the.
That's already processed in China sculptor is our Ana strophic radiation therapy with beam sculpting capabilities and robotic respiratory tracking.
We're up to 17 different indications.
During the first quarter, we were granted an important U S patent for sculpt tourer, which describes the method of beam splitting in sculpting. This patent covers 31 separate claims dealing with how our electron beam generator is able to sculpt and direct X rays precisely where they are warranted.
The technology, that's embedded in our sculpt tourists system differs from the conventional inter operative radiation therapy or breakthrough therapy system and its ability to control the radiation beam and has a longer useful operating life.
Ours is the first device in the world with this capability and we believe it opens up new doors for the delivery of radiation to treat solid tumors of all times. In addition, there may be used for this technology and devices other than sculpture as well providing potential licensing opportunities in the meantime later.
This year, we expect our research partners at the University of Pennsylvania to begin supportive studies in breast and other cancers that have been on pandemic related hole.
With that I'll turn the call over to Javier Ron Paul Our CFO, who will go over our Q4 and fully financial results in more detail Javier. Thank.
Thanks, Joe it's a pleasure to be speaking with all of the earliest operating on Joe.
As mentioned revenue for the first quarter 2020.
'twenty, one or three.
$3 1 million and this compares with revenue of $1 7 million for the first quarter of 2020.
Revenue for the 2021, acquirer, who predicted seven FOT system, including six that wrecked domestic sales and one sales consulting China as well as service contracts and our new Marlborough laser business.
Congrats on the quarter was impacted by the start of the COVID-19 pandemic.
A couple of sales for the first quarter of 2021 was $1 5 million compared with $1 million for the prior year quarter. The increase was.
Commensurate with higher sales between the first quarter of development one gross profit for the first quarter of 2021 was $1 6 million or 51, 7% of revenue and this compares with gross profit of <unk> 7 million or 42, 2% of revenue for the.
Prior year quarter day.
The increase in gross margin was primarily driven by the higher number of units sold in 2021 service revenue on installed units and the impact of COVID-19 on the first three months after the vast amount of twin.
Selling and marketing expense for the first quarter of 2021 was $1 1 million down from $1 8 million for the first water off the top of the twin the 40% decrease was primarily attributable to lower threshold expense due to cancellations related to COVID-19.
<unk> marketing activities, including travel and a lower salary and benefit expense due to reduced head count.
I know it makes a lot of expense for the first quarter of 2021 was $1 million compared with $1 3 million for the first quarter of 2020.
27% decrease primarily reflects lower salary and benefit expenses and reduced headcount.
We offset by higher insurance premium costs.
Cash and development expense for the first quarter of 2020 117 million and this compares with $1 2 million for the first quarter. After document point at 46% decrease was mainly due to lower expenses related to sculpsure or development I spoke to enter the production phase.
And then Duane.
<unk> reported a net loss for the first quarter of 2021 of $1 1 million or <unk> <unk> per share compared with a net loss for the first quarter of $2023 6 million or 22 per share.
Adjusted EBITDA, which is defined as earnings before interest taxes depreciation.
Non stock compensation expense with a negative <unk> 8 million and for the first quarter of 2021, compared with a negative $3 3 million for the first quarter off the top line.
Cash and investments were $13 7 million as of March 31, 2020.
One compared with $14 9 million as of December 31, 2000.
The company had an approximate $8 2 million in long term debt and no outstanding borrowings under its revolving line of credit at March 31 2021.
We're confident that we've got working interest pension expenses I don't know with current cash and access to our existing revolving credit agreement, we continue to be financially well positioned to support our expected growth in 2021.
A final comment please see the table in the news release, we issued earlier today for a reconciliation of GAAP to non-GAAP financial measures.
With that I will turn the call back over to Joe. Thanks.
Thanks, Javier I continue to voice my strong appreciation and net admiration for our staff in the way they have maintained a focus on customers and patients throughout this pandemic I believe we further strengthen those relationships and that we are poised to resume meaningful domestic growth with the worst of the pandemic behind us we look forward to showcasing our SRT.
