American Shared Hospital Services

Good day and welcome to the American Shared Hospital Services fourth quarter 2023 earnings conference call. All participants will be in a 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 one on the touchtone phone. To withdraw your question, please press star then two. 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, Betsy, and thank you to everyone joining us today. AMS's fourth quarter 2023 earnings press release was issued yesterday after the market closed. 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'd 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 at the SEC. This includes the company's quarterly report on Form 10-Q for the three-month period ended March 31, June 30, and September 30, 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. Before I turn the call over to Ray, I'd like to remind participants that we're going to limit all questioners to one question and one follow-up. As always, we'll be happy to take additional questions offline at any time. With that, I'd now like to turn the call over to Ray Stachowiak, Executive Chairman. Ray?

Thank you, Stephanie, and good day to everyone. Thanks for joining us today for our fourth quarter 2023 earnings conference call. I'll begin with some opening remarks and then turn the call over to Bob Hyatt, our Chief Financial Officer, for a financial review of the fourth quarter. Following the prepared remarks, we'll open the call for your questions. Before I turn to our results, I'd like to acknowledge the passing of our founder and longtime chairman, CEO, and friend, Dr. Ernest Bates. Dr. Bates was 87 when he died last week. He was a highly respected board-certified neurosurgeon, entrepreneur, and philanthropist, and was known as a trailblazer and champion for equitable medical care for those in underserved communities. Personally, I've known Dr. Bates for many years. He invited me to join our board of American Shared in 2009, and he was a good friend. I know that we're all going to miss him, his wise counsel, and his incredible sense of humor. Now I'd like to transition to our results. By almost every measure, AMS had a good year in 2023. We made continual improvement as the year progressed and advanced in several important ways. Notably, the sales team we put together last year has gelled and we ended the year with the strongest sales pipeline in many years. This is due not only to the team, who are well-known in our industry, but also to our expanded financial solutions and closer integration with our strategic OEMs. Together, these factors have resulted in significantly increasing the breadth of opportunities for our considerations. These include a range of advanced radiation equipment in various settings, as well as the expansion of our business model to also consider the development of our own majority-owned proton beam and radiation oncology centers in the United States. We would own and operate these centers with this expansion of our business model. The team was also responsible for strengthening our core business by working with customers to increase utilization of their equipment and assist in the signing of four lease extensions. That is, four of our 10 domestic Ammonite customers signed extensions over the last 15 months, and there are others in the pipeline. We believe these extended agreements are a testament to our partnership business model and financial flexibility. International results are also heating up. In the fourth quarter, we completed the equipment upgrade in Ecuador to a new, state-of-the-art gamma knife icon. This is the only gamma knife in Ecuador for non-invasive radial surgery. Already, our volumes are up for the quarter, despite the downtime we had for the installation. Our third international center in Puebla, Mexico, is going to begin treating patients in the second quarter. When it opens in a few weeks, the linear accelerator, or LINAC, that we installed with VMAT, IGRT, and radiosurgery capabilities, will offer the most advanced radiation therapy available in our catchment area. We've also continued to invest in three unique business opportunities that I've mentioned before. We announced the first of these deals during the fourth quarter. It is an acquisition of a 60% majority interest in three radiation therapy cancer centers in Rhode Island. Importantly, these will be our first direct patient services or retail centers in the United States when the acquisition is completed. We look forward to closing this deal soon and disclosing more details, but until then, suffice to say that we believe in this new business, the first from our expanded team and our new pipeline, as an indicator of our ambitions for our company. I'd like to repeat, we will own and operate 60% ownership, our own radiation therapy centers in the United States when we close on this acquisition. This is a very natural progression of our business model. We ended the year with the strongest quarter, reporting total revenue in the fourth quarter of $5.7 million, a year-over-year increase of 13 percent. Gross margin was $2.8 million, a 24 percent increase, reflecting continued tight control over direct costs and positive operating leverage. The gross margin percentage was at 49 percent of revenue, a level that hasn't been reached since 2019. We earned six cents per share in the fourth quarter, despite the headwinds of $350,000 in Rhode Island costs and $362,000 of additional reserves on impaired assets. For the full 12 months of 2023, revenue grew 8% to $21.3 million. Gross margin was $9.3 million. an 11.5 percent increase. The gross margin percentage was 44 percent. We earned 10 cents per share despite Rhode Island expenses of $919,000 for the whole year and additional reserves for impaired assets and removal costs of $940,000 for the year. We expect these headwinds to significantly decrease in 2024. Our balance sheet remains strong. We ended the year with $13.8 million in cash and equivalents, roughly equal to $2.19 per share. At year end, we also had $4.5 million available on our $7 million line of credit, all of which was repaid in the first quarter. We're working hard to leverage these resources into additional long-term revenue streams for our company. Looking ahead, we expect stronger international growth from additional treatment capabilities in Ecuador and the opening of our new center in Puebla. The projected closing of the Rhode Island acquisition will add three additional new revenue streams to our business. We have additional new business opportunities advancing through our complex and long sales cycle as well. We look forward to announcing more details at the appropriate time. With that, I'll turn the call over to Bob for a financial overview.