Sensus Healthcare Inc

NASDAQ:SRTS

Earnings Call Transcript 2023-Q3

[Operator]

Good afternoon, and welcome to the Sensus Healthcare Third Quarter 2023 Financial Results Conference Call. [Operator Instructions] Please note, this event is being recorded.I would now like to turn the conference over to Kim Sutton Golodetz at LHA Investor Relations. Please go ahead.

[Kim Golodetz]

Thank you. This is Kim Golodetz with LHA. Thank you all for participating in today's call. Joining me from Sensus Healthcare are Joe Sardano, Chairman and Chief Executive Officer; Michael Sardano, President and General Counsel; and Javier Rampolla, 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 Sensus 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 as of the date of this conference call, November 9, 2023. Sensus Healthcare undertakes no obligation to revise or update any forward-looking statements, except as required by law. All forward-looking statements are subject to risks and uncertainties as described in the company's Form 10-K and 10-Q.During today's call, references will be made to certain non-GAAP financial measures. Sensus believes these measures provide useful information for investors that they 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?

[Joseph Sardano, executive]

Thank you, Kim, and good afternoon, everyone.Our third quarter financial results reflected typical summer seasonality and macroeconomic conditions with economic challenges continuing to affect many dermatologists. During Q3, we shipped 11 systems, including 3 SRT systems outside the U.S. and 5 SRT-100 Visions to a very large customer. Total unit sales now stand at almost 720 units, and we expect the seasonally strong fourth quarter to help us advance towards our yearly and long-term goal.For Q3, revenues were $3.9 million compared with $9.0 million a year ago. As discussed last quarter's conference call, many of our customers depend on elective aesthetic procedures as a meaningful source of practice and revenue profit. And despite hearing encouraging feedback that patient volumes and procedures mix are improving, macroeconomic conditions, along with our usual seasonal summer lull made for a soft quarter. However, please note that our main focus has always been on the second half of 2023. We continue to believe in a strong Q4 with 5 weeks in. We used our strong cash position to continue to build inventory that we will be able to quickly address demand as our customers adjust to inflation and interest rates. Utilization of SRT to treat non-melanoma skin cancer continues to increase, driven by favorable reimbursement and aging population and clinical results that are at least as good, if not better, than Mohs surgery.I'll remind you that last quarter, we told you that our review of Medicare's shows that SRT experienced a 27% year-over-year treatment growth rate for the past 6 years. If this growth rate continues at its current pace, SRT will soon become the treatment of choice for non-melanoma skin cancer. Our confidence remains high, and we continue to work concurrently on programs that will address any remaining hesitancy for our prospects and put us back in a growth trajectory. Our advanced technology is expected to play a key role in our growth with Sentinel IT front and center. This is our HIPAA-compliant software with clinical, billing and asset management utility that also allows us to track utilization. We enhanced Sentinel earlier this year by adding Sensus Cloud with its remote monitoring capabilities to track and monitor SRT systems. This is ideal for better managing dermatology clinics. We showcased Sentinel and Sensus Cloud at the American Academy of Dermatology Annual Meeting this past March. And looking ahead, the fourth quarter is off to a good start with participation in the Fall Clinical Dermatology Conference and the American Association of Radiation Oncology Annual Meeting, both in October. We are seeing a trend based on the activity at our booth and the attention our products received at these important trade shows, in particular, the SRT-100 Vision, Sentinel IT and Sensus Cloud capabilities, it bolsters our optimism for the future as we enter Q4, which traditionally is our year's strongest sales quarter. As a reminder, the Sensus Cloud system also allows providers to monitor any service issues such as calibration, monitoring voltage and temperature without having to send an engineer to the field. As you may expect, Sentinel IT allows us to track system use in real time, an important feature that may support new sales programs. We also introduced this year an important new and improved high-resolution ultrasound technology to provide see-and-treat capability. This leads to great outcomes of patient reassurances because the physician can actually see the impact of each treatment on the lesion and lesion resolution after treatment.Turning to the hospital market. Radiation oncology is a highly attractive opportunity as it gains interest in the skin cancer treatment market. Although selling to hospitals is a longer selling cycle, it is a market well worth pursuing as we build footholds in the channel. Recall that earlier this year, we sold a system to a hospital in the Northeast, the best Israel Deaconess Hospital in Plymouth, Massachusetts. And now during Q3, we sold another SRT to Cape Cod Hospital in Hyannis, Massachusetts. And we are engaged with several more hospital systems and believe that the positive experiences of these recent hospital customers will serve as supporting references as we penetrate this market.The veterinary market also offers some longer-term potential for growth. We were delighted that the Colorado State University veterinary teaching hospital posted on social media this week that in a clinical trial that they call groundbreaking, they treated horses diagnosed with squamous cell carcinoma with SRT. This is the most common eyelid tumor in horses. CSU said, I quote, the initial results are showing excellent success. We're eagerly awaiting the eventual completion of this trial and the publication of its results in a peer reviewed journal. So with that overview, I'd like to turn the call over to Michael Sardano for a bit more color on our plans and priorities. Michael?

