American Shared Hospital Services(AMS) - 2019 Q3 - Quarterly Report

PART I – FINANCIAL INFORMATION This section provides the unaudited condensed consolidated financial statements and management's discussion and analysis for the period ended September 30, 2019 Item 1. Financial Statements This section presents the unaudited condensed consolidated financial statements for American Shared Hospital Services for the period ended September 30, 2019 Condensed Consolidated Balance Sheets The balance sheet shows a decrease in total assets from $57.5 million at the end of 2018 to $55.3 million as of September 30, 2019, primarily due to a reduction in net property and equipment Condensed Consolidated Balance Sheet Highlights (in thousands) | Account | September 30, 2019 | December 31, 2018 | | :--- | :--- | :--- | | Total Current Assets | $10,244 | $9,946 | | Net Property and Equipment | $43,003 | $46,694 | | Total Assets | $55,258 | $57,502 | | Total Current Liabilities | $8,778 | $9,474 | | Total Liabilities | $23,836 | $26,454 | | Total Shareholders' Equity | $31,422 | $31,048 | | Total Liabilities and Equity | $55,258 | $57,502 | Condensed Consolidated Statements of Operations For Q3 2019, revenues increased to $5.3 million, with net income stable at $165,000, while nine-month revenues grew to $15.8 million, but net income decreased to $466,000 Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2019 | Q3 2018 | 9 Months 2019 | 9 Months 2018 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $5,301 | $4,470 | $15,819 | $14,944 | | Gross Margin | $1,813 | $1,634 | $5,479 | $5,921 | | Operating Income | $446 | $185 | $1,263 | $1,624 | | Net Income (to AMS) | $165 | $168 | $466 | $845 | | Diluted EPS | $0.03 | $0.03 | $0.08 | $0.14 | Condensed Consolidated Statement of Shareholders' Equity Shareholders' equity increased from $31.0 million at the beginning of the year to $31.4 million by September 30, 2019, driven by net income and stock-based compensation - Total shareholders' equity increased from $31,048,000 on January 1, 2019, to $31,422,000 on September 30, 2019[5] - Key changes during the nine months ended September 30, 2019 included net income of $1,028,000 (comprising $466,000 for ASHS and $562,000 for noncontrolling interests), stock-based compensation of $170,000, and cash distributions to noncontrolling interests of $865,000[5][7] Condensed Consolidated Statements of Cash Flows For the nine months ended September 30, 2019, net cash provided by operating activities was $6.1 million, with total cash, cash equivalents, and restricted cash decreasing by $145,000 Cash Flow Summary (Nine Months Ended September 30, in thousands) | Category | 2019 | 2018 | | :--- | :--- | :--- | | Net Cash from Operating Activities | $6,127 | $6,225 | | Net Cash used in Investing Activities | $(729) | $(1,187) | | Net Cash used in Financing Activities | $(5,543) | $(5,351) | | Net Change in Cash | $(145) | $(313) | | Cash at End of Period | $1,647 | $2,189 | Notes to Condensed Consolidated Financial Statements This section details accounting policies, business segments, new lease accounting standards, property and equipment, debt, and stock-based compensation - The company operates in a single reportable segment: leasing radiosurgery and radiation therapy equipment to healthcare providers[17] - The company adopted the new lease accounting standard (ASU 2016-02) on January 1, 2019, recognizing right-of-use assets and lease liabilities of approximately $1,362,000 for operating leases[18] Property and Equipment (in thousands) | Category | Sept 30, 2019 | Dec 31, 2018 | | :--- | :--- | :--- | | Medical equipment and facilities | $90,672 | $94,031 | | Gross Property and Equipment | $96,839 | $100,702 | | Accumulated depreciation | $(53,836) | $(54,008) | | Net Property and Equipment | $43,003 | $46,694 | - As of September 30, 2019, the company had outstanding long-term debt of $3,896,000 and obligations under capital leases of $12,853,000[24][25] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses financial results, revenue trends, operating costs, profitability, liquidity, capital resources, and future commitments for the period Results of Operations Total revenues