AMS - Earnings call transcript Q3 2019 | American Shared Hospital Services

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Operator

Welcome to the Third Quarter 2019 Earnings Conference Call. My name is Paulette, and I will be your operator for today’s call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] Please note that this conference is being recorded.

the to turn Investor Prince now Relations. will call Stephanie over with I begin. you Stephanie, may

Stephanie Prince

Paulette, you, today. us you, Thank thank and everyone, for joining

the turning Harbor about concerning constitute the to Securities make Before Act may the be Private that over company would this that provisions plans call to conference purposes of and on like for call various management, remarks for the expectations, Reform statements. of forward-looking forward-looking I remarks under statements made Safe Please future note Litigation following XXXX. the prospects

quarterly Form Annual materially for Actual results important reports ended statement assumes December ended those may in information this the annual update forward-looking these the and its XX-K June statements XXXX, three definitive conference those XX, of on includes including contained XXXX, a XX, vary the various in for obligation March to The from Meeting for of June the Shareholders XX This indicated months proxy on filings and with on company’s SEC. XXXX. the call. XX-Q by XX, the year no the Form result company’s discussed as company the factors, report held

call the Operating to I like to Officer. Craig? would now turn Craig Chief Financial Tagawa, over and

Craig Tagawa

Wallace, to by through will walking Controller, Thank our you, operational afternoon our conference financial begin our will Stephanie, a business and today everyone Alexis for us results, earnings joining I good then third quarter review. call. and provide XXXX

questions. will the Bates, that, call Wallace, myself for Alexis your Dr. open Ernie and Bates Following

to to when million. or increased the also compared third therapy third higher weeks. to Orlando for to the this increase for down in compared in PBRT fractions XXXX revenue increasing perform increase, year two our reflected Total well – these In system of usage proton X,XXX to of X,XXX adding operations XX.X% X continued quarter system revenue also $X.XXX business Awareness in therapy volumes XX% therapy proton quarter, treatment to demand. million to year XXX proton the a to third continues to approximately Health was the and quarter-over-quarter support quarter was last by The growth the proton and therapy the with of quarter. due the benefits

Gamma to X.X% Turning in in third at Kettering to increased Center downtime was Knife. This lessened a the Revenue Icon Ohio, for increase down by which Cobalt-XX upgrade. the quarter. and months reload was for Medical two due

start the noted, previously disruption the quarter third the second at service As quarter. was of in resolved XXXX

Knife to Lima, stand-alone in increased Gamma procedures our XXX was third primarily increase by facility XX of by the to driven quarter Peru. a in number ago. The XXX year compared The

to Looking to was Medical contribute we us completed quarter, ahead, first expect larger expansion but business. Icon allow volume this to we the to revenue future upgrades Knife incremental Center in through of Icon Kettering treatment tumors. additional Gamma anticipate opportunities upgrades capture our in These upgrades be XXXX.

the and to included receive of will continue payment based will model radiation current noted Medicare announced selected oncology this XX% projects randomly methodology. for proposed new to XX% be test radiation XXXX, approximately approximately payment Medicaid an certain CMS therapy suppliers. radiation and fee-for-service in press or morning, and July payment our services and across Services, this bundled in intended that providers CMS, providers for mandatory reimbursement the As is a oncology structure model, that on release episodic in centers

oncology CMS’ services. proposed payment methodology payment model radiation would The for significantly alter

XX.X% scheduled delivery for increase codes the has to of in centers the – morning proton were approximately the previously, The in and they Gamma the in numbers Knife. reimbursement Medicare XX.X% proposed from For X% most press not commonly were payments. previously used were to included that These model, scheduled XXXX this amounts and Gamma are the release Knife. the been X.X% submitted these for final XX% for therapy finalized

proposed timing the details The and are payment of model uncertain.

As a of result, we cannot rule. the proposed adoption potential the estimate impact of

rates administration could adversely that reimbursement changes keep for in the any in and radiation new informed results. reductions therapy and or methodology reimbursement radiosurgery revenues financial this. on you of or affect However, receive we We’ll information our

With a that, discussion. Alexis call I for over financial will now to turn the detailed Alexis?

