Q1 2025 Sensus Healthcare Inc Earnings Call - Q&A
Good day and welcome to the Sensus healthcare first quarter 2025 financial results Conference call all participants will be in listen only mode.
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Patel: Please note. This event is being recorded I would now like to turn the conference over to <unk> Patel with Alliance Advisors. Please go ahead.
Speaker Change: Good afternoon. This is tough to tell what's alliance advisors I R. Thank you all for joining today's call to discuss census, healthcare's first quarter 2025 financial results. Joining me from Sensus are Joseph Dano, Chief Chairman and Chief Executive Officer, Michael Sir Donald President and General Counsel and Javier and Paul.
Speaker Change: Our 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. All statements other than historical facts that address activities Sensus healthcare assumes plans expects believes intends or anticipates and other similar.
Patel: Expressions that will should or may occur in the future are forward looking statements.
Patel: The forward looking statements are management's beliefs based upon currently available information as of the date of this conference call Nathan 18th 2025.
Patel: Sensus healthcare 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, 10-Q and other SEC filings.
Patel: During today's call references will be made to certain non-GAAP financial measures Sensus believes these measures provide useful information for investors yet they should not be considered as a substitute for GAAP, nor should they be viewed as a substitute for operating results determined in accordance with GAAP, a reconciliation of non-GAAP to GAAP.
Patel: Results is included in today's financial results news release.
Speaker Change: With that I'd like to turn the call over to Joseph Dano Joe.
Speaker Change: Thank you Terry.
Joseph Dano: Good afternoon, everyone and thank you for joining us today during the first quarter, we invested several important sales and marketing research and development initiatives that we expect will benefit our business for the remainder of the year and beyond.
Joseph Dano: Of particular note, we significantly expanded awareness of our fair deal agreement program and strengthened our brand visibility with a strong presence at several major industry events and through targeted marketing activities Rev.
Joseph Dano: Revenues for the first quarter came in at $8 3 million and during the quarter. We shipped 21 SRT systems, bringing our total installed base to over 880 systems.
Joseph Dano: This does not include 11 third deal agreement.
Joseph Dano: Initiated with six going live in Q1.
Joseph Dano: We're on track to surpass 900 systems by the end of the second quarter and expect to reach the milestone of 1000 units under direct sale within the next 12 months.
Joseph Dano: Although first quarter profitability was impacted by elevated marketing and one time legal expenses.
Joseph Dano: The timing of these investments was warranted as they are fundamental to accelerating our trajectory of profitable growth.
Joseph Dano: We expect to return to profitability in each of the next three quarters and could be profitable for the full year.
Joseph Dano: Our marketing activities were very robust last quarter with a strong presence at key industry events, including the winter clinical Maui Derm and the American Academy of Dermatology annual meeting.
Joseph Dano: Our dinner event at the AAD featured Olympic Gold medalist Kittila deci attracted hundreds of attendees, which exceeded our expectations and the maximum capacity of the room.
Joseph Dano: Yet that response highlights a significant interest in Iga SRT and enthusiasm from prospective customers in our various SRT product acquisition programs.
Joseph Dano: Which support our decision to order more units by year end to satisfy anticipated demand.
Joseph Dano: In addition to the big three derm conferences, we participated in several smaller meetings nationwide. These.
Joseph Dano: These conferences provide a more intimate opportunity to speak with perspective customers and expand our reach and have yielded a strong pipeline of new F. B a opportunities.
Joseph Dano: Building on recent successes, we intend to continue with this grassroots sales channel throughout the year.
Joseph Dano: Not only are we spreading the word about FCA, but we also secured multiple new fair deal agreements at these conferences.
Joseph Dano: As you know the SBA provide substantial long term financial and strategic advantages to sentences the centers, notably enhancing the visibility and predictability of our revenue streams.
Joseph Dano: We continue to expect these agreements will begin to contribute significantly to our revenue in the second half of the year.
Joseph Dano: This program is still wrote relatively new we're encouraged by a 65% increase in patient treatments from our fair deal agreement installations, when comparing first quarter volumes with the fourth quarter.
Joseph Dano: This underscores our belief that patient utilization ultimately drives long term profitability and recurring revenue and that this program is a winner.
Joseph Dano: With that overview overview I'll turn the call over to Michael for additional strategic and operational insights Michael.
