Sensus Healthcare, Inc. (SRTS) Q2 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call revealed significant declines in gross profit, gross margin, and a shift from net income to net loss, indicating financial challenges. The Q&A highlighted uncertainties around CMS reimbursement, impacting sales and causing a large customer to pause purchases. Despite some international sales optimism, the lack of clear guidance on reimbursement and increased operating expenses suggest a negative short-term outlook. The overall sentiment leans negative due to financial performance issues and unresolved reimbursement concerns.
Key Financial Performance
Revenue $7.3 million for Q2 2025 compared with $9.2 million for Q2 2024, a year-over-year decline primarily due to fewer capital system sales to a large customer, partially offset by growth in recurring revenue from Fair Deal Agreements.
Gross Profit $2.9 million for Q2 2025 compared with $5.4 million for Q2 2024, a decrease driven by lower sales and higher cost of service.
Gross Margin 39.7% for Q2 2025 versus 58.7% for Q2 2024, primarily driven by lower sales and higher cost of service.
General and Administrative Expense $2 million for Q2 2025 compared with $1.6 million for Q2 2024, reflecting higher professional fees and compensation.
Selling and Marketing Expense $1.4 million for Q2 2025 compared with $1 million for Q2 2024, an increase due to higher trade show expenses, higher costs related to clinical studies, and higher payroll costs due to an increase in headcount.
Research and Development Expense $1.5 million for Q2 2025 compared with $0.9 million for Q2 2024, primarily due to costs associated with ongoing product development and readiness for the anticipated TDI commercialization.
Net Loss $1 million or $0.06 per share for Q2 2025 compared with net income of $1.6 million or $0.10 per diluted share for Q2 2024.
Adjusted EBITDA Negative $1.8 million for Q2 2025 versus a positive $2.1 million for Q2 2024, reflecting higher operating expenses and lower revenue.
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Operating Highlights
SRT-100 Vision: The product combines superficial radiotherapy with image-guided ultrasound for treating non-melanoma skin cancer. However, a proposed LCD may limit reimbursement for ultrasound usage, impacting demand.
TDI platform: The next-generation platform is under FDA review, with feedback expected later this year. Preparations for commercial deployment are ongoing.
International Expansion: Delivered 4 SRT systems to China, indicating growing demand. Achieved MDSAP certification, enabling access to markets in Brazil, Canada, Japan, and Australia.
U.S. Market Expansion: Broadened commercial footprint by partnering with Radiation Oncology Systems for hospital-based oncology segments.
FDA Contracts: Signed 5 new contracts and activated 4 sites in Q2. Treatment volume increased by 27% over Q1.
Sentinel Software: HIPAA-compliant platform enables remote diagnostics and data storage, enhancing operational efficiency.
Reimbursement Changes: Medicare proposed a new physician fee schedule that could increase reimbursement for SRT delivery, potentially transforming U.S. commercial strategy.
Skin Cancer Awareness: Collaborated with advocacy organizations to promote early detection and noninvasive treatment options.
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Risk or Challenges
Proposed Local Coverage Determination (LCD): The proposed LCD to limit reimbursement for the use of ultrasound imaging with the SRT-100 Vision system has caused a temporary stall in domestic sales momentum. This creates uncertainty in the market and could impact future sales and revenue.
Medicare Physician Fee Schedule: A proposed physician fee schedule by Medicare may alter demand for Sensus products. While it could increase reimbursement for certain codes, the uncertainty surrounding its implementation poses a risk to strategic planning and market positioning.
Revenue Decline: Revenues for Q2 2025 decreased to $7.3 million from $9.2 million in Q2 2024, primarily due to fewer capital system sales to a large customer. This decline in revenue impacts financial performance and operational stability.
Gross Margin Reduction: Gross margin dropped to 39.7% in Q2 2025 from 58.7% in Q2 2024, driven by lower sales and higher service costs. This reduction in profitability could affect the company’s ability to reinvest in growth initiatives.
Increased Operating Expenses: General and administrative expenses, selling and marketing expenses, and R&D expenses all increased year-over-year, driven by higher professional fees, trade show costs, clinical studies, and lobbying efforts. These rising costs could strain financial resources.
Net Loss: The company reported a net loss of $1 million in Q2 2025 compared to a net income of $1.6 million in Q2 2024. This shift to a loss position highlights financial challenges and operational inefficiencies.
Regulatory Uncertainty: The 510(k) resubmission for the next-generation TDI platform is still under FDA review, delaying potential commercialization and revenue generation from this product.
International Market Risks: While international sales are growing, reliance on markets like China introduces risks related to economic and regulatory conditions in those regions.
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Guidance & Outlook
Proposed Medicare Physician Fee Schedule: Medicare proposed a physician fee schedule that could significantly increase reimbursement for the delivery of a code of SRT. This new outpatient CPT delivery code, if issued, is expected to improve SRT's positioning and encourage more physicians to adopt the technology.
International Expansion: Momentum is building internationally, supported by the recent MDSAP certification. This certification provides immediate access to markets in Brazil, Canada, Japan, and Australia, with potential revenue contributions expected as early as later this year.
Next-Generation TDI Platform: The 510(k) resubmission for the next-generation TDI platform remains under FDA review, with feedback anticipated later this year. Preparations for commercial deployment are ongoing, including refining training protocols and exploring flexible implementation models.
China Market Growth: Four systems were shipped to China in Q2, indicating significant sales growth and potential economic strengthening in the region.
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Shareholder Return Plan
The selected topic was not discussed during the call.