<unk> systems, along with the Sentinel technology at the South Beach Symposium aesthetic laser symposium in Miami and the fall clinical Dermatology conference during October which is another live show in Las Vegas, We're looking forward to that conference and especially to the prospect of seeing our industry colleagues once again in person.
I'll remind you that our products have enormous room to grow our SRT 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.
Our SRT systems provide a compelling alternative to surgery for millions of patients and arguably the only solution to prevent the recurrence of keloid following surgical excision with those comments I'd like to thank you for your time and attention and now operator, operator, we're ready to take questions.
Absolutely. Thank you ladies and gentlemen, the floor is now open for questions. If you do have a question. Please press star one on your telephone keypad at this time, if youre using a speakerphone, we asked that while posing your question can you just pick up your handset to provide favorable sound quality again, ladies and gentlemen, if you do have a question or comment.
Please press star one on your telephone keypad at this time, please hold as we poll for questions.
And our first question comes from <unk> Chen from H C. Wainwright. Please state your question.
Thank you for taking my questions. My first question is.
Do you expect any seasonality in terms of sales.
Im sorry, SRT systems to China.
That's hard to say because of the economic condition in China, I would have to say from our own.
<unk> point, because we have an upcoming licensing.
Our renewal coming up in November we might see additional activity from customers or potential customers and wanting to order prior to that happening.
Don't anticipate any problems with the renewal of the license, but in this political climate, we don't know we can't answer that but.
We're hoping to see some additional orders between now and November from from the China market.
Got it.
And second could you give us an update.
The capacity per term colleges' office in the U S. Our operating that correctly.
I'm, sorry, I didn't hear the end of the question debt.
Uh huh.
The capacity up dermatologist office in the U S.
Operating at pre COVID-19 levels, Yeah, I don't think that they are operating at key low pre.
Pre COVID-19 levels, especially in certain states, where they still might have might have some very strict guidelines on how they can see patients and when they can see patients.
I think that for instance, in the state of Florida, and some of the other.
Sunbelt States I would see.
Some very very active condition. So I see the market. They are back to what it was pre COVID-19 So states like.
Florida, Texas, Arizona, I think those are very very strong comeback states.
I'm not seeing as much in California, and in New York.
No.
Don't think that we're 100%, but I would think that we're about 80% to 85%, 90% back to where we were pre COVID-19.
Got it got it.
Lastly, do you expect sales.
Aesthetic lasers to make a significant contribution to the top line revenue this year.
I don't know if it'll make a significant but it will definitely give us the percentage of.
Sales and I think that it will have an impact for us.
So we're looking forward to getting those products on the market and you know what.
And I said that we went through phase one we just completed phase one with the Sentinel product being implemented into the into the lasers and so we are going to go on an aggressive marketing kick in the second quarter or two to talk about those lasers, but as in everything else I think the biggest opportunity.
We're going to have is that the south Beach symposium, which is strictly aesthetic lasers.
And that's where we'll be able to display the products as well as to explain directly to customers what the central package means to them.
Alright, thank you.
Thank you.
Thank you and we will take our next question from Anthony Vendetti from Maxim Group. Please go ahead.
Thanks, Good afternoon, Joe Good afternoon Javier how are you. Good afternoon, Anthony how are you. Good afternoon. Good good good.
I just wanted to to.
See what specific steps.
Obviously, one one.
'twenty one is.
An important day for the company, it's been many years in the process of.
Of trying to increase reimbursement.
Put you on a level playing field.
How have you gone about educating the market what kind of steps have you taken.
Or has that been a little bit difficult.
As we're trying to emerge from COVID-19.
I mean, we're obviously got some.
Some tough road ahead, and the marketing side.
Since we don't have meetings and we don't have a lot of face to face meetings, but we have conducted two zoom meetings, where we've had a little over 100 physicians attend each time, one was an evening session around eight o'clock at night on a Thursday, which is amenable to a lot of doctors working after hours versus during the day.
And then on a Saturday morning.
At 11 o'clock for for a couple of hours, where we had.
