Sensus Healthcare, Inc.

in today's call. Joining me from Census Healthcare are Joe Sardano, Chairman and Chief Executive Officer, Michael Sardano, President and General Counsel, and Javier Rampolla, 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, and 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 as of the date of this conference call, November 3rd, 2022. Census Healthcare undertakes no application to revise or update any forward-looking statements except as required by law. while 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 conference call, references will be made to certain non-GAAP financial measures. Census believes these measures provide useful information for investors, yet they should not be considered as a substitute for GAAP. nor should they be reviewed 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?

Thank you, Kim, and good afternoon, everyone. I'm delighted to be reporting continued excellent execution of our growth strategy, strong financial performance evidenced by our very good year-over-year revenue growth, and continued profitability. Our revenue of $9 million was up 64% over last year. In addition, we posted diluted earnings per share of 11 cents compared with 1 cent a year ago. Despite some economic uncertainty and the impact of Hurricane Ian on many of our customers, we're optimistic the fourth quarter will be profitable as well. As you know, last January, our SRT therapy received improved reimbursement from the Centers for Medicare and Medicaid Services, or CMS, when they revalued our main code upwards by 66% for a course of SRT in non-melanoma skin cancer. In addition, ancillary codes received a double-digit boost. Of note, Mohs surgery reimbursement went down. These actions have been game changers for SRT. We have capitalized on these reimbursement changes throughout the pandemic and beyond as patient volumes at customer sites remain robust and more and more practitioners recognized SRT as a best practice for the non-invasive treatment of non-melanoma skin cancer. Our rigorous physician education program highlighting the improved return on investment for SRT is ongoing. especially at dermatology conferences and trade shows. The fair market value lease program we launched earlier this year has supported the purchase of our premium featured and premium priced SRT 100 vision systems. More than half of SRT system sales are now for the vision system, and we expect this percentage to increase with the introduction of significant technology upgrade this past quarter. Note that the interest rates have not yet dampened demand for the vision systems, as return on investment is still robust for physicians, but of course a bit lower than it was before the Fed began raising interest rates. In August, we introduced new state-of-the-art solid-state high-frequency ultrasound, which provides the best view of the epidermis in the market and utilizes a new ergonomically designed probe employing single-use disposables. The upgrade operates in the ideal megahertz range for visualization of all layers of the skin, which is essential for treating skin cancer lesions. In addition, it has built-in electronic medical record capability that allows the operator to easily and accurately record and capture the ultrasound images. This ability improves patient treatments. The new ergonomic probe features single-use disposable standoffs on the tip to create the best skin-to-probe distance. Setup time is also fast, which both our customers and their patients appreciate. All SRT vision units sold from now on will include the new ultrasound technology. Last quarter, I mentioned that we engaged a new advertising firm for a digital marketing program to increase patient awareness of SRT. You may have noticed that our Facebook page has been very active as we work to engage the public. We are also running television advertising in markets where we have the largest presence, for example, Florida, Texas, and Arizona, along with some select national spots. Owing to the upcoming midterm elections, ad space is very expensive, so we've pulled back on purchases. We'll resume more television advertising after the elections and holidays. We still have clips on our website, so if you haven't yet had the opportunity to view them, you can do so. We are also recognizing increased recurring revenues as the business grows in the form of service agreements. At this point, approximately 80% of the systems that come off of their own one-year warranty are covered by service agreements, and 40% of our customers who are eligible for service agreements have opted for them. Note that our ability to diagnose any issues, including before they happen, have been made easier with our Sentinel technology, and that has greatly enhanced our customer service. As a reminder, Sentinel is our proprietary HIPAA-compliant software and is available on all our new products. It allows physicians to easily and accurately document patient data for clinical billing and asset management purposes. This technology has been a game changer for our SRT customers and for Census. as it clearly demonstrates the attractive ROI for the SRT100 Vision and the SRT100 Plus systems. We've also included Sentinel in all six of our Sensus branded aesthetic smart lasers, including the new hair removal system Silk by Sensus that we're very proud of. We launched the system at the Fall Clinical Dermatology Conference last month, generating initial interest. Silk is a diode laser that's truly portable. with a lightweight handpiece, super cold cooling tip, and high repetition rates. The ability to blend wavelengths while emitting light vertically toward the skin increases efficiency by maintaining the density of the laser in the selected area, resulting in deeper and better penetration and more homogeneous energy distributions. Importantly, the laser is sensitive to all skin types, making laser hair removal available to everyone. We're very excited about Silk's potential, and its development is in direct response to our customers' needs. We will continue to showcase the product at conferences and trade shows as we work to build awareness for this new aesthetic laser. We also continue to build awareness for our transdermal infusion system, or TDI. Recall that late last year, we entered into an exclusive U.S. distribution agreement with this noninvasive drug delivery system, which is cleared by the U.S. FDA for the local administration of iconic ionic drug solutions in the body for medical purposes. The TDI launch continues to go very well and is generating significant interest among potential customers who recognize its ability to eliminate injections. The system permits many procedures to be less painful for patients, and interest is particularly high for aesthetic facial procedures, hair growth, and hyperhidrosis or excessive sweating. We took orders during the quarter for 10 systems from hair enhancement centers. Hair enhancement centers will be using our TDI systems to deliver their U.SK Underskins Hair Growth Serum called Skin Savers Hair, U.S.SK Underskins. is a subsidiary of EMS Pharma, the largest pharmaceutical company in Brazil, and in itself, a subsidiary of one of Brazil's largest conglomerates. We delivered one TDI system during the third quarter, and the remainder will be delivered in the fourth quarter. HEC is rapidly growing and currently operates 10 centers in Texas, and we intend to and support their expansion plans beyond this year. In addition, work by Dr. Glynis Ablon of the Ablon Skin Institute and Research Center at Associate Clinical Professor of UCLA to study the delivery of finasteride for hair growth is ongoing. Finasteride is more commonly known as Propecia. Dr. Ablon presented her positive study data at the fall clinical. In addition, Dr. Mark Nestor, the founder of Center for Clinical and Cosmetic Research in Aventura, Florida, continues to present data on the efficacy of utilizing TDI for subjects with axillary hyperhidrosis or excessive sweat glands. He highlighted his work at the fall clinical, which followed his abstract at the winter clinical earlier this year in Hawaii. Turning briefly to our international business, during Q3, we shipped four SRT100 systems to China. while the pandemic rages on and China takes zero tolerance stance on COVID. There has been some discussion about China relaxing that policy, which I would expect to be a positive development for us. That said, no matter where in the world you are, and regardless of economic headwinds or geopolitical uncertainty, skin cancer needs to be treated. Before I turn the call over to Javier to review our financial results, I want to praise our dedicated staff. In particular, as Hurricane Ian bore down on us here in Florida, our staff never stopped thinking about our customers, their patients, and how we could help. Many of our customers and prospective customers in Southwest Florida suffered severe damage and have not yet reopened their clinics. This has impacted our near-term expectations for sales. While we're still looking to post a profit in Q4, at this point, we can't say how the quarter will turn out. We have a robust backlog of orders and we continue to keep a keen eye on expenses. We also have the strongest balance sheet in the company's history and will deploy cash to benefit our shareholders, be it in the form of stock repurchases or acquisitions. With that, I'll turn the call over to Javier.

