American Shared Hospital Services (AMS) Q4 2012 Earnings Report, Transcript and Summary

Good morning, everyone, and welcome to the Fourth Quarter and 2012 Financial Results Conference Call for American Shared Hospital Services. [Operator Instructions] I would now like to turn the call over to Dr. Ernest Bates, Chairman and Chief Executive Officer; Craig Tagawa, Chief Operating and Financial Officer; Norm Houck, Controller of American Shared Hospital Services; and Ernest R. Bates, Vice President, Sales and Business Development. Mr. Tagawa, you may begin.

Thank you, John, and thank you, all, for joining us for AMS' Fourth Quarter and 2012 Financial Results Conference Call and Webcast. 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 Securities and Exchange Commission, including the company's annual report on Form 10-K for the year ended December 31, 2012 and the definitive proxy statement for the annual meeting of shareholders held on June 7, 2012. The company assumes no obligation to update the information contained in this conference call. As you know, the recently enacted American Taxpayer Relief Act of 2012 or ATRA included a provision, Provision 634, that reduces Medicare reimbursement for Gamma Knife services by approximately $4,000 per treatment compared to 2012 Medicare reimbursement levels. Provision 634 is effective beginning today. In the 3 months since ATRA's enactment, AMS and other affected parties have engaged lobbyists and attorneys and have worked vigorously to have this provision rescinded or modified. While we have not yet been successful, we will continue to fight for rescission or modification of Provision 634. This provision was enacted under the assumption that Gamma Knife and linear accelerator-based radiosurgery treatments are clinically equal, and therefore should be reimbursed by Medicare at like amounts. This is contrary to the decision made by the Centers for Medicare and Medicaid in November 2012, just a few months ago, and prior to Provision 634, that the different reimbursement rates assigned to the Gamma Knife and linear accelerator-based radiosurgery devices were appropriate. But just as important, we strongly disagree that the 2 technologies are clinically equal. There have been no randomized studies that demonstrate that Gamma Knife and linear accelerator-based radiosurgery are clinically equivalent. Additionally, there is a significant difference in how these technologies are reimbursed by Medicare. Unlike the Gamma Knife, linear accelerator-based radiosurgery devices are reimbursed for every treatment session, up to 5 treatment sessions. And this is the key point. Since we believe a majority of linear accelerator-based radiosurgery devices treat patients in multiple sessions, the majority of linear accelerator-based radiosurgery treatments are more costly than Gamma Knife treatment, even prior to ATRA. This is why we continue to believe that once all of the facts are thoroughly analyzed, the Gamma Knife's unequaled, clinically documented patient results and cost effectiveness will result in the rescission or modification of Provision 634. We believe our arguments are compelling, and we'll fight for what we believe is the proper outcome. But that is not all we are doing. We also are implementing an aggressive program to lower our costs. Among other steps, this program includes the subleasing of our office space, payroll reductions and the refinancing of existing equipment loans and leases. We expect the reimbursement rate cut to reduce revenues at AMS' 5 U.S. retail Gamma Knife sites, where the company receives a percentage of the hospital's Medicare reimbursement. We do not know what, if any, impact the change in reimbursement might have on our remaining 12 U.S. centers, where AMS' revenue per procedure is contractually fixed with the hospital. As a result of this uncertainty, we are unable to accurately predict the effect that reduced Medicare reimbursement will have on our financial results. To try to put things in perspective, if AMS' business mix in the last 9 months of 2012 -- or 2013 is identical to that in the last 9 months of 2012, we estimate that revenues would be reduced by approximately $500,000 to $650,000 and pretax income by approximately $300,000 to $400,000 during the period. Please note, however, that actual results could vary materially based on many factors, including payer mix volumes, the impact, if any, from the company's other contracts, increases in treatment volume, our continuing mitigation efforts and the results of our cost reduction program. Even as we work to mitigate ATRA's effects and reduce costs, we are moving forward in our Gamma Knife business. We continue to see opportunities to place systems at new and existing AMS sites both in the U.S. and internationally. This past January, the government of Turkey approved reimbursement under the country's health insurance program for treatment with the Perfexion system at Florence Nightingale Hospital Group in Istanbul supplied by AMS through our EWRS Turkey subsidiary. Our newest Perfexion site, Sacred Heart Health System in Pensacola, Florida began treating patients last week. The installation of our 14th Perfexion system at Northern Westchester Hospital in Mt. Kisco, New York is scheduled for the second quarter of 2013. These recent additions to our Perfexion portfolio demonstrate that neurosurgeons and radiation oncologists who know the competing technologies best continue to demand this unequal stereotactic radiosurgery system for treating cancers and other diseases of the brain. Turning briefly to our proton therapy business, construction at MD Anderson Orlando's dedicated proton center is underway. We continue to expect this facility to begin treating patients next year. As we announced previously, AMS has received a firm financing commitment for the MEVION S250 Proton Therapy System we will supply for this $25 million facility. FDA approval of the Mevion device was received last year. The MD Anderson Cancer Center Orlando will be the model for additional proton centers we are developing. AMS owns approximately 1% of Mevion Medical Systems, the developer of the MEVION S250. In addition to the Orlando center, we are developing proton therapy centers in Boston and Long Beach, California, which are expected to employ the Mevion device. We believe our equity investment in Mevion will turn out to be a valuable asset for AMS and our shareholders. AMS is also developing a 1-room proton therapy center in Dayton, Ohio. Now I will turn the call over to Norm Houck to review our financial results. Norm?

