via NewMediaWire -- American Shared Hospital Services (NYSE
American: AMS) (the "Company"), a leading provider of turnkey
technology solutions for advanced radiosurgical and radiation
therapy services, today announced financial results for the third
quarter ended September 30, 2020.
Third Quarter Financial Highlights
-
Total revenue in the third quarter was $4,670,000, a decline of
11.9% from the comparable period in 2019, and an improvement of
17.0% from the $3,991,000 of revenue in the second quarter of
2020. Proton therapy revenue of $1,687,000 was consistent with
the third quarter of 2019 and increased 20.4% compared to the
second quarter of 2020. Gamma Knife revenue of $2,983,000
declined 9.9% compared to the third quarter of 2019 and increased
15.2% compared to $2,590,000 for the second quarter of 2020. The
period-over-period decrease was due to lower average reimbursement
at the Company’s retail sites and a positive contractual adjustment
related to Medicare reimbursement at one of the Company's existing
sites recognized in the prior year.
-
Total proton therapy fractions in the third quarter increased 12.4%
compared to the third quarter of 2019 and increased 20.8% compared
to the second quarter of 2020. Gamma Knife procedures
increased by 8.3% to 377 for the third quarter of 2020 from 348 in
the same period of the prior year and increased 7.7% compared to
350 for the second quarter of 2020. Gamma Knife volumes for centers
in operation decreased 3.0% from Gamma Knife volumes for those same
centers during the same period of the prior year.
-
Net loss in the third quarter was $209,000 compared to net income
of $165,000 for the third quarter of 2019 and a net loss of
$483,000 for the second quarter of 2020. The decrease in net income
compared to the prior year was primarily due to a decrease in the
Gamma Knife average reimbursement rate as well as legal and other
professional fees and transaction costs totaling $69,000 incurred
from the June acquisition of the Gamma Knife Center in Ecuador
(“GKCE”).
-
On September 18, 2020, the Centers for Medicare and Medicaid
Services (“CMS”) issued the final rule that would implement a new
mandatory payment model for radiation oncology services: the
Radiation Oncology Alternative Payment Model (“RO APM”), which is
scheduled to commence July 1, 2021 and be in effect for a five year
period. Four of the Company's Gamma Knife centers are scheduled to
be included in the RO APM although a significant impact on the
Company's Gamma Knife revenues is not anticipated. The Company's
PBRT center was not selected for inclusion in the RO APM.
Ray Stachowiak, Chief Executive Officer of AMS,
commented, “In the third quarter, volumes bounced back
significantly from the pandemic lows of the previous quarter. Total
revenue was up 17% sequentially from the second quarter of 2020,
with PBRT revenue up 20% and Gamma Knife revenue up 15% in the
period. Total revenue in the third quarter was also 2% ahead of
total revenue in the pre-pandemic first quarter of 2020, and EBITDA
increased a stronger 9% over the same period. We also ended the
quarter with a strong cash position of $3.6 million. During the
quarter we received the final ruling from the Centers for Medicare
and Medicaid Services (“CMS”). Our Orlando Health PBRT Center was
not selected to be part of the RO APM and we believe that the CMS
decision will have no significant impact on the reimbursement of
our Gamma Knife services. Looking ahead, we’ve begun taking a hard
look at our expenses, especially with our vendors, and expect to
initiate cost reductions in our administrative expenses in
2021.”
“In September, I was appointed by the Board as
the CEO of AMS. At the same time, all of our corporate managers
were elevated to titles more reflective of their positions and
responsibilities. I believe that we have a great team in
place to reach our goal of sustained profitability. To achieve
this, our plan is to broaden the product line and geographic reach
for our financing solutions and increase the Company’s revenue
streams. To that end, during the third quarter we completed the
upgrade of the Gamma Knife Perfexion to the Icon platform at the
Lovelace Medical Center. We have additional upgrades pending,
including at our recently acquired facility in Ecuador, and we
continue to have productive discussions with prospective clients
for additional equipment placements,” concluded Mr. Stachowiak.
