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Operator
Good day, ladies and gentlemen, and welcome to the Census Healthcare Second Quarter 2021 Financial Results Conference Call. All lines have been placed on a listen-only mode, and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero on your telephone keypad to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Kim Golodetz. Ma'am, the floor is yours.
Kim Golodetz
Thank you very much. This is Kim Golodets with LHA. Thank you all for participating in today's call. Joining me from Census Healthcare are Joe Sardano, Chief Executive Officer, and Javier Rompolla, Chief Financial Officer. As a reminder, some of the matters that will be discussed during today's call contain forward-looking statements within the meaning of federal securities laws. All statements other than historical facts that address activities Census Healthcare assumes, plans, expects, believes, intends or anticipates, or other similar expressions, will, should, or may occur in the future, are forward-looking statements. The forward-looking statements are management's beliefs based on currently available information. Census Healthcare undertakes no obligation to update or revise any forward-looking statements except as required by law. All forward-looking statements are subject to risks and uncertainties, including the continuation and severity of the COVID-19 pandemic, and its impact on sales and marketing, as described in the company's Forms 10-K and 10-Q. During today's call, there will also be reference to certain non-GAAP financial measures. Census believes these measures provide useful information for investors, yet should not be considered as a substitute for GAAP, nor should they be viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in today's financial results press release. With that said, I'd like to turn the call over to Joe Sardano. Joe?
Kim Golodets
Thank you, Kim, and good afternoon, everyone. Thank you all for joining us today. I hope that you all have remained healthy and that vaccinations will permit us to continue our path forward towards normalcy. Indeed, for Census during the second quarter, it felt like we were getting back to normal as we resumed in-person sales calls which are so effective in detailing the attributes of our superficial radiation therapy systems for the treatment of non-melanoma skin cancer and keloid scars, as we continue to educate our market on new reimbursement schedules made available to SRT treatments effective January 1, 2021. While we continue to keep an eye on the Delta variant, we are seeing significant improvements in economic activity. Our Q2 results reflect that improvement, in particular compared with last year's second quarter as market conditions continue to improve towards pre-pandemic levels. Our business gained momentum throughout the first half of the year, and we are cautiously optimistic about continued sequential quarterly growth for the rest of 2021. Specifically, our Q2 revenues of $5.4 million We're up 358% over last year's COVID impacted revenues, and we're up 77% over this year's first quarter. We shipped 17 systems during the second quarter, including seven SRT 100 vision systems. We sold six SRT 100 visions to our large corporate account and 11 SRT systems directly to customers. Volumes for SRT systems installed at customer sites have continued to improve since the Centers for Medicare and Medicaid Services revalued our main procedure code. And since SRT became so much more prominent while in the midst of the pandemic, while surgeries were held to a minimum, reimbursement increased not only for the main SRT code, but also for evaluation and management codes. Combined SRT users are looking at reimbursement values that are higher by as much as 50%. In addition, codes were revalued upward for the ultrasound capability in our SRT100 vision systems. This has provided greater interest in our vision product by both existing customers and prospects. Our sales force, along with our field applications team, have been engaged with customers and prospects in making sure the new reimbursement and shorter payback time as well is well understood, and we will continue to work with this message throughout the remainder of the year. As I described last quarter, we have developed a fair market value lease with our leasing resources, which makes it easier for our customers to consider the higher price SRT 100 vision. The FMV, or fair market value program, is like leasing programs on high-end cars, whereby the monthly payments is much lower than a capital lease because of the high residual value placed on the vision product. We continue to see good interest in this sales option and have already recorded system sales this year under this program. We expect interest to continue to rise throughout the year. The typical break-even is around two patients per month, which is easily doable for the vast majority of our customers and prospects. In addition, various medical associations, such as the American Academy of Dermatology and the American Society for Radiation Oncology, have increased their support for the safety and efficacy of SRT to treat non-melanoma skin