SRTS - Earnings call transcript Q2 2019

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Operator

Good day, ladies and gentlemen, and welcome to your Sensus Healthcare Second Quarter Financial Results Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to your host, Kim Golodetz. Ma’am, the floor is yours.

Kim Golodetz

Thank you. This is Kim Golodetz with LHA. participating call. for all you in today’s Thank

Joining Executive Financial Officer; Sensus Healthcare Officer. Sardano, Chief are Joe and me from Arthur Levine, Chief

occur discussed should that the intends other federal the As that forward-looking laws. expects, All in forward-looking of believes, some than securities or Sensus within during historical similar statements. Healthcare other be plans, facts statements of a and are activities are today’s expressions, or meaning the the may anticipates statements will, call address reminder, future will matters assumes,

those The SEC. forward-looking required beliefs company’s the revise based to available and forward-looking the currently and risk any XX-K undertakes filed on Forms with including subject law. or by Healthcare no as factors statements are are described update as management’s information. risks statements Sensus in except XX-Q All forward-looking statements, to obligation uncertainties,

also call, a financial operating they measures. measures as for believes results these there is today’s reconciliation non-GAAP should a GAAP. of accordance results be certain determined press today’s be A During release. information included yet financial to will results nor non-GAAP with reference substitute should Sensus for investors, GAAP, GAAP not useful in be provide viewed to in for substitute considered

that to to With said, turn Joe? like over Joe Sardano. I’d the call

Joe Sardano

comparing quarter with revenues XX%. shipped quarter, XX total the up quarter, our financial of and including the second were XX afternoon, over highlighted quarter return system. feature-rich results Kim, When mark results to growth with systems Visions. sales SRT-XXX XX% second in everyone. This good our first a revenues up you, double-digit report We by Vision Thank the I’m very prior that SRT-XXX pleased during was to year. growth, our

in moving the recapturing we’re clearly, right delayed and sales. the direction So

had some we issue during and customer QX you a credit deliveries. we many of withheld with key know, a As

process recovering that been we those are this the satisfaction, resolved has our in of Now issue shipments. to

that regulatory address therapists to with oncologists treatments turnkey SRT-XXX and give deliver and with also billing sales customer units, a who the provides our radiation systems. solution for full-time renewed state agreement services. access for requirements, collection provide board-certified to the have We Vision provide and physicians consultation they radiation They

are involved resources financial their for securing for We their procurement did private job into of well in process expansion Their as securing growth investment with business very management equity both their an the as equipment company. excellent and future. team

We’re excited to be it. of a part

directly, very in of two majority to through sold sales our customer, I’m QX, tell we the Vision this including While systems Vision go fourth pleased a Vision that in system system you Israel.

conservative We SRT-XXX+ installed services looking strategy. country. five being large identifies are largest under our go-to-market units to the and customer we more practices are be company units a model may in the to process another These This, with of SRT that a focused Rather, it by with hospital broadening changes approach. address centers. in the point, To no means, dermatology the base are shared market in dermatology current solutions for. installing opportunity our

efficient and will else our few our Sentinel and store is has patient that exclusive a market’s the not program. to powerful in management that an is and in system on with IP with now to made giving while them The HIPAA powerful platform their an from of data tools be also customers our opportunity to Sentinel working will these provides This store to SRT-XXX more our address the now, practices. management is patient years data the This products. needs, to we future for is management capabilities available flexibility and customers is for expanded become provides is product anyone all asset cloud product. unique that tools the platform productive market. have have We multiple-site large technology important Sensus in users and IT the compliant. SRT-XXX+. Vision this provides been a this It This possible the Sensus part

you initiative. as We updates we progress with with provide will this

of invest young in sales marketing. to SRT-XXX+ exhibited at a weeks, SRT well popular non-melanoma we TV skin show trade and of programs increase by where cancer. one the woman’s of Keloids Sandra Network QX, our airs The treatment TLC TV In cable for non-melanoma Popper. for is continue awareness our our and most and skin It patient products Dr. We and keloids dermatology Lee, on Pimple Dr. on the were cable you featured was watched on In know received. cancer as were treated regional program, dermatology hosted several should a keloids the recent the where who is systems successfully. may and shows, treatment

