Sensus Healthcare (SRTS) Q3 2025: SRT Reimbursement Codes Jump 300%, Unlocking Demand Surge
CMS approval of dedicated SRT reimbursement codes, with a 300%+ rate increase, marks a watershed for Sensus Healthcare’s dermatology business, setting the stage for a demand inflection in 2026. Despite near-term margin compression and lower system sales, the company enters a new era of reimbursement certainty, fueling pent-up provider demand and accelerating the shift to non-surgical skin cancer treatment. Investors should watch for rapid adoption, margin normalization, and international expansion as key levers for the next phase of growth.
Summary
- Reimbursement Certainty Transforms Market: New CMS codes for SRT dramatically improve office-based economics and adoption potential.
- Pent-Up Demand Set to Release: Delayed orders and 11 pending sites position Sensus for a strong Q4 and 2026 pipeline.
- Recurring Revenue and Global Expansion: Sentinel platform upgrades and international certifications lay groundwork for durable, diversified growth.
Performance Analysis
Sensus Healthcare’s third quarter reflected a transitional period as system sales fell sharply due to order pauses tied to reimbursement uncertainty. Revenue dropped as unit shipments decreased from 27 to 16 YoY, with a pronounced impact from a large customer’s lower purchases. Gross margin contracted to 39.1% amid higher service costs and investments in the Fair Deal Agreement (FDA, a shared-risk placement model) program, while operating expenses rose due to lobbying, R&D, and salesforce expansion efforts.
Despite these near-term pressures, utilization trends within the FDA program surged—treatment volumes rose 20% sequentially and 157% since program launch, indicating strong patient and provider demand for non-invasive SRT therapy. The quarter also saw Sensus maintain a robust $24.5 million cash balance with no debt, and a sizable inventory of nearly 100 SRT systems, positioning the company to rapidly fulfill orders as reimbursement clarity unlocks pent-up demand.
- Revenue Headwind from Deferred Orders: Sales softness was attributed to customer hesitancy pending CMS decisions, not underlying demand weakness.
- Margin Compression Driven by Investment: Elevated R&D and lobbying costs weighed on profitability but are expected to yield long-term returns.
- Utilization Acceleration Offsets Sales Dip: FDA program treatment growth signals sustainable adoption, even as outright sales paused.
With reimbursement clarity now secured, management expects both system placements and recurring revenue streams to rebound, setting a foundation for margin recovery and growth into 2026.
Executive Commentary
"Earlier this week, CMS published first-ever dedicated CPT codes for superficial radiotherapy in non-melanoma skin cancer and keloids... they also represent an increase in SRT delivery code reimbursement per fraction of more than 300% compared with the current codes being used."
Joe Sardano, Chairman and Chief Executive Officer
"The goal of our lobbying efforts and the outcome of these new CPT codes is that the gap will now narrow between the office-based reimbursement and hospital outpatient rates. Leveling the playing field with hospital systems significantly strengthens the ROI for using SRT in dermatology offices and could expand adoption."
Michael Sardano, President and General Counsel
Strategic Positioning
1. Reimbursement-Driven Market Expansion
Dedicated CMS codes for SRT, superficial radiotherapy, fundamentally alter the economics for dermatology practices, aligning office-based reimbursement with hospital rates and removing a key adoption barrier. This milestone, the result of years of lobbying and clinical validation, is expected to trigger a wave of new installations and utilization growth as providers gain confidence in reimbursement stability.
2. FDA Program and Recurring Revenue Model
The Fair Deal Agreement (FDA) program, a shared-risk equipment placement model, continues to deliver double-digit treatment growth, demonstrating the power of recurring revenue and utilization-based economics. Management is focused on scaling this model, which benefits from the Sentinel software platform’s monitoring and analytics, supporting retention and deeper practice integration.
3. Product Pipeline and Digital Platform Advancements
Sentinel, Sensus’ proprietary software platform, underpins the company’s shift toward data-driven, scalable solutions. The upcoming Sentinel 2.0 upgrade aims to enhance analytics, reporting, and practice management capabilities, appealing to large dermatology groups and private equity-backed networks seeking standardized care and operational efficiency.