cancer and keloids via conference presentations and papers, and we believe this support is resonating with the physicians. Combination of backing by key opinion leaders and our presence at important trade shows, such as the Fall Clinical, has generated a solid list of leads that we expect to convert to sales during the third quarter and beyond. We look forward to attending the fall clinical in Las Vegas in October, which this year will be held both in person and virtually. We made some significant reductions to our sales team last year due to the pandemic shutdown, and I'm delighted to tell you that our sales team is back to pre-COVID numbers in anticipation of the growth we expect in the second half of this year. Our international business is picking up nicely, and we are very pleased with the continued success of our international business, especially in China. Our new distributor for China and Hong Kong has developed an extensive network of prospects that are converting to sales, with four more systems shipped to China during the second quarter. To date, in 2021, we've sold five systems to China, in addition to four sold during the fourth quarter of 2020. Our Vice President of International Sales with deep professional experience in the China market has been making a positive impact to our bottom line. We are now expanding our focus to India for further international growth and are hopeful to record our first sale there later this year. With respect to China, we are working with the Chinese Health Authority in renewing our license for another four years. This is the third time we've gone through this process and we expect to have it completed by the end of the year. In addition, we are finalizing a new distributor in Taiwan and are preparing Sculptura for the regulatory process in China. Research work with Sculptura at luminary hospitals in the U.S. had been put on hold owing to COVID-19. We believe that research to support various oncology indications will resume by the end of the year and that the resumption of Sculptura sales will begin during 2022. We are pursuing new indications for our SRT100 systems as well. As you know, during the first quarter, we shipped the system to Holy Name Medical Center in Teaneck, New Jersey, as a pilot program in the use of SRT to treat the lungs for COVID-19 pneumonia patients. The hospital has used the system on several patients to date and plans to prepare a paper for publication. We are thrilled to help play a part in the treatment of recovery of COVID-19 patients. We will continue to pursue collaborations with interested institutions who believe in our low-dose radiation solution for COVID-19 patients. As a reminder, in evaluating this opportunity, history showed a very successful approach to treating pneumonia with radiation going back nearly 75 years. Our SRT systems are well-suited for COVID-19 because they are portable and allow for bedside treatment in the ICU. Another indication for SRT is in the veterinarian medicine market. We shipped an SRT earlier this year to Colorado State University Veterinary School and announced the first treatment for a bulldog named Daisy. CSU is continuing to treat canines and felines and are now preparing to begin treatment protocol for horses. Tumors are common in horses, and the use of SRT, especially around the eyes, is a promising therapy. We hope to report data from CSU later this year. Turning now to our aesthetic mobile laser business, the integration of our Sentinel IT Solutions software into our proprietary laser is complete, and these lasers are now available through Census Laser Aesthetic Solutions. SLAS is our mobile aesthetic laser division serving dermatologists throughout Florida that offers multiple lasers with custom rental options. Sentinel provides asset management and HIPAA-compliant patient data and storage capability, and contains the software necessary to support shared service models, including direct patient billing. We remain on track to introduce our family of laser products with Sentinel, known as Smart Lasers, at the South Beach Symposium Aesthetic Laser Program, being held in September in Miami. This will be an in-person event as more than 1,000 dermatologists and plastic surgeons have already registered. We also have been actively evaluating expansion to our mobile aesthetic laser business beyond Florida via strategic transactions and geographies where we have an existing SRT customer base. In particular, we see Texas, Georgia, and Arizona as good prospects to roll in this last division. Over the long term, we expect SLAS to become a meaningful source of recurring revenue. Before I turn the call over to Javier to review our financial results in more detail, I want to express on you our optimism for the rest of the year. Barring any new economic restrictions related to COVID-19 or inflation in the U.S., we are confident we will deliver higher revenues as well as adjusted EBITDA throughout the balance of the year. And given our judicious attention to expenses, we believe we are clearly on track to profitability, a goal that the entire Census team is committed to achieving. And with that, I'll turn the call over to Javier. Javier?
