Sensus Healthcare, Inc. — 2021 Form 10-K
Reporting period: Fiscal year ended December 31, 2021; comparisons are with fiscal 2020. This is an annual filing, not a standalone fourth-quarter report. Financial amounts below are in U.S. dollars; unless otherwise noted, figures are in millions.
Business context
Sensus is a medical-device company focused on superficial radiation therapy (SRT), primarily through its SRT-100 product line for non-melanoma skin cancer and other skin conditions. It also earns service revenue and operates a Florida mobile aesthetic-laser rental business. At year-end, its installed base was 564 units in 18 countries. The United States accounted for 95% of 2021 revenue.
Financial performance and liquidity
| Metric | 2021 | 2020 |
|---|---|---|
| Revenue | $27.042 | $9.577 |
| Product revenue | $22.217 | $5.449 |
| Service revenue | $4.825 | $4.128 |
| Gross profit | $16.988 | $5.249 |
| Gross margin | 62.8% | 54.8% |
| Operating income (loss) | $4.120 | $(8.234) |
| Net income (loss) | $4.119 | $(6.836) |
| Basic and diluted earnings (loss) per share | $0.25 | $(0.42) |
| Net cash used in operating activities | $(0.286) | $(0.434) |
Revenue rose 182%, primarily as sales activity recovered from COVID-related disruption in 2020. Operating expenses declined to $12.868 million from $13.483 million: selling and marketing and R&D decreased, while general and administrative costs increased. Net income included no 2021 acquisition or loan-forgiveness gain; 2020 included a $0.588 million bargain-purchase gain and $0.758 million PPP loan-forgiveness gain. The 2021 income-tax provision was zero, with a full valuation allowance maintained against deferred tax assets.
Cash and cash equivalents were $14.519 million at year-end, down from $14.907 million. Total current assets were $31.245 million and current liabilities $5.963 million. Accounts receivable increased to $12.130 million from $3.776 million. Stockholders’ equity was $26.015 million. There were no borrowings on the revolving credit facility; the remaining PPP loan balance was $51,000, classified as current. The company reported compliance with its credit-facility covenants.
Material changes, outlook, and risks
- Management said it achieved profitability for the first time in 2021 and aims to maintain profitability while controlling expenses and continuing marketing investment. It provided no specific revenue or earnings guidance.
- Management cautioned that the 2022 outlook depends in part on the continuing effects of COVID-19 and international trade issues, including potential effects on China. The duration and financial impact of the pandemic could not be reasonably estimated.
- A single U.S. customer represented approximately 57% of 2021 revenue, compared with 40% in 2020, and 94% of year-end accounts receivable, compared with 63% in 2020. This concentration creates significant customer and collection exposure.
- On February 25, 2022, after year-end, Sensus sold the assets comprising its Sculptura product for $15 million in cash. The filing reports a net book value of approximately $1.6 million; the transaction’s full financial effects are not included in 2021 results.
- Other principal risks include reimbursement availability, dependence on the SRT-100 product family, competition and technology changes, reliance on a preferred supplier for major components, regulatory compliance, cybersecurity, and intellectual-property protection.
- The company disclosed a Department of Justice investigation, begun in 2015, concerning a physician’s Medicare billing and possible company involvement relating to reimbursement codes. Sensus disputes wrongdoing, has cooperated, and says it cannot estimate potential costs; no liability was recorded for this matter.
- The auditor issued an unqualified opinion on the financial statements and reported no critical audit matters. Management concluded disclosure controls and internal control over financial reporting were effective at December 31, 2021; the auditor did not attest to internal-control effectiveness.
Most important facts for investors to verify
- Whether the 2021 recovery in device sales and gross margin is sustainable, and whether profitability continues in 2022.
- The significant customer’s continued purchasing and payment performance, given its revenue and receivable concentration.
- The cash proceeds, final accounting treatment, and strategic consequences of the post-year-end Sculptura sale.
- Remaining PPP loan repayment status and the availability and terms of the revolving credit facility, which was scheduled to mature April 1, 2022.
- Any material developments in the DOJ inquiry, reimbursement policies, COVID-related operating conditions, or international trade restrictions.