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 third quarter and first nine months of
2014.
Third Quarter Results
For the three months ended September 30, 2014, medical services
revenue decreased to $3,982,000 compared to $4,396,000 for the
third quarter of 2013. This decrease primarily reflected the sale
of the Company's operations in Turkey effective May 31, 2014. Net
of last year's revenue in Turkey, Gamma Knife revenues increased
slightly for this year's third quarter compared to the third
quarter of 2013.
Net income for the third quarter of 2014 was $13,000, or $0.00
per share. Net income included income tax expense of $29,000, which
represents income tax expense for the third quarter and adjustments
to prior period estimates. This compares to a net loss for the
third quarter of 2013 of $134,000, or $0.03 per share, which
included a pre-tax loss from foreign currency transactions of
$306,000 due to the weakening of the Turkish Lira against the U.S.
Dollar.
The number of procedures performed on Gamma Knife® PerfexionTM
systems supplied by AMS in the United States decreased 6.2% for the
third quarter and 11.5% for the first nine months of 2014 compared
to the same periods of 2013. The total number of procedures
performed in AMS' U.S. Gamma Knife business, including Gamma Knife
and Gamma Knife Perfexion procedures, decreased 2.4% for the third
quarter and 10.1% for the first nine months of 2014 compared to the
same periods of 2013. Gamma Knife Perfexion and total Gamma Knife
procedures increased 19% and 22.2% in third quarter 2014 compared
to second quarter 2014, respectively.
Medical services gross margin for the third quarter of 2014
increased to 40.3%, compared to medical services gross margin of
36.0% for the third quarter of 2013, primarily the result of lower
costs due to the sale of the Turkish subsidiary. Operating income
increased 69.1% to $274,000 for this year’s third quarter compared
to $162,000 for the same period a year earlier.
Selling and administrative expenses for the third quarter of
2014 were $933,000 compared to $887,000 for the third quarter of
2013, primarily due to increased accounting and tax services.
Nine Month Results
For the nine months ended September 30, 2014, medical services
revenue decreased to $11,425,000, compared to medical services
revenue of $13,647,000 for the first nine months of 2013. Net of
revenue in Turkey, Gamma Knife revenues decreased 10.1% for this
year's first nine months compared to the first nine months of
2013.
The net loss for the first nine months of 2014 of $1,010,000, or
$0.21 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 $132,000 from the
Company's operating loss. In comparison, the net loss for the first
nine months of 2013 of $230,000, or $0.05 per share, included a
pre-tax loss from foreign currency transactions of $840,000.
Balance Sheet Highlights
At September 30, 2014, cash, cash equivalents and certificates
of deposit were $10,415,000 compared to $10,909,000 at December 31,
2013. Shareholders' equity at September 30, 2014 was $24,966,000,
or $4.75 per outstanding share. This compares to shareholders'
equity at December 31, 2013 of $24,055,000, or $5.22 per
outstanding share.
On June 13, 2014, AMS realized proceeds of approximately $1.6
million from the private placement of common stock. Additionally,
on October 24, 2014, AMS closed the private sale of $1.2 million
aggregate principal amount of unsecured notes, warrants to purchase
200,000 shares of common stock, no par value, and 100,000 newly
issued common shares at a purchase price of $2.20 per share. The
Warrants expire three years after their initial issuance date and
may be exercised for a purchase price equal to $2.20 per share of
Common Stock, the closing price per share of the Company’s Common
Stock on the New York Stock Exchange.
CEO Comments
Chairman and Chief Executive Officer Ernest A. Bates, M.D.,
said, "As we anticipated, our domestic Gamma Knife business
rebounded in the third quarter. On a same center basis, excluding
Turkey, revenue increased slightly despite a decrease in treatment
volume, reflecting a favorable mix of business across our domestic
sites. Gross margin, operating income and net income all increased
significantly in the third quarter compared to this year's second
quarter and to the third quarter last year. Treatment volume is
continuing to meet our expectations so far in the fourth
quarter.
"Our Perfexion portfolio continues to grow. Our newest Perfexion
system, located at PeaceHealth Sacred Heart Medical Center at
RiverBend, Springfield, Oregon, is scheduled to begin treating
patients next month. This is the fourteenth Perfexion system in
AMS' portfolio and our 28th Gamma Knife site. The Gamma Knife
Perfexion remains the 'gold standard' for cranial radiosurgery and
is an excellent device for treating metastatic brain tumors, with
which an estimated 180,000 patients are diagnosed annually.
