Q4 2023 Sensus Healthcare Inc Earnings Call
Participants
Kim Golodetz; IR; LHA Investor Relations
Joe Sardano; Co-Founder, Chairman, & CEO; Sensus Healthcare Inc
Michael Sardano; President & General Counsel; Sensus Healthcare Inc
Javier Rampolla; Chief Financial Officer; Sensus Healthcare Inc
Alex Nowak; Analyst; Craig-Hallum Capital Group LLC
Yi Chen; Analyst; H.C. Wainwright & Co., LLC.
Anthony Vendetti; Analyst; Maxim Group LLC
Ben Haynor; Analyst; Alliance Global Partners
Presentation
Operator
Yes, good day and welcome to the Sensus Healthcare fourth quarter and full year 2023 financial results conference call. (Operator Instructions) Please also note that this event is being recorded today. I would now like to turn the conference over to Kim Golodetz. Please go ahead.
Kim Golodetz
Thank you, operator. This is Kim Golodetz with LHA. Thank you all for participating in today's call. Joining me from Sensus Healthcare are Joe Sardano, Chairman and Chief Executive Officer; Michael Sardano, President and General Counsel; and Javier Rampolla, Chief Financial Officer.
As a reminder, some of the matters that will be discussed during today's call contain forward-looking statements within the meaning of the federal securities laws. All statements other than historical facts that address activities, Sensus Healthcare assumes plans, expects believes, intends or anticipates and other similar expressions will should what may occur in the future are forward-looking statements.
Forward-looking statements are management's beliefs based on currently available information as of the date of this conference call, February 8, 2024. Sensus Healthcare undertakes no obligation to revise or update any forward-looking statements, except as required by law. All forward-looking statements are subject to risks and uncertainties as described in the company's forms 10-K and 10-Q.
During today's call, references will be made to certain non-GAAP financial measures. Sensus believes these measures provide useful information for investors, yet they should not be considered as a substitute for GAAP, nor should they be viewed as a substitute for operating results determined in accordance with GAAP. A reconciliation of non-GAAP to GAAP results is included in today's financial results press release. With that said, I'd like to turn the call over to Joe Sardano. Joe?
Joe Sardano
Thank you, Kim, and good afternoon, everyone. our fourth quarter financial results reflect our customers' acclimation to an inflationary environment as well as their understanding of the compelling financial proposition and better patient outcomes of SRT to treat non-melanoma skin cancer and keloids.
Sales improved substantially as we shipped 33 systems during the quarter, including three SRT systems outside the United States. This brings the total number of units shipped in 2023 to 66 units. We are fast approaching a total unit installation of 800 systems.
For Q4, revenues were $12.6 million versus $13.1 million a year ago, up more than threefold sequentially. We expect an uptick in the fourth quarter, our seasonally strongest as utilization of SRT to treat non-melanoma skin cancer continues to increase.
This increased utilization is being driven by favorable reimbursement and aging population and clinical results that are at least as good if not better than Mohs surgery for quite some time. Customers and prospects alike have been asking for new ways to add SRT to their practices.
As always, we listen closely to our market and we're delighted to meet their needs with highly competitive offerings. This new recurring revenue model complements our capital equipment sales model, which you will recall, was enhanced with our fair market value lease, which we introduced in 2021.
This new model provides recurring revenue to census and expands our market by providing a another viable option to bring SRT to dermatology practices during the fourth quarter we made our first placement under this model.
We've been carefully preparing this recurring revenue model over the past year, making sure that the economics work for both our customers and for census and ensuring we were abiding by all applicable laws and regulations.
Note also that the capabilities of SRT-100 Vision with image-guided ultrasound and Sentinel Technology make the recurring revenue model possible I've mentioned on previous quarterly call that this advanced technology is expected to play a key role in our growth. And now you may understand why we've been so excited with Sentinel. This is our hip, a compliant software with clinical billing and asset management utility that also allows us to track utilization in real time.
This technology is ideal for better managing dermatology clinics for all of our customers and as a Sensus Healthcare exclusive, during 2023, we also introduced an important new and improved high-resolution ultrasound technology to provide C and treat capability.