after this surgery SRT. SRT We by X% when treat followed showing to recent to look study forward particularly exposure indication, just a continued for given rate clinical recurrence a

engaged believe and an non-melanoma that well-respected could establish an us campaign help Avenue said point, will larger We for RooneyPartners. Madison the Sculptura. we cancer. They even SRT, we firm, treatment repeatedly and experienced that and for To have a the market keloids have represent of SRT all-round skin program PR

from results We’re looking their forward guidance. to involvement their and

brachytherapy Alliance’s SRT on its of products to products under Also, added list for discussed, August as was its we – Healthcare Premier members. category we previously X, approved

organizations, is and about Premier that recall and approximately systems one and of hospitals you organizations. the XXX,XXX other health nation’s largest If serving X,XXX providers group purchasing

efforts the groups will to of Our Premier believe SRT add products this spur SRT the Premier with We to management inclusion support leading-edge several purchasing well. additional in of market. for as included have on SRT months to This could their lineup hospital team project worked penetrate our with technologies. agreement

Annual Sculptura. now In Tracking has the Beam other features. Recall Brachytherapy and capabilities, proprietary unique Robotic to that Sculptura Modulated Robotic XXXX Turning exhibited Meeting. we Sculpting June, Society’s at our American Brachytherapy and system Sculptura Respiratory

product. interest the sales and FDA-cleared being We by team generated are this our work in recently the pleased with oncology

University the Sculptura studies second during several important indications. begin and schools for with began Sculptura Our year. Sculptura the of prominent support quarter. various at collaboration more starting We collaborations collaboration oncological Pennsylvania for this to later of medical provide And studies patient with moving with marketing will ahead, Medicine the Perelman anticipate is shortly. cancer the School expected centers These

September also Oncology. Annual of preparing of for the are and We or ASTRO the Radiation Meeting American Society Therapeutic

We’re capabilities showcasing there Sculptura’s looking its forward to debut. at

demonstrations interested We are many of as adds team the list scheduled anticipating of our sales Sculptura parties. growing

system configuration scheduling. We to a to second have demo to Sculptura booth due decided the our add

Centers with Medicaid proposals is our that Services revaluation. if poised There reimbursement remained consistent recent SRT that They for from XXXX with to a code main when marketplace. Medicare XXXXX is has discussion well Reimbursement timetable. also we for some has that are are for Sculptura and bode Sensus we developments. adopted been position for believe & for identified that our a in benefit scheduled said topic repeatedly have the the and of while, quite I’ve

benefit has This care bodes quality-based new for technologies. multiple oncology CMS new codes health with treatments. that care Sensus proposed single-procedure radiation model model cost-effective a payment versus will bundled well all

example, Sculptura treatment several patients For weeks. to treated over multiple times be radiation modality. is one-time requires external beam

we to relative target positioned expected into well we our effect Given as the linear following is especially to is market in comment pricing model new believe period. XXXX go payment a community Sculptura hospitals. The accelerators,

financial Levine, go I’ll over Chief Financial over Officer, in who our results Arthur will now turn our detail. the call Arthur? more to

Arthur Levine

to a with of It’s be speaking Joe. pleasure you Thanks, all today.

higher-priced vision As unit for million, SRT-XXX $X.X quarter the of sales to Joe was XXXX. the second XXXX the mentioned, from system. second of of up revenues increased This were quarter due XX% mainly

