Q2 2021 Sensus Healthcare Inc Earnings Call
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Ladies and gentlemen, thank you for your patience. Please remain on the line. Your conference will begin momentarily again, we do appreciate your patience. Please remain on the line your conference will begin shortly thank you.
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Good day, ladies and gentlemen, and welcome to the Sensus healthcare second quarter 2021 financial results Conference call. All lines 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 on your telephone keypad to reach a live operator.
At this time it is my pleasure to turn the floor over to your host skin color. That's ma'am the floor is yours.
Thank you very much this is Kim gala, that's what 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 <unk> 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 or other similar expressions will should or may.
<unk> occur in the future are forward looking statements for 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 sort looking statements are subject to risks and uncertainties, including the <unk>.
Continuation and severity of the COVID-19, pandemic and its impact on sales and marketing as described in the company's forms 10-K and 10-Q.
During today's call. There will also be reference to certain non-GAAP financial measures Sensus believes these measures provide useful information for investors get 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 that said I'd like to turn the call over to Joe Sardana Joe.
Thank you Kim and good afternoon, everyone. Thank you all for joining US today I hope that you all have remained healthy and that vaccinations will permit us to continue our path forwards towards normalcy indeed.
Indeed for sensus during the second quarter. It felt like we were getting back to normal as we resumed in person sales calls, which are all are so effective and detailing the true attributes of our superficial radiation therapy systems for the treatment of non melanoma skin cancer and keloid scars as we continue to educate our market.
New reimbursement schedules made available to SRT treatments effective January 1.2021while we continue to keep an eye on the Delta variant, we are seeing significant improvements in economic activity. Our Q2 results reflect that improvement in particular compared with.
Last year's second quarter as market conditions continue to improve towards pre pandemic levels. Our business gained momentum throughout the first half of the year and we are cautiously optimistic about continued sequential quarterly growth for the rest of 'twenty 'twenty 1.
Specifically, our Q2 revenues of $5.4 million were up 358% over last year's Covid impacted revenues and were up 77% over this year's first quarter, we shipped 17 systems during the second quarter, including 7 SRT 100 vision systems.
We sold 6 SRT 100 visions to our large corporate accounts and 11 SRT systems directly to customers.
Volume for SRT systems installed at customer sites have continued to improve since the centers for Medicare and Medicaid services Revalued, Our main procedure code and since SRT became so much more prominent while in the midst of the pandemic, while surgeries were held to a minimum <unk>.
Reimbursement increase not only for the main SRT code, but also for evaluation and management problems combined SRT users are looking at reimbursement values that are higher by as much as 50%. In addition codes were revalued upward for the ultrasound capability in our SRT 100 vision.
Systems.
This has provided greater interest in our vision product by both existing customers and prospects are sales force along with our field applications team had been engaged with customers and prospects and making sure. They read the new reimbursement and shorter payback time as well as.
As well understood and we will continue to work with this message throughout the remainder of the year as.
As I described last quarter, we have developed a fair market value lease with our leasing resources, which makes it easier for our customers to consider the higher price.
T 100 vision.
The FMC or fair market value program is like leasing programs on high end cars, whereby the monthly payment is much lower than the capital lease because of the high residual value placed on the vision product.
We continue to see good interest in this sales option and have already recorded system sales. This year under this program. We have we expect interest to continue to rise throughout the year.
Pickle breakeven is around 2 patients per month, which is easily doable for the vast majority of our customers and prospects.
In addition, various medical associations, such as the American Academy of Dermatology and the American Society for radiation oncology have increased their support for the safety and efficacy of SRT to treat non melanoma skin cancer and key Lloyd's via conference presentations and papers and we believe this support is resonating with them.
Physicians comb.
Combination of backing by key opinion leaders and our presence at important trade shows such as the fall clinical has generated a solid list of leads that we expect to convert to sales during the third quarter and beyond we look forward to attending the fall clinical in Las Vegas in October, which this year will be held both in person.
And virtually.
We've made some significant reductions to our sales team last year due to the pandemic shutdown and I'm delighted to tell you that our sales team is back to pre COVID-19 numbers in anticipation of the growth. We expect in the second half of this year. Our international business is picking up nicely and we are very pleased with the continued success of our international Biz.
Especially in China, our new distributor for China, and Hong Kong has developed an extensive network of prospects that are converting to sales with for more systems shipped to China. During the second quarter to date in 2021, we've sold 5 systems for China. In addition to force sold during the fourth quarter of 2020.
