Welcome to the Fourth Quarter Earnings Conference Call. My name is Paulette, and I will be your operator for today's call. At this time, all participants are in a listen only mode. Later we will conduct a question-and-answer session [Operator Instructions]. Please note that this conference is being recorded. I will now turn the call over to Vivian Cervantes of Investor Relations. You may begin.

Thank you, Operator. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that we may make on this conference call about future expectations, plans and prospects for the company, constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors, including those discussed in the company's filings with the SEC, including the company's annual report on Form 10-K for the year ended December 31, 2017, its quarterly report on Form 10-Q for the three months ended March 31st. June 30th and September 30, 2018, and the definitive proxy statement of the Annual Meeting of Shareholders held on June 14, 2018. The company assumes no obligation to update the information contained in this conference call. I would like to now turn the call over to Dr. Ernie Bates, Chairman and Chief Executive Officer.

Thank you, Vivian. Good afternoon, everyone. Thank you for joining us on our fourth quarter and year-end 2018 earnings conference call. This afternoon, Craig Tagawa, our Chief Operating and Financial Officer, will walk through business and operational results. Alexis Wallace, our Controller, will then provide our financial review. Following that we will open the call for your questions. We are focused on our proton therapy business, and are pleased to report continued system utilization gains with Orlando Health, UF Health Center, our single room proton center. And as we mentioned during our third quarter earnings conference call, we're hard at work extending our footprint. We're making progress with talks on proton units in Southern California, as well as our hometown of San Francisco. We plan to provide timely updates on these activities. Turning to our Gamma Knife business, we anticipate upgrading at least three of our Gamma Knife units to Icon to allow treatment of larger tumors for incremental revenue opportunities in the next 12 months. With that, let me now turn the call over the Craig.

Thank you, Dr. Bates. Good afternoon, everyone and thank you for joining us. Our proton therapy business remains in a positive growth trend and we are pleased to report approximately 22% annual revenue growth in the fourth quarter and for the full year 2018. Driving profitable growth as the increasing number of patients treated Orlando Health with increasing indications treated and favorable reimbursement rates. Therefore, the number of proton fractions continue to rise and was up 339 or 28% to 1,544 during the quarter. Orlando Health continues to expand its use of the proton system aided by increased awareness of the clinical benefits of this advanced therapeutic technology. We believe proton therapy represents a significant long-term growth opportunity for us. Turning to the Gamma Knife. While we saw some softness in total procedures year-over-year on lingering trends from our transition to two centers in Lincoln, Nebraska and Lima, Peru, we also measured a sequential improvement in volume from the third quarter and attribute a portion of the 16% decline in annual revenues of approximately $320,000 in the fourth quarter to an unfavorable shift in payer mix at the company's retail sites. While still profitable, we still saw more Medicare first private pay patients in the quarter. Gamma Knife procedures in the fourth quarter declined by 28 or 7% to 350 versus the comparable period prior year. On a sequential basis, we saw an improvement in procedure volumes with third quarter 2018 procedures at 337 or 5%. We are optimistic as clinical turnover in certain sites normalize. In addition, we look forward to contributions from Merrillville, Indiana, which began treating patients in January 2019. Finally, as Dr. Bates mentioned, we anticipate upgrading at least three of our Gamma Knife units to Icon in the next 12 months, allowing these centers to target larger tumors for incremental revenue opportunities. I'll turn the call over to the Alexis for a detailed financial discussion.

