Sensus Healthcare - Earnings Call - Q4 2020
February 25, 2021
Transcript
Speaker 0
Good day, ladies and gentlemen, and welcome to the Census Healthcare Fourth Quarter twenty twenty Earnings Conference Call. All lines have been placed on a listen only mode. If you have a question or comment, please press star one. Again, that is star 1 for any questions. The floor will be open to your questions following today's presentation.
At this time, it is my pleasure to turn the floor over to your host, to Mrs. Kim Golodetz. Ma'am, the floor is yours.
Speaker 1
Thank you. This is Kim Golodetz with LHA. Thank you all for participating in today's call. Joining me from Census Healthcare are Joe Sardano, Chief Executive Officer and Javier Rampola, Chief Financial Officer. As a reminder, some of the matters that will be discussed during today's call contain forward looking statements within the meaning of federal securities laws.
All statements other than historical facts that address activities Census Healthcare assumes, plans, expects, believes, intends or anticipates and other similar expressions will, should or may occur in the future are forward looking statements. The forward looking statements are management's beliefs based on currently available information. Census Healthcare undertakes no obligation to update or revise any forward looking statements except as required by law. All forward looking statements are subject to risks and uncertainties, including the continuation and severity of the COVID-nineteen pandemic and its impact on sales and marketing as described in the company's forms 10 ks and 10 Q. During today's call, there will also be reference to certain non GAAP financial measures.
Census believes these measures provide useful information for investors yet should not be considered as a substitute for GAAP nor should they be viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non GAAP to GAAP results is included in today's financial results press release. With that said, I'd like to turn the call over to Joe Sardano. Joe?
Speaker 2
Thank you, Kim, and good afternoon, everyone. Thank you all for joining us. And once again, I express my hopes that you have all remained healthy and are keeping safe and that before too long, we'll be able to put the COVID-nineteen pandemic behind us. We are pleased with our fourth quarter revenues of $5,100,000 which were well above our third quarter revenues of 1,600,000.0 This increase reflects the gradual reopening of the economy in certain geographic areas as well as our continued dedication to our physician customers and preparation for resumption of normal practice activities. While our business continues to be impacted by the pandemic, the cautious reopening of regional economies allows Sensus to resume sales.
We were delighted to ship 18 SRT systems during the quarter, including 12 domestic direct sales and three to China. On a year over year basis, our revenues continued to reflect the impact of the pandemic as compared to Q4 twenty nineteen, which were well below the $8,500,000 we recorded a year ago. We continue to take all the steps necessary to keep Census on firm footing and prepare our company for rapid growth when the pandemic subsides. This is a credit to the entire Census team for their cooperation and discipline in adhering to our strict financial guidelines established at the 2020. To that end, reflecting our keen attention to operating expenses, we generated net income of $1,000,000 for the quarter, which is a positive finish to a very challenging year.
We are cautiously optimistic that markets will show modest recovery during the 2021, and we plan to step up select hiring in our sales organization. During the fourth quarter, we received news that we had been waiting many years to receive. The Centers for Medicare and Medicaid Services, or CMS, increased reimbursement for the main SRT code, along with meaningful increases in Evaluation and Management, or E and M codes. We are delighted with the progress following years of lobbying. Specifically, CMS issued new reimbursement amounts for CPT treatment code 77401 and E and M codes.
The combination of these increased values provides SRT users as much as a 50% increase over the reimbursement values of the past several years. In addition, codes were revalued upward for the ultrasound capability in our SRT-one 100 Vision systems. We are delighted that our physician customers will now be more fairly reimbursed for a procedure with outcomes at least comparable to surgery without the potential complications. We also believe new reimbursement amounts will catalyze additional physician interest in adding SRT to their treatment armamentarium, especially after working through the pandemic when surgeries were halted while SRT units continued to treat. We are now tasked with educating our market of these new codes.
To date, we have penetrated only about 2% of The U. S. Market, so clearly there's plenty of upside for growth. We are also delighted that so many key opinion leaders went to bat for us with CMS, highlighting the efficacy and safety of SRT. The American Cutaneous Oncology Society in particular was most helpful working alongside Census with the AAD and CMS.
We have a lot of people to thank for believing in us and our technology. Also during the fourth quarter, there were two separate peer reviewed publications highlighting the efficacy of SRT against the recurrence of keloid scars. The first study I discussed on our last conference call in November, that one showed keloidectomy followed by SRT had an approximate ten percent recurrence rate compared with an expected recurrence rate of more than eighty percent following surgical excision alone. The other was published by the Journal of Clinical Anesthetic Dermatology and was a retrospective study showing that a single low dose of SRT following excision of fourteen keloids had an approximate six point two five percent recurrence rate at six months and for the 10 patients available for the follow-up at twenty four months, none of the keloids had recurred. These are tremendous data points that impact people with skin of color.
