American Shared Hospital Services (AMS) Q1 2025 Earnings Call May 15, 2025 12:00 PM ET Company Participants Kirin Smith - PresidentRaymond Stachowiak - Executive ChairmanGary Delanois - CEOScott Frech - CFO Conference Call Participants M. Marin - Senior Analyst Operator Good day, and welcome to the American Shared Hospital Services First Quarter twenty twenty five Earnings Conference Call. All participants will be in listen only mode. Note this event is being recorded. I would now like to turn the conferenc ...

Financial Data and Key Metrics Changes - For Q1 2025, total revenue increased by 17% to $6.1 million compared to $5.2 million in Q1 2024 [16] - Adjusted EBITDA for Q1 2025 was $949,000, down from $1.75 million in Q1 2024 due to lower procedure volume [7][20] - Net loss for Q1 2025 was $625,000 or $0.10 per diluted share, compared to net income of $119,000 or $0.02 per diluted share in Q1 2024 [20] Business Line Data and Key Metrics Changes - Revenue from the Direct Patient Services segment was $3.1 million for Q1 2025, a 224% increase from $963,000 in Q1 2024, driven by the Rhode Island acquisition and operations in Puebla, Mexico [16][17] - Revenue from the equipment leasing segment decreased to $3 million from $4.3 million in Q1 2024 [17] - Gamma Knife revenue declined by 18% to $2.1 million, with a 24% decrease in procedures [18] - Proton Beam Radiation Therapy revenue decreased by 38% to $1.6 million, with a 35% decrease in treatment fractions [18] Market Data and Key Metrics Changes - The company has established Gamma Knife centers in Peru and Ecuador, with a new center in Puebla, Mexico, enhancing its international presence [12] - The Rhode Island acquisition represents a significant expansion in the U.S. market, with plans for a fourth radiation therapy center and the first proton beam facility in the state [13][14] Company Strategy and Development Direction - The company is transitioning from a cancer treatment equipment leasing focus to a more patient-centric service model, aiming for long-term profitable growth [6][8] - The acquisition of Rhode Island centers and international expansion are key components of the growth strategy [10][12] - Upcoming projects include a new center in Rhode Island and a joint venture for a Gamma Knife center in Guadalajara, Mexico, which is expected to generate revenue by the end of the year [12][14] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the long-term growth potential despite short-term fluctuations in treatment volumes [15][28] - The company is optimistic about the impact of staffing strategies and upgraded technology on future treatment volumes and profitability [11][15] - Management does not foresee significant risks from potential changes in Medicaid reimbursement rates, as most revenue comes from private insurers and Medicare [23][24] Other Important Information - The company maintains a strong balance sheet with cash and cash equivalents of $11.5 million as of March 31, 2025 [20] - Shareholders' equity was $24.7 million, reflecting a slight decrease from the previous quarter [20] Q&A Session Summary Question: Impact of lower procedure numbers and potential regulatory changes - Management indicated that changes in Medicaid reimbursement are not expected to significantly impact the company, as most revenue is derived from private insurers and Medicare [23][24] Question: Flexibility in managing fixed costs with new center openings - Management confirmed that expanding the Direct Patient Services segment will provide more control over activities and patient growth, enhancing fixed cost absorption [25]