[Michael Sardano, executive]

Thanks, Joe. Last quarter, I spoke about our efforts to open up new international territories, a demanding process that requires regulatory approvals and engaging the right distributors. Earlier this year, we were thrilled to sell our first SRT system to Beacon Hospital in Dublin, Ireland, which came just before we announced a new distribution partner in the United Kingdom, MIS Healthcare. We are delighted with this partnership, and MIS has a good backlog of potential hospitals interested in our SRT systems. Our focus on international opportunities continues. And during the quarter, we sold 3 systems outside the United States for a total of 10 systems sold internationally so far this year. Our goal is to enter 3 to 4 new territories over the coming years, building upon our recently added opportunities in the U.K., Ireland and Latin America, where we sold the first unit into Guatemala during the second quarter.With regard to the near future, as we discussed previously, our plan is to expand our Latin American and Asian footprint as quickly as possible with Brazil and Japan being longer-term goals as they are highly regulated.With that, I'll turn the call over to Javier for a discussion of our financial results.

[Javier Rampolla, executive]

Thank you, Michael, and good afternoon, everyone. As Joe mentioned, our revenues for the third quarter of 2023 were $3.9 million as compared with revenues of $9 million a year ago and $4.5 million in the second quarter of 2023. The decrease versus the prior year was primarily due to a lower number of SRT units sold as customers continue to defer purchases as well as lower sales to a large customer. Note that the third quarter is typically slower.Gross profit for the third quarter of 2023 was $2 million or 51% of revenues compared with $5.9 million or 65.6% of revenues for the third quarter of 2022. The decrease was primarily due to the lower number of units sold in the 2023 quarter. Going forward, we anticipate that gross margins will remain to the mid-6% range as our sales continue to improve. Selling and marketing expense for the third quarter of 2023 was $1.3 million compared with $1.8 million for the third quarter of 2022. The decrease was primarily attributable to a decrease in marketing activity as well as lower tradeshow costs and commission expense. General and administrative expense for the third quarter of 2023 was $1.5 million compared with $1.2 million for the third quarter of 2022. The increase was mostly due to higher professionals and bank fees, including costs associated with entering into a new credit facility.Research and development expense for the third quarter of 2023 was $1.1 million compared with $0.7 million in the same quarter last year. The increase was primarily due to expenses related to our project to develop a drug delivery system for the aesthetic market. We recently submitted a 510(k) application to the U.S. Food and Drug Administration, and we expect the completion of work on this project by the end of 2023.Other income of $0.3 million for the third quarter of 2023 was mostly related to interest income, and this compares with $0.1 million in other income for the third quarter of 2022.Net loss for the third quarter of 2023 was $1.5 million or $0.09 per share, and this compares with net income of $1.8 million or $0.11 per diluted share for the third quarter of 2022. Adjusted EBITDA, which we define as earnings before interest, taxes, depreciation and amortization and stock compensation expense was negative $1.7 million for the third quarter of 2023 compared with positive $2.3 million for the third quarter of 2022.I will briefly review our year-to-date financial results. Revenues for the first 9 months of 2023 were $11.8 million compared with $31.4 million for the same period of 2022, reflecting a lower number of SRT units sold as well as lower sales to a large customer. Gross profit year-to-date was $6.2 million or 52.6% of revenue compared with $21.3 million or 67.8% of revenue for the first 9 months of 2022. The decrease was primarily driven by the lower number of units sold and higher cost charged by vendors in the 2023 period.Selling and marketing expense was $5 million for the first 9 months of 2023 compared with $4.8 million for the same period of 2022. The increase was primarily attributable to higher tradeshow expense and headcount costs, partially offset by lower commissions and marketing expenses. General and administrative expense was $4.2 million for the 9 months ended September 30, 2023, compared with $3.6 million for the same period of 2022. The increase was primarily due to higher professional and bank fees.Research and development expense was $3 million for the first 9 months of 2023 compared with $2.3 million for the first 9 months of 2022. The increase was mostly due to expenses related to the development of a drug delivery system for aesthetic use. As I just mentioned, we