Greetings! Welcome to the Assure Holdings Second Quarter 2023 Conference Call. At this time, all participants are in a listen-only mode. Please note, this conference is being recorded. I will now turn the conference over to your host, Brett Maas, of Hayden IR. You may begin.
Hello, everyone, and thank you for participating in today's conference call to discuss Assure Holdings' financial results for the second quarter of 2023. On the call today are Executive Chairman and CEO, John Farlinger, CFO, John Price. Pre-market this morning, the company issued a press release announcing its results. The release is available in the investor section of the company's website. Before we begin the prepared remarks, I'd like to remind everyone that some of the statements made today will be forward-looking statements and are made under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially from those projected or implied due to a variety of factors.
We refer you to Assure's recent filings with the SEC, including its annual report on Form 10-K for the full year, for a more detailed discussion of the risks that could impact the company's future operating results and financial condition. Also, on today's call, management will reference certain non-GAAP financial measures, which we believe provide useful information for investors. For reconciliation of these non-GAAP measures, please consult the most recently filed 10-Q associated with the filing of the earnings release for the quarter ended June thirtieth, 2023, which is available on the SEC website. This call is being recorded and will be made available for replay via a link on the company's website. Now, I'd like to turn the call over to Executive Chairman and CEO, John Farlinger of Assure Holdings. John?
Thank you, Brett. Hello, everyone, thank you for joining us today. Our second quarter results were, for the most part, off from our predicted expectations. On the revenue side of the business, the common theme and problem for Assure, the entire IONM industry and the entire healthcare industry, continues to be the battle against continued and constant downward pressure on reimbursement from insurance payers. We had optimistic expectations that the federal IDR process that started last year would help Assure and the entire healthcare industry to negotiate for equitable reimbursements for services provided. This process has not yet been successful, and earlier this week, the entire process was halted because of litigation and the apparent inequities in this process favoring the large health insurance companies. We are hoping that the courts and the federal government will intervene and bring some equity to this process in the near term.
Over the last three years, our average reimbursement from insurance payers has fallen by nearly 67%, from nearly $6,000 at the end of 2020, to just barely more than $2,000 per procedure during the midpoint of 2023. The industry remains extremely fragmented and poised for consolidation. Reimbursements to providers are presenting challenges not only for us, but for the entire healthcare and IONM industry. Many of our competitors are not well-capitalized, don't have ready access to capital, and have not made the investment in their reimbursement platform, have already become fatalities and become insolvent this year. Given our learning and experience of building a sophisticated, data-driven, revenue cycle management function, collections and cash management is a key differentiator for us in contrast to many of our competitors.
We believe there are compelling opportunities for Assure to leverage the challenges in the industry and apply our experience and scale through continued acquisitions. With the recent successful completion of a public offering for $6 million in gross proceeds, we have proven that we've obtained access to capital to help add additional volume to help grow our business. We expect to be active from an M&A standpoint, and further, we expect valuations will become even more attractive. We expect that there will be additional opportunities for Assure to serve as a consolidator and further scale our operations to get closer to break even. Our operating expenses continue to trend lower year-over-year. We've made steady, measurable progress towards increasing operational efficiencies and improving our financial profile.
During this past year, we made running lean as a key priority during the latter part of 2022, as we anticipated lower reimbursement. We proactively cut over $5 million of spending last year and exited unprofitable markets in an attempt to consolidate our business. The downward reimbursement numbers, unfortunately, were even lower than we had forecasted. We continued with the process of running leaner and continued to cut costs under the 2023. We are planning a further cost cutting, targeting nearly $2 million annually to get closer to profitability. The company will benefit from higher volumes and higher margins during the second half of 2023, as our mix in volume benefits from higher paying commercial cases in the third and fourth quarters of 2023.
Subsequent to quarter end, we announced our acquisition of assets from Innovation Neuromonitoring for $1.2 million in cash and stock. Innovation currently serves more than 3,000 surgeries each year. Which we expect and hope to significantly expand over the next 12 months. The business is concentrated in both Texas, where we have significant market share, and South Carolina, a new market for us. This additional volume will help us to cut our current burn in the third and fourth quarters of this year. As you may recall, in October of last year, we experienced a meaningful decrease in the Texas reimbursement benchmark. We've been utilizing that rate in state arbitration claims with great success to date. In recent weeks, we learned that Texas has again reset and lowered its benchmark, and that's the reimbursement rate for intraoperative neuromonitoring services going forward.