Revenue and Financial Performance - The Company recognized leasing revenue of approximately $2,991,000 for the three-month period ended March 31, 2025, compared to $4,253,000 for the same period in 2024, with PBRT services contributing approximately $1,642,000 and $2,649,000, respectively [97]. - Direct patient services revenues for the three-month period ended March 31, 2025, were approximately $3,121,000, a significant increase from $963,000 in the same period of 2024 [100]. - Revenues increased by $896,000 to $6,112,000 for Q1 2025 compared to $5,216,000 for Q1 2024 [107]. - Revenues from the leasing segment decreased by $1,262,000 to $2,991,000 due to lower Gamma Knife volumes and the expiration of two customer contracts [107]. - Direct patient services revenue increased by $2,158,000 to $3,121,000, primarily driven by the RI Companies following the acquisition on May 7, 2024 [107]. - Radiation therapy revenues from the acquired facilities and the Puebla facility totaled $2,374,000 for Q1 2025, compared to $0 for Q1 2024 [108]. - Total costs of revenue increased by $2,097,000 to $5,170,000 for Q1 2025 compared to $3,073,000 for Q1 2024 [113]. - Net loss attributable to American Shared Hospital Services increased by $744,000 to a loss of $625,000, or $0.10 per diluted share for Q1 2025 [123]. Assets and Liabilities - As of March 31, 2025, accounts receivable balances under ASC 606 were $6,120,000, compared to $1,882,000 as of March 31, 2024 [100]. - Working capital decreased by $4,821,000 to $11,032,000 as of March 31, 2025, compared to $15,853,000 at December 31, 2024 [125]. - The Company had cash, cash equivalents, and restricted cash of $11,491,000 as of March 31, 2025, an increase of $216,000 from December 31, 2024 [124]. - Long-term debt was $18,372,000 as of March 31, 2025, compared to $18,462,000 at December 31, 2024 [129]. - As of March 31, 2025, the Company had long-term debt of $19,926,000 on its condensed consolidated balance sheets [136]. Debt and Financing - The DFC Loan has a first tranche outstanding amount of $1,642,000 with a fixed interest rate of 3.67% and a second tranche of $1,806,000 at 7.49% [131]. - Interest expense increased by $84,000 to $433,000 for Q1 2025 due to increased borrowings [119]. - The Company is in compliance with all covenants related to the DFC Loan as amended and waived as of March 31, 2025 [133]. - The Company received a waiver and amendment from DFC for certain covenants as of December 31, 2023, and through December 31, 2024 [132]. Commitments and Obligations - Total commitments for purchasing and installing three Leksell Gamma Knife Esprit Systems and two Linear Accelerator systems amounted to $9,618,000 as of March 31, 2025 [138]. - The Company has commitments for service and maintenance of its Gamma Knife, LINAC, and PBRT equipment totaling $12,252,000 as of March 31, 2025 [140]. - The Company has an obligation to maintain a minimum fixed charge coverage ratio of 1.25 and a maximum funded debt to EBITDA ratio of 3.0 to 1.0 under the Credit Agreement [130]. Operational Developments - The Company acquired 60% of the equity interests of the RI Companies on May 7, 2024, which operate three radiation therapy facilities in Rhode Island [90]. - The Company operates ten domestic Gamma Knife units and one PBRT system in the United States as of March 31, 2025 [96]. - The Company’s facilities in Rhode Island, Peru, Ecuador, and Mexico are considered direct patient services, where contracts exist between the Company and individual patients [90]. - The approximate CMS reimbursement rates for PBRT treatments in 2025 are $578 for simple treatments and $1,276 for intermediate and complex treatments [92]. - The Company’s revenue recognition policies are based on ASC 842 and ASC 606, with revenues recognized when services are rendered and collectability is reasonably assured [96]. Related Party Transactions - The Company recorded total related party transactions of $1,558,000 for the three months ended March 31, 2025, compared to $2,586,000 for the same period in 2024 [142]. Equipment and Salvage Value - The Company has not assigned any salvage value to its PBRT or LINAC equipment as of March 31, 2025 [101].

Core Viewpoint - American Shared Hospital Services reported a 17% year-over-year revenue growth for Q1 2025, driven by strategic expansion and operational strength despite lower treatment volumes and some seasonality [2][5][6]. Financial Performance - Q1 2025 revenue increased to $6.1 million from $5.2 million in Q1 2024, reflecting a 17% growth [6]. - Direct patient services revenue surged by 224% to $3.1 million, primarily due to the acquisition of Rhode Island centers and the new facility in Puebla, Mexico [5][6]. - Revenue from the medical equipment leasing segment decreased to $3.0 million from $4.3 million, attributed to lower Gamma Knife volumes and the expiration of two customer contracts [7]. - Total proton beam radiation therapy revenue fell to $1.6 million from $2.6 million due to normal cyclical fluctuations [7]. - Radiation therapy revenue reached $2.4 million for Q1 2025, compared to $0 in Q1 2024, driven by the acquisition of Rhode Island facilities and the launch in Puebla, Mexico [8]. - Gross margin for Q1 2025 was $942,000, down from $2.1 million in Q1 2024, primarily due to lower treatment volumes [8]. - The net loss attributable to the company was $625,000, or $0.10 per share, compared to a net income of $119,000, or $0.02 per diluted share, in Q1 2024 [8][10]. Operational Highlights - The company has begun to see an increase in treatment volumes in April 2025 and expects further recovery in the latter half of the year [3]. - Successful acquisition of Rhode Island radiation therapy treatment centers and the opening of a facility in Puebla, Mexico are key growth drivers [3]. - The company is exploring additional acquisition opportunities and anticipates closing on one within the fiscal year [3]. - The linear accelerator business reported $2.4 million in revenue for Q1 2025, compared to zero in Q1 2024, showcasing the effectiveness of the diversification strategy [3][5]. Balance Sheet Overview - As of March 31, 2025, cash, cash equivalents, and restricted cash totaled $11.5 million, slightly up from $11.3 million at December 31, 2024 [10]. - Shareholders' equity (excluding non-controlling interests) was $24.6 million, or $3.82 per outstanding share, down from $25.2 million, or $3.92 per share at the end of 2024 [10][18].