Kim
Thanks, Joe. It's a pleasure to be speaking with all of you this afternoon. As Joe mentioned, revenues for the second quarter of 2021 were 5.4 million, and these compares with revenues of 1.2 million for the second quarter of 2020, which was adversely impacted by the start of the COVID-19 pandemic. Revenues for the 2021 quarter reflect the sale of 17 SRP systems, including four systems sold to China, as well as service contracts and our new mobile laser business. We're casually optimistic that the worst of the pandemic is behind us. Also, we're watching the variants in some of our targeted sales area for any impact. Cost of sales for the second quarter of 2021 was $2.1 million, compared with $0.5 million for the prior year quarter. The increase reflects higher sales during the 2021 quarter. Gross profit for the second quarter of 2021 was $3.3 million, or 61.7% of revenues. And this compares with gross profit of 0.6 million or 54.1% of revenues for the prior year quarter. The increase in gross margin was primarily driven by the higher number of units sold in 2021. Service revenue on installed units and the impact of COVID-19 on the 2020 quarter. Selling and marketing expenses for the second quarter of 2021 was 1.3 million. upside slightly over the $1.2 million for the second quarter of 2020. The slight increase was primarily due to higher commission expense offset by a reduction in headcount. General and administrative expense for the second quarter of 2021 was $1.4 million compared with $0.9 million for the second quarter of 2020. The increase was primarily due to higher legal and professional fees, public company expenses, and insurance costs. Research and development expense for the second quarter of 2021 was $0.9 million compared with $1.1 million for the prior year quarter. The decrease was due to lower sales as the sculptural project entered the production phase during 2020. Our net loss for the second quarter of 2022 of $0.3 million, or $0.02 per share, narrowed significantly from a net loss in the prior year's second quarter of $2.6 million, or $0.16. Adjusted EBITDA, which is defined as earnings before interest, taxes, depreciation, amortization, and stock compensation expense, narrowed even further to less than $100,000 from a negative $2.3 million in the second quarter last year. I will briefly review our year-to-date financial results. Revenues were 8.5 million for the first half of 2021, compared with 2.9 million for the first half of 2020. The 197% increase was primarily driven by the higher number of units sold in 2021, service revenue on installed units, and the impact of COVID-19 in the 2020 period. Cups of sales was 3.6 million for the first half of 2021, compared with 1.5 million a year ago. The increase was due to higher sales in the 2021 period. Gross profits for the first half of 2021 was $4.9 million or 58.1% of revenue, compared with $1.3 million or 47.1% of revenue for the first half of 2020. The increase in gross profits was primarily driven by the higher number of units sold in 2021. Service revenue on installed units and the impact of COVID-19 last year. Selling and marketing expense was $2.3 million for the first half of 2021, compared with $3 million for the first half of 2020. The decrease was primarily attributable to lower threshold expenses due to cancellations related to COVID-19, reduced marketing activities including travel, and selling and benefit expense due to reduced headcount. General and administrative expense was $2.4 million year-to-date, compared with $2.2 million for the prior year period. The increase was primarily due to higher legal and professional fees, public company expenses, and insurance premiums costs. Research and development expense for the first half of 2021 was $1.6 million compared with $2.4 million for the first half of 2020. The decrease in research and development reflected lower spending as the sculptural project entered production phase during 2020. Net loss for the first half of 2021 was $1.4 million, or a loss of $0.08 per share, compared with a net loss of $6.2 million, or a loss of $0.38 per share for the first half of 2020. Adjusted EBITDA for the first half of 2021 was a negative $0.9 million, compared with a negative $5.6 million in the first half of 2020. Turning now to our balance sheet. Cash and cash equivalents as of June 30, 2021 were $15.2 million compared with $14.9 million as of December 31, 2020. The company had no long-term debt and no outstanding borrowings under its revolving line of credit as of the close of the second quarter. We're confident that with our ongoing attention to expense management, along with current cash and access to our existing revolving credit agreement, we continue to be financially well positioned to support our expected growth during 2021. As a final comment, please see the table in the news release we issued earlier today for a reconciliation of GAAP to non-GAAP financial measures. With that, I'll turn the call back over to Joe.
Kim Golodets
Thanks, Xavier. Our second quarter was extremely gratifying, not only because of our financial results, but because the entire Census team pulled together to overcome adversity, keeping in mind the best interests of one another, our customers, and their patients. Even with the growing market awareness of the safety and efficacy of SRT, I'll remind you that our products have enormous room to grow. Our SRT systems are well positioned in a large market consisting of some 14,000 dermatologists, 1,000 Mohs surgeons in the U.S., representing more than 7,500 offices, and it continues to grow, not to mention a further 6,500 plastic surgeons, 5,500 radiation oncologists. Our SRT systems provide a compelling alternative to surgery for millions of patients and arguably the only solution to prevent the recurrence of keloids following surgical excision. With those comments, I'd like to thank you for your time and attention. And before we open up the call to your questions, I want to mention that we'll be presenting virtually at the H.C. Wainwright 23rd Annual Global Investment Conference, being held in a hybrid format September 13th through the 15th. Please contact H.C. Wainwright if you'd like to schedule a one-on-one meeting. And now, operator, we are ready to take questions.
