Q1 2024 Sensus Healthcare Inc Earnings Call
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Operator: Good day and welcome to the Sensus Hlthcr First Quarter 2024 Financial Results Conference Call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on a touchtone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Kim Golodetz. LHA Investor Relations. Go ahead, please.
Good day and welcome to the Sensus healthcare first quarter 'twenty 'twenty four financial results conference call.
Kim Sutton Golodetz: All participants will be in listen only mode.
Operator: Should you need assistance. Please signal a conference specialist by pressing the star key followed by zero.
Kim Sutton Golodetz: After todays presentation, there will be an opportunity to ask questions.
Kim Sutton Golodetz: To ask a question you May press Star then one on a touchtone phone.
Operator: To withdraw your question. Please press Star then two.
Operator: Please note this event is being recorded.
Kim Sutton Golodetz: I would now like to turn the conference over to Kim call. It that's L.
Kim Sutton Golodetz: L H a investor Relations go ahead. Please.
Kim Sutton Golodetz: Thank you. This is Kim Golodetz with LHA.
Kim Sutton Golodetz: Thank you. This is Kim Collins, that's with L. A J. Thank you all for participating in today's call. Joining me from Sensus healthcare are Joe sorry, Dan <unk>, Chairman and Chief Executive Officer, Michael Sardana, President and General Counsel and Javier run Pola 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 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, May 9, 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. Census 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. A reconciliation of non-GAAP-to-GAAP results is included in today's financial results press release.
Kim Sutton Golodetz: 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.
Kim Sutton Golodetz: All statements other than historical facts that address activities sensus healthcare.
Kim Sutton Golodetz: Plans expects believes intends or anticipates and other similar expressions will should or may occur in the future are forward looking statements.
Kim Sutton Golodetz: The forward looking statements of management's beliefs based on currently available information as of the date of this conference call May nine 2024.
Kim Sutton Golodetz: 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.
Kim Sutton Golodetz: During today's call references will be made to certain non-GAAP financial measures.
Kim Sutton Golodetz: <unk> 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. A reconciliation of non-GAAP to GAAP results is included in today's financial results press release with that said I'd.
Kim Sutton Golodetz: With that said, I'd like to turn the call over to Joe Sardano. Okay?
Kim Sutton Golodetz: I'd like to call turn the call over to Joe Giordano Joe.
Joseph C. Sardano: Thank you, Kim, and good afternoon, everyone. I'm delighted to report excellent results for Q1 2024. Sensus Healthcr has seen some very positive momentum as the dermatology community recognizes the importance of IGSRT to their patients and their practices as a non-invasive and highly efficacious modality to treat non-melanoma skin cancer. Dermatologists are now benefiting from a choice of acquisition options, including our new Fair Deal Agreement formally introduced at the AAD in March, which complements our proven fair market value lease program.
Joseph C. Sardano: Thank you Kim and good afternoon, everyone I'm delighted to report excellent results for Q1 2020 for Sensus healthcare has seen some very positive momentum and as the dermatology community recognizes the importance of IGF therapy to their patients and their practices as noninvasive.
Joseph C. Sardano: And highly efficacious modality to treat non melanoma skin cancer dermatologists are now benefiting from a choice and acquisition options, including our new fair deal agreement formally introduced at the AAD in March which complements our proven fair market value lease program.
Joseph C. Sardano: The Fair Deal Agreement is gaining momentum as we continue to expose the details to our dermatology community and as the word begins to spread throughout. Our first quarter financial results were very, very good as we more than tripled revenues compared with the comparable 2023 quarter. In addition, we recorded a substantial profit that reflects our customers' adjustments to the macroeconomic environment, especially compared with last year's net loss. We shipped 26 systems during the quarter compared with 10 a year ago when inflation and macroeconomic uncertainty had a pronounced effect on our customers' business.
Joseph C. Sardano: The fair deal agreement is gaining momentum as we continue to expose the details to our dermatology community and as the world begins to spread throughout our first quarter financial results were very very good.
Joseph C. Sardano: As we more than tripled revenues compared with comparable 2023 2023 quarter. In addition, we recorded a substantial profit that reflects our customers' adjustments to the macroeconomic environment, especially compared with last year's net loss we should.
Joseph C. Sardano: 2006 systems during the quarter compared with 10, a year ago, when inflation and macroeconomic uncertainty had pronounced effect on our customers' businesses.
Joseph C. Sardano: Competence and Spending Plan. Although macroeconomic headwinds persist, we are seeing a determined shift by dermatologists toward a medical dermatology platform versus aesthetic dermatology. As we do this time every year, we attend three very important trade shows and enjoy excellent booth traffic at all of them. In February, we attended the Winter Clinical in Miami and the South Beach Symposium.
Joseph C. Sardano: Evidence and spending plans.
Joseph C. Sardano: Although macroeconomic headwinds persist we are seeing you determined shift by the dermatologist awarded medical dermatology platform versus aesthetic dermatology.
Joseph C. Sardano: As we do this time every year, we attend three very important tradeshows and enjoyed excellent booth traffic at all of them in February we attended the winter clinical in Miami and the South Beach Symposium that in March we attended the American Academy of Dermatology annual meeting, where we launched our new fair deal agree.
