________________________
ý | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
¨ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 |
California | 94-2918118 | ||||
(State or other jurisdiction of | |||||
incorporation or organization) | (IRS Employer Identification No.) |
Two Embarcadero Center, Suite 410, San Francisco, California | |||||
(Address of | 94111 (Zip |
code)
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
American Shared Hospital Services Common Stock, No Par Value | AMS | NYSE AMERICAN |
(unaudited) | ||||||||
ASSETS | March 31, 2019 | December 31, 2018 | ||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 2,049,000 | $ | 1,442,000 | ||||
Restricted cash | 350,000 | 350,000 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $100,000 at March 31, 2019 and $100,000 at December 31, 2018 | 5,918,000 | 5,502,000 | ||||||
Other receivables insurance proceeds | - | 1,137,000 | ||||||
Other receivables | 300,000 | 239,000 | ||||||
Prepaid expenses and other current assets | 1,021,000 | 1,276,000 | ||||||
Total current assets | 9,638,000 | 9,946,000 | ||||||
Property and equipment: | ||||||||
Medical equipment and facilities | 90,214,000 | 94,031,000 | ||||||
Office equipment | 573,000 | 589,000 | ||||||
Deposits and construction in progress | 4,276,000 | 6,082,000 | ||||||
95,063,000 | 100,702,000 | |||||||
Accumulated depreciation and amortization | (49,998,000 | ) | (54,008,000 | ) | ||||
Net property and equipment | 45,065,000 | 46,694,000 | ||||||
Right of use assets | 1,300,000 | - | ||||||
Other assets | 854,000 | 862,000 | ||||||
Total assets | $ | 56,857,000 | $ | 57,502,000 |
LIABILITIES AND | (unaudited) | |||||||
SHAREHOLDERS' EQUITY | March 31, 2019 | December 31, 2018 | ||||||
Current liabilities: | ||||||||
Accounts payable | $ | 446,000 | $ | 435,000 | ||||
Employee compensation and benefits | 246,000 | 207,000 | ||||||
Other accrued liabilities | 1,343,000 | 1,329,000 | ||||||
Other accrued liabilities insurance payable | - | 977,000 | ||||||
Current portion of lease liabilities | 262,000 | - | ||||||
Current portion of long-term debt | 2,044,000 | 2,119,000 | ||||||
Current portion of obligations under capital leases | 4,446,000 | 4,407,000 | ||||||
Total current liabilities | 8,787,000 | 9,474,000 | ||||||
Long-term lease liabilities, less current portion | 1,038,000 | - | ||||||
Long-term debt, less current portion | 2,893,000 | 3,332,000 | ||||||
Long-term capital leases, less current portion | 9,223,000 | 10,308,000 | ||||||
Deferred revenue, less current portion | 355,000 | 382,000 | ||||||
Deferred income taxes | 3,082,000 | 2,958,000 | ||||||
Shareholders' equity: | ||||||||
Common stock, no par value (10,000,000 authorized; 5,714,000 shares issued and outstanding at March 31, 2019 and at December 31, 2018) | 10,711,000 | 10,711,000 | ||||||
Additional paid-in capital | 6,550,000 | 6,495,000 | ||||||
Retained earnings | 8,166,000 | 7,896,000 | ||||||
Total equity-American Shared Hospital Services | 25,427,000 | 25,102,000 | ||||||
Non-controlling interest in subsidiary | 6,052,000 | 5,946,000 | ||||||
Total shareholders' equity | 31,479,000 | 31,048,000 | ||||||
Total liabilities and shareholders' equity | $ | 56,857,000 | $ | 57,502,000 |
ASSETS | March 31, 2020 | December 31, 2019 | ||||||||||||
Current assets: | ||||||||||||||
Cash and cash equivalents | $ | 2,673,000 | $ | 1,429,000 | ||||||||||
Restricted cash | 350,000 | 350,000 | ||||||||||||
Accounts receivable, net of allowance for doubtful accounts of $100,000 at March 31, 2020 and $100,000 at December 31, 2019 | 5,988,000 | 6,894,000 | ||||||||||||
Other receivables | 265,000 | 169,000 | ||||||||||||
Prepaid expenses and other current assets | 1,362,000 | 1,900,000 | ||||||||||||
Total current assets | 10,638,000 | 10,742,000 | ||||||||||||
Property and equipment: | ||||||||||||||
Medical equipment and facilities | 93,429,000 | 92,132,000 | ||||||||||||
Office equipment | 597,000 | 594,000 | ||||||||||||
Deposits and construction in progress | 4,256,000 | 4,215,000 | ||||||||||||
98,282,000 | 96,941,000 | |||||||||||||
Accumulated depreciation and amortization | (57,112,000) | (55,461,000) | ||||||||||||