Speaker Change: Thanks, Joe our fair deal agreement initiatives continues to prove highly successful it provides a compelling competitive differentiation and is gaining momentum.
Joseph Dano: F D a arrangement to deliver substantial value by aligning our financial interests directly with patient volume and practice utilization.
Joseph Dano: This strengthens our customer relationships as well as our long term financial outlook through predictable and recurring revenue streams.
Joseph Dano: The rapid adoption of F D E and growing enthusiasm among large dermatology groups in particular highlight our unique value proposition broad adoption potential and unmatched clinical record.
Joseph Dano: Each E F D. A installation typically requires four to five months from signing the agreement to initial revenue generation to centers due to the nature of patient traffic and insurance payment cycles as.
Joseph Dano: As these contracts begin to mature we anticipate significant revenue contributions starting in the second half of 2025.
Joseph Dano: We also anticipate signing three to five additional multi site FTA customers in 2025.
Joseph Dano: Beginning this quarter, we are providing specific marketing support and data insights to FTA customers to help them build this part of their practice.
Joseph Dano: We're starting with members of large multi site p/e backed organizations, which not only helps that individual practice, but it also shows the power and potential of the FBA program to the corporate parent and to other owned dermatology practices.
Joseph Dano: In parallel our international strategy is progressing we recently attended the European Society of therapeutic radiation oncology or Astro show in Vienna, which was attended by the most prominent doctors and largest radiation therapy companies in the world.
Joseph Dano: We will also soon be exhibiting at the Australian Academy of Dermatology annual meeting, where they have the highest rate of skin cancer of any country in the world.
Joseph Dano: Additionally, our product innovation pipeline continues to advance, particularly with enhancements to our transdermal infusion system or T. G I.
Joseph Dano: We resubmitted our five 10-K application in early March and with a six to nine month FDA review cycle, we are expecting a determination before the end of the year.
Joseph Dano: We will be fine tuning our revenue model and go to market strategy for TDI as it gets closer to market launch.
Joseph Dano: We are optimistic about the commercial prospects for TDI alongside other enhancements in our technology pipeline.
Joseph Dano: In summary, we are strategically executing our plans building sustainable long term growth through FBA installations, expanding our international presence and pursuing technological and product innovation.
Joseph Dano: Now Javier will provide additional detail on our Q1 financial performance Javier.
Javier: Thanks, Michael.
Joseph Dano: And good afternoon, everyone.
Joseph Dano: Revenue for the first quarter up with US on 25 was $8 3 million, which was down from $10 7 million in Q1 after dolphin I'm twenty-four primarily due to lower unit sales to our largest customer.
Joseph Dano: We shipped 21, SRT system last quarter, including 15 through a large customer and one internationally.
We expect Q2 revenue to be higher than Q1 revenue.
And we also expect that revenue in the second half of the year will be higher than the first half of the year.
Our gross profit for Q1 of 2025, 141, 4 million, resulting in a gross margin of 52%, reflecting the lower sales and higher costs associated with services provided.
Operating expenses were significantly higher versus the prior year, reflecting our strategy strategic growth initiatives.
General and administrative expenses rose to $2 2 million from $1 6 million a year ago due to professional fees and compensation some expenses more unique to the first quarter and we do not anticipate similar levels in subsequent quarters, we expect G&A expenses to be about $1 8 million per quarter.
Joseph Dano: For the rest of the year again, largely in line with last year's levels.
Selling and marketing expenses increased to $2 2 million up from $1 3 million a year ago, driven by our participation in major industry events.
We expect sales and marketing expenses to be up about one 3 million per quarter going forward, which is largely in line with our quarterly spend last year.
Research and development expenses increased to $2 six from <unk> 9 million in the prior year period, reflecting our continued investment in production innovation is specifically I work I've been DDI system.
The port preferable reimbursement policies and ongoing work on product enhancements.
Some of those expenses were one time, while all does reflect a heightened emphasis on R&D.
For the balance of the year, whereas R&D expenses to be about one 5 million per quarter, which is about a million per quarter during 2024.
We reported a net loss for the first quarter of 2025, or $2 6 million or a loss of 16 cents per share compared to net income of 2.3 or 14 cents per diluted share in the prior year quarter.
Joseph Dano: Adjusted EBITDA was negative $2 5 million for Q1 of 2025, compared with a positive 3 million a year ago, reflecting higher operating expenses on lower revenue.