They finally have a choice to their keloid problems. We also exhibited virtually at the South Beach Symposium held in early February. Over 1,000 dermatologists were registered for this four day conference with a faculty of renowned physicians presenting the latest in clinical dermatology. Although COVID-nineteen impacted sales, it also presented an opportunity for Census to offer treatment for pneumonia in COVID-nineteen patients by delivering superficial radiation therapy to the lung. During the fourth quarter, we shipped an SRT system to Holy Name Hospital in Teaneck, New Jersey.
Holy Name has been at the forefront of COVID-nineteen therapy since the start of the pandemic. We expect to receive data on the efficacy of our system for this use during the second quarter. In evaluating this opportunity to help our frontline workers and patients, history showed a very successful approach to treating pneumonia with radiation going back almost seventy five years. We engaged an outside physics laboratory to evaluate our radiation and provide us with a non biased opinion on whether or not our radiation could penetrate the body enough to treat the lungs. They published a paper that provided us the confidence that our SRT technology was capable.
In presenting this finding to Holy Name Medical Center, they agreed to acquiring the SRT-one 100 Vision to treat the lung. This is a hospital in Teaneck, New Jersey that has been at the forefront of the epidemic while performing drug discovery with the major drug companies who now have FDA approvals. Our SRT systems are well suited for COVID-nineteen because they're portable and allow for bedside treatment in the ICU rather than transporting patients to a cancer treatment center for radiation therapy and possibly exposing vulnerable oncology patients to the virus. We will introduce a family of four FDA cleared aesthetic lasers powered by our Sentinel IT Solutions software in April. Sentinel provides asset management and HIPAA compliant patient data and storage capability and also contains the software necessary to support shared service models, including direct patient billing.
We will be integrating these lasers into our Census Laser Aesthetics Services. This is our mobile aesthetic laser division that we expect will become a meaningful source of revenue growth, in particular as we roll out disruptive rental strategies during the 2021. These strategies are designed to generate consistent revenue for Sensus while providing physician customers with access to multiple different lasers. We are also looking at expanding our mobile aesthetic laser business beyond Florida via strategic transactions. Sentinel IT has started to generate high margin recurring revenue.
Although still in its lifecycle, Sentinel holds significant promise as an integrated feature, not only the new lasers, but also of the SRT-one 100 plus and SRT-one 100 Vision. Turning now to our international efforts, business in China picked up during the fourth quarter with the sale of three systems. Plus, as of 01/01/2021, we have new distribution partner for China and Hong Kong. Our new VP of International Sales has developed an extensive network of prospects in China, and we're optimistic that China represents an excellent growth opportunity. This year, we will be engaged with the Chinese health authority in renewing our license for another four years.
This will be an expensive endeavor and require almost the entire year to accomplish. This will be our third renewal. In addition, we are finalizing a new distributor in Taiwan and are preparing Sculptura for the regulatory process in China. Sculptura is our anisotropic radiation therapy with beam sculpting capabilities and robotic respiratory tracking for up to 17 different indications. We announced earlier this week that we were granted an important U.
S. Patent for Sculptura, which describes the method of beam splitting and sculpting. This patent covers 31 separate claims dealing with how our electron beam generator is able to sculpt and direct x rays precisely where they are wanted. The technology that's embedded in our Sculptura system differs from conventional interoperative radiation therapy in its ability to control the radiation beam and has a longer useful operating life. Ours is the first device in the world with this capability and we believe it opens new doors for the delivery of radiation to treat solid tumors of all kinds.
In addition, there may be use for this technology in devices other than Sculptura as well providing potential licensing opportunities. As I mentioned last quarter, we've been making solid progress with commercializing the Sculptura system and showcasing its unique technology capabilities when the pandemic stopped us in our tracks. Also, research by the luminary hospitals engaged to provide data to support our marketing efforts for Sculptura came to a standstill. While breast cancer appears to be the initial focus of these cancer centers, we expect Sculptura ultimately will be used for up to 17 different oncology indications. We are hopeful sales will resume later this year.
With that, I'll turn the call over to Javier Rampolla, our CFO, who will go over our Q4 and full year financial results in more detail. Javier?
Speaker 3
Thanks, Joe. It's a pleasure to be speaking with all of you this afternoon. As Joe mentioned, revenues for the 2020 were $5,100,000 and this compares with revenues of $8,500,000 for the 2019. Revenues for the 2020 were derived from the sale of 18 SRT system, including 12 direct domestic sales and three systems to China, as well as service contract and our new mobile laser business. The decrease from the 2019 reflects a lower number of units sold due to the impact of COVID-nineteen.
Gross profit for the 2020 was $3,200,000 or 63% of revenue compared with 5,500,000.0 or 64% of revenue for the 2019. Selling and marketing expense for the 2020 was 1,300,000.0 down from 2,500,000.0 for the 2019. The decrease was primarily due to a reduction in trade show expense and a lower sales commission. General and administrative expense for the 2020 was 800,000.0 compared with 1,100,000.0 for the 2019. The decrease primarily reflects the impact of bad debt expense in 2019.