recently submitted a 510(k) application to the FDA for this product and expect the project to be completed by the end of this year.Other income of $0.8 million for the first 9 months of 2023 was related to interest income. Other income of $12.9 million for the same period of 2022 was related primarily to the gain of $12.8 million on the sale of a noncore asset. Net loss for the 9 months ended September 30, 2023, was $3.7 million or $0.23 per share, and this converts with net income of $21.4 million or $1.28 per diluted share for the ninth month ended September 30, 2022. Net income for the 2022 period includes a $12.8 million gain on the sale of our noncore assets. Adjusted EBITDA for the first 9 months of 2023 was negative $5.4 million compared with positive $23.8 million for the first 9 months of 2022.Turning now to our balance sheet. Cash and cash equivalents as of September 30, 2023, were $20.5 million, down from $25.5 million as of September 30, 2022. The company had no outstanding borrowings under its revolving line of credit as of September 30, 2023, or December 31, 2022. As in previous quarters, we continue to prepare for the growth ambition, most admittedly for higher expected unit sales during the fourth quarter of 2023. We've been building finished good inventories and prepaying for materials in part to get ahead of inflationary price increases. At the end of the third quarter of 2023, inventories were $13.2 million, up from $3.5 million as of December 31, 2022. Prepaid assets were $3.9 million at September 30, 2023 versus $6.3 million as of December 31, 2022.Our cash spend is very focused and highly disciplined and is intended to support our ability to achieve our business goals. Nevertheless, our [Technical Difficulty] continues to position us well to take advantage of the company growth opportunities we may come across or that way that we may create ourselves. As a final comment, we see the tail in the news release we issued earlier today for reconciliation of GAAP to non-GAAP financial measures.With that, I'll turn it back over to Joe.

[Joseph Sardano, executive]

Thanks, Javier. Thank you, Michael. As I mentioned last quarter, SRT treatments surpassed 480,000 in the last 2 years alone, and the ROI for our premium SRT system under our fair market value leasing program continues to be compelling. Interest in SRT remains high, especially as it relates to our premium product, the SRT-100 Vision. We do expect to ship significantly more SRT systems in the fourth quarter of this year and a statement I make based on historical trends as well as the high interest in SRT and the booth traffic and recent important trade conferences and current prospect activities.Clinical results in treating non-melanoma skin cancer non-invasively are excellent, with published studies showing that SRT is as good or better than Mohs surgery. This should be reason enough to choose SRT. Add to that fact that most procedures can leave scars and raise the risk of infection and even death and the fact that our reimbursement is so much higher than it was 2 years ago, while Mohs surgery reimbursement has come down. And SRT becomes the clear choice. We're very excited to be working to make this choice even easier as treating skin cancer and keloids with SRT becomes a meaningful way of supporting one's practice considering the current state of aesthetics.As a final topic before we take your questions, I want to provide you some color on our transdermal drug delivery system known as TDI. As Javier mentioned, we recently submitted our 510(k) application to the FDA and expect to receive clearance in early 2024. This system will, for example, allow PRP to be applied to the scalp with a pain-free hair restoration experience. In addition, posters have already been presented on the application for hyperhidrosis or overactive sweat glands. Our transdermal system includes Sentinel IT solutions capabilities as do all 6 of our Sensus-branded aesthetic smart lasers and SRT devices.We are still in the early stages of tapping the enormous market opportunity for SRT. Our systems are well positioned in a large and largely untapped market. They provide a compelling alternative to surgery for millions of patients and arguably the only solution to prevent the recurrence of keloids following surgical excision. As an overlay to all this, an estimated 1 in 5 Americans will develop skin cancer during their lifetime. This tells us that nearly 70 million people will have non-melanoma skin cancer. So clearly, there's a need for our SRT systems both now and even more so in the future. We are confident that Sensus is positioned for success despite the challenges we faced since February. We have a great staff to drive growth and implement our strategies, which is why we have built inventory to meet the expected demand.With those comments, I thank you for your time and attention. And now operator, we're ready to take questions.