Our vice President of international sales with deep professional experience in the China market has been making a positive impact to our bottom line.
We're now expanding our focus for India for further international growth and are hopeful to record our first sales. There later this year.
With respect to China, we are working with the Chinese Health authority and renewing our license for another 4 years. This is the third time, we've gone through this process and we expect to have it completed by the end of the year. In addition, we are finalizing a new distributor in Taiwan and are preparing sculptor for the regulatory process in China.
Research work with Sculpsure at Luminary hospitals in the U S had been put on hold.
Moving to COVID-19, we believe that research to support various oncology indications for resume by the end of the year and that the resumption of Sculpsure sales will begin during 2022.
We are pursuing new indications for our SRT 100 systems as well as you know during the first quarter, we shipped the system to wholly named Medical Center in Teaneck, New Jersey, as a pilot program and the use of SRT to treat the lungs for COVID-19 pneumonia patients for her.
Hospitals use the system on several patients to date and plans to prepare for paper for publication.
Thrilled to help play a part in the treatment of recovery of COVID-19 patients. We will continue to pursue collaborations with interested institutions, who believe in our low dose radiation solution for COVID-19 patients.
As a reminder, in evaluating this opportunity history showed a very successful approach to treating pneumonia with radiation going back nearly 75 years, our SRT systems are well suited for COVID-19, because they are affordable and allow for bedside treatment in the ICU.
The other indication for SRT is in the veterinary medicine market, we shipped an SRT earlier. This system. This year to Colorado State University Veterinary School and announced the first treatment for our Bulldog named Daisy CSU is continuing to treat canines anti lines and are now preparing to begin treatment protocol for horse.
These tumors are common in horses in the use of SRT, especially around the eyes is a promising therapy.
Hope to report data from CSU later this year, turning now to our aesthetic mobile laser business the integration of our central It solutions software into our proprietary laser is complete and these lasers are now available through sensus lasers that ex solutions slash as our mobile aesthetic.
Laser division, serving dermatologists throughout Florida that offers multiple lasers with custom rental options.
<unk> provides asset management and HIPAA compliant patient data and storage capability and contains the software necessary to support shared service models, including direct patient billing, we remain on track to introduce our family of laser products with Sentinel known as smart lasers at the south.
The symposium aesthetic laser program being held in September in Miami.
This will be in person event is more than 1000, dermatologists and plastic surgeons have already registered.
We also have been actively evaluating expansion to our mobile the aesthetic laser business beyond Florida by a strategic transactions in geographies, where we have an existing SRT customer base in particular, we see Texas, Georgia, and Arizona has good prospects to roll in the slab division or.
For the long term, we expect slabs to become a meaningful source of recurring revenue.
Before I turn the call over to Javier to review our financial results in more detail I want to express our optimism for the rest of the year barring any new economic restrictions related to COVID-19 or inflation in the U S. We are confident we will deliver higher revenues as well as adjusted EBITDA.
The balance of the year and given our judicious attention to expenses. We believe we are clearly on track to profitability.
Our goal that the entire sensus team is committed to achieving and with that I'll turn the call over to Javier Javier.
Thanks, Joe it's a pleasure to be speaking with all of you. This afternoon.
As Joe mentioned revenues for the second quarter of 2021 were $5 for Malian and this compares with revenues of 1 point to Omega for a second quarter of 2020, which was adversely impacted by the start of the COVID-19 pandemic.
Revenues for the 2021 water reflect the sale of 17 SRT systems, including for system sold to China, That's what our service contracts on our new mobile laser business.
Casually optimistic that the worst of the pandemic is behind us, although we're watching the variance in some of our targeted sales area for any impact.
Cost of sales for the second quarter of 2 talking about 'twenty, 1 was $2.1 million compared with <unk> 5 million for the prior year quarter.
The increase reflects higher sales during the discussion about 'twenty 1 quarter.
Gross profit for the second quarter of 2021 was $3.3 malaga for 6 to 1.7% of revenues and this compares with gross profit.
$6 million or 54, 1%.
Yes for the prior year quarter. The increase in gross margin was primarily driven by the higher number of units sold into talk for about 21 service revenue on installed units and the impact of COVID-19 on day, 2 document <unk> quarter.