Thanks, Craig. For the 3 months ended December 31, 2012, medical services revenue decreased 8.3% to $4,125,000 compared to medical services revenue for the fourth quarter of 2011 of $4,500,000. Net income for the fourth quarter of 2012 was $5,000 or $0.00 per diluted share. This compares to net income of $244,000 or $0.05 per diluted share for the fourth quarter of 2011. The number of procedures performed on Gamma Knife Perfexion systems supplied by AMS increased 8% for the fourth quarter and 8% for 2012 as a whole compared to the same periods of 2011. The Perfexion system AMS supplied to Florence Nightingale Hospital Group in Istanbul that began treating patients in May contributed to this growth. The total number of procedures performed in AMS Gamma Knife business, including Gamma Knife and Gamma Knife Perfexion procedures, increased 1.9% for the fourth quarter and 7.1% for the year as a whole compared to the same periods of 2011. Revenue decreased despite the increase in procedure volume primarily due to variations in the mix of procedures by location. Medical services gross margin for the fourth quarter of 2012 decreased to 37% compared to medical services gross margin of 39.5% for the fourth quarter of 2011. Selling and administrative expenses for the fourth quarter of 2012 increased to $952,000 compared to $840,000 for the fourth quarter of 2011. This increase was primarily due to unusually low legal and public reporting related expenses in fourth quarter of 2011. Operating income for the fourth quarter of 2012 was $56,000. This compares to operating income for the fourth quarter of 2011 of $325,000. For the 12 months ended December 31, 2012, medical services revenue decreased to $17,048,000 compared to medical services revenue of $17,237,000 for 2011. Total revenue for 2011 of $22,221,000 included revenue from the sale of a Perfexion system to Lehigh Valley Hospital of $4,984,000. This transaction resulted in pretax income of $844,000, which was recognized in the third quarter of 2011. Net income for 2012 was $38,000 or $0.01 per diluted share. This compares to net income for 2011 of $506,000 or $0.11 per diluted share, which included income from the Lehigh transaction. Cash flow, as measured by earnings before interest taxes, depreciation and amortization or EBITDA, was $2,067,000 for the fourth quarter and $8,306,000 for 2012. This compares to EBITDA of $2,493,000 for the fourth quarter and $9,265,000 for 2011, which included income from the Lehigh transaction I mentioned previously. On the balance sheet at December 31, 2012, cash, cash equivalents and certificates of deposit were $10,564,000 compared to $11,580,000 at December 31, 2011. Shareholders' equity at December 31, 2012 was $24,830,000 or $5.39 per outstanding share. This compares to shareholders' equity at December 31, 2011 of $25,171,000 or $5.46 per outstanding share. Craig?

Thanks, Norm. Now we'd like to open the call to questions. John, we are ready for the first question.

[Operator Instructions] Our first question comes from Steve [indiscernible] from [indiscernible] Investments.

You talked about you're taking steps to have the ATRA provision rescinded. Could you provide more color on that, what exactly you're doing?

