AMERICAN SHARED HOSPITAL SERVICES (NYSE MKT:AMS),
a leading provider of turnkey technology solutions for advanced
radiosurgical and radiation therapy services, today announced
financial results for the second quarter and first half of
2015.
Second Quarter Highlights:
● Revenue increased 38.2% compared to the second quarter of
2014, excluding prior year's revenue in Turkey.
● Operating income increased to $478,000 versus an operating
loss of $602,000 last year.
● The net loss of $1,970,000, or $0.36 per share, included a
$2,114,000 ($0.39 per share) non-cash write-down of AMS' equity
investment in Mevion Medical Systems. Excluding the non-cash
write-down, second quarter net income was $144,000, or $0.03 per
share. For the second quarter of 2014, the net loss was $927,000,
or $0.20 per share.
Second Quarter Results
For the three months ended June 30, 2015, medical services
revenue increased 30.0% to $4,394,000 compared to medical services
revenue of $3,379,000 for the second quarter of 2014. Revenue for
last year's second quarter included the Company's operations in
Turkey, which were sold effective May 31, 2014. Excluding prior
year's revenue in Turkey, medical services revenue increased 38.2%
for the second quarter of 2015 compared to the second quarter of
2014.
The Company incurred a net loss of $1,970,000, or $0.39 per
share, for the second quarter, solely attributable to an impairment
charge of $2,114,000, or $0.39 per share, related to AMS' strategic
equity investment in Mevion Medical Systems. Excluding this charge,
the Company would have reported net income of $144,000, or $0.03
per share for the quarter. This compares to a net loss for the
second quarter of 2014 of $927,000, or $0.20 per share, which
included a pre-tax loss on the sale of the Turkey subsidiary of
$572,000 and a pre-tax gain from foreign currency transactions of
$146,000 due to the strengthening of the Turkish Lira against the
U.S. Dollar.
The total number of procedures performed in AMS' U.S. Gamma
Knife business increased 27.6% for the second quarter
compared to the same period of 2014, excluding procedures performed
in Turkey.
Medical services gross margin for the second quarter of 2015
increased to 41.0%, compared to medical services gross margin of
25.0% for the second quarter of 2014, primarily the result of
increased treatment volume, higher Medicare reimbursement for
certain Gamma Knife procedures, and lower costs due to the sale of
the Turkish subsidiary.
Operating income increased to $478,000 for the second quarter of
2015 compared to an operating loss of $602,000 for the same period
a year earlier. Pretax income, net of income attributable to
non-controlling interest, increased to $250,000 (excluding the
impairment charge) for the second quarter of 2015 compared to a
pretax loss of $893,000 for the second quarter of 2014.
Selling and administrative expenses for the second quarter of
2015 increased to $979,000 compared to $937,000 for the second
quarter of 2014, primarily due to higher legal and audit fees.
First Half Results
For the six months ended June 30, 2015, medical services revenue
increased 14.3% to $8,511,000 compared to medical services revenue
of $7,443,000 for the first six months of 2014. Excluding prior
year's revenue in Turkey, medical services revenue increased 23.1%
for this year's first half compared to the first half of 2014.
For the six months ended June 30, 2015, the Company incurred a
net loss of $1,842,000, or $0.34 per share. The loss was solely
attributable to an impairment charge of $2,114,000, or $0.39 per
share, related to AMS' strategic equity investment in Mevion
Medical Systems. Excluding this charge, the Company would have
reported net income of $272,000, or $0.05 per share for the six
months. This compares to a net loss for the first half of 2014 of
$1,023,000, or $0.22 per share, which included a pre-tax loss on
the sale of the Turkey subsidiary of $572,000 and a pre-tax gain on
foreign currency transactions of $161,000.
The total number of procedures performed in AMS' U.S. Gamma
Knife business increased 17.4% for the first six months of 2015
compared to the same period of 2014, excluding procedures performed
in Turkey. Operating income increased to $934,000 for the first
half of 2015 compared to an operating loss of $705,000 for last
year's first half.
Balance Sheet Highlights
At June 30, 2015, cash and cash equivalents were $1,798,000
compared to $1,059,000 at December 31, 2014. As of December 31,
2014, AMS had a $9,000,000 renewable line of credit with a bank
secured by a certificate of deposit. This line was paid in full on
January 2, 2015 using the proceeds from the certificate of deposit.
