By M. Marin
NYSE:AMS
READ THE FULL AMS RESEARCH REPORT
Direct patient retail segment expanding, with two key projects under development
American Shared Hospital Services (NYSE:AMS) provides and operates advanced radiation therapy treatment systems to treat cancer patients. A core strategy to generate continued growth going forward includes the expansion of its direct patient operating segment. The company is transitioning from one that primarily leases expensive medical equipment to treat cancer patients to one that owns and operates (O&O) the equipment itself and serves patients directly, while concurrently looking to expand its traditional Medical Equipment leasing business.
One of its key growth initiatives is the planned construction of a proton beam radiation treatment (PBRT) center in Johnston, Rhode Island. We view this, and the other planned Rhode Island center, positively, particularly given the general lack of patient access to PBRT care (see below).
AMS’ legacy business is the provision of stereotactic radiosurgery equipment and advanced radiation therapy treatment systems to treat cancer patients under a leasing model. These machines are among the most expensive types of equipment used in radiation oncology. The company’s financing and leasing model enables medical centers to reduce their upfront cost to install this costly equipment. AMS’ traditional business includes providing financing and other solutions to hospitals and medical centers for their radiosurgical equipment needs. Reflecting its roughly 40 years of operation, the company has developed a partnership model with medical center partners, and it has relationships with multiple original equipment manufacturers (OEMs) in this sector and a strong balance sheet to support this business model.
The company’s direct patient segment has recorded strong growth. Direct patient services segment revenue advanced 9.4% year-over-year in 3Q25 to $4.034 million and advanced 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 acquisition of treatment centers in Rhode Island and the July 2024 opening of its radiation therapy facility in Puebla, Mexico, and the higher volume of procedures there.
On the Medical Equipment leasing side, the segment recently 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.
O&O treatment centers in Rhode Island, Peru, Ecuador & Puebla, Mexico
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. 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 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, which it expects to contribute to further growth.
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 Bristol, Rhode Island, 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.
AMS has a solid balance sheet and ample liquidity, we believe, to support its growth initiatives. The company maintains a conservative fiscal strategy. We would expect the company to seek strategic partnerships to reduce its upfront capital investment and still retain a majority interest in the PBRT center under an asset-light model. Depending on the potential partner, this could not only reduce the company’s required upfront capital commitment but potentially also broaden the medical services that the overall center could offer.
Research shows an increase in the use of PBRT…
Recent studies led by researchers at the American Cancer Society (ACS) show an increase in the use of proton beam therapy for domestic oncology patients in the past decade. However, according to a recent study published on the JAMA Network Open, Travel-Time Disparities in Access to Proton Beam Therapy for Cancer Treatment, the cost of installing the equipment has constrained the deployment and use of PBRT systems and, in turn, limited patient access despite the benefits of PBRT.
The study notes that high costs of the equipment and facilities have constrained the deployment of PBRT therapy treatment centers across the country. On the positive side, clinical indications and insurance reimbursement for PBRT are improving, but patient access still remains challenging for many people, reflecting the limited number of available treatment centers. Patients frequently need to travel for hours during the course of treatment to get access to the equipment.
Separately, given its strong relationships within the state, the company believes it will benefit from synergies among its various facilities there. For example, the company expects to leverage its network to facilitate staffing of medical professionals at its O&O sites once construction is completed.
AMS also has 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 this will also benefit the two planned new centers under development.
… But significant percent of patient population needs to travel to reach a treatment center
The company believes its facilities operate in underserved areas of Rhode Island. Moreover, with only two PBRT systems currently in operation in the northeast, according to AMS, the company also believes the location of the planned facility enables access to this treatment and will enable many Rhode Island cancer patients to avoid the need to travel to Boston or New York for critical care.
In fact, the lack of convenient access to PBRT treatment is a challenge that exists throughout the country, according to the above noted study published on the JAMA Network Open, “Travel-Time Disparities in Access to Proton Beam Therapy for Cancer Treatment.” The study found that in the U.S. overall, more than 42% of oncology patients must drive more than two hours in order to access PBRT treatment, and more than 63% must drive at least an hour to reach the nearest PBRT center.
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