[Operator]

Thank you. We will now begin the question-and-answer session.. [Operator Instructions] And our first question will come from Yi Chen of H.C. Wainwright.

[Boobalan Pachaiyappan, analyst]

This is Boobalan dialing in for Yi Chen. A couple from us. So maybe firstly, so the cost of sales remained the same despite a drop in revenue. So is there anything to take note of? And also, how should we think about gross margins for the next quarter and maybe in 2024?

[Javier Rampolla, executive]

So for the next quarter, I think about like the low 60s in the gross margin.

[Boobalan Pachaiyappan, analyst]

Okay. All right. And then do you expect the macroeconomic challenges to remain in place through 2024 that could impact your business?

[Joseph Sardano, executive]

We're expecting Q4 to give us a nice rebound and hopefully launch us into a successful 2024. To what point that success will be is going to be determined. We'll see how Q4 lays out, but we're very confident that Q4 will be a good fourth quarter as it usually is. And I think it will launch us into a better 2024 than, of course, what we're experiencing for 2023.

[Boobalan Pachaiyappan, analyst]

Okay. Maybe one final from us. So I was wondering if you could provide some color on the current trend of device utilization rate in the office of dermatology.

[Joseph Sardano, executive]

Say that again, I need to understand it better.

[Boobalan Pachaiyappan, analyst]

So we'd like some extra color on the current trends of device utilization rate in the office of dermatology.

[Joseph Sardano, executive]

Particularly for SRT?

[Boobalan Pachaiyappan, analyst]

Yes.

[Joseph Sardano, executive]

Yes, I think that the SRT utilization rate is starting to move up as we've done a review of Medicare and Medicaid over the last 6 years, which shows a 27% compounded increase year-over-year for the last 6 years. So we're seeing the volumes in our offices picking up. That doesn't seem to be a deterrent in any way, shape or form. A lot more people are choosing SRT versus Mohs surgery, which is more invasive, as we know. So we see that trend continuing for the foreseeable future. And we fully expect that at some point in the very near future to have SRT possibly overtake a Mohs surgery as the treatment of choice.

[Operator]

And the next question will come from Alex Nowak of Craig-Hallum Capital Group.

[Alexander Nowak, analyst]

Okay. Great. The Q4 bounce back, last Q4 in 2022, I think you did about 36 systems. And based on the trends, the macro environment, everything has changed. I can't imagine you're going to do 36. But like what's kind of a ballpark number that you would be guiding towards?

[Joseph Sardano, executive]

Well, I think it's one of those questions where right from day 1, I think we talked about 60 units for the year. I think that we'll reach our 60-unit goal. After this quarter, we're at 33 systems, I believe. So I think that we'll get to that 60 unit goal by the end of the fourth quarter.

[Alexander Nowak, analyst]

I mean, that's great to hear. Can you speak to your big partners, SkinCure. Just what are they seeing out there? Because obviously, the capital environment is tough. We all know that we'll be going through the earnings season, we've been hearing about other aesthetic names seeing the impact in the dermatology office. But first, it sounds like procedures for SRT are continuing very well. Is that the same with your partner, SkinCure?