Net property and equipment | 41,170,000 | 41,480,000 | ||||||||||||
Right of use assets | 972,000 | 1,106,000 | ||||||||||||
Other assets | 411,000 | 455,000 | ||||||||||||
Total assets | $ | 53,191,000 | $ | 53,783,000 | ||||||||||
LIABILITIES AND SHAREHOLDERS' EQUITY | March 31, 2020 | December 31, 2019 | ||||||||||||
Current liabilities: | ||||||||||||||
Accounts payable | $ | 851,000 | $ | 557,000 | ||||||||||
Employee compensation and benefits | 285,000 | 234,000 | ||||||||||||
Other accrued liabilities | 1,681,000 | 1,779,000 | ||||||||||||
Income taxes payable | 95,000 | 130,000 | ||||||||||||
Current portion of lease liabilities | 255,000 | 279,000 | ||||||||||||
Current portion of long-term debt | 1,451,000 | 1,526,000 | ||||||||||||
Current portion of finance leases | 3,211,000 | 3,709,000 | ||||||||||||
Total current liabilities | 7,829,000 | 8,214,000 | ||||||||||||
Long-term lease liabilities, less current portion | 717,000 | 827,000 | ||||||||||||
Long-term debt, less current portion | 2,923,000 | 1,954,000 | ||||||||||||
Long-term finance leases, less current portion | 7,499,000 | 8,177,000 | ||||||||||||
Deferred revenue, less current portion | 264,000 | 286,000 | ||||||||||||
Deferred income taxes | 2,486,000 | 2,514,000 | ||||||||||||
Shareholders' equity: | ||||||||||||||
Common stock, no par value (10,000,000 authorized; 5,688,000 and 5,817,000 shares issued and outstanding at March 31, 2020 and at December 31, 2019, respectively) | 10,753,000 | 10,753,000 | ||||||||||||
Additional paid-in capital | 6,781,000 | 6,725,000 | ||||||||||||
Retained earnings | 8,420,000 | 8,555,000 | ||||||||||||
Total equity-American Shared Hospital Services | 25,954,000 | 26,033,000 | ||||||||||||
Non-controlling interests in subsidiaries | 5,519,000 | 5,778,000 | ||||||||||||
Total shareholders' equity | 31,473,000 | 31,811,000 | ||||||||||||
Total liabilities and shareholders' equity | $ | 53,191,000 | $ | 53,783,000 |
1
Three Months ended March 31, | ||||||||
2019 | 2018 | |||||||
Rental income from medical services | $ | 5,321,000 | $ | 5,305,000 | ||||
Costs of revenue: | ||||||||
Maintenance and supplies | 668,000 | 626,000 | ||||||
Depreciation and amortization | 1,894,000 | 1,657,000 | ||||||
Other direct operating costs | 822,000 | 816,000 | ||||||
3,384,000 | 3,099,000 | |||||||
Gross Margin | 1,937,000 | 2,206,000 | ||||||
Selling and administrative expense | 1,055,000 | 986,000 | ||||||
Interest expense | 367,000 | 425,000 | ||||||
Operating income | 515,000 | 795,000 | ||||||
Interest and other income | 4,000 | 5,000 | ||||||
Income before income taxes | 519,000 | 800,000 | ||||||
Income tax expense | 124,000 | 150,000 | ||||||
Net income | 395,000 | 650,000 | ||||||
Less: Net income attributable to non-controlling interest | (125,000 | ) | (260,000 | ) | ||||
Net income attributable to American Shared Hospital Services | $ | 270,000 | $ | 390,000 | ||||
Net income per share: | ||||||||
Earnings per common share - basic | $ | 0.05 | $ | 0.07 | ||||
Earnings per common share - diluted | $ | 0.05 | $ | 0.07 |
Three Months ended March 31, | |||||||||||||||||||||||||||||
2020 | 2019 | ||||||||||||||||||||||||||||
Revenues | $ | 4,568,000 | $ | 5,321,000 | |||||||||||||||||||||||||
Costs of revenue: | |||||||||||||||||||||||||||||
Maintenance and supplies | 633,000 | 668,000 | |||||||||||||||||||||||||||
Depreciation and amortization | 1,647,000 | 1,894,000 | |||||||||||||||||||||||||||
Other direct operating costs | 894,000 | 822,000 | |||||||||||||||||||||||||||
3,174,000 | 3,384,000 | ||||||||||||||||||||||||||||
Gross Margin | 1,394,000 | 1,937,000 | |||||||||||||||||||||||||||
Selling and administrative expense | 1,211,000 | 1,055,000 | |||||||||||||||||||||||||||
Interest expense | 282,000 | 367,000 | |||||||||||||||||||||||||||
Operating (loss) income | (99,000) | 515,000 | |||||||||||||||||||||||||||
Interest and other income | 3,000 | 4,000 | |||||||||||||||||||||||||||
(Loss) income before income taxes | (96,000) | 519,000 | |||||||||||||||||||||||||||
Income tax (benefit) expense | (28,000) | 124,000 | |||||||||||||||||||||||||||
Net (loss) income | (68,000) | 395,000 | |||||||||||||||||||||||||||