Alexis Wallace

Craig. Good afternoon, everyone. Thank you,

morning. to begin my your like third attention results remarks, issued I Before XXXX our call I’d this to earnings quarter prepared

You Releases, earnings the can website, on our release access of Investor under ashs.com at the a Press tab. copy

to of For XXXX. to $X.XXX the the revenues XX, for third million XX.X% three months quarter ended XXXX, revenues $X.XXX million of increased September compared

for Third in of quarter system. installed two period XXXX Florida $X.XXX Health compared in XX.X% revenue of for the system $X.XXX revenues million third downtime to XXXX of The included the our Orlando million. proton quarter weeks increased for to therapy

third at volumes $X.XXX quarter to increased Revenue due million of to XXXX compared company’s quarter X.X% for XXXX increased the for existing Knife million to $X.XXX Gamma operations the the of for sites. third

to volumes was One the sites upgrade, for of the and and of a down revenues. which two months lessening Icon the for a contributed reload in increase during Cobalt-XX quarter company’s Gamma Knife

site company’s costs, including XX.X% for direct partially Peru. of XXXX operating third an in quarter company’s increased to maintenance This to of Lima, Indiana of facility Merrillville, XXXX. supplies revenue stand-alone increase new third quarter to and compared revenue the the revenue, $X.XXX margin in and $X.XXX and in reflected other due gross XX.X% of cost of margin of the for million million Gross or or the

for income of quarter XXXX. $XX,XXX for per $X.XX share the quarter per share This $X.XX and of $XXX,XXX XXXX second quarter third share. XXXX or net $XXX,XXX per or third income in of the to of Net or was $X.XX the compares

for third the a financial measure non-GAAP of to XXXX XXXX. $X.XXX was million $X.XXX compared the EBITDA, third Adjusted quarter for quarter of million

$X.XX was per $XX.XXX or shareholders’ million December XXXX, outstanding per million XXXX equity cash December $X.XX $X.XXX at cash, share. compared to XXXX outstanding was at XX, XX, XXXX. million This XX, and September share. at cash or compares equivalents At of XX, million to restricted $X.XXX $XX.XXX Shareholders’ equity September

This for our questions. you presentation. Paulette, back part over concludes the formal to to now like turn call of we the

Operator

the question-and-answer Thank session. first from you. Tony now comes Kamin. We’ll Instructions] And question our [Operator begin

Tony Kamin

Hi. Question well, several the – on questions. I’ve

– Medicare the on revenue percentage of proposal the Knife on you what and and Craig, about, your new comes Medicaid on First, Gamma that talked the Medicare Medicaid? from

Craig Tagawa

and – Generally, revenue from you stream know, – one, parts: broken fee-per-use our X it’s the as the side. retail the – into revenue is side

the we generally about for So for And – on retail would I sites XX%, retail probably say, a Medicare. Alexis, have XX%, that only side. it’s really handle our

Tony Kamin

Okay.

of XX% business your – could Is potentially of XX% So that... be affected?

Craig Tagawa

also that calculate to which advantage. Medicare advantage are those broken down in number it’s then And There haven’t might of we further that some of Yes. well. Medicare – as numbers those the be

at more look that. to have we So closely

Tony Kamin

do And flexibility there to case you this can is do anything mean, any you guess, here – that, I a this your difficult benefit? Okay. mean, I centers possibility actually protect could when and to, of, in kind is there you seems Or have secondarily – any with be – yourselves? I to

Craig Tagawa

advisers. significant In terms based it’s analysis of the think a final the at of be Gamma rule. some not Knife of on business, this impact is But our we going point this don’t to

Gamma standpoint, rule’s final going the going know to have think it’s from a significant don’t come be. we we don’t what to So Knife out But to the impact.

Tony Kamin

your number there’s out was that struck indications came the this to you more? can by you talk – little about for growing morning. a release I with a The in notion Back Okay. a that proton, of statement

Craig Tagawa

Sure.

we’re what necessarily think growing. are indications I seeing the is not

we’re comfortable at more Orlando with certain being by I is like think site. more They’re seeing sites, types indication the implemented becoming neck, and those growing volume that that of our the we’re physicians. lung, of liver seeing and per tumor procedures head

of the it’s So adoption a indications. think be – increased those word I may better for treatment

Tony Kamin

Northern could home San those? company’s I for for the really in of question base we think any – that us on area color some I color a get if cause we the center this know your come in to was there you that? potential – California. some more continue obviously to I Southern discussions and for Francisco think, the would, inflection the Can for long-term And centers shareholders, if probably get of You’ve you an know discussed more I additional Is going could that myself, on Okay. hold PBRT. believe, valuation. up in many

on to So you whatever eager really comment can that. hear

Craig Tagawa

California. me comment on Ernie have Southern of Let some in the that we’re doing things

Ernie Bates

is Southern forward we a hospital an Tony, oncology are a mentioned look earlier, to I in group work proton identify group with, Southern in operating we active partner this now. this as California, active in this you discussions, would with Yes. We California to for move which we – with parties to have establishing facility. Ernie. stated know, as potential with in and we’ve been agreement Hi time previously, we’ve do with radiation various as And some discussions

potentially much terms LINAC will if to both phases, facility actual We with we shorter and this in on to LINAC typically, adding also a that implementation frame machine. a of are do two it would accelerator complement proton the one start that that facility would protocols, would as and time the facility. be be in of Then also a because on contemplating certain accelerator the need linear to linear the proton have which and well based addition in if to out facility were we propose build the would the this first of LINAC proposed

continuing prospects our operations to very there. actually the So we’re down encouraged start by

tuned. So please stay

Tony Kamin

like my of questions. I customers. year. of for Gamma that you’re partner late a Knife, MR-Linac gotten last to great hear your December one in on it what product seems in XXX(k) noticed anticipated potentially you historical Elekta, interesting an for And be a historical had your lot saying, hospital would that It’s

it that of and has I whole it in given third LINAC becomes is Gamma – possible partner a Elekta, the proton that had for the at important historical it your but product So is a one this it you company for kind seems Tufts, like many place marketplace, maybe years category possible after Knife? in that know given this MR-Linac it’s