Research and development expense for the 2020 was 800,000.0 compared with 900,000.0 for the 2019. The slight decrease was mainly due to lower expenses related to this October development as commercial production started. Net income for both the 2020 and 2019 was 1,000,000 or 6¢ per diluted share. Adjusted EBITDA defined as earnings before interest, taxes, depreciation, amortization, and stock compensation expense for both the 2020 and 2019 was $1,300,000 Turning briefly now to the full year financial results. Revenues for 2020 were $9,600,000 and this compares with revenue of $27,300,000 for 2019.
The decrease is primarily due to the lower of units sold as a result of COVID-nineteen. Selling and marketing expense decreased to $5,300,000 for 2020 from 9,100,000.0 in the prior year, primarily due to cancellation of trade shows due to COVID-nineteen, a decrease in commission expense due to lower sales and reduced spending on marketing activities. General and administrative expense was unchanged at $4,000,000 for both years. Research and development expense was 4,200,000.0 for 2020 compared with 6,400,000.0 for 2019. The decrease was primarily due to lower spending as the Sculptura project entered commercial production during 2020.
The net loss for 2020 was $6,800,000 or $0.42 per share compared with a net loss for 2019 of $1,700,000 or $0.10 per share. Adjusted EBITDA for 2020 was negative $5,800,000 compared with negative $800,000 for 2019. Cash and investments were $14,900,000 as of 12/31/2020 compared with $15,500,000 as of December 3139. The company had a small long term debt and no outstanding borrowings under its revolving line of credit, both during 2020 and as of 12/31/2020. We're confident that with our continued attention to expenses along with current cash and access to our existing revolving credit agreement, we continue to be financially well positioned to support our expected growth during 2021.
With that, I will turn the call back over to Joe.
Speaker 2
Thank you, Javier. I'm so very proud of our staff and the way we kept our focus on customers and patients throughout the pandemic. I think you can see from our activities that the team continued to push the envelope in many areas. We believe the worst is now behind us and that we are well positioned to resume the growth trajectory that was interrupted almost exactly one year ago. We're looking forward to 2021 with higher reimbursement amounts for SRT and elevated presence for Sculptura and commercial sales, as well as the contribution from our newly acquired companies, Sensus Laser Aesthetics Solutions.
I'll remind you that our products have enormous room to grow. Our SRT systems are well positioned in a large market consisting of some 14,000 dermatologists and 1,000 Mohs surgeons in The US, representing more than 7,500 offices and growing. Not to mention a further 6,500 plastic surgeons and 5,500 radiation oncologists. We provide a compelling alternative to surgery for millions of patients and arguably the only solution to prevent the recurrence of keloids following surgical excision. With those comments, I'd like to thank you for your time and attention.
And now, operator, we're ready to take questions. Thank you.
Speaker 0
Thank you. Our first question will come from Alex Nowak at Craig Hallum Capital.
Speaker 4
Hey, good afternoon, everyone. This is Trent McCarthy on for Alex. First off, I just wanted to congratulate you guys on getting the increase in reimbursement from CMS. That was great to see.
Speaker 5
Thank you, Trent.
Speaker 4
One quick question on that front. What is the percentage of like actually, what percentage of the beat this quarter would you attribute to people getting excited for this?
Speaker 2
The fourth quarter, I would have to say that it was very, very little, only because we couldn't announce it, market it or anything because it didn't become it wasn't announced by CMS until the very December. So it didn't give us a whole lot of chance to use it as a selling tool. Most of our sales were earlier in the quarter. And then, of course, CMS doesn't make an announcement that says, Oh, by the way, everybody in dermatology, you have an increase in SRT reimbursement, we have to physically take that bull by the horns and go out into the market and now tell the customers exactly or the prospects exactly what that reimbursement is. So we have to educate them and train them on our own.
So that's a lot of heavy blocking and tackling.
Speaker 4
How long do you expect for that to really start to ramp and start to materialize, if you will?
Speaker 2
Well, we have partners such as Pinnacle who we use as our main consultant on this where customers can call them up and find out exactly what that reimbursement is. But we always projected that the first six months of the year is going to be the heavy part. And hopefully, that we'll start seeing some revenues as a result of that in the second half. We'll see business picking up in the second half. But again, a lot of it is reliant on the pandemic and aggressive the dermatologists are going to be within their own practices.
Speaker 4
Got it. That's helpful. Just pivoting real quick over to the recurring side. You guys are expanding these rental businesses to begin offering SRT-one 100 on a recurring basis. What is the latest with that and also the latest on expanding into other rental markets?
Speaker 2
Well, we acquired these two companies because of the opportunity we felt in growing that rental business, not just to have daily rentals or procedure rentals, but also weekly, monthly and yearly rentals. And we've come across several prospects that are also interested in superficial radiation therapy as being part of those rentals. Now there's a lot of things that you have to go through to satisfy the regulatory people in each and every one of the states. But the fact that there's interest there, I think is a good lead in with a lot of these customers. And we'll see where they end up going, whether they go with a rental, or whether they actually buy because of the new reimbursement codes that are out there.