Thank you, Craig and good afternoon. Before I begin my prepared remarks, I would like to call your attention to our fourth quarter and year-end 2018 earnings release results issued this morning. For the three months ended December 31, 2018 revenue decrease 6.2% to $4,770,000 compared to revenues of $5,084,000 for the fourth quarter of 2017. Net income attributable with the company for the fourth quarter of 2018 was $178,000 or $0.03 per share. This compares to net income attributable to the company for the fourth quarter of 2017 of $1,418,000 or $0.24 per share, which included an income tax benefit of $1,546,000 attributable to the revaluation of the company's federal and state deferred tax liabilities, following recently enacted federal tax legislation and the full write-down of the company's investment and equity securities of $579,000. Fourth quarter revenues for our proton therapy system installed at Orlando Health in Florida increased 21.5% from $1,419,000 compared to revenue for the fourth quarter of 2017 of $1,158,000. Revenue for the company's Gamma Knife operations decreased 16.1% to $3,102,000 for the fourth quarter of 2018 compared to $3,697,000 for the fourth quarter of 2017. The decline was due to fewer procedures and an unfavorable payer mix at the company's retail sites. Gross margin for the fourth quarter of 2018 decreased to $1,565,000 or 32.8% of revenue compared to gross margin of $2,184,000 or 43% of revenue for the fourth quarter of 2017. This reflected a decline in Gamma Knife revenue and an increase in cost of revenue, primarily attributable to the initiation of maintenance and service costs for the company's proton therapy system at Orlando Health. Net income for the fourth quarter of 2018 was $178,000 compared to net income of $1,418,000 in the fourth quarter of 2017. Non-GAAP adjusted net income was $178,000 for the fourth quarter of 2018. This compares to non-GAAP adjusted net income net of the tax benefit from tax reform and the loss on the write-down of the company's investment in equity securities of $451,000 in the fourth quarter of 2017. Adjusted EBITDA, a non-GAAP financial measure, was $2,346,000 for the fourth quarter of 2018 compared to $2,673,000 for the fourth quarter of 2017. A reconciliation of GAAP to non-GAAP financial measures is provided in our fourth quarter of 2018 results. Cash and cash equivalents and restricted cash was $1,792,000 at December 31, 2018 compared to $2,502,000 at December 31, 2017. Shareholders' equity at December 31, 2018 was $31,048,000 or $5.23 per outstanding share. This compares to shareholders' equity at December 31, 2017 of $29,885,000 or $5.23 per outstanding share. Operator, I'd like to turn the call back over to you for questions.

Thank you. We will now begin the question-and-answer session [Operator Instructions]. And our first question comes from Robert [Baki], Private Investors. Please go ahead.

Yes, Dr. Bates, I'm calling with reference to our investment in Mevion. I'm wondering, and I'm with a private company. But as Mevion doing well, do they help us obtaining work or we will get work to them, what is the relationship between the two companies?

We're working together.

Our next question comes from the Lenny Dunn from Mutual Trust Company. Please go ahead.

It's my understanding that we've been close to getting some new proton contracts, and it always seems like in front of our nose but not quite there. How close are we now?

I can answer that, Lenny. We're very close to getting a contract in Southern California. I can't give you the name of the hospital. But hopefully, we will have that contract concluded within the next two to three months.

And do you think it will take that long to get it signed or is that one getting started or…

Well, we have to get the documents signed, but there's already been a tentative agreement. But we have to get the document signed before we can name the hospital…

And do you think that it’ll take that long just to get the document signed, or you get it financed or…

Well, Craig thinks it will. Craig, do you want to comment on that?

Yes, these are -- because the dollar amounts of these types of transactions, the documentation takes a little longer than you would expect. So, I think we want to be safe and not over promise as to when it will be completed.

Well, this is almost the end of March so certainly by the end of May?

Well, I was hoping that we would by our next earnings call, we could announce it but Craig seems to think that's too early.

For your next earnings call would be the end of June, I wonder when it would be…

It'd be probably in the May…

Yes, I’ll be the first week of May…

And is there anything else is close to completion?

I would say, as we mentioned in the press release, Lenny that we are diligently working on a project in San Francisco, which we feel very good about, but these are very complex transactions. And until you obviously get something signed, it's not definite. But we feel good about this transaction based on who we're partnering with.

We're also looking at a facility in upstate New York, because that will require a certificate of need. But that also looks very promising.

So you could have sometime in the next four months or so, three of them signed?

Well, some of these, as Dr. Bates mentioned, require a CON, so those take a little longer to get. So what I would say is we're working on a number of them but I think our priorities to try and close the one in Los Angeles and San Francisco first.

And with the Orlando facility doing so well, do you think there's a chance for really hospital to put in second one before somebody else completes the competing one in?

We've been talking to the hospital about putting the second one in and we continue to do that. We've had very consistent, I would say, volume and reimbursement at Orlando. So we’re very pleased with it and I think it's a matter of time before we mutually agreed to do a second unit in Orlando.

And with the three Gamma Knife that you are upgrading, when do you anticipated having those upgrades?

Probably in the third and fourth quarter of this year is what we're targeting.

And do you plan to do any type of road show in the near-term?

Yes, we are. I don't have a date yet.

Because we certainly could use some exposure, stock is selling for approximately half of book value with it being up $0.30 since today. So, we do need to have exposed what we're doing to new investors and particularly with the likelihood of having some proton signings, and this year three of them. And additionally, upgraded to get three Gamma Knife so it's a pretty good story to tell.

Yes it is. I think when you do the Sidoti conference and also one down in Southern California.

Okay. And when is the Sidoti conference?

