International Isotopes on Aug. 14 reported a net loss of nearly $1.2 million for the second quarter of 2019, primarily due to expenses for ongoing remediation of a May radioactive contamination incident in Seattle.
The $1.16 million net loss was close to four times the $332,279 loss reported in the same period of 2018, the Idaho Falls, Idaho, nuclear medicine provider said in its latest 10-Q filing with the U.S. Securities and Exchange Commission. “This is an increase in loss of $824,915 and is a result of net expenses of $887,686 related to the cleanup of the contamination event that occurred at an offsite location in the state of Washington. These expenses are included in an ongoing insurance claim.”
International Isotopes employees on May 3 breached a cesium-137 source while removing an irradiator from a medical research building at the University of Washington under contract to the U.S. Energy Department’s National Nuclear Security Administration (NNSA). The company, a specialist in radioactive source removal, is now supporting remediation of the building.
Costs related to the incident exceeded $1.5 million for the six months ended June 30, the 10-Q says. As of July, International Isotopes had received $634,919 in reimbursements from its insurance provider and expects to reclaim most expenses from the cleanup project, according to the document.
“While no Company wishes to ever be faced with this type of event, I can say I am extremely proud with the manner and discipline that the employees of INIS demonstrated in dealing with, and recovering from, this event in a professional manner,” International Isotopes President and CEO Steve Laflin said in an Aug. 15 press release on the company’s latest earnings. “The Company will support the ongoing investigation into the cause of this event and will work to ensure that appropriate measures are put in place to prevent a similar event from occurring in the future.”
A company spokesperson this week referred questions on the matter to Laflin, who was out of the office and not immediately available for comment. The NNSA this week did not provide an update on the ongoing cleanup program that will enable the facility to be reoccupied.
International Isotopes reported over $2.1 million in revenue for the quarter, down from just shy of $2.4 million on a year-over-year basis. Six-month revenue fell from about $5.2 million in 2018 to $4.7 million this year, the company said in the Aug. 15 earnings announcement.
Management attributed the reductions primarily to lower revenue in its field services and cobalt products businesses: the former due to the timing of contracts and the latter due to unexpected cutbacks in its supply of cobalt when the Energy Department production reactor underwent maintenance. However, the 10-Q acknowledges that International Isotopes has “incurred substantial losses” since being incorporated in 1995.
Revenue in the company’s radiological services branch, which encompasses its source recovery work for the Department of Energy and International Atomic Energy Agency, fell 57% year over year for the quarter and 42% for the first six months of 2019. The contributors there were the contract timing situation and the contamination incident.
Cobalt product sales dropped by 34% for the quarter and 10% for the year through June 30, the earnings release says. “The Company has been working to resume cobalt sales by producing cobalt in the U.S. Department of Energy’s (DOE) Advanced Test Reactor (ATR). Delays in the ATR schedule caused by unplanned maintenance outages resulted in a delay of cobalt products sales. The Company currently expects to begin receiving this cobalt material in early 2020.”
Conversely, International Isotopes reported 29% and 4% upticks in sales for radiochemical products over the last three and six months, resulting from higher demand that is expected to continue increasing throughout 2019.
Nuclear medicine products revenue dipped by 3% in the second quarter from the same period of 2018, but was up 3% over the six-month term. That is the result of anticipated ups and downs in sales, management said.
The company’s fifth business segment, fluorine products, continues to provide no revenue and has minimal costs – $39,927 for the quarter and $77,422 for the half-year. That reflects the freeze on plans since 2013 for a depleted uranium hexafluoride (DUF6) deconversion and fluorine extraction facility in Lea County, N.M.
The plant would process DUF6, generated from enrichment of uranium for nuclear fuel, for extraction of fluorine gases that could be applied to uses such as production of microelectronics. However, there is currently only one potential waste-producing customer: Eunice, N.M.-based enrichment company URENCO USA. That company for now is storing its own waste, and the downturn in the nuclear power market suggests little likelihood of new fuel-producing customers.
Lea County deeded the land for the facility to International isotopes at no cost in August 2011. Construction was scheduled to begin by December 2014, with no fewer than 75 operations personnel hired by the following December. That did not happen, and the parties agreed in 2015 to shift the milestones to December 2015 for construction and December 2016 for hiring. “Those dates were not met, and the Company is currently in the process of renegotiating a second modification to the agreement to further extend those date,” according to the 10-Q.
If the parties cannot reach a deal, International Isotopes has the options to buy the land for an estimated $776,078, plus 5.3% interest, or return it to the county.
