Our Stock of the Week is Sensus Healthcare Inc. (SRTS). SRTS describes itself as "a medical device company specializing in highly effective, non-invasive, minimally invasive, and cost-effective treatments for both oncological and non-oncological conditions. Sensus offers its proprietary low-energy photon radiotherapy known as superficial radiation therapy (SRT), which is the culmination of more than a decade of research and development to treat non-melanoma skin cancers and keloids with its SRT-100™, SRT-100+™, and SRT-100 Vision™ systems. With its portfolio of innovative medical device products, Sensus provides revolutionary treatment options to enhance the quality of life of patients around the world."
SRTS Imagine Guided Radiotherapy is an alternative to Mohs surgery for treating skin cancer lesions. Radiotherapy is extremely effective and is growing in popularity. SRTS's primary customer is SkinCare Oncology LLC, which partners with physicians to offer skin cancer treatment. It is called GentleCure. GentleCure currently has over 335 practice partners.
Sales of medical equipment are often quite lumpy, and SRTS suffered badly in 2023 as many practices delayed new purchases due to inflation concerns. There has been a shift away from cosmetic dermatology, which is now helping SRTS.
The company posted a strong fourth quarter with EPS of $0.26 and then surprised with a very strong first quarter of $0.14 versus an estimate of a loss of $0.05. In addition, revenues of $10.7 million are more than double estimates of $4.1 million. Estimates are being revised and are unknown at this time.
On the conference call, the CEO stated, " I think that we can look to Q2 as being as good a quarter. I can't tell you if it's going to be better, but we're going to drive for it to be as good. We have assembled a significant pipeline of potential customers, so much so that we've ordered more inventory to satisfy anticipated demand by the end of the year." Management is typically quite conservative and prefers not to make estimates.
The company has recently developed a new sales program that it calls a "Far Deal Agreement' in which it shares revenues with physician practices and will provide an ongoing revenue stream. Management anticipants this will payoff substantially starting in 2025.
The company is awaiting FDA approval for a new device for TransDermal Infusion. Management stated, "We are still awaiting a response from the agency and are optimistic it will be coming in the second half of this year. We've generated a great deal of interest in our TDI product at trade shows as a work in progress. This system will, for example, allow platelet-rich plasma, or PRP, to be applied to the scalp in a pain-free restoration experience." It is also used to treat hyperhidrosis or overactive sweat glands.
The company has a very strong balance sheet with net current assets of about $2.85 per share and no debt.
Because the company is so small, there is little analyst coverage, but H.C. Wainwright increased its target price on the stock to $10 from $8 after the first quarter report.
The stock usually trades very thinly, but after the surprisingly strong earnings report, it had volume of 19.7 million shares. There were only about 17 million shares issued, so short-term traders were very active. The stock is currently being actively day traded, and that is creating extreme volatility, but that should slow down and help to eventually create opportunities based on what looks like a very good value.
As always, we will not chase strength on Monday but will be trading the stock very aggressively.
This post is for educational purposes only! This is not advice or a recommendation. We do not give investment advice. Do not act on this post. Do not buy, sell, or trade the stocks mentioned herein. We WILL actively trade this stock differently than discussed herein. We will sell into strength and buy or sell anytime for any reason. We will actively trade into any unusual activity. At the time of this post, principals, employees, and affiliates of Shark Investing, Inc. and/or principals, clients, employees, and affiliates of Hammerhead Financial Strategies, LLC, directly or indirectly, controlled investment and/or trading accounts containing positions in SRTS. To accommodate the objectives of these investing and/or trading accounts, the trading in these shares will be contrary to and/or inconsistent with the information contained in this posting.