Selling and marketing expenses for the second quarter of 2 talking about 'twenty, 1 was $1.3 million upside slightly over $1.2 million for the second quarter of 2000, and that's why the slight increase was primarily due to higher commission expense offset by a reduction in head count.
General and administrative expense for the second quarter of 2021 was 1 for me and got it compared with <unk> 9 million for the second quarter of 2020. The increase was primarily due to higher legal and professional fees public company expenses and insurance costs.
Research and development expense for the second quarter after talking about 'twenty, 1 was <unk> 9 million compared with 1.1 day eylea for the year for prior year quarter. The decrease was due to lower sales at the scope for a project enter the production phase during 2020.
Our net loss for the second quarter of 2022 of <unk> 3 million or <unk> <unk> per share narrowed significantly from a net loss from the prior year second quarter of $2.6 million for 16.
Adjusted EBITDA, which is defined as earnings before interest taxes, depreciation amortization and stock compensation expense now or even further to less than 100000 from a negative $2.3 million in the second quarter of last year.
I will briefly review our year to day financial results.
Revenues were $8.5 million for the first half of 2021 compared with $2.90 day for that first half of 2 doesn't win the 197% increase was primarily driven by the higher number of units sold in 2021 service revenue only installed units and the impact upcoming items.
In the 2020 period.
<unk> sales was $3.6 million for the first half of 2021, compared with $1.5 million a year ago, the increase by the due to higher sales in the 2021 period.
Gross profit for the first half was to talk about 'twenty, 1 was for $9 million or 58, 1% of revenue compared with $1.3 million or <unk> 47, 1% of revenue for the first half of 2020 day increase in gross profit was primarily driven by the higher number of units sold in 2012.
1 <unk>.
Service revenue on as both units and the impact of COVID-19 last year.
Selling and marketing expense was $2.3 million on for the first half, let's talk about 'twenty, 1 compared with $3 million for the first half was about 120. The decrease was primarily attributable to lower ratio of expenses due to cancellations related to COVID-19, reduced marketing activities, including travel and salary and benefit expense due to reduced.
Head count.
General and administrative expense was $2 for mainly on year to day, compared with $2.2 million for the prior year period.
The increase was primarily due to higher legal and professional fees and public company expenses and insurance premiums for cost.
Ratio from development expense for the first half for 2 talking about 'twenty, 1 was $1.6 million compared with $2.4 million for the first half of 2020 day.
The decrease in research and development reflected lower spending other sculpsure our project enter production phase III underway.
Net loss for the first half was up about 21 was $1 for Romania for a loss of <unk> <unk> per share from prior with a net loss of $6.2 million or a loss of 38 per share for the first half of 2012.
Adjusted EBITDA for the first half of 2021 with a negative <unk> 9 million compared with a negative $5.6 million in the first half of 2020.
Turning now to our balance sheet.
Cash and cash equivalents as of June 32021 were $15.2 million compared with $14.9 million as of December 31, 2020 day.
The company has no long term debt and no outstanding borrowings under its revolving line of credit as of the close of the second quarter.
We're confident that with our ongoing attention to expense management, along with current cash and access to our existing revolving credit agreement, we continue to be financially well positioned to support our expected growth during 2021.
Finally, a 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'll turn the call back over to Joe Thanks Javier.
Our second quarter was extremely gratifying not only because of our financial results, but because the entire sensus team pulled together to overcome adversity keeping in mind the best interest of 1 another our customers and their patients even with the growing market awareness of the safety and efficacy of SRT I'll remind you that our products.
It'd be 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 it continues to grow not to mention a further 6500 plastic surgeons 5500 radiation.
Colleges.
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 before we open up the call to your questions I want to mention that we'll be presenting virtually at the H C. Wainwright 20, <unk> annual global investment conference being held in a hybrid format September 13th through the 15, please contact HC Wainwright, if you'd like to <unk>.
<unk> and 1 on 1 meeting and now operator.
We are ready to take questions.
Thank you the floor is now open for questions. If he would like to ask a question. Please press star 1 on your telephone keypad at this time and for your question has been answered to you could remove yourself from the queue by pressing 1 again, ladies and gentlemen at star 1.
And our first question comes from Anthony Vendetti from Maxim groups go ahead Anthony.
Thanks.
Good afternoon, Joe and Javier How're you doing.
We're doing great Anthony Thank you for being on today.
Sure of course.
