Good afternoon, and welcome to the First Quarter 2020 Conference. My name is Brandon, and I'll be your operator for today. [Operator Instructions].Please note, this conference is being recorded. And I will now turn it over to Stephanie Prince. Stephanie, you may begin.

Thank you, Operator, and thank you to everyone joining us today. 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 may be made 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. This includes the company's annual report on Form 10-K for the year ended December 31, 2019 and the definitive proxy statement at the annual meeting of shareholders to be held on June 26, 2020. The company assumes no obligation to update the information contained in this conference call.I would now like to turn the call over to Ray Stachowiak, Interim President and CEO. Ray?

Thank you, Stephanie. Good afternoon to everyone joining us today for our first quarter 2020 earnings conference call. I'll begin with some opening remarks, and then ask Craig Tagawa, our COO and CFO, to go through the business and operational results. Alexis Wallace, our Controller, will then provide a financial review. Following that, Craig, Alexis, Ernie Bates and I will open the call for your questions.I'd like to begin by reminding everyone that last month, Dr. Bates retired. I was appointed by the Board as Interim President and Chief Executive Officer. I've had a long, personal and professional relationship with Dr. Bates and have great respect and admiration for what he has built here at American Shared Hospital Services for over 40 years. Dr. Bates is remaining as Executive Chairman of the Board through the end of this year, and I'm glad that he'll continue to be involved as we all work together to advance the company.Dr. Bates and I have a shared interest in capital-intensive, advanced medical technology for hospitals, which are in great need of creative and flexible financing solutions. I founded Shared Imaging in 1994. Shared Imaging is a preferred independent provider of CT, MRI and PET/CT equipment and services. I grew Shared Imaging from $3 million to over $60 million a year in sales. We were profitable.I met Dr. Bates many years ago when he was interested in selling AMS' CT and MRI business. In 2008, I sold 50% of Shared Imaging. At that time, I asked Dr. Bates to join the Shared Imaging board, which he continues to serve. In 2013, I decided to retire as President of Shared Imaging, while serving in that role for over 19 years. As of today, I continue to own 50% of Shared Imaging, and continue to serve as…

Thank you, Ray, and good afternoon, everyone. Since our year-end conference call at the beginning of April, we've been closely monitoring the impact of the COVID-19 pandemic on our business. As expected in the first quarter, there was no material impact on our PBRT volumes due to the therapies focused on cancer patients whose procedures should not be postponed indefinitely. Most Gamma Knife procedures are also for cancer patients. Although, as we said on the last quarter call, approximately 40% of the procedures may be considered nonurgent and possibly subject to delayed treatment.In the second half of March, we did experience some softening of volumes in Gamma Knife, although the impact appeared more modest than we had initially anticipated. Gamma Knife revenue decreased 15.2% for the first quarter compared to the first quarter of 2019. The decline was related to 2 factors: first, we believe that the number of procedures which were consistent with the same period last year were potentially impacted by COVID-19. Procedures increased to 376 compared to 375 procedures in the first quarter of 2019. Procedures in the fourth quarter of 2019 totaled 414. Secondly, we also registered a decline in average reimbursement rates similar to last year's fourth quarter. The lower growth in procedures was magnified by lower overall reimbursement rate in this year's first quarter as compared to the rate we received in the same period last year.First quarter revenue for the proton therapy business increased 2.1% quarter-over-quarter and 12.8% sequentially from the fourth quarter of 2019. Total proton therapy fractions in the quarter increased by 130 or 8.4% quarter-over-quarter to 1,676 compared to 1,546 in the first quarter last year. Sequentially, fractions increased by 65 or 4% compared to 1,611 in the fourth quarter of 2019. Steady increases in awareness and across indications of…

