SRTS - Wow that really is a stinker of a quarter. Listened to the call and CEO is basically blaming it all on inflation in the sense that lots of people who would have gone to the dermatologist for botox treatments etc have cut back on these discretionary doctor visits. Thus, less visits overall to the derm dr, and thus the docs are scared to buy right now because they're not seeing as many patients. But he was adamant that they'll do 60 machines for the year. When asked why he was so confident he admitted it wasn't from signed orders but said it was from the interest they were seeing and though Q2 will likely be another challenge, the second half of the year is where it will kick in.
My take (which could be wrong) is that to a certain extent it sounded like he was trying to come up with reasons/excuses for why he didn't see this coming. At beginning of this year they hired more people for the expected growth . . . and then the growth didn't come. It's a little concerning that he's adamant about knowing when biz is going to improve when he didn't see this coming. If it's really the economy and inflation, then how is he Nostradamus to know exactly when all that is going to change? They also bought back shares at much higher prices.
The one possible glimmer of good news (which wouldn't happen immediately) is they are approaching more hospital oncology depts. In the past, it sounds like hospitals weren't that interested becuz relative to the high dollar cancer surgeries for all types of cancers everywhere in the body, this little skin cancer stuff wasn't worth messing with. But now, he says reimbursements for nearly all of those surgeries are coming down, so they're looking for new ways to bring in revenue. They sold one system to a large hospital chain becuz that chain was ready to try something new and they minimized the paperwork for approval, but normally this can be a yearlong process.
So that's my recollection of what I heard on the call. For me, I'm gonna wait and see if Q3 comes in with anything. I was high on this company last year in I think it was Q2 and Q3 of that year becuz of the increased reimbursement rates, and easy comps but Q4 was gonna be very tough comp and after that tax changes. It ran very quickly from like $7-8 to the low teens where I exited. It was always just gonna be a max of a two quarter hold for me, but certainly can't say I ever foresaw this sort of revenue and earnings collapse.
I would have liked to have heard more humility. Doesn't make sense to be so certain when he was just so wrong. It may all go like he says, but I'll wait for proof that it's starting to happen. I think there will be plenty of time to buy if/when that time comes.