I think what we're doing is we are educating the -- many of the lawmakers as to, really, the differences on how these technologies treat patients. If you look at, as we've mentioned in our releases, how linear accelerator-based radiosurgery devices treat, the majority of their treatments are done with multiple fractions. And we believe this is close to 4 fractions per treatment. The Gamma Knife treats in 1 fraction. So if you look at the costs to CMS and you take into account the costs of fractionation, the costs of the -- just the delivery codes, not taking into account any ancillary codes, and if you look at the 2012 rates, they are very close in amount. So I think what we're looking at is if just to say that the rate adjustment for the Gamma Knife is unfair in that they were previously, if you take into account how these 2 technologies are reimbursed in an actual manner, that they were already being reimbursed very, very similarly in amount. And that's why we feel that the reduction to the Gamma Knife was unjustified.

Steve, it's our feeling, this is Dr. Bates, is that we were not treated fairly here. The Gamma Knife was not treated fairly, and our partner, Elekta, feels the same. The average LINAC course for a brain was about 2.41 fractions when you look at all brain episodes. And if you look at the multi-fraction episodes, it's 3.89. So clearly, the patients are being inconvenienced more. They're coming back at least 4x for a treatment that could be done at 1x with the Gamma Knife. And the average reimbursement for both of these machines is close to $7,000. And there wasn't a big difference yet. We've been harmed by reducing us by $3,000 and not doing the same for the LINAC. So there's really no cost savings here. And we're collecting the data. And we feel very strongly by the end of the year we will have enough data that we can give the lawmakers to show that if you look at the data, the savings that they're predicting of roughly $400,000 over 10 years is not going to happen. If anything, the cost may go up. And hopefully, we'll have that data in the next few months.

Okay. That's -- you've presented a compelling argument, but what exactly has been done to reach out to the lawmakers to tell your story? Or has that not been done yet?

That has been done, but it's an ongoing process. Remember, we only had a couple of months to gear up our efforts, and we've hired lobbyists. Some of our -- the people that we are working with have also hired lobbyists and attorneys, as we mentioned previously, to really the staffers of lawmakers to really educate them as to the fine points of how the technologies treat from a clinical standpoint so they can understand the reimbursement aspects and the impact on CMS of the various methods that each of these technologies are reimbursed and how they actually treat patients.

I want to point out again, Steve, this is just an unprecedented action. CMS just opined in November that the reimbursement for the Gamma Knife, based on its cost to provide the service, was appropriate and right. This has never been done before, that you could go to 1 legislature who'd step in and introduce a law that would bypass a system that's worked for many, many years and that clearly is a fair system. What has been done here is unfair.

Agreed. Going onto another question. Immediately after this came out, this is in early January, a Gamma Knife center, I believe it was in Spokane, they came out and said that if this sticks, that they may go out of business because they just won't be able to make enough money doing Gamma Knife treatments. Do you see this happening if it does stick?

Well, we're not going out of business. We're in it for the long run. Elekta's not going out of business. We both strongly support the Gamma Knife, and we're going to be around with the Gamma Knife for many, many years. And by the way, I think that, that center retracted that statement.

Okay. All right. Now ATRA, it cut Medicare reimbursements. Do you also see cuts from insurance company reimbursements for non-Medicare treatments?

We don't at this point, mainly because the rates are not generally tied to Medicare.

And historically, private payers have always paid more for services than Medicare has, so hospitals are used to that.

Okay. And if ATRA does stick, and you now have Gamma Knife systems that will be getting a much lower reimbursement for Medicare treatments, do you anticipate a material reduction in the value of the Gamma Knife systems on your balance sheet?

We'll have to look at that, as that situation arises. Of course, you're talking about whether they're impaired or not. From a gas standpoint, we will have to look at that if it sticks.

Norm, do you want to explain how that would different from Gamma Knife to Gamma Knife?

Well, sure. I mean, each one of our sites is accounted for separately, and some obviously do better than others. So we'll have to look at each site on an individual basis to see whether it -- we see impairment tests or not.

Okay. Now it's been -- since -- it's been 3 months since ATRA occurred. Can you provide any color on what will happen to the revenues at the other 12 centers where you get paid a contractually fixed amount?

We can't -- we cannot at this point. We're still uncertain as to what the effect will be. We'll know more when we report the -- probably the first quarter's results.

Okay. Let's see. Moving on to the proton beam centers. On the 8-K -- or the 10-K, I forget, you said that the construction of the first MEVION S250 was taking longer than expected. Can you provide some color on that?

Yes. I think you're referring to the first unit at Barnes Jewish.?

That's right, yes.