Core Viewpoint - American Shared Hospital Services reported a 17% year-over-year revenue growth for Q1 2025, driven by strategic expansions and operational strengths despite some declines in treatment volumes [4][6]. Financial Performance - Revenue for Q1 2025 was $6.1 million, up from $5.2 million in Q1 2024, primarily due to expanded radiation therapy services [4][6]. - Direct patient services revenue surged by 224% to $3.1 million, attributed to the acquisition of Rhode Island centers and the new facility in Puebla, Mexico [4][6]. - Revenue from the medical equipment leasing segment decreased to $3.0 million from $4.3 million, influenced by lower Gamma Knife volumes and contract expirations [5][6]. Operational Highlights - The company experienced a gross margin of $942,000 in Q1 2025, down from $2.1 million in Q1 2024, mainly due to lower treatment volumes [7]. - A net loss of $625,000 was reported for Q1 2025, compared to a net income of $119,000 in the same period last year [7][16]. - Adjusted EBITDA for Q1 2025 was $0.9 million, a decrease from $1.7 million in Q1 2024 [8][18]. Strategic Initiatives - The company is optimistic about future growth, with plans for further acquisitions and operational efficiencies to enhance profitability [3][6]. - New facilities in Rhode Island and Mexico are expected to contribute to long-term growth, with a focus on expanding direct patient care services [3][4]. Balance Sheet Overview - As of March 31, 2025, cash and cash equivalents totaled $11.5 million, slightly up from $11.3 million at the end of 2024 [9][17]. - Shareholders' equity was reported at $24.6 million, down from $25.2 million at the end of the previous year [9][17].

Core Viewpoint - American Shared Hospital Services (AMS) is set to discuss its first quarter 2025 financial results in a conference call scheduled for May 15, 2025, at 12:00 pm ET [1]. Financial Results Announcement - The financial results press release for the first quarter of 2025 will be issued before the market opens on May 15, 2025 [2]. Teleconference and Webcast Information - Domestic callers can join the call by dialing 1-844-413-3972, while international callers can dial 1-412-317-5776, at least 10 minutes prior to the start [3] - A simultaneous webcast will be available on the company's website [3] - A replay of the call will be accessible until May 22, 2025, through specified phone numbers and the company's website [3] Company Overview - AMS is a leading provider of turnkey solutions for cancer treatment centers, health systems, and cancer networks in North and South America [4] - The company collaborates with partners to enhance cancer service lines and provide integrated care close to patients' homes [4] - AMS shares capital investment costs and profitability with health system partners based on ownership interests [4]

Core Viewpoint - American Shared Hospital Services (AMS) is set to hold its Annual Meeting of Shareholders on June 26, 2025, at 9:00 a.m. CT, focusing on its role as a provider of stereotactic radiosurgery equipment and advanced radiation therapy services [1][2]. Group 1 - The Annual Meeting will be conducted in-person at 3041 Woodcreek Drive, 200, Downers Grove, IL 60515 [2]. - The record date for determining shareholders entitled to notice and to vote at the Annual Meeting is set for April 28, 2025 [2]. - AMS is recognized as a leading provider of turnkey solutions to cancer treatment centers and health systems across North and South America [3]. Group 2 - The company collaborates with partners to enhance cancer service lines and deliver integrated cancer care in local settings [3]. - AMS shares capital investment costs and profitability with health system partners based on their ownership interests [3].

Core Viewpoint - American Shared Hospital Services (AMS) is actively participating in the Planet MicroCap Showcase: VEGAS 2025, highlighting its role as a leading provider of stereotactic radiosurgery equipment and advanced radiation therapy services [1][2]. Company Overview - AMS is a prominent provider of turnkey solutions for cancer treatment centers, health systems, and cancer networks across North and South America [3]. - The company collaborates with partners to enhance cancer service lines and deliver integrated cancer care in local settings [3]. - AMS shares capital investment costs and profitability with health system partners based on ownership interests [3]. Event Details - The presentation at the Planet MicroCap Showcase will take place on April 23, 2025, at 12:00 PM ET, hosted by Ray Stachowiak and Gary Delanois [2]. - Investors can access the live presentation through a provided webcast link [2]. - One-on-one investor meetings will be conducted in person at the Paris Hotel & Casino in Las Vegas, NV [2].