Thank you, Craig, and good afternoon, everyone. Before I begin my prepared remarks, I'd like to call your attention to our first quarter earnings press release that we've issued this morning. If you need a copy, you can access it on our website at ashes.com at Press Releases under the Investors tab.For the three months ended March 31, 2020, total revenue decreased 14.2% to $4,568,000 compared to revenue of $5,321,000 in the first quarter of 2019. First quarter revenue for the company's proton therapy system installed at Orlando Health in Florida increased 2.1% to $1,676,000 compared to revenue for the first quarter of 2019 of $1,642,000.First quarter proton therapy revenue increased 12.8% sequentially from the $1,486,000 reported in the fourth quarter of 2019. Revenue for the company's Gamma Knife operations decreased 15.2% to $2,892,000 for the first quarter of 2020 compared to $3,411,000 for the first quarter of 2019. As Craig spoke about, the decline was due to lower average reimbursement at the company's retail sites as compared to the first quarter last year.Gross margin for the first quarter of 2020 decreased to $1,394,000 or 30.5% of revenue compared to gross margin of $1,137,000 or 36.4% of revenue for the first quarter of 2019. Net loss for the first quarter of 2020 was $135,000 or $0.02 per share. This comparison net income for the first quarter of 2019 of $270,000 or $0.05 per share.Fully diluted weighted average common shares outstanding were 6,153,000 for the first quarter of 2020 compared to 5,886,000 for the first quarter of 2019. Adjusted EBITDA, a non-GAAP financial measure, was $1,822,000 for the first quarter of 2020 compared to $2,710,000 for the first quarter of 2019. The decline was primarily due to lower net income, as well as lower depreciation and amortization due to the company's IGRT equipment, which became fully depreciated in the fourth quarter of 2019.At March 31, 2020, cash, cash equivalents and restricted cash was $3,023,000 compared to $1,779,000 at December 31, 2019. Shareholders' equity at March 31, 2020, was $31,473,000 or $5.53 per outstanding share. This compares to shareholders' equity at December 31, 2019 of $31,811,000 or $5.47 per outstanding share.This concludes the formal part of our presentation. Brandon, we'd like to now turn the call back over to you for questions.

[Operator Instructions]. And we have Anthony Marchese online.

Good afternoon, Ray, and congratulations on your new role. The stock currently trades at 1/3 of tangible book. So I'm curious, from your perspective, you've been on the Board, you've had an association with the company, what is it that, from your standpoint, you believe the reason the discount exists? And more importantly, what are your plans to close the gap? Because it seems to me that a company of this type should not be trading below tangible book.

Thank you for your question. I think that's an excellent question. I'm not sure myself how the marketplace has determined this valuation of, like you said, about 1/3 of our book value. One of the reasons for my investment has, quite frankly, been the fact that there is tangible equity in the company, and it's got substantial book value per share. So I'll let the marketplace make that determination. But I think if we can get a good leadership team in place with the retirement of Dr. Bates, I think we can see what added value we might be able to take the company from where it's at today.

We have Lenny Dunn online.

Yes. This is Lenny Dunn but that's okay. I have -- I actually have a few questions. The book value actually went up a little even though we reported a loss. And maybe, I don't know if Craig is the right person to explain that, but it's clear to me that we're a profitable company, and I'm not quite sure what the difference is. So if you could explain that, and then I have another question.

I'll let Alexis address your question, Lenny.

Yes. So the reason the book value went up is because we had some performance awards that were considered legally issued shares for management. Those were issued back in 2017, and they expired on March 31. So they went back into the plan. So you'll see that our outstanding shares actually went down for the period. And if you take a look at our filing, which should go up later today. There are some detailed discussion in how that's accounted for.

Okay. Well, that explains that to me, and that's fine. And then the other thing is you have some extraordinary legal and other costs that brought down our reported earnings. And I want to understand that those are nonrecurring, so when I model in what I think the company should be worth, I can do that. Are they nonrecurring? And can you break it down just a little bit?

Well, Lenny, I would say is what we said is that these fees and legal fees and other fees were related in part to the COVID-19 pandemic and the transition in senior management. We also expect that a lot of these, hopefully, will be nonrecurring. But we're going to continue to have fees, whether they be legal or consulting as we try and add new services to the company and do some transactions that may be a little more difficult. So although we don't expect these fees to just perpetuate over time, we expect that there may be a new set of fees related to our ability to grow the company further.

