International Isotopes said Tuesday it would no longer provide radiological field services for the Department of Energy, after the federal agency put a hold on all existing contracts in the wake of a cesium-137 spill last May during a job in Seattle.
“Regardless of the DOE’s future plans for field service contracts, it is unlikely that the Company will seek this type of contract work in future years,” the Idaho Falls, Idaho, nuclear medicine company said in a press release on its 2019 earnings.
That applies to all radiological field services outside International Isotopes’ own facility, President and CEO Steve Laflin told RadWaste Monitor.
The Energy Department has been the only client for this work over the latest year, though the company had previously provided the same service for the United Nations’ nuclear agency. In October 2018, International Isotopes announced the award of 12 separate contracts for radiation source recovery, worth a total of $1.6 million.
The work has primarily involved recovery of retired sealed sources used in hospitals, industry, and other settings, along with installation or extraction of select cobalt therapy devices, according to an International Isotopes 10-K annual report filed Monday with the Securities and Exchange Commission.
“The decision is based upon changing insurance requirements and carrier exclusions of covered activities,” Laflin said by email. “It is possible the coverage requirements could change in future years but it is unknown what future contract opportunities there could be.”
In May 2019, International Isotopes was removing a blood irradiator from a research facility at the University of Washington’s Harborview Medical Center in Seattle for DOE’s National Nuclear Security Administration (NNSA). An accident caused the release of cesium-137, contaminating 13 people and seven floors of the building.
In the 10-K, management said DOE has since “indefinitely” frozen or terminated all contracts with International Isotopes for this work. Laflin did not discuss details of those contracts, and the NNSA did not respond to questions by deadline Friday for RadWaste Monitor.
The company was working under contract for the agency’s Cesium Irradiator Replacement Project, which aims to replace weaponizable medical equipment with safer equipment.
The Los Alamos National Laboratory in New Mexico runs the Off-Site Source Recovery Program responsible for the removal of the cesium irradiator from the university. The incident greatly displeased the NNSA, and it cost new lab prime Triad National Security some fees, according to the team’s first-ever performance evaluation summary.
International Isotopes aided the cleanup effort until August, after which Perma-Fix Environmental Services, of Atlanta, took over as the NNSA’s main remediation contractor on-site. The broken irradiator was shipped to the Pacific Northwest National Laboratory near Richland, Wash., for analysis.
In its 10-K, International Isotopes said its former contracts with the NNSA should indemnify the company — even if it is found legally liable for the incident — from financial damages, under the federal Price-Anderson Act. The law provides broad protection for licensed federal contractors involved with nuclear and radiological incidents, and International Isotopes has asked the NNSA to invoke those protections.
The cesium spill cost International Isotopes just under $2.5 million in 2019, almost all of which the company believes it can recover as expenses and from insurance, the 10-K says. In 2019, for example, International Isotopes recovered more than $950,000 related to the incident from its insurance company.
International Isotopes and the NNSA investigated the cause of the incident last year, and the company said it is still waiting for the results of that investigation from the federal government.
The company’s radiological services revenue dropped by roughly 58% from 2018 to 2019, from nearly $2.3 million to just shy of $1.2 million, the 10-K says. Its contribution to company-wide revenue was nearly halved, year over year, from 22% to 13%.
International Isotopes acknowledged the potential harm to the business if it cannot replace that lost revenue source, but expressed confidence in its ability to do so: “We believe that the loss in revenue resulting from suspension of radiological field service work will be compensated for by increased revenues in our remaining business segments.”
Overall, the company reported a 14% drop in sales, year over year, from $10.4 million in 2018 to over $8.9 million in 2019. Its net loss spiked by 80%, from $844,576 in 2018 to over $1.5 million in 2019, on the back of higher operating costs and a one-two punch from increased other costs and loss of revenue due to the Seattle accident.
The other expense line item rose by $201,305 from 2018 to 2019, directly related to that incident, the earnings release says.
Sales of sodium iodide-131 and other radiochemical products rose by 26% year over year, from almost $2.3 million to nearly $2.9 million, largely due to increased manufacturing on contract. The materials, used in medications and for industrial operations, provided 32% of company sales in 2019, rising from 21% the year before.
Cobalt product sales dipped by well over half, from just over $2 million to $846,404, while the company waited on supply of the material used in sealed-source production from DOE’s Advanced Test Reactor at the Idaho National Laboratory. An initial delivery arrived in the first quarter of this year, and the company said in the earnings release it expects to increase revenue in this business in 2020. The percentage of company revenue from cobalt product sales dropped from 20% in 2018 to 9% in 2019.
International Isotopes recorded a 4% bump in sales of nuclear medicine standards, from close to $3.8 million in 2018 to over $3.9 million last year. That resulted from more customers, new products, and higher pricing, the release says. Nuclear medicine calibration standards, employed in nuclear pharmacy for operations including testing imaging systems and calibrating dose measurement equipment for patients, represented 44% of total revenue for 2019. That was up from 37% the prior year.
Finally, the company brought in $160,500 in revenue from its largely moribund fluorine products business, which earned nothing in 2018.
“These revenues were related to an agreement to provide engineering and technical assistance services related to our fluorine products intellectual property,” according to the 10-K. “We expect similar revenue amounts in 2020; this agreement concludes in 2020.”
In 2013, International Isotopes suspended plans for a depleted uranium hexafluoride (DUF6) deconversion and fluorine extraction facility in Lea County, N.M. The plant is intended to process DUF6 to extract fluorine gases for uses such as microelectronics manufacturing. However, the only existing waste-generating customer, nearby uranium enrichment provider URENCO, simply stores its own waste.
Expenses for planning and other activities in the fluorine products line grew from $122,651 in 2018 to $151,035 in 2019.
