Last year was a very difficult year for OMI (ONCO) in that the Company lost a couple of clients near the first of the year while
picking up a couple of smaller new accounts. However, staff reductions were required and implemented to keep OMI competitive.
Despite the cost reduction measures, OMI incurred a net loss of over $140,000 for the Fiscal Year ending October 31, 2011.
After careful review of the Company's operations, contracts -- and the changes that were occurring in the industry --
it was determined that OMI (ONCO) needed a full re-engineering of the Company to remain competitive for the future.
In October 2011, the Company initiated a number of the identified changes which needed to be implemented immediately.
These included a reduction in management salaries, elimination of two administrative positions, consolidation of existing offices,
and implementation of strict spending controls. These actions will result in estimated annual savings in excess of $250,000 to the Company.
In addition to those actions, and as part of our restructuring plans, OMI reached an agreement in late November
with Precise Oncology, a Radiation Oncology Practice Management company, to provide full Financial Management Services
including A/R, A/P, payroll, and full financial oversight. They will also be providing Legal Assistance, Professional Physics Consulting,
and other general business services in addition to establishing a Line of Credit for market development and sales.
Based on the restructuring efforts implemented by OMI,
ONCO's First Quarter 2012 Financials (Nov. 1, 2011 through January 31, 2012) showed a Net Income of $44,714.63.
ONCO's mobile Prostate Treatment Service also underwent several setbacks. There are two major issues affecting the
referral patterns in the Urology/Radiation Oncology fields and the final determination of treatment modality.
Radiation Oncologists receive the greatest majority of their prostate patients by referral from Urologists.
Those not referred for Radiation Treatments are usually Surgery patients.
There are two primary modalities for Radiation Treatment of prostate cancer:
a) External Beam Radiation Therapy (EBRT), also referred to as IMRT, and
b) Brachytherapy (Radioactive-Seed Implant Therapy), the implantation of Radioactive Seeds into the prostate.
A recent study by Cleveland Clinic involving 137,427 men from 1991 to 2007 determined Radioactive-Seed Therapy for
prostate cancer leads to fewer complications and a lower re-occurrence of prostate cancer for the patient, post treatment,
that would require additional treatment being provided. Over the 16-year study period, 8.8% of men who had EBRT
needed a later procedure, 6.9% of the Surgical patients needed additional treatment,
but only 3.7% of those receiving Radioactive Seeds required additional treatment.
So, why are Urologists changing their referral patterns and more of their patients receiving EBRT?
1) Many Urologists are (and have been) building their own Radiation Treatment Centers, hiring a Radiation Oncologist
as an employee,and treating the prostate with IMRT, which carries a much higher reimbursement
from Medicare and Medicaid (as well as from most commercial insurance carriers). By using this model,
more patients are receiving IMRT for the higher reimbursement than are being referred for
Radioactive-Seed Implant Therapy, which carries a lower reimbursement from payers.
This model has also involved the collaboration, involvement, and financial ownership of hospitals.
This issue has recently received high profile visibility in the news media, and it is anticipated that
Federal and State regulators as well as commercial insurance companies will (and are) closely monitoring
this referral pattern for treatment, and will place corrective mechanisms in place soon, allowing for
the patient to have more input into the recommended treatment and associated costs involved.
2) The second cause of reduction of prostate cancer seed patients is that hospitals are employing more Physicians,
including Urologists, which lowers the outside referrals to conventional free-standing Physician practices.
In this way, the hospital systems are able to better control the referral patterns of patients for treatment,
keep these patients in-house in their owned facilities to include cancer centers, and allow for more control
over the treatment processes.
Today, hospitals are under extreme pressure to cut costs, expand revenue,
and justify expensive new technology such as the da Vinci Robotic Surgical Devices being purchased
by many systems as an adjunct to these Surgery services.
Additionally, OMI (ONCO) has seen these systems move more toward
treatment of prostate cancer with IMRT as well as assisting with maintaining their profit margins,
or in support of their eroding Net Revenue due to a reduction in cancer patient referrals into their centers.
At the time of this writing, OMI (ONCO) and at least 80% of its associated clients who are experiencing
lower referral numbers are unable to determine the actual reason for overall reduction of referrals
to cancer centers.
We have faced the challenges outlined above, and have pursued new Brachytherapy contracts,
and the prospects for new business are very promising.
In summary, OMI (ONCO) has made adjustments to operations and changing medical politics, to lower costs
and increase the bottom line. OMI (ONCO) will continue to make necessary adjustments to its operations in response to
both the changing Medical marketplace, and to take advantage of all identified operational cost reductions.
Opportunities are expected to increase as more Physicians and patients begin to understand the effectiveness of
prostate Radioactive-Seed Implants over other treatment methods, and this will result in increased use of ONCO's
mobile services in the future, and in profitability.