Less: Net income attributable to non-controlling interest | (67,000) | (125,000) | |||||||||||||||||||||||||||
Net (loss) income attributable to American Shared Hospital Services | $ | (135,000) | $ | 270,000 | |||||||||||||||||||||||||
Net (loss) income per share: | |||||||||||||||||||||||||||||
(Loss) earnings per common share - basic | $ | (0.02) | $ | 0.05 | |||||||||||||||||||||||||
(Loss) earnings per common share - diluted | $ | (0.02) | $ | 0.05 | |||||||||||||||||||||||||
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2019 AND 2018 | ||||||||||||||||||||||||||||
Additional | Non-controlling | |||||||||||||||||||||||||||
Common | Common | Paid-in | Retained | Sub-Total | Interests in | |||||||||||||||||||||||
Shares | Stock | Capital | Earnings | ASHS | Subsidiaries | Total | ||||||||||||||||||||||
Balances at January 1, 2019 | 5,714,000 | $ | 10,711,000 | $ | 6,495,000 | $ | 7,896,000 | $ | 25,102,000 | $ | 5,946,000 | $ | 31,048,000 | |||||||||||||||
Stock-based compensation expense | - | - | 55,000 | - | 55,000 | - | 55,000 | |||||||||||||||||||||
Cash distributions to non-controlling interests | - | - | - | - | - | (19,000 | ) | (19,000 | ) | |||||||||||||||||||
Net income | - | - | - | 270,000 | 270,000 | 125,000 | 395,000 | |||||||||||||||||||||
Balances at March 31, 2019 | 5,714,000 | $ | 10,711,000 | $ | 6,550,000 | $ | 8,166,000 | $ | 25,427,000 | $ | 6,052,000 | $ | 31,479,000 | |||||||||||||||
Balances at January 1, 2018 | 5,710,000 | $ | 10,711,000 | $ | 6,272,000 | $ | 6,873,000 | $ | 23,856,000 | $ | 6,029,000 | $ | 29,885,000 | |||||||||||||||
Stock-based compensation expense | - | - | 55,000 | - | 55,000 | - | 55,000 | |||||||||||||||||||||
Net income | - | - | - | 390,000 | 390,000 | 260,000 | 650,000 | |||||||||||||||||||||
Balances at March 31, 2018 | 5,710,000 | $ | 10,711,000 | $ | 6,327,000 | $ | 7,263,000 | $ | 24,301,000 | $ | 6,289,000 | $ | 30,590,000 |
FOR THE THREE-MONTH PERIODS ENDED MARCH 31, 2020 AND 2019 | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Common Shares | Common Stock | Additional Paid-in Capital | Retained Earnings | Sub-Total ASHS | Non-controlling Interests in Subsidiaries | Total | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at January 1, 2019 | 5,714,000 | $ | 10,711,000 | $ | 6,495,000 | $ | 7,896,000 | $ | 25,102,000 | $ | 5,946,000 | $ | 31,048,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 55,000 | — | 55,000 | — | 55,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash distributions to non-controlling interests | — | — | — | — | — | (19,000) | (19,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net income | — | — | — | 270,000 | 270,000 | 125,000 | 395,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at March 31, 2019 | 5,714,000 | $ | 10,711,000 | $ | 6,550,000 | $ | 8,166,000 | $ | 25,427,000 | $ | 6,052,000 | $ | 31,479,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at January 1, 2020 | 5,817,000 | $ | 10,753,000 | $ | 6,725,000 | $ | 8,555,000 | $ | 26,033,000 | $ | 5,778,000 | $ | 31,811,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Stock-based compensation expense | — | — | 56,000 | — | 56,000 | — | 56,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Restricted common shares returned to plan | (129,000) | — | — | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Cash distributions to non-controlling interests | — | — | — | — | — | (326,000) | (326,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Net (loss) income | — | — | — | (135,000) | (135,000) | 67,000 | (68,000) | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Balances at March 31, 2020 | 5,688,000 | $ | 10,753,000 | $ | 6,781,000 | $ | 8,420,000 | $ | 25,954,000 | $ | 5,519,000 | $ | 31,473,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Three Months ended March 31, | ||||||||
2019 | 2018 | |||||||
Operating activities: | ||||||||
Net income | $ | 395,000 | $ | 650,000 | ||||
Adjustments to reconcile net income to net cash from operating activities: | ||||||||
Depreciation and amortization | 1,910,000 | 1,677,000 | ||||||
Deferred income tax | 124,000 | 118,000 | ||||||
Stock-based compensation expense | 55,000 | 55,000 | ||||||
