Q1 2021 American Shared Hospital Services Earnings Call

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Good day and welcome to the American shared hospital services first quarter 2021 earnings Conference call. All participants will be in listen only mode should you need assistance. Please signal conference specialist by pressing Star then zero on your telephone keypad.

After todays presentation, there will be an opportunity to ask questions to ask the question. You May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two please note. This event is being recorded.

I'd now like to turn the conference over to Stephanie Prince of P. C. G Advisory. Please go ahead.

Thank you Andrew and thank you to everyone joining us today before turning the call over to management I would like to make the following remarks concerning forward looking statements.

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 of 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 company's filings with the SEC the.

This includes the company's annual report on form 10-K for the year ended December 31, 2020, and the definitive proxy statement for the annual meeting of shareholders to be held on June 25th to low to one the company assumes no obligation to update the information contained in this conference call I would now.

Now like to turn the call over the race to Kodiak CEO of M. S Ray.

Okay.

Thank you Stephanie and.

And good afternoon, everyone.

Thanks for joining us today for our first quarter 2021 earnings conference call.

I'll begin with some opening remarks, and then Craig the gala our president.

All in CFO.

We will go through the business and operational results.

Alexis Wallace, our Chief Accounting Officer.

He will then provide a financial review.

Following that myself, Craig Alexis and Ernie Bates, our senior VP sales and business development and international assets.

We'll open the call for your questions.

Since our year end conference call just five weeks ago.

We announced the important action.

That's resulted in a stronger balance sheet.

And as expected to enhance long term shareholder value.

That action that we announced on April 13.

The establishment of a banking relationship.

With fifth third bank N a.

The principal subsidiary of fifth third Bancorp.

A diversified bank holding company cash.

<unk> in Cincinnati, Ohio.

With over $200 billion in assets.

The $22 million credit agreement that we signed with the third is the milestone in our company's history.

Yeah.

It consists of three facilities.

A term loan of $9 $5 million.

That refinance $6 $8 million of domestic gamma knife debt.

An additional $1 6 million was used for two gamma knife reloads.

With two customers that had recently extended their agreements.

The remaining $1 1 million is available for future projects.

The second facility is of five $5 million term loan.

That refinanced the company's PBR tea equipment debt.

And also provide additional working capital.

This debt was due to mature in the fourth quarter of 2021.

The third facility in the credit agreement is the $7 million revolving line of credit.

Which will be used to increase our flexibility in negotiating future projects and for general corporate purposes.

The term loans will deliver significant principal payment reductions.

Which we estimate of $5 $9 million over the next 12 months.

Savings on our interest expense will be over $350000 over the same period.

And we will also free up $300000.

And cash that had been previously restricted.

Overall, the transaction immediately lowers our cost of capital.

And resulted in a swing to a positive working capital position of $4 $2 million at the end of the first quarter.

<unk> two of negative $1 5 million at December 31, 2020.

Our new relationship with fifth third is a key part of our strategy to increase gross.

Perhaps most importantly.

With the $5 million in cash in our balance sheet at March 31, 2021.

The positive cash flow that we expect for the balance of the year.

And now supplemented by the $7 million line of credit.

We have greater resources and are in a much firmer position to negotiate with potential customers on new projects.

Combined with our expanded product and financial offerings.

And the recent asset write downs.

I believe that these decisive actions put us on the right path.

The reach our goal of increased gross.

And sustained profitability.

Already in the first quarter.

Without the benefit of the full impact of these actions.

We reported breakeven results on muted volume.

Assuming that the pandemic continues to recede.

We expect patient volumes to normalize.

I'll now turn the call over to Craig.

For the first quarter operational review.

Yeah.

Thank you Ray and good afternoon, everyone in the first quarter, we reported breakeven results on total revenue of approximately $4 4 million.

The four 5% decline compared to first quarter revenue last year, which was the only mostly non pandemic impacted quarter of the 2020 year.

First quarter Gamma knife revenue rebounded from the pandemic lows and was even with a strong quarter last year.

Gamma knife centers in Peru, and Ecuador, both contribute to a strong first quarter.

