Q4 2023 Sensus Healthcare Inc Earnings Call

Good day.

Operator: Good day. And welcome to the Sensus Hlthcr fourth quarter and full year 2023 financial results conference call. All participants will be in a listen only mode.

Welcome to the Sensus healthcare fourth quarter and full year 2023 financial results Conference call.

All participants will be in a listen only mode.

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After today's presentation there'll be an opportunity to ask questions.

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Operator: And to withdraw your question, please press star, then... Please also note that this event is being recorded today. I would now like to turn the conference over to Kim Golodetz. Go ahead. Thank you, Operator. This is Kim Golodetz from LHA.

To withdraw your question. Please press Star then two.

Please also note that this event is being recorded today.

I would now like to turn the conference over to you can go with that <unk>. Please go ahead.

Thank you operator this is Kim Collins L. A J. Thank you all for participating in today's call. Joining me from Sensus healthcare are just like Ano, Chairman and Chief Executive Officer, Michael Sardana, President and General Counsel and hobby areas I'm, Paula <unk> Chief Financial Officer.

Kim Sutton Golodetz: Thank you all for participating in today's call. Joining me from Sensus Health Care are Joe Sardano, Chairman and Chief Executive Officer, Michael Sardano, President and General Counsel, and Javier Rampolla, 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. For example, all statements other than historical facts that address activities Sensus Health Care assumes, plans, expects, believes, intends, or anticipates, and other similar expressions, will, should, or may occur in the future.

As a reminder, some of the matters that will be discussed during today's call contain forward looking statements within the meaning of the federal securities laws.

Statements other than historical facts that address activities Sensus healthcare assumes plans expects believes intends or anticipates and other similar expressions well shared what may occur in the future are forward looking statements.

Kim Sutton Golodetz: The forward-looking statements are management's beliefs based on currently available information as of the date of this conference call, February 8, 2024. Sensus Health Care undertakes no obligation to revise or update any forward-looking statements except as required by law. All forward-looking statements are subject to risks and uncertainties, as described in the company's Forms 10-K and 10-Q. During today's call, references will be made to certain non-GAAP financial measures. Sensus believes these measures provide useful information for investors. However, they 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.

The forward looking statements are management's beliefs based on currently available information as of the date of this conference call February eight 2024.

Health care undertakes no obligation to revise or update any forward looking statements, except as required by law. All forward looking statements are subject to risks and uncertainties as described in the company's one 10-K and 10-Q.

During today's call references will be made to certain non-GAAP financial measure.

Sensus believes these measures provide useful information for investors yet they 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.

Joe Sardano: A reconciliation of non-gap-to-gap results is included in today's financial results press release. With that said, I'd like to turn the call over to Joe Sardano. Okay?

A reconciliation of non-GAAP to GAAP results is included in today's financial results press release.

That said I'd like to turn the call over to Joe Joe.

Joe Sardano: Thank you, Kim, and good afternoon, everyone. Our fourth quarter financial results reflect our customers' acclimation to an inflationary environment, as well as their understanding of the compelling financial proposition and better patient outcomes of SRT to treat non-melanoma skin cancer and keloids. Sales improved substantially as we shipped 33 systems during the quarter, including three SRT systems outside the United States. This brings the total number of units shipped in 2023 to 66 units. We are fast approaching a total unit installation of 800 systems. For Q4, revenues were $12.6 million versus $13.1 million a year ago, up more than threefold sequentially.

Thank you Kim and good afternoon, everyone, our fourth quarter financial results reflect our customers' acclamation to an inflationary environment as well as their understanding of the compelling financial proposition and better patient outcomes of S. R. T to treat non melanoma skin cancer and keloid.

Sales improved substantially as we shipped 33 systems during the quarter, including three SRT systems outside the United States. This brings the total number of units shipped in 2023 to 66 units. We are fast approaching a total unit installation of 800.

<unk> systems.

For Q4 revenues were $12 6 million versus $13 1 million a year ago up more than threefold sequentially, we expect an uptick in the fourth quarter, our seasonally strongest as utilization of SRT to treat non melanoma skin cancer continues to increase this.

Joe Sardano: We expect an uptick in the fourth quarter, our seasonally strongest as utilization of SRT to treat non-melanoma skin cancer continues to increase. This increased utilization is being driven by favorable reimbursement, an aging population, and clinical results that are at least as good, if not better, than Mohs surgery. For quite some time, customers and prospects alike have been asking for new ways to add SRT to their practices. As always, we listen closely to our market, and we're delighted to meet their needs with a highly competitive offering. This new recurring revenue model complements our capital equipment sales model, which you'll recall was enhanced with our fair market value lease, which we introduced in 2021. This new model provides recurring revenue to Sensus and expands our market by providing another viable option to bring SRT to dermatology practices. During the fourth quarter, we made our first placement under this model.

Increased utilization is being driven by favorable reimbursement and aging population and clinical results that are at least as good if not better than most surgery for quite some time customers and prospects alike have been asking for new ways to add SRT to their practices as always we listen closely to our mark.

And we're delighted to meet their needs with highly competitive offering this new recurring revenue model complements our capital equipment sales model, which you'll recall was enhanced with our fair market value lease, which we introduced in 'twenty 'twenty. One this new model provides recurring revenue to sensus.

And expands our market by providing a another viable option to bring SRT to dermatology practices during the fourth quarter. We made our first placement under this model we.

Joe Sardano: We have been carefully preparing this recurring revenue model over the past year, making sure that the economics work for both our customers and for Sensus, and ensuring that we are abiding by all applicable laws and regulations. Note also that the capabilities of SRT100 Vision with image-guided ultrasound and Sentinel technology make the recurring revenue model possible. I've mentioned on previous quarterly calls that this advanced technology is expected to play a key role in our growth, and now you may understand why we've been so excited with Sentinel. This is our HIPAA-compliant software with clinical, billing, and asset management functionality that also allows us to track utilization in real time. This technology is ideal for better managing dermatology clinics for all of our customers and is a Sensus Hlthcr exclusive. In 2023, we also introduced an important new and improved high-resolution ultrasound technology to provide see-and-treat capability. This leads to great clinical outcomes because the physician can actually see the impact of each treatment on the lesion and lesion resolution after treatment.

We've been carefully preparing this recurring revenue model over the past year, making sure that the economics work for both our customers and for Sensus and ensuring we were abiding by all applicable laws and regulations note also that the capabilities. The best R. A T 100 vision with image guided ultrasound and Sentinel.

<unk> technology makes the recurring revenue model possible I've mentioned on previous quarterly calls that this advanced technology is expected to play a key role in our growth and now you may understand why we've been so excited with Sentinel. This is our HIPAA compliant software with political billing and <unk>.

Asset management utility that I'll also allows us to track utilization in real time.

This technology is ideal for better managing dermatology clinics for all of our customers and as they sensus healthcare exclusive.

