Sensus Healthcare, Inc. (SRTS): 5 FORCES Analysis [Nov-2025 Updated]

You're looking at Sensus Healthcare, Inc. (SRTS) right now, and honestly, the numbers from Q3 2025-only $6.9 million in revenue and a $0.9 million net loss-tell a story of real pressure. That massive customer concentration risk, where one US buyer swings between 59% and 65% of your total sales, is a huge red flag, even with over 900 SRT systems installed globally. Before making any big moves, you need to map out exactly where the competitive fight is coming from. So, let's break down Michael Porter's Five Forces for Sensus Healthcare right now to see just how much leverage suppliers and customers really have, and what threats are lurking just outside that installed base.

Sensus Healthcare, Inc. (SRTS) - Porter's Five Forces: Bargaining power of suppliers

You're looking at the cost structure for Sensus Healthcare, Inc. (SRTS), and the supplier side of the equation definitely warrants a close look. The nature of their Superficial Radiation Therapy (SRT) devices means that specialized, proprietary medical device components drive a significant portion of the Cost of Sales. Honestly, when you see gross margins dip, supplier costs are often a key lever.

For the first nine months of 2025, Sensus Healthcare reported a Cost of Sales of $12.6 million. This contributed to a year-to-date gross profit of $10 million, representing a gross margin of only 44.4% of revenues for that period. To put that in perspective against the prior year, the Q3 2025 gross margin was 39.1%, down from 59.1% in Q3 2024. Management noted that higher costs of servicing the system and costs associated with the Fair Deal Agreement program were large drivers of this decline.

The reliance on external sourcing for the core technology, which is proprietary low energy x-ray radiation technology, suggests that a small pool of qualified vendors likely exists for high-tech parts like specialized X-ray tubes or ultrasound modules necessary for the SRT-100™, SRT-100+™, and SRT-100 Vision™ systems.

Here's a quick look at the financial context for the first nine months of 2025, which shows the impact of these costs:

Switching costs for critical, FDA-cleared components are definitely high. If a component is integral to an FDA-cleared device, re-qualifying a new supplier involves extensive testing, documentation, and potentially new regulatory submissions, which ties up resources. You can see the investment Sensus Healthcare is making in development, with Research and Development expense reaching $4.1 million for the first half of 2025. This R&D spend is partly for new products, but also for lobbying related to reimbursement, indicating a focus on the existing technology platform.

Even though Sensus Healthcare, Inc. manufactures in the US, as evidenced by their Boca Raton, Florida headquarters, they still rely on external component sourcing for their systems, of which they have sold more than 900 globally since launch.

The supplier power dynamic is shaped by these factors:

• Reliance on proprietary technology components.
• High capital expenditure for component re-qualification.
• Supplier leverage in specialized, high-tech medical parts.
• Impact of service costs on gross margin performance.

Finance: review Q3 2025 inventory valuation against Cost of Sales to isolate potential component inventory write-downs by next Tuesday.

Sensus Healthcare, Inc. (SRTS) - Porter's Five Forces: Bargaining power of customers

The bargaining power of customers for Sensus Healthcare, Inc. (SRTS) is assessed as extremely high, primarily driven by significant revenue concentration risk within its customer base. This concentration means that the decisions of a few key accounts carry disproportionate weight on the company's top-line performance.

One US customer, in particular, has historically represented a substantial portion of the revenue base, with recent analysis pointing to this single entity accounting for a concentration risk between 59% to 65% of recent total revenue. This level of dependence gives that customer considerable leverage in negotiations regarding pricing, payment terms, and order volume.

The customer base itself is not composed of small, unsophisticated buyers. Sensus Healthcare primarily serves sophisticated healthcare providers, namely dermatologists and hospitals. These entities employ financial and clinical staff who thoroughly evaluate the return on investment (ROI) for medical equipment, especially given the capital intensity of purchasing an SRT system outright. Furthermore, the recent establishment of dedicated CPT® codes by CMS, which management noted increased delivery code reimbursement by more than 300%, is a direct response to the need to improve the ROI calculation for these sophisticated buyers.

The power of these customers is further amplified by the structure of the Fair Deal Agreement (FDA) lease model. This model is designed to offer practices ease of adoption by alleviating the need for significant upfront capital investment, linking revenue generation directly to patient treatment volume. While this drives recurring revenue for Sensus Healthcare, it inherently means customers face low switching costs for the service component, as they are paying per treatment rather than being locked into a depreciating asset purchase. The growth in this model shows customer preference for flexible, usage-based economics: Fair Deal Agreement (FDA) program treatment volumes increased by 20% from the second quarter of 2025 and 52% compared to the first quarter of 2025.

Finally, customers retain the ability to defer large capital purchases, which directly impacts Sensus Healthcare's unit sales figures. This is evident in the year-over-year comparison of system shipments, which directly correlates with revenue volatility. The impact of such deferrals was clearly visible in the third quarter of 2025 unit sales.