Obviously, a good quarter nice bounce back.
<unk>.
Other than the fact that.
Covid.
Restrictions are largely lifted we don't know what the go forward needs.
Delta variant, but.
You've seen a nice bounce back.
Do you attribute that more to.
The current the current environment.
With regard to the pandemic or you attribute it more to the.
Positive reimbursement.
Ruling that took effect on January 1st.
Well I think a little bit of both deserves the credit on that but I want to give our sales and marketing team. The majority of the credit for that because.
There's no question in our mind after 7 long years of working with CMS and them complying by giving us additional reimbursement schedules that help our doctors make a little more money, which makes this much more amenable and accessible to patients who prefer a nonsurgical choice I think that.
That's continuing to grow the we're just starting to spread and as we get to more of the non virtual meetings the face to face meetings I think that'll be impacted even greater and we've got a couple of those shows to go to in the second half of the year, which I think is going to help us so as we gain more ground and begin more geography and explaining what the.
CMS.
Has done for this I think that we're going to see us gain ground and I think COVID-19 will be behind us unless we shut down half the world again, but I will tell you as I've said in previous calls I think that the market has learned with Covid is all about being in the healthcare market I don't think as a country will shut down in the same manner. We did the first time I think that there.
Be a separate or a different reaction the second time, but I think that the precedent here is the fact that we're getting out in the field getting face to face with our customers and educating them on the on the new codes and what it means to them and how they can get involved with SRT and the fact that COVID-19 did have an impact on their business.
As in the past, we're reminding everybody the American Academy of Dermatology told all the most surgeons to stop surgeries during that piece or a period of time and as I said before the last machine turned off.
The <unk> machine when they shut their offices in the first machine that was turned back on was the ESR team machine. So it's it was proof positive that if youre looking at best practices. This was a great way of continuing the cash flow, while still treating your patients and now with the new reimbursement.
Making it almost equivalent to what most surgery would be without the hassle.
No that's great and then just.
On Sculpsure.
Obviously, a higher price point product.
What can you tell us about how that pipeline looks in terms of.
Either customers or what it looks like in terms of potential sales as.
As we move towards.
The end of this year and particularly.
Into 2022.
Yeah, I think the combination of the new reimbursement codes, which provides providers with higher reimbursement every time, they treat skin cancer <unk> keloid, along with this new fair market value lease and I want to thank our the resources that we utilize to help US go with this it's very common in other.
Parts of medical devices with health care, whether it be MRI pet C T or anything else, but the fair market value lease brings down the monthly payment for these doctors so that they can afford the higher priced units and if youre looking at pro forma is based on the combination of the fair market value lease along with the increased revenues.
Approximately 2 patients a month has your breakeven.
Which was exactly the same breakeven as an SRT 100, or with our tier 100 plus product.
Without the fair market value lease so across the board, it's going to provide physicians with the more affordable CIS.
System, which provides them with a better return on their investment and much sooner. So the combination of both I think is it's coming in at the right time, that's going to help our physicians.
Realize that SRT is a valuable tool for their practice.
Okay. That's helpful on the SRT.
How about on the Sculpsure, though product.
I know that wasn't.
And expectation.
For this year, but how is that pipeline looking as we move into 2022.
But.
We did talk about it not really providing us with the revenues that we were hoping for and having a delayed by COVID-19 because the hospital market is devastated by Covid and now that there's a come back I'm sure you saw earlier in the month or as earlier in the week. There was the a b C study that showed the 270 some hospitals that they surveyed all.
The ICU as were filled in.
It showed that 96% of the people in the ICU where.
We're in vaccinated. So we still got a long ways to go on Vaccinating everybody.
But we still see a delay in that market, but we also are pushing forward with our luminaries 1 has been hit harder than the other and.
Both luminaries are strong people they want to be first and what they do but clearly.
Our relationship with 1 of the units and I don't want to go beyond that has surpassed the other 1 and wanting to move forward faster and wanting to be number 1 in the world to accomplish things. So we're seeing progress on the clinical side and the interest has not waned by any of the prospect base that we have the prospect base is still very.
Interested wanting to know and up keeping with all of the latest data and information that we have so I think we're going to continue to see progress on the clinical side and maybe even some clinical studies that were completed before the end of the year.
So we're excited for that so we're not deterred.