While we have not yet seen reimbursements come through at the proposed rate, we are concerned about the potential implications and are evaluating the impact that such changes could have on our financials in the Texas market. All in all, we are encouraged by the progress we are making towards both growing and expanding our business, despite the industry-wide challenges that persist with regards to reimbursement. We remain focused on two things: adding profitable volume in core markets, and two, continuing to reduce operating costs to run leaner, remain optimistic about improving cash flow from operations during the latter part of 2023. Lastly, an update on a couple of non-operating items that could positively impact our financial position in 2023. The first has to do with litigation.
We're involved in two pieces of litigation in Louisiana, where we are seeking payment for services provided to two former partners. One is scheduled to go to trial in early October, and the other is scheduled for trial in early 2024. We have a settlement discussion on this latter piece of litigation in early September. These claims represent seven-figure amounts of restitution. Second, as mentioned in our last earnings call, we have filed for the Employee Retention Credit, or ERC, a refundable tax credit for businesses that continue to pay employees while shut down during the COVID-19 pandemic. We have filed amended tax returns for the years ended 2020 and 2021. We expect cash refunds from the IRS of approximately $3.2 million.
In summary, neuromonitoring is widely considered to be the standard of care, and surgeons agree it is a vital resource in the operating room during complicated surgeries. Demand for our services is strong, and our business proposition is compelling, despite the reimbursement challenges that are facing the broader industry in the short term. We remain optimistic that these disbursement headwinds are not long-term and that we can improve our results during the latter part of 2023. Next, John Price will walk us through the financial results for the second quarter. John?
Thanks, John, thank you everyone for joining us today. Our total managed case volume for the second quarter was 4,900, a decrease year-over-year and sequentially. This decrease was largely attributed to exiting unprofitable markets during 2022. For the second quarter of 2023, we reported gross revenue of $4 million and net revenue of $1.5 million. Net loss was $5.3 million, and adjusted EBITDA was a loss of $4.9 million. Gross revenue for the second quarter was negatively impacted by both the decrease in volume and weakness in reimbursement rates, as John previously discussed. Our second quarter case volume was down slightly to approximately 4,900 managed cases from 5,200 in Q1 of 2023.
We attribute this to continued attempts by our team to exit some of our unprofitable markets, as well as revenue- share MSA agreements. We collected approximately $5 million in cash. Our average days to collect remained essentially the same, moving from 46 days during the first quarter of 2023 to 48 days during the second quarter of 2023, a significant improvement over our prior year collection experience. Our strong cash collections continue to reduce our exposure to accounts receivable reserves. During the second quarter of 2023, bad debt was approximately $2.5 million. The increase in bad debt is primarily related to collecting cash more quickly, resulting in a reduction to aged accounts receivable. A reduction in reimbursement rates has significantly impacted the aged AR. We anticipate a similar amount of bad debt during the third quarter.
Cost to revenues for the second quarter of 2023 were $3.4 million, compared to $4 million for the year ago quarter, a decrease of 15%, primarily related to the decrease in volume of cases and the benefit from our efforts to reduce our cost of delivery. Operating expenses for the second quarter of 2023 were $3.6 million, compared to $4.1 million in the year ago quarter, a decrease of 12% related to the cost-cutting initiatives management implemented during the prior year. We continue to focus on diligently managing our costs, both cost of revenue and operating costs. Year to date, our operating expenses are down nearly 20%, and we expect another decrease in overall expenses with the cost reduction plan John discussed earlier.
During the second quarter, we continued to transition away from our legacy MSAs in order to preserve the revenue generated by the professional component of our IONM services. As of the end of the second quarter, we transitioned the majority of the remaining MSA volume to wholly owned entities and expect to have fully exited all MSAs by the end of this year.
Assure Holdings would like to let participants know that the CEO and CFO are available this week for one-on-one meetings. Please coordinate with Brett Maas. This concludes today's conference, and you may disconnect your lines at this time. Thank you for your participation.