Thanks, Joe. It's a pleasure to be speaking with all of you this afternoon. As Joe mentioned, our revenues for the third quarter of 2022 were $9 million, and this compares with revenues of 5.5 million for the third quarter of 2021, which was still impacted by the COVID-19 pandemic. Revenues for the 2022 quarter reflect a higher number of units sold, including four SRT100 systems that were shipped to Asia, along with service contract revenue and sales of our transdermal infusion system. Gross profit for the third quarter of 2022 was 5.9 million or 65.6% of revenues. And this compares federally with 3.2 million or 57.9% of revenues for the third quarter of 2021. The increases were mostly driven by a higher number of units sold in 2022, service revenue on installed units and the impact of COVID-19 on the 2021 quarter. Selling and marketing expense for the third quarter of 2022 was 1.8 million, up from 1.2 million for the third quarter of 2021. The increase was mostly attributable to higher trade show and advertising expenses. General and administrative expense for the third quarter of 2022 was 1.2 million, compared with $1.1 million for the third quarter of 2021. The slight increase was mostly due to higher professional fees. Research and development expense for the second quarter of 2022 was $0.7 million unchanged from the prior year quarter. We recorded a provision for income tax in the third quarter of 2022 of 0.5 million and we had no such provision in the third quarter of last year. Net income for the third quarter of 2022 was 1.8 million or 11 cents per diluted share and this compares with net income of 0.2 million. or one cent per share for the third quarter of 2021. Adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization, and stock compensation expense, was 2.3 million for the 2022 third quarter, up from 0.5 million a year ago. Turning briefly to year-to-date financial results, Revenues for the first nine months of 2022 were $31.4 million, up 124% over $14 million for the first nine months of 2021. The increase was mostly driven by a higher number of units sold, service revenue on installed units, and the impact of COVID-19 on the 2021 results. Gross profit for the first nine months of 2022 was $21.3 million or 67.8% of revenue, compared with $8.1 million or 58% of revenue for the first nine months of 2021. As with the revenues, the increases were mostly driven by higher number of units sold in 2022. service revenue on installed units, and the impact of COVID-19 on comparable 2021 period results. For the first nine months of 2022, selling and marketing expense was $4.8 million, compared with $3.5 million for the same period of 2021. The increase was mostly attributable to higher threshold expense, advertising, and commission expenses. General and administrative expense was $3.6 million through September 30, 2022, compared with $3.5 million in the same period a year ago, while research and development expense was unchanged from the prior year at $2.3 million. Net income for the first nine months of 2022 was $21.4 million or $1.28 per diluted share. compared with a net loss of $1.2 million, or $0.07 per share, for the first nine months of 2021. Net income for the first nine months of 2022 includes a $12.8 million gain on the sale of a non-core asset within the first quarter. Net income for the ninth month and the September 30, 2022, excluding this gain, was $8.6 million, or $0.52 per diluted share. Adjusted EBITDA for the first nine months of 2022 was $23.8 million, compared with a negative $0.4 million for the same period of 2021. Turning now to our balance sheet. Cash and investments were $37.6 million as of September 30, 2022, up from $14.5 million as of September 31, 2021. The company had no outstanding borrowings under its revolving line of credit. I want to score what we have been saying for some time. Our attention to expense management is front and center, and we continue to be in the strongest financial position in the company's history. Our balance sheet positions us well to take advantage of the compelling growth opportunities we may come across. As a final comment, please see the table in the news release we issued earlier today for the reconciliation of GAAP to non-GAAP financial measures. With that, I'll turn the call back over to Joe.