Joseph Dano: Please see the table in the news release, we issuer earlier today for a reconciliation of GAAP to non-GAAP financial measures.
Joseph Dano: Our balance sheet remained strong as we ended the quarter with $19 1 million in cash no debt and inventory maintained at $9 9 million.
Joseph Dano: This inventory level positions us to meet anticipated demand in upcoming quarters for both direct and four placements on the deferred deal agreement.
Joseph Dano: I will now turn it back to Joe for closing remarks, Thank you Javier and Michael for those updates to sum things up before we take your questions. The first quarter was strategically significant marked by important investments that position us for profitable growth.
Our underlying metrics business metrics and strategic momentum give us strong confidence for the remainder of 2025 and beyond.
We anticipate revenue growth and profitability as the year progresses with profitability for the full year.
We appreciate your continued support and look forward to providing further updates throughout the year operator, we're ready to take questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad, if you're using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you'd like to withdraw. Your question. Please press Star then two at this time.
We will pause momentarily to assemble our roster.
And your first question comes from <unk> Chen with H C. Wainwright. Please go ahead.
Oh, Thank you for taking my questions. My first question is the first quarter of 'twenty five appears to be a weaker compared to the first quarter of 24 do you think the rest of the quarters of 25 could be a stronger R. R.
Okay.
The toy so courts.
No we're expecting each subsequent quarter to be profitable.
So we're we're excited about are above what the opportunity provides us and that's based on revenues that were starting to see coming from the fair deal agreement as well as the outright sale of products.
And if there's any part of the first quarter revenue up based on the third year agreement.
Yes.
But not not large enough.
Joseph Dano: It's all right because you made the comment that we expect.
Contribution to start in the second half.
That's correct, but as we've been stating for the past six to 12 months is that we were going to start seeing some significant revenues in the second half of 2025. So we are on track.
Joseph Dano: Got it.
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<unk> existing U S tariff policy affecting the company's business.
So far we have not witnessed any tariffs repercussions on any of our businesses.
Okay, great. Thank you.
Thank you Lee.
Joseph Dano: Yeah.
Yeah.
And your next question comes from Jason Witness with Roth Capital. Please go ahead.
Jason Witness: Hi, Thank you. Thank you taking the questions.
Just a couple on the fair deal agreement.
You mentioned four to five I think you were saying four to five months to get fully up to speed on these installed and do you have a sense of what kind of volumes.
You may anticipate once once they reach full capacity.
Jason Witness: Hey, Jason This is Michael so the four to five month comment wasn't in regards to installed it was in regards to once and install excuse me I should rephrase that once an agreement is signed any agreement at the time it gets installed and we actually received money for many patients. It's four to five months from that finding of the cause of that.
Speaker Change: Apologize right, Okay, yeah exactly.
Do you have a sense or do you.
Do you anticipate do you think that the ground running or do you.
Is there a buildup over here in terms of volumes do you have a general sense of how that might go.
Yeah everything is key to the patient volume once it's installed so the cool thing is here when we're doing the capital equipment over the last 15 years nothing changes prior to installation on the Saturday Yoga mats. So it's something that we've been doing for 15 years straight and we have an expertise that and then once it's implemented the only difference is that.
From a billing standpoint, we get a piece of the pie from every patient that comes through so as each of these sites start ramping up the marketing and I think you've heard that I mentioned that we're also helping with that marketing as well from a general standpoint.
Once that patient volume gears up that's when you're going to see tremendous revenue coming through and we've stated that in the second half we believe that it's going to be a much more significant.
Got it and also I think you mentioned that Youre getting some traction with smaller players I think initially I think.
You've given us something like a three D potential unit opportunity, which I think was based primarily on larger PE backed centers. So does this increase the pie in your opinion based on what you've been saying I mean, this last quarter in terms of.
Have you been talking to you and who is interested in FTA agreements.
Yeah, absolutely the p/e backed groups the larger ones. The roll ups are the ones that were really is the big fish were obviously targeting knows.
It's a slower process as far as getting those groups to sign and much like a hospital sale, but once they sign on it's like a huge hockey stick of course to your point. So we like I said in the.
And in our comments here, we believe we can sign three to five more of those type of groups by the end of the year because those kind of those negotiations are ongoing.
I can't I don't know Andrew.