And they are continuing to commission the unit and to make sure that it's -- that all the beams are aligned. And we had expected the first treatment to be a little earlier in the year. But I think at this point, it's probably going to be sometime in the third to fourth quarter this year the first treatment will be completed. There's nothing that we know of that would tell you there's a significant problem other than this being the first unit, and the first unit always takes longer than you expect.

So hopefully, we'll see the first patient treated in September of this year.

Yes, that's what we're told.

Okay. And you talked about the center in Florida as having a firm financing commitment. For the other 3 proton beam centers, do you have firm financing commitments? Or where do they stand right now?

No we do not yet -- we're starting to work on lining that up at the present.

We're really confident that we will get financing for those machines. We've been meeting with several institutions that have expressed their willingness to look hard at it and consider financing it. And what everyone is waiting for is for the first patient to be treated at the Barnes facility. And then I think you'll see things really opening up. We were in New York recently, talking with a firm that is looking at possibly financing multiple machines for us once it’s issued and the first machine up and running. I think what is very clear, if you look at this industry now, is that our position of only doing single rooms was a sensible and economically feasible thing to do. A lot of these machines that are now 4 rooms are not getting the numbers that they had expected. If they were at 1 room, they all would be doing remarkably well.

Okay. Going back to a question that was asked last quarter. It was mentioned twice. Why not hire an additional sales person or people to go out and sell the Mevion or other proton beam equipment? And your response to that question, "Well, we have 3 people that are doing that." And I assume that to be the both Bates and Mr. Tagawa. And then after that on the call, it was mentioned, "Well, we're really busy doing this, and we're really busy doing that." And I got -- I felt the impression was that maybe there are 3 people out selling, but they're not doing it full-time. And another person mentioned, 1 sale of a single PBRT unit would pay for that salesperson many times over. So why not go out and do that? What's the reasons there?

I think one of the reasons is, at this point, we want to make sure of the timing of the first unit. And remember, the other factor is we have to put deposits down when we -- on additional units. So I think we're being prudent about the timing of when we do all this. We have additional people that already want to get MEVION systems. So I think we're concentrating on waiting to see what happens with the first unit first.

Steve, we have 17 facilities where we have Gamma Knives, and at least half of these will be appropriate for protons. And they've already expressed an interest in getting protons once this -- the first machine is up and running. So those are places where you don't really need the full-sale cycle. They're ours already. We only have 10 employees. We're trying to keep our costs down. But we have -- besides those of our own facilities, we have several hospitals that come to us and said, "We're interested in getting a MEVION once it’s up and running."

Our next question comes from Tony Kamin from Eastwood Partners.

A little more specificity maybe around the -- if you could give it around the targeted cuts. You've had the figure in there of sort of a -- potentially a $300,000 to $400,000 hit to pretax income. And since the company is sort of just mildly profitable, that would indeed be a pretty big hit. So are you targeting the cuts that you mentioned to be in that range of the $300,000 to $400,000?

I think, Tony, we're looking at cuts that may be greater than that. We're looking at cuts in grant. We're looking at cuts in payroll, including all salaries. We're looking at changes in our maintenance contracts, then we pay about $1.5 million in service contracts for our Perfexions. We're looking at all of these things. We just reduced our rent by anywhere from $130,000 to $150,000 a year. Is that the right number, Norm?

Close.

Close.

Okay. Well, I think that's very appropriate and I think that's great. The previous caller asked some of my questions around the Mevion, but let me just try to ask this. I guess I didn't think that the Barnes testing would take so long. So I guess I'm surprised that 10 months after FDA approval, we have the same number of signed contracts as we did prior to approval. And I heard sort of what you just said, that you're talking to a lot of people. But I didn't really anticipate. I'm not sure the company anticipated this Barnes testing taking so long. So once that happens, would it be reasonable to expect that when that logjam breaks, you might be able to sign multiple new proton contracts within a reasonable period of time?

Yes, I would say, yes, we'll have to find the deposits, but we're looking now for -- we're looking for outside investors. We've got several who would help us with that. Yes, we'll be signing more contracts. But that is a problem in a sense. The people that have agreed to finance our unit in Orlando want to do more, but they're not going to do more until the machine in Barnes is up and running.

