Release Date: November 14, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Revenues more than doubled year-over-year for the second consecutive quarter, reaching $8.8 million in Q3 2024.
- Sensus Healthcare Inc (SRTS, Financial) maintained profitability despite the summer seasonality, with a net income of $1.2 million compared to a net loss in the previous year.
- The company signed a significant Fair Deal agreement with Platinum Dermatology Partners, covering 130 clinical sites in the US, which is expected to contribute to future growth.
- Gross profit margin improved to 59.3% in Q3 2024 from 51% in the same quarter last year.
- Sensus Healthcare Inc (SRTS) continues to expand its global presence, shipping systems to international markets such as Israel and engaging in the veterinary market.
Negative Points
- The accidental disclosure of financial results during live trading hours was a procedural setback.
- The hospital market, while promising, has a longer sales cycle, potentially delaying revenue realization.
- General and administrative expenses increased slightly due to higher compensation and bad debt expenses.
- The Fair Deal agreement, while promising, does not immediately impact sales numbers as it is based on recurring revenue.
- The company's largest customer represents about 50% of placements, indicating a potential risk of over-reliance on a single client.
Q & A Highlights
Q: With the Fair Deal agreement with Platinum Dermatology Partners, does that imply you'll be signing contracts for the remaining 130 clinics, and how might that cascade into 2025?
A: The contract covers all 130 sites, so no additional contracts are needed. We will conduct surveys at various sites to install systems as quickly as possible, which will likely extend into next year with ongoing requests for additional products.
Q: What percentage of placements are related to your largest customer?
A: Our largest customer represents about 50% of placements.
Q: Regarding the Fair Deal agreement with Platinum Dermatology, have they indicated how many systems they intend to procure under the agreement in 2025?
A: Platinum Dermatology requested that the agreement be open for all 130 sites, allowing them the option to install a unit at each site. This will be an ongoing process as they continue to expand.
Q: Are you in negotiations with other large dermatology practices similar in size to Platinum Dermatology?
A: Yes, there are about 12 to 15 companies that are private equity-sponsored, and several are reviewing our contracts.
Q: How are you pursuing demand in the international market, and is the Fair Deal agreement available there?
A: The Fair Deal agreement is not currently offered internationally. We are expanding through distributors, with recent interest from Southeast Asia, including Vietnam, Laos, and Cambodia.
Q: What would you attribute to the outperformance in the third quarter, traditionally a quiet period?
A: The third quarter did not recognize any contribution from the Platinum deal. The outperformance is due to increased revenues from existing FDA agreements and installations, with significant revenue expected in the second half of 2025.
Q: Will your production capacity be enough to serve large orders like the one from Platinum Dermatology?
A: Yes, we have the capacity to handle the volume. Installations are systematic, involving training and construction, and we have enough inventory to cover 2025.
Q: Could you provide any comment on the target number of systems shipped or Fair Deal agreements expected next year?
A: We do not provide specific guidance but aim to maximize shipments and agreements. Interest is expected to increase as we work with companies like Platinum.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