But either way, it gives us another opportunity and another topic to discuss with potential prospects who may not have been interested in the past. So this is an exciting opportunity for us. And with regard to the laser rentals, we think that organically, we're going to see some business increase in that as we get back to where we were pre COVID. And that might happen sooner than not because of the type of patient that we have involved there, as well as the fact that it's a different business model. So we're looking forward to developing that business to a much richer environment.
Speaker 4
Got it. For the questions.
Speaker 2
Thank you, Trent.
Speaker 0
We'll move next to Scott Henry at Roth Capital.
Speaker 6
Thank you. Good afternoon and a really strong quarter, Joe. Congratulations.
Speaker 2
Thank you, Scott.
Speaker 6
We did have a couple of questions. First, we're a couple of months or almost two months into Q1. I know you tend to be strong in Q4 anyways. How should we think about Q1 sequentially from these levels at Q4? I don't know if I'd expect it to match this, but I would think perhaps it'll be stronger than what we've seen in Q2 and Q3.
Just wanted to get your thoughts on that.
Speaker 2
Well, number one, it better be stronger than Q1 or Q3 because we're planning on it. And listen, it's a very, very good question and it's difficult to answer, but we see our market opening up a little in those regions where there are a majority of areas in the country that are open in spite of COVID versus the major lockdowns that exist in other parts of the country. And we've got another point of topic to discuss and that being the new reimbursement codes. So we're going to go through a series of Zoom meetings with prospects and our existing customers to talk about this. It's really not us, but it's the American Cutaneous Oncology Society will be hosting this with presentations to let everybody know what those reimbursement codes are.
Then of course, Pinnacle is the main focus of our customers where they can follow-up with those folks on a regular basis and understand exactly what that reimbursement is. So we're hoping that this catches on sooner rather than later. And we see people that are interested again, to what extent that they're going to buy. We're going to push real hard to do a whole lot better than we did in the previous quarters one, two and three of last year and hopefully replicate what we did in Q4 for 2019. It's a tall order and I don't think anybody can tell us that everything's going to be normal anytime soon, but we're going to push as hard as we can.
Speaker 6
Okay, great. Thanks for that color. And then also on the income statement, gross margins bounced back strong in Q4. I'm sure a lot of that was volume. But do you think we could maintain gross margins at that level assuming that you do still have a bit higher volume than we saw in the 2020?
Speaker 2
The last four or five years, the sales team has done an excellent job in maintaining our average selling prices, including whatever we sold during the COVID period. And so our customers are absolutely realizing how important this technology and how valuable this technology is. And it's not a question of the price they pay, it's more of a question is how do we support them and how do we get patients? Because there's plenty of patients out there. So I think that there's a value that's been established for the product.
And I think that we should be able to maintain those margins of between 6265% as we have had for the last four, five, six years. And it's just a matter of how many units can we sell in order to stay up there. That's the big deal as we've seen this quarter versus the previous quarters.
Speaker 6
Okay. And then operating expenses, if we combine the three categories together, they bounced around a lot in 2020. But, the question is, but as a whole, if we take the yearly operating expenses for 2020, would you expect 2021 to look similar?
Speaker 2
The neat thing of what and the timing of the R and D that we've had for the past several years is the fact that I would say 90% to 95%, 99% of the R and D is behind us because those products have been developed. Not only Sculptura, but also the development of lasers that we're going to be introducing around April 1. So my expectation, I think Javier, I'll let you discuss it as well. We went from 6,500,000.0 in 2019 to about 4,500,000.0 in 2020, and I'm hoping that we should be considerably a whole lot less than 4,500,000.0 in 2021. What I'm looking forward to is spending a whole lot more money on sales and marketing expense, especially in the commission side.
We our people to make a lot of money, which means that they're going to be selling a lot of product.
Speaker 3
That's correct, Joe. And we expect selling and marketing to be a little bit higher for 2021. G and A will sustain at the about a $4,000,000 and then r and d, definitely, we we wanna push that to to a decrease from two thousand and 20 as well.
Speaker 6
Okay. Great. And, in the past, you've broken out SRT one hundreds versus the vision. It's not that critical, but, I I don't know if you have those numbers available.
Speaker 2
Javier, I think you have those numbers.
Speaker 3
I I do have the numbers. We, ship out eight vision systems in Q4.
Speaker 6
Okay, great. Then that should do it for me. Thank you for taking the questions.
Speaker 2
Thanks, Scott. Appreciate it.
Speaker 0
We'll take our next question from Anthony Vendetti at Maxim Group.
Speaker 7
Thanks, good afternoon. How you doing, Joe?
Speaker 2
Hey Anthony, how are you?
Speaker 7
Very well, thanks. You
Speaker 0
mentioned
Speaker 7
on the last question there, you brought up the fact that there's gonna be some new lasers probably around April 1. Can you talk about that? Are those proprietary sensors lasers? Is that going to complement the rental strategy that you have? Just a little more color on that.