During 2023, we also introduced an important new and improved high resolution ultrasound technology to provide see and treat capability.

This leads to great clinical outcomes, because the physician can actually see the impact of each treatment on the lesion and lesion resolution after treatment with.

Joe Sardano: We're looking forward to directly benefiting from the SRT treatment growth rates we've seen. Recall that earlier in 2023, we found in our surveys of Medicare that SRT experienced a 27% year-over-year treatment growth rate for the six years we reviewed. Should this growth rate continue, SRT will soon become the treatment of choice for non-melanoma skin cancers.

We're looking forward to more directly benefiting from the SRT treatment growth rates we've seen.

Recall that earlier in 2023, we found in our surveys of Medicare that SRT experienced a 27% year over year treatment growth rate for the six years. We reviewed should this growth rate continue SRT will soon become the treatment of choice for non melanoma skin cancer.

Joe Sardano: We're very excited to be interacting with customers and prospects during the coming week. This weekend, we'll be showcasing our SRT products, in particular, the SRT100 Vision IGSRT system and the Sentinel technology and Sensus cloud capabilities at the South Beach Symposium, which begins today in Miami. We'll also be at the Winter Clinical, also in Miami, beginning February 16th.

We're very excited to be interacting with customers and prospects during the coming weeks. This weekend, we'll be showcasing our SRT products in particular, the SRT 100 vision I GSR T system, and the Sentinel technology and sensors cloud capabilities that the South Beach Symposium, which begins.

Today in Miami.

We'll also be at the winter clinical also in Miami beginning February 16th.

Joe Sardano: We'll follow those conferences up with the American Academy of Dermatology's annual meeting being held March 8th through 12th in San Diego, where we will have a very strong presence. While dermatology is our primary market, we continue to engage with the radiation oncology market, which is mainly a hospital-based channel. As mentioned last quarter, we've had good success in this area, having recently placed an SRT system at Cape Cod Hospital. As a reminder, this market has a longer sales cycle as we continue to see increased interest. With respect to the transdermal infusion product, we filed our 510K application with the US FDA in October of 2023, and we are hopeful that we'll be hearing from the agency in the coming weeks. This system will, for example, allow platelet-rich plasma, or PRP, to be applied to the scalp in a pain-free hair restoration experience. In addition, posters have already been presented on the application of hyperhidrosis or overactive sweat glands.

We'll follow those conferences up with the American Academy of Dermatology annual meeting being held March eight through 12 in San Diego, where we will have a very strong private private presence.

Dermatology is a primary or market, we continue to engage with the radiation oncology market, which is mainly a hospital based channel as mentioned last quarter. We've had good success in this area, having recently placed an SRT system at Cape Cod Hospital as a reminder, this market is a longer sales.

Cycle as we continue to see increased interest.

With respect to the transdermal infusion product, we filed our five 10-K application with the U S. FDA in October of 2023 and are hopeful that we'll be hearing from the agency in the coming weeks. This system will for example, allow platelet rich plasma or PRP to be applied to the scalp.

When a pain free hair restoration experience. In addition, posters have already been presented on the application of hyperhidrosis or overactive sweat glands are transdermal system includes Sentinel I T solution capabilities.

Joe Sardano: Our transdermal system includes Sentinel IT solution capabilities, as do all six of our Sensus-branded Aesthetic Smart lasers. We will be exhibiting our TDI product at the upcoming dermatology trade shows as a works in progress. With those remarks, I'll turn the call over to Michael Sardano, who, in addition to his duties as President and General Counsel, joined our Board of Directors last week. He'll give you a brief update on our international business and talk about our new collaboration with Q-Rays. Michael.

As do all six of our sensus branded aesthetics smart lasers, we will be exhibiting our TDI product that the upcoming dermatology tradeshows as it works in progress.

With those remarks, I'll turn the call over to Michael I'll start Dan Oh, who in addition to his duties as President and General Counsel joined our board of Directors last week he'll give you a brief update on our international business and talk about our new collaboration with your race Michael Thanks, Joe We spent the last year working to own.

Michael Sardano: Thanks, Joe. We've spent the last year working to open up new international territories, which requires both regulatory approvals and strategic engagement of distributors. We continue to support our international distributors across Asia, Europe, and the Middle East, and we are developing a number of promising opportunities to supplement our strong demand in China. We sold a total of 13 SRT systems internationally in 2023, which included sales to three new territories for census during the year, namely Ireland, Guatemala, and Turkey.

Often up new international territories, which requires both regulatory approvals and strategic engagement of distributors. We continue to support our international distributors across Asia, Europe, and the Middle East and we are developing a number of promising opportunities to supplement our strong demand in China.

We sold a total of 13 SRT systems internationally in 2023, which includes sales to three new territories for sensus during the year, namely, Ireland, Guatemala and Turkey.

Michael Sardano: As I stated in our last earnings call in November, our plan is to expand our Latin American, European, and Asian footprint as quickly as possible, with Brazil and Japan being longer-term prospects as they are highly regulated. Our goal is to open two to three new territories per year, which we achieved in 2023. Turning back to the U.S. market, earlier this week, we announced a collaboration with Cure Aid. CureAIDS is led by two radiation oncologists, Dr. Mohamed Khan, who is on the Sensus Medical Advisory Board and is Vice Chair for Radiation Oncology Education at Emory University in Atlanta, and Dr. Clayton Hess, who is the Director of Dignity Health at Sierra Nevada Memorial Hospital in California. CureAIDS has purchased an SRT100 vision system and will be treating patients out of their California headquarters.

As I stated in our last earnings call in November our plan is to expand our Latin American European and Asian footprint as quickly as possible with Brazil, and Japan being longer term prospects as they are highly regulated.

Our goal is to open two to three new territories per year, which we achieved in 2023.

Turning back to the U S market earlier this week, we announced a collaboration with cure race here.

<unk> is led by two radiation oncologist, Dr. Mohammed Khan, who was on the census Medical Advisory Board and as Vice Chair for radiation oncology education at Emory University in Atlanta, and Dr. Clayton Hess, who is the director of dignity health and Sierra Nevada Memorial Hospital in California.

Hearings has purchased an SRT 100 vision and we'll be treating patients out of their California headquarters.

Javier Rampolla: Q-RAID is focused on three main endeavors, the treatment of patients for non-melanoma skin cancer and keloids, treatment oversight for Sensus' dermatology customers, and conducting clinical trials with the use of Sensus' SRT technology. QAs will be instrumental to our recurring revenue model, and we are very excited to be partnering with them. With that, I'll turn the call over to Javier for a discussion of our financial results. Thank you, Michael. And good afternoon, everyone.

<unk> is focused on three main endeavors the treatment of patients for non melanoma skin cancer in keloid treatment oversight for sensus is dermatology customers and conducting clinical trials with the use of census is SRT technology.

<unk> will be instrumental to our reoccurring revenue model and we are very excited to be partnering with them with that I'll turn the call over to Javier for a discussion of our financial results.