Financial Results for the Three Months Ended September
30, 2020
For the three months ended September 30, 2020,
total revenue decreased 11.9% to $4,670,000 compared to total
revenue of $5,301,000 for the third quarter of 2019 and increased
17.0% compared to total revenue of $3,991,000 for the second
quarter of 2020. The Company recorded no revenue from its IGRT
equipment in the current quarter compared to $314,000 in the third
quarter of 2019. The equipment was fully depreciated and sold in
July upon expiration of the Company’s contract.
Third quarter revenue for the Company's proton
therapy system installed at Orlando Health in Florida increased
0.6% to $1,687,000 compared to revenue for the third quarter of
2019 of $1,677,000 and increased 20.4% compared to revenue of
$1,401,000 in the second quarter of 2020. The
period-over-period increase was due to higher volumes, offset by a
lower average reimbursement per fraction. Average reimbursement per
fraction was consistent with the second quarter of 2020. Total
proton therapy fractions in the third quarter were 1,632, an
increase of 12.4% compared to 1,452 proton therapy fractions in the
third quarter of 2019 and an increase of 20.8% compared to 1,351 in
the second quarter of 2020.
Revenue for the Company's Gamma Knife operations
decreased 9.9% to $2,983,000 for the third quarter of 2020 compared
to $3,310,000 for the third quarter of 2019 and increased 15.2%
compared to $2,590,000 for the second quarter of 2020. The
period-over-period decline was due to lower volumes at same stores,
a lower average reimbursement at the Company’s retail sites and a
positive contractual adjustment related to Medicare reimbursement
at one of the Company's existing sites recognized in the prior
year. Gamma Knife procedures increased by 8.3% to 377 for the
third quarter of 2020 from 348 in the same period of the prior year
and 7.7% compared to 350 for the second quarter of 2020. The
increase from the second quarter reflects the acquisition of GKCE.
Gamma Knife volumes for centers in operation decreased 3.0% from
Gamma Knife volumes for those same centers during the same period
of the prior year.
Gross margin for the third quarter of 2020
decreased to $1,138,000, or 24.4% of revenue, compared to gross
margin of $1,813,000, or 34.2% of revenue, for the third quarter of
2019, and increased from $907,000, or 22.7% of revenue, for the
second quarter of 2020.
Selling and administrative costs increased by
$70,000, or 6.6%, to $1,135,000 for the third quarter compared to
$1,065,000 for the third quarter of 2019, and a decline of 6.2%
compared to $1,210,000 for the second quarter of 2020. The
period-over-period increase is due to tax, legal, and consulting
fees of $69,000 in the third quarter related to the Company's
acquisition of GKCE.
Net loss for the third quarter of 2020 was
$209,000, or $(0.03) per share. This compares to net income
for the third quarter of 2019 of $165,000, or $0.03 per diluted
share, and a net loss of $483,000, or $(0.08) per diluted share,
for the second quarter of 2020. Fully diluted weighted average
common shares outstanding were 6,049,000 and 5,908,000 for the
third quarter of 2020 and 2019, respectively.
Adjusted EBITDA, a non-GAAP financial measure,
was $1,979,000 for the third quarter of 2020, compared to
$2,445,000 for the third quarter of 2019 and $1,437,000 for the
second quarter of 2020. The year-over-year decline was primarily
due to the reduction in overall income.
Financial Results for the Nine Months Ended September
30, 2020
For the nine months ended September 30, 2020,
revenue decreased 16.4% to $13,229,000 compared to revenue of
$15,819,000 for the first nine months of 2019. The Company recorded
no revenue from its IGRT equipment in the nine-month 2020 period
compared to $771,000 in the comparable period of 2019, after the
expiration of the Company’s contract and the equipment was fully
depreciated and sold.
