Sensus (SRTS) Q2 Revenue Falls 21%

Sensus Healthcare (SRTS 0.38%), a medical device maker specializing in non-invasive dermatology treatments, reported its second-quarter earnings on August 7, 2025. The headline news was a substantial miss on both revenue and profitability, with reported GAAP revenue well below Wall Street expectations. Revenue (GAAP) dropped to $7.3 million, notably under the consensus GAAP estimate of $9.3 million and down from $9.2 million (GAAP) in Q2 2024. The firm posted a net loss per share of $0.06 (GAAP), and last year’s $0.10 profit (GAAP, Q2 2024). Gross margin shrank to 39.7%, a sharp year-over-year slide in revenue. Overall, the quarter reflected operational and market headwinds, driving a notable step back in both sales and profitability.

Source: Analyst estimates provided by FactSet. Management expectations based on management's guidance, as provided in Q1 2025 earnings report.

Business Overview and Strategic Focus

Sensus Healthcare manufactures and sells superficial radiation therapy (SRT) systems, which are medical devices that offer non-invasive treatment for non-melanoma skin cancers and keloids. Its SRT systems present an alternative to surgery by using targeted radiation, typically offered within dermatology practices and, increasingly, by radiation oncologists. The company’s product family also includes the TDI system, designed for transdermal drug infusion, though it remains pre-commercial.

In recent periods, the firm has emphasized growth in recurring revenues through Fair Deal Agreements (FDAs)—a model where Sensus participates directly in a share of patient treatment revenue rather than relying strictly on equipment sales. Management has stated that revenue from FDAs is expected to begin contributing meaningfully in the second half of 2025. Sensus is also widening its international reach, strengthening regulatory compliance, and investing in product innovation. Success depends on market acceptance of SRT, sustained regulatory clearances, robust intellectual property, and a steady supply chain for critical system components.

Quarterly Developments: Financial and Business Drivers

During the quarter, Revenue (GAAP) declined by 20.7% compared to Q2 2024, falling well below internal and external forecasts. The shortfall was mainly due to a lower number of SRT system units sold to a major customer. While recurring revenue from Fair Deal Agreements helped partially offset this decline, total device shipments fell: the company shipped 19 SRT units, including four to China, down from 21 units in Q1 2025. Management described a “mid-May” proposal to limit insurance reimbursement for procedures performed with the SRT-100 Vision system as a meaningful disruptor, with the impact directly felt in domestic sales momentum in the second half of the quarter.

The drop in revenue led to a corresponding contraction in gross profit and margin. Gross margin contracted by 19 percentage points to 39.7% (GAAP), with management pointed to higher delivery and service costs exacerbating the hit. Operating expenses climbed across the board: general and administrative costs rose to $2.0 million, up from $1.6 million; selling and marketing outlays reached $1.4 million; and research and development rose to $1.5 million, up from $0.9 million a year ago. The higher R&D spending was primarily due to increased costs associated with ongoing product development.

The loss from operations was further extended by these higher costs, resulting in a net loss of $1.0 million (GAAP), in contrast to a $1.6 million profit (GAAP) in Q2 2024. Adjusted EBITDA, a non-GAAP metric that reflects core operating profitability before excluding certain non-cash or non-recurring items, was negative $1.8 million.

International sales showed pockets of strength, with four systems shipped to China, pointing to expanding non-U.S. business. The company also received MDSAP certification for its full SRT system product range, a step supporting broader global regulatory compliance and access. In the U.S. Sensus launched a new distribution partnership with Radiology Oncology Systems, targeting expansion beyond dermatology into the hospital-based and radiation oncology sectors. Management stated that tangible results from the agreement are anticipated to begin later in 2025.

The Fair Deal Agreement model continued to see traction, with five agreements signed and four going live. FDA-based treatment volume grew 27% compared to the prior quarter. This ramp in recurring revenue is a core part of Sensus’s ongoing business transition, but it did not fully compensate for the revenue lost from fewer traditional system sales, particularly to large customers, as reflected in the results.

Management flagged rising inventories, which may reflect lower-than-expected sales or preparation for future deliveries, as inventories increased to $12.4 million as of June 30, 2025, from $10.1 million as of December 31, 2024. Accounts receivable fell meaningfully, helping keep cash steady at $22.2 million as of Q2 2025, and the company remained free of debt.

Looking Ahead: Management Outlook and Key Areas to Watch

Management did not issue formal guidance for Q3 2025 or FY2025. Executives signaled hope for improvement later in the year, especially as new distribution deals mature and the Fair Deal Agreement program continues to ramp up, but acknowledged that near-term challenges persist. Management specifically indicated that revenue from Fair Deal Agreements is expected to begin contributing meaningfully in the second half of 2025. The company’s earlier goal of returning to profitability each quarter going forward was not achieved, as it reported a GAAP net loss for the period.

The earnings release referenced proposed changes in Medicare reimbursement policy that, if enacted, could improve the economics of SRT adoption in outpatient settings beginning January 1, 2026. Until then, management expects recurring revenue from FDAs and international growth efforts to be the principal drivers, but also cited reimbursement risk as a continuing uncertainty, with meaningful FDA revenue contribution expected in the second half of 2025. For investors, the main story for the rest of the year will revolve around the pace of FDA treatment ramp-up, margin trends as the recurring revenue model scales, and further regulatory developments tied to reimbursement both in the U.S. and internationally.

Revenue and net income presented using U.S. generally accepted accounting principles (GAAP) unless otherwise noted.