By M. Marin

NYSE:AMS

READ THE FULL AMS RESEARCH REPORT

As O&O footprint expands, company expects benefits to accelerate

American Shared Hospital Services (NYSE:AMS), which provides advanced radiation therapy treatment systems to treat cancer patients, reported 2024 results last week. Recent measures aimed at boosting and diversifying revenue. include expanding operations geographically and by business line. In 2024, AMS began operating three Rhode Island facilities and began operating a new Versa HD Linear Accelerator (LINAC) in Puebla, Mexico under its model to own and operate (O&O) equipment at select locations. Full year 2024 revenue advanced 32.9% year-over-year to $28.3 million, as AMS continues to expand its direct patient, or O&O, footprint. With a more than quadrupling in quarterly direct patient income in 4Q24, the 4Q24 year-over-year consolidated revenue improvement accelerated to 53.8%.

Growing its O&O or retail footprint is a core objective for AMS. The company recently obtained Certificate of Need (CON) approvals for a fourth treatment center in Bristol, Rhode Island and a proton beam radiation treatment (PBRT) center in Johnston, Rhode Island and anticipates significant synergies within its expanding Rhode Island footprint. In 1Q25, AMS acquired property in Bristol, Rhode Island where it expects to construct a linear accelerator facility. AMS anticipates that the facility could commence treating patients in about 18 to 24 months.

Strong cash position to support growth initiatives…

With cash and equivalents of $11.3 million at the end of 2024, we believe AMS has the financial flexibility to continue to upgrade its installed base and pursue other growth measures. Moreover, the company consistently generates positive cash from operating activities. The company believes that its cash balance, combined with the roughly $7 million on the revolver and ‘asset-light’ approach to new business initiatives could potentially be leveraged to provide $100 million in acquisition capital.

Reflecting the proximity of existing & planned RI facilities, AMS expects significant synergies

The cancer centers in Rhode Island represent AMS’s first domestic retail locations and expand AMS’s 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. The RI centers are located near Rhode Island hospital campuses. The company views the Rhode Island deal as a milestone acquisition that expands its footprint of O&O radiation oncology centers into the U.S. Moreover, AMS has entered into a professional services agreement with Brown University Health System, which the company notes is the state’s largest health system for radiation oncologists. The agreement streamlines physician recruitment and improves patient service capabilities, according to AMS which anticipates additional synergies reflecting the proximity of the existing and planned Rhode Island facilities to one another.

With international expansion further diversifying revenue base…

Moreover, the company’s international footprint has expanded as AMS has expanded its direct or retail segment footprint. In addition to revenue from the Rhode Island facilities, the company is generating O&O revenue from sites in Mexico and South America. The radiation therapy center in Puebla, Mexico began treating patients in July 2024.

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