As a result, current liabilities decreased to $8,902,000 at June
30, 2015 compared to $16,251,000 at December 31, 2014.
Shareholders' equity at June 30, 2015 was $24,602,000, or $4.59 per
outstanding share. This compares to shareholders' equity at
December 31, 2014 of $26,154,000, or $4.88 per outstanding
share.
CEO Comments
Chairman and Chief Executive Officer Ernest A. Bates, M.D.,
said, "Under generally accepted accounting principles, the recent
cancellation of Mevion Medical System's initial public offering
required us to recognize the impairment in the value of our
strategic equity investment in the company. We continue to believe
strongly in Mevion's long-term prospects based on the demonstrated
clinical potential of its advanced, single treatment room MEVION
S250™ proton therapy system. Mevion has manufactured and delivered
six proton therapy systems to date, and has added strong healthcare
venture capital firms to its investor base through multiple
financing rounds. In the end, therefore, this impairment was based
on accounting rules only, and we remain optimistic about our
investment as an economic and financial matter.
"Operationally procedure volumes remained robust in the second
quarter, which together with higher Medicare reimbursement for
certain Gamma Knife procedures compared to 2014, drove a
substantial increase in revenue for the period. Gross margin
increased, reflecting the better pricing environment and a
favorable mix of procedures by location. With the payoff of our
line of credit in January, the sale of EWR Turkey in May 2014, and
the pay-down of one of the Company's existing debt obligations at
the end of 2014, interest expense decreased significantly. These
factors combined to produce a solid increase in operating and net
income for this year's second quarter versus prior year. Underlying
these gains is the fact that the Gamma Knife Perfexion remains the
'gold standard' for cranial radiosurgery. The device is
particularly well-suited to treat metastatic brain tumors,
diagnosed in an estimated 180,000 new patients annually.
"While it is premature to make any assumptions regarding
Medicare reimbursement for 2016, recently the Centers for Medicare
and Medicaid Services (CMS) announced proposed reimbursement rates
for next year. CMS is proposing a modification of the comprehensive
APC for both Gamma Knife and LINAC one session cranial
radiosurgery. The proposed comprehensive reimbursement rate of
approximately $7,347 will be inclusive of the delivery and certain
ancillary codes but exclusive of co-insurance payments or other
adjustments. CMS further proposes that effective in 2016, treatment
planning and MRI treatment imaging codes again be billed and
reimbursed separately. The average proposed 2016 CMS reimbursement
rate for delivery and separately reimbursable ancillary codes
(exclusive of co-insurance and other adjustments) is estimated at
$8,827 compared to the current rate of $9,768, a decrease of 9.6%.
Also, the proposed proton therapy delivery code rates per daily
session are $519, a 2.1% increase ($508 in 2015) for a simple
treatment without compensation, $1,152, a 7.5% increase ($1,072 in
2015) for a simple treatment with compensation, and $1,152, a 7.5%
increase ($1,072 in 2015) for an intermediate or complex treatment.
I emphasize that these reimbursement rates are preliminary and may
change when CMS announces the final rates later this year.
"We remain optimistic about our Gamma Knife business, but proton
therapy remains our primary strategic emphasis for the future. Our
first proton center, now under construction at UF Health Cancer
Center at Orlando Health, is expected to begin treating patients in
first quarter 2016. We are in discussions with other hospitals
around the country that have expressed interest in partnering with
AMS to develop proton centers of their own, also employing the
MEVION S250 proton therapy system now being installed at UF Health
Cancer Center at Orlando Health.
"Mevion has reported outstanding clinical results from its
proton systems already treating patients at cancer centers in St.
Louis and Jacksonville, and most recently at Robert Wood Johnson
University Hospital in New Brunswick, New Jersey. The systems'
reliability and patient throughput are meeting expectations, and
the devices have demonstrated their ability to treat a diverse and
complex array of cancers in both children and adults. We believe
that the clinical advantages of proton technology in the treatment
of a wide range of cancers will support a robust economic return
for the Mevion device, even with its relatively high purchase price
and long lead time required to get the system up and running
compared to other radiotherapy devices. This is why we are
confident that we can launch additional proton projects in short
order once appropriate financing is available, a project we are
pursuing diligently with several potential lenders.