Speaker 2
Sure. I'll describe the lasers to you. Will have a CO2 laser, we'll have a Q switched laser, we'll have a PICO laser, as well as an IPL laser. I'm not going to get into the actual specifics of each one, but they're pretty common lasers that will be out there. They'll be available to sell by our direct sales team that's already selling SRT and talking to the same customers, and we will integrate these systems over a period of time to be included in our laser services division, which is providing the rentals.
The key thing, as we've been talking about with all of these lasers, was implementing the Sentinel program into this and the Sentinel feature, which provides and will be exclusive to our company in this market, whether it's SRT or lasers, that being the IT solutions piece that provides an asset management program to all of our customers. A lot of the customers that have multiple sites can manage each one of these lasers as well as SRT remotely from a workstation, a laptop, iPhone, or even an iWatch. And all of this, and that was the length of time that it took to integrate these because a lot of these lasers just didn't have that capability. That was the big thing that our engineering team has been doing over the last couple of years. So we're excited to be bringing these out.
We do have models that we're presenting to our marketing team. We'll be taking pictures, developing brochures, and having it all ready for an April 1 launch. If we can do it sooner, we could, but we're looking at April 1 as being a right thing to do because we'll have all the support data behind it.
Speaker 7
Excellent, okay, great. And then on the 18 system shipped, 12 domestic, three China, the other three obviously would have to be international as well. What other countries did you sell into? I'll let Javier talk
Speaker 2
to that because out of the eighteen, two were not counted as revenue, but they were shipped. They'll be counted as revenue for this quarter. And one of them was a vision. One of them had gone to a hospital, which I think everybody understands they don't quite move as fast as a dermatology practice. So I'll let go ahead, Javier.
Yeah, let
Speaker 3
me answer. So correct. So in Q4, which you have a vision system of which we had to defer one, three SRTs that went to China and then seven SRTs that was shipped to The US domestically. Out of those seven, we also defer one of them due to assessment clauses and all that. So a total of 18 units shipped in the quarter.
Speaker 7
Okay, excellent. So maybe just, Joe, if you could talk a little bit then just to shift gears to the COVID-nineteen, what you're doing there in Teaneck, New Jersey. Do you see that as an opportunity commercially beyond COVID-nineteen, assuming obviously COVID-nineteen starts to fade somewhat over the rest of 'twenty one? Do you see that as an opportunity though for treatment of pneumonia post COVID-nineteen? How do you look at that opportunity?
Speaker 2
It's an excellent question, I'm hoping that you're right that COVID-nineteen in 2021 gets behind us. But here's what we did. And we started this about six, seven months ago as far as looking at this. Again, we look back in the history books and the predecessor to our SRT product was the ortho voltage unit. The ortho voltage unit did everything that we thought it would do because that was the ultimate radiation device at that time.
And one of the things, the primary way to treat pneumonia in the lung was radiating the lung. And the ortho voltage unit was the primary source of doing it. When drugs started coming into play, and other medications to help clear lungs and pneumonia and things like that, in the 70s, it became lesser used, obviously, and so therefore, people started going to those other medications, if you will, to clear up pneumonia. When we started looking at COVID-nineteen, we said, well, if it was impactful for pneumonia in the lung, because that's what COVID-nineteen is just an expansion or extension of pneumonia. I'm wondering if our radiation would be helpful.
And so we contracted with an independent outside physics organization, who took a look at our radiation and the penetration capability of our system and said, your radiation would penetrate into the lungs and provide an equal distribution of radiation sufficient enough to clear pneumonia in the lung. And so they ended up because of that, they ended up writing an independent paper on that. And so we took that paper. And because of my past experience with GE Medical Systems, Teaneck, New Jersey was an important part of our life when we introduced positron emission tomography back then and PET CT scanning. And one of the chief investigators who is still there and in charge of one of the major departments, I discussed it with her.
And she said, we're the epicenter of COVID-nineteen here in New Jersey, we're just overwhelmed and inundated with COVID patients. And we would be very, very happy to take a look at anything that might be able to help us. She recalled the fact that pneumonia was treated with the older ortho voltage units. So with that being said, we made presentations of the independent study to the doctors of the hospital, the radiation oncologists, the pulmonologists, the radiologists, the administration of the hospital. And they came back after the presentation and said, anything is worth it.
If we could save a life, it's worth it. So we want to do it. So now the next thing that we had to come up with was, how do we find the fact that we need to have a shield? And so we had to find a place somewhere in the world that can manufacture a mobile shield. And this is what I'm going to say that I think is very, very important.
But this was another part of why we were looking into this. We had discovered that there's about a dozen facilities in The United States headed up by Emory, by the James Cancer Center at Ohio State University, Miami Cancer Institute. They're doing studies under an IRB and they were using radiation, low dose radiation to treat COVID-nineteen. However, that low dose radiation came from their linear accelerators in their cancer centers. And if you go through the papers that have been published by them so far, there's not a large amount of patients that they've done.
And the reason being is they've seen this as a major obstacle in bringing COVID patients, which is highly infective, to an area or a department filled with cancer patients whose immune systems are usually at the lowest and infecting those rooms with COVID. And they found out that cleaning those rooms, disinfecting those rooms, which puts downtime on those rooms impacts their cancer centers. And if they can only find a way to treat the patient bedside. And we're the solution if it works. And so it was easy for me to call a trusted physician that we had past experiences with to see if this thing would work.