Joseph C. Sardano: Then in March, we attended the American Academy of Dermatology annual meeting, where we launched our new fair deal agreement at the largest annual gathering of dermatologists in the US, with more than 10,000 medical personnel at this year's event. Under the Fair Deal Agreement, dermatology offices gain access to Sensus' image-guided, award-winning superficial radiotherapy technology under a new service model with an economic value proposition that's second to none. Sensus manufactures and sells the only proven FDA-cleared IGSRT system and holds a patent for SRT combined with ultrasound, which is deeper and more effective. The response among conference attendees exceeded our most optimistic expectations.
Joseph C. Sardano: We also generated a record number of sales leads for our portfolio of SRT products. Quite simply, we're now delivering the best technology under the best terms while offering customers an economical choice. Our proven technology has the simplest formula to treat non-melanoma skin cancer non-invasively and with the highest cure rates of up to 99.1%. This new fair deal agreement complements our strong, long-standing capital equipment sales model and, more recently, our fair market value lease model to expand our market.
Joseph C. Sardano: And then to the largest annual gathering of dermatologist in the U S with more than 10000 medical personnel at this year's event.
Joseph C. Sardano: Under the fair deal agreement dermatology offices gain access to Sensus image guided award winning superficial radiation radiotherapy technology under a new service model with an economic value proposition that second to none.
Joseph C. Sardano: <unk> manufactures and sells the only proven FDA cleared <unk> T system and holds a patent for SRT combined with ultrasound, which is deeper and more effective.
Joseph C. Sardano: The response among conference attendees exceeded our most optimistic expectations. We also generated a record high number of sales leads for our portfolio of SRT products quite simply we are now delivering the best technology under the best agreement, while offering customers an economic choice are proven.
Joseph C. Sardano: Technology is the simplest formula to treat non melanoma skin cancer, noninvasively and with the highest cure rates of up to 99, 1%.
Joseph C. Sardano: This new fair deal agreement complements our strong long standing capital equipment sales model and more recently, our fair market value lease model to expand our market.
Joseph C. Sardano: Our corporate and SRT vision brands are well-established and highly regarded in the industry, and dermatologists know they will get unmatched product quality, the best customer service, and the most compelling value proposition with Sensus. We're delighted to have already entered into several contracts under the Fair Deal Agreement, and we've assembled a growing pipeline of leads that we expect to convert as the year progresses. To review, the Fair Deal Agreement is a recurring revenue option that addresses the customer's need to deploy capital to other areas of their business, and it facilitates what we believe is a compelling economic model.
Joseph C. Sardano: Our corporate and SRT vision brands are well established and highly regarded in the industry and dermatology is no. They will get unmatched product quality, the best customer service and the most compelling value proposition with sensus.
Joseph C. Sardano: We're delighted to have already entered into several contracts under the fair deal agreement and we've assembled a growing pipeline of leads that we expect to convert as the year progresses.
Joseph C. Sardano: To review the fair deal agreement as a recurring revenue option that addresses the customers need to deploy capital to other areas of their business and it facilitates what we believe is a compelling economic model. We've been carefully preparing this model for more than a year, making sure that the economics work.
Joseph C. Sardano: We've been carefully preparing this model for more than a year, making sure that the economics work for both our customers and for us, and ensuring that we are abiding by all applicable laws and regulations. Note also that the capabilities of the SRT100 Vision with image-guided ultrasound and the availability of Sentinel technology, which includes HIPAA-compliant planning software, make the recurring revenue model possible. The improved high-resolution image-guided ultrasound technology provides a see-and-treat capability, which leads to great clinical outcomes because the physician can actually see the impact of each treatment on the lesion and the lesion resolution after treatment.
Joseph C. Sardano: For both our customers and for us and ensuring that we were abiding by all applicable laws and regulations.
Joseph C. Sardano: Note also that the capabilities of the SRT 100 vision with image guided ultrasound and the availability of Sentinel technology, which includes HIPAA compliant planning software makes a recurring revenue model possible. The improved high resolution image guided ultrasound technology provides a C and treat.
Joseph C. Sardano: <unk>, which leads to great clinical outcomes, because the physician can actually see the impact of each treatment on the lesion and the lesion resolution after treatment the combination of our world class technology and now a user friendly agreement provides our base with the best value proposition in the market today.
Joseph C. Sardano: The combination of our world-class technology and now a user-friendly agreement provides our base with the best value proposition in the market today. To enhance the fair deal agreement, during the first quarter, we engaged consultants to provide customers with oversight and supervision and facilitate the utmost efficiency and effectiveness of the dermatology practice. In addition, curators will research new indications for Sensus Superficial Radiotherapy, including inflammatory diseases. In addition to launching the Fair Deal Agreement at these trade shows, we also showcased the state-of-the-art capabilities embedded in the SRT-100 vision. This included our newly patented technology covering 33 individual planes.
Joseph C. Sardano: To enhance the fair deal agreement during the first quarter, we engaged cure rates to provide customers with oversight and supervision and facilitate the utmost efficiency and effectiveness of the dermatology practice. In addition, cure rates with research new indications for sensus superficial radiotherapy.
Joseph C. Sardano: Including inflammatory diseases in.
Joseph C. Sardano: In addition to launching the fair deal agreement at these trade shows we also showcase the state of the art capabilities embedded the SRT 100 vision. This included our newly patented technology covering 33 individual claims the patent describes the technology that essentially a treatment planning system.
