Q1 2024 American Shared Hospital Services Earnings Call
[music].
Operator: Good afternoon, everyone, and welcome to the American Shared Hospital Services first quarter 2024 earnings conference call. All participants will be in a listen-only mode.
Good afternoon, everyone and welcome to the American shared hospital services first quarter 2024 earnings Conference call.
Speaker Change: All participants will be in a listen only mode.
Operator: Do you need assistance? You may 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 and 1 on your touch-tone telephone. If you want to withdraw your questions, you may press star and two. There's also no today's event is being recorded at this time. I'd like to turn the floor over to Karen Smith with PCG advisory. Please go ahead.
Speaker Change: You need assistance or.
Conference Specialist: The conference specialist by pressing the star key followed by zero.
Speaker Change: After todays presentation, there will be an opportunity to ask questions.
Speaker Change: To ask a question you May press star and one on your Touchtone telephone.
Conference Specialist: So all your questions you May press star two.
Conference Specialist: Please also note today's event is being recorded at this time.
Conference Specialist: I'd like to turn the floor over to Dan Smith.
Conference Specialist: Please go ahead.
Karen Smith: Thank you, Operator, and thank you everyone for joining us today. AMS's first quarter 2024 earnings press release was issued this afternoon after the market closed. If you need a copy, it can be accessed on the company's website at www.ashs.com in press releases under the investors tab. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans, and prospects for the company constitute forward-looking statements for the purposes of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995.
Dan Smith: Thank you operator, and thank you everyone for joining us today.
Dan Smith: A M S's first quarter 2024 earnings press release was issued this afternoon. After the market close if you need a copy can be accessed on the company's website at www Dot a S. H S dot com at press releases under the investors tab.
Management: We're turning the call over to management I would like to make the following remarks concerning forward looking statements. Please note that various remarks that may be made on this conference call about future expectations plans and prospects for the company constitute forward looking statements for the purposes of Safe Harbor provisions under the private Securities litigation.
Karen Smith: Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC. This includes the company's quarterly report on Form 10-K for the year ended December 31st, 2023 and the definitive proxy statement for the annual meeting of shareholders that was held on June 20th, 2023. The company assumes no obligation to update the information contained in this conference call.
Management: And reform Act of 1995.
Management: Actual results may vary materially from those indicated by these forward looking statements as a result of various important factors, including those discussed in the company's filings with the SEC.
Management: This concludes the company's quarterly report on Form 10-K for the year ended December 31, 2023, and the definitive proxy statement for the annual meeting of shareholders was held on June 22023. The company assumes no obligation to update the information contained in this conference call.
Karen Smith: Before I turn the call over to Ray, I'd like to remind everyone about our Q&A policy, where we provide each participant the time to ask one question and one follow-up. As always, we'll be happy to take additional questions offline at any time. With that, I'd now like to turn the call over to Ray Stachowiak, Chairman and CEO. Ray, please go ahead.
Ray: I turn the call over to Ray I'd like to remind everyone about our Q&A policy, where we provide each participant to ask one question and one follow up as always we'll be happy to take additional questions offline at anytime.
Raymond C. Stachowiak: With that I'd now like to turn the call over to race to Kodiak Executive Chairman and CEO. Please go ahead.
Raymond C. Stachowiak: Thank you, Karen. Good afternoon, everyone.
Raymond C. Stachowiak: Thank you Karen and good afternoon, everyone.
Raymond C. Stachowiak: Thank you for joining us today for our first quarter 2024 earnings conference call. I'll begin with some opening remarks and then turn the call over to Bob Hiatt, our CFO, for a financial review of the first quarter results. Following the prepared remarks, we'll open the call to your questions. Before I turn to our results, I'd like to acknowledge the unexpected passing of our Chief Executive Officer, Peter Gaccione. We are deeply saddened by Peter's passing; he'll be dearly missed.
Speaker Change: Thank you for joining us today for our first quarter 2024 earnings conference call.
Speaker Change: I'll begin with some opening remarks, and then turn the call over to Bob Hyatt, Our CFO for a financial review of the first quarter results.
Robert L. Hiatt: Following their prepared remarks, we'll open the call for your questions.
Robert L. Hiatt: Before I turn to our results I'd like to acknowledge the unexpected passing of our Chief said, Chief Executive Officer, Peter Gotcher Jani.
Peter Gotcher: We are deeply saddened by Peter's passing you'll be dearly missed.
Raymond C. Stachowiak: Peter's enthusiasm, integrity, and empowering leadership style shaped the organization over the last 18 months, and his tremendous contribution to AMS will not be forgotten. Peter's legacy lives on, and we wish his family, friends, and colleagues a very happy memory. With Peter's passing, we announced several management changes to ensure a seamless operation, as we capitalize on our growth trajectory. I've taken on the CEO position. In addition to my executive chairman role, and the company's president, Craig Tagawa, has become president and chief operating officer.
Peter Gotcher: Peter's enthusiasm integrity, and empowering leadership style shape the organization over the last 18 months and.
Peter Gotcher: And his tremendous contribution of M S will not be forgotten.
Speaker Change: Peter's legacy lives on and we wish his family friends and colleagues very happy memories.