Got it. I mean, I just think that considering the uncertainty that will be around Gamma Knife for at least until you can get potentially some government change, I just think that the valuation of AMS, in large part, any valuation improvement is going to depend on showing some momentum in the proton business. So obviously, I think you guys know that, but I think that's what -- that's particularly what I'm looking for in terms of seeing the company getting on the track that people will be able to understand where the future growth will come from. So in that light, on the non-MEVION system, I thought I heard Craig say that the Kettering is now a 1-room system in his prepared remarks or I think you just said Dayton, Ohio. But is that a change? And where are you at in terms of the progress with Kettering?

Well, we are looking at -- we've always looked at starting with 1 treatment room. I think we're very consistent in terms of that. All of our sites may eventually have more than 1 treatment room if volumes dictate. But going forward, as Dr. Bates mentioned, we think using a 1 treatment room concept is the most prudent financially. And that is the model we're going to use going forward. We may increase it, just like traditionally radiation therapy departments, as their volume dictates, they might get a second linear accelerator or a third. And we're going to use the same principle now that the technology is available that you can do that. These 4- and 5-room systems were built, predicated on the fact that you could keep the cost per room down and that there'd be more than enough patients to pay for that type of capital. That, in many cases, hasn't been borne out. But as Dr. Bates mentioned, even the ones that are performing up to what they had hoped, they would all be more than enough patients for a single room center. So we are progressing with our project in Dayton and just like we are on the others. And as we get closer, we'll obviously provide more information.

Yes, there was a pretty interesting article I saw today from something called Xconomy where even a couple oncologists who were skeptical of the big 4-room centers said they're interested in what Mevion is doing. So I think you clearly were ahead of the curve on that. The final question I have, in terms of Gamma Knife going forward, if the revenue levels are cut by Medicare as much as they are, how is Elekta going to respond? Just strikes me as common sense, you can't sell a machine for x if the person who's buying it is only going to get a portion of the revenues they were before. So how is Elekta responding? And have they found ways to help cushion the impact on the AMS a little bit?

Yes, Tony, they have. We've had 2 meetings with Elekta in the last month, one most recently in Sweden. There are things -- we have a game plan with them to deal with this if we don't get it rescinded. I don't think we want to indulge it in this call since our competitors are obviously listening to this call, we don't want to let them know what our strategy is, but we have a game plan to keep the Gamma Knife, even at these lower rates, competitive.

Great. And actually, I have 1 more. The -- can you talk a little bit about -- I noticed a percentage of revenues that included some revenues from Turkey that was higher than I thought. Can you talk about your experience so far and...

Yes, I want Ernie to talk about Turkey and the international in general because the international has turned out to be a much better project than even what we had predicted. It was slow starting, but it's beginning to take off. If you notice that the increased number of treatments that we've announced in the end of the year, a lot of these came out of Turkey. You want to say a word about Turkey and how we're doing there, profit-wise?

Sure. So as you're aware, we are up and running at 2 different sites in Turkey. In Istanbul, we have a Perfexion Gamma Knife treating patients. And we also have, in southern Turkey in a town called Adana, at Baskent University, a Gamma Knife and also a Elekta radiosurgery device called the Axesse. And we are doing quite well on the Gamma Knife in Adana, treating upwards of 40 patients a month. So we're starting to see the high volumes that we anticipated happening at that site. And we're also at -- almost at maximum capacity on the Axesse. This Axesse unit is one of the few sort of dedicated radiosurgery devices in that region. So we're seeing a lot of interest. We're starting to focus more on marketing these devices, that there is more awareness within the physician community and also on patients. And we're starting to see quite a bit of self-referral business coming into both of those centers. So we think that the marketing will be key for us to continue to bring in patients from not only within Turkey, domestic patients, but we're also bringing patients from outside of Turkey. And so we think that, that -- this is going to be an interesting model for us going forward in terms of diversifying revenues from the Gamma Knife and other radiosurgery businesses.

Have you seen any other -- further interest in -- because of the early success, are we seeing any other interest coming out of Europe or that part of the world?

We are. We are, Tony. We're seeing interest in other markets. We're trying to take a very measured approach. Until now, we've taken a fairly measured approach to setting up these businesses because as I'm sure you can imagine, there are obviously costs involved with setting up these businesses. And, of course, we're looking at different legal and regulatory structures. So it takes quite a bit of leg work in setting up each of these international businesses. But we're quite confident that we can replicate what we've done in the U.S., in select international markets. We've chosen Turkey to be that market, one of those markets, and we're looking at some others now as well where reimbursement actually is -- remains quite strong. And perhaps there may be some impact from what we're seeing in the U.S., but we haven't seen that yet in some of these more developed markets where reimbursement is actually higher.

