American Shared Hospital Services

Good afternoon, everyone, and welcome to the American Shared Hospital Services first quarter 2024 earnings conference call. All participants will be in a listen-only mode. Should you need assistance, you may 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 and one on your touch-tone telephone. To withdraw your questions, you may press star and two. As you also know, today's event is being recorded. At this time, I'd like to turn the floor over to Karen Smith with PCG Advisory. Please go ahead.

Thank you, Operator, and thank you, everyone, for joining us today. AMS's first quarter 2024 earnings press release was issued this afternoon after the market closed. If you need a copy, it can be accessed on the company's website at www.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-K for the year ended December 31st, 2023, and the definitive proxy statement for the annual meeting of shareholders that was held on June 20th, 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 everyone about our Q&A policy, where we provide each participant the time to ask 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 and CEO. Ray, please go ahead.

Thank you, Karen. Good afternoon, everyone. Thank you for joining us today for our first quarter 2024 earnings conference call. I'll begin with some opening remarks and then turn the call over to Bob Hyatt, our CFO, for a financial review of the first quarter results. Following the prepared remarks, we'll open the call for your questions. Before I turn to our results, I'd like to acknowledge the unexpected passing of our Chief Executive Officer, Peter Gaccione. We are deeply saddened by Peter's passing. He'll be dearly missed. Peter's enthusiasm, integrity, and empowering leadership style shaped the organization over the last 18 months, and his tremendous contribution to AMS will not be forgotten. Peter's legacy lives on, and we wish his family, friends, and colleagues very happy memories. With Peter's passing, we announced several management changes to ensure seamless operations as we capitalize on our growth trajectory. I've taken on the CEO position in addition to my executive chairman role, and the company's president, Craig Tagawa, has become president and chief operating officer. Bob Hyatt continues to serve as our company's Chief Financial Officer. Ernie Bates will continue in the role of Vice President of International Sales and Marketing. And Curtis Ellis will continue to serve as Director of Sales, Western Region, USA. We are also very pleased to announce that Ranjit Pradham was promoted from Head of Marketing and Customer Advocacy to Vice President of Customer Advocacy and Global Marketing. Mr. Pradham brings 30 years of experience in healthcare to the role, having served in product management, marketing, technology, and general management positions at Fortune 100 companies and global leaders like GE, Abbott, Electa, CISMEX, and Philips. With our acquisition of a 60% interest in three radiation therapy centers in Rhode Island, we announced the appointment of Greg Mercurial as our Senior Vice President of Radiation Oncology. Mr. Mercurial brings deep experience in the radiation oncology field to this role, including 20 years in certificate of need attainment for the development and operation of radiation therapy facilities. He's built a strong network of relationships with physicians, hospitals and OEMs for making the use of high technology medical equipment more accessible. Mr. Mercurial served a nationally renowned provider of radiation therapy for 15 years, strategizing the attainment of certificates of need to establish five radiation therapy centers in Rhode Island in joint ventureship partnership with five community hospitals treating over 1,000 patients a year and generating $9 to $10 million a year in revenue. He has served as a radiation business consultant to major healthcare systems across the country, freestanding radiation oncology providers, and manufacturers of radiation therapy products. So as you can see, we have a robust senior management team to drive additional momentum as we continue to execute on our growth strategy. Now let's go on to the quarterly results. We're pleased to report that AMS had a good first quarter and we're extremely excited about the coming year. We have continued to show market improvement in advancement in several important ways. Notably, the sales team has been showing nice momentum and our sales pipeline is extremely strong. In fact, with the Rhode Island acquisition that we just closed, our projected revenue backlog has more than doubled to over $210 million. This is due not only to the team, excuse me, This is due not only to the team who are well known in our industry, but also due 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 consideration. These include a range of advanced radiation therapy equipment in various settings, as well as the expansion of our business model to also develop our own operated majority owned proton beam and radiation oncology centers in the United States. The team continues to focus on strengthening our core business by working with customers to increase utilization of their equipment. This focus strategy led to the signing of four lease extensions from our 10 domestic Gamma Knife customers over the last 12 months. We have others in the pipeline. We believe these extended agreements are a testament to our partnership business model and financial flexibility. What's really impressive is that this is up significantly from prior years, which is a testament to our focus, determination, and execution International results have also continued heating up. In the first quarter, we saw volumes increasing following the completed equipment upgrade in Ecuador to a new state-of-the-art gamma knife icon, the only gamma knife in Ecuador for non-invasive radiosurgery. Our gamma knife in Peru, the only gamma knife in that country, also showed excellent results in the first quarter. Our third international center in Puebla, Mexico remains on track to begin treating patients in the next 60 days. This newly opened linear accelerator in Puebla, Mexico that we're installing will have DMAT, IGRT, and radiosurgery capabilities offering the most advanced radiation therapy available in that catchment area of Puebla, Mexico. We also continue to invest in the three unique business opportunities in Rhode Island previously discussed. The first of these deals was announced in the fourth quarter for the acquisition of a 60% majority interest in three radiation therapy centers in Rhode Island. This acquisition closed last week. These are our first direct patient services or retail centers in the United States. This new business, which is the first from our expanded team and new pipeline, clearly reflects our strong ambitions for the company. We started the year with a solid quarter, reporting total revenue in the first quarter of $5.2 million, a year-over-year increase of 5.9%. Gross margin was $2.1 million, a 12.3% increase, reflecting tight control over direct costs, and positive operating leverage. The gross margin percentage came in at 41%. We earned two cents per share for the quarter, a slight decrease from the three cents per share in the prior year's first quarter. Our balance sheet remains strong. We ended the first quarter with over 13 million in cash and equivalents, roughly equal to $2 per share We also had $2.4 million outstanding on our $7 million line of credit as of March 31, 2024, which has been paid off early in the second quarter of 2024. We continue to leverage these resources carefully for additional long-term revenue streams. As we look into the coming months, we expect stronger international growth. from additional treatment capabilities in Ecuador, continued strong volume from our center in Peru, and the opening of the new center in Puebla. The recent closing of the Rhode Island acquisition adds three new revenue streams to our business, in addition to the new business opportunities that are moving through our pipeline through that intricate and long sales cycle. We are excited to share more details at the appropriate time. With that, I'll turn the call over to Bob for a financial overview.