Proton therapy revenue increased 0.8% to
$4,764,000 for the first nine months of 2020 compared to $4,728,000
for the first nine months of 2019. Total proton therapy fractions
in the first nine months of 2020 were 4,659, an increase of 5.7%
compared to 4,407 proton therapy fractions in the comparable period
of 2019.
Gamma Knife revenue decreased 18.0% to
$8,465,000 for the first nine months of 2020 compared to
$10,320,000 for the first nine months of 2019. The number of Gamma
Knife procedures in the first nine months of 2020 was 1,103, an
increase of 1.8% compared to 1,084 Gamma Knife procedures in the
comparable period of 2019. The year-over-year revenue decline was
due to a positive contractual adjustment related to Medicare
reimbursement at one of the Company's existing sites recognized in
the prior year and lower average reimbursement at the Company’s
retail sites.
Net loss for the first nine months of 2020 was
$827,000, or $(0.14) per share. This compares to net income
for the first nine months of 2019 of $466,000, or $0.08 per diluted
share. Adjusted EBITDA, a non-GAAP financial measure, was
$5,238,000 for the first nine months of 2020, compared to
$7,620,000 for the first nine months of 2019.
Balance Sheet Highlights
At September 30, 2020, cash, cash equivalents,
and restricted cash was $3,983,000, compared to $1,779,000 at
December 31, 2019. Shareholders' equity at September 30, 2020
was $30,714,000, or $5.34 per outstanding share. This
compares to shareholders' equity at December 31, 2019 of
$31,811,000, or $5.47 per outstanding share.
Conference Call and Webcast Information
AMS has scheduled a conference call at 12:00
p.m. PDT (3:00 p.m. EDT) today. To participate, please call 1 (888)
466-9845 at least 5 minutes prior to the start of the call and
enter passcode number: 6465095#. A simultaneous Webcast of the call
may be accessed through the Company's website, www.ashs.com, or at
www.streetevents.com for institutional investors.
A replay of the call will be available at the
following link through November 26, 2020:
https://edge.media-server.com/mmc/p/7f7iwanm
About American Shared Hospital Services (NYSE American:
AMS)
American Shared Hospital Services provides
turnkey technology solutions for advanced radiosurgical and
radiation therapy services. AMS is a world leader in providing
Gamma Knife radiosurgery equipment, a non-invasive treatment for
malignant and benign brain tumors, vascular malformations, and
trigeminal neuralgia (facial pain). The Company also offers
proton therapy, and the latest IGRT, IMRT and MR/LINAC systems. For
more information, please visit: www.ashs.com.
Earnings Disclosure
The outbreak of the novel coronavirus COVID-19,
is now a pandemic as declared by the World Health Organization and
has led to adverse impacts on the U.S. and global economies and
will likely continue to impact business activity, including the
Company’s. The pandemic has impacted and could further impact the
Company’s operations and the operations of its customers as a
result of quarantines, facility closures, and travel and logistics
restrictions. While the disruption caused by the pandemic is
currently expected to be temporary, there is uncertainty regarding
its duration. Therefore, while the COVID-19 pandemic has impacted
the Company’s results of operations, financial position, and
liquidity, the duration and intensity of the impact of the COVID-19
pandemic and resulting disruption to the Company’s operations is
uncertain. The Company will continue to monitor the situation
closely and assess the impact on its operations and financial
results for the remainder of the year.