Thanks, Michael and good afternoon, everyone.

Javier Rampolla: As Joe mentioned, our revenues for the fourth quarter of 2023 were $12.6 million, and this compares with revenues of $13.1 million a year ago and revenues of $3.9 million in the third quarter of 2023. The decrease versus the prior year reflects a lower number of SRT units sold. Gross profit for the fourth quarter of 2023 was $7.8 million, or 62.3% of revenues, compared with gross profit of $8.4 million, or 63.7% of revenues, for the fourth quarter of 2022. The increase was primarily due to the lower number of units sold in the 2023 war. The lead on marketing expense for the fourth quarter of 2023 was $0.6 million, compared with $1.6 million for the fourth quarter of 2022. The decrease was primarily attributable to lower compensation expense, partially offset by higher trade-show costs.

As Joe mentioned, our revenue for the fourth quarter of 2023 were $12 6 million and this compares with revenue of 31 1 million.

A year ago on revenues of $3 9 million in the third quarter of 2023.

The decrease versus the prior year reflects a lower number of units sold.

Gross profit for the fourth quarter of developing on 23 was $7 8 million or 62, 3% of revenue compared with gross profit of $8 4 million or 63, 7% of revenue for the fourth quarter of 2022. The decrease was primarily due to the lower number.

Units sold in the 2023 crore.

So even our marketing expense for the fourth quarter of 2023 was one 6 million compared with $1 6 million for the fourth quarter of 2022.

The decrease was primarily attributable to lower compensation expense, partially offset by higher trade show costs.

Javier Rampolla: General and Administrative Expense for the fourth quarter of 2023 was $1 million compared with $1.4 million for the fourth quarter of 2022. This was due to lower compensation expense in the 2023 quarter and higher bad debt expense in the prior year quarter. Research and Development Expense for the fourth quarter of 2023 was $0.7 million compared with $1.2 million in the same quarter last year. The decrease was primarily due to the completion of the development of a drug delivery system for the aesthetic market. We have submitted a 510K application to the U.S. Food and Drug Administration and have completed most of the work on this project. Other income of $0.2 million for the fourth quarter of 2023 was mostly related to interest income and was unchanged from the fourth quarter of 2022.

General and administrative expense for the fourth quarter off the document plenty of three 1 million compared with $1 4 million for the fourth quarter of 2022. The decrease was due to lower compensation expense in the background 20, threep water and higher bad debt expense in the prior year quarter.

Research and development expense for the fourth quarter of 2023 was $1 7 million compared with $1 2 million in the same quarter last year.

The decrease was primarily due to the completion of development of a drug delivery system for aesthetic market. We have some neat it up by saying Hey application, but I just put on drug administration.

And have completed most of the work on this project.

Other income of one 2 million for the fourth quarter of 2023 was mostly related to interest income and was unchanged from the fourth quarter of 2022.

Javier Rampolla: Net income for the fourth quarter of 2023 was $4.2 million, or $0.26 per diluted share, and this compares with net income of $2.8 million, or $0.17 per diluted share, for the fourth quarter of 2022. Adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization, and stock compensation expense, was $5.7 million for the fourth quarter of 2023, up from $4.3 million for the fourth Let me touch on a few of the four-year financial results highlights. Revenues for 2023 were $24.4 million, compared with $44.5 million for 2022, reflecting a lower number of first-party units sold as customers deferred purchases due to microeconomic conditions and lower sales to a customer in 2020. Gross profit was $14.1 million for 2023, or 57.6% of revenues compared with $29.6 million or 66.5% of revenues for 2022, reflecting a lower number of units sold and higher costs charged by vendors in 2023.

Net income for the fourth quarter of 2023 was $4 2 million or 26 cents per diluted share and this compares with net income of $2 8 million or 17 cents per diluted share for the fourth quarter of 2022.

Adjusted EBITDA, which we define us earnings before interest taxes, depreciation amortization and stock compensation expense was $5 7 million for the fourth quarter of 2023 up from $4 3 million for the fourth quarter. After the dolphin in 'twenty two.

Let me touch on a few full year financial results highlights.

Revenues for 2023 were $24 4 million compared with $44 5 million.

22, reflecting a lower number of first time till UN installed as customers deferred purchases due to microeconomic conditions and lower sales to a customer in 2023.

Gross profit was $14 1 million for 2023, or 57, 6% of revenue compared with $29 6 million or 66, 5% of revenues for 2022, reflecting a lower number of units sold and higher cost of charge.

<unk> in 2023.

Javier Rampolla: Selling and marketing expense was $5.6 million for 2023 compared with $6.3 million for 2022 due to lower compensation expense offset by higher threshold expenses. General and Administrative Expenses were $5.2 million for 2023 compared with $5 million for 2022, with the increase reflecting higher professional fees and compensation expenses. R&D was $3.7 million for 2023, compared with $3.5 million for 2022, with the increase largely due to expenses related to the development of a drug delivery system for aesthetic use. Other income net of $1 million for 2023 was mostly related to interest income; other income net of $13.2 million for 2022 was related primarily to the gain of $12.8 million on the sale of a non-core asset. Net income for 2023 was $0.5 million or $0.03 per diluted share, and this compares with net income for 2022 of $24.2 million or $1.46 per diluted share.

But in a market and explain what $5 6 million for 2023, compared with $6 3 million for 2022 due to lower compensation expense offset by higher Tradeshow expenses.

General and administrative expense was $5 2 million for 2023, compared with $1 million for 2022, with the increase reflecting higher professional fees and compensation expense.

10 years, R&D was $3 7 million for 2023, compared with $3 5 million before deducting 22, with the increase largely due to expense related to the development of a drug delivery system for aesthetic use.

Other income net of $1 million for 2023 was mostly related to interest income.

Other income net of $13 2 million for 2022 western related primarily to the gain of $12 8 billion on the sell off of non core assets.

Net income for 2023, 1.5 million or <unk> <unk> per diluted share and this compares with net income for 2022 of $24 2 million or $1.46 per diluted share.

Javier Rampolla: MediComfort 2022 includes a $12.8 million gain on the sale of an Oncor app. Just the EBITDA for 2023 was $0.3 million, compared with $28.1 million for 2021. Turning it down to a rebuttal, Catch and Catch Equivalents as of December 31, 2023 were $23.1M versus $25.5M as of December 31, 2022. The company had no outstanding borrowings under its revolving out-of-credit facility as of year-end 2023 or 2022.

Net income for 2022 include the $12 $8 million gain on the sale of a noncore asset.

Adjusted EBITDA for 2023, what's the point $3 million compared with $28 1 million afford to document in 'twenty two.

Turning now to our balance sheet.

Cash and cash equivalents I thought December 31, 2023, or $23 1 million versus $25 5 million from December 31, 2022.

Company had no outstanding borrowings under its revolving line of credit as of year end 2023 or 2022.

