Q4 2021 American Shared Hospital Services Earnings Call

Good day and welcome to the American shared hospital services fourth quarter and year end 2021 earnings conference call.

All participants will be in a listen only mode should you need assistance. Please signal a conference specialist by pressing the star key followed by zero after.

After todays presentation, there will be an opportunity to ask questions to ask a 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 would now like to turn the conference over to Stephanie Prince with P. C. G Advisory. Please go ahead.

Thank you Chad and thank you to everyone joining us cobalt 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.

Excuse me.

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. This includes the company's annual report on Form 10-K for the year ended December 31, 2020 quarterly reports on form.

<unk> 10-Q for the quarters ended March 31 June 30 and September 30th.

I'll have two O two one and the definitive proxy statement for the annual meeting of shareholders that was held on June 25th 2021.

Company assumes no obligation to update the information contained in this conference call I would now like to turn the call over to race to Kodiak CEO of Ams Ray.

Thank you Stephanie.

Afternoon, everyone.

Thank you for joining us today for our fourth quarter and year end 2021 earnings conference call.

I'll begin with some opening remarks, and then turn the call over to Alexis Wallace, Our Chief Accounting Officer for a financial review.

Craig <unk>, our president and CEO and CFO will then provide an operational review of the results.

Following the prepared remarks myself.

Craig Alexis and Ernie Bates, our senior Vice President sales and business development and international operations.

We'll open the call for your questions.

<unk> finished 2021 on a strong note.

Reporting the highest revenue of the year in the fourth quarter.

Revenue was $4 $7 million short quarter.

$17 $6 million for the year.

Operating income was $723000.

The fourth consecutive positive quarter compared to losses last year.

And $1.4 million for the full year.

Reagan Alexis will go into the details in a few moments.

We accomplished a great deal in 2021.

Actions, we've taken include strengthening the balance sheet.

Through the impaired asset write down in December 2020.

And refinancing our debt.

Our refinancing with fifth third Bank last April .

<unk> reduced our principal payments and interest expense.

In addition, we have established a $7 million line of credit to.

To increase our resources for new business opportunities.

We broadened our product lines. So we can offer all radiation therapy equipment from all manufacturers.

We also expanded our addressable market by signing a business development agreement that.

That provides support.

In our pursuit of new advanced radiation therapy opportunities.

In the federal facilities market, such as VA and department of Defense hospitals.

This is in addition to our other marketing initiatives in the United States and International Health care markets.

Late last year, we also lowered our expenses further by sub leasing or downtown San Francisco office.

In addition to our other cost control efforts.

Together these actions resulted in increased profitability.

And a return to positive net.

Net income for both the quarter and the year.

We have substantial resources for future opportunities.

<unk> $8 $3 million in cash and the new $7 million line of credit.

These assets can be even further leveraged to accelerate the growth of our business.

I'll now turn the call over to Alexis for the fourth quarter and full year financial review.

Alexis.

Thank you Ray and good afternoon, everyone.

Before I begin my prepared remarks, I'd like to call your attention to our fourth quarter and year end 2021 earnings press release that was issued earlier this morning.

You need a copy it can be accessed on our web site at a S. H S Dot com at press releases under the investors tab.

Now turning to our fourth quarter results.

For the three months ended December 31, 2021 revenue increased one 8% to 4 million and 689000 compared to revenue of $4 million 608000 for the fourth quarter of 2020.

Fourth quarter revenue for the company's proton therapy system installed at Orlando Health in Florida increased 21% to $1 million 685000 compared to revenue for the fourth quarter of 2000 21.430 million.

Couple of proton therapy fractions in the fourth quarter were 1113, a decrease of seven 9% compared to 1209 proton therapy fractions in the fourth quarter of 2020.

Revenue for the company's gamma knife operations decreased six 8% to $3 million 4000 for the fourth quarter of 2021 compared to $3 million 205000 for the fourth quarter of 2020.

Yes knife procedures decreased by 13, 6% to 369 for the fourth quarter of 2021.

From 427 in the same period of the prior year.

Gross margin for the fourth quarter of 2021 increased 116% to $2 million 218000, or 47, 3% of revenue compared to gross margin at 127000 or 22, 3% of revenue for the fourth quarter of 2020.

Selling and administrative costs increased by 17, 7% to 1.238 million for the three month period compared to 1.052 million for the same period in the prior year.

Interest expense decreased 42% to 152000 compared to 254000 for the same period in the prior year.

Operating income for the fourth quarter of 2021, 723000 compared to an operating loss of $8 million 543000 in the fourth quarter of 2020.

This includes the write down of impaired assets of 105008 thousand 264000 in the fourth quarter of 2021 and 2020, respectively.

Excluding the write downs and non-GAAP operating income was 828000 compared to a loss.

279000, a positive swing of 1 million and 107000.

Net income in the fourth quarter of 2021 was 219 or four cents per diluted share compared to a net loss of 6.231 million or $1 <unk> per diluted share for the fourth quarter of 2020.

Fully diluted weighted average common shares outstanding were $6 million and 117000 and $6 million 154000 for the fourth quarter of 2021 and 2020, respectively.