This leads to great clinical outcomes because of the physician can actually see the impact of each treatment on the lesion and lesion resolution after treatment. We're looking forward to more directly benefiting from the SRT treatment growth rates. We've seen recall that earlier in 2023, we found in our surveys of Medicare that SRT experienced a 27% year-over-year treatment growth rate for the six years, we review should this growth rate continue.
SRT will soon become the treatment of choice for non-melanoma skin cancer. We're very excited to be interacting with customers and prospects during the coming weeks. This weekend will be showcasing our SRT. products, in particular, the SRT-100 Vision, IGSRT system and the Sentinel technology and Sensus cloud capabilities that the South Beach Symposium, which begins today in Miami will also be at the winter clinical also in Miami, beginning February 16, we'll follow those conferences up with the American Academy of Dermatology annual meeting being held March 8 through 12 in San Diego, where we will have a very strong private private presence while dermatology is our primary market. We continue to engage with the radiation oncology market, which is mainly a hospital based channel.
As mentioned last quarter, we've had good success in this area having recently placed an SRT system at Cape Cod hospital. As a reminder, this market has a longer sales cycle as we continue to see increased interest with respect to the transdermal infusion product. We filed our 510(K) application with the U.S. FDA in October of 2023 and are hopeful that we'll be hearing from the agency in the coming weeks. This system will, for example, allow platelet rich plasma or PRP to be applied to the scalp and a pain-free hair restoration experience.
In addition, posters have already been presented on the application of hyperhidrosis or over active sweat glands. Our transdermal system includes Sentinel IT. solution capabilities as do all six of our census branded aesthetic smart lasers. We will be exhibiting our TDI. product at the upcoming dermatology trade shows as a works in progress.
With those remarks, I'll turn the call over to Michael Sardano, who in addition to his duties as President and General Counsel, joined our Board of Directors last week. He'll give you a brief update on our international business and talk about our new collaboration with CureRays. Michael?
Michael Sardano
Thanks, Joe. We spent the last year working to open up new international territories, which requires both regulatory approvals and strategic engagement of distributors. We continue to support our international distributors across Asia, Europe and the Middle East. And we are developing a number of promising opportunities to supplement our strong demand in China, we sold a total of 13 SRT systems internationally in 2023, which includes sales to three new territories for census during the year, namely Ireland, Guatemala and Turkey.
As I stated in our last earnings call in November. Our plan is to expand our Latin American European and Asian footprint as quickly as possible with Brazil and Japan seeing longer-term prospects as they are highly regulated. Our goal is to open two to three new territories per year, which we achieved in 2023.
Turning back to the US market. Earlier this week, we announced a collaboration with CureRays. CureRays is led by two radiation oncologist, Dr. Mohammed Khan, who is on the census medical advisory board and as Vice Chair for radiation oncology education at Emory University in Atlanta and Dr. Clayton has who is the Director of Dignity Health at Sierra Nevada Memorial Hospital in California.
CureRays has purchased and SRT-100 Vision, and we'll be treating patients out of their California headquarters. CureRays is focused on three main endeavors, the treatment of patients for non-melanoma skin cancer and keloids treatment oversight percentages, dermatology customers, and conducting clinical trials with the use of censuses SRT technology. CureRays will be instrumental to our reoccurring revenue model, and we are very excited to be partnering with them. With that, I'll turn the call over to Javier for a discussion of our financial results.
Javier Rampolla
Thanks, Michael, and good afternoon, everyone. As Joe mentioned, our revenue for the fourth quarter of 2023 were $12.6 million and this compares with revenue of $13.1 million a year ago, and revenues of $3.9 million in the third quarter of 2023. The decrease versus the prior year reflect a lower number of SRT units sold.
Gross profit for the fourth quarter of 2023 was $7.8 million or 62.3% of revenues compared with gross profit of $8.4 million or 63.7% of revenues for the fourth quarter of 2022. The decrease was primarily due to the lower number of units sold in the 2023 quarter.