Javier Rampolla: We built, finished goods, and inventory, and prepaid for materials earlier during 2023, in part to get ahead of any price increases and to prepare for the anticipated growth, especially from the recovery revenue model. At the end of 2023, inventories were $11.9 million, well above $3.5 million at the end of 2022. Prepaid inventory was $3 million at the end of 2003 versus $6.6 million at year-end 2022.

We've built finished goods in inventory and prepaid for materials earlier going into 2023 in part to get ahead of any pricing price increase with Andrew prepared for the anticipated growth, especially from the recurring revenue models.

At the end of the Dunkin' I'm twenty-three inventories were $11 9 million well above $3 5 million from the end of 2020 to prepaid.

Prepaid inventory was <unk> at the end of 2003 upgrades versus $6 6 million at year end 2022.

Joe Sardano: Our cash flow continues to be very focused on highly... Nevertheless, our balance sheet positions us well to take advantage of the competitive growth opportunities we may come across or that we may create ourselves. For a final comment, please see the table in the news release we issued earlier today for the reconciliation of gap-to-non-gap financial measures. With that, I'll turn the call back to you all. Thanks, Javier and Michael.

Our gas Japan continues to be very focused on highly disciplined nevertheless, our balance sheet positions us well to take advantage of the compelling growth opportunity. We may come across that we made sure we had ourself.

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.

I'll turn the call back to Joe Thanks, Javier and Michael.

Joe Sardano: The ROI for our premium SRT system under our fair market value leasing program continues to be compelling, and although it's early, our initial introductions of our recurring revenue model are being met with a great deal of interest. With the many upcoming medical meetings, I'm sure we'll gain momentum for this program as the word spreads. Published studies have shown that SRT clinical results are as good or better than most surgeries, and certainly it's non-invasive, leaving no scarring.

Our ROI for our premium SRT system under our fair market value of the leasing program continues to be compelling and although it's early our initial introductions of our recurring revenue model are being met with great deal of interest with the many upcoming medical meetings I'm sure will gain momentum for this program is.

The word spreads published studies have shown that SRT clinical results are as good or better than most surgery and certainly it's noninvasive, leaving no scarring.

Joe Sardano: There is no question that SRT and IGSRT have become the number one option for surgery. However, as I've said many times, we are still in the early stages of tapping the enormous market opportunity for SRT just in non-melanoma skin cancer and keloids. Our systems are well positioned in a large and largely untapped market. They provide a compelling alternative to surgery for millions of patients and are arguably the only solution to prevent the recurrence of keloids following excision.

There is no question that SRT in IGF start T have become the number one option to surgery.

As I've said many times, we are still in the early stages of tapping the enormous market opportunity for SRT, just the non melanoma skin cancer and keywords, our systems are well positioned in a large and largely untapped market. They provide a compelling alternative to surgery for millions of patients in there.

Arguably the only solution to prevent the recurrence of keloid following excision is.

Joe Sardano: As an overlay to all of this, an estimated 1 in 5 Americans will develop skin cancer during their lifetime. This tells us that nearly 70 million people will have non-melanoma skin cancer. So clearly, there's a need for our SRT systems both now and even more so in the future. We are confident that Sensus is positioned for success, and we have a great team to drive growth and implement our strategies. With those comments, I thank you for your time and attention.

As an overlay to all of this and estimated one in five Americans will develop skin cancer during their lifetime.

This tells us that nearly 70 million people will have non melanoma skin cancer. So clearly there's a need for our SRT systems, both now and even more so in the future. We are confident that census is positioned for success and we have a great team to drive growth and mint and implement our strategies with those <unk>.

I. Thank you for your time and attention and now operator, we're ready to take questions.

Operator: And now, operator, we're ready to take questions. We will now begin the question and answer session. To ask a question, you may press star, then 1 on your touch-tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys.

We will now begin the question and answer session.

Ask a question you May press Star then one on your Touchtone phone.

If youre using a speakerphone please pick up your handset before pressing the keys and if any time. Your question has been addressed and you would like to withdraw it. Please press Star then two.

Alex Nowak: And if at any time your question has been addressed and you would like to withdraw it, please press star, then... At this time, we will pause just momentarily to assemble our roster. And our first question will come from Alex Nowak with Craig Howe Capital. Please go ahead. Okay, great. Good afternoon, everyone.

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

And our first question will come from Alex Nowak with Craig Hallum Capital. Please go ahead.

Okay, Greg good afternoon, everyone.

Joe Sardano: Joe, I was hoping you could expand on the new recurring model that you've put in place here. Maybe kind of walk through how this came together, all the work you've been doing in the background to make it possible, maybe touch on the economics, just some more detail as you're venturing into the recurring model versus the capex model that we certainly know very well. Sure. First of all, we've been evaluating this model for quite some time, and we wanted to make sure that we were timing it right for when we would bring it to market. And I would tell you that over the last year to two years, we've been engaged with our customer base, our prospect base, who have continued to ask us to get involved in a recurring model, a recurring revenue model, such as this.

Joe I was hoping you could expand on.

The new recurring model that you've placed here, maybe kind of walk through how this came together all the work you've been doing in the background to make it possible.

Maybe touch.

Touch on the economics, just some more detail as you're venturing into the recurring model versus the Capex model that we have.

Certainly no very well.

Sure.

First of all we've been evaluating this this model for quite some time and we wanted to make sure that we were timing it right for when we would bring it to market and I would tell you that over the last year to two years we've been.

Engaged with our customer base, our prospect base, who have continued to ask us to get involved in a recurring model recurring revenue models such as this.

Joe Sardano: And so, you know, after listening to them, we decided that this is the right time for us to come into this market. And it is a good opportunity to complement the existing offerings that we have in fair market value leases, as well as the other SRT 100 products that we have as well. So with that being said, the model is one where we can come in and provide a service using our technology, along with HR or people that would assist.

So you know in listening to them, we've decided to that this is the right time for us to come into this market and it is a good opportunity to complement the existing offerings that we have in fair market value leases as well as the other SRT 100 products that we have as well so with that being said.

The model is a model, where we can come in and provide a service using our technology along with us.

HR or people that would assist we've provided some support with the cure rates people being able to provide oversight for these customers and we're working closely with our independent dermatology based coding and billing experts.

Joe Sardano: We've provided some support with the Q-Raise people being able to provide oversight for these customers, and we're working closely with independent dermatology-based coding and billing experts that can help us and help our customers with that endeavor. So we think that we have all the tools necessary to provide a turnkey position with the SRT 100 Vision IGSRT program that gives them another choice in getting SRT into their practice. Makes total sense. You might not want to go into economics on the call here, but I'll try for it anyway.

It could help us and help our customers.

With that endeavor. So we think that we have all the tools necessary to provide a turnkey.

Position with the SRT 100 vision I GSR T program that gives them another choice and getting SRT into their practice.