Operator
Thank you. The floor is now open for questions. If you would like to ask a question, please press star 1 on your telephone keypad at this time. If your question has been answered, you can remove yourself from the queue by pressing 1. Again, ladies and gentlemen, it's star 1. And our first question comes from Anthony Vendetti from Maxim Group. Go ahead, Anthony.
Anthony Vendetti
Thanks. Good afternoon, Joe and Javier. How are you doing?
Kim Golodets
We're doing great, Anthony. Thank you for being on today.
Anthony Vendetti
Sure, of course. Obviously, a good quarter, nice bounce back. You know, other than the fact that, you know, COVID restrictions, you know, are largely lifted, we don't know what the go forward means with the Delta variant, but you've seen a nice bounce back. Do you attribute that more to the current environment or with regard to the pandemic or you attribute it more to the positive reimbursement ruling that took effect on January 1st?
Kim Golodets
Well, I think a little bit of both deserves the credit on that, but I want to give our sales and marketing team the majority of the credit for that because there's no question in our mind after seven long years of working with CMS and them complying by giving us additional reimbursement schedules that help our doctors make a little more money, which makes this much more amenable and accessible to patients who prefer a non-surgical choice. I think that that's continuing to grow. The word is starting to spread. And as we get to more of the non-virtual meetings, the face-to-face meetings, I think that'll be impacted even greater. And we've got a couple of those shows to go to in the second half of the year, which I think is going to help us. So again, As we gain more ground and gain more geography in explaining what this CMS has done for this, I think that we're going to see us gain ground. And I think COVID will be behind us unless, you know, we shut down half the world again. But I will tell you, as I've said in previous calls, I think that the market has learned what COVID is all about. Being in the healthcare market, I don't think as a country we'll shut down in the same manner we did the first time. I think that there will be a separate or a different reaction the second time, but I think that the precedent here is the fact that we're getting out in the field, getting face-to-face with our customers, and educating them on the new codes and what it means to them and how they can get involved with SRT. And the fact that COVID did have an impact on their businesses in the past, we're reminding everybody the American Academy of Dermatology told all the most surgeons to stop surgeries during that period of time. And as I said before, the last machine turned off was the SRT machine when they shut their offices. And the first machine that was turned back on was the SRT machine. So it was proof positive that if you're looking at best practices, this was a great way of continuing the cash flow while still treating your patients. And now with the new reimbursement, making it almost equivalent to what most surgery would be without the hassle.
Anthony Vendetti
No, that's great, Joe. And then just, On Sculptura, obviously a higher price point product, what can you tell us about how that pipeline looks in terms of, you know, either customers or what it looks like in terms of, you know, potential sales as we move towards, you know, the end of this year and particularly, you know, into 2022? Yeah, I think,
Kim Golodets
The combination of the new reimbursement codes, which provides providers with higher reimbursement every time they treat skin cancer and or keloids, along with this new fair market value lease, and I want to thank the resources that we utilize to help us go with this. It's very common in other parts of medical devices with healthcare, whether it be MRI, PET-CT, or anything else. But the fair market value lease brings down the monthly payment for these doctors so that they can afford the higher priced unit. And if you're looking at pro formas based on the combination of the fair market value lease, along with the increased revenues, you have approximately two patients a month as your breakeven, which was exactly the same breakeven as an SRT 100 or West RT 100 plus product without the fair market value lease. So across the board, it's going to provide physicians with a more affordable system of which provides them with a better return on their investment and much sooner. So the combination of both, I think, is coming in at the right time that's going to help our physicians realize that SRT is a valuable tool for their practice.
Anthony Vendetti
Okay, you know, that's helpful on the SRT. How about on the Sculptura, though, product? You know, I know that wasn't an expectation earlier, for this year, but how's that pipeline looking as we move into 2022?
Kim Golodets
Well, we did talk about it not really providing us with the revenues that we were hoping for and having it delayed by COVID because the hospital market is devastated by COVID. And now that there's a comeback, I'm sure you saw earlier in the month or earlier in the week, there was a ABC study that showed the 270 some hospitals that they surveyed, all the ICUs were filled and it showed that 96% of the people in the ICUs weren't vaccinated. So we still got a long ways to go on vaccinating everybody, but we still see a delay in that market. But we also are pushing forward with our luminaries. One has been hit harder than the other. And, you know, both luminaries are strong people. They want to be first in what they do, but clearly, you know, our relationship with one of the units and I don't want to, go beyond that, has surpassed the other one in wanting to move forward faster and wanting to be number one in the world to accomplish things. So we're seeing progress on the clinical side, and the interest is not waned by any of the prospect base that we have. The prospect base is still very interested, wanting to know and upkeeping with all of the latest data and information that we have. So I think we're going to continue to see progress on the clinical side and maybe even some clinical studies that were completed before the end of the year. So we're excited for that. So we're not deterred at anything with Sculptura, but we know that the timing is not there. So therefore, we want to focus all of our energies on what our bread and butter is right now, and that's superficial radiation therapy for treatment of skin cancer and keloids.