Joseph C. Sardano: The patent describes the technology that is essentially a treatment planning system made possible by fusing a radiation therapy device with high-frequency ultrasound, permitting seamless operation. Between interest in this new technology and our new sales offering, we have assembled a significant pipeline of potential customers. So much so that we've ordered more inventory to satisfy anticipation by the end of the year and demand, as Javier will highlight in his prepared remarks. While dermatology is our primary market, we continue to engage with this radiation oncology market, which is mainly a hospital-based channel.
Joseph C. Sardano: Possibly by fusing of radiation therapy device with high frequency ultrasound permitting seamless operation.
Joseph C. Sardano: Between interest and this new technology, and our new sales offering we have assembled a significant pipeline of potential customers. So much. So that we've ordered more inventory to satisfy anticipation by the end of the year ended demand as Javier will highlight in his prepared remarks.
Joseph C. Sardano: Dermatology is our primary market, we continue to engage with this radiation oncology market, which is mainly a hospital based channel as a reminder, this market has a longer sales cycle as we continue to generate increased interest.
Joseph C. Sardano: As a reminder, this market has a longer sales cycle as we continue to generate increased interest. Turning now to our transdermal infusion, or TDI, product, recall that we filed a 510 application with the U.S. FDA in the fourth quarter of 2023. We're still awaiting a response from the agency and are optimistic it will be coming in the second half of this year. We've generated a great deal of interest in our TDI product and trade shows as it works in progress. This system will, for example, allow platelet-rich plasma, or PRP, to be applied to the scalp in a pain-free restoration experience. In addition, posters have already been presented on its application for hyperhidrosis or overactive sweat glands.
Joseph C. Sardano: Turning now to our transdermal infusion or TDI product recall that we filed a 510 application with the U S. FDA in the fourth quarter of 2023, we're still awaiting a response from the agency and are optimistic it will be coming in the second half of this year with.
Joseph C. Sardano: We generated a great deal of interest in our TDI products and trade shows as a works in progress. This system will for example, allow platelet rich plasma or PRP can be applied to the scale has been a pain free aspiration restoration experience. In addition, posters have already been presented on its application.
Joseph C. Sardano: For hyperhidrosis or overactive sweat glands are transdermal system includes Sentinel it solution capabilities.
Joseph C. Sardano: Our transdermal system includes Sentinel IT solution capabilities. With those remarks, I'll turn the call over to Michael Sardano, our President and General Counsel, who will give you a brief update on our international business.
Michael J. Sardano: These remarks, I'll turn the call over to Michael Giordano, Our President and General Counsel, who will give you a brief update on our international business Michael.
Michael J. Sardano: Thanks, Joe. As I stated on the last call, Census has been working diligently on expanding into new international territories and deepening the penetration where we already have clearance. In 2023, Census achieved sales to three new territories, Ireland, Guatemala, and Turkey. In 2022, Sensus announced that Taiwan had approved our SRT technology to be sold into the country, and I am pleased to announce that we have sold our first image-guided SRT100 vision system in Asia to Far Eastern Memorial Hospital in Taiwan. Far Eastern Hospital has more than 1,000 beds and is one of the largest private hospitals in Taiwan.
Michael J. Sardano: Thanks, Joe and.
Michael J. Sardano: As I stated on the last call census has been working diligently on expanding into new international territories and deepening the penetration where we already have clearance.
Michael J. Sardano: In 2023 census achieved sales to three new territories, Ireland, Guatemala, and Turkey and <unk>.
Michael J. Sardano: 2022 census announced the Taiwan had approved our SRT technology to be sold into the country and I am pleased to announce that we have sold our first image guided SRT 100 vision system in Asia to far Eastern Memorial Hospital in Taiwan.
Michael J. Sardano: Far eastern has more than 1000 beds and is one of the largest private hospitals in Taiwan.
Michael J. Sardano: We are optimistic this sale will open the door to additional sales of our vision system in the Asian territory due to its compelling patient-centric and user-friendly features and benefits. We are especially excited about Far Eastern as a customer, as they are planning to conduct and publish research on potential new indications for the SRT, which may be instrumental in the support of label expansion beyond non-melanoma skin cancer and keloid. Please note that this system was shipped during the second quarter of 2024, so revenue will be reflected in next quarter's results.
Michael J. Sardano: We are optimistic this sale will open the door to additional sales of our vision system in the Asian territory due to its compelling patient centric and user friendly features and benefits.
Michael J. Sardano: We are especially excited about far eastern as a customer as they are planning to conduct and published research on potential new indications for the SRT, which may be instrumental in supporting them.
Michael J. Sardano: Label expansion beyond non melanoma skin cancer and keywords.
Michael J. Sardano: Please note that this system was shipped during the second quarter of 2024, so that revenue will be reflected in next quarter's results.
Michael J. Sardano: And in another first for Sensus, we sold an SRT100 system to the leading veterinary hospital in Tel Aviv, Israel, to provide a gentler radiotherapy option to treat tumors in smaller animals with a focus on dogs and cats. SRT is well known in Israel among the dermatology and radiation oncology communities, as there are four major hospitals already using the vision system in the territory. We are extremely excited to now enter the veterinary community in Israel as well.
