Earnings call transcript: American Shared Hospital Srvcs Q4 2024 misses EPS forecast

American Shared Hospital Services (AMS) reported its Q4 2024 earnings, revealing a significant miss in earnings per share (EPS) compared to forecasts. The company posted an EPS of -$0.20, falling short of the expected $0.08. Despite exceeding revenue forecasts with $9.07 million against the projected $8 million, the stock saw a decline of 4.9% in pre-market trading, reflecting investor concerns over the earnings miss. According to InvestingPro data, AMS maintains a "GREAT" overall financial health score of 3.06 out of 5, with particularly strong profit metrics at 3.75.

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Key Takeaways

• American Shared Hospital Services reported a Q4 2024 EPS of -$0.20, missing the forecast of $0.08.
• Revenue for the quarter was $9.07 million, surpassing the forecast of $8 million.
• The stock price fell by 4.9% in pre-market trading following the announcement.
• The company is expanding its international presence, with new centers in Latin America.
• Continued focus on transitioning from equipment leasing to a patient-centric service model.

Company Performance

American Shared Hospital Services demonstrated robust revenue growth in Q4 2024, with a year-over-year increase of 59.2%. The company is focusing on expanding its international footprint, particularly in Latin America, and shifting its business model towards direct patient services. Despite these positive developments, the earnings miss has raised concerns among investors.

Financial Highlights

• Full Year 2024 Revenue: $28.34 million (up 32.9% YoY)
• Adjusted EBITDA: $8.9 million (up 8.9% YoY)
• Net Income: $2.2 million or $0.33 per diluted share (up 258% YoY)
• Q4 2024 Revenue: $9.1 million (up 59.2% YoY)
• Cash and Equivalents: $11.3 million (as of December 31, 2024)

Earnings vs. Forecast

American Shared Hospital Services reported an EPS of -$0.20, significantly missing the forecasted $0.08. However, the company exceeded revenue expectations, reporting $9.07 million compared to the anticipated $8 million. This earnings miss, despite a revenue beat, is a critical factor in the stock’s negative market reaction.

Market Reaction

Following the earnings release, American Shared Hospital Services’ stock fell by 4.9% in pre-market trading. The stock’s performance reflects investor disappointment over the earnings miss, despite positive revenue figures and strategic expansions. Trading at $2.80, the stock sits near its 52-week low of $2.64, while maintaining relatively low price volatility with a beta of 0.42. InvestingPro data shows the stock has delivered a modest 0.68% return over the past year, though it boasts strong returns over the past five years.

Outlook & Guidance

Looking ahead, American Shared Hospital Services is focusing on further international expansion and increasing treatment volumes through full staffing at its centers. The company anticipates stronger growth from its new centers in Latin America and is exploring additional business development opportunities. InvestingPro analysts project continued profitability this year, with revenue growth forecast at 26% for FY2024. The analyst price target stands at $4.85, suggesting potential upside from current levels.

Executive Commentary

Ray Stokoyak, Executive Chairman, expressed satisfaction with the company’s revenue growth, stating, "We are very pleased to report another year of strong revenue growth." CEO Gary Delaneyas highlighted the potential for increased treatment volumes, noting, "I am confident that once we are fully staffed at each center that we will begin to see growth in treatment volumes."

Risks and Challenges

• The earnings miss could impact investor confidence and stock performance.
• The transition to a patient-centric service model may face operational challenges.
• International expansion involves geopolitical and market risks.
• Staffing shortages could hinder growth in treatment volumes.
• The decline in Gamma Knife procedures and Proton Therapy fractions poses a challenge.

Q&A

During the earnings call, analysts focused on the company’s expansion in Rhode Island and its strategic partnerships with local health systems. Executives emphasized the synergies between healthcare providers and the potential for increased treatment volumes with full staffing.

Full transcript - American Shared Hospital Srvcs (AMS) Q4 2024:

Conference Operator: Good day and welcome to the American Shared Hospital Services Fourth Quarter twenty twenty four Earnings Conference Call. All participants will be in a listen only mode. After today’s presentation, there will be an opportunity to ask questions. Please note this event is being recorded. I would now like to turn the conference over to Kieran Smith, Investor Relations.

Please go ahead.

Kieran Smith, Investor Relations, American Shared Hospital Services: Thank you, Betsy, and thank you everyone for joining us today. AMS’ fourth quarter and full year twenty twenty four 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 09/30/2024, the annual report on Form 10 ks for the year ended 12/31/2023 and the definitive proxy statement for the Annual Meeting of Shareholders that was held on 06/25/2024. 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 and A policy, where we provide each participant a 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 Stokoyak, Executive Chairman. Ray, please go ahead.