Vision Importantly, revenues compares were XX.X% XXXX and was $X.X second million, significantly important of deliveries for this back an Gross for above revenues or some quarter of with XX.X% $X.X million customer. first quarter unit of XXXX held of XXXX. revenue quarter we the profit of to second million or revenues, when $X.X the

a model gross units. be way SRT-XXX The mainly the slightly for percentage we The gross overall better to of to previous business XXXX in margin second our to half continue increase that in as guidance to mix low shift mid-XXs, view was range for the favoring is appropriate our in an margin year. but Vision margin the product to QX than due

for of the the from and second of quarter unchanged was quarter million, expense $X Selling second XXXX. marketing XXXX

marketing If first expenses the QX large selling and trade associated comparing expenses you included with shows. quarter, to note that two our are

to sales and and XXXX expect to We associated with well also the the due to the ASTRO few third expenses higher marketing for costs XXXX. expenses expect the compared as trade year sales marketing show as primarily hiring a quarter Overall, be more to launch, we increase in and full sales reps. somewhat of Sculptura the

XXXX. administrative expense the million, $X.XX of second quarter and for was the about than more $XX,XXX of second XXXX quarter General

relatively We flat expect remainder the of year. G&A to for trend the expenses

and quarter increase XXXX quarter the XXXX of quarter for second the the compared million production $X for $X.X first related for in second ramp-up over mainly $X.X expense Sculptura. development expenses XXXX million The XXXX. the of with and to to Research the was due million of was of

expect modest the We R&D year. decrease second half during a spending in the of

we invest product that note enhancements. in please Sculptura, receive luminaries from R&D as resources feedback However, the may on we some

net share. for income compares net a of the quarter share per loss XXXX XXXX. with $X.X of million million reported $X.XX per or for $X.X We $X.XX second or second This diluted the quarter of of

before XXXX. million the for Adjusted $X.X negative quarter is million second compared was as a for amortization earnings with of positive compensation stock interest, taxes, EBITDA and expense. depreciation, $X.X XXXX second Adjusted of a defined EBITDA quarter the

We achieved income positive in adjusted QX. EBITDA and net

and main Going be spending of marketing areas clinical will discretionary R&D, forward, our studies.

quarterly managing with We results. short-term forward, on these our going closely will an areas be eye

in order However, the to roll we areas result to and longer-term in results. variability objectives Sculptura spending appropriate some first short-term will customers. the in then we and luminaries could in This in to invest address other these as as out

investments long-term of on of June borrowings XX, XX, $X outstanding $XX.X Cash quarter and as December million The million company XXXX, of credit had debt compared of and with as million revolving were its line end. no no $XX.X XXXX. as

$X.X collected overdue million QX, March that on receivable in XXXX. we During had XX, accounts been

Revenue $XX the our the million compared for of XXXX first of or half XXXX. X.X% $X.X to to of half Turning or increased was half revenue of $XX.X XXXX of million first the million XX.X% million for with XX.X% briefly results. profit $X.X first with for half first the of revenue for financial Gross XXXX. year-to-date compared

million per with million of $X.XX the half loss compared half of with million million per a half $X.X first the first or loss of compared or was for $X.XX of $X $X.X loss first of the of G&A year share for compared XXXX. $X.X of R&D $X.X million first first first and half period. marketing for for for was the $X.X half prior of expense compared year-to-date the XXXX. with Selling $X.X expense was $X the XXXX expense was XXXX million the a million with The XXXX. net share half million for XXXX net for

call With that, the Joe. I will turn over back to

Joe Sardano

Arthur. to including number second I resumption conference on that year mentioned quarter’s believe call of will be we strong, a a by of last sales items, Thanks, the the of half important very customer. a aided

I think reporting out. the we’re bear today this results

back and on are for We and continued sustainable track time growth.

to oncologists. plastic ways not customers radiation XX,XXX large dermatologists and a believe surgeons a multiple market systems making explore consisting offices multisite work to X,XXX and to positioned representing X,XXX-plus SRT well help existing to Mohs U.S., the them and X,XXX our continue surgeons some in purchase We We and growing, with X,XXX progress. units, further are mention in we’re of

who will physicians care the option, growth to As patients customers skin provide recent to will treatment the comparing we needed providing our patient the the sustain program provide. Sentinel that total non-melanoma work SRT aware skin as this cancer efficiencies marketing with productivity the physicians organic in feature to reach solutions well as a of options positive of of to an Adding thus keloids. their with valued data this base SRT Mohs population patient to treating about cancer offer will the their treating are and surgery, ensure as

rate skin Just to a remind SRT of Mohs’ non-melanoma cancer. you, cure which with for study a XX.X%, the retrospective showed five-year rate cure exceeds

for a study see how keloid the rates, recurrence story you can Combine this community. showing recent be powerful can the with X% just

our price-attractive in markets, solutions physicians to position are and pleased very our We and providing patients. efficacious with target

