By M. Marin
NYSE: AMS
READ THE FULL AMS RESEARCH REPORT
O&O footprint set to expand further in 2026-2028 timeframe
American Shared Hospital Services (NYSE: AMS) provides and operates advanced radiation therapy treatment systems to treat cancer patients. AMS is in the process of transitioning from a company that primarily leases expensive cancer treatment medical equipment to one that also owns and operates (O&O) the equipment itself. The company reported 1Q26 results last week that, in our view, highlight the benefits of this transition.
The company intends to pursue growth opportunities for both its equipment leasing segment and direct patient care services unit. Expanding its direct patient operating segment is a core growth and diversification strategy for the company. AMS serves patients directly through its direct patient care segment, while concurrently looking to expand its legacy Medical Equipment leasing business.
Despite the recent expiration of a leasing agreement in 2025, total revenue of $7.1 million increased 15.9% year-over-year. The company’s 1Q26 gross profit advanced 36.7% to $1.3 million, and gross profit margin was 18.2%, compared to 15.4% in 1Q25. Operating costs associated with the company’s direct patient services segment were higher, including increased staffing, facility-related expenses, and maintenance costs at the Rhode Island and Puebla facilities, among other expenses.
Higher treatment volumes contributed to margin improvement and the narrower operating loss. Adjusted EBITDA grew 18.4% year-over-year. Direct patient services revenue increased 30.2% to $4.1 million. Leasing revenue was $3.0 million, relatively even compared with $3.0 million in the prior year period. AMS ended 2025 with eight domestic medical equipment leasing agreements. Its O&O centers operate in the U.S. and Latin America. The impact of a recent 2025 leasing agreement expiration was partially offset by improved procedure volumes at certain other sites that had been upgraded with new equipment. Increased proton beam radiation therapy (PBRT) volumes were partially offset by the impact of the above-noted contract expiration of a Gamma Knife contract in April 2025 within the leasing segment.
\With 229 Gamma Knife procedures performed, Gamma Knife procedures increased 10.1% year-over-year. PBRT treatments increased 20.7% year-over-year to 1,003 procedures. PBRT volumes are expected to continue to trend up, as clinical indications and insurance reimbursement for PBRT are improving. Moreover, we believe the company’s planned installation of an O&O PBRT site will likely enable AMS to have greater control over procedure scheduling.
The company’s results benefited from strong procedure volume growth at the Orlando PBRT facility, as well as at the Rhode Island centers and international Gamma Knife centers. In 2025, the company secured a seven-year lease extension with Orlando Health for its PBRT system. PBRT equipment is among the most expensive type of equipment used in radiation oncology. The company’s financing and leasing model enables medical centers such as Orlando Health to reduce upfront cost to install and upgrade this costly equipment. The partnership between AMS and Orlando Health has been in place for more than two decades, which AMS believes underscores the value of its Leasing model services and long-term relationships with medical centers.
AMS attributes the higher overall procedure volume to its recent efforts to stabilize physician staffing and enhance clinical operations, including a professional services agreement it formed 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. Moreover, the company indicated that volumes continue to trend higher to-date in 2Q26. As equipment utilization continues to improve, as the company anticipates, it is expected to contribute to further expansion in margins and profitability.
The direct patient care segment comprised the majority of total revenue in 1Q26, with a 57% contribution. This reflects the company’s ongoing strategic expansion of its direct patient care footprint. The direct patient segment has recorded strong growth, up 30.2% year-over year. Direct patient services segment revenue benefited from the company’s 2024 acquisition of treatment centers in Rhode Island and the July 2024 opening of its radiation therapy facility in Puebla, Mexico.
The cancer centers in Rhode Island represent AMS’s first domestic retail locations and expanded 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. AMS noted two primary challenges it encountered with the RI centers in 2025: reduced radiation therapy treatment volumes, primarily related to physician turnover, and lower revenue resulting from billing and collection activities. The company believes it has largely corrected these issues.
As the O&O footprint expands, we expect that the Direct patient services sector can help smooth out the 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, reflecting normal fluctuations in procedure volumes.
Acontract that was set to expire in 2Q26 has been renewed and extended
Upcoming expected catalysts for long-term growth include the planned construction of two new centers in RI and the opening 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 is expected to start up there in late 2026/2027.
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