American Shared Hospital Services

Good day and welcome to the American Shared Hospital Services Third Quarter 2024 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 a touch-tone phone. To withdraw your question, please press star and then two. Please note that this event is being recorded. I would now like to turn the conference over to Kieran Smith, Investor Relations. Please go ahead.

Thank you, Nick, and thank you, everyone, for joining us today. AMS's third quarter 2024 earnings press release was issued today before the market opened. 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-Q for the three-month period ended June 30, 2024, the annual report on Form 10-K for the year ended December 31, 2023, and the definitive proxy statement for the annual meeting of shareholders that was held on June 25, 2024. 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 Skoliak, Executive Chairman and CEO. Ray, please go ahead.

Thank you, Karen. Good afternoon, everyone. Thanks for joining us today for our third quarter 2024 earnings conference call. I'll begin with some opening remarks, then turn the call over to Bob Hyatt, our Chief Financial Officer, for a financial review of our third quarter results. Following the prepared remarks, we'll open the call for your questions. Before we review the quarter, I'd like to highlight a key addition to our Executive Management Team that we previously announced in mid-October. Gary Delanus has joined our team as our Executive Vice President and Chief Operating Officer. Gary's deep experience with physician and TAOR relationships, billing and collections, policies and procedures lends itself directly, perfectly to our overall growth strategy as we further expand and optimize our overall business. Gary is a seasoned executive with a wealth of progressive healthcare management experience, providing innovative and proven solutions to physician groups, health systems, ACOs, and health plans. He has significant board of director experience with various healthcare systems based in California, West Virginia, Rhode Island, and Michigan. Prior to this role, Mr. Delanus served as Senior Vice President, US Operations at 21st Century Oncology, responsible for daily operations at over 140 radiation therapy centers, working with over 160 radiation oncologists, treating thousands of patients daily. Clearly, he is more than qualified and is a welcome addition to our team. We also announced the promotion of Ranjit Pradham, the Senior Vice President, Sales and Marketing. Ranjit played a critical role in the company's success, recently renewing and expanding five of American Shared's 10 domestic Gamma Knife agreements over the last 18 months. In his new role, he will spearhead the company's strategic business development and marketing initiatives and drive growth in new business, further strengthening the company's impact and outreach in oncology services. Now, let's review our quarterly results. We reported another quarter of strong revenue growth and our enthusiasm for our overall prospects continues to grow. We've continued to show solid improvement and advancement in several important ways, and we're extremely excited about the upcoming year. This is, of course, not without our fair share of challenges. As we navigate through seasonality and procedure volume fluctuations, integrate the Rhode Island acquisition, invest in much-needed upgraded equipment, and implement additional operating efficiencies that in the short run impacted our margins and profitability but positions us for success over the longer term. We followed our quarter one and quarter two with another solid quarter revenue growth, which totaled 6.99 million, up nicely from the comparable quarter in 2023 of 5.1 million. The 36% year-over-year revenue growth for this past quarter was showcased by continued early benefit from the Rhode Island acquisition that we closed this past May as well as from our new facility in Puebla, Mexico. The gross margin declined by $732,000, which was affected by lower gamma and ice treatment volumes and also is reflective of the change in mix from the strong growth of our retail segment. Additionally, we reported a small net loss of $207,000 or $0.03 per share for the quarter, compared to a small gain of $118,000, or $0.02 per share, in the third quarter of 23. Our balance sheet remains strong. We ended the third quarter with over $14.1 million in cash and equivalents, which is roughly equal to $2.17 a share. We also had $4.5 million outstanding on our $7 million line of credit as of September 30, 2024. We continue to leverage these resources carefully for additional long-term revenue streams. We're fortunate to have this strong balance sheet with significant capital to deploy in strategic initiatives such as the Rhode Island Acquisition. as well as other business opportunities that we come across. As a reminder, the Rhode Island acquisition is a great example of how we deployed $3 million and were able to strategically acquire fair market value and net assets worth $8 million. This was clearly an excellent allocation of capital. Furthermore, of the assets acquired, 3.4 million alone was cash. Cash. We've been implementing operating efficiencies to better optimize this business. Specifically, we have invested $1.1 million in CapEx in our Rhode Island centers. We've replaced two very old CT simulators which are needed for treatment planning, and purchased the third CT-STEM, which was being leased. We've also added software packages for improved efficiency and patient care. We've also begun converting from higher cost temporary staffing that the previous Rhode Island facilities owner, Genesis Care, was utilizing as it was struggling. struggling to bring on permanent employees, which are more cost effective and provide longer term stability overall. We've also recently put our linear accelerators on service and maintenance agreements, which adds to our dependability and high uptime for better quality service. It should be noted that we acquired three radiation therapy centers which were generating positive income. They were generating positive income, positive EBITDA. But they were being managed by a company that was going through the bankruptcy process. Let's keep that in perspective. The team also continues to focus on strengthening our core business by working with clients to increase utilization of our equipment. This focused strategy has led to the signing of five lease extensions in the last 18 months from our 10 domestic Gamma Knife clients, and we have others in the pipeline. Again, this is not without heartache. In this quarter, we navigated through the loss of a site that we had in third quarter 23, We had scheduled downtime for an equipment upgrade. In addition, there are lower treatment volumes, partially due to physician shortages and seasonal staffing factors at some of our sites. Despite the challenges our team faces, we believe these extended agreements are a testament to our partnership business model, our financial flexibility, and a very important growth drive. We have already noticed an uptick in our Gamma Knife treatment volumes in the month of October. Our international business represents a large growth opportunity. We're also expecting continued momentum. As many of you know, we have the only Gamma Knife systems in the countries of Peru and Ecuador. Just a few months ago, we announced that our third international center in Puebla, Mexico had begun treating patients. The newly opened linear accelerator, or LINAC, that we installed has VMAT, IGRT, and radiosurgery capabilities that offer the most advanced radiation therapy available in our catchment area. In early July, we announced our fourth international center with the signing of a joint venture agreement for gamma knife facility in Guadalajara, Mexico. This facility will have one of only three gamma knife systems in a country of 130 million. I'd like to also comment that we've been incurring incremental costs related to our Rhode Island acquisition in excess of three or $400,000 a quarter. We expect to see a decrease in excess of $300,000 in our fourth quarter. I'd also like to remind our investors that we announced early this year we had three unique business opportunities. The first of these was the closing of our 60% majority interest in the three radiation therapy cancer centers in Rhode Island. We closed that in early May. 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 the power of our growth strategy. I'd like to talk about the second, The second is the CON certificate of need that we have been granted to build a fourth radiation therapy center in Bristol, Rhode Island. And the third business opportunity is a very powerful one. We have applied for a certificate of need to provide a radiation therapy center with proton beams. a proton beam radiation therapy center in the state of Rhode Island. This proton beam radiation therapy center will be the only system in New York City and Boston and represents a significant growth opportunity. As of now, think about this, we would be the 100% owner-operator of this proton beam radiation therapy center. We look forward to announcing additional progress on this matter as appropriate. As we look into the coming months and the year ahead, we expect stronger international growth from additional treatment capabilities in Ecuador, strong volume from our center in Peru, and the new centers in Guadalajara and Puebla. The recent closing of the Rhode Island acquisition adds three new revenue streams to our business, in addition to the other exciting new business opportunities moving through the long sales cycle. Our backlog continues to give us strong confidence in the overall business for our long-term future. With that, I'll turn the call over to Bob for a financial overview.