[Joseph Sardano, executive]

SkinCure is seeing that increase as well. So that's encouraging. But the hesitation for signing on the dotted line to add new installations as we've had the same problem as they've had. So we can compare notes and see the same results there. But we're also seeing together with them a much better fourth quarter. I think that we consistently said that the doctors will learn or patients will come back as they learn how to live with the inflationary numbers. That's on the aesthetic side. The fact of the matter is that skin cancer is something that's not going to go away unless it's treated, and there's more skin cancers being discovered each and every day. And so the doctors are finding a very good way of treating that with SRT. And I think that it's also a nice complement to the fact that if they're seeing lower numbers on the aesthetic side, this is certainly a way of gaining back some of the revenue that they're losing on the aesthetic side so that they're more balanced as far as their offerings between medical dermatology versus aesthetic dermatology. So I think you're going to see a lot of the practices starting to even out on those things. I think over the last several years, the whole industry migrated towards the aesthetic side, which was a cash business. It's an easy path to fall into. And I think this is a big awakening. I remember 4 or 5 years ago, going to all the tradeshows and all of the speakers were talking about having a balanced offering to their customers, so they're not too heavily weighted one versus the other. I think this is a reset, if you will, it's going to help people get back on to the equilibrium, if you will. And of course, SRT is going to be one of the main players in that.

[Alexander Nowak, analyst]

Got it. That's really helpful. And the company, Joe, you and the team, you've taken the company now through 2 different environments. One, call it the lower interest rate environment where maybe a fair value lease could come a lot cheaper. There is more access to capital by these clinics so they could take a place in SRT for, call it, a little bit of a lower risk. And now we've gone through this higher interest rate environment, where now it's becoming a little bit more difficult for a clinic to sign on the dotted line, as you mentioned. Does it at all make you question or look towards sharing in the economics on the procedures where if a clinic is going to do x number of procedures, you can actually get a piece of that economic benefit versus just the capital sale upfront and then the service contract?

[Joseph Sardano, executive]

It's always been on our minds as far as the ability for us to do that. it's always available to our customers if they want to bring that up with us. But we have a very good partner that is right now fulfilling that. They have a very successful model. I think it's a proven model. The fair market value lease that we offer is not so much laden by the interest rate because the fact that it's an off-balance sheet vehicle that provides with no personal guarantees for the customer, and it allows them to get into something where literally, there's a huge residual base on the system that they are not having to pay for. So it's a much less costly way of doing it, and it's still an opportunity for them to keep 100% of their revenues. If they have high patient population, which we're seeing it grow, it's difficult for a customer to want to give up a certain percentage of that revenue when they can keep it all. So I think we provide them with a very, very good alternative to what our biggest customer is doing. And I think that, that's one way of supporting our market. And until we start seeing a greater demand from our market for us to be involved with that. It's always being considered. I can assure you that. And maybe one day it will happen, but it's not going to be this day.

[Alexander Nowak, analyst]

Okay. No, makes sense. And then just lastly on the expenses. The team has done a great job keeping the expenses at, I think, a reasonable run rate even during this challenging macro time. So going into Q4, and I guess more 2024, do you expect to hold the expenses largely flat? Or would you need to do a little bit of increasing, but profitability comes back in store in Q4 and 2024?

[Joseph Sardano, executive]

Well, first of all, I appreciate you bringing that up because I think the financial team, in particular, led by Javier has really kept us on track and very disciplined on what we do with our dollars. And if you notice, we have more cash in the bank at the end of this quarter than we did after the second quarter. So we're very cognizant of it. We're strict on it. It's part of our DNA and the way we manage our business. I think that it will remain flat for the balance of the year. We're not looking at increasing expenses. We've had increase in some of the R&D expenses due to the TDI product that we've put through the FDA and all of the fixes that it has to go through as well as the testing, which is extremely expensive, even before you get to the FDA, it's done by a third-party group. All of those things are very, very important for us, but it's something that we live with every day. So I don't think that we're going to increase any of the expenses. If one of the notes that you had from Javier that was increases in some expenses due to sales and tradeshows. We had the American Academy of Dermatology tradeshow was in a very expensive state. And then most recently, ASTRO was in San Diego. If you know anything about the tradeshows, everything in the tradeshows that have already been scheduled, we got the upcoming American Academy of Dermatology in March also in San Diego. The actual costs to us, to any manufacturer to exhibit in California is almost 3x than it was 2 years ago. I mean they've increased the cost tremendously. I'm not sure if we're going to continue to see a lot of these big societies continue to have their meetings in California because of those costs. But I mean, we were as shocked as everybody else was when we showed up and we learned of the extra costs that were involved. So that's pretty much the difference in the expense that we've had in 2022 versus 2023. It was just that one very show. But I would tell you, we do it again only because the show was very valuable to us. We had as much activity at our booth at ASTRO, the American Society for Therapeutic Radiation as we did several months earlier at the American Academy of Dermatology.