for the nine months ended September 30, 2019, increased by 5.8% to $15.8 million, primarily driven by PBRT, while net income declined to $466,000 due to higher operating expenses Revenue by Source (Nine Months Ended Sept 30, in thousands) | Revenue Source | 2019 | 2018 | Change | Change % | | :--- | :--- | :--- | :--- | :--- | | PBRT System | $4,728 | $3,622 | +$1,106 | +30.5% | | Gamma Knife | $10,320 | $10,476 | -$156 | -1.5% | | IGRT Contract | $771 | $846 | -$75 | -8.9% | | Total Revenue | $15,819 | $14,944 | +$875 | +5.8% | - The increase in PBRT revenue was driven by higher volumes (4,407 fractions in 2019 vs. 3,597 in 2018) and a higher average reimbursement rate[47][48] - The decrease in Gamma Knife revenue for the nine-month period was attributed to lower volumes and a decrease in the average reimbursement rate at retail sites[49] - Total costs of revenue increased by $1.3 million for the nine-month period, driven by higher maintenance costs for the PBRT system, increased depreciation, and higher direct operating costs at retail sites[52][53][54][55] Liquidity and Capital Resources As of September 30, 2019, the company held $1.65 million in cash, with working capital of $1.47 million, deemed sufficient to meet obligations over the next 12 months Key Liquidity Metrics (as of Sept 30, 2019, in thousands) | Metric | Amount | | :--- | :--- | | Cash, cash equivalents and restricted cash | $1,647 | | Working Capital | $1,466 | | Shareholders' Equity | $31,422 | | Total Assets | $55,258 | - The company has scheduled debt and capital lease payments of approximately $1.85 million and $5.03 million, respectively, over the next 12 months[65] Commitments The company has significant future commitments totaling $71.3 million, primarily for equipment purchases, capital leases, and debt - The company has purchase commitments for two MEVION S250i PBRT systems for $34.0 million, with delivery projected no later than 2023[68][69] - Commitments for Gamma Knife and LINAC systems, including Cobalt-60 reloads and Icon upgrades, total $6,960,000, scheduled between 2020 and 2022[70] Total Contractual Obligations (in thousands) | Category | Total | Next 12 Months (est.) | 2020-2022 | | :--- | :--- | :--- | :--- | | Long-term debt | $4,383 | $1,242 | $2,686 | | Capital leases | $14,509 | $4,142 | $11,947 | | Future equipment purchases | $40,960 | $0 | $40,960 | | Equipment service contracts | $10,182 | $344 | $7,651 | | Total | $71,258 | $5,728 | $64,206 | Item 3. Quantitative and Qualitative Disclosures about Market Risk The company does not hold derivative instruments or significant market-sensitive investments, thus limiting its exposure to market risk - The Company does not hold derivative instruments and has no significant market-sensitive investments, limiting its exposure to market risk[74] Item 4. Controls and Procedures Management concluded that the company's disclosure controls and procedures were effective as of September 30, 2019, with no material changes to internal control over financial reporting - The CEO and CFO concluded that the company's disclosure controls and procedures were effective as of September 30, 2019[76] - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, such controls[78] PART II - OTHER INFORMATION This section covers other information including legal proceedings, risk factors, sales of equity securities, and exhibit index Other Information Items This section confirms no legal proceedings, no changes to risk factors, no unregistered sales of equity securities, and no defaults upon senior securities during the period - Item 1: No legal proceedings were reported[80] - Item 1A: There are no changes to the risk factors listed in the Company's Annual Report on Form 10-K for the year ended December 31, 2018[80] - Items 2, 3, 4, and 5 reported no activity or were not applicable[80] Item 6. Exhibit Index This section lists the exhibits filed with the report, including a services agreement amendment, CEO and CFO certifications, and XBRL data files - The report includes certifications from the CEO and CFO as required by Sections 302 and 906 of the Sarbanes-Oxley Act[82] - Interactive Data Files (XBRL) are included as exhibits[82]