Acquisition and Expansion - The Company acquired a 60% interest in three existing linear accelerator facilities in Rhode Island for a purchase price of $2,850,000, closing the transaction on May 7, 2024[22][28]. - The Company began treating patients at a stand-alone radiation therapy facility in Puebla, Mexico in July 2024[37]. - The Company has established a joint venture in Puebla, Mexico, with an 85% ownership interest, to treat public- and private-paying cancer patients[29]. - The Company expects to construct a linear accelerator facility in Bristol, Rhode Island, with a purchase price of $1,185,000 for the property, anticipating patient treatment to begin in approximately 18 to 24 months[33]. - The Company completed the acquisition of 60% of the equity interests of the RI Companies on May 7, 2024, which operate three radiation therapy facilities in Rhode Island[168]. - The Company acquired real property in Bristol, Rhode Island for $1,185,000 on February 6, 2025[150]. Revenue and Financial Performance - Total revenue for 2024 was $28,340,000, representing a 32.9% increase from $21,325,000 in 2023, driven by new facilities in Puebla, Mexico, and the acquisition of RI Companies[192]. - Revenue from Gamma Knife services in 2024 was $9,716,000, representing 34.3% of total revenue, down from $10,992,000 and 51.5% in 2023[45]. - PBRT revenue decreased by 1.8% to $9,952,000 in 2024, with the number of fractions down 4.3% to 5,139, while average revenue per fraction increased by 2.6% to $1,937[194]. - Gamma Knife revenue fell 11.6% to $9,716,000, with the number of procedures decreasing by 9.3% to 1,084 due to contract expirations[196]. - For the year ended December 31, 2024, 56% of the Company's revenue was derived from the leasing segment, while 44% came from the retail segment[191]. - Revenue sharing arrangements accounted for approximately 47% of total revenue for the year ended December 31, 2024, down from 70% in 2023[175]. - The Company recognized retail revenues of approximately $12,556,000 for the year ended December 31, 2024, compared to $3,553,000 in 2023[179]. Debt and Financing - The Company entered into a $22 million credit agreement in April 2021, which includes a $7 million revolving line of credit for future projects[54]. - A Supplemental Term Loan of $2.7 million was added to the credit agreement in January 2024, maturing on January 25, 2030, to finance capital expenditures in Puebla, Mexico[55]. - A Second Supplemental Term Loan of $7 million was added in December 2024, maturing on December 18, 2029, for capital expenditures related to domestic Gamma Knife leasing operations[56]. - The Company has incurred additional debt through various amendments to its credit agreements, including a $2,700,000 term loan and a $7,000,000 term loan[102]. - As of December 31, 2024, the Company's combined long-term debt, net, totaled $20,182,000, with a $7,000,000 Revolving Line available for future projects[103]. Operational Challenges and Risks - The Company is not in compliance with certain covenants of the DFC Loan as of December 31, 2023, but has received waivers and amendments to address these issues[57]. - The integration of the RI Companies poses risks, including potential disruptions to existing operations and added costs for regulatory compliance[110]. - The Company is addressing a material weakness in internal controls over financial reporting, which could impact its ability to report financial results accurately[114]. - The Company has experienced equipment impairment, with its Gamma Knife portfolio determined to have no remaining salvage value as of December 31, 2024[131]. - The Company faces competition from conventional neurosurgery and radiation therapy, with Gamma Knife radiosurgery being an alternative due to its favorable morbidity outcomes[59]. - The Company is not in compliance with certain debt covenants, but has received waivers to avoid default, which could adversely affect financial condition if future waivers are not granted[107]. Market and Regulatory Environment - The repeal of the Affordable Care Act's individual mandate could lead to a decrease in the number of insured patients seeking Gamma Knife or radiation therapy treatment[78]. - The Company believes it is in compliance with the federal anti-kickback statute, which has been subject to evolving interpretations and could impact its operations[77]. - The Company is subject to various federal civil and criminal laws targeting false claims and fraudulent billing activities, and it believes it is in compliance with the Federal False Claims Act[81]. - The Federal reimbursement rate for outpatient Gamma Knife treatment has been significantly reduced, potentially impacting the Company's return on investment[98]. - The average Medicare reimbursement delivery rate for Gamma Knife is projected to decrease from $7,691 in 2023 to $7,420 in 2024, before rising to $7,645 in 2025[71]. Employee and Operational Structure - The Company has a workforce of 43 full-time employees in the United States and additional staff in Peru, Ecuador, and Mexico, with no union representation[88]. - The Company maintains general and professional liability insurance in the United States, which it believes is adequate for its business operations[87]. - The Company has long-term leases for many facilities, and failure to renew these leases could require relocation or closure of facilities, impacting operations[119]. Technology and Equipment - The Company has begun the process to upgrade its Gamma Knife unit in Peru with an Esprit, expected to be completed around April 2025[42]. - The Company upgraded its Gamma Knife unit in Ecuador to the Esprit, enhancing procedure efficiency[167]. - The Company completed two Esprit upgrades and began installation at a third site during 2024, indicating ongoing investment in technology[219]. Cash Flow and Liquidity - The Company had cash and cash equivalents of $11,275,000 at December 31, 2024, down from $13,808,000 at December 31, 2023, a decrease of $2,533,000[215]. - Operating activities generated $167,000 in cash in 2024, driven by net income of $1,532,000 and non-cash charges for depreciation and amortization of $6,174,000[216]. - Trade accounts receivable increased by $7,267,000 to $11,610,000 at December 31, 2024, with days sales outstanding (DSO) rising to 150 days from 74 days[217]. - The increase in DSO was attributed to the addition of four retail sites during 2024, which generally have longer collection periods[217]. Cybersecurity and Macroeconomic Factors - The Company has established cybersecurity guidelines to protect its IT infrastructure, but there is no guarantee against evolving cyber threats[137]. - The Company has established a comprehensive cybersecurity governance framework overseen by the IT Manager and the Board of Directors to manage cybersecurity risks[144]. - Macroeconomic conditions, including inflation and geopolitical tensions, could negatively impact the Company's business and capital investment decisions[129].

