Q1 2024 Earnings Summary
- Immediate increase in revenue and profitability from the acquisition of three radiation therapy centers in Rhode Island, with treatments continuing seamlessly and revenue hitting AMS's books immediately without any downtime.
- Strong growth pipeline with two additional opportunities in Rhode Island: building a fourth radiation therapy center in an underserved community expected to be well received, and pursuing a proton beam radiation therapy center, potentially expanding future revenue streams significantly.
- Projected revenue backlog has more than doubled to over $210 million, indicating AMS is at a critical inflection point with strong future revenue potential.
- Delays in starting new centers may impact revenue growth: The company is experiencing delays in the startup of its new center in Puebla, Mexico, primarily due to factors beyond their control such as regulatory environment, licensing, credentialing, and construction issues. As the CEO stated, "It just hasn't gotten done. And for that, I'm a bit disappointed, quite frankly."
- Long lead times for new projects may postpone revenue generation: The planned fourth radiation therapy center in Bristol, Rhode Island, is expected to begin treating patients in about 12-plus months, while the proposed proton beam radiation therapy center in Rhode Island could take two to three years before the first patient is treated. These extended timelines may delay the company's revenue from these significant projects.
- Equipment upgrades lead to operational downtime, potentially reducing revenues: Upgrading the Gamma Knife equipment causes downtime of approximately 60 days, during which the facilities are not operational. As mentioned, "There is about 60 days, plus or minus, I'll say, 15 to 30 days on that 60-day time line, downtime." This downtime can impact the company's short-term revenue and profitability.
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Rhode Island Acquisitions
Q: Will the Rhode Island facilities add immediate revenue?
A: Yes, the three acquired radiation therapy centers in Rhode Island will contribute immediate revenue and profitability, with no downtime in operations. Patients were treated on May 7 under previous ownership and continued on May 8 under AMS ownership. -
New Rhode Island Projects Timeline
Q: What's the timeline for new Rhode Island projects?
A: AMS is pursuing a fourth radiation therapy center in Bristol, expected to treat patients in about 12 months after CON approval and construction. The proton beam center has a longer timeline of two to three years post-CON approval due to complex construction. -
Puebla, Mexico Delays
Q: Is the Puebla, Mexico startup delayed?
A: Yes, AMS is disappointed with the delays at Puebla, primarily due to regulatory and construction issues beyond their control. The first patient is now expected in the next 60 days, nearly two years after signing the agreement. -
Capacity Ramp-Up at Puebla
Q: How quickly will Puebla reach full capacity?
A: The ramp-up will be gradual but continuous. While equipment rarely reaches full capacity, increasing utilization improves profitability due to the fixed cost structure. -
Device Upgrade Downtime
Q: Is there downtime when upgrading devices?
A: Yes, upgrading a Gamma Knife device typically results in about 60 days of downtime, plus or minus 15 to 30 days, for installation and commissioning. -
Downtime at Rhode Island Facilities
Q: Will there be downtime at Rhode Island facilities?
A: No, there is no downtime expected. The staff is trained, and operations continued seamlessly from previous ownership to AMS ownership.