Want to say a word about Peru because that machine should be starting up this year?

Yes, Peru, we're still working on getting our unit placed in Peru. And obviously, the economy continues to perform very strongly there, and we look forward to placing the first Gamma Knife in the country there. So right, again, we're just dealing with some permitting issues. And once we get those managed and resolved, we expect to have that unit sent down to Peru and to begin treating patients later this year.

Our next question comes from Tony Polak from Aegis.

Could you tell us what the value of your equity investment in Mevion is on your balance sheet?

About $2.7 million.

Okay. And has that been revalued upward or downward over the last few years?

We have not. We've considered that a temporary impairment.

Okay. And can you tell us when you expect to get a first revenue from the proton therapy and -- whichever will be the first one?

For us, it'll probably be the -- sometime in the latter part of 2014.

Okay. Would that be Orlando?

Correct.

Our next question...

Once again, we'd like -- to all of you that -- our unit that was going into Boston is most likely, probably may go elsewhere. And Craig is shaking his head at me. But we have a good opportunity to put a machine in San Francisco. That will be the first one in San Francisco. I'm quite excited about it, obviously, one of the business proton machines in the country.

Our next question comes from Mason Matschke from Raymond James.

As a longtime shareholder, we invest in this company because we saw a great opportunity in the future for some of these new technologies. And as what happens many times, there's delays and changes. And as you said, this is unprecedented, what just happened with the Medicare reimbursements. And a lot of us have been asking for the last year since we've had some of these delays, in getting to substantial revenues and profits, that the company announces some type of cuts to payroll, to rent, to ease some of the pain the shareholders have had possibly while we've been waiting. And I was really disappointed that you came out in your press release and you didn't announce specific cuts. We've waited a long time for this, and as a shareholder, I do believe in the opportunity. But right now, there's a lot of uncertainty, and the share price has been severely damaged since last summer. We've taken the drop on the $3.40 level, all the way down to $2. So I would hope that -- I can see your next calls maybe in another 6 weeks, but even before that, if we can have some specific information on what the cuts may be and what the savings may be over time. I think a lot of shareholders, including myself, would greatly appreciate that. We've held in for a long time, and I think we all believe you're going to hit that opportunity that we've been waiting for. But it would be nice to take some cuts along the way that may help shareholders and increase shareholder value, and maybe we can start moving towards the net asset value of the company. I just wanted to kind of get your input on that. And then I have another question for you.

Yes, I think what we did say, Mason, there will be salary cuts. There will be reduction in rent. We don't have the exact number yet. And there will be cuts in our maintenance contract. And we're looking at renegotiation -- renegotiating our leases. There will be cuts. And as soon as we have a final number, we'll give you that.

Okay. And then I have another question. And I know other people have asked this in the past. But I think with the changes that are possibly going to be happening with the revenue and the importance of what we're going to see with the European business, do you feel that you guys could disclose the EBITDA cash flow numbers, P&L, for your international operations so we can kind of get a better gauge on how the profitability is of that area? And then if you could bulk out the Gamma Knife's and Perfexion Knives so we can kind of see where the revenues are coming and how the savings may be helping in that area.

I think we haven't done that as they are considered 1 business segment. So we haven't done that in the past. Also, for competitive reasons, we haven't wanted to do that. So as a management team, we could relook at that and we could relook at it with our auditors as well as to what would be the appropriate disclosures.

I'd greatly appreciate that. I can see your potential for growth in your international operations and I think it may give some comfort to some of the longer-term shareholders that you're seeing some growth in that area.

Yes, but I think, Mason, we've said we're not going to expand that area into our existing machines are clearly on the track to be highly profitable because the European market, as you know, does have its own difficulties. We're being very cautious. We are now at the point of only got 3 machines. Ernie, is that correct?

Correct.

In the immediate future, we have no plans to go beyond those 3, even though we've been asked to put another machine or 2 machines in Turkey.

Well, as a small company, it would help me as an investor and other people that analyze the returns of the company just to get an idea of the EBITDA from your international business, just to -- just as a way to grade the management and really to look at how you're doing and how we can look at maybe how some new businesses will do. I mean, this is a small company, and the share price is going the opposite direction. You've had some important milestones with some of the investments you've hit with Mevion, but we're seeing the shares go the wrong way. And I understand that what happened was unprecedented, but it happened. And I think we're going to have to do some unprecedented things to improve shareholder value. This delay in St. Louis is just another setback. We were hoping that, that may come out in May. So it's just -- everything takes longer, and I'd like to just -- I'd like to see some of the...