Michael J. Sardano: And in another first for centers, we sold an SRT 100 system to the leading veterinary hospital in Tel Aviv, Israel to provide a gentler radiotherapy option to treat tumors in smaller animals with a focus on dogs and cats.
Michael J. Sardano: Our T is well known in Israel, among the dermatology and radiation oncology communities and there are four major hospitals are already using the vision system and the territory. We are extremely excited to now entered the veterinary community and Israel as well.
Michael J. Sardano: Throughout the rest of 2024 and beyond, Census will continue to strive to expand our Latin American, European, and Asian footprint as quickly as possible. Additionally, we are working on new clearances for the SRT100 vision system to augment the clearances for the SRT100 model. Our goal is to open two to three new territories per year, which we achieved in 2023. With that, I'll turn the call over to our CFO, Javier Rampolla, for a discussion of our recent financial results.
Michael J. Sardano: Throughout the rest of 2024 and beyond census will continue to strive to expand our Latin American European and Asian footprint as quickly as possible. Additionally, we are working on new clearances for the SRT 100 vision system to augment the clearances for the SRT 100 model our goal is to open.
Javier Rampolla: Two to three new territories per year, which we achieved in 2023 with that I'll turn the call over to our CFO Javier ran Poland for a discussion of our recent financial results.
Javier Rampolla: Thank you, Michael, and good afternoon, everyone. As John mentioned, revenues for the first quarter of 2024 more than tripled to $10.7 million, significantly above the $3.4 million for the first quarter of 2023, as we achieved 26 units compared with 10 a year ago. Gross profit for the first quarter of 2024 was $6.7 million, or 62.5% of revenue, compared with gross profit of $1.6 million, or 47.5% of revenue, for the first quarter of 2023.
Javier Rampolla: Thanks, Michael.
Speaker Change: Good afternoon, everyone.
Javier Rampolla: The increase was primarily due to the higher number of units sold in the 2024 quarter. The real marketing expense for the first quarter of 2024 was $1.3 million compared with $2.1 million for the first quarter of 2023. The decrease was primarily attributable to a decline in marketing expense, headcount, and trade show costs. Even though we attended the same number of trade shows as last year, we were able to reduce expenses and use our funds more efficiently. This year, we shifted our focus to emphasize product and sales options versus hosting KOL events in previous years.
Javier Rampolla: As Joe mentioned revenues for the first quarter. After document 24 more than tripled to $10 7 million significantly above the $3 4 million for the first quarter after a dominant player as.
Javier Rampolla: We achieved 26 units compared with a year.
Javier Rampolla: Year ago.
Javier Rampolla: Gross profit for the first quarter after about 124.
Javier Rampolla: 7 million or 52, 5% of revenue.
Javier Rampolla: Compared with gross profit of $1 6 million or <unk>.
Javier Rampolla: 47, 5% revenue for the fourth quarter after talking about 'twenty.
Javier Rampolla: The increase was primarily due to the higher number of units sold in the 2024 floor.
Javier Rampolla: So we've got a marketing expense for the fourth quarter of 2004 was $1 3 million compared with $2 1 million for the first quarter of 2023.
Javier Rampolla: The decrease was primarily attributable to a decline in marketing expense headcount and structural cost.
Javier Rampolla: Even though we attended the same number of Tradeshows at last year, we were able to pair expenses until use our workforce more efficiently.
Javier Rampolla: This year, we shifted our focus away from the byproduct and self options versus hosting kols had been in previous years.
Javier Rampolla: General and administrative expenses for the first quarter of 2024 were $1.6 million, compared with $1.4 million for the first quarter of 2023. The increase was primarily due to higher professional fees and compensation. Research and development expense for the first quarter of 2024 was $0.9 million compared with $1.1 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.
Javier Rampolla: Jim.
Javier Rampolla: What we've experienced for the first quarter. After the background 24 was $1 6 million compared with $1 4 million for the fourth quarter off the documents I mean in theory.
Javier Rampolla: The increase was primarily due to higher professional fees and compensation.
Javier Rampolla: Research and development expense for the first quarter after that on the 24 was four 9 million compared with $1 1 million in the same quarter last year.
Javier Rampolla: The decrease was primarily due to the completion of development of a drug delivery.
Javier Rampolla: I think market.
Javier Rampolla: We've submitted the 510K application, and we're awaiting clearance. Other income of $0.2 million for the first quarter of 2024 was mostly related to incentive income and was unchanged from the first quarter of 2023. Net income for the first quarter of 2024 was $2.3 million, or $0.14 per diluted share, and this compares with a net loss of $1.9 million, or $0.12 per share, for the first quarter of 2023. Adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization, and stock compensation expense, was $3 million for the first quarter of 2024, compared with a negative $2.7 million Joining now are 12 of us.
Javier Rampolla: So neither despite 10-K application awaiting care.
Javier Rampolla: Other income of one 2 million for the first quarter of 2024 was mostly related to interest income was unchanged from the first quarter of 2023.
Javier Rampolla: Net income for the first quarter of 2024 was $4 3 million or <unk> 14 per diluted share and this compares with a net loss of $1 9 million or <unk> 12 per share for the first quarter of 2023.
Javier Rampolla: Adjusted EBITDA, which we defined as earnings before interest taxes, depreciation amortization and stock compensation expense was 12 million for the first quarter after that 144, compared with negative $2 7 million for the fourth quarter off the top line.
