American Shared Hospital Services (NYSE:AMS) is a leading provider of turn-key technology solutions for stereotactic radiosurgery and advanced radiation therapy equipment and services. The company has demonstrated resilience in the face of industry challenges, reporting solid financial results for the full year 2023 and the first quarter of 2024.

Financials

For the full year 2023, AMS reported annual net income of $610,000 and annual revenue of $21,325,000. The company generated annual operating cash flow of $5,718,000, though its annual free cash flow was negative $555,000 due to capital expenditures. In the first quarter of 2024, the company reported revenue of $5,216,000, a 5.9% increase from the prior year period. Gross margin improved 12.3% to $2,143,000, with a gross margin percentage of 41%. Net income for the quarter was $119,000, or $0.02 per diluted share, compared to $188,000, or $0.03 per diluted share, in the prior year period.

Business Overview

AMS operates two reportable segments: Leasing and Retail. The

Leasing segment

Retail segment

The company's PBRT system in Florida generated $2,649,000 in revenue for the first quarter, a 14.5% increase year-over-year, driven by higher average reimbursement despite a 16.9% decrease in fractions. Gamma Knife revenue decreased slightly by 1.7% to $2,567,000, due to the expiration of two customer contracts and downtime for equipment upgrades, partially offset by strong performance in Peru and Ecuador.

Recent Developments

Geographically, the company's international operations continue to show promising growth. The upgrade of the Gamma Knife equipment in Ecuador added capacity and improved patient experience, leading to increased volumes. The company's Gamma Knife facility in Peru also reported excellent results in the first quarter. Additionally, the company's new center in Puebla, Mexico is on track to begin treating patients within the next 60 days.

On the domestic front, AMS made a significant move with the acquisition of a 60% interest in three radiation therapy centers in Rhode Island. This acquisition, which closed in May 2024, adds three new revenue streams to the company's business and represents its first direct patient services or "retail" centers in the United States. The company is also pursuing two additional opportunities in Rhode Island: the development of a fourth radiation therapy center and the potential establishment of a proton beam radiation therapy center.

Liquidity

The company's balance sheet remains strong, with $13,042,000 in cash, cash equivalents, and restricted cash as of March 31, 2024. AMS also had $2,400,000 outstanding on its $7,000,000 line of credit as of the end of the first quarter, which has since been repaid.

Outlook

Looking ahead, the company expects stronger international growth from the additional treatment capabilities in Ecuador, continued strong volume from the center in Peru, and the opening of the new center in Puebla, Mexico. The recent Rhode Island acquisition also adds three new revenue streams to the business, and the company has a robust pipeline of new business opportunities that it is actively pursuing.

Conclusion

AMS has demonstrated its ability to navigate industry challenges and capitalize on growth opportunities. The company's diversified revenue streams, international expansion, and strategic acquisitions position it well for continued success. Investors should closely monitor the company's progress as it executes on its growth strategy and integrates its recent Rhode Island acquisition.