American Shared Hospital Services

Good day and welcome to the American Shared Hospital Services second quarter 2023 earnings conference call. All participants will be in listen-only mode. Should you need assistance, please signal a conference specialist by pressing the star key followed by zero. After today's presentation, there will be an opportunity to ask questions. To ask a question, you may press star, then 1 on your touch-tone phone. To withdraw your question, please press star, then 2. Please note this event is being recorded. I would now like to turn the conference over to Stephanie Prince of PCG Advisory. Please go ahead.

Thank you, Alison, and thank you to everyone joining us today. AMS's second quarter 2023 earnings press release was issued this morning before the market opened. If you need a copy, it can be accessed on the company's website at ashs.com at press releases under the investors tab. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans and prospects for the company constitute forward-looking statements for the purposes of safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the company's filings with the SEC. This includes the company's quarterly report on Form 10-Q for the three-month period ended March 31, 2023, the annual report on Form 10-K for the year ended December 31, 2022, and the definitive proxy statement for the annual meeting of shareholders that was held on June 20, 2023. The company assumes no obligation to update the information contained in this conference call. I would now like to turn the call over to Ray Stachowiak, Executive Chairman of AMS. Ray?

Thank you, Stephanie, and good afternoon, everyone. Thank you for joining us today for our second quarter 2023 earnings conference call. I'll begin with some opening remarks. and then turn the call over to Peter Gaccione, AMS's Chief Executive Officer. Bob Hyatt, our CFO, will then give a financial review of the second quarter results. Following these prepared remarks, we'll open the call for your questions. AMS had a good second quarter, with year-over-year revenue increasing by almost 11% to $5.6 million. Revenue also increased just over 13% compared to the $4.9 million in the first quarter of this year. Good cost controls drove an almost 21% increase in the gross margin to $2.5 million, or 45.2% of revenue. It's the highest level we've reached since the fourth quarter of 2021. During the quarter, our expanded sales and marketing team continued to generate and work on many new business opportunities. We invested roughly $250,000 in activities required to pursue three unique business opportunities that would expand our domestic footprint. In addition, our team is working on several other opportunities with existing customers for ongoing agreement extensions and product upgrades to newer cancer treatment technologies. This morning, we made an announcement, our third order of the year, for an extension and upgrade to a newest free gamma knife with Methodist Hospital in San Antonio, Texas. However, as we reviewed our existing sites, we saw two that are not considering renewing their agreements Therefore, we've added to our reserves for impaired assets and anticipated removal costs of $578,000 now in the event that this occurs. We are in discussions with both sites to seek other alternatives, but it is prudent to increase these reserves now. Excluding these two items that together totaled $828,000, Net income would have swung approximately $340,000 higher to roughly $232,000 or 4 cents per share compared to the $188,000 or 3 cents per share we reported in our first quarter. We're very excited about the installation of new equipment with expanded treatment offerings at our three international locations. At our newest cancer center joint venture in Puebla, Mexico, installation of the digital linear accelerator with VMAT, IGRT, and radial surgery capability, or LINAC, is in its final installation phase and will be the most advanced radiation therapy treatment system within our catchment area when completed. We expect patient treatments to begin in November. At our center in Ecuador, installation of the upgraded Gamma Knife icon is expected to begin in September with patient treatments expected to restart in November 2023. In Peru, we expect to begin installation of the new Gamma Knife Esprit during quarter one, 2024. This will be the only Esprit Gamma Knife in the country for non-invasive radial surgery and one of the first Esprit systems in all of South America when installation is complete. Please note that the Pueblo-Mexico joint venture will be a new revenue stream when treatments start up in November. Both Ecuador and Peru will be closed to patients during their respective installation periods. When the installations are complete, our three centers will have the most advanced radiotherapy cancer treatment systems in their respective markets. We look forward to offering expanded treatment capabilities to the many patients in those areas, and we expect increases in our international revenue. During the second quarter, we continued to generate positive cash flow, despite the higher levels of investment, and again, added to our cash balances, which now total $13.8 million, or approximately $2.18 per share. Interest income on our growing cash balance is also helping to offset higher interest expense on our variable rate debt. Let me close my comments by saying it's an exciting time at AMS after all the repositioning that we've done over the last three years. Our activity levels have increased significantly, and we look forward to sharing our results with you in the months ahead. I'll now turn the call over to Peter.