Selling and marketing expense for the fourth quarter of 2023 was $0.6 million compared with $1.6 million for the fourth quarter of 2022. The decrease was primarily attributable to lower compensation expense, partially offset by higher tradeshow costs.
General and administrative expense for the fourth quarter of 2023 was $1 million compared with $1.4 million for the fourth quarter of 2022. The decrease was due to lower compensation expense in the 2023 quarter and higher bad debt expense in the prior year.
For research and development expense for the fourth quarter of 2023 was $0.7 million compared with $1.2 million in the same quarter last year. The decrease was primarily due to the completion of development of a drug delivery system for aesthetic markets. We have submitted a 510(K) application for the US Food and Drug Administration and have completed most of the work on these projects.
Other income of $0.2 million for the fourth quarter of 2023 was mostly related to interest income and was unchanged from the fourth quarter of 2022. Net income for the fourth quarter of 2023 was $4.2 million or $0.26 per diluted share, and this compares with net income of $2.8 million or $0.17 per diluted share for the fourth quarter of 2022.
Adjusted EBITDA, which we define as earnings before interest, taxes, depreciation, amortization, and stock compensation expense was $5.7 million for the fourth quarter of 2023, up from $4.3 million for the fourth quarter of 2022.
To let me touch on a few out of full year financial results. Revenue for 2023 were $24.4 million compared with $44.5 million for 2022, reflecting a lower number of processing unit stall as customers deferred purchases due to macroeconomic conditions and lower sales to our customer in 2022.
Gross profit was $14.1 million for 2023 or 57.6% of revenue compared with $29.6 million or 66.5% of revenues for 2022, reflecting a lower number of units sold and higher cost of charge by vendors in 2023. Selling and marketing expense was $5.6 million for 2023 compared with $6.3 million for 2022 due to lower compensation expense offset by higher tradeshow expenses.
General and administrative expense was $5.2 million for 2023 compared with $5 million for 2022 with the increase, reflecting higher professional fees and compensation expense. R&D was $3.7 million for 2023 compared with $3.5 million for 2022 with the increase largely due to expense related to the development of a drug delivery system for aesthetic use.
Other income net of $1 million for 2023 was mostly related to interest income. Other income net of $13.2 million for 2022 was related primarily to the gain of [$12.8 million] on the sale of non-core assets. Net income for 2023 was $0.5 million or $0.03 per diluted share. And this compares with net income for 2022 of $24.2 million or $1.46 per diluted share. Net income for 2022 includes the [$12.8 million] gain on the sale of a non-core asset. Adjusted EBITDA for 2023 was $0.3 million compared with $28.1 million for 2022.
Turning now to our balance sheet, cash and cash equivalents, as of December 31, 2023 were [$23.1 million] versus [$25.5 million] as of December 31, 2022. The company had no outstanding borrowings under its revolving line of credit as of year end 2023 or 2022.
We built finished goods and inventory and prepaid for materials earlier during 2023 in part to get ahead of any pricing price increases after prepared for the anticipated growth, especially from the recurring revenue model at the end of 2023, inventories were $11.9 million, well above $3.5 million as of the end of 2022.
Prepaid inventory was $3 million at the end of 2023 versus [$6.6 million] at year end 2022. Our cash spend continues to be very focused and highly disciplined. Nevertheless, our balance sheet positions us well to take advantage of the compelling growth opportunity we may come across or that we may create ourselves as a final comment. Please see the table in the news release we issued earlier today for a reconciliation of GAAP to non-GAAP financial measures. With that, I'll turn the call back to Joe.
Joe Sardano
Thanks, Javier and Michael. The ROI for our premium SRT. system under our fair market value leasing program continues to be compelling. And although it's early, our initial introductions of our recurring revenue model are being met with great deal of interest with the many upcoming medical meetings, I'm sure will gain momentum for this program as the word spreads published, studies have shown that SRT clinical results are as good or better than most certainly surgery and certainly it's non-invasive leaving no scar.
There's no question that SRT and IGSRT have become the number one option for surgery as I've said many times, we are still in the early stages of tapping the enormous market opportunity for SRT just in non-melanoma skin cancer and keywords.