Anthony Vendetti
Okay, great. Makes sense. Thanks very much. I'll jump back in the queue. Thanks, Joe.
Kim Golodets
You got it.
Operator
Thanks, Anthony. And our next question comes from Ben Hainer from Alliance Global Partners. Go ahead, Ben.
Anthony
Good afternoon, gentlemen. Thanks for taking the questions. First off, for me, you mentioned India expanding to the country there. You know, what's the traction there? Obviously, huge population. Is there, you know, a large keloid opportunity as well? Or, you know, just kind of some thoughts and any additional color there would be great.
Kim Golodets
Thanks, Ben, and thanks for being on the line. Yes, India is a massive market next to China outside of the United States. We've had a lot of inquiries as we continue to push forward with the regulations and being able to sell into China. We currently know that there's a lot of keloids in India that are not being treated properly. Therefore, SRT is a strong... you know, player to help them with that problem. But we also have seen a lot of interest on the COVID side because we don't see them reacting with the drugs and vaccinations as readily with COVID. So that's kind of piqued their interest and it's kind of piqued our interest as well. So we're very, very excited to be getting into that market. And we know it's still going to be a haul, but I think that that could be as good for us as China is right now. And so we expect to make some breakthroughs with some sales hopefully before the end of the year.
Anthony
And is the plan similar to China where you bring in someone who has some nice experience on the ground there, or do you work with distributors or a combination? What does that look like?
Kim Golodets
We currently have a list of potential distribution partners that work in China. We prefer to work through distribution partners in China, people who have relationships with China or India. I'm sorry. I'm sorry.
Anthony
Okay. All right. Just making sure.
Kim Golodets
No, you're right. I appreciate the correction. But it is India, and we prefer to work with a preferred distribution partner there. And we'll narrow that gap very, very quickly and probably get into some prospecting and some sales sequences here in the third quarter and hopefully close before the end of the year.
Anthony
Okay, so we should be on the lookout for an announcement saying, you know, we've partnered with a distributor in India here in short order.
Kim Golodets
Yes, safe to say, yes.
Anthony
Okay, got it. And then just, you know, I always like to ask about mobile laser business and how that's going. You know, just can you kind of give us an indication there on, you know, how things track sequentially or, you know, any metrics that you can share there or color?
Kim Golodets
We see growth, okay? We're not hitting the numbers that we would like to hit. We're never satisfied with any of our numbers, by the way. But we're not losing money with this. We're making a little money. It's still a small business that's coming back from COVID, and it's coming back a little slower than what we're seeing on the sales side with the capital sale of an SRT system. But we're slowly seeing this market coming back, and I think By the end of the year, it could be in a nicer form of revenues, which we expect with potential acquisitions between now and the end of the year with areas like Georgia and Arizona and Texas.
Anthony
Okay, great. Well, that's all I have for the moment. Thanks for taking the questions, and congrats on the quarter.
Kim Golodets
Thank you very much, Ben. Appreciate it.
Operator
And our next question comes from Yi Chen from HC Wainwright. Go ahead, Yi.
Yi Chen
Thank you for taking my questions. My first question is, Joe, you haven't observed any dermatologist office closing again as a result of the Delta variant, right?
Kim Golodets
Not as of now, no, none.
Yi Chen
Okay, good to know. And previously you mentioned that clinical data from Sculptura is slated to be published in the second half of this year. So I'm just wondering if it is still on track to be made available.
Kim Golodets
That's what we were anticipating, yes. But of course, you know, it relies in our clinical partner on how they accumulate the data, how fast they accumulate it, and how fast they decide to publish or at least let the information be known. So we're anticipating and we continue to anticipate data and information coming out before the end of the year.
Yi Chen
Okay, got it. And could you give us a rough estimate on the percentage contribution to the revenue from the aesthetic lasers and mobile business units?