However, COVID-19 has have any lingering impact on the <unk> volumes.

Bind with planned maintenance fractions were down again in the first quarter.

First quarter revenue for the company's proton therapy system installed at Orlando Health decreased eight 7% when compared with the first quarter of 2020 period over period higher average reimbursement per fraction helped to partially offset the lower <unk>.

Or of Frac shows.

Gamma knife revenue of $2 9 million was even with the first quarter of 2020 as the decrease in volume was offset by an increase in the average reimbursement rate.

Total proton therapy fractions decreased 26, 6%, primarily due to the continued impact from COVID-19, compounded by maintenance related downtime gamma.

Gamma knife procedures decreased by five 6% to 355 for the first quarter from 376 from the same period of last year. The decrease was primarily due to the exploration of the contract in the fourth quarter of 2020 and an additional contract in the first quarter of 2021.

Offset by the acquisition of GK C E in the second quarter of 2020.

Jim Nice volumes per standards of operation, where even with gamma knife volumes for those same centers during the same period of the prior year.

Gross margin for the current first quarter increased by increased to 32, 9% of revenue compared to gross margin of 35% of revenue for the first quarter last year.

Depreciation and amortization decreased by 449000 or 27, 3% in the current quarter.

This was primarily due to the expiration of the contract in the fourth quarter of 2020, and then the additional contract in the first quarter of 2021.

Plus the write off of some impaired gamma knife equipment at year end the eliminated depreciation expense for this equipment in the current period versus last year.

Selling and administrative costs decreased 10, 5% period over period, primarily due to the lower legal and other fees. We expect additional declines in administrative expenses. This year as we focus on optimizing our cost structure net.

The income was 29000 compared to a net loss for the first quarter of last year of 135 sales in the.

164000, pauses swing was due to the decrease in depreciation expense as well as shown at the administrative costs.

We continued adding to our cash balances during the first quarter and had just over 5 million at March 31.

During the first quarter of 2021, we completed two cobalt 60 reloads, we have several other upgrades pending in the pipeline, including the Gamma knife Center of Ecuador, which is scheduled for installation of this fall and what should we one of the few gamma knifes in all of South America.

We are also planning a cobalt 60 reload in the fourth quarter based on a recently executed contract extinction other discussions with potential clients for expanded product line as Reece Grace spoke about are ongoing.

With that I'll now turn the call over to Alexis for a detailed financial discussion of Lexus.

Thank you Craig and good afternoon, everyone before I begin my prepared remark I liked the calling your attention to our first quarter earnings range, perhaps of the that was issued earlier this morning.

A copy of it can be accessed on our website at <unk> Dot com at press releases under the investors tab.

Now turning to our first quarter of results.

The three months ended March 31st 2021, total revenue of 4.364 million an increase of four 5% when compared with 4 million of 568000 and part of it from the first quarter of 2020.

The first part of have answer the company's proton therapy system and some of that airline.

They're helping Florida was 1.531 million a decrease of eight 7% when compared with the first quarter of 2020.

Total proton therapy per accident decreased 26.6% to 1231 for the three month period ended March 31st 2021 compared to 1676.

Same period in the prior year.

Revenue for the company of Gamma knife operations of 2.819 million, even when compared with the first quarter at 2020.

And the nice Christy interest increased by five 6% of 355 net.

The first quarter at 2021, and 370 effects in the same period of the prior year.

The M&A volume three centers in operation even of a gamma knife oriented and at the same centers than during the same period of the prior year.

Gross margin for the first quarter of 2021, the increase to $9 million 434000, or 32, 9% of revenue.

The gross margin of 1.394 million or is there anything any five per cent of revenue for the first quarter of 'twenty claim.

Following the administrative cost decreased to $1 million and 85000, instead of the first corner a $10 five per cent decrease compared to 1.211 million of kind of first quarter I kind of in 'twenty.

Operating income from the first quarter of 2021, and it was 90000 compared to net operating loss of 99000 in the first quarter of 2020.

Net income from the first quarter of 2021 20.

29000, or zero cents per diluted share.