That's fair, but do you can you comment on roughly kind of a range of sizes in terms of how many machines. They maybe I shouldn't sitting out F D A's with.
Well each of these sites have 150 plus.
Speaker Change: Officers nationwide each of them or some some more of course, so from there it's really unlimited as far as how many they want to start with I think that yeah.
Sky's the limit Jason let me quite been here I think one of the key things that we mentioned is 65% increase in the number of treatments from Q4 to Q1. So that's that's the focus that we're that we're on we need to drive those treatments because that's what drives the revenue.
The installations are great and I think that as we work with these larger groups, we're naturally going to be putting the products into their their biggest areas first it's not going to be the weakest areas because they're interested in making the money as well and since we're splitting that revenue 50 50, we're both targeting the same and targeting in <unk>.
Speaker Change: Having the same objective, but when you look at the first quarter, which are the fourth quarter, where we had minimal installation for the second quarter, where we're starting to install more to have a 65% increase you can imagine where this could possibly go once we start accelerating are the installations the patient volumes that.
Each place and I think that only starts multiplying and it allows us to possibly hit a hockey stick much sooner than the than not.
Got it I appreciate the comments I'll jump back in queue.
Thank you.
And your next question comes from Jeremy Pearlman with Maxim Group. Please go ahead.
Thank you for taking the question. Good evening, just a couple more questions on the F. D. A units would you do you have a car in a number for the current install base and is there a target goal by the end of 2025.
Or that's not something we're yeah, we're not providing that kind of guidance I think at this meeting are this call right now we'd probably provided the most guidance based on the facts and the projections that we can see from the existing installations. So you know I think that we're moving along fairly aggressively here and I think it's going to be look.
And good for us.
Okay understood and then also you did mention that.
To reach mature utilization within the clinic and Youre going to help those clinics get there. They used it you mentioned some marketing maybe just could you talk a little bit of what else you plan on doing to help us clinics beach that mature utilization rate.
Well we have.
A database of analytics that we're able to provide and work with these accounts to identify those key places and then to identify the number of patients in each one of those regions and we can access that was.
Those patients through aggressive.
Marketing digital marketing and social media. So that's that's the tack that we're taking and that's what's been working for us up until now and I think it's going to accelerate even more.
Okay understood and then just the sales and marketing expense, how you expected the rest of the quarter that includes the marketing for the.
The targeted patients for these F D a.
Units correct, yes, correct.
Okay, and then and then just one last question switching over to you know you said you mean you submitted.
Resubmitted the five 10-K application for the T D. I at the end of March and expect hopefully a positive outcome by the end of 2025, and just playing Devil's advocate is there anything any U S. EPA might come back with some feedback questions anything you could think of and how you expect to handle that.
I can tell you that right now we've been very pleased with the fact that as a follow up since our our submission to the FDA. We have not had any follow up questions from the S. P. A and so we're very very comfortable I think so where are they with the submission that we have so things are moving along slowly.
Speaker Change: If they were going to have any questions that you would've gotten to us by now and so far there are not so I think things are on track Yeah. We submitted March 7th to be accurate and then nothing has to come back like just so far they usually get back to you quicker than two and a half months. So yes you.
Usually it's a few weeks yeah.
Okay, great to hear thank you so much for taking the questions and I'll rejoin the queue.
Thanks, Jeremy.
Yeah.
Yeah.
Again, if you have a question. Please press Star then one.
Your next question comes from Ben Hayner with Lake Street Capital markets. Please go ahead.
Good afternoon, gentlemen, thanks for taking the questions and congrats on the 65% growth in treatments for the FAA counts.
Thank you Ben.
I was wondering on that 65% growth figure.
If you could share maybe.
How much of that growth sequentially was sort of same store sales growth or you know is there any sort of cohort analysis he could.
Sure that kind of helps us understand it better all these things sort of ramp up.
Yeah, Ben this is Avi, Arizona, so basically like 60% out of the 65 is basically organic right installations are where you don't produce any before from bird to walk their production in Q1. It is in and about five percentage there. The new go lives that we had with Macquarie.
Okay got it and then once they go live if you could kind of refresh my memory.
How long.
After the treatments happen do you guys received.
The the money.
Recollections yeah.
45 days or two months or something like that yeah. It's between 45 and 60 days it really depends.
Okay got it and then.
And then just thinking about these smaller conferences are maybe more intimate.