Our systems are well positioned in a large and largely untapped market. They provide a compelling alternative to surgery for millions of patients and arguably the only solution to prevent the recurrence of keloids following excision as an overlay to all of this, an estimated one in five Americans will develop skin cancer during their lifetime.
This tells us that nearly 70 million people will have non-melanoma skin cancer. So clearly there's a need for our SRT systems both now and even more so in the future, we are confident that Sensus is positioned for success, and we have a great team to drive growth amid and implement our strategies. With those comments, I thank you for your time and attention. And now, operator, we're ready to take questions.
Question and Answer Session
Operator
(Operator Instructions) Alex Nowak, Craig-Hallum Capital.
Alex Nowak
Okay, great. Good afternoon, everyone. Joe, I was hoping you could expand on the new recurring model that you've placed here on maybe kind of walk through how this came together, all the work you've been doing in the background to make it possible and maybe some can touch on the economics, just some more detail as you're venturing into the recurring model versus the CapEx model that we certainly know very well.
Joe Sardano
Sure. First of all, we've been evaluating this on this model for quite some time. And we wanted to make sure that we were at timing it right for when we would bring it to market. And I would tell you that over the last year to two years. We've been engage with our customer base, our prospect base, who have continued to ask us to get involved in a recurring model of recurring revenue models such as this.
And so in listening to them, we've decided to that this is the right time for us to come into this market. And it is a good opportunity to complement the existing offerings that we have in fair market value leases as well as the other SRT-100 products that we have as well.
So with that being said, the model is a model where we can come in and provide a service using our technology along with that HR or people that would assist. We've provided some support with the CureRays people being able to provide oversight for these customers.
And we're working closely with the independent dermatology base on the coding and billing experts that could help us and help our customers with that endeavor. So we think that we have all the tools necessary to provide a turnkey position with the SRT-100 vision IGSRT program that gives them another choice in getting SRT into their practice.
Alex Nowak
Makes total sense. You might not want to go into the economic piece on the call here, but I'll strive for it anyway. If you place an SRT vision, is this something that will be under normal utilization paid, so back over? Help us out around there.
Joe Sardano
Yes. Of course, the you know, it has to work out for both sides. So for us, it will allow us to get involved with the recurring revenue model. And I would tell you this that I think that we will target a bunch of units that will be installed this year, and it'll probably be the first quarter and second quarter of next year.
Before we start recognizing and substantial or incremental revenues that we can claim for the following year. I don't see significant revenues happening this year, but I think that will be a start. And I think as we continue to place systems over the coming years, it will generate an awful lot of revenue for the company long term, along with selling the products as well.
Alex Nowak
Yeah, no doubt. Does the model change the skin care relationship at all?
Joe Sardano
No, it shouldn't. I think this complements the offering that we have skin cure is doing very, very well on their own. They have an excellent format and an excellent model that works very, very well for the customer base that they have. But it seemed like over the last year or so that there were customers or prospects that were left out of that where they didn't want to go one way or the other. And this provides them with an alternative. So for us, it's just an additional tool that allows a lot more prospects to come into the into play.
If you look at what we did with with the fair market value lease that provided a lot of customers the opportunity to move up from an SRT-100 and SRT-100 Vision. So it made it more affordable this is going to further enhance the more customers to want to get involved with SRT-100, especially the 100 vision IGSRT. product and what we're trying to do overall is make this more available to more patients who are looking to get this done. So this just adds to our vocabulary, if you will, or the armaments that we have the tools in our toolbox.
Alex Nowak
And then just maybe just a last set of questions. A big Q4 bounce back after what has been a difficult, but for 18 months with the market environment that's out there that I can dermatology just expand on what you're seeing out there queue for this to turn it back. We're going to be 2024, you could be back in a positive momentum from here was how our Q1 place is looking like. And then just lastly, on the cost cuts, it looks like the implement implement a number of cost cuts. Maybe walk through a little bit more there, what's going on?