Financial Data and Key Metrics Changes - For fiscal year 2024, total revenue increased by 32.9% to $28.34 million compared to fiscal year 2023 [2] - Adjusted EBITDA for fiscal year 2024 increased by 8.9% to $8.9 million [2][18] - In Q4 2024, total revenue rose by 59.2% to $9.1 million compared to Q4 2023 [18] - Net income for fiscal year 2024 increased by 258% to $2.2 million, or $0.33 per diluted share [17] Business Line Data and Key Metrics Changes - Revenue from direct patient services segment for fiscal year 2024 was $12.6 million, a 253% increase from $3.4 million in fiscal year 2023 [13][14] - Revenue from the equipment leasing segment decreased by 15.6% to $17.8 million in fiscal year 2024 [14] - Gamma Knife revenue decreased by 11.6% to $9.7 million for fiscal year 2024 [14] - Proton beam therapy revenue decreased by 1.8% to $10 million in fiscal year 2024 [15] Market Data and Key Metrics Changes - The company has established its first direct patient services cancer treatment centers in the U.S. with the acquisition of three centers in Rhode Island [11] - The international business segment is expected to see continued growth, particularly in Ecuador and the newly opened center in Puebla, Mexico [9][10] Company Strategy and Development Direction - The company is transitioning from a cancer treatment equipment leasing focus to a more patient-centric service model [1] - Strategic initiatives include expanding the business footprint in Rhode Island and establishing new treatment centers in Mexico [10][11] - The company aims to enhance operational efficiencies and improve patient care through partnerships with local health systems [7][32] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the growth strategy and the ability to navigate industry challenges [39][40] - The company anticipates stronger international growth and increased treatment volumes from new facilities [10][12] - Management highlighted the importance of operational efficiencies and technology investments to support growth initiatives [16][39] Other Important Information - The company ended the year with cash and cash equivalents of $11.3 million, down from $13.8 million at the end of 2023 [25] - Shareholders' equity increased to $25.2 million, or $3.92 per outstanding share, compared to $22.6 million, or $3.59 per outstanding share, at the end of 2023 [25] Q&A Session Summary Question: Benefits of expanding footprint in Rhode Island - Analyst inquired about additional benefits from expanding the footprint in Rhode Island and potential economies of scale with new facilities [30] Response: Synergies from partnerships - Management confirmed that there will be synergies from the relationship with Brown University Health and other local health systems, enhancing cancer care provision in the state [32]