American Shared Hospital Services(AMS) - 2024 Q3 - Quarterly Report

Revenue and Growth - The Company recognized leasing revenue of approximately $3,312,000 and$11,464,000 for the three and nine-month periods ended September 30, 2024, compared to $3,946,000 and$12,987,000 for the same periods in the prior year, respectively [90]. - Retail revenues for the three and nine-month periods ended September 30, 2024 were approximately $3,687,000 and$7,807,000, compared to $988,000 and$2,440,000 for the same periods in the prior year [93]. - Revenues for the three and nine-month periods ended September 30, 2024 increased by $1,865,000 (36.4$3,644,000 (23.3%) to $6,999,000 and$19,271,000, respectively, compared to the same periods in the prior year [99]. - Retail segment revenues increased by $2,699,000 (273.5$5,367,000 (220.5%) to $3,687,000 and$7,807,000 for the three and nine-month periods ended September 30, 2024, primarily due to the RI Acquisition [99]. - Revenues from the PBRT system increased by $97,000 (4.4$308,000 (4.4%) to $2,316,000 and$7,386,000 for the three and nine-month periods ended September 30, 2024, driven by higher volumes and a shift in payor mix [100]. - Gamma Knife revenue decreased by $895,000 (32.9$1,218,000 (14.6%) to $1,821,000 and$7,131,000 for the three and nine-month periods ended September 30, 2024, due to lower procedure volumes [102]. Acquisitions and Investments - 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 [83]. - The Company recorded a net bargain purchase gain of $3,942,000 related to the RI Acquisition, which closed on May 7, 2024, after acquiring 60$2,850,000 [114]. - As of September 30, 2024, the Company had commitments totaling $13,383,000 for the purchase and installation of four Leksell Gamma Knife Esprit Systems and two Linear Accelerator systems [128]. - The Supplemental Term Loan of$2,700,000 was added to the credit agreement to finance capital expenditures in Puebla, Mexico [122]. Financial Performance and Expenses - Total costs of revenue increased by $2,597,000 (85.6$4,191,000 (46.0%) to $5,629,000 and$13,290,000 for the three and nine-month periods ended September 30, 2024 [106]. - Selling and administrative expenses increased by $188,000 (10.8$436,000 (8.3%) to $1,923,000 and$5,698,000 for the three and nine-month periods ended September 30, 2024, due to higher personnel costs and legal fees [111]. - Interest expense increased by $59,000 (21.3$245,000 (29.7%) to $336,000 and$1,070,000 for the three and nine-month periods ended September 30, 2024, attributed to higher borrowings and interest rates [113]. Cash and Debt Management - The Company had cash, cash equivalents, and restricted cash of $14,077,000 as of September 30, 2024, an increase of$269,000 from December 31, 2023 [119]. - Working capital decreased by $1,518,000 (15.6$8,159,000 as of September 30, 2024, primarily due to increases in accounts payable and accrued liabilities [120]. - The Company has a combined long-term debt of $14,375,000 as of September 30, 2024 [126]. - The Company entered into a$22,000,000 credit agreement with Fifth Third Bank, which includes a $9,500,000 term loan, a$5,500,000 delayed draw term loan, and a $7,000,000 revolving line of credit [121]. - The Company borrowed$4,500,000 under the revolving line of credit as of September 30, 2024 [128]. - The Company is subject to covenants under the credit agreement, including a minimum fixed charge coverage ratio of 1.25 to 1.0 and a total funded debt to EBITDA ratio of 3.0 to 1.0 [123]. - The Company is in compliance with all debt covenants as of September 30, 2024 [125]. Regulatory and Market Conditions - The Centers for Medicare and Medicaid established a 2024 reimbursement rate of approximately $7,420 for a Medicare Gamma Knife treatment, down from$7,691 in 2023 [85]. - The approximate CMS reimbursement rates for PBRT treatments in 2024 are $561 for simple treatments and$1,362 for intermediate and complex treatments, compared to $572 and$1,323 in 2023, respectively [85]. Operational Overview - The Company operates ten domestic Gamma Knife units and one PBRT system in the United States as of September 30, 2024 [89]. - The Company has two international Gamma Knife units in operation in Lima, Peru, and Guayaquil, Ecuador, as part of its retail segment [89]. - The Company’s leasing contracts typically have a ten-year term and are classified as either fee per use or revenue sharing [90]. - The Company’s PBRT system at Orlando Health operates under a revenue share contract within the leasing segment [89]. Related Party Transactions - Total related party transactions for the three months ended September 30, 2024, amounted to $694,000, compared to$2,338,000 for the same period in 2023 [132]. - The Company has cash on hand of $14,077,000 as of September 30, 2024, and is actively seeking financing resources for future projects [128].