Net accrued interest on lease financing | 2,000 | - | ||||||
Changes in operating assets and liabilities: | ||||||||
Receivables | (477,000 | ) | (575,000 | ) | ||||
Prepaid expenses and other assets | 254,000 | 143,000 | ||||||
Customer deposits/deferred revenue | (15,000 | ) | (40,000 | ) | ||||
Accounts payable and accrued liabilities | 52,000 | 589,000 | ||||||
Net cash from operating activities | 2,300,000 | 2,617,000 | ||||||
Investing activities: | ||||||||
Payment for purchase of property and equipment | (272,000 | ) | (497,000 | ) | ||||
Proceeds from insurance | 160,000 | - | ||||||
Net cash used in investing activities | (112,000 | ) | (497,000 | ) | ||||
Financing activities: | ||||||||
Principal payments on long-term debt | (516,000 | ) | (484,000 | ) | ||||
Principal payments on capital leases | (1,046,000 | ) | (1,037,000 | ) | ||||
Distributions to non-controlling interests | (19,000 | ) | - | |||||
Net cash used in financing activities | (1,581,000 | ) | (1,521,000 | ) | ||||
Net change in cash, cash equivalents, and restricted cash | 607,000 | 599,000 | ||||||
Cash, cash equivalents, and restricted cash at beginning of period | 1,792,000 | 2,502,000 | ||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 2,399,000 | $ | 3,101,000 | ||||
Supplemental cash flow disclosure: | ||||||||
Cash paid during the period for: | ||||||||
Interest | $ | 367,000 | $ | 425,000 | ||||
Income taxes | $ | 67,000 | $ | 12,000 | ||||
Schedule of non-cash investing and financing activities | ||||||||
Right of use assets and lease liabilities | $ | 1,300,000 | $ | - | ||||
Interest capitalized to property and equipment | $ | 27,000 | $ | 28,000 |
Three Months ended March 31, | |||||||||||||||||
2020 | 2019 | ||||||||||||||||
Operating activities: | |||||||||||||||||
Net (loss) income | $ | (68,000) | $ | 395,000 | |||||||||||||
Adjustments to reconcile net income to net cash from operating activities: | |||||||||||||||||
Depreciation and amortization | 1,676,000 | 1,910,000 | |||||||||||||||
Non cash lease expense | 67,000 | — | |||||||||||||||
Deferred income taxes | (28,000) | 124,000 | |||||||||||||||
Stock-based compensation expense | 56,000 | 55,000 | |||||||||||||||
Accrued interest on lease financing | — | 2,000 | |||||||||||||||
Interest expense associated with lease liabilities | 17,000 | — | |||||||||||||||
Changes in operating assets and liabilities: | |||||||||||||||||
Receivables | 848,000 | (477,000) | |||||||||||||||
Prepaid expenses and other assets | 557,000 | 254,000 | |||||||||||||||
Accounts payable, accrued liabilities and deferred revenue | 383,000 | 37,000 | |||||||||||||||
Income taxes payable | (35,000) | — | |||||||||||||||
Lease liability | (84,000) | — | |||||||||||||||
Net insurance proceeds receivable | — | 160,000 | |||||||||||||||
Net cash provided by operating activities | 3,389,000 | 2,460,000 | |||||||||||||||
Investing activities: | |||||||||||||||||
Payment for purchase of property and equipment | (195,000) | (272,000) | |||||||||||||||
Net cash used in investing activities | (195,000) | (272,000) | |||||||||||||||
Financing activities: | |||||||||||||||||
Principal payments on long-term debt | (554,000) | (516,000) | |||||||||||||||
Principal payments on finance leases | (912,000) | (1,046,000) | |||||||||||||||
Principal payments on short-term financing | (158,000) | — | |||||||||||||||
Distributions to non-controlling interests | (326,000) | (19,000) | |||||||||||||||
Net cash used in financing activities | (1,950,000) | (1,581,000) | |||||||||||||||
Net change in cash, cash equivalents, and restricted cash | 1,244,000 | 607,000 | |||||||||||||||
Cash, cash equivalents, and restricted cash at beginning of period | 1,779,000 | 1,792,000 | |||||||||||||||
Cash, cash equivalents, and restricted cash at end of period | $ | 3,023,000 | $ | 2,399,000 | |||||||||||||
Supplemental cash flow disclosure: | |||||||||||
Cash paid during the period for: | |||||||||||
Interest | $ | 282,000 | $ | 367,000 | |||||||
Income taxes paid | $ | 34,000 | $ | 67,000 | |||||||
Schedule of non-cash investing and financing activities | |||||||||||
Lease reassessment right of use assets and lease liabilities | $ | 67,000 | $ | — | |||||||