Ray Stokoyak, Executive Chairman, American Shared Hospital Services: Thank you, Karen, and good afternoon, everyone. Thanks for joining us today for our fiscal year twenty twenty four earnings conference call. Before I dive into our financial performance, I’d like to take a moment to announce an important leadership transition. Today, we announced that Gary Delaneyas was appointed as our Chief Executive Officer of American Shared Hospital Services. I will remain very much involved and continue to serve as Executive Chairman, focusing on the strategic direction and key growth opportunities.

Gary brings extensive experience in health care operations and financial management. I’m very confident in his ability to lead AMS into our next phase of expansion and innovation. Now I’ll begin with some opening remarks, then turn the call over to Gary for additional detail, followed by Scott Freck, our CFO, for a financial review of our fiscal year results. Following our prepared remarks, we’ll open the call for your questions. We are very pleased to report another year of strong revenue growth, driven by our strategic initiatives, including the continued integration of our Rhode Island acquisition, expansion of our Direct Patient Services segment and additional international business development.

Our commitment to operational efficiency and financial discipline remains steadfast as we transition from a cancer treatment equipment leasing focus to a more patient centric service model. From a quarterly perspective, we continued our sequential and year over year momentum as well with another solid quarter of revenue growth, which increased 59% year over year and 30 from our last quarter. This growth was driven by the continued early benefit from our Rhode Island acquisition that we closed last May as well as from the opening of our new radiation therapy treatment facility in Puebla, Mexico. Our fourth quarter twenty twenty four adjusted EBITDA increased 29 compared to fourth quarter of twenty twenty three. For fiscal year twenty twenty four, revenue totaled $28,340,000 an increase of 32.9% from fiscal year twenty twenty three.

Adjusted EBITDA for fiscal ’twenty four came in at 8,900,000 an 8.9% increase year over year. Additionally, our adjusted EBITDA came in at $1.38 per share, providing investors with a clearer perspective on our financial performance. We encourage investors to consider what a fair EBITDA multiple might be for our enterprise value, given the recurring nature and growth of our revenues, our expanding international footprint and the strategic initiatives we have in motion. We believe this is an opportune time for investors to follow our company closely as we execute on our growth strategy and working towards growing our shareholder value. Before I hand the call over to Gary, I’d also like to highlight our strong balance sheet, robust business development opportunities that drives our enthusiasm, our confidence in the long term trajectory of our company.

With that, I’ll hand the call over to Gary, our new CEO, for additional details.

Gary Delaneyas, Chief Executive Officer, American Shared Hospital Services: Gary? Thanks, Ray, and good afternoon, everyone. I’m excited to take on the CEO role and help lead our strong management team and the company into its next phase of growth. Now I will provide some additional details around financial performance as well as our strategic initiatives. We’re excited about the growth we have been seeing in the overall business that is a direct result of our recent acquisition of the three Rhode Island cancer treatment centers and our new one in Puebla, Mexico.

At the Rhode Island centers, we have invested in CapEx by upgrading CT simulators used in the treatment planning process and also added software enhancements for improved efficiency and patient care. We also made significant progress on optimizing our staffing costs that will improve long term profitability, specifically our professional services agreement with Brown University Health System, the largest health system in Rhode Island

Scott Freck, Chief Financial Officer, American Shared Hospital Services: for

Gary Delaneyas, Chief Executive Officer, American Shared Hospital Services: radiation oncologist staffing at our three centers, which is now fully operational. This agreement streamlines physician recruitment and improves patient service capabilities. I am confident that once we are fully staffed at each center that we will begin to see growth in treatment volumes at each of our centers and increased physician engagement with the healthcare community. Additionally, we put our linear accelerators on service and maintenance agreements, which adds to their dependability and higher uptime for better patient service. The team also continues to focus on strengthening our radiation therapy equipment leasing segment by working closely with our health system customers to create greater community awareness among referring physicians to drive increased utilization of their Gamma Knife systems, the gold standard for stereotactic radiosurgery.

Our international business segment also represents a large growth opportunity where we are expecting continued momentum. As a reminder, we have the only Gamma Knife centers in the countries of Peru and Ecuador. Now with our third international center in Puebla, Mexico, we are treating cancer patients for a full range of cancer diagnoses with the most advanced radiation therapy treatment capabilities available in our catchment area. In fiscal year twenty twenty four, we also established our fourth international center with the signing of a joint venture agreement for a Gamma Knife center in Guadalajara, Mexico. As we look forward into the coming months and years ahead, we expect stronger international growth from additional treatment volumes in Ecuador, strong volume from our newly upgraded center in Peru and from our two new centers in Guadalajara and Puebla, Mexico.

We also continue to expand our business footprint in Rhode Island. The first of these expansion initiatives was for the acquisition of 60% majority interest in the three radiation therapy treatment centers in Rhode Island, which closed this past May. These are our first direct patient services cancer treatment centers in The U. S. This new business segment clearly reflects the power of our growth strategy and further demonstrates our ability to partner with health systems, Care New England and Prospect CharterCare, the second and third largest health systems in Rhode Island.