Makes it makes total sense you might not want to go on to the economic piece.

On the call here, but I'll try for it anyway. If you place an SRT vision is this something that well you know under normal utilization paid self back over.

Joe Sardano: If you buy an SRT vision, is this something that will, you know, under normal utilization, pay itself back over? Help us out around here. Yeah. Of course, it has to work out for both parties. So for us, it will allow us to get involved with the recurring revenue model. And I would tell you this, I think that we will target a bunch of units that will be installed this year. And it will probably be the first quarter and second quarter of next year before we start recognizing substantial or incremental revenues that we can claim for the following year. I don't see significant revenues happening this year, but I think that it will be a start. And I think as we continue to place systems over the coming years, it will generate an awful lot of revenue for the company in the long term, along with selling the products as well. Yeah, no doubt. Does the model change the skin care relationship at all? No, it shouldn't.

Help us out around there yes.

Of course, the you know what has to work out for both sides. So for us it will allow us to get involved with the recurring revenue model and I would tell you. This that I think that we will target a bunch of units that will be installed this year and it will probably be the first quarter and second quarter of <unk>.

Next year before we start recognizing.

Substantial or incremental revenues that we can claim for the following year I don't see.

Significant revenues happening this year, but I think that it'll be a start and I think as we continue to place systems over the coming years. It will generate an awful lot of revenue for the company long term along with selling the products as well.

Yeah, no doubt that does the model change the skin care relationship at all.

No it shouldn't I think at this complements the offering that we have skin cure is doing very very well on their own. They have an excellent format and an excellent model that works very very well for the customer base that they have but it seems like over the last year or so that there were customers or prospects that were left out of that where they did.

Joe Sardano: I think it, you know, this complements the offering that we have. SkinCure is doing very, very well on its own. They have an excellent format and an excellent model that works very, very well for the customer base that they have. But it seemed like, over the last year or so, there were customers or prospects that were left out of that where they didn't want to go one way or the other, and this provides them with an alternative. So for us, it's just an additional tool that allows a lot more prospects to come into play. If you look at what we did with the fair market value lease, that provided a lot of customers with the opportunity to move up from an SRT100 to an SRT100 Vision, so it made it more affordable.

Want to go one way or the other and this provides them with an alternative so for US. It's just an additional tool that allows a lot more prospects to come into the into play. If you look at what we did with with the fair market value lease that provided a lot of customers the opportunity to move up from an SRT 102.

And SRT 100 vision. So it made it more affordable this is going to further enhance the more customers to want to get involved with us our T 100, especially the 100 vision I GSR T product and what we're trying to do overall is make this more available to more patients who are looking to get this done so.

Joe Sardano: This is going to further enhance the number of customers wanting to get involved with SRT100, especially the 100 Vision IGSRT product. And what we're trying to do overall is make this more available to more patients who are looking to get this done. So this just adds to our vocabulary, if you will, or, you know, the armaments that we have, the tools in our toolbox. And then maybe just the last set of questions, you know, the big Q4 bounce back after what has been a difficult, let's call 18 months with the market environment that's out there in aesthetics and dermatology. Just expand on what you're seeing out there.

This just adds to our vocabulary, if you will or.

You know the arguments that we have the tools in our toolbox.

And then just maybe just the last set of question a big Q4 bounce back after what has been a difficult let's call. It 18 months with the with the market environment. That's out there and it's not a can dermatology just expand on what you're seeing out there Q4 or is this the turn it back we're going to be 2024, it could be back into positive momentum from here.

Joe Sardano: Q4, is this the turn and back? We're going to be in 2024; it could be back on a positive momentum from here. What is it?

Joe Sardano: How are Q1 places looking? And then, just lastly, on the cost cuts, it looks like you implemented a number of cost cuts. Maybe walk through a little bit more there.

How our Q1 place is looking like and then just lastly on the cost cuts it looks like your employment implement a number of cost cuts maybe walk through a little bit more there and what's going to stack.

Joe Sardano: What's going on? Sure. Well, if you recall, we announced after the first quarter that we had been speaking to a lot of our customers thanks to the early meetings and conferences that we had in February and March, as we are coming up with those same types of meetings again this year. And in listening to those customers, we started to understand where they were hurting and how they were getting impacted by the economy and inflation with fewer people coming through their doors getting the aesthetic work that they required, which was cash business for them. And based on that, and then following up at the AAD, I mean, it was pretty much clear where the market was going. And after the first quarter, we pretty much announced that to a lot of people. Not a lot of people believed this at the time, but I think that it proved itself over the course of the year.

Sure well if you recall, we announced after the first quarter that we had been speaking to a lot of our customers. Thanks to the early meetings and conferences that we had in February and March as we are coming upon those same types of meetings again this year and in listening to those customers, we started to understand where they are.

Where are they were hurting and how they were getting impacted by the economy and inflation with less people coming through their doors getting the aesthetics.

That they required which was cash business for them and based on that and then following up at the a D. I mean, it was pretty much clear where the market was going in after the first quarter, we pretty much announced that through a lot of people not a lot of people believe this at that time, but I think that it proved out over the course of the year and quite frankly everything.

Joe Sardano: And quite frankly, everything that we said would happen as we forecasted the order and provided what we thought was guidance for where the year was going, I think it proved out exactly where we were. And I think we did a little better than where the market was actually leading us from the first, second, and third quarters, and then when we got into the fourth quarter.

We said would happen as we forecasted the order and provided what we thought was guidance for where the year was going I think it proved out exactly where where we were and I think we did a little better than where the market actually was leading us from the first second and third quarter and then when we got into the fourth quarter. So how does this look.

Joe Sardano: So how does this look for the first quarter and beyond for 2024? Well, you know, of course, we have excitement as we're moving into the new year because we ended the year with some great momentum. We're introducing a new model, which we think is going to take up a lot of space as far as taking on a lot of products that we're going to install. But I think it's also going to lead to more sales, because I think people are going to continue to buy the product versus having to share revenues with anybody.

For the for the first quarter and beyond for 2024, well you know of course, we have excitement as we're moving into the new year, because we ended the year with some great momentum, we're introducing a new model, which we think is going to take up a lot of space as far as taking on a lot.

Products that were going to install but I think it's also going to lead to more sales because I think people are going to continue to buy the product versus having to share revenues with anybody I think it is going to bring some customers to base and give them give us a whole lot more flexibility on what we're offering and then you know we're pushing.

Joe Sardano: I think it's going to bring some customers to Base and give us a whole lot more flexibility on what we're offering. And then, you know, we're pushing really, really hard with the FDA for the TDI product. And we're gaining a lot of interest in that although we can't really push it or sell it; we can show it as a work in progress.

Really really hard with the FDA for the TDI products and we're gaining a lot of interest in that we can't really push it or sell it we can show it as it works in progress, but there's you know once we get FDA clearance for that I think it's going to generate some good revenue when youre looking at you know $1 million to $2 million is what we're predicting or identifying.