Javier Rampolla: Turning now to our balance sheet.
Javier Rampolla: Cash and cash equivalents as of March 31st, 2024 were $14.7 million versus $23.1 million as of December 31st, 2023, and we had no outstanding borrowing under our reverberating line of credit. We had accounts receivable outstanding as of March 31, 2024 of $19.6 million compared with $10.6 million as of December 31, 2023. Note that a significant portion of those receivables have now been collected. We continue to build inventory to get ahead of any price increases and to prepare for anticipated growth, especially from the recurring revenue model.
Javier Rampolla: Cash and cash equivalents as of March 31, So that's been in place for <unk> were $14 7 million versus $23 1 million outflow of December 31, two document 23, and we had no outstanding borrowings on our revolving line of credit.
Javier Rampolla: We had a casual receivable outstanding as of March 31, 2024 of $19 6 million compared with $10 6 million as of December 31, 2023.
Javier Rampolla: Note that a significant portion of our receivable has now been collected.
Javier Rampolla: We continue to build inventory to get ahead of any price increases and to prepare for anticipated growth, especially from a recurring revenue model.
Javier Rampolla: As of March 31, 2024, inventories were $14.7 million compared with $11.9 million as of the end of 2023. Pre-paid inventory was $3.7 million versus $3 million at year-end 2023. Our gut sense continues to be very focused and highly disciplined. As has been our practice, we maintain a strong balance sheet to position us to take advantage of the compelling growth opportunities we may come across or that we may create ourselves. As 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. With that, I'll turn the call back to Joe. Thank you, Javier. Thank you.
Javier Rampolla: As of March 31, 2020 for inventories were $14 7 million compared with $11 9 million outflow at the end of the document.
Javier Rampolla: Prepaid inventory was $3 7 million versus 3 million at year end 2019.
Javier Rampolla: Our cash and continue to be very focused on highly disciplined.
Javier Rampolla: Our top speed our progress we maintain a strong balance sheet to position us to take advantage of the compelling growth opportunity. We may come across all that we may create a horse.
Javier Rampolla: A final comment please see the table in the news release, we easier earlier today for a reconciliation of GAAP to non-GAAP financial measures.
Javier Rampolla: With that I'll turn the call back to Joe.
Joseph C. Sardano: Thank you, Javier. Thank you, Michael.
Joe: Thank you Javier Thank you Michael.
Joseph C. Sardano: I hope that we've conveyed the excitement we have for the future of Sensus healthcare, we've come through some challenging situations. During the past few years depend demick shuttering dermatology offices, and then high inflation and economic uncertainty, putting the brakes on practice purchase decisions I applaud our talented staff are doing the hard work.
Joseph C. Sardano: I hope that we've conveyed the excitement we have for the future of Sensus Healthcare. We've come through some challenging situations during the past few years, the pandemic shuttering dermatology offices, and then high inflation and economic uncertainty putting the brakes on practice purchase decisions. I applaud our talented staff for doing the hard work to get us to this most exciting point in our life as a company.
Joseph C. Sardano: To get us to this most exciting point in our life as a company.
Joseph C. Sardano: SRT offers a more patient-friendly alternative to Mohs surgery, with cure rates that are as good or better. With our state-of-the-art and constantly upgraded technology, along with three different purchase options, we believe we have a compelling offering for all practices as we see the fair deal agreement rapidly gaining momentum. Last year, we surveyed Medicare claims and found that SRT experienced a 27% annual growth rate for the six years we reviewed. Should this rate continue, SRT will soon become the treatment of choice for non-melanoma skin cancer, making our new Fair Deal Agreement even more attractive.
Joseph C. Sardano: SRT offers a more patient friendly alternative to most surgery with cure rates that are as good or better with our state of the art and constantly upgraded technology along with three different purchase options. We believe we have a compelling offering for all practices as received a fair deal agreement.
Joseph C. Sardano: Rapidly gaining momentum.
Joseph C. Sardano: Last year, we surveyed Medicare claims and found that SRT experienced a 27% annual growth rate for the six years. We reviewed should this rates continue SRT will soon become the treatment of choice for non melanoma skin cancer.
Joseph C. Sardano: Making our new fair deal agreement, even more attractive.
Joseph C. Sardano: An estimated 1 in 5 Americans will develop skin cancer during their lifetimes, meaning nearly 70 million people alive today will have non-melanoma skin cancer. So, whether Medicare or private insurance, we are in the early stages of tapping the enormous opportunity for SRT just in non-melanoma skin cancer and keloids. Our systems provide a compelling alternative to surgery for millions of patients and are arguably the only solution to prevent the recurrence of keloids following surgical excision.
Joseph C. Sardano: An estimated one in five Americans will develop skin cancer during their lifetime, meaning nearly 17 million people alive today will have non melanoma skin cancer.
Joseph C. Sardano: So whether Medicare or private insurance, we are in the early stages of tapping the enormous opportunity for SRT, just been non melanoma skin cancer and keloid, our systems provide a compelling alternative to surgery for millions of patients and arguably the only solution to prevent the recurrence of keloid.
Joseph C. Sardano: Following surgery.
Joseph C. Sardano: We are confident that Sensus is positioned for success, and we have a great team to drive growth and implement our strategy. With those comments, I thank you for your time and attention, and now, Operator, we're ready to take questions.