Because of the number of patients that they had, they said they wanted to work it because this makes a lot of sense. They were originally invited to be part of that initial study and their pulmonologist refused because they didn't want those patients in the cancer center. So I don't know if this will be the solution. They will decide if it's a solution, but it's certainly an opportunity. And then the last question that you had, how would this work?
I don't think COVID is going away. I think COVID is going to be part of the new standard. It's going to be part of our life for the rest of our lives. There was an article, I think yesterday or today, that said, since COVID has come, the flu has gone away. There aren't any flu symptoms, so it's COVID.
Now instead of having an annual injection or vaccine for the flu, we're going have two injections for the COVID from either Pfizer or someplace else. And if they can get it down to one where it's sufficient, that'll be fine. But in my opinion, if you're in an ICU, and you've got a problem, irregardless of the vaccine, because these are for patients that the vaccine didn't help, it could be possible that every hospital in the world needs one of these machines because this is a pandemic that's worldwide. And so this is a very inexpensive way of treating COVID patients around the world. So if it works, it's going to be big.
If it doesn't work, it's a good try.
Speaker 7
It's just an extra shot on goal. Okay. And then just last
Speaker 2
thing That's on my best way to put it. You're a hockey guy. There you go.
Speaker 7
Sculptura, now that we're into '21, and I agree with you, I think COVID's going away, but hopefully it starts to circulate at a much lower level for the rest of this year, rates go up. But Sculptura, that's a opportunity for you that we've talked about for a while in 2020, obviously put a damper on new sales for that. Do you feel like the pipeline for that has come back? Just how should we think about Sculptura in 2021?
Speaker 2
Yeah. We had a face to face visit with our team and the UPenn team in January. Our management team decided to go and see them regarding all of the engineering that we were looking at. And we had a face to face conversation based on obligations of both sides to meet. We see in their faces in their eyes and they've indicated they're more anxious than ever to get going with the Sculptura system.
The pandemic is still impacting their resources. But they also seeing it subside and getting more involved in the Sculptura. I would have to say from my own predictions, we'll follow-up with meetings with them. But my own sense is that I think that we might see some movement on their side in the second quarter. I'm thinking that we'll have patients treated in the third quarter.
And I will also tell you this, they consistently are getting calls from other sites wanting to know what's going on because of their interest. Just this week alone, I've had two separate phone calls with other facilities in the country that are wanting to know what's going on with this, even to the point where they want to push for a Zoom meeting presentation, not just from us, but they also want to have the ability to talk to the UPenn people. These are things that I think are going to be conducted over the next three to six months. Anxious to get going. And I think that they'll get going.
And I'm thinking that we might have an opportunity to make one extra sale this year, which I think would be huge for us. So we're pushing for that because I think we've got prospects that are interested.
Speaker 7
Okay, excellent. Thanks, Joe. Thanks, Javier. Appreciate it.
Speaker 4
Be back
Speaker 2
in the queue. Thanks. Thanks, Anthony. Hope to see you soon.
Speaker 0
Ladies and gentlemen, if you did have a question or comment, it is star one on your telephone keypad. Again, star one for any questions or comments. We will go next to Ben Haynor at Alliance Global Partners.
Speaker 5
Good afternoon, gentlemen. Thanks for taking the questions.
Speaker 2
Thanks, Ben, for being on.
Speaker 5
Yeah, no problem. First for me, just with the system you have out there at Holy Name, it was great to hear the background of ortho voltage and how you came across the opportunity and were able to do the research and get it out there with the past relationship. But have you seen any other incoming interest from folks once that was announced and kind of the light bulbs go off in other folks' head?
Speaker 2
Yes, and we have an opportunity at several other centers, some not as how can I put it not as reputed as Holy Name, but just to give you an idea in rural Tennessee, a regional community hospital that's very, very interested? And They talk to people at Holy Names because we connected them there. They can't wait for results from Holy Names because they're inundated with a lot of COVID-nineteen patients. I think we know that within the last four or five months, there's been a major spike in Tennessee, whereas before it was pretty quiet. But this is a hospital that has six hundred-seven 100 patients in ICU where they've turned other floors into ICU.
So huge opportunity there, opportunities at other hospitals that are waiting to see how this turns out because it's not optimum to be treating those patients in the cancer center, and this is something that I think everybody wants to see successful.
Speaker 5
Makes sense. And then you mentioned coming up with the mobile shield. Does that help you with state regulators in other jurisdictions or other states with just the regular type installs?
Speaker 2
We hope. We hope. But you have to remember that because of COVID, a lot of state regulators, and we had to check with the state regulators of New Jersey, have softened a lot of the regulations due to COVID. So I don't expect that it will be there forever. But I think that for this time period, because of COVID-nineteen and the urgency, I think that they're allowing us to do this.