Adjusted EBITDA was $2 million 150000 for the fourth quarter of 2021 compared to 2.538 million for the fourth quarter of 2020.

At December 31, 2021, cash cash equivalents and restricted cash were 8.263 million compared to 4.325 million at December 31 2020.

Shareholders' equity at December 31, 2021 was $24 million 239000 or $4.01 per outstanding share.

This compares to shareholders' equity at December 31, 2020 of $23 million 650000, or $4 eight per outstanding share.

Okay.

Briefly for the 12 months revenue decreased one 2% to $17 million 628000.

Proton therapy revenue decreased by 1.818% to 6.058 million.

Total proton therapy fractions were 4426, a decrease of 24, 6% for the year, primarily due to the continued impact from the COVID-19 pandemic as well as downtime we experienced for the repair of equipment components during the second half of the year.

Gamma knife revenue decreased 4% to $11 million 629000, the number of gamma knife procedures were 1436, a decrease of six 1%.

On a same center basis gamma knife volumes increased six 9% from the prior year.

Operating income for 2021 was 1.351 million compared to an operating loss of 9.463 million for 2020, which includes the write down of a parent assets that I mentioned earlier.

non-GAAP operating income excluding the write downs was 1.456 million compared to a loss of $1 million 199000.

A positive swing of 2.655 million.

I'll now turn the call over to Craig for the fourth quarter operational overview Craig.

Thank you Alexis and good afternoon to everyone.

As <unk> mentioned total revenue in the fourth quarter was $4 7 million, a one 8% increase over last year.

It was the highest revenue quarter of the year and broadly reflects moderately lower volumes offset by higher reimbursements.

Fourth quarter revenue from our proton therapy system in Florida.

Increased 21% to $1 7 million higher average reimbursement for a fraction was offset by moderately lower fractions.

Which decreased seven 9% year over year to 1113 for the quarter.

Volume continued to be impacted by ongoing downtime for the repair of proton system components, which was completed in October 2021.

Gamma knife revenue decreased six 3% to $3 million. The decrease was due to a decline in procedures offset by an increase in average reimbursement.

The increase in average reimbursement was due to the exploration of an agreement in the fourth quarter of 2020, which was reimbursed at a lower rate and an increase in the average rate at the company's retail sites.

Yes knife procedures decreased by 13, 6% to $360 million for the fourth quarter, primarily due to the exploration of two agreements one in the fourth quarter of 2020 and the other in the first quarter of 2021.

<unk> high volume customers.

On a same center basis gamma knife volumes for same centers.

Operations were even from gamma knife volumes for those same centers during the same period of the prior year, which excludes the two agreements that expired.

Gross margin increased 116% in dollars to 2 billion 218000.

The gross margin percentage also more than doubled to 47, 3% of revenue compared to 22, 3% for the fourth quarter of 2020.

The increase was primarily due to a 29, 4% decrease in depreciation and amortization and a 46, 3% decrease in other direct operating costs, reflecting the continued benefits of the 2020 year end balance.

Balance sheet restructuring.

The two agreements explorations and a decrease in operating cost for the company's existing retail sites.

Selling and administrative costs increased by 17, 7% to $1 2 million for the quarter.

This was due to higher legal and related fees associated with the pursuit of new business opportunities.

Interest expense was down 42% year over year to 152000.

Selecting the debt refinancing that we completed last April which significantly lowered the interest rate on the portfolio.

non-GAAP operating income for the fourth quarter was 828000 compared to a loss of 279000 last year.

This was a positive swing of $1 1 billion reflects lower total direct operating costs and interest expense.

These numbers exclude the impaired asset write downs, we've been mentioning the 105800.

$8 million 264000 in the fourth quarter, 2021, and 2020, respectively.

In the first and fourth quarter of 2021, we completed cobalt 60 reloads for two existing customers that extended the agreements for five years.

Upgrade that gamma knife center, Ecuador is scheduled to be installed later this year pending regulatory approvals.

We'll be one of the few gamma knife icon units in all of South America.

The expansion of our radiation therapy product offerings and target markets has helped to increase our new business pipeline and we continue to have discussions with existing and potential clients for these advanced products.

As Ray mentioned operating income was now positive for the fourth consecutive quarter.

The financial actions, we took this year have put us on firm footing and well positioned to sustain the important trend.

This concludes the formal part of our presentation.

Chad wed now like to turn the call back to you and open for questions.

We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if youre using a speakerphone. Please pick up your handset before pressing the keys.

To withdraw your question. Please press Star then two.

At this time, we will pause momentarily to assemble our roster.

And once again, if you would like to ask a question. Please press Star then one.

At this time I'm showing no questions. So I would like to turn the conference back over to race to <unk> for any concluding remarks.

Thank you Chad and thanks to everyone for joining us today.

MFS ended the year with good momentum, we believe we're very well positioned for future growth.

We look forward to speaking with you again on our first quarter conference call. It mid may.

Please contact us directly if you have any questions before them.

Be well stay safe.

Goodbye.

And thank you Sir the conference has now concluded. Thank you for attending today's presentation you may now disconnect.

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