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 2014.
Second Quarter Results
For the three months ended June 30, 2014, medical services revenue
decreased to $3,379,000 compared to $4,583,000 for the second quarter of
2013. In addition to lower procedure volume at many of AMS' Gamma Knife
sites and the sale of its Turkey operations effective May 31, 2014, the
decrease in revenue was exacerbated by one site being down for the
entire quarter due to personnel issues that have now been resolved, and
two sites which generated significant procedure volumes in second
quarter 2013 having an unusually slow second quarter this year. Both
sites have bounced back to their usual treatment levels in July. Gamma
Knife revenues in July improved 18% and 33% compared to average monthly
revenues for the first and second quarter of 2014, respectively, and
improved 5% compared to July 2013 revenues, net of volume in Turkey.
The net loss for the second quarter of 2014 was $927,000, or $0.20 per
share, which included a pre-tax loss on the sale of the Turkish
subsidiary of $572,000, a pre-tax gain from foreign currency
transactions of $146,000 due to the strengthening of the Turkish Lira
against the U.S. Dollar, and an income tax charge of $165,000, which
offset an income tax benefit of $131,000 from the Company’s operating
loss. Although this sale resulted in a book loss, it generated
approximately $540,000 in cash for the Company. This compares to a net
loss for the second quarter of 2013 of $122,000, or $0.03 per share,
which included a pre-tax loss from foreign currency transactions of
$393,000.
The number of procedures performed on Gamma Knife® PerfexionTM
systems supplied by AMS decreased 25% for the second quarter and 12% for
the first six months of 2014 compared to the same periods of 2013. The
total number of procedures performed in AMS' Gamma Knife business,
including Gamma Knife and Gamma Knife Perfexion procedures, decreased
28% for the second quarter and 17% for the first six months of 2014
compared to the same periods of 2013.
Medical services gross margin for the second quarter of 2014 was 25.0%,
compared to medical services gross margin of 41.3% for the second
quarter of 2013. In addition to the impact of lower revenue, the
decrease in gross margin reflected higher depreciation and maintenance
costs associated with the opening of a new Perfexion site in the second
quarter of 2013, as well as the upgrade to Perfexion specifications of a
Gamma Knife at another site and two cobalt reloads which occurred in the
fourth quarter of 2013. Because an upgrade or cobalt reload increases
the book value of the unit, depreciation expense also increases.
Selling and administrative expenses for the second quarter of 2014
decreased 18.7% to $937,000 compared to $1,153,000 for the second
quarter of 2013.
First Half Results
For the six months ended June 30, 2014, medical services revenue
decreased to $7,443,000, compared to medical services revenue of
$9,251,000 for the first six months of 2013.
The net loss for the first six months of 2014 of $1,023,000, or $0.22
per share, included a pre-tax loss from the sale of the Turkish
subsidiary of $572,000, a pre-tax gain from foreign currency
transactions of $161,000, and an income tax charge of $165,000, which
offset an income tax benefit of $161,000. In comparison, the net loss
for the first six months of 2013 of $97,000, or $0.02 per share,
included a pre-tax loss from foreign currency transactions of $534,000.
Balance Sheet Highlights
At June 30, 2014, cash, cash equivalents and certificates of deposit
were $9,944,000 compared to $10,909,000 at December 31, 2013.
Shareholders' equity at June 30, 2014 was $25,021,000, or $4.76 per
outstanding share. This compares to shareholders' equity at December 31,
2013 of $24,055,000, or $5.22 per outstanding share.
Proceeds of approximately $5.2 million from the sale of the Company's
Gamma Knife business in Turkey were used to reduce outstanding debt,
including approximately $1.7 million of short-term debt. Proceeds of
approximately $1.6 million from the private placement of common stock
completed on June 13, 2014 were used primarily to strengthen the
Company's balance sheet in anticipation of its proton therapy
initiatives.
CEO Comments
Chairman and Chief Executive Officer Ernest A. Bates, M.D., said, "We
were disappointed by the slow pace of Gamma Knife procedures in this
year's second quarter at many of our sites. We are working diligently to
resolve this issue and restore normal procedure volume. A variety of
non-recurring factors also affected us in the first half, including
scheduled downtime at a number of our centers for maintenance and
upgrades that have now been completed, personnel issues at one center
that have now been resolved, and of course the extreme weather
experienced by much of the nation last winter and early spring. As
previously noted, July 2014 Gamma Knife revenues have increased
significantly, net of volume in Turkey, an encouraging sign for the
future.
"During the second quarter we closed the sale of our Gamma Knife and
radiation therapy business in Turkey. While we viewed our Turkey
operations as a good long term investment, the continued volatility of
the Turkish Lira against the U.S. Dollar (which resulted in cumulative
foreign currency transaction losses of $908,000) and the opportunity to
generate approximately $540,000 in cash for our domestic operations were
compelling reasons to consummate the sale.
"We also completed a private placement of common stock to several AMS
Directors in the second quarter, which raised approximately $1.6
million. We used the proceeds of this transaction mainly to improve the
strength of our balance sheet in anticipation of our proton therapy
initiatives.
