Sensus Healthcare(US:SRTS)2023-05-04 02:40Financial Data and Key Metrics Changes - Revenues for Q1 2023 were $3.4 million, down from $10.3 million in Q1 2022, primarily due to a lower number of SRT units sold and inflation impacts on medical practices [31][32] - Gross profit for Q1 2023 was $1.6 million, or 47.1% of revenues, compared to $7.1 million, or 68.9% of revenues in the previous year, reflecting lower unit sales and higher vendor costs [32] - Net loss for Q1 2023 was $1.9 million, or $0.12 per share, compared to net income of $16.1 million, or $0.97 per diluted share in Q1 2022, which included a $12.8 million gain on the sale of a non-core asset [36][37] Business Line Data and Key Metrics Changes - Selling and marketing expenses increased to $2.1 million in Q1 2023 from $1.2 million in Q1 2022, attributed to higher advertising expenses and increased participation in targeted tradeshows [33] - Research and development expenses rose to $1.1 million in Q1 2023 from $0.7 million in the same quarter last year, mainly due to ongoing aesthetic project expenses [35] Market Data and Key Metrics Changes - The compounded annual growth rate for SRT reimbursement has been 27% year-over-year for the past six years, while Mohs surgery has only grown at 5% during the same period [20] - The company is witnessing increased interest in its SRT systems in Asian markets, having shipped its first system to Taiwan and two systems to China in Q1 2023 [19] Company Strategy and Development Direction - The company is focusing on addressing customer hesitancies due to inflation by building inventory and prepaying for components, expecting to ship over 60 systems in 2023 [10][11] - Sensus Healthcare is expanding its presence in smaller regional conferences to connect more closely with customers and is also targeting the radiation oncology segment for skin cancer treatments [14][15][24] Management's Comments on Operating Environment and Future Outlook - Management views the current hesitancy in purchasing decisions as a temporary operating environment influenced by inflation affecting dermatology practices [10][12] - The company remains optimistic about future growth, emphasizing the importance of its proprietary Sentinel IT solutions and the potential for increased sales as the market adjusts to current economic conditions [42][48] Other Important Information - Cash and cash equivalents were $19.3 million as of March 31, 2023, down from $25.5 million at the end of 2022, while inventory increased to $6.3 million from $3.5 million [38][39] - The company is actively engaging in discussions to open new international territories, particularly in Asia and South America, with Brazil identified as a significant market opportunity [27][28] Q&A Session Summary Question: How is inflation impacting customer purchasing decisions? - Management explained that inflation is affecting consumers' discretionary spending on elective procedures, leading to hesitancy in purchasing SRT systems [53][56] Question: What were the service revenues in the quarter? - Service revenue accounted for approximately 28% of total revenue in the quarter [63] Question: What is the outlook for Q2? - Management anticipates Q2 to be another challenging quarter, but expects gradual improvement as customers adapt to the inflationary environment [71][80] Question: What is the company's strategy for international expansion? - The company is focusing on regulatory approvals and engaging the right distributors to expand into Asian markets, with specific targets on Korea and Japan [27][126] Question: What are the plans for the drug delivery system? - The drug delivery system is close to submission for FDA approval, with expectations for submission within the current quarter [99]