Craig Tagawa

Yes, really been these real third think parties, We’ve at I with capital think has because lend to They themselves of the we ourselves. high cost and it, self-partnering of looking possibilities like it so. systems.

coming at we’re So – that, looking are and that we looking are are also these at the the at out. MRI-LINAC, we PET/CT of MRI scanners looking some

So…

Tony Kamin

press the underway? can on you hospitals guys think too that? in to California. of Okay. that starting at you’re what sense don’t time? work are were making a something are we all say the period Or all to want comment I it you makes do that you to world is at talking look in about – for And hard, And long with, very Southern you take beginning you when but of process But the I progress on might

Craig Tagawa

number a think, are on, this quite on partners, had in good making I hospital of something, initiative, we and situations and with working discussions work this we’re we very years, as several those hospital been partner, But identified progress active and It’s now did know, have you we identified partner. not potential We’ve out. Tony. another for

So we’re by encouraged it. very

Tony Kamin

final That’s a great. And question. then

– love or to Just would there if continuing, I on, know have you somewhere. activity Area Bay one can identify at company in partner Area any Bay know, I Is comment the potential kind site? all the the of, to for a near

Craig Tagawa

Yes, for I site. a we’re looking think

have Francisco, I that. a obstacles forward find hope of as have able the to are a a sites. go be on overcome to secure we identified it’s San enough we few to and think site. site But a site a order but identified that there we’ve large not in know, couple you And to to in easy we

Tony Kamin

you and much a it quarter. good very was Great, Okay. thank

thank you. So

Craig Tagawa

Thanks, Tony.

Operator

comes ahead. question the Steve go Please next from Our Smith.

Unidentified Analyst

hi. Yes,

sheet. You’ve balance at your on value is chosen Why MEVION to that? zero

Craig Tagawa

financing. the to at in The MEVION. MEVION investment that was through oldest was that’s shareholders, value – XX Shared recent that no the And longer holds essentially, point, American most why And is that their acquired the an the X.

Unidentified Analyst

that now anything amount new mean worth were AMS’ anymore? shares financing, in ownership of, the miniscule the not that stake and that just issued? down there to is so Does Okay. sort many a is Or a,

Craig Tagawa

final that own MEVION MEVION – our transaction in – after the in we refinancing do underwent of shares anymore their company. not The any the

Unidentified Analyst

a get shareholders that existing It where what of bankruptcy, Is like kind happened? sounds almost nothing.

Craig Tagawa

– don’t was some It’s the I the financing. existing that a the bankruptcy, value Well, not but end shareholders, the of end know. the at of the zero result is

Unidentified Analyst

to go Tony’s to frustrating been comment long-term It’s a very Yes, I’m going ride. shareholders. about Okay. back

healthy XX You stock a or a the paid was share, dividend, $X half forward has a you at And profitable stock XX the go years, years, price fast back its $X was it value. it lost company.

talked there’s there a stock never Turkey, and lighting was happened. Russell lost. rooms – the operating the average you – a If in been XXX%. lot There Microcap way, it Along in a compare Index, was to where that initiative to is there which up about failed venture an the operation money initiative was was

person was think a and $X years happened. company never went same been And the three, was very and that, with to we’re brought then quarter, the million even It’s operations. working Gamma And the company it to buy getting compensation And a on you going Directors, forward go ride. top hear it’s saying, it’s can happen. there, shares. There frustrating – single again. of legal of there, Bates and every were four Board you we’re to I there, period to Dr. on you thing the yes, back the looking there where And a the fees and were Knife

MEVION part once more the it machines, that – work, a If and the to it’s what’s wasn’t the we people business of and that happened. the do years machine see leadership happened XX this to have part would the there. they company – thoughts just regarding get and little I’d of AMS, of just to your company? be. this they one out MEVION expect over like And know bit are about see what they hasn’t And where You last frightening

Craig Tagawa

to proton were say we they sale than business to. What did $X with thought. up – is than the much Knife the add just you were had of Gamma not finish color, us the longer the would roll we started, come close faster that fees out to to thought million I we taking They MEVION we When program when would honestly It’s referred nowhere some that. system not did. the

manufacturers system technology and wasn’t single-room very system, it’s first this the The makes system the the by XXXX. it adopted for the point a been mostly right operational sense. because at technology, good The has is all most

and protons on bullish the single-room very concept. still We’re

as had the we’re good mentioned looking And And very Beach, as other one Bates whether be doing still Long in through we both Ernie at they still promise, we’re – that. feel MRI-LINAC. pursuing basis, earlier, business And expanding and we protons think an at Knife our we’re all about opportunities, Mr. and or, hold domestically looking Gamma and Kamin those on mentioned, internationally. opportunistic

but the is – we the So taken us I than think we’re has it course it longer is that granted – think taking anticipated, right course.