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Key Q&A
Q:On the proposed CMS reimbursement under the physician fee schedule for next year, is there any connection between the tripling of the radiation delivery code and the reduction in the imaging code for SRT?
A:Michael Sardano explained that the LCD and the proposed physician fee schedule are separate items. The LCD was focused on limiting ultrasound utilization due to perceived overuse, but lobbying efforts are underway to prevent its implementation. The proposed fee schedule aims to even out reimbursement rates between hospitals and outpatient facilities, resulting in a 300% increase in the delivery code for SRT.
Q:Did the LCD impact interest on the FDA side or treatment volumes?
A:Michael Sardano stated that the LCD caused a temporary pause due to uncertainty. However, studies show that ultrasound improves cure rates for non-melanoma skin cancer, and SRT is expected to remain a key treatment option.
Q:Is the company on track to reach 1,000 capital sales within a year?
A:Joseph Sardano indicated that they are on track and expect accelerated installations if CMS decisions align with their lobbying efforts. However, final decisions may not be clear until the fourth quarter.
Q:Has a large customer paused purchases due to the reimbursement issue?
A:Joseph Sardano confirmed that a large customer paused purchases due to uncertainty but remains committed to SRT. He expects rapid resumption of purchases once clarity is achieved.
Q:Could the reimbursement issue significantly impact sales for the quarter ending September 30?
A:Joseph Sardano acknowledged the potential impact but noted that early clarification from CMS could mitigate this. However, the timing of CMS's decision remains uncertain.
Q:Can sales to China offset potential domestic sales impacts?
A:Joseph Sardano mentioned that China will continue to order, and MDSAP certification allows sales expansion to other countries like Japan, India, and Brazil. He expects international sales to grow.
Q:What is the company's path forward if the LCD results in significantly reduced reimbursement?
A:Michael Sardano emphasized that the LCD focuses only on ultrasound usage and that they have strong evidence supporting its benefits. They are actively lobbying to counter claims against ultrasound usage.
Q:What are the details of the ROS distribution efforts and their expected impact on sales?
A:Joseph Sardano and Michael Sardano highlighted a strong relationship with ROS, which has extensive connections in radiation oncology. They expect results from this partnership before the end of the year.
Q:What is the timeline for international market expansion following MDSAP certification?
A:Michael Sardano stated that some expansions, such as in Japan and Taiwan, are immediate, with further growth expected in South America and other regions soon.
Q:Is there any macro-level softness in capital equipment spending in dermatology or oncology?
A:Michael Sardano does not believe there is macro-level softness, attributing the pause to SRT-specific uncertainties. He also noted that the increased Section 179 spending limit could be beneficial.
Q:Review of Unclear Management Responses
A:Management avoided providing a clear timeline for when CMS would make a decision on the reimbursement issue, stating only that it might be sometime in the fourth quarter. Additionally, while they expressed confidence in their lobbying efforts, they did not provide specific evidence or data to support their claims about the likelihood of maintaining the status quo.
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Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
China
Co
LCD reimbursement
LLC Research
MDSAP
Medicare physician
ROS
Research Division
SRT Vision
Unidentified
afternoon result
awareness
certification
code SRT
compensation Selling
cost service
coverage
date result
delivery code
device
expense increase
fee schedule
frequency ultrasound
headcount Research
imaging
importance
increase headcount
partner
payroll increase
physician fee
protocol
result Revenues
sale cost
service period
treatment
SRTS Transcript
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The earnings call reveals mixed signals. While the company faces financial strain with a negative EBITDA and net loss, it shows potential for growth with expanding international sales and recurring revenue streams. The absence of sales to the largest customer is a setback, but there's optimism for future returns. The Q&A highlights interest in new CPT codes, indicating potential for future revenue growth. However, the lack of clear timelines for revenue inflection and the ongoing financial strain balance out the positives, resulting in a neutral sentiment for the stock price movement.
Sensus Healthcare, Inc. (SRTS) Q4 2025 Earnings Call Transcript
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The company reported disappointing financial results with significant revenue and profit declines, resulting in a net loss. Despite optimistic guidance and international expansion plans, uncertainties like the largest customer's exclusion from projections, unclear FDA approval timelines, and vague management responses during the Q&A raise concerns. Increased expenses and negative EBITDA further contribute to a negative sentiment. Although there is potential in international markets and reimbursement changes, the overall outlook remains negative due to financial underperformance and uncertainties.
Sensus Healthcare, Inc. (SRTS) Q3 2025 Earnings Call Transcript
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The earnings call reveals declining financial metrics, including reduced units sold, gross profit, and increased net loss, indicating weakening financial health. Despite some positive elements, like international expansion and potential breakeven in Q4, the negative trends, including a significant drop in gross margin and increased operating expenses, dominate. The Q&A section did not alleviate concerns, as management's responses lacked clarity on critical timelines. Given these factors, the stock is likely to experience a negative reaction in the near term.
Sensus Healthcare, Inc. (SRTS) Q2 2025 Earnings Call Transcript
Unknown8-8
The earnings call revealed significant declines in gross profit, gross margin, and a shift from net income to net loss, indicating financial challenges. The Q&A highlighted uncertainties around CMS reimbursement, impacting sales and causing a large customer to pause purchases. Despite some international sales optimism, the lack of clear guidance on reimbursement and increased operating expenses suggest a negative short-term outlook. The overall sentiment leans negative due to financial performance issues and unresolved reimbursement concerns.
SRTS Report
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