[Alexander Nowak, analyst]

No, that's good to hear. I appreciate the update.

[Operator]

And our next question comes from Ben Haynor of Alliance Global Partners.

[Benjamin Haynor, analyst]

Just kind of following up on that trade show commentary you just made. Can you share a little bit more on that front? Just kind of the leads that you've seen maybe relative to past years? I know COVID kind of messes with that quite a lot, I guess. But just any trends you've seen over time and the level of interest for SRT?

[Joseph Sardano, executive]

First and foremost, we started to see this trend since COVID. If everybody understands the American or the Radiological Society and Radiation Oncology, but CMS Centers for Medicare & Medicaid Services is putting an awful lot of pressure on treatments for cancer and reducing a lot of the reimbursement for the treatment of cancer. And when I'm saying the treatment of cancer, I'm talking about the regular cancers, lung cancer, breast cancer, prostate, all of those cancers. There's a huge reduction and a huge push by centers for Medicare and Medicaid services to cut those reimbursements because of the high volumes that are occurring in those areas, in those treatments of cancer. With that being said, a lot of these hospital administrators are saying, okay, we're losing revenue on our treatment of cancer with our cancer centers, what are we not doing? Where can we go and find more revenue to make up for those losses? And of course, as they're looking over the fence into somebody else's backyard, what aren't they treating? They're not treating skin cancer. And skin cancer is the low-hanging fruit. They can certainly attract a lot of the patients, and they certainly can attract treatment for that, but they have to have the right equipment. And so they've identified, which they've identified a long time ago that SRT is a very low-cost system that would get them back into the game for treating skin cancer and to make up for the losses that they're seeing in the reimbursement for all of their other cancers.So at this meeting, we had dozens of hospitals that were prescheduled coming to our booth for demonstrations on the SRT. They were physicians, they were physicists, they were administrators. They were all coming to find out what this SRT is all about and how it can treat skin cancer and how big this skin cancer market is. And so we were very, very happy to help them understand how big the market is and what they can do. Now you have a lot of also independent radiation oncology centers that are also suffering through the same thing, but want to learn what else can they do? And if you recall just a few years ago, we had a doctor out of Red Rocks, Colorado that had a system in a private setting. And he was doing 50 to 60 treatments a month in skin cancer. He was doing a tremendous job until he sold the practice, retired and moved back to his home state of Indiana. But we've had tremendous interest in that market. We think that, that market is going to continue to grow. If you noticed we talk about the 3 major hospitals that we signed up just in the United States this year alone with one also being signed up, which is Beacon Hospital, in Dublin, Ireland, which is a private hospital, which is much like the U.S. market. So we're starting to see that market grow and gain a lot of interest, and we expect to have some activity over the next several months with that market.

[Benjamin Haynor, analyst]

Okay. That's very helpful commentary. And just kind of recapping it sounds like you got a lot of answers from non-dermatology sort of institution. On the dermatology side, you mentioned that all the folks there may be a reset getting back to more of a balanced practice. What's your thoughts on some of these folks sticking kind of with the unbalanced or hoping for the unbalanced aesthetics versus traditional medical treatments that they've gone to, are they hoping to get hope that a lot of the aesthetic stuff comes back soon and maybe sitting on their hands when it comes to getting an SRT or any additional thoughts there?

[Joseph Sardano, executive]