"Our confidence was bolstered by Mevion's recent announcement
that it has entered into an investment agreement where up to $200
million will be invested in Mevion to accelerate its worldwide
expansion. The investment will facilitate an increase in
manufacturing capacity and global service capability to support the
installation of new proton therapy sites in the U.S. and
internationally. Mevion also said that it plans to form a
joint venture in China with its new investors, HOPU Investments and
YuanMing, to expand access to proton therapy in that country. We
are pleased by these developments because the substantial cash
investment and proposed China joint venture are additional signs of
support for the global expansion of the market for proton
therapy."
Earnings Conference Call
American Shared has scheduled a conference call at 12:00 p.m.
PDT (3:00 p.m. EDT) today. To participate in the live call, dial
(800) 351-9852 at least 5 minutes prior to the scheduled start
time. A simultaneous WebCast of the call may be accessed through
the Company's website, www.ashs.com, or through CCBN,
www.earnings.com (individual investors) or www.streetevents.com
(institutional investors). A replay will be available for 30 days
at these same internet addresses, or by calling (888) 843-7419,
pass code 4050 9234#.
About AMS
American Shared Hospital Services provides turnkey technology
solutions for advanced radiosurgical and radiation therapy
services. AMS is the 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 the latest IGRT
and IMRT systems, as well as its proprietary Operating Room for the
21st CenturySM concept. AMS owns a common stock investment in
Mevion Medical Systems, Inc., developer of the compact MEVION S250
Proton Therapy System.
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, which involve risks and uncertainties including, but not
limited to, the risks of the Gamma Knife and radiation therapy
businesses, the risks of developing The Operating Room for the 21st
Century program, the risks of investing in a development-stage
company, Mevion Medical Systems, Inc., and the risks of the timing,
financing, and operations of the Company’s proton therapy business.
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, 2014, its quarterly report on Form 10-Q for the three months
ended March 31, 2015, and the definitive Proxy Statement for the
Annual Meeting of Shareholders held on June 16, 2015.
Selected Financial Data
(unaudited) Summary of Operations Data
Three months ended Six months ended June 30, June 30, 2015
2014 2015 2014 Medical services revenue $ 4,394,000 $
3,379,000 $ 8,511,000 $ 7,443,000 Costs of revenue 2,592,000
2,534,000 5,112,000
5,309,000 Gross margin 1,802,000 845,000 3,399,000 2,134,000
Selling & administrative expense 979,000 937,000 1,800,000
1,859,000 Interest expense 345,000 510,000
665,000 980,000 Operating income
(loss) 478,000 (602,000 ) 934,000 (705,000 ) (Loss) on sale of
subsidiary -- (572,000 ) -- (572,000 ) Gain on foreign currency
transaction -- 146,000 -- 161,000 Other income <loss>
(2,109,000 ) 6,000 (2,103,000 ) 15,000
Loss before income taxes (1,631,000 ) (1,022,000 )
(1,169,000 ) (1,101,000 ) Income tax expense 106,000
34,000 236,000 4,000 Net
loss $ (1,737,000 ) $ (1,056,000 ) $ (1,405,000 ) $ (1,105,000 )
Less: Net (income) loss attributable to
non-controlling interest
(233,000 ) 129,000 (437,000 )
82,000
Net loss attributable to American Shared
Hospital Services
$ (1,970,000 ) $ (927,000 ) $ (1,842,000 ) $ (1,023,000 )
Loss per common share: Basic $ (0.36 ) $ (0.20 ) $ (0.34 ) $ (0.22
)
Assuming dilution
$
(0.36
)
$
(0.20
)
$
(0.34
)
$
(0.22
)
Balance Sheet Data Jun. 30 Dec. 31 2015
2014 Cash and cash equivalents $ 1,798,000 $ 1,059,000
Certificate of deposit $ -- $ 9,000,000 Current assets $ 6,431,000
$ 14,247,000 Investment in equity securities $ 600,000 $ 2,709,000
Total assets $ 56,928,000 $ 67,528,000 Current liabilities $
8,902,000 $ 16,251,000 Shareholders' equity $ 24,602,000 $
26,154,000
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version on businesswire.com: http://www.businesswire.com/news/home/20150819005314/en/
American Shared Hospital ServicesErnest A. Bates, M.D., (415)
788-5300Chairman and Chief Executive
Officereabates@ashs.comorBerkman AssociatesNeil Berkman, (310)
477-3118Presidentinfo@berkmanassociates.com
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