Kim Golodets
I would say right now it's insignificant. I can assure you that we're not losing money with it, but I would say that the actual contribution is not significant at this time. I also want to address the follow-up to your question about the dermatologists not closing their businesses. I think that's a very important question that I want to expand on. The fact is that we haven't seen any of them close, and I firmly believe that there's a very strong determination by the entire market not to ever close again the way they did in the past. I think that if you're going to look at anything that they're going to resolve with any kind of a pandemic resurrection, if you will, it would continue to be the, the surgery part where they would lower the number of surgeries that they have keeping people at a distance, which positively impacts SRT as it did the last time. So, you know, again, there's a determination, not just the reluctance, but a determination by the, by the, dermatology team and offices to stay open, remain open. They experienced and applied best practices and I think SRT is one of those best practices.
Yi Chen
Got it, got it. And lastly, are there any data published regarding the treatment of COVID-19 related pneumonia using SRT?
Kim Golodets
There is no publication per se, but there is publication for low-dose radiation treatment, okay? You can go online. You might find some papers from Emory University, which is probably the leading provider of low-dose radiation in treating COVID. They may have treated between 20 and 40 patients. And so you may find some information from Emory regarding that. They've been very, very successful. I think that Miami Cancer Institute is also one of those groups that's involved in that study. There's maybe 10 different teaching institutions that are involved in this study across the nation. The problem is that during the peak of the pandemic, they treated some patients, but they treated a very limited number of patients because, as we learned, they were treating those patients in the cancer center. And immunologists as well as hospital administration and everybody else did not appreciate or did not want to take on the risk of bringing highly contagious pandemic patients down to the cancer center to be treated with a linear accelerator via low dose radiation treatment protocol because it impacted the very low immune systems of those patients who were being treated with cancer. It was kind of contradictory. to treat one patient or two patients or 10 patients when you have thousands of patients being treated for cancer and other cancers with very low immune systems. And the cost of bringing a patient into an electron beam accelerator room and having to set it up for a very contagious patient and then having to tear it down afterwards and going through all the cleanup afterwards could cost a day or two of production in treating these other patients. became highly inefficient and very costly. So our solution we thought of by bringing the machine, which is on wheels to the patients in the ICU or in their bedside provided the physicians an opportunity to treat many more patients with low dose. And so that's what holy name hospital is doing today. I can tell you that they're encouraged by the initial studies that they've done. Okay. but they've taken it upon themselves to apply the protocols, which have to go through their IRB. They want to be especially careful because of the risks that are involved. And of course, you know, attorneys have to be involved when it comes to risk. And even though they're patients that have problems, they can take months to do that, which they did. And so now there was a lull in the action as far as availability of patients. Whereas before, when we started this, there was plenty of patients, but, they feel that they can move forward with this and be able to publish a paper independent of us helping them do that, which makes it much more credible in the end. So we're excited for what's happened initially with their initial patients that they've treated.
Yi Chen
Got it. Thank you.
Operator
Thank you. And our next question comes from Alex Nowak from Craig Hallam Capital. Go ahead, Alex.
Alex Nowak
Hey guys, this is Trent on for Alex. I'm hopping between calls here, so I apologize if these questions have already been answered, but I got two quick ones. The first, have you put any thought into adding a consumable component to the SRT system?
Kim Golodets
No. The only consumable that is worthwhile there is going to be our service. That's our consumable. We have accessories that the customers pay for. The fact is, CMS, Centers for Medicare and Medicaid Services, has a difficult time applying reimbursement codes for a consumable. So unlike a catheter or anything else they would use in the body that you would have to dispose of, there's very little consumables available to this. So that's why it doesn't make sense to add a consumable. You know, there's a lot of companies like General Electric, Siemens, Varian. They have accessories. They have software. that they sell, that they upgrade, upgrade products, things like that. That's what we have to focus on in providing additional revenues for these products. But their models have worked for the last 100 years. We feel our model can work for another 100 years. It's a different story, however, when we start talking about aesthetic lasers. That's a cash business. It's not reliant on CPT codes that come from the government, and therefore we don't have to worry about reimbursement because people will pay out of pocket for that.
Alex Nowak
Got it. Okay, that's helpful. And then the second one, are you hearing any traction for SRT with direct sales force and also through skin care with the new reimbursement rights?