Well, an interesting fact, Ben, we have a bunch of groups out there that are going through roll-ups that are being supported by private equity money. And they have anywhere from 100 to close to 300 centers depending on these groups. And I would say that there's about 15 that participates in that area with the private equity money. And they are closing in on representing about 20% of the total market. And how they go about evaluating to buy a practice, they buy a practice and the highest evaluation that they get for a practice is based on their medical dermatology, not their aesthetic dermatology. On the aesthetics side, they're looking at anywhere between 0.5% and 0.75% of their value, whereas on the medical dermatology side, the medical dermatology, meaning there are CPT codes, CMS supports it, reimburses it. There's existing coding that pays for it. They're valued at somewhere between 1.25 and 1.75. So if a dermatology practice is looking for an exit, the best way to get the most money out of it is to have everything leaning towards the medical dermatology space. They get less money based on the aesthetic space. And for the specific reason that it's controlled by how the markets are, how the economy is going, how the middle class is going, who's going to go to get their BOTOX, remove the wrinkles, add this, remove that. All of those things become skeptical and reliant on inflation in the economy. So this is a perfect period for a lot of these places to get a reset. And so I think that we're seeing that happen. And I have to give credit to our team overall and the flexibility that we show and how we manage our business and being able to go through those things. Imagine just in the last 2 years, we've come through COVID, and now we're going through an inflationary period of time and the reset time where the economics in our space is very, very difficult. And so if you look at where our market is and in our industry, look at all of the companies that are involved on the aesthetic side of dermatology, the laser companies, the end modes of the world, all those and see where they're valued this year versus where they were valued a year ago when the economy was a whole lot better. I think that we're seeing exactly where it is. And then when you look on the oncology side, you had a magnificent company called ViewRay, which came out with the first product that was an MR-based electron beam system that used MRI in real time to treat patients for the regular cancers. That was a company and over $200 million was put into it and it recently filed bankruptcy. And so if you're not managing your business right, I think that you have a severe chance of getting hurt. And all of these things hurt our market in totality. You don't like to see anybody get hurt. But I think that overall, we've done a very, very good job navigating through these headwinds that we're faced with. And I think that we will come out of it doing very, very well.

[Benjamin Haynor, analyst]

Okay. That's also very helpful commentary. And then lastly for me, and maybe this is more of my own curiosity than anything. Utilization for international systems versus what you see in the U.S.? I mean, do the international folks keep these things humming at a greater rate? Or is there any way that you kind of characterize how these things get used internationally versus in the U.S. and what that might do for future purchases?

[Joseph Sardano, executive]

Yes. Internationally, everything relates to the radiation oncology world. It's very seldom that dermatologists are allowed to use this technology in their practices. There's a couple of places in the world. Germany is one of those places. There's a couple of states in Latin America. Brazil is one, but it's very difficult for us to break into, which we will break into. It just cost us a lot of money and a lot of time to get there, but we will get there. But the rest of the world is pretty much a socialized healthcare system. So everything has to go to the radiation oncology department. Acquiring technology and medical devices is not something that they want to do. So a physician who does surgery only in the United States that they consider Mohs surgery a practice. Everywhere else in the world, it's just surgery. And so all of these surgeons that exist, they're walking around the hospitals, mostly 99% of them are employees of the state. They're part of the social welfare state. And so they don't have to buy equipment. They just throw the surgeon on it to cut it up. It's just the way it is. And so it's a much more difficult sale, but it also relates to the fact that if you look at a hospital like Beacon Hospital, Beacon Hospital is a private hospital. It helps pay, they have much more sophisticated people, the wealthier people who can afford a separate insurance go to those hospitals and they get treated better. I know in Canada, they started now practice where you can buy insurance if you are above the poverty line or if you're in the middle, moderate area of the middle class and you can get treated fast. You don't have to wait for 1.5 years to have a CT scan. You might get it in 6 weeks if you're on one of these things. So all of these things are taking place. There's always a group of people that can afford it, and it's always going to go to those people first, but that's what we're seeing in the rest of the world.

[Michael Sardano, executive]

Additionally, Ben, just to add to Joe's comments, they used in China, Vietnam, Taiwan and other places in Asia, kind of experimentally sometimes because of the low dose of radiation. So there's all sorts of future potential for indications for uses based on the clinical studies we know of going over there.

[Operator]

This concludes our question-and-answer session. I would like to turn the conference back over to Joe Sardano for any closing remarks.

[Joseph Sardano, executive]

Thank you, Laura. Thank you once again for your time this afternoon and for your interest in Sensus Healthcare. I'd like to mention that we'll be holding virtual one-on-one meetings during the JPMorgan Healthcare Conference the week of January 8. Please contact LHA if you'd like to get on the schedule. We'll speak with you again when we report fourth quarter financial results in early February. In the meantime, thanks again for joining us today. Happy Thanksgiving, happy holidays to all.

[Operator]

The conference has now concluded. Thank you for attending today's presentation. You may now disconnect.