Will this be a standard? I hope it becomes a standard. The physics the physicist team at Holy Name is looking at this as very, very sufficient. They've done the studies of the unit because it was delivered last week, installed this week, and they've done some of the testing on it. And so they're finding that any radiation scatter is no worse than having it in a room so far, so far.
But when you're using it with ICU patients, and they want to get to the patient and things could change. But over time, we'll find out the data will be accumulated and we'll put it together and we'll see where it goes. But certainly an opportunity, but I'm also gonna give you this point, the cost of that mobile unit was almost more than what it cost to do an entire room.
Speaker 5
Ah, okay. So it would be more of eliminate the headache with the regulators rather than cost savings? Potentially.
Speaker 2
Potentially. So could it be something that we do in the hospitals? Yes, I think that can be done in the hospitals. Can it be done in private setting? Probably not.
Speaker 5
Okay, that's fair. And then you mentioned these disruptive rental strategies, these couple of new rental strategies that you have. Can you give us any more color on how the disruptive term applies? And if not, when should we expect to hear more on that front?
Speaker 2
Yeah, well, the disruption comes from a customer doesn't have to buy anything. They don't have to put out cash to buy a medical device. And therefore, if they rent it, what does that do? So if we're provided with a service that pays X by them, and we say, okay, we have a fleet of three, four, five different lasers that they have access to for their various treatments that they have. If they had to buy those four or five lasers, you're looking at probably 150,000 to $300,000 for them to outlay for those four or five lasers.
We would have an agreement with them that pays X dollars per month over a two or a three year period that certainly wouldn't come close to that 150,000 to $300,000 period. They wouldn't have to worry about service contracts. They wouldn't have to worry about downtime with breakage and things like that. And they would have a fleet of lasers at fingertips whenever they need it. And I think that that's an opportunity for them.
And I think that's where the disruption comes. And it's a great way for us to avoid the competition that exists. And I think some of you are very knowledgeable about the laser business. It has tremendous competition with all the companies out there. We want to provide a different thing for our customers and especially the customers that have multiple sites.
We think that we can provide them with something unique.
Speaker 5
Sure, makes sense. And then just finally for me, the mobile van opportunity that you're looking at outside of Florida, is that a single state? Is that multiple states? Any kind of color you might be able to provide there would be helpful. And then congrats on the quarter guys and the progress
Speaker 4
Thanks. As
Speaker 2
Thank you, Ben. Appreciate it. One of the opportunities that we've already looked at three markets that we're very interested in. I'm not going to name what those markets are, but it's clearly around the cluster of SRT machines that we have in those areas, those pockets. Why?
Because we already have a customer base, we have good relationships with those customers, so we want to further develop and expand those markets with other technologies. Those are the doctors that asked us, I wish I could buy more stuff from you, and the answer was lasers. So we want to expound on that. So we've already identified several operators in those areas that might be good fits for us. We're not looking for the biggest, we're looking for the best.
We want the best management involved, and more importantly, we want the ones that have the best relationships with their customers. We strive on those relationships and we enjoy those relationships and we want to strengthen them wherever we can. So those are the things that we're looking at and we're seeing signs of this organic growth and building what we already have. And if that continues, we probably want to make some things happen and start conversations in the second quarter to make these things effective in the third quarter so that at least we have an impact on our revenues for this year because we like the business.
Speaker 5
Sure. That's definitely helpful. And again, thanks for taking the questions, gentlemen.
Speaker 2
Thanks, Ben. Appreciate it.
Speaker 3
Thank you. Thank you.
Speaker 0
We'll move next to James Terwinger at Northland Securities.
Speaker 8
Hey, Joe, can you hear me?
Speaker 2
Yes, sir, James. How are you doing out there in Memphis?
Speaker 8
I'm doing well. First of all, congratulations on fantastic quarter considering what you were navigating with everything going on. I've been jumping between calls, so I apologize if I've missed. A lot of things have been covered. I think there's been great questions on this call.
I may have missed a few things though. On the reimbursement side, you talked about CPT 77,401 and E and M evaluation and monitoring and the percentage increase. Can you quantify what's the dollar increase? I mean, my thesis is that clinicians should be gravitating to the SRP for the clinical thesis, but it's always nice to have a reimbursement tailwind reimbursement increase, pushing the sales, so to speak, as you move into 2021, what is the, and you have multiple treatments there. So what is the dollar increase?
Can you back into that?
Speaker 2
Yeah, I can go to that. And what I will say is this, realize that in various parts of the country, there are various levels of that revenue. It could vary anywhere between $1 and $5 from what CMS has provided as an average across the country. So it could be a little bit more and it could be a little less. Percentage wise, it's about a 67% increase in seventy seven thousand four hundred one versus what it was the previous several years.
And when it comes to the EM codes, they've gone up 30%. So the combination of the two, pending what protocols the doctor brings together for the number of treatments he's going to plan or she's going to plan on patient, it's approximately 50% increase across the board. So in the last several years, we've seen an average reimbursement being somewhere around $2,100 for an average treatment plan of about 14 or 15 fractions. And so now you're looking at somewhere closer to between 3,200 and 3,800, depending on the number of fractionation that a doctor is going to choose for that treatment plan.