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

Operator

And question. Instructions] B. Thank with you. questions. D’Silva Andrew our FBR will for with The is floor first go [Operator now open for Riley we

Andrew D’Silva

questions, congrats for Hey, good on rebound. and Thanks my the really, taking afternoon.

I And calls. you this. sorry, moving any of between highlighted if was

But terms they tonight. know of that? were me it. as just payment with changes as maybe and a of if on you far contract let I anything So just Obviously, transcript turnkey check your went did some like to you renewal for partner, there? as there you I’ll know renewed could July. large the just it up starters, for the kind were you on renegotiations changes the little that out or in relates bit Were any in elaborate

Joe Sardano

and the thanks, opportunity all, for question. to the you future, Andy, continues thank terms have the with of definitely contract which First Yes, near for you we your The for will did going. call, work still being SkinCure. keep some out information But on renew conditions, on and details on. on that do. we’ll additional but have to some the talks move in we We

Andrew D’Silva

we Okay. Great. codes questions. more And bundled reimbursement kind not around And that package one of talking the E/M but the then of set just it’s or before. specifically quick about were

that yet don’t with was And couple bill payers if but there’s a resolved of if inquiries clients just CID related past. Obviously, just was there’s anything, from subsequent had any any I those I back. have a Specifically, to space and understand that the in from years in the actually few customer the wondering issues been billing issues. may for you broader I others received

So that well. would be very on any useful color as

Joe Sardano

was with very there period, closely And comments made the comment that document they of there the We’ve provided to SRT. X,XXX-page on in out CMS. public, zero – been Okay. the working actually was last

quo satisfied that to think with. the to for reimbursement. true maintaining status receiving they be they’re are which customers, I our So And date, to holding now, seem

CMS the in in has be regarding customers to revalued getting the to that want the for We’re wait And requesting they code responses to be being codes true are and payment. XXXXX more that seems more remained where areas E/M paid fact to XXXX.

Now change to tried And to sticking conjunction they’re was working get best with process. try process. move up. them But to our that very them we in hard them it to difficult that very, to their therefore, for

I been revalued expected XXXX. continue recognizing with in work it’s up, going think are happen time, frame, is what but go it’s the time This for will go to to anticipate, customers we’ll and with main a status it long our that happy And the our CMS’ So quo. that with event has we’re not code difficult very to that down. to

say months, that which can least bad we So XX status at for to going for quo, next it’s not is a be position the us.

Andrew D’Silva

years the DOJ little that a what sorry. bit of referencing. just color Got back. actually I was took it. a I’m place meant I CID on few That was

Joe Sardano

Okay.

absolutely Okay. From follow-up zero that. been that DOJ report Nothing thing, on news. to there’s

Andrew D’Silva

Okay. Great.

And sorry, one more quick question.

your far as – remarks. goes, Sculptura Just as really positive of prepared out

with have those data Just take attack curious from kind working to you of yet? line? market? get sort so Or what discussions had it’s broader to any you have you some of out any a from Do idea going can time of institutions the

Joe Sardano

show ASTRO that with going in ASTRO. that done get I to protocols the we’re make time UPenn. to I’m be as coming up Yes. although I But possible happen by assure talk considering that is to the I many things is next particularly diligently working closely It’s biggest diligently the our try of to there They’re because month. I very tell procedures be not mean that as to frame, we’re for can the done can is we’re therapeutic – were to very, product. can’t for to able working try interested ASTRO you sure identify that working friends everybody really obviously very very is that any going industry. if then. a lot And you we’re about at developing

in So up But to running. and the we’re going overall, Israel, to is things happen. that facility be with trying make new

well. more QX going be as impressed announce names think quarter, that along And this we’re help will I then. mention us everybody to to going we aggressive program to that think of think able a couple I way very be there should in that a we I with And well. as see So are the opportunities the

Andrew D’Silva

could you for too amazing be it’d mean I it Great. in time if get ASTRO.

on And my good going you thank very again And forward much rebound. congrats for this So taking questions. the year. luck

Joe Sardano

Thanks, very support. your it Appreciate Andy, for much.