Speaker Change: With Peter's passing we announced several management changes to ensure seamless operations as we capitalize on our growth trajectory.
Peter: I've taken on the CEO position in.
Peter: In addition to my executive Chairman role.
Peter: And the company's President Craig Tagalog has become president and Chief operating officer.
Raymond C. Stachowiak: Bob Hiatt continues to serve as our company's Chief Financial Officer. Ernie Bates will continue in the role of Vice President of International Sales and Markets, and Curtis Ellis will continue to serve as Director of Sales, Western Region, USA.
Peter: Bob Hyatt continues to serve as our company's Chief Financial Officer.
Peter: Ernie Bates will continue in the role of Vice President of International sales and marketing.
Peter: And Curtis Dallas will continue to serve as director sales Western region USA.
Raymond C. Stachowiak: We are also very pleased to announce that Ranjeet Pranam has been promoted from Head of Marketing and Customer Advocate to Vice President of Customer Advocacy and Global Marketing. Mr. Pradham brings 30 years of experience in health care to the role, having served in product management, marketing, technology, and general management positions at Fortune 100 companies and global leaders like GE, Abbott, Electa, Cisnex, and Philips. With our acquisition of a 60% interest in three radiation therapy centers in Rhode Island,
Speaker Change: We are also very pleased to announce that ran G. Proud of them was promoted from head of marketing and customer advocacy, the vice president of customer advocacy and global marketing.
Mr. Problem: Mr problem brings 30 years of experience in health care to the role having served in product management marketing technology and general management positions at Fortune 100 companies and global leaders like G E AB.
Speaker Change: Elekta suezmax and fill ups.
Mr. Problem: With our acquisition of a 60% interest in three radiation therapy centers in Rhode Island.
Raymond C. Stachowiak: We announce the appointment of Greg Mercurial as our Senior Vice President of Radiation Oncology. Mr. Mercurial brings deep experience in the radiation oncology field to this role, including 20 years and a certificate of need attainment for the development and operation of radiation therapy facilities. He's built a strong network of relationships with physicians. Hospitals and OEMs for making the use of high technology medical equipment more accessible. Mr. Mercurial served as a nationally renowned provider of radiation therapy for 15 years.
Mr. Problem: We announced the appointment of Greg material as our senior Vice President of radiation oncology.
Greg Material: Mr material brings deep experience in the radiation oncology field to this role include.
Greg Material: Including 20 years in certificate of need attainment.
Greg Material: For the development and operation of radiation therapy facilities.
Greg Material: He has built a strong network of relationships with physicians.
Greg Material: Hospitals, and Oems for making the use of high technology medical equipment more accessible.
Greg Material: Mr. Mercurial served a nationally renowned provider.
Speaker Change: Aviation therapy for 15 years.
Raymond C. Stachowiak: Strategizing the attainment of Certificates of Need to establish five radiation therapy centers at centers in Rhode Island in Joint Ventureship Partnership with five community hospitals, treating over 1,000 patients a year and generating $9-10 million a year in revenue. He has served as a radiation business consultant to major healthcare systems across the country, freestanding radiation oncology providers, and Manufacturers of Radiation Therapy Products.
Mr. Mercurial: Strategizing to attainment of certificates of need to establish five radiation therapy centers in Rhode Island, and joint venture ship partnership with.
Mr. Mercurial: With five community hospitals breathing over 1000 patients a year and generating nine to 10 million a year round Robin.
Bruce: He has served as a radiation business consultant to major health care systems across the country Bruce.
Bruce: Freestanding radiation oncology providers and manufacturers of radiation therapy products.
Bruce: So as you can see we have a robust senior management team.
Raymond C. Stachowiak: We have a robust senior management team to drive additional momentum as we continue to execute on our growth strategy. Now, let's go on to the quarterly results. We're pleased to report that AMS had a good first quarter, and we're extremely excited about the coming year. We have continued to show market improvement and advancement in several important ways. Notably, our sales team has been showing nice momentum, and our sales pipeline is extremely strong. In fact, with the Rhode Island acquisition that we just closed, our projected revenue backlog has more than doubled to over $210 million. This is due not only to the team. Excuse me.
Bruce: Drive additional momentum.
Bruce: As we continue to execute on our growth strategy.
Speaker Change: Now, let's go onto the quarterly results.
Speaker Change: We're pleased to report that <unk> had a good first quarter.
Speaker Change: And we're extremely excited about the coming year.
Speaker Change: We have continued to show market improvement in advancement in several important ways.
Speaker Change: Notably.
Sales Team: The sales team has been showing nice momentum and our sales pipeline is extremely strong.
Speaker Change: In fact, with the Rhode Island acquisition that we just closed.
Speaker Change: Our projected revenue backlog has more than doubled to over $210 million.
Raymond C. Stachowiak: This is due not only to the team who are well known in our industry, but also due to our expanded financial solution and closer integration with our strategic OEM. Together, these factors have resulted in significantly increasing the breadth of opportunities for our consideration. These include a range of advanced radiation therapy equipment.
Speaker Change: This is due not only to their team.
Speaker Change: Excuse me.
Speaker Change: This was due not only to the team where are well known in our industry, but also due to our expanded financial solutions and closer integration with our strategic Oems.