Right of use assets and lease liabilities | $ | — | $ | 1,300,000 | |||||||
Interest capitalized to property and equipment | $ | 32,000 | $ | 27,000 | |||||||
Acquisition of equipment with long-term debt financing | $ | 1,184,000 | $ | — |
The Company through its wholly-owned subsidiary, Orlando, provided proton beam radiation therapy (“PBRT”) and related equipment to a customer in the United States. The Company also directly provides radiation therapy and related equipment, including Intensity Modulated Radiation Therapy, Image Guided Radiation Therapy (“IGRT”) and a CT Simulator to the radiation therapy department at an existing Gamma Knife site in Massachusetts.
In February 2016, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2016-02 Leases (“ASU 2016-02”) which requires lessees to recognize, for all leases, at the commencement date, a lease liability, and a right-of-use asset. Under the new guidance, lessor classification criteria for direct financing and sales-type leases is modified. In July 2018, the FASB issued ASU No. 2018-10Leases (Topic 842) Codification Improvements to Topic 842, and ASU No. 2018-11Leases (Topic 842) Targeted Improvements (“ASU 2018-11”), in December 2018 the FASB issued ASU No. 2018-20Leases (Topic 842) Narrow-Scope Improvements, and in February 2019 the FASB issued ASU No. 2019-01Leases (Topic 842) Codification Improvements. ASU 2018-11 provides a new transition method in which an entity can initially apply the new lease standards at the adoption date and recognize a cumulative-effect adjustment to the opening balance of retained earnings in the period of adoption. This standard is effective for annual periods beginning after December 15, 2018. The Company performed an analysis to determine if its revenue agreements with customers fall under the scope of ASU 2016-02 or ASU 2014-09,Revenue from Contracts with Customers (Topic 606) and concluded that, other than with respect to the Company’s stand-alone facility in Lima, Peru, ASU 2016-02 applied. The Company adopted ASU 2016-02 and related ASUs as of January 1, 2019 using the modified retrospective transition method. The Company elected to initially apply ASU 2016-02 and related ASUs beginning January 1, 2019 and elected to use the package of practical expedients upon adoption. The provisions of the package of practical expedients allowed the Company to not reassess whether any expired or existing contracts are or contain leases, the lease classification for expired or existing contracts, and the Company need not reassess the initial direct costs for any existing leases. The Company also used the hindsight expedient upon adoption which allowed the Company to examine its history when assessing lease term and whether it will exercise renewal options for certain contracts. The Company recognized lease liabilities and right-of-use assets of approximately $1,362,000 for its operating leases at January 1, 2019, with no initial material impact to its consolidated statements of operations.
In June 2016, the FASB issued ASU No. 2016-13Financial Instruments – Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments (“ASU 2016-13”), which requires measurement and recognition of expected credit losses for financial assets held. The new guidance is effective for fiscal periods beginning after December 15, 2018. The Company adopted ASU 2016-13 as of January 1, 2019 and there was no significant impact on its consolidated financial statements and related disclosures as a result.
In July 2018, the FASB issued ASU No. 2018-09, Codification Improvements (“ASU 2018-09”). This standard does not prescribe any new accounting guidance, but instead makes minor improvements and clarifications of several different FASB Accounting Standards Codification areas based on comments and suggestions made by various stakeholders. Certain updates are applicable immediately while others provide for a transition period to adopt as part of the next fiscal year beginning after December 15, 2018. The Company adopted ASU 2018-09 as of January 1, 2019 and there was no significant impact on its consolidated financial statements as a result.