Joe Sardano: But there's, you know, once we get FDA clearance for that, I think it's going to generate some good revenue. And you're looking at, you know, one to $2 million is what we're predicting or identifying as that potential revenue for the entire year. So with all that being said, you know, yeah, we hope that there's no more world strife, we hope that there's no more inflation, these are all things that we can't control. We're in the middle of an election year; take all that away.

Is that potential revenue for the entire year, so with all that being said you know yeah. We hope that there is no more world stripe, we hope that Theres no more inflation. These are all things that we can't control. We are in the middle of an election year take all that away and we're enthusiastic about what we're doing because more and more patients are going to have access to SRT, which means that they're going to.

Joe Sardano: And we're enthusiastic about what we're doing because more and more patients are going to have access to SRT, which means that they're going to have more, more treatments being done with SRT. And we want to participate in that. And that, in the short and long term, is going to generate more revenue for us. So I think we're establishing ourselves with a total solutions, turnkey, type of operation to address almost every instance that our customer is looking for to acquire SRT because they recognize the fact, too, that they need SRT to treat skin cancer because there's just not enough doctors to go around for the amount of skin cancer that exists. So we're excited, and it's going to hit on all the revenue points that we possibly can get, including recurring revenues now that we're looking at on top of service revenues that continue to increase. And so I have to say that we're very enthusiastic, and we're just going to drive and execute as we have. And again, I'm going to thank the entire team headed by Javier that's kept us extremely disciplined on our expenses. We've always been extremely mature about them and disciplined about it.

More more treatments being done on SRT, and we want to participate in that and that's in the short and long term is going to generate more revenue for us. So I think we're establishing ourselves with a total solutions turnkey type of operation to address almost every instance that are customers looking forward to require SRT.

Because they recognize the fact too that they need SRT to treat skin cancer, because theres just not enough doctors to go around for the amount of skin cancer that exists. So we're excited it's going to hit on all of the revenue points that we possibly can get including recurring revenues now that we're looking at on top of our service revenues that continue to increase.

And so I have to say that we're very enthusiastic and were just going to drive and execute as we have and again I'm going to thank the entire team headed by Javier that's kept us extremely disciplined on our on our expenses and we've always been extremely mature about those and disciplined about it.

Joe Sardano: And I think that we continue to be even more disciplined as the years go on and as the months and days go on. So again, we're overall overexcited in every way. It's great to hear. Appreciate the update. Thank you. No, thank you, Alex, and Sensus Hlthcr. And our next question will come from Yi Chen with HC Wainwright. Please go ahead.

And I think that we continue to be even more disciplined as the years go on and as the months and days go on so again, we're overall over excited in every in every way.

It's great to hear I appreciate the update thank you.

Thank you Alex.

And our next question will come from <unk> Chen with H C. Wainwright. Please go ahead.

Yi Chen: Thank you for taking my questions. My first question is, the number of systems shipped in the quarter, that includes the system under the recurring revenue model, correct? No, I doubt it. No, it doesn't?

Thank you for taking my questions.

My first question is the.

The number of system shipped in the quarter that includes the assistant under the recurring revenue model correct.

No it doesn't.

No it does it okay gotcha.

Joe Sardano: Okay. The 66 units that we talked about were ones that recognized revenue. Okay, so for 2024, do you expect the models under the recurring revenue, I mean systems shipped under the recurring revenue model could increase significantly and maybe potentially overtake the number of systems shipped under the capital purchase model? We don't feel that way, Yi.

So.

The units that we talked about were ones that recognized revenue.

Okay. So for 2024 do you expect the mottos under the recurring revenue.

The systems shipped under the recurring revenue model could increase significantly.

And maybe potentially overtake a b.

Both systems shipped under the capital purchase.

We don't feel that way I E.

Joe Sardano: We think that it's going to complement our sales. But again, I don't think it's going to overtake selling the equipment outright, but it's just another way for our customers to acquire the system. Now, I don't know what it's going to be like in a year or two from now, but I would tell you that in this first year of initiating the recurring revenue model, we still expect to sell more units than we provide in the recurring revenue model platform. Do you have to share any part of the recurring revenue with Q-Rates? Nope. OK. And can you provide rough guidance at this point on how many systems you expect to be shipped in 2020? You know, I don't want to go there.

We think that its going to complement our selling.

But again, it's not going to I don't think its going to overtake.

Selling the equipment outright, but it's just another way for our customers to acquire.

The system now I don't know, what it's going to be like in a year or two years from now, but I would tell you that in the in the in this first year of initiating recurring revenue model, we still expect to sell more units then provide and the recurring revenue model platform.

Got it.

Do you have to share any part of the recurring revenue was cure rates.

No.

Okay.

Got it.

And.

Can you provide a rough guidance at this point, how many systems do you expect to ship to be shipped in 2024.

You know I don't want to go there, we're always going to try to push for more but you know again it all depends on how the year works out I mean, when we started when we were at this last year at this time, we were expecting some big things happening in 2023, after such a great fourth quarter as well.

Joe Sardano: We're always going to try to push for more. But again, it all depends on how the year works out. I mean, when we were at this time last year, we were expecting some big things happening in 2023 after such a great fourth quarter as well. But things didn't turn out that way. Inflation hit really hard.

But things didn't turn out that way inflation hit really hard so it's a it makes you worry about predicting things at the same things we would rather.

Joe Sardano: So it makes you worry about predicting things and saying things. We would rather overachieve and undercommit versus going the other way. We don't want to disappoint anybody, but I can assure you that everybody in the team is going to work very, very hard to make sure that we achieve better than we did the year before. Okay, got it. And should we expect the gross margin to improve in 2024 as you place more units under recurring revenue? So I will keep the margins, G, the way they are right now because we're basically at the early stage of this program.

Overachieve and under commit versus going the other way, we don't want to disappoint anybody, but I can assure you that everybody in the team is going to work very very hard to make sure that we achieve better than what we did the year before.

Okay got it.

Got it.

And Ah shall we expect the gross margin to improve in 2024 as you place more units under the recurring revenue.

So I will give the margins there.

The way they are right now ours basically in the early stage of this program. So I will just keep them. The way. It is in the hole and then we will continue to improve as we continue you know developing.

Javier Rampolla: So I will just keep them the way they are, and they will continue to improve as we continue developing this program. Okay, got it. Thank you. Thank you. And our next question will come from Anthony Vendetti with Max. Please go ahead. Thanks. So if we could just dig in a little more into the utilization trends that you're seeing for the systems that you have out there, and do you have a total installed base at this point number that you can share?

Developing this program.

Okay got it thank.

Thank you.

Thank you.

Yeah.

And our next question will come from Anthony Vendetti with Maxim Group. Please go ahead.

Thanks. Thanks.

So if we could just dig in a little more into.

The utilization trends that youre seeing for the systems that you have out there.