Joe Sardano
Sure. Well, if you recall, we announced after the first quarter that we had been speaking to a lot of our customers, thanks to the early meetings and conferences that we had in February and March as we are coming up on those same types of meetings again this year.
And in listening to those customers, we started to understand where they were, where they were hurting and how they were getting impacted by the economy and inflation with less people coming through their doors, getting the aesthetics of work that they required, which was cash business for them.
And based on that and then following up at the AAD, I mean, it was pretty much clear where the market was going. And after the first quarter, we pretty much announced that to a lot of people not a lot of people believed us at that time, but I think that it proved out over the course of the year.
And quite frankly, everything that we said would happen as we forecasted the order and provided what we thought was guidance for where the year was going. I think it proved out exactly where where we were and I think we did a little better than where the market actually was leading us from the first second and third quarter and then when we got into the fourth quarter.
So how does this look for the first quarter and beyond for 2024? Well, of course, we have excitement as we're moving into the new year because we ended the year with some great momentum. We're introducing a new model, which we think is going to take up a lot of space as far as taking on a lot of products that we're going to install.
But I think it's also going to lead to more sales because I think people are going to continue to buy the product versus having to share revenues with anybody I think it's going to bring some customers to base and give them a give us a whole lot more flexibility on what we're offering.
And then, you know, we're pushing really really hard with the FDA for the TBI product, and we're gaining a lot of interest in that. We can't really push it or sell it. We can show it as a works in progress, but there's once we get FDA clearance for that. I think it's going to generate some good revenue when you're looking at $1 million to $2 million is what we're predicting or identifying as that potential revenue for the entire year.
So with all that being said, yeah, we hope that there's no more real strike. We hope that there's no more inflation. These are all things that we can't control. We're in the middle of an election year, take all that away, and we're enthusiastic about what we're doing because more and more patients are going to have access to SRT, which means that they're going to have more and more treatments being done on SRT.
And we want to participate in that and that in the short and long term is going to generate more revenue for us. So I think we're establishing ourselves with a total solutions turnkey type of operation to address almost every instance that our customers looking for to require SRT because they recognize the fact to that they need SRT to treat skin cancer because there's just not enough doctors to go around for the amount of skin cancer that exists.
So we're excited. It's going to hit on all the revenue points that we possibly can get, including recurring revenues now that we're looking at on top of service revenues that continue to increase. And so we just have to say that we're very enthusiastic and we're just going to drive and execute as we happen.
Again, I'm going to thank the entire team headed by a heavier that's kept us extremely disciplined on our on our expenses, and we've always been extremely mature about those and disciplined about it. And I think that we continue to be even more disciplined as the years go on and as the months and days go on. So again, we're overall overexcited than never in every way.
Alex Nowak
It's great to hear. Appreciate the update, I think you know.
Joe Sardano
Thank you, Alex.
Operator
Yi Chen, H.C. Wainwright.
Yi Chen
Thank you for taking my questions. My first question is the number of systems shipped in the quarter. That includes the assistance under the recurring revenue model, correct?
Joe Sardano
No, it doesn't.
Yi Chen
No, it doesn't?
Joe Sardano
No, it doesn't.
Yi Chen
Okay. So --
Joe Sardano
The units that we talked about were ones that recognize revenue.
Yi Chen
Okay, so for 2024, do you expect the models under the recurring revenue, the systems shipped under the recurring revenue model could increase significantly and maybe potentially overtake the number of systems are shipped under the capital purchase?
Joe Sardano
We don't feel that way, Yi. We think that it's going to complement our selling. But again, it's not going to I don't think it's going to overtake selling the equipment outright, but it's just another way for our customers to acquire the system. Now, I don't know what it's going to be like in a year or two years from now. But I would tell you that in this first year of initiating recurring revenue model, we still expect to sell more units than provide in the recurring revenue model platform.
Yi Chen
Got it. Do you have to share any part of the recurring revenue with CureRays?
Joe Sardano
No.
Yi Chen
Okay, got it. Can you provide a rough guidance at this point on how many systems you expect to be shipped in 2024?