I understand your frustration. We feel the same way. When those deposits were made on those machines in 2006, and there we are in 2013.

Well, we're losing our money on our value per shares. You're still getting paid the same thing for the last 10 years, Dr. Bates. So I really would like to see you take a pay cut. That's it's for my questions.

You pointed out that I haven't had a raise in 10 years. Thank you. And we will be taking pay cuts, including me.

Our next question comes from Lenny Dunn from Freedom Investors.

First, I want to make a couple of comments, then I have a question. When you discussed the fact that this is unprecedented and unfair, you're preaching to the choir. So -- but hopefully, the lobbyists that are working on this will be able to get through to some of these sellers. And I would like to also comment that the Huffington Post and Wall Street Journal, which probably have never agreed on anything before, both published articles about the unfairness of what Harry B. [ph] did and how he stuck it into the middle of the night into the bill. So in general, I think your argument is very strong, and, again, having the Huffington Post and Wall Street Journal agree on it is unprecedented also. Now that being said, my questions of why -- we don't have to know what the entire basket of groceries is going to save us. What we needed -- but whatever you've done with rent and with subleasing certainly could be clarified. I mean, this could be done in various announcements. And some of them you may have already done, I would hope, because it's been a few months. And some of them you may be working on. And I do appreciate the fact, Dr. Bates, that you're taking a pay cut under the circumstances because it is unprecedented. And we get this thing going the way it should again, I have no problem with you getting your pay reinstated. So we're all on the same side here. So, I guess, is it possible to get some releases as to what things you've already done as opposed to get waiting until you could announce everything you're going to do?

Well, we don't want to divulge our strategy to the people that we're negotiating with at this point. I mean, I can tell you, the rent has been reduced, as I said, $130,000, $150,000 a year.

Have you moved out of the sublease space yet? Or are you still...

Yes, we have. We just -- we're retaining like 1,000 square feet here, which we couldn't rent.

Well, I understand. It would be a material event. You probably have a few employees who would have difficulty commuting the other way. So I would understand that you might need some space for that reason. But a little more clarity with your shareholders who are trusting and are patient would be very much appreciated.

Well, you can help us, Lenny, by getting in touch with your legislature and letting them know how unfair this action is. You could help us and the shareholders with that. And I say that to all of you because, as I said, this is unprecedented, it's unfair.

In our case, Ron Johnson and Paul Ryan would certainly agree with you, but that's not everybody in the country. That's our Wisconsin people. So -- but I just think that we need to have as much knowledge as we can out there to work with. So it's easier to be patient. I don't have anything further.

Mr. Tagawa, there are no further questions. Would you like to make your closing remarks?

I'd just like to thank everybody for joining us this afternoon. And we look forward to speaking with you on our 2013 first quarter results conference call in May. And I'll turn it over to Dr. Bates for his final remarks.

Well, I just want to let you all know that we are going to continue with Elekta, our partners, to fight to get this thing rescinded. As we've said earlier, it is unfair. And I think that the company going forward is looking at other opportunities. I think we're not going to be the same company we were last year. We are expecting to announce an agreement with our OR21, filing after all these years. Craig, do you want to say a word about?

Yes, we've been working on some very unique lighting systems that -- where we have patents with a partner of ours. And hopefully, we'll be entering into a licensing agreement in the not too distant future from now.

We've been asked to look at an interventional MRI business. It's something that we looked at 10 years ago at the major university hospital. We're looking to see if that's economically feasible. People come to us with these opportunities because we've been around so long. And that may be a new and exciting business for us. We're going to spend some time evaluating it. But again, we think this is unfair. We think we'll get this changed. If we don't get it changed, we will continue to do a Gamma Knife business. We may do it in a different way. But I want to remind you all that there are 130 Gamma Knifes in the United States, and these 130 are all fighting to get this thing changed because they've all been -- felt that they've not been dealt with fairly. In the end, I think this is going to cost our government more money by this action. And we just need to be able to demonstrate that and show that to the congressional budget office, that this will not save money. And if we're effective in doing that, we will get this thing changed. Those are the comments I have to make.

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