By M. Marin
READ THE FULL AMS RESEARCH REPORT
Expanded O&O footprint contributes to strong revenue growth…
American Shared Hospital Services (NYSE:AMS), which provides and operates advanced radiation therapy treatment systems to treat cancer patients, reported 2Q26 results last week that, in our view, highlight the benefits of AMS’s ongoing transition to a company that both leases expensive cancer treatment medical equipment and in many markets also owns and operates (O&O) the equipment itself.
Total 2Q26 revenue increased 19% year over year to $8.4 million, driven primarily by a 40% year over year advance in Direct Patient Services revenue to $4.9 million. The company’s Direct Patient Services segment owns and operates the equipment itself and has been growing significantly as AMS has expanded its O&O footprint. Segment revenue growth reflected higher procedure volumes at the company’s O&O Rhode Island radiation therapy centers and at its O&O Peru and Puebla, Mexico facilities.
The company’s three cancer centers in Rhode Island are AMS’s first domestic retail locations. The acquisition of these facilities expanded AMS’s O&O, or retail / direct business segment, footprint substantially. All three Rhode Island sites are equipped with state-of-the-art cancer treatment technology using LINACs and comprehensive treatment planning software. Since acquiring these centers in 2024, AMS has initiated measures to stabilize physician staffing and enhance clinical operations, including forming a professional services agreement with Brown University Health System — the state’s largest health system for radiation oncologists, according to the company. The agreement streamlines physician recruitment and improves patient service capabilities, according to AMS. The company believes these efforts have contributed to improved operating performance and higher overall procedure volumes.
At the same time, Proton Beam Radiation Therapy (PBRT) performance improved during 2Q26 and international operations made strong contributions to revenue. The company believes these results reflect the benefits of the company’s growth strategy and investments it has made to expand its treatment capabilities and geographic footprint since launching its O&O initiative. PBRT revenue increased 22% year-over-year in 2Q26 to $2.3 million, reflecting higher treatment volumes and higher average per treatment reimbursements. PBRT treatment fractions increased roughly 10% year-over-year.
In addition, in 1H26 international Gamma Knife revenue increased 56% to $2.7 million as treatment volumes increased at AMS O&O international centers. Following upgrade to an Esprit system in Lima, Peru during 2025, which brings newer generation technology to the center and is expected to expand the company’s treatment capabilities there to support future growth, international Gamma Knife procedure volumes continued to improve. The upgraded platform has reduced treatment times and improved patient throughput, which in turn contributes to stronger operating performance at the Peru O&O location. The company is seeing continued growth in demand for advanced radiation therapy and it believes its portfolio of oncology treatment centers positions AMS to participate across multiple areas of cancer treatment.
…With O&O footprint set to grow further
AMS intends to continue to grow procedure volumes and expand the installed O&O base of advanced radiation therapy technologies to be positioned to capitalize on long-term opportunities in radiation oncology, as it exercises disciplined capital allocations and further strengthens its balance sheet and liquidity. AMS signed a JV (joint venture) for a Gamma Knife facility in Guadalajara, Mexico in July of 2024 and expects to begin operations at the Guadalajara Center in late 2026/early 2027.
Upcoming O&O expansions and potential catalysts for long-term growth include the planned construction of two new centers in RI and of a center in Mexico. In 3Q24, AMS signed a JV for a Gamma Knife facility in Guadalajara, Mexico. The company’s installation of a new Esprit unit there is expected to startup in late 2026/early 2027 and begin to contribute to further growth, as noted.
As the O&O footprint expands, we expect that the Direct patient services sector can help smooth out lumpiness of quarterly results over time. Relative segment contributions could fluctuate from quarter to quarter, in our view, as equipment upgrades are completed and/or as the O&O footprint expands and reflecting normal fluctuations in procedure volumes.
AMS is focused on strengthening its balance sheet; believe insider liquidity inextension supports positive outlook
AMS continues to address strengthening its balance sheet and disciplined capital allocation to drive growth and shareholder value. Earlier in 3Q26, the company entered into a third amendment to its credit agreement and forbearance agreement with Fifth Third Bank, as indicated. The amendment set a revised repayment schedule for certain outstanding debt and provided AMS added flexibility to pursue strategic alternatives and strengthen its capital structure. Concurrently, the company also secured $2.0 million of subordinated financing from RCS/TIG Holdings LLC, an entity controlled by AMS’’s Executive Chairman, to provide additional liquidity as AMS continues to execute its strategic initiatives, as it continues discussions regarding its longer-term capital structure alternatives designed to support future growth initiatives and strengthen its balance sheet. We believe this liquidity extension supports the positive outlook on the company’s prospects. Moreover, strong operating cash generation in 1H25 point to potentially accelerating cash flow generation as procedure volumes climb, in our view.
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