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 fourth quarter and 2013.
Fourth Quarter Results
Medical services revenue for the three months ended December 31, 2013 decreased 4.6% to $3,937,000, compared to medical services revenue for the fourth quarter of 2012 of $4,125,000.
The net loss for the fourth quarter of 2013 of $82,000, or $0.02 per basic and diluted share, included a pre-tax loss from foreign currency transactions of $334,000 due to the weakening of the Turkish Lira against the U.S. Dollar. Before this foreign currency transaction loss, pre-tax income for the fourth quarter of 2013 was $151,000, net of losses attributable to non-controlling interests. In comparison, net income for the fourth quarter of 2012 of $5,000, or $0.00 per basic and diluted share, included a pre-tax gain from foreign currency transactions of $137,000. Before this foreign currency transaction gain, the pre-tax loss for the fourth quarter of 2012 was $18,000, net of income attributable to non-controlling interests.
Operating income for the fourth quarter of 2013 increased to $262,000, compared to operating income for the fourth quarter of 2012 of $56,000.
The number of procedures performed on Gamma Knife® PerfexionTM systems supplied by AMS increased 5% for the fourth quarter and 18% for 2013 compared to the same periods of 2012. The total number of procedures performed in AMS' Gamma Knife business, including Gamma Knife and Gamma Knife Perfexion procedures, increased 7% for the fourth quarter and 19% for 2013 compared to the same periods of 2012.
Medical services gross margin for the fourth quarter of 2013 was 34.3%, compared to medical services gross margin of 37.0% for the fourth quarter of 2012.
Selling and administrative expenses for the fourth quarter of 2013 decreased 21.2% to $750,000 compared to $952,000 for the fourth quarter of 2012.
Twelve Months Results
For the twelve months ended December 31, 2013, medical services revenue increased 3.1% to $17,584,000, compared to medical services revenue of $17,048,000 for 2012.
The net loss for 2013 of $312,000, or $0.07 per basic and diluted share, included a pre-tax loss from foreign currency transactions of $1,174,000. Before this foreign currency transaction loss, pre-tax income for 2013 was $438,000, net of losses attributable to non-controlling interests. Net income for 2012 of $38,000, or $0.01 per basic and diluted share, included a pre-tax gain from foreign currency transactions of $132,000. Before this foreign currency transaction gain, pre-tax income for 2012 was $70,000, net of income attributable to non-controlling interests.
Cash flow, as measured by earnings before interest, taxes, depreciation and amortization (EBITDA), was $1,984,000 for the fourth quarter and $7,969,000 for 2013, compared to $2,067,000 for the fourth quarter and $8,306,000 for 2012.
Balance Sheet Highlights
At December 31, 2013, cash, cash equivalents and certificates of deposit were $10,909,000 compared to $10,564,000 at December 31, 2012. Shareholders' equity December 31, 2013 was $24,055,000, or $5.22 per outstanding share. This compares to shareholders' equity at December 31, 2012 of $24,830,000, or $5.39 per outstanding share.
CEO Comments
Chairman and Chief Executive Officer Ernest A. Bates, M.D., said, "We delivered higher operating and pre-tax income before foreign currency transaction charges for the fourth quarter and 2013 compared to the same periods of 2012 in one of the most challenging environments we have faced in AMS's history. The reduction in Medicare reimbursement for Gamma Knife services that went into effect on April 1, 2013, as mandated by the American Taxpayer Relief Act of 2012, was a significant headwind, as was an unfavorable mix of procedures by location in the fourth quarter.
"We were able to offset the impact of reduced reimbursement to some extent with higher patient volume at a number of our established sites, as well as the addition of two Gamma Knife Perfexion units to our portfolio during the past year. We also reduced our costs aggressively. We cut selling and administrative expenses by about 21% for the fourth quarter of 2013 compared to prior year, partly the anticipated result of the program we announced in late April to reduce future cash outlays by approximately $1,000,000 annually. Additionally, we reduced interest expense by refinancing some of our more mature Gamma Knife units, and paid off one of the Company's debt obligations in 2013.
"Reimbursement for Gamma Knife services will increase in 2014. Effective January 1, 2014, CMS Gamma Knife delivery code reimbursement increased to $3,592 from the previous rate of $3,301. It is estimated that including ancillary services and outlier adjustments, if applicable, Gamma Knife centers may receive Medicare reimbursement of up to $9,000 per treatment under the recently announced CMS rates.
"CMS also announced 2014 proton therapy delivery code rates per daily session of $872 (versus $1,137 in 2013) for a simple treatment and $1,205 (versus $682 in 2013) for an intermediate or complex treatment. These rates are consistent with our proton therapy business plan.
"Construction of the dedicated proton center at the University of Florida Health Cancer Center at Orlando Health is moving steadily forward. AMS will supply a MEVION S250TM Proton Therapy System for this facility. FDA approval of the MEVION S250 was received last year. Delivery of the MEVION synchrocyclotron to the UF Health Cancer Center is expected late this summer, and the facility is expected to begin treating patients in late 2015. We see the UF Health Cancer Center at Orlando Health as the model for additional proton centers AMS is developing."
Dr. Bates noted that in December 2013, Mevion announced that the world's first MEVION S250 proton therapy treatment was delivered to a patient at the S. Lee Kling Center for Proton Therapy at the Siteman Cancer Center at Barnes-Jewish Hospital and Washington University School of Medicine in St. Louis, the initial site for the system. This was followed by the first MEVION S250 proton therapy treatment delivered to a pediatric patient at Barnes-Jewish Hospital in February 2014.
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 3696 5752#.
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