A coast the American cutaneous oncology Society.
<unk> introduced the the reimbursement codes.
As they are right now so.
Those are two of the.
The events that we've had and we've had some good turnout and some good interest.
As a result of that.
Again getting back to the live shows where we've.
Regularly done extremely well is going to be really helpful. And we don't see any of those coming back until the fall clinical happens towards the end of the year, but we're going to continue to do the zoom meetings on a regular basis I think that will pick that up in the second quarter and.
Third quarter, all the way through to the end of the year, we'll be doing these on a regular basis, it's a matter of getting the proper doctors aren't at the right time, when they are able to present so.
That's going to be the main thrust we wanted to do it face to face heart to heart and Doctor to Doctor.
Sure understood obviously.
That's always the desirable in more effective way to do it.
Are you looking Joe right now to increase the sales force are you are you taking it slow right now as as.
Each each like you said each geographical areas a little bit different in terms of how quickly. They are opening up but I was just curious what's the sales force.
Our territory goal.
By the end of the year versus where you are right now we've been very very aggressive in building back up our sales force I would tell you we're back to about 95% of where we were prior to COVID-19 and I believe that by the end of the second quarter will probably be over that amount, where we ended up.
Prior to COVID-19, So we're aggressively adding more people on board because the more people that we have onboard.
More training that they're going to get and then the more education and training that we'll be able to get out to the field face to face and that's where we prefer to do our business. So we want to have a very strong sales force bigger.
Bigger and better than we've ever had before to launch into the second half of the year.
And Joe I know you mentioned, so thats helpful and I know you mentioned the mobile aesthetic business Youre looking to expand outside of Florida.
Have you identified.
Certain territories, where it.
That makes sense to go next and then.
Just a little more color on your proprietary.
Laser aesthetic laser launch.
Put and one of the first steps that we have and we already have a couple of our units already in motion in central Florida. They are in a van and they are being used to serve as some of the customers that we have in central Florida with with the census name on the on the laser.
So we're adapting it one one scanner at a time and we're going to implemented in that vein and hopefully we'll start selling them directly as well just not just the on the rental side, but also on the sales side.
Okay, Great and then just one last question on sculpture.
I know that sales cycles.
Obviously longer.
Since the E P as much much larger than on on a an SRT system, but.
He color on on how those discussions are going any any expectation at this point.
May be selling one of those before the end of the year.
What can you say about that so I think that that.
It's hard to say that we're disappointed although we are okay, but.
With the pandemic. The pandemic is really put a lot of our major hospitals on their backside.
I don't think that we really realize how this has impacted our overall healthcare system and what it does I know what it's done a lot of the hospitals in the area here in the state of Florida that surrounds our offices, but I also know what the hospitals that we're dealing with are going through and how it's impacted them. So we continue.
To push forward, we have good relationships as a matter of fact, we're looking at even extending those relationships for the time being but the protocols are being put together and we fully expect that the patients will be treated and thats sometime before the end of the year. We will have a bunch of patients that had been treated with the results.
Be better known to our market and to the rest of the world how that impacts potential opportunities. We do have a nice list of prospects that continue to that we interact with on a regular basis.
All involved in in contact with our installation basis wanting to know where things go but quite frankly, they all have a great understanding of what this.
COVID-19 stuff is done to those hospitals, so they're not pressing it they understand and they're anxious to get the results as well.
Okay, Great I'll hop back in the queue. Thank you pressure thanks Anthony.
As a reminder, that star one if you do have a question or comment.
And there appear to be no further questions at this time I'd like to turn the floor back over day Mr. Sardana.
Closing remarks.
Thank you Karen so in closing I want to thank you once again for your time this afternoon and for your interest in Sensus, we continue to move forward on multiple fronts and are optimistic about our prospects as we drive towards a more typical business pattern and hopefully begin to put the COVID-19 pandemic in the rearview mirror please stay safe everyone.
I look forward to talking to you. Thank you.
Thank you ladies and gentlemen, this does conclude today's teleconference actually thank you for your participation you may disconnect. Your lines at this time and have a great day.
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