Kim Golodets
Yes. As we have announced today and as one of the questions was asked before, to what degree do we attribute the increase in reimbursement versus overcoming or having COVID behind us? It's a combination of both with the majority I give credit to our sales organization as well as our applications organization in going directly to customers and face-to-face providing them with data, information, training, educating them on what those new reimbursement codes are. As I stated once before in the previous call, you know, January 1 when CMS came up with the new reimbursements, they didn't send emails to all of our customers and all of our prospects saying congratulations, you got higher reimbursement. We have to do that. We're the ones that have to do that, and we have to do that face-to-face, one-to-one. So performas are usually asked by the customers, and based on the way they want to bill and the protocols that they use to treat patients, we can show them performas that provides them the feedback they need for what they see as their reimbursement. And so with our third-party group, Pinnacle, which provides all the expertise for reimbursement regarding those codes, our doctors have access to all of that information that they need that will help them with the billing and the coding. So we're getting positive results, and I attribute the results of the second quarter directly to our sales team and our applications team going through that educating and training of our physicians one-on-one. And that will continue to grow. We'll hit bigger volumes of people as we grow through the year.
Alex Nowak
Okay. Appreciate the questions.
Kim Golodets
Thank you. Thank you.
Operator
As a reminder, ladies and gentlemen, you may press star 1 to enter the queue. And our next question comes from James Twilliger from Northland Securities. Go ahead, James.
James Twilliger
Hey, Joe. Can you hear me?
Kim Golodets
I certainly can, James. How are you today?
James Twilliger
I'm doing okay. Congratulations on a very good quarter. I got a couple of questions here. Most have been answered though, but very quickly going back to the animal health comment. I know it's, you know, the top of the first inning, it's very, very early, but what type of market size is that? What are your thoughts on animal health as, as, as you start to work with Colorado state, probably some other universities, how should, how should we think about that?
Kim Golodets
Well, first of all, I, I thank you for, uh, for being on. I appreciate the comments and, um, Thanks for that question. I think it's an important part of where we might be able to expand our indications into a very large market. Now, it's never going to be the size of our existing dermatology space, but I'll give you an example. About three years ago, Varian decided that they were going to get involved with their Halcyon product at a much lower cost than their electron beam unit at about a $2 million price tag. And quite frankly, from what I've heard from the veterinarian market that they're way below that in providing the veterinarians with an alternative to how they treat their patients using radiation. And so they decided before the transaction with Siemens that they were going to make it into a separate division, a wholly separate division that they can operate a new revenue stream from. I know that the initial years and talking to some of their folks running that that they've done as much as $40 million, but they expected within 24 months to grow that business to $100 million. And it can be, in my estimation for them, as much as a billion dollars. So there's approximately 500 cancer centers around the country that are involved strictly with veterinarian markets. And if you go to the center at the Colorado State University, they have a hospital that has an imaging center equivalent, second to none, of any major community, large community hospital, and a cancer center, the same thing, with all of the latest electron beam devices. Now, they purchased them used, but the cost of managing those on an annual basis, the operating cost, is still about $2 million. The Halcyon, you know, they probably bought it for 1.2 to 1.3 million at these other facilities, but the operating expense is still about $1 million. So the opportunity with superficial radiation therapy has been indicated so far with the dozen or so patients that Colorado State has done is extremely important for them because the charges that they're experiencing to the pet owners is between $4,000 and $6,000 to treat a cancer. And that's not going to change based on spending $400,000 for a device versus $2 million for a device. They're still going to make that money. And it can be found to be as effective and probably even more effective and cost effective for them. So it makes it easier to acquire. Therefore, you should be able to sell more. And therefore, we should be experiencing the same results, which Colorado State seems to be telling us at this time. Now, we know that they've identified several equine candidates, because of tumors around their eyes. And apparently the benefit for that is if they had to do surgery in removing those tumors, that they would cut into a lot of nerves, tendons, things like that, which would disable, either blind the animal or not allow them to use their eyelids the way they currently use. And if you've ever been on a farm or near horses, you know that flies are all around these animals, and that's what causes a lot of, infections around their eyes and everything else. So this can be a valuable tool and some of the valuable tools that it allows them to treat a patient is that they don't have to give them full anesthesia as they would in surgery or with electron beam. They can do local anesthetic because it's a light, more of a lighter superficial radiation, photon radiotherapy, and it doesn't have really an impact on the patient in trying to set them up, keeping them still and all these other things. So a lot of advantages for setup, delivery, and then results. So we're excited for the opportunity, and we're excited that Colorado State is excited. And a lot of it had to do with one of our board members living in that city and just addressing it a couple of years ago. And here we are now with a physician who's gung-ho on this, and I think it's going to expand.