Operator

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

Anthony Vendetti

Thanks. guys. you? Good How afternoon, are

Joe Sardano

We’re good, Andy. are you? How

Anthony Vendetti

Good. Good. Good.

follow But bit building like know four and there. products I So up just little aesthetic Israel you’re between I’m to I Joe and so also because calls. you noted a your Arthur, mentioned bouncing

then that here in and You of them? products, this then and the of on reimbursement in sort little by said announcing something this have for of the What’s stuff. I’ll end quarter expectation now quarter maybe of follow-up we’re in third the And year quarter. of terms whether your it’s some commercializing more a or a the

Joe Sardano

make into track things to the But now, to sometimes move Sure. are products as disappointments, We you’re year to could you and fiscal pushing on have to tell right try we’re back. have this, XXXX. that available. can move to going sure keep I things the going sometimes aesthetic

where it We They that adding we’re go have than our we’ll delivered, know should that’s control base to and be But goes. going it the process the how We to And take be it’s as to has pristine. to see product we’re it but XX be products product that an different we FDA we position And to once FDA. continue. through have anything to don’t available able want market. where the on else days.

we lot of a those So as being speak. things are developed

excited We’re manufacturing got also and other is The it. with for facility ready, alternatives manufacturing opportunities. We’ve able capable.

to to three the where I products can just FDA year. time, them that’s That’s excited delivered that products you FDA and tell to the approved. this end as can time. best So in the we’re we’re I’m they tell four we’re give you can there. this the before at yes, I available those that the that we’re I approve at going pushing quarter hard as have products, going products, of fourth going, can’t for heck you still XX get so

Anthony Vendetti

then a codes you Okay. – is bit is new being one I Joe, mentioned not know to XXXX. And the problem. then XXXX. in Sure. Thanks, some a Not that evaluated update. And some until of you little the expect be codes reimbursement and for just of going reviewed

remind the get what And And do per review it’s know with what I just be reimbursed per it’s depends person go the the be right to XX everyone the if out it And codes it generally – to procedure if and what So could think then But treatments. are. way you treatment. now on treatment? XX plan? in will it XXXX What is you think in according things it positive? comes XXXX that I

Joe Sardano

product. Okay. Well, it And perhaps we ago, some were in that we have a would months at the – that of sides. two one-payment for they’re was way, about Either type product. now, of brachytherapy Sculptura. talking healthy the really help looking help a XXXX, Sculptura at thing reimbursement us with announced CMS or we’re couple codes right On that opportunities looking exist

So codes we’re at looking standpoint. healthy from that

SRT the our revalue. XXXXX, to side on get to is we’ve hard On main try been real what pushing code

for of average, of care, for of said, line. XX for treatments XX $X,XXX on episode available the to that codes to or reimburses you’re like cancer, you care. looking XX between somewhere That that XX around about about $X,XXX, is episode that the Now physicians treatment care, episode $X,XXX, at, and in are the which XX skin of SRT

that get is that care amount least of XXXXX. whole the they so money code, that for in And of episode one

XXXX. fact to recognizes not years. undervalued. been that not it Everybody has five it it’s which revalued the been requires revalued so statute every by Has everybody the since be met And recognizes

hurry codes. better codes. get that at them their at more have they’re think you today, say have in develop CMS They’re from – so to increase Medicare reimbursement or I reimbursement that agree to from decreasing and to looking will trying models look is CMS money They’re CMS is And for at we for – value Medicaid. that looking when no where we to help paying