Joe Sardano
You know, I don't want to go there. We're always going to trying to push for more. But you know, again, it all depends on how the year works out. I mean, when we started when we were at this last year at this time, we were expecting some big things happening in 2023 after such, a great fourth quarter as well. But things didn't turn out that way.
Inflation hit really hard. So it makes you worry about predicting things and the same things we would rather we overachieve and under commit versus going the other way, we don't want to disappoint anybody, but I can assure you that everybody in the team is going to work very, very hard to make sure that we achieve better than what we did the year before.
Yi Chen
Okay, got it. And shall we expect the gross margin to improve in 2024 as you place more units under the recurring revenue model?
Javier Rampolla
So I would give the margins, Yi, the way they are right now versus basically in the early stage of this program. So I will just keep them the way it is, and that will continue to improve as we continue developing this program.
Yi Chen
Okay, got it. Thank you.
Operator
Anthony Vendetti, Maxim Group.
Anthony Vendetti
Thanks. So if we could just dig in a little more into the utilization trends that you're seeing for the systems that you have out there? And do you have a total installed base at this point number that you can share? And then just just just an update. I know you're awaiting FDA approval for the for your transdermal fusion system, but where is that exactly and I guess obviously up to the FDA, but what's your expectation for a final approval?
Joe Sardano
Number one, we have over 750 installations of SRT products around the world. So we're closing and hopefully sometime in this fiscal year, we'll hit 800 and and go beyond the We submitted the TDI product in October of 2023.
And you know, I couldn't predict when the FDA will finally approve it, but we sure would like to get FDA clearance by the time we get to the AAD in March of the second week of March. If we had that approved, I think that we could start shipping units in April.
We've begun the process of working with manufacturing and getting things lined up for that process. So I think that we'll be ready to ship in the second quarter of this year as long as we get FDA clearance in the first quarter.
Kim Golodetz
Okay, that's great. And just any type of utilization trends that you're able to glean from your Sentinel system or just from what you're hearing from the physicians?
Joe Sardano
Yes, I think that we're seeing the same as we've seen in the past with the 27% increase year over year. Clearly, the volumes continue to go up and so there's more and more people that are getting, they're their body scans or whatever for for skin cancer, and they seem to be choosing the noninvasive way of being treated.
So it's a fast way. It's a more productive way. It's a good cash flow for the doctors. There's a lot of good points for all of this to happen. And I think that trend is going to continue to grow. And there's no question in my mind, as I've stated before, that this will sooner or later become the number one choice for the treatment of non-melanoma skin cancer. I think it will be the treatment of choice very, very shortly.
Anthony Vendetti
Okay, great. And then just let's just lastly on in terms of the recurring model, you know, is there a minimum number of treatments, I know in the fair market lease, it's relatively it's [2, 2.5] depending on the interest rate, I guess treatments per month or whatever to just breakeven, which is which is obviously a bit of not a not a large number, but in terms of how many treatments do they have to perform in order to get the placement or is it a placement and it's just a revenue sharing program?
Joe Sardano
Yeah, first of all, our both to patients is the approximate breakeven to own a system or to buy a system. There's not a minimum number of units or patients that must be delivered with a recurring revenue. But I would tell you that we don't have any of our customers currently with SRT that do less than 10 patients a month. For the most part. We have some customers that are doing 50 and 60 patients a month. So we're seeing some very high volumes at those sites.
And so clearly, we're going to approach the customers and the customers who are interested in this model are the ones that know that they have some some decent volumes, they're going to come to us, and we're going to come to whatever agreement we're going to establish But clearly, I think the model that we're going to have is that if the doctors do a lot of patients, they're going to have the ability to keep most of their money. And I think that's going to be a fair valuation for us.
And I think that it's going to be profitable for us and profitable for them. So we're looking forward to introducing this model to them. I think that they'll agree that this is something that is going to be worthwhile for them to review. But I will also tell you this if we made 10 presentations to 10 different customers on the recurring revenue model, I bet you [five] end up buying it anyway, right, right.