Here's a quick look at the unit sales impact:

The drop in Q3 2025 shipments to 16 units from 27 units in Q3 2024, driven by lower sales to that large customer, demonstrates the immediate financial consequence when a major customer chooses to slow capital expenditure or adjust order cadence. The fact that this single large customer accounted for 10 of the 16 units shipped in Q3 2025 underscores the concentration risk.

The customer's power is further evidenced by the financial results:

• Q3 2025 Revenue was $6.9 million, down 21.6% from Q3 2024's $8.8 million.
• Nine Months 2025 Revenue was $22.5 million, a decrease of $6.2 million (or 21.6%) versus the first nine months of 2024.
• Gross Margin compressed to 39.1% in Q3 2025 from 59.1% in Q3 2024, partly due to lower sales volume.

Sensus Healthcare, Inc. (SRTS) - Porter's Five Forces: Competitive rivalry

You're analyzing the competitive landscape for Sensus Healthcare, Inc. (SRTS) as of late 2025, and the rivalry force is definitely showing some strain. The intensity here is best described as moderate to high, driven by the need to displace entrenched, established treatment protocols in dermatology and oncology. For many conditions, physicians default to familiar surgical or topical treatments, which means Sensus Healthcare, Inc. has to prove not just efficacy, but a compelling economic and workflow advantage over the status quo.

Rivalry is also high when you look at the broader medical equipment space. While Sensus Healthcare, Inc. has a specialized niche with Superficial Radiotherapy (SRT), they compete for capital expenditure dollars against other device manufacturers offering solutions for skin conditions or even adjacent radiation oncology applications. The pressure is evident in the financials; the Q3 2025 net loss of $0.9 million, compared to a net income of $1.2 million in Q3 2024, shows the financial pressure inherent in this competitive environment. Also, the gross margin compression-falling to 39.1% in Q3 2025 from 59.1% in Q3 2024-suggests pricing or cost-of-sales challenges within this competitive dynamic. Honestly, managing costs is key when you are fighting for market share.

Still, Sensus Healthcare, Inc. has built a base that offers some insulation. The installed base is stated to be over 900 SRT systems globally, which is a significant anchor. This installed base creates a network effect, meaning more installed systems lead to more clinical experience, more data, and potentially easier adoption for new customers due to familiarity among peers and service infrastructure. Here's a quick look at the recent unit movement:

Differentiation remains a core competitive tool for Sensus Healthcare, Inc. The SRT-100 Vision's Image-Guided (IG-SRT) technology is a key differentiator. This technology allows physicians to visualize the treatment area in real-time, which directly addresses the precision concerns that often fuel rivalry against established methods. This capability helps move the conversation from simple device sales to offering a superior, data-backed treatment platform. The company exited Q3 2025 with $24.5 million in cash and no debt, which provides a financial cushion to continue investing in this differentiation against competitors.

The intensity of rivalry is also shaped by the recent regulatory wins, which, while positive, also signal a more formal competitive arena. The Centers for Medicare & Medicaid Services (CMS) established dedicated CPT® codes validating SRT for treating non-melanoma skin cancer. This is a double-edged sword; it reduces reimbursement uncertainty, which helps adoption, but it also formalizes the playing field, making it easier for rivals to benchmark and compete directly on economics. The operating expenses for Q3 2025 hit $5.3 million, up from $3.7 million in the prior year period, indicating increased investment-likely in sales, marketing, and G&A to fight for mindshare in this newly clarified, yet still competitive, market.

You should watch the following factors that feed into this rivalry:

• Displacement of surgical procedures for NMSC.
• Adoption rate versus established radiation oncology practices.
• Success in expanding treatment indications beyond NMSC and keloids.
• The ability to maintain gross margins above the recent 39.1% level.

Finance: draft 13-week cash view by Friday.

Sensus Healthcare, Inc. (SRTS) - Porter's Five Forces: Threat of substitutes

You're looking at the competitive landscape for Sensus Healthcare, Inc. (SRTS), and the threat from substitutes is definitely a major factor you need to model. These are established, clinically proven alternatives that treat the same conditions-non-melanoma skin cancer (NMSC) and keloids-but use different technologies or procedures. Honestly, this is where the rubber meets the road for any non-invasive device company.

The surgical gold standard, Mohs surgery, presents a formidable benchmark. Mohs surgery is the surgical gold standard with 98% to 99% cure rates for primary basal cell carcinoma, and cure rates around 95% to 96% for squamous cell carcinoma. Even for recurrent cases, Mohs maintains a high cure rate of about 94%. The recurrence rate for primary tumors treated with Mohs Micrographic Surgery is less than 1%. This high efficacy sets a very high bar for any alternative therapy like Sensus Healthcare's Superficial Radiation Therapy (SRT).