Speaker Change: Together. These factors have resulted in significantly increasing the breadth of opportunities for our consideration.
Speaker Change: These include a range of advanced radiation therapy equipment in various settings.
Raymond C. Stachowiak: Unknown Attendee, as well as the expansion of our business model to also develop our own, operated majority-owned proton beam and radiation oncology centers in the United States. The team continues to focus on strengthening our core business by working with customers to increase utilization of their equipment. This focused strategy led to the signing of four lease extensions from our 10 domestic Ammonite customers over the last 12 months, and we have others in the pipeline.
Speaker Change: As well as the expansion of our business model. So also developed our own.
Speaker Change: Operated majority owned proton beam and radiation oncology centers in the United States.
Speaker Change: The team continues to focus on strengthening our core business.
Speaker Change: By working with customers to increase utilization of their equipment.
Speaker Change: This focused strategy led that led to the signing of four lease extensions.
Speaker Change: From our 10 domestic gamma knife customers over the last 12 months.
Speaker Change: We have others in the pipeline.
Raymond C. Stachowiak: We believe these extended agreements are a testament to our partnership business model and financial flexibility. What's really impressive is that this is up significantly from prior years, which is a testament to our focus. Determination and Execution. International results have also continued heating up. In the first quarter, we saw volumes increase following the completed equipment upgrade in Ecuador to a new state-of-the-art gamma knife icon, the only Gamma Knife in Ecuador for non-invasive radial surgery.
Speaker Change: We believe these extended agreements are a testament to our partnership business model and financial flexibility.
Speaker Change: What's really impressive is that this is up significantly from prior years, which is a testament to our focus.
Speaker Change: Termination and execution.
Raymond C. Stachowiak: Our Gamma Knife in Peru, the only Gamma Knife in that country, also showed excellent results in the first quarter. Our third international center in Pueblo, Mexico, remains on track to begin treating patients in the next 60 days. This newly opened linear accelerator in Pueblo, Mexico that we're installing will have VMAT, IGRT, and radial surgery capabilities, offering the most advanced radiation therapy available in that catchment area.
Speaker Change: International results have also continued heating up.
Speaker Change: In the first quarter, we saw volumes increasing following the completed equipment upgrade in Ecuador.
Speaker Change: New state of the art Gamma knife icon.
unknown: The only gamma knife in Ecuador for Noninvasive radio surgery.
Speaker Change: Our gamma knife in Peru, the only gamma knife in that country also showed excellent results in the first quarter.
Speaker Change: Our third International Center in Puebla, Mexico remains on track to begin treating patients in the next 60 days.
unknown: This newly opened linear accelerator.
Claiborne: Yeah, I'm Claiborne, Mexico that were installing will have been that <unk> and radio surgery capabilities offering the most advanced radiation therapy available in that catchment area of Playboy Mexico.
Raymond C. Stachowiak: We also continue to invest in the three unique business opportunities in Rhode Island previously discussed. The first of these deals was announced in the fourth quarter for the acquisition of a 60% majority interest in three radiation therapy centers.
Claiborne: We also continue to invest in the three unique business opportunities in Rhode Island previously discussed.
Claiborne: The first of these deals was announced in the fourth quarter for the acquisition of a 60% majority interest in three radiation therapy centers.
Speaker Change: In Rhode Island.
Raymond C. Stachowiak: This acquisition closed last week. These are our first direct patient services or retail centers in the United States. This new business, which is the first for our expanded team and new pipeline, literally reflects our strong ambitions for the company. We started the year with a solid quarter. Reporting total revenue in the first quarter of $5.2 million, a year-over-year increase of 5.9%, gross margin was $2.1 million, a 12.3% increase, reflecting tight control over direct costs.
Claiborne: This acquisition closed last week.
Speaker Change: These are our first direct patient services or retail centers in the United States.
expanded team: This new business, which is the first for our expanded team and new pipeline.
expanded team: So literally reflects our strong ambitions for the company.
expanded team: We started the year with a solid quarter ripped.
Claiborne: The reporting total revenue in the first quarter of $5 2 million.
Claiborne: Our year over year increase of five 9%.
Speaker Change: Gross margin was $2 1 million or 12, 3% increase reflecting tight control of our direct costs.
Raymond C. Stachowiak: At a positive Operating Level, gross margin percentage came in at 41%. We earned two cents per share for the quarter, a slight decrease from three cents per share in the prior year's first quarter. Our balance sheet remains strong. We ended the first quarter with over $13 million in cash and equivalents, roughly equal to $2 per share.
Speaker Change: And positive operating leverage.
Speaker Change: The gross margin percentage came in at 41%.
Speaker Change: We earned <unk> <unk> per share for the quarter, a slight decrease from <unk> <unk> per share in the prior year's first quarter.
Speaker Change: Our balance sheet remains strong we ended the first quarter with over $13 million in cash and equivalents roughly.
Speaker Change: Roughly equal.
Speaker Change: $2 per share.
Robert L. Hiatt: We also had $2.4 million outstanding on our $7 million line of credit as of March 31, 2024, which was which was paid off early in the second quarter of 2024. We continue to leverage these resources carefully for additional long-term revenue. As we look into the coming months, we expect stronger international growth from Additional Treatment Capabilities in Ecuador, continued strong value from our center in Peru, and the opening of the new center in place.