Speaker Change: <unk>, we are confident that census is positioned for success and we have a great team to drive growth and and implement our strategies with those comments I. Thank you for your time and attention and now operator, we're ready to take questions.
Operator: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touchtone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been answered and you would like to withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster. Our first question comes from Yi Chen of H.C. Wainwright & Company. Go ahead, please.
Speaker Change: We will now begin the question and answer session to ask a question you May Press Star then one on your Touchtone phone.
Operator: If you are using a speakerphone please pick up your handset before pressing the keys.
Yi Chen: Any time your question has been addressed and you would like to withdraw your question. Please press Star then two.
Operator: At this time, we will pause momentarily to assemble our roster.
Yi Chen: Our first question comes from E. Chen of H C. Wainwright and company go ahead. Please.
Yi Chen: Hi, thank you for taking my questions. Historically, the fourth quarter would be the strongest quarter in terms of sales. And this first quarter of 24 was really strong, I mean, even to the level of historical fourth quarter sales levels. So how should we really expect the rest of the quarters, the remainder of 2024, to perform?
Yi Chen: Alright. Thank you for taking my questions. So my first question is historically, the fourth quarter would be the strongest quarter.
Yi Chen: In terms of sales and this first quarter of 2004 was really strong.
Yi Chen: Even to the level of.
Yi Chen: Historical fourth quarter sales levels, so how should we really expect.
Yi Chen: Yeah.
Yi Chen: The rest of the quarters for the remainder of 2024 to play out.
Joseph C. Sardano: Well, I think that, Yi, thanks for being on the call and thanks for the question. I think it's a good opportunity. If you saw last year and all the previous years, the first quarter really sets the pace for us each and every year as we continue to build our business over the course of the year. And so, like last year in the first quarter, I believe we had $3.6 million in revenue. This year, we have $10.7 million in revenue, and I think we can grow from that.
Speaker Change: Well I think that yeah, thanks for being on the call and thanks for the question I think.
Joseph C. Sardano: It's a good opportunity if you saw last year in all the previous years, the first quarter really set the pace for us each and every year as we continued to build our business over the course of the year and so as a as like last year in the first quarter I believe we had $3 $6 million in revenue. This year, we have $10 7 million in <unk>.
Joseph C. Sardano: Canoe and I think we can grow from that I think that we can look to Q2 as being as good a quarter I can't tell you if it's going to be better, but we're gonna drive to for it to be as good as we recall the third quarter is a fairly seasonal it has been.
Joseph C. Sardano: I think that we can look to Q2 as being another good quarter. I can't tell you if it's going to be better, but, you know, we're going to drive for it to be as good. As we recall, the third quarter is fairly seasonal. It has been for the last 10, 15 years, so there usually is a lull in the action there. And then if I look at the fourth quarter, you know that we're very, very conservative.
Joseph C. Sardano: For the last 10 15 years, so they're usually there's a lull in the action there and then if I look at the fourth quarter. You know that we're very very conservative we have an election year coming up and I'm sure that there's going to be hesitation as we get into the fourth year in the fourth quarter, but the fourth quarter is usually our best quarter as you've indicated so.
Joseph C. Sardano: We have an election year coming up, and I'm sure that there's going to be hesitation as we get into the fourth quarter. But the fourth quarter is usually our best quarter, as you've indicated, so we continue to anticipate a good quarter in the fourth quarter. So, I think the anticipation is for a good second quarter, much equivalent to the first, and the third quarter being the seasonal quarter, and the fourth quarter, I think we have to wait and see, and we'll probably be able to determine better by the time the end of the second quarter comes around.
Joseph C. Sardano: We continue to anticipate.
Joseph C. Sardano: A good quarter for the fourth quarter. So I think the anticipation is.
Joseph C. Sardano: A good second quarter much equivalent to the first and the third quarter being the seasonal quarter in the fourth quarter I think we have to wait and see and we'll probably be able to determine better by the time at the end of the second quarter comes around.
Joseph C. Sardano: Do you believe the fair deal agreement is the primary driver for performance in the first quarter of 2024?
Joseph C. Sardano: And do you believe the so your deal agreement is the primary driver for the performance in the first quarter 2020.
Joseph C. Sardano: It's not the primary driver, but I will tell you that it is an indicator of where we're going for the future. We're seeing a lot of activity. There are a lot of questions that are coming up. There are a lot of comparisons that are coming up. We compare very favorably with what's available in the market, and therefore, there's a lot more interest coming. So this recurring revenue model, we'll see placements increase over time this year, but I think in the second half of next year, we should see some significant revenues along with major significance in 2026.
Speaker Change: It's not the primary driver, but I will tell you that it is an indicator for where were going for the future.
Joseph C. Sardano: We're seeing a lot of activity. There is a lot of questions that are coming up there's a lot of comparisons that are coming up we compares very favorably with what's available in the market and therefore, there is a lot more interest coming about so this recurring revenue model, we'll see placements increase over over time this year, but I think in the <unk>.
Joseph C. Sardano: Second half of next year, we should see some significant revenues along with major significance in 2026, but we're growing that that part of the business and we're seeing a lot of action a lot of activity and a lot of interest and I think as the year goes on it is going to gain even more strength.