James Twilliger
No, that's, you know, animal health is a nice market for a company with your market cap to not only have what you have on the table, but to have that in the cupboard. That's very interesting from a total addressable market standpoint.
Kim Golodets
Yeah, and from a distribution standpoint, Gibbs, forgive me, but from a distribution standpoint, there's a lot of companies in that space that would love to distribute our product into that market that would have a whole lot more expertise. So I can see us making those sales without having to change our format, the way we're dealing and addressing superficial radiation therapy. I think we can capitalize on that.
James Twilliger
Well, you must be reading my notes because my next question was on the Salesforce. Just in terms of the Salesforce, remind me again, if you don't mind, how many salespeople did you kind of have pre-COVID, maybe as we were starting 2020 or ending 2019? Then I'm going to use the terminology we got hit by COVID, you COVID-adjusted, okay? And now I'm not saying we're out of COVID, but we're kind of starting to say, can we get to the other side of COVID? I hope we can, of course. And what do you think the sales force, just in terms of number of feet on the street, would you be looking at, let's call it post-COVID in terms of sales?
Kim Golodets
Well, I will tell you that we feel that we're pre-COVID right now, okay? We're going to hire more people in the third quarter so that we want to be as much at full strength or beyond before the end of the year because the task that we have is getting to as many offices as possible to preach what we got from CMS because we feel that that's going to help drive the business as well as the new financing that we have for leases. So the combination of both is going to help us doing that. So I would tell you that We're pre-COVID currently, and we'll be, by the end of this quarter, post-COVID with additional. But you know how conservative and how conscious we are of the profitability line. So we don't want to get ahead of ourselves. We're trying to get ahead of ourselves, but without the expense. But there's just no way that you can get around it. But we still want to get some revenues in and then hire more people because we think that's one of the answers to our profitability before the end of the year.
James Twilliger
Now, if the market continued to develop, which I believe it would, as we did a COVID shutdown, one could assume that when it opens back up, it's had its natural growth without your team. You know, it's going to be robust or more robust on the other side. In terms of my last question here, G&A was a little bit higher since we're talking expenses. I mean, nothing major, just a little bit higher. Were there some one-time issues in there or – Is there anything in there that's going to continue to move into Q3 and Q4? I don't want to get you into a guidance type of thing, but how should I think of GMA expenses in terms of the second half of the year? I know you're growing your business.
Kim Golodets
Yeah, well, understand this, and I think you'll understand this, and everybody else on the line will understand it. We're looking at certain markets to expand our business, and it's going to take some due diligence and some extra expenses in order to pursue those things. And so you're going to see some of those expenses happen in that line item that's going to continue to drive our business. But it's clearly money that we're investing in pursuing growing our markets, not spending, not R&D or anything like that. It's in pursuing markets to grow our business. And, you know, until we get results out of any of those due diligences as we get across the line, you know, we don't announce it in any way, shape, or form until something happens. But we can't stop continuing to grow our markets and to grow our businesses in the areas that we're looking at.
James Twilliger
No, no, I'm just trying to do some modeling questions. You guys have done a very, very good job of managing the balance sheet in this downturn. And again, congratulations on the good quarter. This is a, I think your team's done a good job. I'll jump back into you. Thanks, Joe.
Kim Golodets
I appreciate the questions. They're good questions. I appreciate the comments and Again, our number one priority is profitability. We're working endlessly to make that happen. We're not trying to spend too much. We don't want to spend too little. There's a fine balance there, and I can assure you that ourselves, along with our board members, are very tight on every penny that we spend.
Operator
And at this point, there are no more questions. I would now like to turn it back to management for any closing remarks.
Kim Golodets
Okay, thank you, everybody, for being on the line. So in closing, I want to thank you once again for your time this afternoon and for your interest in census health care. We look forward to our next financial results conference call in early November. And in the meantime, please stay safe, wear your mask where appropriate, and let's keep moving forward. Thank you so much.
Operator
Thank you, Vistos. To conclude today's conference, we thank you for your participation. You may disconnect your lines at this time and have a wonderful day.
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