You know what.
What's the sort of profile of folks that are attending these I mean, it sounds like maybe you can get closer to some of these potential multi site.
Agreement false.
Larger P folks, but is there also a fairly large opportunity from maybe the smaller practices the mom and pops.
These sorts of those or what's the right way to think about it yeah. Yeah. I'll give you. An example, I love analogies. So when you go to these large and you were at the H D. Smith I over there and when you go to these large conferences you see all the big wave because right. The a D. A elite if you will when you go to like a smaller states show for instance, so Oklahoma.
State Dermatology show you need people that don't necessarily want to have the limelight right. They don't come to the a D. But what I can tell you is that we have a practice. There for instance that does 60 patients a month on their SRT and they've been doing it for four years because they are one of the only dermatologists in the area.
And they have a bunch of farmers in that area rural that cant access they don't have as much access to care that someone is in Miami or New York or L. A and so that is literally a perfect place to put an FCA you're talking about 60 patients in one spot and like Joe had said and I've said in the past I'd much rather have 10.
Agreements out there with 100 patients in each agreement and 110 100 agreements out there with 10 patients in each.
Just if you don't find more profitable and lucrative if that makes sense.
Yeah that does makes sense and then I don't know what kind of following up on that.
You know it.
It kind of flows into the whole multi site or the the multistate agreements I mean, if they if every one of these larger practice groups that you're talking to has 150.
Sites are more.
Oh, what do you see in terms of it.
Do you deploy 30 units due to deploy 50 units of 10 units and everyone. Just tries to where it kind of refers into the the practices with where the units exist or how might that work, what's the right way to think about that.
I think that you know the strategy that we're seeing develop so far with each one of the of the larger groups as they have already identified anywhere between 10 and 20 practices that they want to have a delivery and installation, but usually the biggest practices that are going to have or generate the highest volumes.
And then they'll they'll start filling in the blanks from there and so are there theyre very slow on that process, but theyre very calculated okay. So.
It's.
They are very determined to get these units installed but it's a it's a it's a process that we have to go through we're very comfortable with the process of of delivery and installation and training and startup.
But they have to be a whole lot more calculated in a lot more deliberate and a lot of those things. So we work with the process there are a little different in each one.
Speaker Change: But there once they get going I think.
You can imagine this if we have five or 10 in these practices installed in their pumping out.
10, 15, 2030 patients a month they start seeing the revenue coming in that's when they'll start accelerating the installations even more.
Speaker Change: Okay that makes sense and then lastly for me you know.
On those you know 10, 15 20, whatever installation study that each of them might have do those tend to match up with the the sort of you know patient database or the data that you have in terms of where the treatment volumes might be or do they choose different ones then.
Do you guys might have chosen in pneumonia.
They match up very very well, even their own thoughts of what they think is a high volume area. We can show them the analytics that proves them right and so the confidence level in the in the data that we're able to provide them is really really good for them as well as it is for us and so that's the best of all worlds and those are the.
Units that usually get installed first and I think that that's going to bode well for future credibility as we start directing them to some other areas, where we can attract even more patients because in those areas, where maybe very or they are not as busy if we show them that there's there's many patients has been very busy areas theyre just not attracting those patients.
And we think that SRT is going to be able to bring those patients into those practices, they're going to be more than more than willing to put those units in there to to attract more business for sure.
Okay that makes a lot of sense excellent well. Thanks for taking the question guys and Oh I'll leave it there.
Speaker Change: Thanks, Matt.
Speaker Change: Okay.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to Joe Sardana for any closing remarks.
Okay. Thanks for all the question is as we wrap up today's call I want to thank all of you for your continued interest in sensus healthcare, while the first quarter reflected various seasonal event driven and opportunistic headwinds we are optimistic about the trajectory for the remainder of the year, particularly as our FDA agree.
To begin to contribute to revenue and we returned to profitability in the quarters ahead. I'd also like to recognize that may is skin cancer awareness month, an important reminder of why we do what we do every year more people are diagnosed with skin cancer than all other cancers combined at <unk>.
We remain committed to delivering safe effective and patient friendly solutions that help dermatologists treat skin cancer, noninvasively and with confidence.
Thank you again, and we look forward to updating you on our progress in about three months operator.
The.
<unk> has now concluded. Thank you for attending today's presentation you may now disconnect.
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