And do you have.

Total installed base at this point number that you can share.

Anthony V. Vendetti: And then just an update, I know you're awaiting FDA approval for your transdermal infusion system. Where is that exactly, and I guess, obviously, up to the FDA, but what's your expectation for, you know, final approval? Number one, we have over 750 installations of SRT products around the world, so we're closing in, and hopefully, sometime in this fiscal year, we'll hit 800 and go beyond. We submitted the TDI product in October of 2023, and I couldn't predict when the FDA would finally approve it, but we sure would like to get FDA clearance by the time we get to the AAD in March, the second week in March.

And then.

And then just just just an update I know you're awaiting FDA approval for the for your transdermal infusion system, but.

Where is that exactly and I guess, obviously up to the FDA, but what's your expectation for.

Final approval.

Okay.

Number one we have over 750 installations of SRT products around the world. So we're closing in hopefully sometime in this fiscal year will hit 800 and go beyond.

The we submitted the TDI product in October of 2023, and you know I couldnt predict when the FDA will finally approve it but we sure would like to get FDA clearance by the time, we get to the AAD in March the <unk>.

We can March if we had that approved I think that we could start shipping units in April we've begun the process of working with manufacturing and getting things lined up for that process. So I think that will be ready to ship in the second quarter of this year as long as we get FDA clearance in the first.

Joe Sardano: If we had that approved, I think that we could start shipping units in April. We've begun the process of working with manufacturing and getting things lined up for that process, so I think that we'll be ready to ship in the second quarter of this year as long as we get FDA clearance in the first quarter. Okay, no, that's great. And any type of utilization trends that you're able to glean from your Sentinel system or, just from www.thevenusproject.com, what you're hearing from the physicians. Yep, I think that we're seeing the same as we've seen in the past with the 27% increase year over year. Clearly, volumes continue to go up, and so there are more and more people that are getting their bodies scanned or whatever for skin cancer, and they seem to be choosing the non-invasive way of being treated.

<unk>.

Okay, Yeah, no that's great and just.

Any any type of.

Utilization trends that Youre able to glean from your Sentinel system or.

Just just from what.

What youre hearing from them.

Physicians.

Yeah, I think that we're seeing this the same as we've seen in the past with the 27% increase year over year clearly the volumes continue to go up.

And so there's more and more people that are getting their bodies scanned or whatever for for skin cancer and they seem to be choosing.

The noninvasive way of being treated so it's a fast way its a more productive way. It's a good cash flow for the doctors Theres a lot of.

Joe Sardano: So it's a fast way, it's a more productive way, it's a good cash flow for the doctors, there's a lot of good reasons for all of this to happen, and I think that that trend is going to continue to grow, and there's no question in my mind, as I've stated before, that this will sooner or later become the number one choice for the treatment of non-melanoma skin cancer. I think it'll be the treatment of choice very, very shortly. Okay, great. And then, just lastly... In terms of the recurring model, you know, is there a minimum number of treatments? I know in the fair market lease, it's relatively, it's two, two and a half, depending on the interest rate, I guess, treatments per month or whatever, to just break even, which is, which is obviously a problem.

Good points for all of this to happen and I think that that trend is going to continue to grow and there is no question in my mind as Ive stated before that this will sooner or later become the number one choice for the treatment of non melanoma skin cancer I think it'll be the treatment of choice very very shortly.

Okay, Great and then just let just lastly.

In terms of the recurring model.

Or is there a minimum number of treatments I know on the fair market lease it's relatively it's two two and a half depending on the interest rate I guess.

Treatments per month or whatever just breakeven.

Which is which is obviously.

Not not a large number but in terms of how many treatments do they have to.

Joe Sardano: Not a large number, but in terms of how many treatments do they have to, perform in order to get the placement, or is it a placement, and it's just a revenue-sharing program? Yeah, first of all, although two patients is the approximate break even to own a system or to buy a system, there's not a minimum number of units or patients that must be delivered with a recurring revenue, but I would tell you that we don't have any of our customers currently with SRT that do less than 10 patients a month for the most part, and we have some customers that are doing 50 and 60 patients a month, so we're seeing some very high volumes at those sites, and so clearly we're going to approach the customers, and the customers who are interested in this model are the ones that know that they have some decent volumes.

Perform in order to get.

Get the placement or is it a placement and it's just.

It's just a revenue sharing program.

Yes.

First of all the.

Although two patients as the approximate breakeven to own a system where to buy a system.

Theres not a lot.

Minimum number of units or patients that must be delivered with a recurring revenue, but I would tell you that we don't have any of our customers currently with SRT that do less than 10 patients a month for the most part and we have some customers that are doing 50, and 60 patients a month. So we're seeing some very high volume.

At those sites and so clearly we're going to approach the customers and the customers who are interested in this model are the ones that know that they have some did some decent volumes, they're going to come to us and we're going to come to you know whatever agreement, we're going to establish but clearly I think the model that were.

Joe Sardano: They're going to come to us, and we're going to come to whatever agreement we're going to establish, but clearly, I think the model that we're going to have is that if the doctors see a lot of patients, they're going to have the ability to keep most of their money, and I think that's going to be a fair valuation for us, and I think that it's going to be profitable for us and profitable for I think that they'll agree that this is something that is going to be worthwhile for them to review, but I would also tell you this: if we made 10 presentations to 10 different customers on the recurring revenue model, I'll bet you five end up buying it anyway.

Going to have is that if the doctors do a lot of patients they're going to have the ability to keep most of their money and I think that's going to be a fair valuation for us and I think that it's going to be profitable for us and profitable for them. So we're looking forward to introducing this model to them I think that they all agree that this.

Is something that is gonna be worthwhile for them to review, but I would also tell you. This if we made 10 presentations to 10 different customers on the recurring revenue model a bunch of five ended up buying it anyway.

Joe Sardano: Right, right. Okay. Especially as you're saying that, on average, the physicians that purchase the product see 10 patients a month, and some see many more than that. They may decide the fair market lease is a better way of going at the revenue sharing. But you're giving them the option, which, theoretically, for some that are reticent to either go the lease route or lay out the cash, could increase the adoption rate in 2024.

Right right, Okay, especially if you say as you are saying that.

On average.

The physicians that they purchased the product see 10, 10 patients a month and some see many more than that they may decide to fair market lease.

Is it is a better way of going into the sharing revenue, so, but you're giving them the option, which theoretically for so for some that are reticent necessarily to either go to the lease route or lay out the cash.

It could increase the adoption rate in 2024.

Joe Sardano: Yep. Additionally, this is Michael. Hey, Anthony, how are you?

Additionally, this is Michael Anthony how are you.

Part of it.

Michael Sardano: Part of this model also is that we're going to be taking away some of the work from an operations standpoint that goes into the practice. So certain practices are actually willing to pay us on the outside to supply some personnel that would take away some of the operational work from the practice itself so that they can concentrate on other areas of the business. So we would be supplying those personnel to then take away that work.