Posted at: http://www.oncologymed.com/investor_relations/letter_from_the_ceo
A Previous Letter from the CEO
July 11, 2011
Oncology Med, Inc. (Pinksheets:ONCO) continues to grow and be a strong healthcare company with clients, contracts, or operations
now in 12 states from Florida to Massachusetts. ONCO's main clinical offices are in Pittsburgh,PA, with Corporate executive offices located
in the District of Columbia suburbs of Virginia and additional key executive staff located in other metropolitan areas
of the Eastern U.S. The Company continues to maintain a strong presence within the healthcare community,
and specifically in the area of support for cancer care treatment and services.
With the impending changes in healthcare legislation and implementation as well as the establishment of
Accountability Care Organizations (ACOs) for the control of payment to healthcare organizations for best outcome lowest cost,
the Company wants to assure the Shareholders that it is anticipating nothing but a positive impact to
the Company from these significant changes in the healthcare market.
OCNO has always provided low cost, best outcome, cafeteria options for the support and treatment services offered to
clients and their patients. This will continue to be the goal, because it allows clients to be more flexibleand competitive
in their markets; moving faster to meet the demands of Physicians, patients, and the ultimate payors
and future ACOs. It is anticipated that as consolidation continues in healthcare to regional and/or
large vertically-integrated systems which are either trying to become or stay a major player in their respective markets,
that these systems will expand their willingness to outsource contract services to allow for rapid change,
expansion, or market share which will be demanded and necessary in the new healthcare environment.
This already is being seen in the cancer treatment arena.
Profit and Loss Statements have been released for the 1st and 2nd Quarters of the 2011 Fiscal Year
that runs from November 1 through October 31. These are the most recent available, but are un-audited and have not been posted
through the PinkSheet reporting mechanism.
During the 1st Quarter 2011, ONCO did not renew three contracts in the Medical Physics Staffing Division.
Subsequently, this had an appreciable impact to revenue for that period. In turn, ONCO has reduced staff by two Medical Physicists
and one administrative position, to adjust for the reduced demand in that Division.
ONCO has successfully in signed two additional contracts for start-up physics support at
two new Veterinary Radiation Oncology Practices; one in the Pittsburgh area and the other in North Carolina.
Both of these contracts include continuing physics support, which will contribute additional long-term revenue flow to the Company.
Revenue from these contracts was not generated in the First Quarter 2011; however, Revenue from them was generated
and did show up in the Second Quarter 2011.
There is also a typical seasonal pattern associated with prostate cancer brachytherapy demand,
with the Winter months being typically slower than other times, which
contributed to a lowering of Revenue numbers in our 1st and 2nd Quarters.
Anticipated acquisition of necessary capital equipment for new contracts is expected in the 4th Quarter,
which will increase expenses due to the cost incurred through the capital leases associated with this equipment.
Generally, this is offset by Revenues generated from the new contracts in many businesses.
However, with prostate brachytherapy, as with most medical procedures, the equipment needs are always in advance of
generated Revenue from utilization and revenue generating cases being performed by at least one budgetary quarter.
Our Prostate Cancer Brachytherapy business has continued to grow, but at a rate less than forecasted
for our current budget year. ONCO is diligently working to finalize negotiations with new contract sites in
Eastern Massachusetts and District of Columbia metropolitan areas, which should result in
appreciable growth in the coming months. We will be announcing these once the contracts are executed
with those medical facilities; however, the District of Columbia facilities are already preparing to schedule cases in
the next couple of months, indicating that contract execution is near.
Prostate cancer brachytherapy treatment is typically scheduled 1-3 months in advance, after the initial diagnosis
of the patient has been made. ONCO continues to work with Dr. Irving Kaplan and his associates from
the Harvard Medical Group's Radiation Oncology practice, to recruit new Ambulatory Surgery Centers (ASC) in the Boston area.
ONCO's joint affiliation with this group of Radiation Oncologists has been very successful,
and ONCO continues to see growth in this geographical area above expectations and forecast.
In addition, ONCO continues to work with other key Radiation Oncologists in this area, and is actively recruiting
other Physicians for use of ONCO's services in contracted medical facilities.
One of our other key initiatives is to team with companies that market linear accelerators to
a new significant growth market of Veterinary Radiation Oncology practices. Our execution of the two additional
medical physics support contracts with new Veterinary Radiation Oncology practices, listed above,
contributed nicely to our revenue income during the Second Quarter 2011. Besides acceptance and commissioning of
the equipment for the site, these contracts include continuing medical physics support for
continued Revenue generation for the remainder of this budget year and into next year.
ONCO is aggressively pursuing this potentially lucrative market as a good long-term revenue stream for
the Medical Physics Division over the next several years.