Speaker Change: We also had $2 4 million outstanding on our $7 million line of credit as of March 31, 2024.
Speaker Change: Which was.
Speaker Change: Which has been paid off early in the second quarter 2024.
Speaker Change: We continue to leverage these resources carefully.
Speaker Change: For additional long term revenue streams.
Speaker Change: As we look into the coming months, we expect stronger international growth from additional treatment capabilities in Ecuador.
Speaker Change: Continued strong volume from our center in Peru.
Speaker Change: And the opening of the new center and quite well.
Robert L. Hiatt: The recent closing of the Rhode Island acquisition adds three new revenue streams to our business, in addition to the new business opportunities that are moving through our pipeline through that intricate and long sales cycle. We are excited to share more details at the appropriate time. With that, I'll turn the call over to Bob for a financial overview.
Speaker Change: The recent closing of the Rhode Island acquisition acquisition adds three new revenue streams to our business.
Speaker Change: In addition to the new business opportunities that are moving through our pipeline through that intricate and long sales cycle.
Speaker Change: We are excited to share more details at the appropriate time.
Robert L. Hiatt: With that I'll turn the call over to Bob for a financial overview.
Robert L. Hiatt: Thank you, Ray, and good afternoon, everyone. First quarter revenue increased 5.9% to 5.2 million compared to 4.9 million in the year-ago quarter. As previously discussed, we redefined our business segments to better reflect our revenue sources. Rental revenue from the company's medical equipment leasing segment, which we now refer to as leasing, was $4.3 million for the first quarter of 2024, compared to $4.2 million in the year ago first quarter, an increase of six-tenths of a percent.
Robert L. Hiatt: Thank you Ray and good afternoon, everyone.
Bob: First quarter revenue increased five 9% to $5 2 million compared to $4 9 million in the year ago quarter.
Bob: As previously discussed we redefined our business segments to better reflect our revenue sources.
Bob: Rental revenue from the company's medical equipment leasing segment, which we now refer to as leasing was $4 3 million for the first quarter 2024, compared to $4 2 million in a year ago first quarter, an increase of six tenths of a percent.
Robert L. Hiatt: Revenue from the company's direct patient services or retail segment was $963,000 for the first quarter ended March 31, 2024, compared to $696,000 for the year-ago quarter, marking an increase of 38.4%. The upgrade of the equipment in Ecuador added capacity and improved patient experience and volume, and the Peruvian revenues increased due to promotion of the center throughout the country, which accounted for the increase. First quarter revenue for the company's proton therapy system in Florida was $2.6 million, an increase of 14.5%, primarily due to continued increases in average reimbursement despite a decrease in Brexit. Total proton therapy fractions in the first quarter were 1,276, compared to 1536 proton therapy fractions in the first quarter of 2023.
Speaker Change: Revenue from the company's direct patient services, our retail segment was 963000 for the first quarter ended March 31 2024.
Speaker Change: 696000, with a year ago quarter, marking an increase of 38, 4%.
Speaker Change: The upgrade of the equipment in Ecuador added capacity improved patient experience and volume.
Speaker Change: In Peru revenues increased due to promotion of the center of the country, which accounted for the increase.
Speaker Change: First quarter revenue for the company's proton therapy system in Florida was $2 6 million an increase of 14, 5% primarily due to continued increases in average reimbursement despite a decrease in Brexit.
Speaker Change: Total proton therapy Brexit in the first quarter were 276.
Speaker Change: Compared to 536 proton therapy fractions in the first quarter of 2023.
Robert L. Hiatt: A 16.9% decrease due to normal cyclical fluctuations. Total Gamma Knight revenue decreased slightly by 1.7% to $2.6 million due to a decrease in procedures from two expired contracts as well as downtime at two sites for the installation of upgraded equipment, but it was nearly offset by high volume in our other locations, particularly Peru and Ecuador. To put this in perspective, total gamma knife procedures were 273 in the first quarter compared to 293 in the first quarter a year ago. However, excluding the two customer contracts that expired, gamma knife procedures increased by 10, or 4%, for the first quarter of 2024.
Speaker Change: The 16, 9% decrease due to normal cyclical fluctuation.
Speaker Change: Global Gamma knife revenue decreased slightly by one 7% to $2 6 million due to a decrease in procedures from two expired contracts as well as downside at two sites for the installation of upgraded equipment, but it was nearly offset by a high volume at our other locations, particularly Peru and Ecuador.
Speaker Change: Put this in perspective total gamma knife procedures with 273 for the first quarter compared to 293 in the first quarter a year ago.
Speaker Change: However, excluding the customer contract that expired.
Speaker Change: The night procedures increased by 10 or 4% for.
Speaker Change: For the first quarter of 2024.
Speaker Change: Gross margin for the first quarter importantly, three increased 12 point.
Robert L. Hiatt: Gross margin for the first quarter of 2023 increased 12 points. I'm sorry, for the first quarter of 2024, 12.3% to 2.1 million compared to 1.9 million for the first quarter of 2023. Selling and administrative costs increased 22.1% to $1.9 million for the first quarter of 2024, compared to $1.5 million in the Eurovote quarter. This includes approximately $377,000 that we've invested in pursuing new business opportunities, as Ray had talked about.