"There is more good news. On October 31, 2014, the Centers for
Medicare and Medicaid Services (CMS) posted its final Medicare
hospital outpatient prospective payment rates for calendar year
2015. Effective January 1, 2015, CMS has established a
comprehensive Ambulatory Payment Classification (APC) for both
Gamma Knife and linear accelerator (LINAC) one session cranial
radiosurgery. The comprehensive reimbursement rate 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. This represents an estimated increase of
$4,168 per Medicare Gamma Knife treatment (exclusive of
co-insurance and other adjustments) effective January 1, 2015.
"We also are encouraged by significant forward progress in our
proton therapy business. We used a portion of the proceeds of the
private offerings mentioned above to make progress payments of $2.0
million to Mevion Medical Systems, Inc. for our MEVION S250™ proton
therapy system to be installed at the UF Health Cancer Center at
Orlando Health, and entered into a commitment letter with a major
international financial institution to provide lease financing for
the completion and installation of our proton device. Then, earlier
this month, we were pleased to announce the delivery of the
superconducting synchrocyclotron proton accelerator—the key element
of the MEVION S250 system--to the dedicated proton center now under
construction at UF Health Cancer Center at Orlando Health. As
Central Florida’s most advanced cancer center, the UF Health Cancer
Center at Orlando Health is the first hospital in the Central
Florida region to install a proton therapy system. We expect the
installation process to be completed in approximately 14 months and
patient treatments to begin shortly thereafter."
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 3845 8426#.
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 and Form 10-K/A for the year
ended December 31, 2013, the Quarterly Report on Form 10-Q for the
quarter ended March 31, 2014, the Form 10-Q and Form 10-Q/A for the
quarter ended June 30, 2014, and the definitive Proxy Statement for
the Annual Meeting of Shareholders held on June 10, 2014.
AMERICAN SHARED HOSPITAL SERVICES
November 13, 2014
Third Quarter Financial Results
Selected Financial Data (unaudited)
Summary of Operations Data
Three months endedSeptember 30,
Nine months endedSeptember 30,
2014 2013 2014 2013 Medical services revenue $ 3,982,000 $
4,396,000 $ 11,425,000 $ 13,647,000 Costs of revenue
2,379,000 2,815,000 7,688,000
8,055,000 Gross margin 1,603,000 1,581,000 3,737,000
5,592,000 Selling & administrative expense 933,000 887,000
2,792,000 3,275,000 Interest expense 396,000
532,000 1,376,000 1,459,000
Operating income 274,000
162,000 (431,000 ) 858,000 (Loss) on sale of subsidiary --
-- (572,000 ) -- (Loss)
gain on foreigncurrency transaction
--
(306,000 ) 161,000 (840,000 ) Other income 7,000
11,000 22,000 19,000
Income (loss) before income taxes 281,000 (133,000 ) (820,000 )
37,000 Income tax expense 29,000 0
33,000 40,000 Net income (loss) $
252,000 $ (133,000 ) $ (853,000 ) $ (3,000 ) Less: Net (income)
attributableto non-controlling interest (239,000 )
(1,000 ) (157,000 ) (227,000 ) Net income (loss)
attributable toAmerican Shared Hospital Services $ 13,000 $
(134,000 ) $ (1,010,000 ) $ (230,000 ) Earnings (loss) per
common share: Basic $ 0.00 $ (0.03 ) $ (0.21 ) $ (0.05 )
Assuming dilution $ 0.00 $ (0.03 ) $ (0.21 ) $ (0.05 )
Balance Sheet Data
September 30,2014
December 31,2013
Cash and cash equivalents $ 1,415,000 $ 1,909,000
Certificate of deposit $ 9,000,000 $ 9,000,000 Current assets $
15,131,000 $ 7,706,000 Investment in equity securities $ 2,705,000
$ 2,701,000 Total assets $ 63,520,000 $ 71,742,000 Current
liabilities $ 17,151,000 $ 11,785,000 Shareholders' equity $
24,966,000 $ 24,055,000
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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