Speaker 8
Fantastic. Question, and I think you talked about this a little bit earlier. Know I don't want to box in a corner, but I'm a big fan of Sculptura. And clearly everyone's talking COVID, but no offense. I just had my college roommate's wife actually passed away at 50.
By the time they caught the cancer, it was in her spine and it had moved within the bone marrow three different places that came on the tissue. It was stage four fast moving. He's got three kids. The cancer market's not going away. We're talking a lot about COVID.
How is your, and I know looking backward, it was almost impossible to get to the hospitals in 2020 with the shutdown and COVID to talk about a thing like Sculptura. How do you view Sculptura in 2021? Know, in terms of the excitement around that product, you've got, you know, some of the best facilities out there using it. You're talking to some of the other, some of the best facilities that I'm sure are interested. How should we think about Sculptura in 2021?
Speaker 2
I think that what's exciting for us is the fact that we had a face to face meeting with our friends at UPenn in late January. Our management team on the engineering side felt that it was important to visit them and they were happy to receive us in spite of all the restrictions in getting into their hospital. And of course, they had to go through all kinds of things to get in with testing and everything else before they even got there and then having everything duplicated by the time they got there. But the enthusiasm for the Sculptura product there has not waned in any way, shape or form. As a matter of fact, it's almost like being at a horse race and holding the horse in the gate when everybody else has left the gate.
This horse wants to catch up and move even faster. So they are more willing than ever to get going with this. So they're as committed as they ever were. However, they are restricted because all of the focus and all of the resources within that hospital are being directed towards COVID and they're being and it's very, very costly, very time consuming and very expensive. But here's what I feel from that meeting.
I think that at some point in the second quarter, that they're going to get back onto the bandwagon where we're going to have a lot of interface with them in the final touches, if you will, of developing exactly what they want, because part of that collaboration is them tweaking things to their own personal needs, which we are doing. And that development is pretty much done for the most part. But we just have to put it in there and make it work for them and everything will be satisfactory. So I see that happening in the second quarter, early in the second quarter. Then I see them finally getting on their protocols either by the end of the second quarter or early in the third quarter, where we should have some data and results of that testing.
And from those clinical studies that they're going to do on patients with the first set of patients being breast cancer. With that being said, we've got and we continue to get calls as they continue to get calls as well from hospitals that are very interested in the technology that want to get updates. And so I'm thinking that we have an opportunity maybe to sell a unit before the end of the year. Not sure it's going to happen because of hospitals and things like that, and they've got a lot of restrictions on their medical or their device acquisitions on their capital budgets. But if we're able to get a sale, whether it's within the country or outside the country, I think that we've got an opportunity to do that before the end of the year, and then I think that will set us off for decent 2022 with Sculptura.
Speaker 8
All right, fantastic. And then lastly, we have these ice storms in Texas and other places in the South, not necessarily Florida, so you guys escaped it. I spoke to a lot of different doctors and dentists, their practices were pretty much closed for the week. Is that going to have a major impact on you guys or is that more of kind of just push back one or two weeks some of the things you're working on?
Speaker 2
Well, that impacts the doctors who already have our equipment and the volume of patients that they're already treating. So they will probably have to reengage those patients, redo their treatment planning. It's nothing for us, but I have to say, and this is not something that we want to have happen, but we did have a customer who had damage to their device because of consequent snow, rain, flooding, and that kind of stuff. There was damage to a unit. They're applying to their insurance and if the insurance pays for it, we got another unit going.
So not that it's a negative, it might be a positive, but it's not the way we want to build our business. But I don't think it's holding back any of the decisions other than the time for that week that we weren't able to see those customers.
Speaker 8
Okay, fantastic. Again, congratulations on a great quarter and keep it up. Thanks a lot, Joe.
Speaker 7
Thanks, James. Appreciate it very much.
Speaker 0
And with no other questions holding, I'll turn the conference back to management for any additional or closing comments.
Speaker 2
Thank you, Jeff. So in closing, I wanna thank you once again for your time this afternoon and for your interest in Census. We continue to move forward on multiple fronts and are optimistic about our prospects when we return to a more typical business pattern and we hope it's soon. Before we conclude, I want to let you know that we'll be participating in three virtual conferences later this month. Next week, we'll be presenting at the HC Wainwright Global Conference.
The week after that, we'll be presenting at the ROTH Virtual Conference, followed by the Maxim Virtual Conference shortly after that. We'll be issuing a press release to let you know how you can listen to our presentations. If you'd like a one on one meeting at either of these conferences, please contact your sales rep at either bank and We'll be more than happy to accommodate. Again, we want to recognize and thank the many frontline workers who continue to help the many COVID-nineteen stricken patients. Please stay safe, everyone, and thank you so much.
Speaker 0
Ladies and gentlemen, that will conclude today's conference. We thank you so much for your participation. You may disconnect at this time and have a great day.