SRT. I identified code undervalued skin fact episode of think the cancer an that bodes XXXX, be for it are we being as and for revalued the by that So care well will

that if to I for – this see I model would And care have ever bundled SRT don’t this an love involved your love here – would of three a and know skin episode you treat modalities payment would but happen, me, cancer. says, in I or to in

have the that product if would And a X that you our you accelerator, And effects. it’s be than poison. dollars Pick of linear pay your often There’s where Mohs not surgery. think think product SRT Pick you it’s scarring. a safe, want kind that for we’ll have skin model. more whatever you they You I to to chosen relish I efficacious. of go. thousands that’s side that There’s or to have would no want, in treatment cancer. said, would give I of everybody no because be put opportunity would

go. But we’ll see where they

of I it with think They with through we’re mentioned they at period What Sculptura, at lot a bundled four-year run a I to and were XXXX. think we’re that haven’t that start in it announced looking a And of CMS. with seeing lot have that they yet changes looking opportunities. XXXX. payment, that opportunity

definitely payments. they’re bundled looking So at

Anthony Vendetti

the right, And the like linear payment, you treatment? compared Mohs came for surgery the cost out, also to if definitely terms said, SRT option in total least and a certainly, compared of expensive accelerator, to that Okay. bundle is

Joe Sardano

be taken if the patient it’s their payment at that And if any any way But Yes. it And or treatment. the cost. – whatever CMS their going or scores is. they they to going bleeding things they the patient, if dermatitis done after infection well. have you going to Again, establish be treatment there’s on needs you as the to affect is And excessive damage that’s have an all to to again, want. that provider a right overexposure, work from by to are device to payment can now, the of if have use or have those bundled quality is there’s for if then the

Anthony Vendetti

payment? there’s Because It’s Right. bundled one reimbursement? additional just no

Joe Sardano

exactly. payment, One

Anthony Vendetti

Exactly. for entire Payment episode care? the of

Joe Sardano

Yes.

think very is at I a quality amount have provides of that a risk. looking – risk product provider quality So factor, least we a if

Anthony Vendetti

I’ll Thanks, great. Okay, Joe. in it. the back queue. hope Appreciate

Joe Sardano

Thank you, Anthony.

Operator

our go [Operator with H.C. we’ll Yi ahead. Chen Instructions] take from question And next Wainwright. Please

Boobalan

Yi This have questions Boobalan in for a from Chen couple regarding the presentation. HCW. Hi. is I of

So system shipped were how many under quarter? during the this

Joe Sardano

XX It it. said we shipped quarter. in Well, systems was the

Boobalan

Okay.

between other I’m couple Sorry. a I it. calls. of missed have might

many systems next do sell the within Sculptura next months? to you how expect is the XX question So

Joe Sardano

I you couldn’t tell that.

not providing one we’re already we’ve installations We’re expect quarter. customers to shipped. guidance. have and But suspect that I all installed have the five for have two delivered year. the third we And along we said we have the we’ll a we’ve five for that third And that take. looking clinical those units to end units before of

Boobalan

one, last expenses trend And of operating would forward? the what Okay. going be

Joe Sardano

that answer you let I’ll Arthur, one.

Arthur Levine

can Yes. All I that right. answer one.

me will take development be should and well. QX And expect line, for covered of be expenses by General research will and higher I marketing I it in administrative QX QX flat. expect script and modestly The be my to and in year. selling Let compared and than in as line I this lower balance the the QX.

Boobalan

That’s you. from Thank Okay. me. it

Joe Sardano

Thank you much. very

Operator

And to further be there appear questions time. this at no

it management remarks. for closing turn any So to over I’ll back

Joe Sardano

Okay. Thank you.

to So your interest time afternoon in in and Sensus. all for closing, want you for this your I thank

and have a seeing you look Thank XXXX. invite next an our like to ASTRO so Chicago, great We thank up-and-close day. much. everybody number And there want week to to I’d forward at Sculptura. you of you For for come look in visiting those by to you we booth,

Operator

appreciate participation. today’s conclude your We does teleconference. That

and lines have a great time, day. disconnect at your this may You

Sensus Healthcare (SRTS) 9 Aug 192019 Q2 Earnings call transcript