Okay. I guess that's sort of an answer. And the -- I guess the COVID-19 situation, at least in my opinion, barring some disastrous reversal seems to be getting a little bit under control and at least the hospitals in our area, Wisconsin and so on, are now doing elective procedures. And I think that there are likely -- that it is likely there'd be a backlog of people that use these "elective procedures." I don't think they're necessarily elective. They're just, I guess, in their wisdom, the government felt they were postponable. But the hospitals don't appear to be overwhelmed anymore with needing beds for the COVID-19 people, so they're moving forward with that. And then I think that's probably going to be the case nationally. So we should be able to resume to a more normal level of procedures for the Gamma Knife. The proton beam business, obviously, is going full blast, but the Gamma Knife business was restrained. Could you either criticize my opinion or comment on it?

Well, I'll comment on it. I think you're correct. Many of the hospitals are now starting to treat elective procedures. I think due to the COVID-19 pandemic, we saw that patients, even though they were already diagnosed and scheduled to receive treatment, they elected to delay their treatment, and that was a factor. Until people feel comfortable coming in, they may delay their treatment a little longer. That's one of the unknowns.And the other impact of the COVID-19 was the fact that patients weren't being diagnosed as in a timely manner because people did not want to go into the hospital to get diagnosed. So that will take a little time to unwind itself as well. But as long as we continue to make progress on the COVID-19 pandemic and people feel comfortable coming into the hospital, I think, hopefully, we will see a return to the more normalcy in terms of our patient treatments, both for the Gamma Knife and PBRT.

Okay. Because we certainly could use normalcy for a lot of reasons. But -- okay, and I could see why you would have all your potential PBRT contracts on hold because hospitals will be unlikely to want to make a major commitment until they can clearly see the future. Is that an accurate statement?

Yes. As we've mentioned before, and as I mentioned on this call in my prepared remarks, the APM model has brought in some uncertainty for PBRT. So I think we're waiting for that to clear up as well.

Okay. And I'd like to also comment that I appreciate Dr. Bates' leadership. I've only been involved with the company maybe a little over 20 years, but not the full 40 that he was around. So I just wanted to comment on that, too.

Thank you, Lenny.

We have Tony Kamin on line.

Question, following a little bit on the proton beam. I think what strikes out to me is that the Orlando Center has had really, really great results consistently since it was installed. And I know that gets subsumed a little bit by the still larger Gamma Knife business. And an also sort of a fact, I think, people forget, is that you do have deposits down, I believe, on 2 more Mevion. So I guess my curiosity is having really good results on the PBRT, understanding that in this environment, hospitals may be more cautious, at the same time, I'm wondering, does this sort of the COVID thing with pushing interest rates down as a side effect, what do you look at the finance environment now? Does it -- is there some ability perhaps to access finance in better, more creative, more inexpensive ways for AMS? Or is the fear factor of people just not wanting to do anything in this environment overwhelming that?

I'll let Ernie answer that from the business development sales cycle standpoint.

Tony, this is Ernie Bates. It's an excellent question. If anything, what we're finding is given the uncertainty from the pandemic, we are finding that hospitals and other clinical partners are actually looking for creative financing solutions that they can acquire this capital-intensive equipment. So as Craig pointed out, yes, a lot of decisions are being placed on hold or in suspension given the uncertainty. But there are still discussions that are taking place with these centers that are interested in deploying this capital-intensive technology. And we're having those discussions. So in answer to your question, I would say that we are that alternative financing solution for many, many centers.

Yes. That's great. And then I think even though it was mentioned on a prior conference call, I think this was the first time in the press release that MR/LINAC was mentioned. And I do -- it does seem like a pretty exciting extension of sort of the product line that AMS can offer. But just curious, it was in the press release today, so I assume the company feels that this is an area that could be potentially good one for growth. So maybe if you could comment on that.

Ernie, you want to comment on?

