American Shared Hospital Services Q1 2023 Earnings Call

Good morning, and welcome to the American shared hospital services first quarter 2023 earnings Conference call.

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I would now like the call I'm sure Stephanie Prince from TCG Advisory. Please go ahead.

Thank you Anthony and thank you to everyone joining us today.

And this is first quarter 2023 earnings press release was issued this morning before the market opened.

You need a copy it can be accessed on the company's website at.

H S dot com at press releases.

This can be.

Before turning the call over to management I would like to make the following remarks concerning forward looking statements. Please note that various remarks that may be made on this conference call about future expectations plans and prospects for the company constitute forward looking statements for the purposes of Safe Harbor.

Harbor provisions under the private Securities Litigation Reform Act 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.

This includes the company's annual report on Form 10-K for the year ended December 31, 2022.

And it is proxy statement for the annual meeting of shareholders to be held on June 20th 2023.

Company assumes no obligation to update the information contained in this conference call.

I'd now like to turn the call over to Grace to Korea.

As chairman of damage right.

Thank you Stephanie and good morning, everyone.

Thanks for joining us today for our first quarter 2023 earnings conference call.

I will begin with some opening remarks, and then turn the call over to Peter got she Oni American shares recently appointed Chief Executive Officer.

Bob Hi, at our New Chief Financial Officer will then give a financial review of our first quarter results.

Following the prepared remarks, we'll open the call for your questions.

Today I'd like to start off by focusing on the expansion of our team over the last 12 months.

In my mind that these are some of the final steps to be put in place and the turnaround that we've undertaken at a M S.

In the past couple of years.

Most recently, Bob Hyatt joined our team as our Chief Financial Officer in April .

Bob is a seasoned financial executive who has served as CFO at both public and private companies.

I believe he will make significant contributions to our growth.

In the past 12 months, we've also added our new CEO .

Peter Gauci oney.

Well respected executive in our industry.

We also added Jim keel as our vice president of domestic sales and business development.

And ran G proud of him as our new in house customer advocate.

He's in charge of growing our current client relationships.

Ernie Bates continues to flourish in developing our international opportunities.

In his continuing role as vice President of international sales and business development.

Creates a gala our president.

<unk> to provide very valuable contributions in the structuring and negotiation of our future orders.

While these investments have currently added to our expenses.

We believe that all had been necessary for future revenue growth.

These are these investments have begun to pay off.

With our sales pipeline now full with numerous possibilities that are working their way through the complex sales cycle required for our product offerings.

During the first quarter, we received the approvals we are waiting for the place the upgraded gamma knife icon in Ecuador.

As well as the approval for the new linear accelerator or linac.

Our new cancer Center joint venture in Puebla, Mexico.

The installation of this new Atlanta Linac has already begun.

And we're excited at the expected startup of both systems during the third quarter of this year.

We continue to generate strong positive cash flow during the first quarter. Despite its challenges.

We ended the quarter with $13 $2 million in cash.

Roughly equivalent to $2 three per share.

If we subtract at $2.03 from our recent stock price up to 80 a share.

Sure seems to me that it greatly undervalues all of our other tangible assets.

Yeah.

Looking ahead.

With stronger international growth on horizon.

Numerous new contract possibilities domestically.

And a strong financial position.

We're confident that MFS is poised for new growth.

I'll now turn the call over to Peter.

Thank you Ray and good morning, everyone.

Since our last conference call, our sales and customer support teams have been very active.

Internationally, we've been working hard in both Peru, and Ecuador to increase education and marketing to our referring physicians.

We have a large network and as we've expanded our customer support teams, we've improved communications with them all.

This includes informing all of our referring physicians that we're installing new gamma knife systems at our facilities very soon.

These new systems will provide several additional treatment capabilities for patients, including faster treatment times Frameless treatments advanced onboard C. T imaging with same day imaging and treatment and allow for remote treatment planning and approval.

All of these changes will improve the patient treatment experience increased departmental workflow.

And also the important relationship that we have with our physician referral network.

In Ecuador, as Ray said.

We now have received the required permits to upgrade the current gamma knife for sea to the gamma knife icon and were scheduled for delivery and installation and July August 2023.

We are also on track in Puebla, Mexico, the new Linac with Vivat image guided radiation and radio surgery was delivered to the site last week and the mechanical equipment installation has already begun as planned.

We're excited about the third quarter startup of both advanced systems.

In the U S. Our recently appointed customer advocate has been working diligently with many of our sites to see how to increase patient volumes.

We believe that the solution is a combination of increased marketing as well as possible equipment upgrades to bring in new treatment capabilities at some sites, which also means that our agreements will be extended.

This is what our second order of the year is.

As Ray mentioned, a five year agreement extension with an equipment upgrade to the newest gamma knife a spray.

The osprey will provide additional treatment capabilities for patients to improve the patient treatment experience, including faster treatment times, and we expect that patient volumes will increase as a result.

It will be the first Ah sprays in the U S. When it is installed in the fourth quarter.

In addition, our first order of the year is scheduled to begin installation in September 2023.

As planned.

Broadly sales activity is very strong with a number of projects moving through our sales pipeline.

This includes the two waters that we've already announced this year.

This activity includes gamma knife projects worldwide, including the U S.

With MRI, linac, and proton beam radiation therapy centers as well.

