By M. Marin
READ THE FULL AMS RESEARCH REPORT
Upgrading equipment & planning new O&O centers, with financial flexibility to support initiatives
American Shared Hospital Services (NYSE:AMS) continues to transition and grow its direct patient segment, as the company’s initiatives are aimed at laying the foundation for continued growth going forward. Revenue of $7.2 million in 3Q25 was 2.5% ahead of 3Q24’s roughly $6.99 million and slightly better compared to 2Q25’s $7.1 million. Direct patient services segment revenue advanced 9.4% year-over-year to $4.034 million and about 15% sequentially compared to $3.5 million in 2Q25. The company’s growth strategy focuses on expanding this segment. Revenues from the direct patient services benefited from the company’s 2024 Rhode Island acquisition and the opening of its radiation therapy facility in Puebla, Mexico, in July 2024, as that facility ramps. A decline in revenues from the leasing segment stemmed primarily from lower PBRT volumes, reflecting what the company believes are normal cyclical fluctuations.
The company’s Medical Equipment Leasing segment has seen certain contracts renewed, generally in conjunction with an agreement for an equipment upgrade. Contract renewals contribute to stable revenue flows over the term of the new contract. Importantly, AMS signed a contract renewal for a 10-year extension and upgrade to an existing Gamma Knife system installation. We view this as a positive that is expected to contribute to aggregate revenue and supports the company’s view that its focus on customer care and service can facilitate AMS’s ability to renew and enter into new agreements to lease costly medical equipment.
The company’s core business generates steady positive annual cash flow and forms a strong base on which AMS is adding new business lines and revenue streams to fuel growth. Specifically, the company has embarked on an expansion strategy aimed at diversifying and expanding its product portfolio, entering new geographies, boosting revenue, and developing new business lines within its focus area along the cancer care continuum, including taking stakes in certain treatment centers to capture more of the expected profits and upside via its growing Direct patient services segment.
Direct retail segment ~ 56.3% of 3Q25 revenue vs 52.7% in 3Q24 as AMS expands O&O footprint
As the O&O footprint expands, the direct or retail segment accounted for 56.3% of total revenue in 3Q25, up from 52.7% in 3Q24. While we expect the relative contributions could fluctuate from quarter to quarter as equipment upgrades are completed, as the O&O footprint expands, and reflecting normal fluctuations in procedure volumes, we believe the strong contribution of the Direct patient services sector reflects the benefits of the company’s recent growth initiatives.
In all, the company owns treatment centers in Rhode Island, Peru, Ecuador, and a site in Puebla, Mexico that has the Versa HD LINAC. AMS signed a JV for a Gamma Knife facility in Guadalajara, Mexico in 3Q24. The company expects revenue from the upgrade to a new Esprit being installed there to start up in 2Q26 that it expects to contribute to further growth.
AMS expects to benefit from synergies as it works on developing new sites in Rhode Island
With the RI centers located near Rhode Island hospital campuses, the company also expects to benefit from synergies as it works on developing new sites in Rhode Island. AMS recently obtained Certificate of Need (CON) approvals for a fourth treatment center in Rhode Island in Bristol and a proton beam radiation treatment (PBRT) center in Johnston, Rhode Island. AMS acquired property in Bristol, Rhode Island in 1Q25 where it expects to construct the linear accelerator facility.
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