American Shared Hospital Services Reports 2012 Third Quarter Results
, a leading provider of turnkey technology solutions for advanced radiosurgical and radiation therapy services, today announced financial results for the third quarter and first nine months of 2012.
Medical services revenue for the three months ended September 30, 2012 increased 1.7% to $4,236,000. This compares to medical services revenue for the third quarter of 2011 of $4,164,000. Total revenue for the third quarter of 2011 of $9,148,000 included revenue from equipment sales of $4,984,000. Net income for the third quarter of 2012 was $9,000, or $0.00 per diluted share. This compares to net income of $220,000, or $0.05 per diluted share, for the third quarter of 2011.
In March 2011, AMS announced a contract to upgrade a Gamma Knife to Perfexion specifications at Lehigh Valley Hospital in Allentown, Pennsylvania. As part of this upgrade, AMS agreed to the early termination of the existing 10-year lease on the Gamma Knife system it supplied to Lehigh in 2004, and Lehigh agreed to purchase the Perfexion system. Pre-tax income from this transaction of $844,000 was recognized in the third quarter of 2011.
The number of procedures performed on Gamma Knife Perfexion systems supplied by AMS increased 16.2% for the third quarter and 8.0% for the first nine months of 2012 compared to the same periods of 2011. The total number of procedures performed in AMS' Gamma Knife business, including Gamma Knife and Gamma Knife Perfexion, increased 5.2% for this year's third quarter and 8.9% for the first nine months compared to the same periods of 2011. The Perfexion system AMS supplied to Florence Nightingale Hospital Group in Istanbul through its EWRS Turkey subsidiary that began treating patients in May contributed to this growth. Revenue increased more slowly than procedure volume primarily due to variations in the mix of procedures by site. Revenue comparisons were also constrained by the termination late in the third quarter of 2011 of the lease on the Gamma Knife system AMS supplied to Lehigh Valley Hospital, and the expiration in the second quarter of 2012 of a customer contract at another site.
Medical services gross margin for this year's third quarter increased to 40.0%, compared to medical services gross margin of 38.8% for the third quarter of 2011.
Selling and administrative expenses for the third quarter of 2012 decreased to $960,000 compared to $1,038,000 for the third quarter of 2011. Operating income for this year's third quarter was $210,000. This compares to operating income for the third quarter of 2011 of $813,000, which included income from the Lehigh transaction mentioned above.
Cash flow, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA), was $2,112,000 for the third quarter and $6,239,000 for the first nine months of 2012, compared to $2,691,000 for the third quarter and $6,772,000 for the first nine months of 2011.
At September 30, 2012, cash, cash equivalents and certificates of deposit were $9,716,000 compared to $11,580,000 at December 31, 2011. Shareholders' equity September 30, 2012 was $25,221,000, or $5.48 per outstanding share. This compares to shareholders' equity at December 31, 2011 of $25,171,000, or $5.46 per outstanding share.
For the nine months ended September 30, 2012, medical services revenue increased to $12,923,000 compared to medical services revenue of $12,737,000 for the first nine months of 2011. Total revenue for the first nine months of 2011 of $17,721,000 included revenue from equipment sales of $4,984,000. Net income for the first nine months of 2012 was $33,000, or $0.01 per diluted share, compared to net income for the first nine months of 2011 of $262,000, or $0.06 per diluted share, which included income from the Lehigh transaction mentioned above.
Chairman and Chief Executive Officer Ernest A. Bates, M.D., said, "We grew our Gamma Knife business modestly in the third quarter, as the upgrade of many of our existing sites to Perfexion specifications and the expansion of our client base and international footprint over the past couple of years more than offset the impact of the sale of the Lehigh site and the expiration of a customer contract at another site this year, as well as the headwinds created by the slow economic recovery and its effect on the health care industry overall.
"With the steady maturation of our existing Perfexion sites, the installation of a Perfexion at a new site, Sacred Heart Health System in Pensacola, Florida, in the first quarter of 2013, the installation of our fourteenth Perfexion system at Northern Westchester Hospital (NWH) in Mt. Kisco, New York scheduled for the second quarter of 2013, and the addition of the Gamma Knife we have contracted to provide to Hospital Central FAP in Lima, Peru early next year, we believe that growth in our Gamma Knife business may accelerate. We will continue our vigorous efforts to bring advanced radiosurgery and radiation therapy devices to additional partner hospitals in this country and around the world."
Dr. Bates continued, "In a major breakthrough in our proton therapy business, just last month AMS received a firm financing commitment for the MEVION S250 Proton Therapy System AMS will supply for the $25 million proton therapy center now under construction at MD Anderson Cancer Center Orlando. This debt financing is similar to the structure we have used for many years to finance our Gamma Knife projects, minimizing dilution for AMS shareholders. MD Anderson Orlando's new facility, the first proton center in Central Florida, is expected to begin treating patients in early 2014.
"Following the announcement in June of FDA 510(k) clearance for the MEVION S250, our receipt of a firm financing commitment for the proton device we will supply to the new center in Orlando is the next important step in AMS' long-term strategy to develop proton projects as rapidly as possible, even as we continue growing our Gamma Knife business. The MD Anderson Cancer Center Orlando center will be the model for additional proton centers we are developing. With our first proton center now under construction, we expect AMS' proton therapy business to accelerate. We are pleased to play a critical role in making this exciting cancer therapy available at an affordable price."
AMS owns approximately 1% of Mevion Medical Systems, developer of the MEVION S250, and in addition to Orlando is developing proton therapy centers in Boston and Long Beach, California which are expected to employ the Mevion device. "We believe our equity investment in Mevion will turn out to be a valuable asset for AMS and our shareholders," Dr. Bates said. AMS is also developing a two room proton therapy center in Dayton, Ohio.
Dr. Bates added that the Company is currently evaluating options to relocate its corporate headquarters and refinance certain of its equipment debt under its continuing program to reduce operating costs.
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) 588-4973 at least 5 minutes prior to the scheduled start time. A simultaneous WebCast of the call may be accessed through the Company's website, , or through CCBN, (individual investors) or (institutional investors). A replay will be available for 30 days at these same internet addresses, or by calling (888) 843-7419, pass code 3370 6680#.
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 Century concept. AMS owns a preferred stock investment in Mevion Medical Systems, Inc., developer of the compact MEVION S250 Proton Therapy System.