Sensus Healthcare(SRTS) - 2022 Q3 - Quarterly Report

PART I – Financial Information Item 1. Condensed Consolidated Financial Statements The unaudited condensed consolidated financial statements for the period ended September 30, 2022, reflect significant growth in assets, revenue, and profitability, including a $21.4 million net income driven by an asset sale Condensed Consolidated Balance Sheets As of September 30, 2022, the balance sheet shows a 70% increase in total assets to $54.8 million, driven by a surge in cash and a substantial rise in stockholders' equity Condensed Consolidated Balance Sheet Highlights (in thousands) | Financial Metric | Sep 30, 2022 (unaudited) | Dec 31, 2021 | | :--- | :--- | :--- | | Assets | | | | Cash and cash equivalents | $37,577 | $14,519 | | Total current assets | $51,530 | $31,245 | | Total assets | $54,759 | $32,240 | | Liabilities & Equity | | | | Total current liabilities | $6,584 | $5,963 | | Total liabilities | $7,635 | $6,225 | | Retained earnings (Accumulated deficit) | $3,473 | $(17,942) | | Total stockholders' equity | $47,124 | $26,015 | Condensed Consolidated Statements of Operations The statements of operations reveal substantial revenue growth and a significant profitability turnaround for the three and nine months ended September 30, 2022, largely due to an asset sale Statement of Operations Summary (in thousands, except per share data) | Metric | Q3 2022 | Q3 2021 | 9 Months 2022 | 9 Months 2021 | | :--- | :--- | :--- | :--- | :--- | | Revenues | $9,010 | $5,525 | $31,428 | $14,017 | | Gross Profit | $5,874 | $3,201 | $21,278 | $8,132 | | Income (loss) from operations | $2,161 | $195 | $10,659 | $(1,199) | | Gain on sale of assets | - | - | $12,779 | - | | Net income (loss) | $1,829 | $195 | $21,415 | $(1,199) | | Diluted EPS | $0.11 | $0.01 | $1.28 | $(0.07) | Condensed Consolidated Statements of Cash Flows Cash and cash equivalents increased by $23.1 million for the nine months ended September 30, 2022, driven by strong operating cash flow and a significant asset sale Cash Flow Summary for the Nine Months Ended Sep 30 (in thousands) | Cash Flow Activity | 2022 | 2021 | | :--- | :--- | :--- | | Net cash provided by operating activities | $8,701 | $1,494 | | Net cash provided by investing activities | $14,851 | $167 | | Net cash used in financing activities | $(494) | $(177) | | Net increase in cash and cash equivalents | $23,058 | $1,484 | - The primary driver of investing cash flow was the $15.0 million received from the sale of the Sculptura assets[20][51] - Financing activities included a $1.0 million repurchase of common stock and $0.7 million in proceeds from the exercise of stock options[20] Notes to the Condensed Consolidated Financial Statements The notes provide details on accounting policies, significant events including a $15 million asset sale, revenue concentration, and an ongoing Department of Justice investigation - On February 25, 2022, the Company sold its Sculptura assets for $15 million in cash, recognizing a $12.8 million gain[51] - The U.S. market is the primary source of revenue, accounting for 95% of total revenue for the nine months ended September 30, 2022, with a single U.S. customer accounting for 73% of revenue in the same period[36] - The company is cooperating with a Department of Justice investigation into billing practices by a physician who used the company's SRT-100 device, disputing any wrongdoing and unable to estimate potential costs[67] - In Q1 2022, the company released a $3.7 million valuation allowance against its deferred tax assets, concluding it is more likely than not that these assets will be realized[79] Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations Management discusses strong financial performance for the first nine months of 2022, driven by increased sales, expanded gross margins, and enhanced liquidity from an asset sale Results of Operations Results of operations show significant revenue growth and gross margin expansion for both the third quarter and nine months ended September 30, 2022, driven by higher unit sales Q3 2022 vs Q3 2021 Performance (in millions) | Metric | Q3 2022 | Q3 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $9.0 | $5.5 | +63.6% | | Gross Profit | $5.9 | $3.2 | +84.4% | | Gross Margin | 65.6% | 57.9% | +7.7 p.p. | | Selling & Marketing Expense | $1.8 | $1.2 | +50.0% | Nine Months 2022 vs 2021 Performance (in millions) | Metric | 9M 2022 | 9M 2021 | Change (%) | | :--- | :--- | :--- | :--- | | Revenues | $31.4 | $14.0 | +124.3% | | Gross Profit | $21.3 | $8.1 | +163.0% | | Gross Margin | 67.8% | 58.0% | +9.8 p.p. | | Selling & Marketing Expense | $4.8 | $3.5 | +37.1% | Financial Condition, Liquidity and Capital Resources The company's financial condition and liquidity significantly improved, with cash and cash equivalents increasing by $23.1 million, supported by strong operating cash flow and an asset sale - Cash and cash equivalents increased by $23.1 million from December 31, 2021, to September 30, 2022[103] - Net cash provided by operating activities was $8.7 million for the nine months ended September 30, 2022, compared to $1.5 million in the prior year period[108] - Net cash from investing activities was $14.9 million, primarily from the sale of assets[109] - There were no borrowings under the revolving line of credit as of September 30, 2022[105] Item 3. Quantitative and Qualitative Disclosures about Market Risk This section is not applicable for the company as a smaller reporting company - The company stated that this section is not applicable[114] Item 4. Controls and Procedures Management concluded that disclosure controls and procedures were effective as of September 30, 2022, with no significant changes to internal control over financial reporting - Based on an evaluation as of September 30, 2022, the Chief Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective[116] - No significant changes were made to the internal control over financial reporting during the third quarter of 2022[117] PART II – Other Information Item 1. Legal Proceedings The company is involved in ordinary course legal proceedings and refers to the financial statement notes for details on commitments and contingencies, including a DOJ investigation - The company is involved in ordinary course legal proceedings and directs readers to the Commitments and Contingencies note in the financial statements for more details[67][120] Item 1A. Risk Factors No new risk factors are presented in this report, with investors directed to previously disclosed risks in the 2021 Annual Report and subsequent filings - The company refers to the risk factors disclosed in its 2021 Annual Report and subsequent quarterly reports, with no new additions in this filing[121] Item 2. Unregistered Sales of Equity Securities and Use of Proceeds The company reported no unregistered sales of equity securities, no use of proceeds from registered sales, and no equity security purchases during the nine months ended September 30, 2022 - There were no unregistered sales of securities during the nine months ended September 30, 2022[122] Item 3. Defaults Upon Senior Securities The company reported no defaults upon senior securities - None[124] Item 5. Other Information No other information required to be disclosed under this item was reported - None[126] Item 6. Exhibits This section lists exhibits filed with the Form 10-Q, including CEO and CFO certifications and Inline XBRL documents - The exhibits filed include certifications from the CEO and CFO, along with XBRL data files[127]