This compares to a net loss for the first quarter of 2020, and the 175000 or <unk> <unk> per diluted share.

Weighted average diluted common shares were 6 million of 322000 and $6 million 153000 per the first quarter at 2021 and 2020, respectively.

Adjusted EBITDA and non-GAAP financial measure, whereas the 1.600 million for the first quarter of 2021.

Compared to $1 million 820000 of kind of first quarter actually train.

At March 31st 2021, cash cash equivalents and restricted cash of 5 million of 13000 compared to 4 million free here again.

At December 31, 2020.

Shareholders' equity at March 31st 2021, with $23 million 844000.

$4 11 per outstanding share.

This compares to the shareholders' equity at December 31st 2020, and $23 million 650000.

Eight per outstanding share.

This concludes the formal part of our presentation, Andrew we'd now like to turn the call back over to you for questions.

Okay.

At this time, we will begin the question and answer session.

To ask a question you May press Star then one.

On your telephone keypad.

If you were using the speaker phone.

Please pickup your handset before pressing the keys.

If at any time your question has been addressed.

And you would like to withdraw your question. Please.

Please press Star then two.

At this time, we will pause momentarily.

To assemble our roster.

The first question.

Comes from Jeffrey Cohen, a private investor please.

Please go ahead.

Hi, This is Jeffrey Cohen good morning.

Was curious about your revolver and whether you've drawn down at all on it.

Jeff. Thanks for your question this the race to Kodiak.

The answer is no we've not drawn down on our revolver.

Thank you there's been no need to.

Again, if you have a question.

Please press Star then one on a touchtone phone.

The next question.

Comes from Lenny Dunn.

With mutual Trust company. Please go ahead.

Good morning.

Two questions.

Obviously growing the top line of preeminent huh.

All of them.

The one gamma knife you discussed are there others in the pipeline and part of that question is no.

I know you wrote off some.

Because two of possible <unk>.

The ability to place some of them.

Even though the written off.

If the.

Customer range.

Is the right contract with you.

Uh huh.

Lenny Hi, this is ray thanks for your call and welcomed.

Welcome back to our.

Quarterly call.

We continue to search for locations to place our gamma knifes, whether they're used systems kind of coming out of old accounts or or new situations.

Situations, new gamma knife.

Don't have anything to announce today, but we continue to prosper.

Prospect and try to move situations.

Situations alone.

As we've mentioned in the past, it's a very long sales cycle.

And these.

These things do take time.

But I, probably can't say that we've got more discussions going on than we have in the recent past.

I would think so with.

The COVID-19.

With the world.

Yeah.

Some of the.

Also with the proton beam.

Now the yen has place.

And hospitals are buying how Greg, but I would say.

Theres still a pay per use market out there.

The it's possible to get another one or two.

<unk>.

John.

Do you have anything of the pipeline I'm not asking for.

Specifics.

We continue our search to find some nice homes for proton beam therapy.

Primarily in the U S.

Yes.

Okay and then the other question is on the other side.

Not only sheet.

You still have that expensive of office rent.

Have you made an effort to.

It may be released that and moved to the space that makes more sense.

I can assure you that yes, we've taken a look at it and are making our best efforts too.

Look at that opportunity.

As you know the office space market is pretty down.

As you know under the present status circumstances.

And when does the lease runs to.

I can't recall.

Sure.

Greg do you have thoughts on that.

I think there's another three years to go of approximately.

Hopefully one of the startups once expense of space.

You can release.

Okay.

Really.

Hi, my questions have been answered in the.

Our next conference call.

Uh huh.

We have some results.

[noise] patient Guy.

Again, if you have a question.

Please press Star then one on a touchtone phone.

This concludes our question and answer session I would like to turn the conference back over to Ray the Kodiak for any closing remarks.

Thanks for joining us today.

We are very excited about the future for American shared.

Please feel free to contact us directly if you have any questions before.

Before our next second quarter conference call in mid August.

The all hope that you stay safe and have a great day.

Goodbye.

The conference has now concluded. Thank you for attending today's presentation you may now disconnect.

Okay.

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