Accounting Pronouncements Issued and Not Yet Adopted
In February 2018, the FASB issued ASU No. 2018-03 Recognition and Measurement of Financial Assets and Financial Liabilities (“ASU 2018-03”), which clarifies certain aspects of ASU 2016-01.2016-1. These are: equity securities without a readily determinable fair value – discontinuation, equity securities without a readily determinable fair value – adjustments, forward contracts and purchased options, presentation requirements for certain fair value option liabilities, fair value option liabilities denominated in a foreign currency, and transition guidance for equity securities without a readily determinable fair value. In August 2018, the FASB issued ASU No. 2018-13 Fair Value Measurement (Topic 820): Disclosure Framework – Changes to the Disclosure Requirements to Fair Value Measurement (“ASU 2018-13”), which amended the effective date and other certain measurement aspects of ASU 2018-03. The new guidance is effective for fiscal years and interim periods within those fiscal years beginning after December 15, 2019. The Company does not expectadopted ASU 2018-03 orand ASU 2018-13 to have aon January 1, 2020. There was no significant impact on its condensed consolidated financial statements and related disclosures.
7
March 31, | December 31, | |||||||
2019 | 2018 | |||||||
Medical equipment and facilities | $ | 90,214,000 | $ | 94,031,000 | ||||
Office equipment | 573,000 | 589,000 | ||||||
Deposits and construction in progress | 2,026,000 | 3,832,000 | ||||||
Deposits towards purchase of proton beam systems | 2,250,000 | 2,250,000 | ||||||
95,063,000 | 100,702,000 | |||||||
Accumulated depreciation | (49,998,000 | ) | (54,008,000 | ) | ||||
Net property and equipment | $ | 45,065,000 | $ | 46,694,000 |
2019:
March 31, | December 31, | |||||||||||||
2020 | 2019 | |||||||||||||
Medical equipment and facilities | $ | 93,429,000 | $ | 92,132,000 | ||||||||||
Office equipment | 597,000 | 594,000 | ||||||||||||
Deposits and construction in progress | 2,006,000 | 1,965,000 | ||||||||||||
Deposits towards purchase of proton beam systems | 2,250,000 | 2,250,000 | ||||||||||||
98,282,000 | 96,941,000 | |||||||||||||
Accumulated depreciation | (57,112,000) | (55,461,000) | ||||||||||||
Net property and equipment | $ | 41,170,000 | $ | 41,480,000 |
Capital
The Company’s lessee operating lease agreements are for administrative office space and related equipment, and the agreement to lease clinic space for its stand-alone facility in Lima, Peru. These leases have remaining lease terms between 3 and 54 years, some of which include options to renew or extend the lease. As of March 31, 2019,2020, operating ROU assets and liabilities were $1,300,000.
Year ending December 31, | Operating Leases | |||
2019 (excluding the three-months ended March 31, 2019) | $ | 250,000 | ||
2020 | 340,000 | |||
2021 | 347,000 | |||
2022 | 331,000 | |||
2023 | 214,000 | |||
Thereafter | 6,000 | |||
Total lease payments | 1,488,000 | |||
Less imputed interest | (188,000 | ) | ||
Total | $ | 1,300,000 |
Year ending December 31, | Operating Leases | ||||
2020 (excluding the three-months ended March 31, 2020) | $ | 229,000 | |||
2021 | 313,000 | ||||
2022 | 321,000 | ||||
2023 | 214,000 | ||||
2024 | 5,000 | ||||
Total lease payments | 1,082,000 | ||||
Less imputed interest | (110,000) | ||||
Total | $ | 972,000 |
Three Months ended March 31, | ||||||||
2019 | 2018 | |||||||
Net income attributable to American Shared Hospital Services | $ | 270,000 | $ | 390,000 | ||||
Weighted average common shares for basic earnings per share | 5,853,000 | 5,818,000 | ||||||
Diluted effect of stock options and restricted stock | 33,000 | 37,000 | ||||||
Weighted average common shares for diluted earnings per share | 5,886,000 | 5,855,000 | ||||||
Basic earnings per share | $ | 0.05 | $ | 0.07 | ||||
Diluted earnings per share | $ | 0.05 | $ | 0.07 |
10
Three Months ended March 31, | ||||||||||||||||||||||||||||||||
2020 | 2019 | |||||||||||||||||||||||||||||||
Net (loss) income attributable to American Shared Hospital Services | $ | (135,000) | $ | 270,000 | ||||||||||||||||||||||||||||
Weighted average common shares for basic earnings per share | 6,126,000 | 5,853,000 | ||||||||||||||||||||||||||||||
Diluted effect of stock options and restricted stock | 27,000 | 33,000 | ||||||||||||||||||||||||||||||
Weighted average common shares for diluted earnings per share | 6,153,000 | 5,886,000 | ||||||||||||||||||||||||||||||
Basic (loss) earnings per share | $ | (0.02) | $ | 0.05 | ||||||||||||||||||||||||||||
Diluted (loss) earnings per share | $ | (0.02) | $ | 0.05 |
2022.
