Release Date: February 05, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• Sensus Healthcare Inc (NASDAQ:SRTS) reported a 71% increase in annual revenue, reaching $41.8 million, driven by higher unit sales of their SRT 100 systems.
• The company achieved its fifth consecutive quarter of profitability with a net income of $1.4 million for the fourth quarter.
• Sensus Healthcare Inc (NASDAQ:SRTS) ended the year with $22.1 million in cash and no debt, providing a strong capital position for future investments.
• The Fair Deal Agreement program has gained significant traction, particularly among large dermatology groups and private equity-backed practices.
• The company is expanding its international footprint, with 10 systems shipped internationally during the year, and exploring new markets such as veterinary medicine.

Negative Points

• Gross profit margin decreased from 62.3% to 54.4% year-over-year due to a one-time discount and higher service costs.
• General and administrative expenses increased significantly, mainly due to higher compensation and professional fees.
• The company anticipates a potential decline in sales for the first quarter of 2025 compared to the first quarter of 2024.
• There is a delay in revenue recognition from the Fair Deal Agreement placements, with contributions expected in the second half of 2025.
• The company faces competition from traditional treatments like Mohs surgery, which remains a significant alternative in the dermatology market.

Q & A Highlights

• Warning! GuruFocus has detected 5 Warning Signs with SRTS.

Q: Can you provide a breakdown of the number of units shipped in the fourth quarter and how many were part of the Fair Deal Agreement? A: Javier Rampolla, CFO, stated that 39 units were shipped in Q4, none of which were part of the Fair Deal Agreement. The Fair Deal Agreement units are not included in the shipment count.

Q: As you move into 2025, how will the Fair Deal Agreement placements contribute to the top line, and how will you monitor their utilization? A: Joe Sardano, CEO, explained that they are targeting high-volume installations first to ensure a strong start. They expect significant revenue growth in the second half of the year as installations and patient volumes increase.

Q: Are there any new competitors emerging in the space, and how quickly can new FDA sites reach full capacity? A: Michael Sardano, President, noted that the main competitor remains Mohs surgery, with no new competitors emerging. The Fair Deal Agreement is particularly attractive to private equity-backed groups, allowing them to expand without significant capital outlay.

Q: What percentage of sales came from your largest customer, and do you anticipate continued purchases in 2025? A: Joe Sardano, CEO, mentioned that 25 out of 39 units delivered in Q4 were to their largest customer, who is expected to continue purchasing throughout 2025.

Q: Can you provide more color on the interest level from private equity groups and how advanced these discussions are? A: Joe Sardano, CEO, stated that there are 12 to 15 major private equity-backed roll-ups representing about 20% of dermatology clinics. They are in discussions with several groups, and the Fair Deal Agreement is well-suited to their needs.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.