Speaker Change: I'm sorry.
Speaker Change: First quarter reporting 12, 3% to $2 1 million compared to gross margin of one 9 million for the first quarter of 2023.
Speaker Change: Selling and administrative costs increased 22, 1% to $1 9 million for the first quarter of 2024 compared to $1 5 million in the year ago quarter.
Raymond C. Stachowiak: This includes approximately 377000 that we've invested in pursuing new business opportunities as Ray has talked about.
Robert L. Hiatt: Net interest expense was $237,000 in the 2024 period compared to $184,000 in the comparable period of last year. The increase is due to an increase In the interest rate and borrowings on the company's variable rate debt were offset by increases in interest income on the company's strong cash balance. The operating loss for the first quarter of 2024 was $85,000 compared to operating income of $98,000 in the first quarter of 2023, which reflects higher selling and administrative expenses associated with our recent Rhode Island activity.
Raymond C. Stachowiak: Net interest expense was 237000 into 2024 period compared to 184000 in the comparable period of last year.
Raymond C. Stachowiak: The increase was due to an increase.
Raymond C. Stachowiak: In the interest rate and borrowings on the company's variable rate debt offset by increases in interest income on the company's strong cash balance.
Ray: The operating loss for the first quarter of 2024 was $85000 compared to operating income of about $8000 in the first quarter of 2023, which reflects higher selling and administrative expense.
Raymond C. Stachowiak: With our recent.
Speaker Change: Got it.
Robert L. Hiatt: The income tax benefit of $44,000 for the first quarter of 2024, compared to the income tax expense of $68,000 for the same period last year, was primarily due to a change in the deferred tax valuation allowance. Net income attributable to American Shared Hospital Services in the first quarter of 2024 was $119,000 or $0.02 per diluted share, compared to net income of $188,000 or $0.03 per diluted share for the first quarter of 2023.
Speaker Change: The income tax benefit of 44000 for the first quarter for 24 compared to income tax expense.
Speaker Change: For the same period last year was primarily due to a change in our deferred tax valuation allowance.
Speaker Change: Net income attributable to American shared hospital services in the first quarter of 2024 was 119000 or <unk> <unk> per diluted share compared to net income of 188000 or three cents per diluted share for the first quarter of 2023.
Robert L. Hiatt: Fully diluted weighted average common shares outstanding were $6,576,000 and $6,472,000 for the first quarter of 2024 and 2023 respectively. Adjusted EBITDA, a non-gas financial measure, was $1.7 million for the first quarter of 2024 compared to $1.9 million for the first quarter of 2023, and March 31 2024 cash cash equivalents and restricted cash was 13.04 million compared to 13.81 million and December 31 2023, Shareholders equity excluding non controlling interest in city rates was $22.84 million or $3.61 for outstanding share at March 31, 2024, compared to $22.62 million or $3.59 for outstanding share at December 31, 2023.
Speaker Change: Fully diluted weighted average common shares outstanding.
Speaker Change: 576000.
Speaker Change: $6 million and 472000 for the first quarter of 2024.
Speaker Change: Three respectively.
Speaker Change: Okay.
Speaker Change: Adjusted EBITDA, a non-GAAP financial measure was $1 7 million for the first quarter of 2024 compared to $1 9 million for the third quarter.
Speaker Change: Great.
Speaker Change: At March 31, 2024, cash cash equivalents and restricted cash was $13 4 million compared to $13 eight 1 million at December 31, 2023.
Speaker Change: Shareholders' equity excluding Noncontrolling interest in subsidiaries was $22 eight 4 million or $3 61 per outstanding share at March 31, 2024, compared to $22 62 million or $3 59 per outstanding share at December 31, 2023.
Robert L. Hiatt: This concludes the formal part of our presentation. Thank you for joining us today. We look forward to updating you on our progress in the quarters ahead. Operator, we now turn the call back to you and are open to questions.
Company Representative: This concludes the formal part of our presentation. Thank you for joining US today, we look forward to updating you on our progress in the quarters ahead.
Speaker Change: Operator, we'd now like to turn the call back to you and open for questions.
Operator: Ladies and gentlemen, at this time, we'll begin that question and answer session. To ask a question, you may press star and then one on a touch-tone telephone. To withdraw your question, you may press star and two. As a reminder, we do ask that you please limit yourselves to one question and a single follow-up. Our first question today comes from, and Maren from Zax. Please go ahead with your question.
Operator: Ladies and gentlemen at this time, we'll begin the question and answer session to ask a question you May Press Star and then one using a touch tone telephone.
Operator: Draw your questions you May press star two.
Operator: As a reminder, we do ask that you. Please limit yourselves to one question and it was <unk>.
Operator: I'll follow up.
Operator: Yeah.
Operator: Our first question today comes from.
Meredith: And Meredith from Zacks. Please go ahead with your question.
Meredith: Thank you.
Operator: Yes.
Operator: Oh.
Marla Marin: I'm obviously very happy with the results. I'm wondering about when you upgrade a device, you know, and obviously, that's something that you're talking to customers about. When you upgrade, there is a little bit of downtime associated with the upgrade even after the machinery is installed on site because of the need to train the medical staff that will be using the device.