Anything with sculpt tourer, but we know that the timing is not there. So therefore, we want to focus all of our energies on what our bread and butter is right now and that's superficial radiation therapy for treatment of skin cancer and keywords.
Okay, Great makes sense, thanks, very much I'll jump back in the queue. Thanks chip.
Got it thanks Anthony.
And our next question comes from Ben Hayner from Alliance Global Partners go ahead Ben.
Good afternoon, gentlemen, thanks for taking the questions.
First off for me you mentioned.
India expanding too.
2 other country there.
What's the traction there obviously a huge population is there you know a large keloid opportunity as well or just kind of some thoughts and any additional color there would be great.
Thanks, Ben and thanks for being on the line.
Yes, India is a massive market next next to China outside of the United States.
We've had a lot of inquiries as we continue to push for forward with the regulator regulations and gate being able to sell into China.
We currently know that Theres, a lot of keloid in China or in sorry in India that are not being treated properly. Therefore.
<unk> has a strong.
Player to help them with that problem, but we also have seen a lot of interest on the COVID-19 side, because we don't see them reacting with the drugs and the vaccinations as readily with Covid. So that's kind of peak their interest and it's kind of keep piqued our interest as well.
So we're very very excited to be getting into that market.
And we know it's still going to be a haul, but I think that that could be as good for us as China is right now.
So we expect to.
Some breakthroughs with some sales hopefully before the end of the year.
And is the plan to similar to China, where you bring in someone who has some nice experience on the ground there or are you do work with distributors or combination with what does that look like.
We currently have a list of potential distribution partners to work in China, we prefer to work through distribution partners in China people, who have relationships with China or India.
I'm, sorry, I'm, sorry, yeah, sorry, okay.
Or again, just making sure for right now Youre right I appreciate the correction, but it is India and we prefer to work with the preferred.
Preferred distribution partner, there and we'll narrow that gap.
Very very quickly and probably get into some prospecting and some sales sequences here in the third quarter and hopefully close before the end of the year.
Okay. So we should be on the lookout for an announcement, saying.
<unk> partnered with.
Distributor in India.
Here in short order basically, yes safe to say, yes.
Okay got it and then just.
It comes from you Chen from H C. Wainwright go ahead E.
[noise] Okay. Thank you for taking my questions. My first question is Joe you have observed in a dermatologist office closing again as a result of the Delta very up right.
Not as of now no none.
Okay. Good to know and previously you mention that clinical data from Sculptura is slated to be published in the second half of this year. So I'm just wondering if it is still on track to be made available.
Yeah, that's what we were anticipating yes, but of course, you know it relies in our in our political partner on how they accumulate the data how fast the accumulated and how fast they they decided to publish or at least let the the information be no. So we're anticipating and we continue to anticipate data and information coming up before the.
The end of the year.
Okay got it.
And could you give us a rough estimate the <unk> the percentage contribution for them to the revenue from the aesthetic lasers in mobile business units.
I I would say right now it's insignificant I can assure you that we're not losing money with it but I would say that the actual you know contribution is is not significant at this time I I also want to address you follow up to your question about the dermatologist not closing their their businesses.
I think that's a very important question that I want to.
[noise] expand on the fact is that we haven't seen any of them and I close and I and I firmly believe that there's a very strong determination by the entire market not to ever closed again the way. They did in the past. So I think that if you're going to look at anything that they're going to resolve with any kind of a pandemic.
Low immune systems of those patients who are <unk> being treated with cancer. It was kind of contradictory to treat 1 patient or 2 patients for 10 patients. When you have thousands of patients being treated for cancer and other cancers with very low immune systems and the cost of bringing it patient into electron beam acts.
Celebrate a room and having to set it up for a very contagious patient and then having to tear it down afterwards and going through all the clean up afterwards could cost the day or 2 production and treating these other patients became highly inefficient and very costly so our solution.
<unk>, we thought of by bringing the machine, which is on wheels to the patient in the I C U or in there, but bedside provided the physicians an opportunity to treat many more patients with low dose and so that's what Holy name Hospital is doing today I can tell you that they're encouraged.
By the initial studies that they've done okay, but they've taken it upon themselves to apply the protocols, which have to go through their I R. B, they want to be especially careful because of the risks that are involved.
And then of course, you know attorneys have to be involved when it comes to risk and even though their patients that have problems. They can take months to do that which they did and so now there was a lull in the action as far as availability of patients, whereas before when we started this there was plenty of patients, but they feel that they can move forward with this and be able to publish.