The second initiative is the Certificate of Need or CON that we have been granted to build and operate a fourth radiation therapy center in Bristol, Rhode Island. And the third initiative is a CON that we officially obtained just this past December to build and operate the first proton beam radiation therapy center in the state of Rhode Island, which clearly demonstrates represents another significant growth opportunity. We look forward to announcing additional progress on these opportunities in due course. I will close now by reiterating our strong confidence in our overall business strategy and I’m very excited and honored to work collaboratively with our strong management team to lead the company forward for continued revenue and profitability growth over the long term. With that, I’ll turn the call over to Scott for a financial review.

Scott Freck, Chief Financial Officer, American Shared Hospital Services: Thank you, Gary, and good afternoon, everyone. I’ll start off with a review of the full fiscal year twenty twenty four financial performance followed by the fourth quarter twenty twenty four financial results. For the fiscal year ended 12/31/2024, total revenue increased by 33% to $28,300,000 compared to $21,300,000 in fiscal year twenty twenty three. Revenue from our Direct Patient Services segment was $12,600,000 for fiscal year twenty twenty four compared to $3,400,000 in fiscal year twenty twenty three marking an increase of 253%. This significant growth was primarily driven by acquisition of the Rhode Island radiation therapy operations, a 20.5% revenue growth in Peru and Ecuador and launch of operations in Pueblo, Mexico in quarter three of twenty twenty four.

Revenue from the equipment leasing segment decreased $15,600,000 from $17,800,000 in fiscal year twenty twenty three. Gamma Knife revenue declined 11.6% to $9,700,000 for fiscal year twenty twenty four compared to $11,000,000 in fiscal year twenty twenty three. The number of Gamma Knife procedures in 2024 was ten eighty four, a 9.3% decrease from the eleven ninety five procedures done in 2023. This decline is due to the expiration of two contracts during 2023 and one in 2024. Revenue from proton beam radiation therapy also called PBRT decreased 1.8% to $10,000,000 in fiscal year twenty twenty four compared to $10,100,000 in fiscal year twenty twenty three.

Total Proton Therapy fractions for 2024 were 5,139, a 4.3% decrease from the 5,369 fractions done in 2023. The decline was primarily due to hurricanes in the state of Florida that impacted volumes along with the normal cyclical fluctuations that we see. Our gross margin for fiscal year twenty twenty four was $9,200,000 compared to $9,300,000 in fiscal year twenty twenty three. The decline in gross margin and percentages reflects increased operational expenses, higher staffing costs and investments in technology infrastructure to support growth initiatives, as well as lower Gamma Knife treatment volumes and strong growth from our Patient Services segment, has a lower gross margin. Full year ’20 ’20 ’4 operating income was a gain of $279,000 excluding impairment compared to $1,200,000 in fiscal year twenty twenty three.

Net income attributable to American Shared Hospital Services for fiscal year twenty twenty four increased 258% to $2,200,000 or $0.33 per diluted share compared to $610,000 or $0.10 per diluted share for fiscal year twenty twenty three. This significant increase was primarily driven by the bargain purchase gain resulting from the Rhode Island acquisition, positive net income contributions from the newly acquired Rhode Island centers and improved operational efficiencies across our domestic and international business segments. Adjusted EBITDA, our non GAAP financial measure increased 8.5% to $8,900,000 for fiscal year twenty twenty four compared to $8,200,000 in fiscal year twenty twenty three. Now I’ll review the quarter results for the fourth quarter ended 12/31/2024. Total revenue increased by 59.2% to $9,100,000 compared to $5,700,000 in the same period of 2023, driven by the Rhode Island acquisition that closed this past May, as well as the new facility in Pueblo, Mexico.

Revenue from the company’s direct patient services or segment was $4,800,000 a 420% increase from Q4 twenty twenty three. This substantial growth was primarily due to the acquisition of the Rhode Island Radiation Therapy Centers and commencement of operations at the facility in Pueblo, Mexico. Revenue from the leasing segment decreased $4,100,000 from 4,800,000.0 Q4 of 20 20 3. This decline was mainly due to lower Gamma Knife volumes driven by the expiration of two contracts in the second and third quarters of twenty twenty three and a third contract expiration in the fourth quarter of twenty twenty four. Gamma Knife revenue decreased by 2.2% to $2,600,000 Gamma Knife procedures totaled $253,000,000 an 8.7% decrease from the two seventy seven procedures in Q4 of twenty twenty three.