Operator: I am obviously very strong results.
Operator: Wondering about.
Speaker Change: Why do you upgrade a device you know and obviously, that's something that you're talking to customers.
Speaker Change: Customers about.
Speaker Change: When you upgrade.
Speaker Change: Is there a little bit of downtime associated with the upgrade even after the machineries installed on site.
medical staff: Because of the need to train the medical staff.
medical staff: That will be using the device.
Raymond C. Stachowiak: Yes, there is downtime. When the Gamma Knife is upgraded, and we've done a number of them recently, It typically is about 60 days of downtime to deinstall the Old Gammonite, install the new one, and go through the credentialing process and commissioning of the New Gammonite. So there are about 60 days, plus or minus, I'll say 15 to 30 days, on that 60-Day Time
Speaker Change: Yes, there is downtime.
Marla Marin: Okay, I got it. And here's my follow up.
medical staff: When a gamma knife is upgraded and we've done a number of them recently.
Speaker Change: It typically.
Speaker Change: <unk> is about 60 days are down.
The D: The D install the old Gammaknife installed the new one and go through the.
Speaker Change: Credentialing process.
Speaker Change: Commissioning of the new gamma knife.
D: There is about 60 days plus or minus I'll say 15 to 30 days.
Speaker Change: On that 60.
D: A day.
Speaker Change: <unk> downtime.
Raymond C. Stachowiak: So would it be fair to say, though, that with the Rhode Island facilities coming on board, the equipment is already in place, and the staff has already, you know, been working with the equipment. And so you're not anticipating any kind of downtime? Or is that not the right way to think about it?
Speaker Change: Okay got it.
Speaker Change: I guess my follow up.
Speaker Change: Would it be fair to say, though that with the Rhode Island facilities coming on board.
Speaker Change: Equipment is already in place.
Speaker Change: Does your staff.
Speaker Change: Has already been working with your equipment and so you're not anticipating.
Speaker Change: And kind of downtime or is that not the right way to think about it.
Raymond C. Stachowiak: Now, the correct way of thinking about it is that there is no downtime. They were treating patients on Tuesday, May 7th, the last day of their ownership of the cellars, and they are treating patients on Wednesday, May 8th, the first day of our ownership. And that revenue will hit our book. Unknown Attendee, Peter Gaccione, Robert Hiatt, Harry Long, and of doing an acquisition like this, you get an immediate bump in revenue and profitability from an acquisition.
Speaker Change: No the correct way of thinking about it is there is no downtime.
Seller: They were treating patients on Tuesday may seven the last day of ownership of the seller.
Seller: And they are treating patients on Wednesday may eight the first day of our ownership.
Speaker Change: And that revenue will hit our books in the second quarter, beginning with the patients that were treated last week Wednesday may eight and there they're on that's one of the benefits.
Speaker Change: Doing an acquisition like this you get an immediate bump in your revenue.
Speaker Change: And profitability from an acquisition.
Raymond C. Stachowiak: And I contrast that with the agreement we signed in Pueblo, Mexico; we're installing the equipment, and we expect to be treating our first patient in the next 60 days. But we signed that agreement almost two years ago. So signing the agreement and a joint venture like this in Pueblo, Mexico does take some time. And revenues don't start for a prolonged period of time, depending upon licensing and commissioning and the training involved and preparation of the facility itself.
Speaker Change: And I contrast that with.
Speaker Change: The agreement, we signed in platelet Mexico.
Speaker Change: We're installing the equipment and we expect to be treating our first patient in the next 60 days, but we signed that agreement almost two years ago.
Speaker Change: The signing of the agreement and a joint venture like this in Puebla, Mexico does take some time.
Speaker Change: And are the revenue doesn't start for a prolonged period of time, depending upon licensing and commissioning in the training involved in the preparation of the facility itself.
Marla Marin: Okay, thank you very much.
Speaker Change: Okay. Thank you very much.
Speaker Change: Mhm.
Operator: Once again, if you would like to ask a question, please press star and one. To withdraw your questions, you may press star and two. Again, that is star and then one to join the question. Ladies and gentlemen, if we do have, actually, if you would like to ask a question, please press star and one. To withdraw your question, you may press star and two or know that while we pause again for questions. And our next question comes from Aaron Granowitz, who is a private investor. Please go ahead with your question.
Speaker Change: Once again, if you would like to ask a question.
Speaker Change: Please press star and one.
Speaker Change: To withdraw your question you May press Star two.
Speaker Change: Again that is starting in one to join the question queue.
Speaker Change: Hello, Ladies and gentlemen, we do have actually.
Speaker Change: If you would like to ask a question Please press star and one.
Speaker Change #101: And what's your all your questions you May press star and two well know that while we pause again for questions.
Speaker Change: And our next question comes from Aaron Graduate from who is a private investor. Please go ahead with your question.
Aaron Granowitz: Hi Ray and team, Solid Quarter guys. I have a question regarding the two new growth opportunities in Rhode Island. Can you speak to the length of time it takes to get the certificate of need? And in the meantime, are you able to work on site acquisition for the new proton beam center and also the new radiation center? And so if you can kind of walk us through what the time from now to construction time is and how that kind of looks.