Paper independent of us, helping them to do that which makes it much more credible Indiana. So we're excited for what's happened initially with their initial patients that they've treated.
Got it.
<unk>.
Thank you.
And our next question comes from Alex Nowack from Craig Hallum Capital Go ahead Alex.
Hey, guys just turns on for Alex hopping between calls here. So I apologize if these questions have already been answered.
But I got 2 quick ones. The first have you put any thought into adding a consumable component to the S. O 2 system.
No.
The only consumable that is worthwhile there is going to be our service that's a considerable.
We have accessories that the customers pay for the fact is CMS centers for Medicare and Medicaid services is a difficult time applying reimbursement codes for consumables. So unlike a catheter.
Or anything else that would use the body that you would have to dispose of there's very little consumables available to this so that's why it doesn't make sense to add a consumable you know there's a lot of companies like general electric Siemens Varian they have accessories, they have software that they sell.
That they upgrade upgrade products things like that so we have to focus on in providing additional revenues for these products, but their models have worked for the last hundred years, we feel our model can work for another hundred years. It's a different story. However, when we start talking about aesthetic lasers, that's a cash business, it's not reliant.
C. P T codes that come from the government and therefore, we don't have to worry about reimbursement because people will pay out of pocket for that.
Got it Okay. That's helpful and then the second 1.
Are you hearing in excuse me are you hearing any traction for S. R. T with direct sales force and also for your skin care with the new reimbursement rates.
Yes, as we have announced today and that is 1 of the questions was asked before to what degree do we attribute the increase in reimbursement versus overcoming or having COVID-19 behind us. It's a combination of both with the majority I give credit to our sales organization as well as our applications.
<unk> and going directly to customers and face to face providing them with data information training educating them on what those new reimbursement codes are as I stated once before in the previous call. You know January 1, which CMS came up with the new reimbursements. They didn't send emails to all of our customers and all of our prospects Saint can.
Gratulation she got higher reimbursement, we have to do that we're the ones that have to do that and we have to do that face to face 1 to 1 so performers are usually asked by the customers and based on the way they want a bill and the protocols that they used to treat patients. We can show them performers that provides them for.
Back they need for what they see as their reimbursement so with our third party group Pinnacle, which provides all the expertise for reimbursement regarding those codes are doctors have access to all of that information that they need that will help them with the billing and the coding so where we are.
Getting positive results for and I attribute the results of the the second quarter directly to our sales team in our applications team going through that educating and training of our physicians 1 on 1 and that will continue to grow with bigger volumes of people and as we grow through the year.
Okay appreciate the questions.
Thank you.
As a reminder, Lady and channel how many May press star wanted to enter the kill and our next question comes from change Swillinger from Northland Securities Gonna had changed.
Hey, Joe can you hear me.
I certainly can James how right that day.
I'm doing okay mm congratulations on on Ah I'm very good corner.
I got a couple of questions here, most have been answered, though but very quickly going back to the animal house calm and I know, it's the top of the first inning, it's very very early but what type of market size is that what what are your thoughts on animal health as as as you started to work with Colorado, staying probably some other universities, how how should we think about that.
Well first of all I I. Thank you for for being on I. Appreciate the comments and thanks for that question I think it's an important part of where we might be able to expand our indications into a very large market now it's never gonna be the size of our existing dermatology space, but I'll give you an example.
About 3 years ago, very and decided that they were going to get involved with their halcion product at a much lower cost than their electron beam unit.
At about a 2 million dollar price tag and quite frankly from what I've heard from the veterinarian market that they're way below that in providing the veterinarians with a an alternative to how they treat their patients using radiation and so they decided before the transaction with Siemens that they were gonna.
Make it into a separate division wholly separate division that they can operate a new revenue stream from I know that the initial years and talking to some of their folks running that that they had done as much as $40 million, but they expected within 24 months to grow that business $200 million and it can be.
Be in my estimation for them as much as a billion dollars. So they there's approximately 500 cancer centers around the country that are involved strictly with veterinarian markets.
And if you go to the center at at the.
Colorado State University. They have a hospital that has an imaging center equivalent second to none of any major community large community hospital and a cancer center. The same thing with all of the latest electron beam devices now they purchase them used but the cost of managing those on an annual Bay.