4. International Expansion and Certification
MDSAP certification, a global regulatory standard, opens access to key markets including Japan, Canada, Brazil, and Australia. With initial shipments to China and trade show participation in Japan, Sensus is laying the groundwork for international revenue to reach 20% of total sales over the next 12 to 24 months, diversifying its growth base and reducing reliance on the US market.
5. Portfolio Flexibility and Market Adaptation
Sensus is evolving its product mix in response to changing reimbursement dynamics. The SRT-100, a lower-cost system, is poised for increased demand, while the Vision platform’s advanced imaging and Sentinel integration remain critical for enterprise customers. Sentinel 2.0 will further blur the line between the two, supporting broad market coverage.
Key Considerations
This quarter marks a strategic inflection for Sensus, as reimbursement certainty transforms the addressable market and unlocks operational leverage. Investors should weigh the following:
- Reimbursement-Driven Demand Surge: The >300% code increase is expected to drive both pent-up and new demand, particularly from dermatology offices previously hesitant to invest.
- FDA Program as Growth Engine: Utilization-based recurring revenue is gaining traction, with treatment volumes up 157% since launch and expected to remain a core driver.
- Margin Recovery Potential: One-time lobbying and R&D costs should moderate, while higher utilization and improved product mix support long-term margin expansion.
- International Ramp and Diversification: Initial traction in China and Japan, plus MDSAP access, could accelerate global adoption and buffer against US market cyclicality.
- Sentinel Platform as Differentiator: Enhanced analytics and practice integration position Sensus for stickier relationships and competitive advantage in consolidated dermatology networks.
Risks
Execution risk looms as Sensus must convert pent-up demand into realized sales and utilization, while managing cost discipline to restore profitability. International expansion carries regulatory and timing uncertainties, and competitive responses to new reimbursement rates could intensify market dynamics. Margin normalization is not guaranteed if product mix or service costs shift unfavorably.
Forward Outlook
For Q4 2025, Sensus signaled:
- Break-even or profitable operations as pent-up demand is released and system placements accelerate.
- Strong start to 2026 with anticipated milestone of 1,000 global systems sold and initial Sentinel 2.0 results.
For full-year 2025, management did not provide explicit revenue or margin guidance but emphasized:
- Pent-up demand and new reimbursement codes will drive a strong close to the year and robust 2026 pipeline.
Management highlighted several drivers:
- 11 pending sites expected to go live in Q4, with additional pipeline growth anticipated.
- Continued FDA program expansion and international sales ramp as key contributors.
Takeaways
The CMS reimbursement milestone is a game changer, clearing the way for Sensus to capitalize on non-surgical skin cancer treatment demand and recurring revenue models. Margin pressure appears transitory, with operating leverage expected as sales and utilization rebound. International expansion and Sentinel platform upgrades offer additional growth vectors, but execution and cost management remain critical watchpoints.
- Reimbursement Inflection: The >300% code increase removes a structural barrier, unlocking both sales and utilization growth potential.
- Recurring Revenue Leverage: FDA program and Sentinel platform provide a scalable, sticky revenue base as utilization rises.
- Execution Watch: Investors should monitor the pace of system placements, margin recovery, and early international traction as leading indicators for 2026 performance.
Conclusion
Sensus Healthcare’s Q3 was a transitional quarter, but the CMS reimbursement breakthrough fundamentally reshapes its growth trajectory. With pent-up demand, a strong balance sheet, and platform investments, Sensus is positioned for accelerated adoption and margin recovery. Sustained execution on sales, utilization, and international expansion will determine the magnitude of the opportunity unlocked by this regulatory win.
Industry Read-Through
The CMS decision to grant dedicated SRT codes with hospital-level reimbursement is a bellwether for office-based cancer therapy, signaling regulatory willingness to support non-invasive, site-of-service-neutral care models. This move will likely pressure surgical alternatives and accelerate adoption of technology-driven, outpatient oncology solutions. Companies across medtech, radiation oncology, and digital health should anticipate increased demand for data-driven, recurring revenue models and prepare for heightened competition as reimbursement barriers fall.