The primary impediment to OMI's growth this past year and possibly for the remainder of this budget year is
the availability of funds to support aggressive new business development initiatives, expansion into new
geographical markets, and the expansion and growth of existing services. The current economic environment
has had a dramatic impact on the ability of small, medium, and large businesses to secure necessary and desired capital
for growth and expansion of their companies. ONCO's Executive Team and Board are looking into options for
infusion of capital for the Company's growth objectives, and will report going forward on success in this area.
Otherwise, we may only see growth for the remainder of this budget year in our current markets located in
theOhio/EasternPennsylvania, Northeast (New York, Connecticut, and Massachusetts), and Western Pennsylvania/DC markets
for our prostate brachytherapy. ONCO is experiencing and expects to continue some moderate growth in
the Medical Physics Division in the Eastern half of the U.S.for the remainder of this year.
I, Dr. William Walker, CEO of Oncology Med (ONCO), hope that the information provided is
helpful for our Shareholders to fully understand OMI's current status, anticipated near term successes, and the
short- and long-term needs and goals as the Company continues to build, expand, diversify, and grow.
I will try to continue to keep the Investors and Shareholders informed when there is important news to be announced
associated with our successes or any other notable change in the Company's operations, goals, expansion initiatives,
and new market/services growth. ONCO's establishment of a FaceBook Account is one of the ways the Company intends to
move information to you as quickly as possible. Past news releases were surgical and strategically targeted, which did not necessarily help
Shareholders and Investors with current news and communications from the Company. Investors and Shareholders are encouraged to have
patience as the Executive Team and Board works to position the Company for long-term success.
In doing so, much of our short- and long-term business strategies, as well as target markets, new markets, and current client negotiations
must remain confidential to a large degree, to keep ONCO competitive with other companies in the same or similar lines of business,
many of whom are not publicly traded and do not ave to share specific information with Investors, Shareholders, or the public at large.
Posted at: http://www.oncologymed.com/investor_relations/letter_from_the_ceo
Source: Oncology Med, Inc.,
Tuesday May 4, 2010, 9:00 am
PITTSBURGH, PA--(Marketwire - 05/04/10)
Oncology Med, Inc. (Pinksheets:ONCO), provider of various cancer treatments, announced today that it has executed
an exclusive multiple-year contract with the University of Pittsburgh Medical Center (UPMC)
to provide mobile Prostate Cancer Brachytherapy services. This contract includes 11 medical hospitals and 38 affiliate cancer centers
in Ohio and Pennsylvania. Oncology Med, Inc. expects this contractual relationship to provide as much as 25% same market growth
in its Pennsylvania and Eastern Ohio prostate cancer brachytherapy market for provisions of equipment, staff, technology,
and the sale of disposable Radio-Nucleide Implantable Seeds.
"We are extremely pleased to complete the lengthy negotiations with UPMC and come to a very beneficial contractual relationship
between this very large medical treatment network and our company," stated William Walker, PhD, CEO of Oncology Med, Inc.
"This is a major accomplishment in view of one of our Corporate strategic goals of expansion of same market growth
in each of our geographical territories," he continued.
"We will be able to absorb this increase in patient volume and purchased services with our current in-house resources of
staff and equipment," Dr. Walker added. "Therefore, we expect a very appreciable expansion of our overall net bottom line this year,
with very minimal expenses to be borne by servicing this new contract," he concluded.
Oncology Med derives Revenue from mobile prostate cancer brachytherapy contracts from "per use" user fees associated with
Ultrasound Imaging, Medical Physics Treatment Planning, and provision of equipment and staff used in
medical procedures in advance of the actual treatment and day of treatment, as well as the sale and management of
the disposable Radio-Nucleide Implantable Seeds. In addition, equipment, staff, and all resources are mobile,
allowing for usage at multiple facilities without additional capital outlay.
Oncology Med is considered to be one of the cancer industry's leading experts on provision of equipment, staff, treatment planning,
technology, and other resources for the treatment of prostate cancer. It is the leader in provision of mobile low dose radiation (LDR)
brachytherapy prostate cancer services and support with current contracts and services being provided in at least 9 states.
In addition to the mobile (LDR) brachytherapy services, Oncology Med has set up and implemented
several high dose radiation (HDR) systems for treatment of various localized cancers, including prostate and breast,
which requires fixed site equipment, staff, and support services.
Additional Oncology Med, Inc. service contracts include
staffing numerous cancer centers with Medical Physicists, Dosimetrists, and if need be, Radiation Therapists,
acceptance and commissioning of new cancer treatment equipment and software, periodic audit services, consulting services,
initial completion of radiation license and/or subsequent amendments to a license, and assistance with design and build-out
of radiation treatment vaults to meet Federal, State, and Local Regulations and Codes.