On September 18, 2020, the Centers for Medicare
and Medicaid Services (“CMS”) issued the final rule that would
implement a new mandatory payment model for radiation oncology
services: the Radiation Oncology Alternative Payment Model (“RO
APM”). The RO APM is scheduled to commence July 1, 2021 and will be
in effect for a five (5) year period. The RO APM significantly
alters CMS' payment methodology from a fee for service paradigm to
a set reimbursement by cancer type methodology for radiation
services provided within a 90 day episode of care. Under the RO
APM, hospital based and free-standing radiation therapy providers
are mandatorily required to participate in the model based on
whether the radiation therapy provider is located within a randomly
selected Core Based Statistical Area ("CBSA"). CMS projects that
providers treating approximately 30% of radiation oncology patients
have been selected to participate in the RO APM. The remaining
providers not included in the RO APM will continue to receive
reimbursement based on a fee-for-service methodology. The RO APM
includes but is not limited to PBRT and Gamma Knife services. Four
(4) of the Company's Gamma Knife centers are scheduled to be
included in the RO APM. It is not anticipated that inclusion in the
RO APM will have a significant impact on the Company's Gamma Knife
revenues. The Company's PBRT center was not selected for inclusion
in the RO APM. For centers not included in the RO APM proposed
model, Medicare reimbursement in 2021 for the most commonly used
PBRT delivery codes is proposed (pending final determination) to
increase by approximately 4.9% and to decrease by approximately
0.1% for Gamma Knife.
Safe Harbor Statement
This press release may be deemed to contain
certain forward-looking statements with respect to the financial
condition, results of operations and future plans of American
Shared Hospital Services (including statements regarding the
expected continued growth of the Company and the expansion of the
Company’s Gamma Knife, proton therapy and MR/LINAC business, which
involve risks and uncertainties including, but not limited to, the
risks of economic and market conditions, the risks of variability
of financial results between quarters, the risks of the Gamma Knife
and proton therapy businesses, the risks of developing The
Operating Room for the 21st Century program, the risks of
changes to CMS reimbursement rates or reimbursement methodology,
the risks of the timing, financing, and operations of the Company’s
Gamma Knife, proton therapy, and MR/LINAC businesses, the risks of
the COVID-19 pandemic and its effect on the Company’s business
operations and financial condition, the risk of expanding within or
into new markets, the risk that the integration or continued
operation of acquired businesses could adversely affect financial
results and the risk that current and future acquisitions may
negatively affect the Company’s financial position. Further
information on potential factors that could affect the financial
condition, results of operations and future plans of American
Shared Hospital Services is included in the filings of the Company
with the Securities and Exchange Commission, including the
Company's Annual Report on Form 10-K for the year ended December
31, 2019, its Quarterly Report on Form 10-Q for the three months
ended March 31, 2020 and June 30, 2020, and the definitive Proxy
Statement for the Annual Meeting of Shareholders that was held on
June 26, 2020.
Non-GAAP Financial Measure
Adjusted EBITDA, the non-GAAP measure presented
in this press release and supplementary information, is not a
measure of performance under the accounting principles generally
accepted in the United States ("GAAP"). This non-GAAP
financial measure has limitations as an analytical tool, including
that it does not have a standardized meaning. When assessing our
operating performance, this non-GAAP financial measure should not
be considered a substitute for, and investors should also consider,
income (loss) before income taxes, income (loss) from operations,
net income (loss) attributable to the Company, earnings (loss) per
share and other measures of performance as defined by GAAP as
indicators of the Company's performance or
profitability.
Adjusted EBITDA is a non-GAAP financial measure
representing our (loss) earnings before interest, taxes,
depreciation, and amortization. We define Adjusted EBITDA as net
(loss) income before interest expense, income tax (benefit)
expense, depreciation and amortization expense, stock-based
compensation expense, and acquisition transaction costs.
We use this non-GAAP financial measure as a
means to evaluate period-to-period comparisons. Our management
believes that this non-GAAP financial measure provides meaningful
supplemental information regarding our performance by excluding
certain expenses and charges that may not be indicative of the
operating results of our recurring core business, such as
stock-based compensation expense. We believe that both
management and investors benefit from referring to this non-GAAP
financial measure in assessing our performance.