Joseph C. Sardano: But we're growing that part of the business, and we're seeing a lot of action, a lot of activity, and a lot of interest. And I think as the year goes on, it's going to gain even more strength.
Yi Chen: And lastly, could you give us a bit more information on the economics between census and QRAs?
Speaker Change: Got it and lastly could you give us a bit more information on the economics between sensors bill rates.
Joseph C. Sardano: Yep, Q-Raise is a very good opportunity for us. And, you know, let me hand it over to Michael to talk about it since he is more part of the regulatory compliance side. Thanks.
Yi Chen: Yes, <unk> is a very good opportunity for us and let me hand, it over to Michael to talk about it.
Joseph C. Sardano: He is more part of the regulatory piece sure. Thanks Ann This is Michael So <unk> is a group of radiation oncologists as it consists of them as a profession and with some of the state regulatory compliance things that we're going through we believe that it's best practices.
Michael J. Sardano: Sure, thanks Yi, this is Michael. So Q-rays is a group of radiation oncologists that consists of them as a profession, and with some of the state regulatory compliance things that we're going through, we believe that it's best practice to involve remote radiation oncology in this. It just makes the states look at census and SRT as a whole as really here to stay and part of the community, and it just helps from a patient standpoint as well, so that's why we decided to partner with Q-rays.
Michael J. Sardano: <unk> involved remote radiation oncology in this.
Michael J. Sardano: It just makes the states look at census, and SRT as a whole as really here to stay and part of the community and it just helps from a patient standpoint, as well and so that's why when you decided to partner with Keurig.
Yi Chen: Thank you and congratulations for a very successful year. Thank you, Yi. I appreciate it.
Speaker Change: Got it.
Speaker Change: Thank you and congratulations for a very good quarter.
Speaker Change: Thank you yeah. Thank you David.
Yi Chen: Okay.
Operator: Our next question comes from Anthony Vendetti of Maxim Group. Go ahead, please.
Yi Chen: Our next question comes from Anthony Vendetti of Maxim Group go ahead. Please.
Anthony V. Vendetti: Thanks. Good afternoon. Hey, Joe. Hey, Michael. How are you?
Anthony V. Vendetti: Thanks, Good afternoon, Hey, Joe Hey, Michael how are you doing that.
Anthony V. Vendetti: Tony.
Anthony V. Vendetti: So on the 26 systems, obviously, based on your comments, it sounds like most of those are more through the fair market value lease program. The fair deal agreement is relatively new, and I think you mentioned, right, only several deals so far have been signed up on that at this point, correct?
Anthony V. Vendetti: So on the 2006 systems.
Anthony V. Vendetti: It's obviously based on your comments it sounds like most of those are.
Anthony V. Vendetti: A more through the.
Anthony V. Vendetti: Fair market value lease program.
Anthony V. Vendetti: The fear deal agreement is relatively new.
Anthony V. Vendetti: I think you mentioned rate only several deals so far have been signed up for it.
Anthony V. Vendetti: On that at this point correct.
Joseph C. Sardano: Several deals have been signed up, but we're still waiting for delivery of a lot of those deals because they take a little longer to implement. I wouldn't count all of the installations as the fair market value deal. A lot of those installations are yet to come, so we're not even counting them.
Speaker Change: Yes, several deals have been signed up.
Joseph C. Sardano: Still waiting for delivery of a lot of those deals because.
Joseph C. Sardano: Because they take a little longer to implement so.
Joseph C. Sardano: I wouldn't count all of the installations being the fair market value deal a lot of those installations are yet to come so we're not even counting those.
Joseph C. Sardano: You mean the Fair Deal Agreement ones; aren't you counting them? The Fair Deal Agreement, yes.
Speaker Change: You mean, the fair deal agreement once youre not counting the fair deal agreement yes.
Joseph C. Sardano: Okay, got it. And then, and then the 26 systems, you know, obviously, you have one very large customer that has accounted in the past for over 50% of your revenues from those 26 systems. Without naming that customer, is your largest customer responsible for over half of those 26 systems, or is it more spread out this quarter? Yeah, they are. They are. No, listen. They are a very good customer. We work together on a lot of things, and we're constantly in conversation, and they definitely are responsible for more than half of those orders.
Speaker Change: Okay got it and then and then the 26 systems.
Joseph C. Sardano: Obviously, you had one very large customer that has has counted.
Joseph C. Sardano: In the past for over 50% of your revenues.
Joseph C. Sardano: Of those 26 systems.
Joseph C. Sardano: Without naming that customer is.
Joseph C. Sardano: Is that your largest customer responsible for over half of those 26 systems or was it more spread out at this point, yes. They are they are no listen there is very.
Joseph C. Sardano: Very good customer.
Joseph C. Sardano: We work together in a lot of things and we're constantly in conversation and they definitely are responsible for more than half of those orders. So they are seeing the market coming back the way we see the market. So it's an exciting time.
Joseph C. Sardano: So they're seeing the market coming back the way we see the market. So it's an exciting time. Okay, um, and this particular customer has many different sites, but concentrated in a certain geographic area.
Joseph C. Sardano: Okay.
Joseph C. Sardano: And this particular customer has.
Joseph C. Sardano: Many different sites, but concentrated in a certain geographic.
Joseph C. Sardano: Part of the United States at this point correct.
Joseph C. Sardano: No, quite frankly, they're spread all over the country now. They have really, really...