This is the operating costs, there's still about $2 million Halcion you know they probably bought it for 1.2 to 1.3 million at these other facilities, but the operating expense is still about $1 billion. So the opportunity with superficial radiation therapy has has been indicated so far with the duck.
Or so patients that Colorado state has done.
Is extremely important for them because the charges that they're experiencing to the to the the pet owners is between 4 and $6000 to treat a cancer.
And that's.
That's not gonna change based on spending.
$400000 for a device verses $2 million for a device, they're still going to make that money and it can be found to be as effective and probably even more effective and cost effective for them. So it makes it easier to acquire therefore, you should be able to sell more and therefore, we should be experiencing the same results were.
Colorado State seems to be telling us at this time now we know that they've identified several equine candidates because of tumors around their eyes.
And apparently the benefit for that is that they had to do surgery, b and removing those tumors that they would cut into a lot of nerves tendons things like that which would've descended disable either blind the animal or not allow them to use their eyelids. The way. They currently use and if you've ever been on a farm or near a horse.
<unk> you know that flies are they're all around these animals and that's what causes a lot of infections around their eyes and everything else. So this is this can be a valuable tool in some of valuable tools that it allows them to treat a patient is that they don't have to give them full anesthesia, they wouldn't surgery or with electron beam they can.
Hit by Covid, you Covid adjusted Okay, and now I'm, not saying we're out of Covid, but we're kind of starting to say can we get to the other side of Covid I hope, we can of course and what day. What do you think the sales force just in terms of number of feet on the street would you be looking at let's call. It post COVID-19.
Terms of sales.
I will tell you that we feel that were pre COVID-19 right now.
We're going to hire more people in the third quarter.
We want to be as much at full strength or beyond before the end of the year because the task that we have is getting to as many offices as possible to preach what we got from CMS, because we feel that that's going to help drive the business as well as the new.
Financing that we have for leases. So the combination of both is going to help us doing that so I would tell you that were pre COVID-19 currently and we will be by the end of this quarter post Covid post COVID-19 with additional but you know how conservative and how conscious we are of the profitability line. So.
We don't want to get ahead of ourselves, we're trying to get ahead of ourselves, but without the expense.
There's just no way that you can get around it but we still want to get some revenues in.
And then then hire more people because we think that's 1 of the answers to our profitability before the end of the year.
Now if the market continue to develop which I believe it would as.
As we did a COVID-19 shutdown 1 could assume that when it opens back up.
Its natural growth without her team.
It's going to be robust.
More robust on the other side in terms of.
My last question here.
G&A was a little bit higher since for Tenneco on expenses I mean, nothing major just a little bit higher were there. Some 1 time issues in there or is there anything in there that's going to continue to move into Q3 and Q4 I don't want it gets you into our guidance type of thing, but how should I think of G&A expenses in terms of the second half for the year I know youre growing your business.
Well.
Understand this and I think you'll understand this and everybody else on the line I understand it.
We're looking at certain markets to expand our business and it's going to take some due diligence from some extra expenses in order to pursue those things and so youre going to see some of those expenses happened in that in that line item, that's going to continue to drive our business, but it's clearly money that we're investing in pursuing growing our markets.
Not spending not R&D or anything like that it's in pursuing markets to grow our business and until we get results out of any of those due diligence as we got across the line.
We don't announce it in any way shape performance or something happens but.
We can't stop continuing to grow our markets and to grow our businesses in the areas that we're looking at.
No no I'm just trying to do some modeling questions you guys have done a very very good job of managing the balance sheet in this in this downturn it again.
Congratulations on a good quarter. This is Ed I think the team has done a good job.
Back in the queue. Thanks, Joe.
I appreciate the questions are good questions I appreciate the comments.
Again, our number 1 priority is profitability.
Working endlessly to make that happen, we're not trying to spend too much where we don't want to spend too little there is a fine balance there and I can assure you that ourselves along with our board members are very tight on every penny that we spend.
And at this point there are no more questions I would now like to turn it back to management for any closing remarks.
Okay. Thank you everybody for being on the line. So in closing I want to thank you once again for your time this afternoon and for your interest in Sensus healthcare, we look forward to our next financial results Conference call in early November and in the meantime, please please stay safe.
Your mask, where appropriate and let's keep moving forward. Thank you so much.
Thank you. This does conclude today's conference. We thank you for your participation and you may disconnect. Your lines at this time and have a wonderful day.
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