I think it's in the fall. I don't have the exact date, but I'll let you know.

Our next question comes from Tony Kamin from Eastwood Partners. Please go ahead.

I guess on the Icon upgrade, you mentioned that it would potentially give you some incremental revenues that you don't get now. Can you talk about the upgrade of Icon, what it really lets you do that that those sites are not doing now? And what your, when you say incremental revenues, what magnitude could we potentially be talking about?

Well, there's two things that are different with the Icon upgrade. It has a cone beam CT attached to the Perfexion. So it's not a forklift upgrade at the Perfexion, all our units are currently Perfexions and are upgradeable to Icon. So we're going to roll some of the Icons out at some of our larger volume sites first. And there's -- one of the differences with the Icon, it allows you to do non-frame based procedures. You could use a mask. So, by doing on the larger tumors, you are not able to necessarily treat them in one fraction, because the dose that you would have to provide. So by having a masked based system, you're able to provide up to five fractions or five treatments sections with lower doses that on a cumulative basis equal of the large enough dose to kill the tumor. So we think there are larger tumors that we can do. The other thing that the Icon does, it allows more flexibility for the clinicians and we think that will also help in terms of volumes. The physicians can now, with the Icon, have the ability to do a MR several days in advance, use that MR and do the treatment planning. So the day of treatment, they would just do the accounting CT scan on that patient and co-merge that image with the treatment plan that’s already been completed. And if they match up, there's no further work and they can do the treatment. Currently, they would do -- put on a frame and then do an MR at the day of the treatment. So this really streamlines it and allows for the physicians to use their time more efficiently. So, we think that may help us in terms of getting additional volumes as well by being more efficient and taking less of their time. So from the both of those, we think we will get more volume. Elekta believes that you can get 20% to 30% more volume. But for us, we don't want to promise that those are going to be what we're going see, but we're testing it out at some of the sites that we think are the most appropriate and will give us the best hands on data to see how far will take the Icon.

And then Dr. Bates, a question more on the macro landscape for proton. I get the sense that in terms of the acceptance of it, whether it's through clinical trials or just treatment modalities becoming more favorable or maybe it's just insurance companies that the hostility that was there from a cost basis and not proven yet basis on proton beam several years ago, is greatly changed and seems to be going from that attitude towards this really is the right thing to treat. And so, I wanted to ask you about that. And then if in your opinion that will likely make more hospitals interested in making that transition to offering proton beams?

You're correct, there is now greater utilization. And also because the costs of cancer drugs have been increased so dramatically, it's making now more sense to use protons, particularly since we can get the same results or better. So you're correct. Utilization is going up. We're able to treat more tumors in different sites in the body than what we were able to do before.

And do you think that has -- which is pretty logical that that happening is now getting more and more hospitals to seriously consider with their needs to offer this?

Yes.

Our next question comes from Anthony [Marchese], which is a Private Investor.

Two questions, one, we're pretty much at the end of the first quarter. Can you shed any light on how you're feeling about the quarter or the same factor? I guess the question is that the same factors that affected you -- first question, same factors that affected you in the fourth quarter potentially going to impact you in the fourth quarter with respect to part of the business?

I think, I just want to be consistent with what we've always done as a practice and that's not give guidance. So, I would defer on that question at this point.

Second question would be, it was my understanding that there was an East Coast Hospital, an Ivy League hospital that was considering a proton beam machine. Any idea whether that's gone anywhere?

Yes, we were not selected on that in that RFP.

We went to or they do it themselves?

I'm under a confidentiality, so I really can't speak to it.

Talking about Yale or Harvard, no we do not get that. But we were told if it doesn't work out with the people that they've chosen, they'll come back to us.

[Operator Instructions] And we're showing no further questions at this time. I will now turn the call back to back to Dr. Bates for closing comments.

Thank you again for joining us this afternoon. In summary, we remain confident and have outlook at our profitable businesses to particularly focus on driving our proton therapy operations. Volume and reimbursing trends in proton therapy at our Orlando Health facility continue to support our growth expectations, and we're focused on expanding our footprint. We are in talk we placed proton units in California, including our hometown of San Francisco. We anticipate upgrading at least three of our Gamma Knife's to Icon to the next 12 months to expand our market to include large tumors and continue the plans to add to our Gamma Knife centers. We look forward to providing timely updates on our activities and remain focused on driving steady gains in revenues and earnings performance. We look forward to speaking with you in our first quarter 2019 conference call in May.

Thank you, ladies and gentlemen. This concludes today's conference. Thank you for participating and you may now disconnect.