Joseph C. Sardano: No quite frankly, they're spread all over the country.
Joseph C. Sardano: They are really really really good representation across the country.
Anthony V. Vendetti: Okay, and then just on the economics of the fair deal agreement. So when a customer decides to go that route and take a placement versus purchases, is there an initial upfront placement fee that's much lower than an actual purchase fee? And then do they have to commit to a certain amount of recurring revenue, or is the recurring revenue piece higher because the cost of the system is significantly less than if it was purchased outright? How does that economics work out?
Joseph C. Sardano: Okay, and then just on the <unk>.
Anthony V. Vendetti: The economics of the fair deal agreement so.
Anthony V. Vendetti: When when a customer decides to go that route.
Anthony V. Vendetti: And take a placement versus purchases.
Anthony V. Vendetti: Is there is there an initial upfront placement fee that's much lower than an actual purchase fee and then do they have to commit to a certain amount of recurring revenue or is that recurring revenue piece higher because.
Anthony V. Vendetti: The cost of the system is significantly less than if it was purchased outright how does that how does those economics work out.
Joseph C. Sardano: Well, one of the reasons why we're calling it the Fair Deal Agreement is because none of those stipulations exist. It's a totally different concept that provides us with a very strong balance sheet once revenue starts or once patient treatments begin. So, as we say, it's a fair deal agreement. It really benefits the physician and their practice. And we have a saying, the more patients that they see, the more they keep.
Speaker Change: Well one of the reasons why we're calling it a fair deal agreement is because none of those stipulations exist.
Joseph C. Sardano: It's a totally different concept that provides us with a very strong balance sheet. Once the revenue starts to once the patient treatments to begin.
Joseph C. Sardano: So as we as.
Joseph C. Sardano: As we say, it's a fair deal agreement it really benefits the.
Joseph C. Sardano: The physician in their practice and we have a saying that more patients that they do the more they keep.
Joseph C. Sardano: Right, right, right, right. Okay, okay. Any update on the transdermal infusion system?
Joseph C. Sardano: Right right right right okay. Okay.
Joseph C. Sardano: Any update on the transdermal infusion system.
Joseph C. Sardano: You know what? It's a very frustrating time right now for us to be working with the FDA, and I sympathize with the amount of work and the bottleneck that they've had. And so it's a tough position with TDI. They have a bunch of people that are trying to get things done, but there's such a backlog. It's tough for us to even get a phone call return, so we keep persisting. We're on track.
Joseph C. Sardano: It's a very frustrating.
Joseph C. Sardano: Right now for us to be working with the with the FDA and I sympathize with the amount of work and the bottlenecks, let's say pad and so it's.
Joseph C. Sardano: It's a tough it's a tough position with with the T V.
Joseph C. Sardano: They have a bunch of people that are trying to get things done, but there's such a backlog.
Joseph C. Sardano: It's tough for us to even get a phone call returns. So we keep persisting we were on track, we're not getting any questions back.
Joseph C. Sardano: We're not getting any questions back. Any questions that we did have, we've already answered. And so we're in a wait and hold position until that happens. We're disappointed that it hasn't happened yet, but we expect it to happen.
Joseph C. Sardano: Any questions that we did have we already answered and so we're in a wait and hold position until that happens we're disappointed that it hasnt happened, but we expect that to happen.
Anthony V. Vendetti: Okay, thanks very much. I'll hop back in the queue.
Speaker Change: Okay. Thanks, very much I'll hop back in the queue I appreciate the color.
Operator: Thanks Anthony. Thanks Anthony. Again, if you have a question, please press star, then 1.
Joseph C. Sardano: I appreciate the color. Thanks, Anthony. Thanks, Anthony.
Speaker Change: Thanks, Anthony Thanks Anthony.
Joseph C. Sardano: Okay.
Joseph C. Sardano: Again, if you have a question. Please press Star then one.
Joseph C. Sardano: Okay.
Joseph C. Sardano: Yeah.
Joseph C. Sardano: Okay.
Joseph C. Sardano: Okay.
Operator: This concludes our question and answer session. I would like to turn the conference back over to Joe Sardano for any closing remarks. Thank you, everyone, for being on the call.
Joseph C. Sardano: This concludes our question and answer session I would like to turn the conference back over to Joseph Giordano for any closing remarks.
Joseph C. Sardano: Thank you everyone for being on the call and thank you once again for your time this afternoon and for your interest in Sensus Healthcare. We plan to conduct virtual one-on-one meetings with the investment community in the coming weeks. Please contact LHA, our investor relations firm, if you'd like to request a meeting. We'll speak with you again when we report our second quarter financial results in August. In the meantime, thank you again for joining us and happy Mother's Day.
Joseph C. Sardano: Thank you everyone for being on the call and thank you once again for your time this afternoon and for your interest in Sensus healthcare, we plan to conduct virtual one on one meetings with the investment community in the coming weeks. Please contact <unk> our.
Joseph C. Sardano: Our investor relations firm, if you'd like to request the meeting.
Joseph C. Sardano: We will speak with you again, when we report second quarter financial results in August in the meantime, Thank you again for joining us and happy mother's day.
Operator: The conference is now concluded. Thank you for attending today's presentation. You may now disconnect.
Speaker Change: The conference has now concluded. Thank you for attending today's presentation you may now disconnect.