Good.

Part of this model also is that we're going to be taking away. Some of the work from an operation standpoint that go into the practices. So certain practices are actually willing to pay us on the outside to supply some personnel that would take away some of the operational work from the practice.

So that they could concentrate on other areas of the business. So it would be supplying those personnel that doesn't take away that work.

Michael Sardano: Okay, interesting. Okay, great. That's helpful. I appreciate it. I'll hop back in the queue.

Okay interesting okay great.

That's helpful color I appreciate it I'll hop back in the queue. Thanks, Thanks, Anthony Thanks Anthony.

Anthony V. Vendetti: Thanks. Thanks, Anthony. Thanks, Anthony.

Operator: Again, if you have a question or a follow-up, please press star, then 1. Our next question will come from Ben Hanor with Alliance Global Partners. Please go ahead.

And again, if you have a question or a follow up. Please press star then one to join the queue.

Our next question will come from Ben Hayner with Alliance Global Partners. Please go ahead.

Ben Hanor: Good afternoon, gentlemen. Thanks for taking the questions. Can you hear me?

Yeah. Good evening gentlemen, thanks for taking my questions can you hear me, Okay, Yes, Sir Hey, Ben.

Operator: Okay. Yes, sir. Hey, Ben.

Hey, guys.

Michael Sardano: Excellent. Okay. So just to maybe clarify, how many different components will go into the recurring revenue model? I mean, it sounds like there's, you know, potential for rental, there's potential for a click fee, there's potential for some of the folks that are the personnel that you're putting on the ground. You know, what could that fee encompass or how does that fee ultimately get put together? on the market, portly or whatever.

Sure.

Just to maybe clarify how many different components will go into the recurring revenue model I mean, it sounds like there is.

Potential for rent all of the potential for a click fee. There is potential for some of the folks that are the personnel that you're putting on the ground.

What could that fee encompass.

How does that ultimately get put together.

On the mobile importantly, or whatever.

Michael Sardano: Yep. Thanks, Ben. Thank you, Michael. Thanks for the question. So, there are really two components to it. There's the device component, and then there's the personnel component. So, on the device side, it's simple: it's the SRT-100 vision. They utilize it the same way that they would if they purchased it or leased it. And on the personnel side, as I just said to Anthony, we would supply these people, mainly a radiation oncologist, an RTT, and a physicist, to do the work that these practices are usually on their own for. So, for instance, if you bought a car, I always just use cars as an example, you'd have to take the car in to Toyota or what have you and have that fixed.

Yep, Thanks, Dan what about Michael.

Thanks for the question. So there's really two components to it there's the device component and then there's the personnel component. So on the device design is simple, it's the SRT 100 vision and.

They utilize it the same way that they would if they purchase it or at least it and on the personnel side as I, just said to Anthony we would supply. These personnel, mainly a radiation oncologist and RPT and a physicist to do their work that these practices are usually on their own for so for instance, if you bought a car I always just.

Used cars as an example.

You'd have to take the car in to Toyota or what have you and have that fixed well now we're going to do that for you. In addition, we can drive the car for you.

Michael Sardano: Well, now we're going to do that for you. In addition, we can drive the car for you, and we can do all the things that you'd normally have to do from a responsibility standpoint in an operations aspect. So some practices are very interested in that just because they're so busy with other things.

And we can do all of the things that you'd normally have to do from a responsibility standpoint, and an operations aspect to some practices are very interested in that just because they're so busy with other things.

Ben Hanor: Okay, that makes sense. That's helpful. I mean, do you have a sense of how much demand there is out there for the recurring revenue model and providing the personnel that you haven't been able to fulfill just because you haven't had it in the past? Well, I can tell you that based on the meetings that we've had with people and people asking us about the model and interested in getting into this, I think the interest is very, very high. So I think the opportunity to make these presentations is extremely important, and I think the biggest impact that we're going to have is going to be with the bigger models, the bigger private equity-backed groups that are looking at this model and are very, very serious about it because they would like to use their capital to buy more clinics, and so we free up a lot of their capital to be able to do this.

Okay.

That's helpful.

Do you have a sense on how much demand there was out there for the recurring revenue model.

Providing the personnel that you haven't been able to fulfill just because.

I haven't had this in the past.

Well I can tell you that based on the meetings that we've had with people and people asking us about the marvell and <unk> interested in getting into this I think the interest is very very hot.

So I think the opportunity to make these presentations is extremely important and I think the the biggest impact that we're going to have is going to be with the the bigger models. The bigger private equity backed groups that are looking at this model and being very very serious about it because they would like to use their capital to buy more.

And so we free up a lot of their capital to be able to do that so I think that's where our biggest opportunity is going to be.

Ben Hanor: So I think that's where our biggest opportunity is going to be with this model. Okay, that's definitely helpful. And then on the expense side of the equation, and obviously, a great job controlling expenses, in particular, on sales and marketing, is that decline partially a function of moving to the recurring revenue model as well? Or is that just, you know, straight up cost? So in Q4, we experienced a one-time reduction in compensation expense that we recorded. So that is basically what is driving the decrease in seller marketing in Q4. Okay, can you kind of quantify that for me? I mean, it's like half a million. It was about $800,000.

With this model.

Okay.

Definitely helpful and then on the.

On the expense side of the equation and obviously great job controlling expenses.

In particular, our sales and marketing is that the clients partially a function of.

Moving to the recurring revenue model as well or is that just.

Straight up cost control.

So in Q4, we experienced a onetime reduction in compensation expense that we recorded so that is basically what is driving the decrease in selling and marketing in Q4 event.

Okay.

Okay.

To quantify that for me.

Half a million.

It was about it was about 800000.

Javier Rampolla: Here's how it goes. Okay, great. I guess that's all I have, gentlemen. I'll take the rest offline. Thanks, Ben.

Yes.

Okay great.

I guess, that's all I had gentlemen, I'll pick the restaurants.

Thanks, Ben Thanks Pam.

Yeah.

This concludes our question and answer session I'd like to now turn the conference back over to Joe Sardana for any closing remarks.

Joe Sardano: This concludes our question and answer session. I'd like to now turn the conference back over to Joe Sardana for any closing remarks. Thank you. Thank you once again for your time this afternoon and for your interest in Sensus Hlthcr. I'd like to mention that we'll be participating in the 36th Annual Roth Conference being held in Dana Point, California, from March 17th through the 19th, and I hope to see some of you there. We'll speak with you again when we report our first quarter financial results in May. In the meantime, thanks again for joining us today. The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your line.

Thank you once again for your time this afternoon and for your interest in Sensus healthcare I'd like to mention that we'll be participating in the 36th annual Roth Conference being held in Dana point, California from March 17th through the 19th and I Hope to see some of you. There we'll speak with you again, when we report first quarter financial results.

In may in the meantime, thanks again for joining us today.

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