Contacts:
American Shared Hospital Services Ray Stachowiak Chief Executive
Officer rstachowiak@ashs.com
Investor Relations PCG Advisory Stephanie Prince P: (646)
762-4518 sprince@pcgadvisory.com
AMERICAN SHARED HOSPITAL SERVICES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
|
|
Summary of Operations Data |
|
|
|
|
|
|
|
|
|
|
|
Three months ended September 30, |
|
Nine months ended September 30, |
|
|
|
|
|
|
|
|
|
|
|
2020 |
|
2019 |
|
2020 |
|
2019 |
Revenues |
|
4,670,000 |
|
5,301,000 |
|
13,229,000 |
|
15,819,000 |
Costs of revenue |
|
3,532,000 |
|
3,488,000 |
|
9,790,000 |
|
10,340,000 |
Gross margin |
|
1,138,000 |
|
1,813,000 |
|
3,439,000 |
|
5,479,000 |
Selling & administrative
expense |
|
1,135,000 |
|
1,065,000 |
|
3,556,000 |
|
3,201,000 |
Interest expense |
|
254,000 |
|
302,000 |
|
803,000 |
|
1,015,000 |
Operating (loss)
income |
|
(251,000) |
|
446,000 |
|
(920,000) |
|
1,263,000 |
Other income |
|
3,000 |
|
7,000 |
|
7,000 |
|
15,000 |
(Loss) income before income
taxes |
|
(248,000) |
|
453,000 |
|
(913,000) |
|
1,278,000 |
Income tax (benefit)
expense |
|
(34,000) |
|
99,000 |
|
(192,000) |
|
250,000 |
Net (loss) income |
|
($214,000) |
|
$354,000 |
|
($721,000) |
|
$1,028,000 |
Less:
Net loss (income) attributable to non-controlling interest |
|
5,000 |
|
(189,000) |
|
(106,000) |
|
(562,000) |
Net (loss) income attributable
to American Shared Hospital Services |
|
($209,000) |
|
$165,000 |
|
($827,000) |
|
$466,000 |
|
|
|
|
|
|
|
|
|
(Loss) earnings per common
share: |
|
|
|
|
|
|
|
|
Basic |
|
($0.03) |
|
$0.03 |
|
($0.14) |
|
$0.08 |
Assuming dilution |
|
($0.03) |
|
$0.03 |
|
($0.14) |
|
$0.08 |
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding: |
|
|
|
|
|
|
|
|
Basic |
|
6,049,000 |
|
5,889,000 |
|
6,060,000 |
|
5,899,000 |
Assuming dilution |
|
6,049,000 |
|
5,908,000 |
|
6,060,000 |
|
5,917,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance Sheet Data |
|
|
|
|
|
|
|
|
|
|
|
|
|
9/30/2020 |
|
12/31/2019 |
|
|
|
|
Cash, cash equivalents and
restricted cash |
|
$3,983,000 |
|
$1,779,000 |
|
|
|
|
Current assets |
|
$10,960,000 |
|
$10,742,000 |
|
|
|
|
Total assets |
|
$52,340,000 |
|
$53,783,000 |
|
|
|
|
|
|
|
|
|
|
|
|
|
Current liabilities |
|
$8,027,000 |
|
$8,214,000 |
|
|
|
|
Shareholders' equity |
|
$30,714,000 |
|
$31,811,000 |
|
|
|
|
American Shared Hospital Services
Adjusted EBITDA
Adjusted EBITDA |
|
|
|
|
|
|
|
Q3 |
Q3 |
|
YTD |
YTD |
|
|
2020 |
2019 |
|
2020 |
2019 |
Net (Loss)
Income |
$(209,000) |
$ 165,000 |
|
$ (827,000) |
466,000 |
Plus: |
Income Tax Expense |
(34,000) |
99,000 |
|
(192,000) |
250,000 |
|
Interest Expense |
254,000 |
302,000 |
|
803,000 |
1,015,000 |
|
Depreciation and Amortization
Expense |
1,819,000 |
1,817,000 |
|
5,103,000 |
5,719,000 |
|
Stock-Based Compensation
Expense |
80,000 |
62,000 |
|
189,000 |
170,000 |
|
Acquisition Transaction
Costs |
69,000 |
- |
|
162,000 |
- |
Adjusted
EBITDA |
1,979,000 |
2,445,000 |
|
5,238,000 |
7,620,000 |
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