11
The following table summarizes stock option activity for the three-month periodperiods ended March 31, 2020 and 2019:
Stock Options | Grant Date Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (in Years) | Intrinsic Value | |||||||||||||
Outstanding at January 1, 2019 | 613,000 | $ | 2.85 | 3.14 | $ | - | ||||||||||
Outstanding at March 31, 2019 | 613,000 | $ | 2.85 | 2.43 | $ | 34,000 | ||||||||||
Exercisable at March 31, 2019 | 489,000 | $ | 2.87 | 2.31 | $ | - |
Stock Options | Grant Date Weighted- Average Exercise Price | Weighted- Average Remaining Contractual Life (in Years) | Intrinsic Value | |||||||||||||||||||||||
Outstanding at January 1, 2020 | 450,000 | $ | 2.78 | 2.44 | $ | 27,000 | ||||||||||||||||||||
Outstanding at March 31, 2020 | 450,000 | $ | 2.78 | 2.20 | $ | — | ||||||||||||||||||||
Exercisable at March 31, 2020 | 425,000 | $ | 2.79 | 2.00 | $ | — | ||||||||||||||||||||
Outstanding at January 1, 2019 | 613,000 | $ | 2.85 | 3.14 | $ | — | ||||||||||||||||||||
Outstanding at March 31, 2019 | 613,000 | $ | 2.85 | 2.43 | $ | 34,000 | ||||||||||||||||||||
Exercisable at March 31, 2019 | 489,000 | $ | 2.87 | 2.31 | $ | — |
12
The Company recognizes revenues under ASC 842 and ASC 606Revenue from Contracts with Customers(“ (“ASC 606)”606”). The Company had sixteen (16) Gamma Knife units, one (1) PBRT system and one (1) IGRT machine in operation as of March 31, 20192020 and seventeen Gamma Knife units, one PBRT system and one IGRT machine in operation as of March 31, 2018.2019. Three (3) of the Company’s customer contracts are through subsidiaries where GKF or its subsidiary is the majority owner and managing partner. Seven (7) of the Company’s sixteen (16) current Gamma Knife customers are under fee-per-use contracts, and eight (8) customers are under retail arrangements. The Company, through GKF, also owns and operates a single-unit Gamma Knife facility in Lima, Peru. This unit economically functions similarly to the Company’s turn-key retail arrangements. The Company’s contracts to provide radiation therapy and related equipment services to an existing Gamma Knife customer and the Company’s PBRT system at Orlando Health – UF Health Cancer Center (“Orlando Health”), are also considered retail arrangements.
13
Effective January 1, 2015, the Centers for Medicare and Medicaid (“CMS”) established a Comprehensive Ambulatory Payment Classification for single session radiosurgery treatments. CMS has established a 20192020 total reimbursement rate of approximately $9,300$9,600 ($9,1009,300 in 2018)2019) for a Medicare Gamma Knife treatment. The approximate CMS reimbursement rates for delivery of proton therapy for a simple treatment without compensation for 2019 will be $5202020 is $539 ($522520 in 2018)2019) and $1,079$1,246 ($1,0531,079 in 2018)2019) for simple with compensation, intermediate and complex treatments, respectively.
Revenues increased
Revenuelease to end sometime in mid-2020.
Total costs of revenue increased by $285,000 to $3,384,000revenues for the three-month period ended March 31, 2019 from $3,099,0002020 was the result of the winding down of the Company’s IGRT system, which was being used as a back-up system at the customer site. The Company’s contract for its IGRT equipment expired in April 2020 and the Company agreed to sell the equipment to it's existing customer for $150,000, which was equal to the equipment's salvage value.
Depreciation and amortization increased by $237,000 to $1,894,000other direct operating costs for the three-month period ended March 31, 2019 from $1,657,0002020 was due to increased operating costs at the Company’s newest Gamma Knife site in Merrillville, Indiana and the Company’s stand-alone facility in Lima, Peru, as these sites continue to ramp up volumes.
Other direct operating costs increased by $6,000 to $822,000 for the three-month period ended March 31, 2019, from $816,0002020, was primarily due to legal and other fees, including, but not limited to the COVID-19 pandemic and the transition in senior management.
Selling and administrative costs increased by $69,000 to $1,055,000decrease for the three-month period ended March 31, 2019 from $986,000 for the same period in the prior year. The increase was primarily due to recruiting fees, temporary administrative staffing, and consulting fees.