In addition, given the U S market trends that point to more consolidation of cancer centers.

Oregon shared is becoming more involved in discussions for U S cancer Center acquisitions joint ventures, and other creative turnkey financial models similar to some of our past successes.

Although we cannot disclose any further information due to confidentiality agreements, but the point is that these are new and additional projects that have been recently added to our already increasing sales funnel.

We've also greatly increased our social media presence on our four major platforms and I believe that this increased marketing and the expanded visibility of American shared unique value proposition is.

It is driving a large part of this interest.

As a reminder, American shares unique position provides clinical cancer treatment centers the opportunity to partner with all the major original equipment manufacturers through one turnkey vendor in one creative relationship.

American shared now has multiple opportunities for growth and with our newly expanded team and deep financial resources.

We intend to become actively involved in many of them.

I'll now turn the call over to Bob for a financial overview.

Yeah.

Thank you Peter and good morning, everyone.

First quarter revenue increased one 6% to $4 9 million compared to 4.8 in the year ago period.

First quarter revenue for the proton therapy system in Florida increased 13, 5% to $2 3 million compared to 2.0 well yet.

Okay.

Primarily due to higher average reimbursement period over period for the current quarter.

Total proton therapy fractions in the first quarter were 15 <unk> hundred 36.

A decline of five 7% or 92 fraction compared to 628 in the first quarter last year.

Yeah.

Total gamma knife revenue decreased 7% to $2 6 million compared to $2 8 million in last year's first quarter.

Domestic gamma knife revenue declined eight 9% to $1 9 million and international revenue decreased one 4% the point 7 million period over period.

The decline in overall gamma knife revenue was due to a decrease in procedures, partially offset by an increase in average reimbursement.

The increase in average reimbursement continues to be driven by a favorable shift in payer mix to more commercial payers.

Total gamma knife procedures decreased by 10, 9% to 293 for the first quarter of 2023 three.

329 in the first quarter of 2022.

Also within the range of normal cyclical fluctuations.

Yeah, Manav domestic procedures declined 15% to 216 international procedures increased two 7% to <unk> 77 for the first quarter of 2023 compared to 2022.

As Peter mentioned, our new customer advocate has been working to increase customer utilization.

And we expect additional international growth would be approvals now in place for the icon upgrade with advance treatment capabilities at our gamma knife cancer Center in Ecuador.

And for the new linear accelerator or linac for.

For our new cancer Center joint venture in Puebla, Mexico.

Both are expected to be in place in treating patients in the third quarter of this year.

Gross margin for the first quarter decreased to seven 7% to one 9 million or 38, 7% of revenue compared to gross margin $2 1 million or 42%.

42, 6% of revenue for the first quarter of 2022.

Selling and administrative costs increased by 16, 7% to $1 5 million for the first quarter compared to $1 3 million as you can.

Continued to invest in sales and marketing initiatives associated with new business opportunities.

Net interest expense increased 184000 in the 2020 pre period compared to 148000 last year and.

An increase of 24, 3% as a result of increases in interest rates on our company variable rate debt.

Okay.

Operating income was 98000 compared to operating income of 600000 in the first quarter of 2022.

Decrease of 83, 7%.

This reflects higher operating costs and selling and administrative expenses.

Income tax expense decreased 7% to 16000 for the first quarter of 2023 compared to 206000 for the first quarter last year.

The period over period decrease was primarily due to lower earnings in the current period and return to provision adjustments arising from foreign tax return as well as permanent domestic tax differences in the prior year.

Yeah.

Net income attributable to American shared hospital services in the first quarter of 2023 was 188000 or <unk>.

Sure compared to net income of 209000 or four cents per diluted share for the first quarter of 2022.

The decrease was primarily due to higher interest expense and higher.

Selling and administrative expenses I discussed.

Fully diluted weighted average common shares outstanding were <unk> 6 million.

2000 and.

6 million 299.

First quarter of 2023 and 2022, respectively.

Adjusted EBITDA, a non-GAAP financial measure was approximately $1 9 million in both periods.

At March 31, 2023 managed.

Cash cash equivalents and restricted cash was 13 quaint $2 million an increase of 748000 December 31st 2022.

Shareholders' equity excluding Noncontrolling interest in subsidiaries was $21 9 million or $3 54 per outstanding share at quarter end compared to $21 6 billion or $3 57 per outstanding share at March 31, 2022.

This concludes the formal part of our presentation.

Thank you for joining us today, we look forward to updating you on our progress in the quarters ahead.

Yeah.

Yeah.

We will now begin the question and answer session.

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It appears there are no questions. This concludes our question and answer session.

I'd like to turn the conference back over to rates the Kodiak for any closing remarks.

Thank you Anthony and thank you to everyone who joined us today.

I'd like to just make a couple of observations one.

If you analyze our balance sheet, we got more cash on our balance sheet today than we do interest bearing debt.

A bit of a milestone.

And most of all we've assembled a great team.

Our management team is well poised as very experienced.

To grow our company and reach our goals of same growth and profitability.

Ams in the best position that has been for several years.

All the pieces. It seems like are now in place and we're very excited about our future.

We look forward to speaking with you again on our second quarter call in mid August . Please contact dress. Please contact us directly if you have any questions before then.

Well and stay safe.

Bye.

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