Aaron Graduate: Hi, Ray and solid quarter, guys I have a question regarding your new growth opportunities in Rhode Island.
Aaron Graduate: Moving to the length of time it takes to get the certificate of need and in the meantime are you able to work on site acquisition for the new proton beam.
Aaron Graduate: And then also the new radiation center and so if you can kind of walk us through what is the time from now and constructed in time and how that kind of luck.
Aaron Graduate: Mhm.
Raymond C. Stachowiak: That's a very good question. Thank you for asking it. I'd like to clarify sometimes.
Speaker Change #102: That's a very good question and thank you for asking it.
Speaker Change #102: I would like to clarify sometimes I wanted to make sure everyone understands we've been pursuing tree opportunities in Rhode Island.
Raymond C. Stachowiak: I want to make sure everyone understands we've been pursuing three opportunities in Rhode Island, and the first one is the acquisition of these three radiation therapy centers. I don't want to get confused that the three opportunities are the three radiation therapy centers we just acquired. That's the first opportunity in Rhode Island for three radiation therapy centers. The second opportunity is to open a fourth radiation therapy center, which we would build from the ground up basically.
Speaker Change #104: And the first one is the acquisition of these three radiation therapy centers I don't want to get confused that the three opportunities are to three radiation therapy centers, we just acquired.
Speaker Change #103: The first opportunity in Rhode Island, three radiation therapy centers.
Speaker Change #105: The second opportunity is to open a fourth radiation therapy center, which we will build from the ground up basically.
Raymond C. Stachowiak: And we're not really interested in owning the facility. We'd probably lease the facility from a REIT. But we'd own and operate the radiation therapy center in that facility. That facility is targeted to go into Bristol, Rhode Island, which is on the east side of Rhode Island, and I'll say in an underserved community. We expect to have a hearing on the CON that's required sometime in the very near future, and I'm sure that will be well received, I'll just say.
Speaker Change #106: And we're not really interested in owning the facility would probably leased the facility from a REIT.
Speaker Change #109: We had all of them own and operate the radiation therapy center in that facility.
I: This facility is targeted to go into Bristol, Rhode Island, which is on the east side of Rhode Island, and I'll stay in an underserved community.
Speaker Change #106: We expect to have a hearing.
Speaker Change #107: On the C O N. That's required some time in the very near future and will I'm sure that.
Speaker Change #107: We will be well received I will just say.
Raymond C. Stachowiak: The third opportunity and to comment on the Bristol facility. It'll take some time to build that facility, install the equipment, you know. I'm going to say that the revenue on that and the first patient being treated at that facility could be about 12 plus months out. So, let me just set expectations along the line for that opportunity.
Speaker Change #107: The third opportunity.
Speaker Change #107: And to comment on our Bristol facility.
Speaker Change #110: It'll take some time to build that facility install the equipment.
Speaker Change #117: I'm going to say that the revenue on that in the first patient being treated at that facility could be about 12 plus months out.
Speaker Change #113: So let me just set expectations along the line on that opportunity the third and final opportunity has even a longer timeline associated with it.
Raymond C. Stachowiak: The third and final opportunity has even a longer timeline associated with it. We have applied for CON to operate a proton beam radiation therapy center that we would own and operate in Rhode Island. We have a targeted site for that center that we're not yet ready to disclose.
Speaker Change #118: We have applied for C O N to operate a proton beam radiation therapy center that we would own and operate in Rhode Island.
Speaker Change #110: We have a targeted.
Speaker Change #114: Site for that center.
Speaker Change #112: We're not yet ready to disclose.
Speaker Change #112:
Raymond C. Stachowiak: There is a CON, but that hearing has not yet been scheduled. So we're awaiting the scheduling of that hearing by the Rhode Island Department of Health for that CON, for the proton beam. The timeline for the proton beam is even longer. I would estimate that once we have a CON in place, it could take two, sometimes up to three years before the first patient is treated, even if we're fairly aggressive in site acquisition and construction design.
Speaker Change #121: There is a C O N that hearing has not yet been scheduled.
Speaker Change #119: So we're awaiting.
Speaker Change #115: The scheduling of that hearing by the Rhode Island Department of health for that C. O N. So the proton beam.
Speaker Change #115: Yes.
Speaker Change #122: The timelines for the proton beam is even longer.
Speaker Change #122: Would estimate that.
Speaker Change #122:
Speaker Change #116: Once we have our C O N in place it could take two sometimes up to three years before the first patient is treated even if were fairly aggressive.
Speaker Change #132: And the site acquisition construction design.
Raymond C. Stachowiak: The vault is a very complex construction project, so that timeline is even further out. But, you know, it's well worth being patient. We've had an excellent experience in our pro-time being relationship that we currently have in Orlando, Florida. And all good things take time.
Speaker Change #123: The vault is a very complex construction project.
Speaker Change #120: So that timeline is even further out.
Speaker Change #120: But you know.
Speaker Change #124: It's well worth being patient we've been we've had a excellent experience in our proton beam relationship that we currently have in Orlando, Florida.
Speaker Change #124: And are all good things take time.