"We also are encouraged by the continued growth of our domestic
Perfexion portfolio. We recently signed a contract to supply a Perfexion
system to PeaceHealth Sacred Heart Medical Center at RiverBend,
Springfield, Oregon. This new Perfexion system, the fourteenth in AMS'
portfolio, is expected to begin treating patients in the fourth quarter
of 2014. This installation will also mark our 28th new Gamma
Knife site.
"Another reason for optimism are the proposed Medicare hospital
outpatient prospective payment rates for calendar year 2015 recently
posted by the Centers for Medicare and Medicaid Services (CMS).
Effective January 1, 2015, the proposed comprehensive reimbursement rate
for both Gamma Knife and LINAC one session cranial radiosurgery of
approximately $9,768 will be inclusive of the delivery and ancillary
codes but exclusive of co-insurance payments or other adjustments. The
average current CMS reimbursement rate for delivery and ancillary codes
(exclusive of co-insurance and other adjustments) is approximately
$5,600. While these reimbursement rates are not final and could change,
we are pleased that CMS has proposed an increase for this life-saving
therapy.
"The cost reduction program we announced in April 2013 has helped
mitigate the impact of lower revenue on our financial results. General
and administrative expenses decreased 18.7% for this year's second
quarter and 22.2% for the first half versus the same periods a year ago.
We are on track to reduce cash outlays by approximately $1,000,000
annually compared to our cash outlays in 2013."
Turning to the Company's proton therapy business, Dr. Bates said that
construction of the dedicated proton center at the University of Florida
Health Cancer Center at Orlando Health is moving forward. AMS will
supply a MEVION S250TM Proton Therapy System for this
facility. Delivery of the MEVION synchrocyclotron to the UF Health
Cancer Center is expected this fall, and the facility is expected to
begin treating patients in first quarter 2016. Dr. Bates said that the
UF Health Cancer Center at Orlando Health is the model for additional
proton centers AMS is developing.
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
3787 3970.
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, and 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 and Form
10-K/A for the year ended December 31, 2013, the Quarterly Report on
Form 10-Q for the quarter ended on March 31, 2014, and the definitive
Proxy Statement for the Annual Meeting of Shareholders held on June 10,
2014.
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Selected Financial Data
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(unaudited)
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Summary of Operations Data
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Three months ended
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Six months ended
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June 30,
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June 30,
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2014
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2013
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2014
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2013
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Medical services revenue
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$
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3,379,000
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$
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4,583,000
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$
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7,443,000
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$
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9,251,000
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Costs of revenue
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2,534,000
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2,690,000
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5,309,000
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|
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5,240,000
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Gross margin
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845,000
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1,893,000
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|
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2,134,000
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|
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4,011,000
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Selling & administrative expense
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937,000
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1,153,000
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1,859,000
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2,388,000
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Interest expense
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510,000
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456,000
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|
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980,000
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927,000
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Operating (loss) income
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(602,000
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)
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284,000
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(705,000
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)
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696,000
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(Loss) on sale of subsidiary
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(572,000
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)
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--
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(572,000
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)
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|
--
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Gain (loss) on foreign currency transaction
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146,000
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(393,000
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)
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161,000
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(534,000
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)
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Other income (loss)
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6,000
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(6,000
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)
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15,000
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8,000
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(Loss) income before income taxes
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(1,022,000
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)
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(115,000
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)
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(1,101,000
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)
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|
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170,000
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Income tax expense (benefit)
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34,000
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(12,000
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)
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4,000
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|
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40,000
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Net (loss) income
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$
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(1,056,000
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)
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$
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(103,000
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)
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$
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(1,105,000
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)
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$
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130,000
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Less: Net loss (income) attributable to non-controlling interest
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129,000
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(19,000
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)
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82,000
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(227,000
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)
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Net (loss) attributable to American Shared Hospital Services
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$
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(927,000
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)
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$
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(122,000
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)
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$
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(1,023,000
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)
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$
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(97,000
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)
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(Loss) per common share:
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Basic
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$
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(0.20
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)
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$
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(0.03
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)
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$
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(0.22
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)
|
|
$
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(0.02
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)
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Assuming dilution
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$
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(0.20
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)
|
|
$
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(0.03
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)
|
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$
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(0.22
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)
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$
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(0.02
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)
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Balance Sheet Data
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Jun. 30,
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Dec. 31,
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2014
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2013
|
|
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|
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Cash and cash equivalents
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$
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944,000
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$
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1,909,000
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Certificate of deposit
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$
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9,000,000
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$
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9,000,000
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Current assets
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$
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15,369,000
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|
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$
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7,706,000
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|
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Investment in equity securities
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$
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2,701,000
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$
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2,701,000
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Total assets
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$
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65,259,000
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|
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$
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71,742,000
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|
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|
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|
|
|
|
|
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Current liabilities
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$
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17,591,000
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|
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$
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11,785,000
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|
|
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Shareholders' Equity
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$
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25,021,000
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|
|
$
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24,055,000
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Copyright Business Wire 2014