Anthony Vendetti
Okay. Especially if you say as you're saying that the on average and the physicians that they purchased the product see 10 patients a month and some see many more than that, they may decide to fair market lease is a better way of going at the sharing revenue. So but you're giving them the option, which theoretically first so for some that are reticent necessarily to either go the lease route or lay out the cash could could increase the adoption rate in 2024.
Michael Sardano
Additionally, this is Michael. Anthony, how are you?
Anthony Vendetti
Hey, how are you, Michael?
Michael Sardano
Good. Part of this model also is that we're going to be taking away some of the work from an operations standpoint that go into the practices. So certain practices are actually willing to pay, you know, us from the outside to supply some personnel that would take away some of the operational work from the practice itself so that they could concentrate on other areas of the business. So we would be supplying some of those personnel to then take away that work.
Anthony Vendetti
Okay, interesting. Okay, great. That's helpful color. I appreciate it. I'll hop back in queue. Thanks.
Operator
(Operator Instructions) Ben Haynor, Alliance Global Partners.
Ben Haynor
Yeah, gentlemen, thanks for taking my questions. Can you hear me okay?
Joe Sardano
Yes, sir.
Michael Sardano
Hey, Ben.
Ben Haynor
Hey, guys. So just to maybe clarify how many different components that will go into the recurring revenue model? I mean, it sounds like there's, you know, potential for rental. There's potential for a click fee. There's potential for some of the folks that are the personnel that you're putting on the ground of, what could that fee income number? How do you -- how does that fee ultimately get put together on the modem portfolio whatever?
Michael Sardano
Thanks. And Ben, it's Michael. Thanks for the questions. So there's really two components to it. There's the device component and then there's the personnel component so on the devices side is simple. It's the SRT-100 Vision and they utilize it the same way that they would if they purchased it or lease it. And on the personnel side, as I just said to Anthony, we would supply these personnel mainly a radiation oncologist and RTT. and a physicist to do the work that these practices are usually on their own for.
So for instance, if you bought a car, I always just used cars as an example, you'd have to take the car in Toyota or what have you and have that fixed. We'll now we're going to do that for you. In addition, we can drive the car for you and we can do all of the things you'd normally have to do from a responsibility standpoint and an operations aspect. So some practices are very interested in just because they're so busy with other things.
Ben Haynor
Okay. And then I just thought I mean, you have a sense on how much demand, though was out there for the recurring revenue model and provide the personnel that you haven't been able to fulfill just because we haven't had in the past.
Joe Sardano
Well, I can tell you that based on the meetings that we've had with people and people ask me about the model and you're interested in getting into this. And I think the interest is very, very high. And so I think the opportunity to make these presentations is extremely important.
And I think the biggest impact that we're going to have is going to be with the bigger models, the bigger private equity back groups that are looking at this model and being very, very serious about it because they would like to use their capital to buy more clinics. And so we free up a lot of their capital to be able to do that. So I think that's where our biggest opportunity is going to be with this model.
Ben Haynor
Okay. That's certainly helpful. And then on the expense side of the equation, obviously great job controlling expenses, in particular, our sales and marketing. Is that decline partially a function of moving to the recurring revenue model as well? Or is that just straight up cost?
Javier Rampolla
So in Q4, we experienced a one-time reduction in compensation expense that we recorded. So that is basically what is driving the decrease in sales and marketing in Q4, Ben.
Ben Haynor
Okay. Can you quantify that for me, [is that $0.5 million]?
Javier Rampolla
It was about [$800,000].
Ben Haynor
Okay, great. I guess that's all I had gentlemen, I'll take the rest offline.
Operator
This concludes our question-and-answer session. I'd like to now turn the conference back over to Joe Sardano for any closing remarks.
Joe Sardano
Thank you. Thank you once again for your time this afternoon, and for your interest in Sensus Healthcare. I'd like to mention that we'll be participating in the 36th Annual ROTH Conference being held in Dana Point California from March 17 through the 19, and I hope to see some of you there. We'll speak with you again when we report first quarter financial results in May. In the meantime, thanks again for joining us today.
Operator
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect your lines.