Aaron Granowitz: Okay, that's some helpful color. As a follow-up regarding the new Puebla, Mexico location, I believe in the press release you guys guided that the first patient will be treated in the next 60 days. Can you help understand, you know, is that longer than previously expected in terms of the startup and also in terms of a ramp-up of such a facility? If you can give an idea of how long it takes to get into more or less full capacity as time goes on? Thank you.
Speaker Change #124: Okay about that.
Speaker Change #133: Helpful color as a follow up regarding the new <unk>, Mexico location I believe in the past really you guys guided the first patient will be treated as the next few days.
Speaker Change #120: Is is can you help understand it.
Speaker Change #120: Longer than previously expected.
Speaker Change #131: In terms of the start up and also in terms of a ramp up of such a facility. If you can give an idea.
Speaker Change #125: Long does it take to get into more or less full capacity as time goes on.
Speaker Change #125: Yeah.
Raymond C. Stachowiak: We are disappointed about the timeline for the startup at Pueblo, and I gotta say that for the most part, it was for things that we do not control. The regulatory environment, the licensing, the credentialing, the construction, as much as our team has tried to expedite the initiation of services at that center, it just hasn't gotten done. And for that, I'm a bit disappointed, quite frankly. I have a question. I want to understand when you talked about full capacity, what you're what you're meaning by that full capacity concept, Aaron.
unknown: We are disappointed about the timeline for the start up that plagued willa.
Speaker Change #129: And I got to say that for the most part it was for things that we do not control.
Speaker Change #126: The regulatory environment.
Speaker Change #126: The licensing that credentialing the construction.
Speaker Change #127: As much as our team has tried to expedite the initiation of services at that center. It just hasnt gotten done.
Speaker Change #127: And for that.
Speaker Change #128: I'm a bit disappointed quite frankly.
Speaker Change #128:
Speaker Change #128: I have a I wanted to understand when you talked about full capacity, what you're what you're meaning by that full capacity concept Aaron.
Aaron Granowitz: Well, I mean, if we use 100% of, you know, the machine running nonstop, full capacity, you know, there's the first patient treated. So what's the kind of arc and timeline for the first patient treated? And maybe it's only 10% of, you know, the capacity of the machine as time goes along? How can we kind of view the arc of that?
Aaron Graduate: Well I mean, if we use the 100 per ton.
Speaker Change #138: You know that machine running nonstop full capacity there.
Speaker Change #139: First patient treated so hot and what's kind of the arc and timeline of birth piece and treated and maybe it's 10% of.
Speaker Change #134: The capacity of the machine birds as time goes along how can we kind of view the arc of that.
Raymond C. Stachowiak: I would expect the ramp-up to be gradual, but it should have continuous ramping up. Most of the time, the equipment never reaches full capacity, and you don't need full capacity to be profitable. You know, we want it to operate at full capacity, obviously, because our cost structure in that situation is very high. And the more utilization, the better the bottom line. Almost everything falls to the bottom, so we strive to increase that capacity all the time. Okay.
Speaker Change #136: I would expect the ramp up due to gradual be gradual but you have continuous ramping up.
Aaron Granowitz: Okay, that's helpful. Thank you, guys.
Speaker Change #136:
Speaker Change #135: Most of the time the equipment.
Speaker Change #135: Never reaches full capacity and you don't need full capacity too.
Speaker Change #135:
Speaker Change #130: To be profitable.
Speaker Change #130: And.
Speaker Change #137: You know what we want it to operate at full capacity, obviously, because our cost structure in that situation very fixed.
Speaker Change #137: And the more utilization.
Speaker Change #137: The better the bottom line almost everything falls down to the bottom. So we strive to increase that capacity all the time.
Speaker Change #144: Okay. That's helpful. Thank you guys.
Speaker Change #137: Uh huh.
Operator: And ladies and gentlemen, at this time, and with no additional questions, I'd like to turn the floor back over to Ray Stachowiak for closing comments.
Speaker Change #141: And ladies and gentlemen at this time in showing no additional questions I'd like to turn the floor back over to <unk> for closing comments.
Raymond C. Stachowiak: Thank you, Jamie. And thank you to everyone who joined us today. We're clearly excited about our future and believe that AMS is at a critical inflection point, especially as we nearly doubled our projected revenue revenue backlog year over year. We look forward to updating you on our continued progress. And if you have any questions in the meantime... Please do not hesitate to contact us directly. Thank you for your continued interest in American Shared Hospital Services.
Jamie: Thank you Jamie and thank you, everyone, who joined us today.
Speaker Change #140: We're clearly excited about our future and believe that am mass.
Speaker Change #143: A critical inflection point.
Jamie: Especially as we nearly doubled our projected revenue and the revenue backlog year over year.
Speaker Change #142: We look forward to updating you on our continued progress.
Speaker Change #148: And if you have any questions in the meantime, please do not hesitate to contact us directly.
Speaker Change #147: Thank you for your continued interest in American shared hospital services.
Speaker Change #147: Great day.
Operator: Ladies and gentlemen, with that, we'll conclude today's conference call and presentation, and thank you for joining us. You may now disconnect your line.
Speaker Change #146: Ladies and gentlemen, with that we'll conclude today's conference call and presentation. Thank you for joining you may now disconnect your lines.