Sure. Yes, we do, Tony. I think I may have mentioned on previous calls that there are approximately 4,000 LINAC accelerators here in the United States. And roughly 1,000 of those units need to be replaced every 1 to 2 years. So there's a fairly high turnover rate. And given what we're seeing, as Craig mentioned, with the radiation oncology, APM and episodic care, we're finding that clinical providers are finding -- are trying to find ways to best capitalize on these opportunities to provide care in a bundled environment. And what's unique about the MR/LINAC is that it provides the ability to reshape the radiation treatment dose based on daily changes in the shape, size and position of the tumor and surrounding healthy anatomy. And the importance of that is that it enables an accurate dose delivery with real-time visualization of the tumor. And that's something you can't just do with a LINAC alone. The MR/LINAC enables that capability to basically see what you're treating. And with that, that enables clinicians to potentially provide higher and effective radiation doses with fewer fractions. And so as I mentioned earlier, with bundled payments, if you're able to provide fewer fractions and receive reimbursement at a case rate, if you will, it's a big advantage to the clinical provider to be able to do that. So we're very excited about the opportunities with MR/LINAC.

Tony, this is Ray. I'd just like to reinforce that a bit, too, because Dr. Bates really started the company's entry into looking at this technology, into MR/LINAC. And I'd just like to make sure that our investors understand that it fits in -- this product fits into our long-term strategic vision. It's a very capital-intensive product. Hospitals out there are searching for creative and flexible financing solutions. And I do think American Share can be in that marketplace.

Great. And I understand your longtime partner, Elekta, actually is a manufacturer of those machines. Is that correct?

That's correct.

We have Nick Dorico [ph] on line.

I feel, to continue on with Tony's first few questions about the proton, I feel that, that will be a big driver of AMS. So what I'd like to find out is what's your opinion about the industry trends on proton regarding insurance companies more -- allowing to pay for claims, growth and interaction that we've seen in the Orlando Health, but what about across the country? How many units out there? I'll pause on that because those are my first two questions.

Well, I'll answer the question in terms of the indications. I think we are seeing that Orlando, they're treating a fair number of pediatric patients and some of the more difficult cases, as well as they do treat prostate cases as well. But they have a very complex mix of patients that they're treating. And I think for Medicare purposes, there have been really no issues in terms of getting reimbursed. And on a commercial insurance basis, there are certain companies that they know will reimburse for certain types of indications that they work with. And they build up a rapport over time with the various insurance companies as to really how their patients can benefit from protons as opposed to having conventional radiation therapy. So I see that it's an educational process with the insurance companies. And I think that's happening over time, and I think it's getting better and better.

Okay. And as for the margin versus protons versus photons, what is -- what are the margins there?

We haven't disclosed that individually. So we don't break it out at this point.

I see. I believe there was a couple of units, a couple of places in California that the company was aggressively looking at last year. Is there an update to that? I know it's on hold and whatnot, but what type of discussions? Where we are? Are we at 50% through? 60%? Like can you give a little bit more color on that?

I'll let Ernie answer that question as to where we're at in Southern California.

Nick, we are continuing to have discussions with a group in Southern California. One thing that has to be understood about protons is that it is a very long and complex sales cycle. Oftentimes, these sales cycles take more than 2 to 3 years. So we have been engaged for some time in Southern California. But there is still very strong interest in the clinical community for development of a single room center. So we will continue to keep you apprised as we work on these opportunities there.

Nick, one thing that I also will mention, just with respect to centers in the United States. There are over 35 proton centers in the U.S., and over the past couple, I would say, 2 years, the vast majority of those new sites have been single room or other compact solutions, meaning no more than 2 rooms. And Dr. Bates believed, many years ago, that the future of proton or the future of the adoption of proton being radiation therapy would not be based on continued development of very expensive 4, 5 room centers that were built at the cost of over $250 million, in many cases; that we would see more widespread adoption of single room solutions, which are far less capital-intensive with much lower ROI requirements. And that's exactly what we've been seeing. And Mevion, as a maker of this single room compact solution, they just made recent announcements, Letters of Intent, in potential new operations in Danbury, Connecticut and also in Texas. So we're continuing to see movement in that direction.

[Operator Instructions]. Okay. Looks like no further questions at the moment. I will now turn it back to Ray for closing remarks.

Thank you, everyone, for joining us today. I'm really excited to be here in my new role, and look forward to adding value to AMS. Please contact us if you have any questions before the second quarter conference call in mid-August. Stay safe, stay well and have a great week. Goodbye.

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