Interest expense decreased by $58,000 to $367,000 for the three-month period ended March 31, 2019 from $425,000 for the same period in the prior year. The decrease2020 was due to a lower average principal base on the Company’s debt and leases in the first quarter of 20192020 compared to the same period in the prior year, effectively reducing interest expense.
GKF and its subsidiaries.
2020 was primarily due to legal and other professional fees and a decrease in the average reimbursement rate at the Company’s retail sites.
$326,000.
15
The Company as of March 31, 20192020 had shareholders’ equity of $31,479,000,$31,473,000, working capital of $851,000$2,809,000 and total assets of $56,857,000.
$53,191,000.
deposits, which are described below.
16
As of March 31, 2019,2020, the Company had commitments to service and maintain its Gamma Knife and PBRT equipment. The service commitments are carried out via contracts with Mevion, Elekta and Elekta AB. Mobius Imaging, LLC. In addition, in April 2019, the Company signed agreements to service the Icon upgrades which will be installed at various dates between 2020 and 2022.The Company’s commitment to purchase a LINAC in 2019system also includes a 9-year agreement to service the equipment. Total service commitments as of March 31, 20192020 were $7,426,000.$10,036,000. The Gamma Knife and certain other service contracts are paid monthly, as service is performed. The Company believes that cash flow from cash on hand and operations will be sufficient to cover these payments.
On April 30, 2019, the Company signed agreements for commitments to purchase six Icon upgrades to the Gamma Knife Perfexion, related Icon equipment service, and three Cobalt-60 reloads, all at existing customer sites. One of the Icon upgrades and one Cobalt-60 reload are scheduled to occur during 2019. The remaining Cobalt-60 reloads and Icon upgrades are scheduled to occur during 2020. Total Gamma Knife commitments agreed to as of April 30, 2019 were $7,615,000. It is the Company’s intent to finance these commitments. There are no significant cash requirements, pending financing, for these commitments in the next 12 months. There can be no assurance that financing will be available for the Company’s current or future projects, or at terms that are acceptable to the Company.
Payments Due by Period | ||||||||||||||||||||
Contractual Obligations | Total amounts committed | 2019 | 2020-2022 | 2023 | After 5 years | |||||||||||||||
Long-term debt (includes interest) | $ | 5,573,000 | $ | 1,801,000 | $ | 2,686,000 | $ | 334,000 | $ | 752,000 | ||||||||||
Capital leases (includes interest) | 15,981,000 | 4,171,000 | 10,978,000 | 524,000 | 308,000 | |||||||||||||||
Future equipment purchases | 38,235,000 | 2,250,000 | 35,985,000 | - | - | |||||||||||||||
Equipment service contracts | 7,426,000 | 1,567,000 | 3,414,000 | 345,000 | 2,100,000 | |||||||||||||||
Operating leases | 1,398,000 | 260,000 | 962,000 | 176,000 | - | |||||||||||||||
Total contractual obligations | $ | 68,613,000 | $ | 10,049,000 | $ | 54,025,000 | $ | 1,379,000 | $ | 3,160,000 |
Payments Due by Period | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Contractual Obligations | Total amounts committed | 2020 | 2021-2023 | 2024 | After 5 years | |||||||||||||||||||||||||||||||||||||||||||||||||||
Long-term debt (includes interest) | $ | 4,970,000 | $ | 1,346,000 | $ | 2,482,000 | $ | 668,000 | $ | 474,000 | ||||||||||||||||||||||||||||||||||||||||||||||
Finance leases (includes interest) | 12,149,000 | 3,179,000 | 8,449,000 | 521,000 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Future equipment purchases | 39,560,000 | 400,000 | 39,160,000 | — | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Equipment service contracts | 10,036,000 | 1,787,000 | 4,655,000 | 1,734,000 | 1,860,000 | |||||||||||||||||||||||||||||||||||||||||||||||||||
Operating leases | 1,094,000 | 233,000 | 856,000 | 5,000 | — | |||||||||||||||||||||||||||||||||||||||||||||||||||
Total contractual obligations | $ | 67,809,000 | $ | 6,945,000 | $ | 55,602,000 | $ | 2,928,000 | $ | 2,334,000 |
17
None.
Date: | May | /s/ Ray Stachowiak | ||||||
Ray Stachowiak | ||||||||
Interim President and CEO | ||||||||
Date: | May 11, 2020 | /s/ Craig K. Tagawa | ||||||
Craig K. Tagawa | ||||||||
Senior Vice President | ||||||||
Chief Operating and Financial Officer |