Unidentified Analyst

Okay.

was with MEVION lot a that the MEVION of there, more, out ones know MEVION single-room system, competitive purchase two and out see system a proton contract product the system. come with the current look you is first to If of the I single-room you one Is under to in – company a the the still landscape? bigger players is

Craig Tagawa

also does actually a system two very they’ve MEVION which good system. and newest our imaging to adopted some orders initial upgraded Yes. complement is The we which – the SXXXi, really The that. one, to beam MEVION technology scanning, pencil

good very the feel system. we So about

Unidentified Analyst

I questions my were had. Those Okay.

think and I I I that. but of need leadership of The That questions, be your performance been said, Thanks. has your tough as again, to they and company, asked. the the important appreciate – the stock dismal, accountable – time. I it’s some held to answers it’s for being Sorry to think be

Craig Tagawa

you Thank very much.

Operator

question Please next from go Our comes Dunn. ahead. Lenny

Lenny Dunn

mentioned, have proton the line But Gamma finish have. Beach, to the and year? fine to performance as happen this the long it to center realistic previous and the terribly with it’s Knife even the to with that Long this expect is callers get you still Again, looks with been

Ernie Bates

I mentioned, having those earlier. are as Lenny, We discussions,

physician partners our a confident that with patients. success a this of going we to very our that proposed in that actually treating actually are specifically, partners but be to facility. is clinical as positive working and really are we’re And center the documentation, hand-in-hand we of element able are potential to future very this will that key once and I’ve mentioned, are we’re closing confident not So the successful open terms discussions direction. And going in do if sure be

Lenny Dunn

long this But put Well, sure, eventually, to it don’t I’m why it and be, I’m together. takes will it I that will know sure just happen.

Ernie Bates

are take also reason Steve’s been another understand, these they unfortunately, this to Yes, projects And that a proton comments process. lead these It a centers. time long And our has require times. looking we on does develop diversify why to based with long just frustrating – streams that’s modalities. revenue we’re other

we of As in Craig other provide medical at find at MR-guided ways there of costs. that think us well. linear some lower to we’re it, issue that lot be pressure. we’re add expand address services we demand of I the a is care looking and the LINACs this straight identifying will cost cancer this looking care complement to enable And now our health we’re marketplace looking mentioned, and accelerators that costs, model seeing that scope that in will environment as rising a where of initiatives containment we’re may to will

Lenny Dunn

And the as a Knife we see the that have soon? to time, long of a Gamma expect do pipeline does things take business, couple can not lead that because with reasonably in we

Craig Tagawa

Yes.

Icon be we’ll of in first think initiating year. I upgrades more the six some next months

Ernie Bates

awareness also we we’re in to see we the Peru where going the the marketing are operation, add, of we is Knife, entire and country to we’re successfully in initiatives, XX that in steady going initiatives, that serving place the growth the that putting better Gamma to Lenny, population. certain Gamma and I’ll – that on think to Gamma continue this people, of million be able only raise country a Knife Knife

there us large markets opportunity well looking for international other some growth a that we’ve think that is there as we as at. So been

accretive and be opportunities growth American also looking Shared. also acquisitions we’re both potential organic So to at could

Lenny Dunn

to young positive are enough and you. well, fruits. the soon. announcements hopeful some Thank I be to I continue see Well, both that enjoy And Dr. we’ll Bates Okay.

Ernie Bates

Thanks, Lenny.

Operator

And questions, I’ll no we now are turn back the Craig Tagawa. showing and call further to

Craig Tagawa

everyone, like for I’d thank joining to this afternoon. again, us

Shared to Services, at continue to Health. strive for remain operating growth replicate Orlando success the we previously, said As driven I achieved we we’ve at Hospital American as

the sites Knife, incremental opportunities tumors. for business large remain capture optimistic at existing upgrades, will continued through implementation Gamma revenue which our in we to us In Icon gains enable of

XXXX you a call you, March. to and in afternoon, forward wish thank to great with year-end again. our look on Have early speaking We conference

Operator

disconnect. may and participating, gentlemen. Thank you, Thank and ladies concludes conference. for today’s you now This you

American Shared Hospital Services (AMS) 9 Nov 192019 Q3 Earnings call transcript