Other substitutes include standard excision, cryotherapy, and topical chemotherapy, all of which have their own established patient pathways and physician familiarity. To be fair, the established nature of these treatments means they are well-understood by payers and providers, which can slow the adoption of newer modalities. For instance, while Mohs surgery is typically completed in one to two visits, SRT requires a commitment of 15 to 20 treatments over several weeks.

SRT's value proposition hinges on being non-invasive, which directly addresses the drawbacks of surgery, especially concerning cosmetic outcomes. While 94 percent of Mohs patients report being satisfied or very satisfied with the cosmetic outcome, satisfaction with the outcome of SRT is reported as much lower. This is a critical trade-off you need to weigh. The non-invasive nature of SRT means no cutting and no anesthesia, which is a huge plus for many patients, particularly older adults or those with underlying medical conditions. However, the data on side effects for SRT shows potential cosmetic concerns that must be factored in:

The cure rates for SRT are competitive but generally sit below the Mohs standard for primary NMSC. Image-guided SRT (IG-SRT) cure rates range from 90-95%, though some literature suggests rates as high as 99.5% for NMSC. The recurrence rate for all NMSCs after standard SRT was approximately 5%. The recent establishment of dedicated CPT codes by CMS validates SRT for non-melanoma skin cancer, which should improve economics and reimbursement certainty, potentially narrowing the gap against surgical options. For context on Sensus Healthcare's current operational scale against this competitive backdrop, Q3 2025 revenues were $6.9 million, and they shipped 16 SRT systems. FDA treatment volume, however, showed strong sequential growth, up 20% over Q2 2025.

The key action here is monitoring how the new CMS CPT codes-which offer compelling economics-translate into market share gains against the established surgical procedures. Finance: draft 13-week cash view by Friday.

Sensus Healthcare, Inc. (SRTS) - Porter's Five Forces: Threat of new entrants

You're assessing the barriers for a competitor trying to break into the Superficial Radiotherapy (SRT) market where Sensus Healthcare, Inc. (SRTS) operates. Honestly, the threat of new entrants is kept in check by significant structural hurdles, primarily regulatory and capital requirements.

New players face an immediate, costly gauntlet with the Food and Drug Administration (FDA). Developing a novel medical device, especially one for oncology, demands navigating complex approval pathways. For instance, the FDA user fee for a Premarket Approval Application (PMA) in Fiscal Year 2025 alone was set at $445,000. If a new entrant needs to submit a standard premarket application, the FY 2025 user fee is $540,783. To put this in perspective for a device like Sensus Healthcare's, which combines imaging and therapy, the total estimated cost to bring a Class II device to market without requiring clinical data can still range from $500K-$2M. For a more complex Class III device, that cost balloons to an estimated $5M-$119M+.

Beyond the direct FDA fees, the capital required for the underlying research and infrastructure is substantial. Sensus Healthcare, Inc. reported its Research and Development expense for the third quarter of 2025 as $1.8 million. This level of sustained investment is necessary to keep pace. To fund this, Sensus Healthcare, Inc. ended Q3 2025 with $24.5 million in cash on its balance sheet, a war chest that a startup would struggle to match initially, especially while also trying to generate revenue, which for Sensus Healthcare, Inc. totaled $22.5 million for the first 9 months of 2025.

Sensus Healthcare, Inc.'s intellectual property (IP) portfolio acts as a strong deterrent. The company's SRT technology is the result of over a decade of research and development. A key piece of this protection is U.S. Patent No. 11,894,123 B2, issued in February 2024, which specifically covers the workflow management system integrating high-frequency ultrasound and optical imaging data for the SRT-100 Vision system. Furthermore, the proprietary Sentinel software platform, which offers real-time remote monitoring and asset management, is a Sensus Healthcare, Inc. exclusive, adding a layer of technological lock-in.

Finally, a new entrant must overcome the established market presence and distribution strength. Sensus Healthcare, Inc. has built a significant installed base that provides a recurring revenue foundation. As of Q3 2025, the company noted it had sold more than 900 systems globally since the platform's launch, having surpassed 880 systems in early 2025. To service and grow this base, Sensus Healthcare, Inc. has established distribution channels, such as partnering with Radiology Oncology Systems (ROS) for nationwide hospital and oncology center coverage. A new competitor would need to replicate this scale, which takes time and capital, even if they only manage to ship the 16 SRT systems Sensus Healthcare, Inc. shipped in Q3 2025.

Here is a quick look at the key barriers:

• FDA PMA user fee for FY 2025: $445,000
• Estimated Class II device total cost: $2M-$30M
• Q3 2025 R&D expense: $1.8 million
• Global installed base (Q3 2025): Over 900 systems
• Key patent covers imaging/therapy fusion

The required investment in regulatory compliance and market penetration suggests the threat remains low to moderate for any company not already possessing deep pockets and specialized medical device expertise.

Finance: review capital expenditure plan against competitor funding estimates by end of month.