Revenue from protein beam therapy in Florida decreased 16% to $2,600,000 from $3,100,000 in Q4 of twenty twenty three. Proton therapy fractions were fourteen seventy one, a 39% decrease compared to the 2,396 in the same period last year. Gross margin for Q4 of twenty twenty four was $3,200,000 compared to $2,800,000 in the same period last year. The percentage decrease was primarily due to lower Gamma Knife treatment volumes and growth in the Direct Patient Services segment, which typically has a lower gross margin. Selling and administrative expenses decreased slightly to $1,700,000 compared to $1,800,000 in Q4 of twenty twenty three.

Interest expense was $429,000 in Q4 of twenty twenty four compared to $287,000 in the same period last year. The operating loss for Q4 of twenty twenty four was $1,800,000 compared to an operating income of $407,000 in Q4 of twenty twenty three. This was due to a loss on a write down of impaired assets and removal costs in the leasing segment. The income tax expense for Q4 twenty twenty four was $71,000 compared to income tax expense of $338,000 in the same period last year. The net loss attributable to American Shared Hospital Services in Q4 twenty twenty four was $1,300,000 or $0.20 per share compared to net income of $415,000 or $06 per share in Q4 of twenty twenty three.

The Q4 twenty twenty four period includes results from our new business development opportunities in the Direct Patient Care segment and increased reserves from impaired assets and removal costs of $2,900,000 in the Leasing segment. Adjusted EBITDA, a non GAAP financial measure, increased 29% to $3,500,000 for Q4 twenty twenty four compared to $2,700,000 in Q4 twenty twenty three. We ended the year in strong financial position supported by our balance sheet. As of 12/31/2024, cash and cash equivalents including restricted cash set at $11,300,000 compared to $13,800,000 at 12/31/2023. Shareholders’ equity excluding non controlling interest in subsidiaries was $25,200,000 or $3.92 per outstanding share compared to $22,600,000 or $3.59 per outstanding share at 12/31/2023.

Fully diluted weighted average common shares outstanding were 6,542,000 for Q4 and 6,552,000 for Q4 of twenty twenty three. This concludes the formal part of our presentation. Thank you again for joining us today. We look forward to updating you on our progress in the quarters ahead. We’d now like to turn the call back to the operator and open it up for questions.

Conference Operator: We will now begin the question and answer session. The first question today comes from Ann Merin with Zacks. Please go ahead. Thank you. So there’s a lot of growth, footprint growth in the state of Rhode Island that you’ve talked about.

It’s obviously a big factor behind the revenue expansion in 2024. So you mentioned on the call, I think, I think Gary spoke to it in his prepared remarks, the agreement with Brown University and how that will likely accelerate hiring of medical professionals. Are there any other benefits that you can think about or speak to of operating or expanding your footprint within the state? And are the facilities that you’re contemplating, the new facilities, the fourth radiation treatment center, the proton beam center, are they close enough to the three existing facilities that there can be any kind of economies that we can talk about? Thank you.

Ray Stokoyak, Executive Chairman, American Shared Hospital Services: Marla, thanks for your question very much. Very good question. Very perceptive. There will be synergies from that relationship. And Rhode Island is a relatively small state.

And the three largest health care providers in the state is Brown University Health. And we’ve now entered into this relationship for their provision of professional services. The second largest health care system, Care New England, is actually a 20% equity owner in our three radiation therapy centers. And the third largest health care system, CharterCare Prospect CharterCare is also a 20% equity owner in our three radiation therapy centers. And there will be synergies from all those relationships, that will advanced the provision of cancer care in the state and will be, I’ll say, a central focus of that initiative.

Conference Operator: Okay. Thank There are no further questions at this time, which concludes our question and answer session. I would like to turn the conference back over to Ray Stokowiak for any closing remarks.

Ray Stokoyak, Executive Chairman, American Shared Hospital Services: Thank you, Betsy. Thanks everyone for joining us today. American Shared Hospital Services is at a pivotal moment. We got strong momentum behind our growth strategy. The Rhode Island acquisitions not only expanded our footprint, but also established our first direct patient services business in The United States, marking a significant milestone for our company.

Internationally, our expansion into Mexico, coupled with continued growth in Peru and Ecuador, further strengthens our position as a leader in specialized radiation therapy services. We recognize that growth comes with challenges. We’re prepared to navigate the complexities of this evolving industry. Our recent expansion of our senior leadership team, the upgrade in our equipment portfolio, operational efficiencies will enhance the quality and accessibility of our services. Further, our CON approval in Rhode Island for a fourth radiation therapy center and our CON to develop and operate the first and only expected proton beam therapy facility in Rhode Island represents another major long term opportunity for expansion.

We’re confident in our strategy and our team’s ability to execute. We look forward to updating you on our continued progress as we drive sustainable growth and long term success. If you have any questions, don’t hesitate to reach out. We welcome any conversation. Thanks again for your interest in American Shared Hospital Services.

Have a great rest of your day and rest of the week. Thank you and goodbye.

Conference Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.

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