AMERICAN SHARED HOSPITAL SERVICES REPORTS 15% REVENUE GROWTH AND 8% INCREASE IN OPERATING INCOME FOR THE SECOND QUARTER OF 2005 San Francisco, CA

AMERICAN SHARED HOSPITAL SERVICES REPORTS 15% REVENUE GROWTH

AND 8% INCREASE IN OPERATING INCOME FOR THE SECOND QUARTER OF 2005

San Francisco, CA, July 26, 2005 AMERICAN SHARED HOSPITAL SERVICES (AMEX,PCX:AMS), the leading

provider of Gamma Knife radiosurgery services, today announced higher revenue, operating income

and net income for the second quarter and first half of 2005 versus the comparable periods of 2004.

AMS s growth this year has been fueled by the addition of two new Gamma Knife units that went into

service in the first half of 2005, as well as strong growth in the second quarter from Gamma Knife

units in operation for more than one year, said Ernest A. Bates, M.D., Chairman and Chief

Executive Officer. Our 21st Gamma Knife project, at Mercy Health Center in Oklahoma City, is

expected to begin treating patients in August.

For the three months ended June 30, 2005, revenue increased 15% to $4,730,000 compared to

$4,114,000 for the same period last year. Operating income improved for the 18th consecutive

quarter, increasing 8% compared to the prior year period to $854,000 from $794,000 last year.

Income before income taxes increased 10%, to $624,000 compared to $568,000 for the second quarter

of 2004. Net income for the second quarter of 2005 increased to $391,000, or $0.08 per diluted

share, reflecting an effective income tax rate of 37%. This compares to net income for the second

quarter of 2004 of $389,000, or $0.08 per diluted share, reflecting an effective income tax rate of

32%. The higher 2005 income tax rate resulted from a reduction in income tax benefit related to

the exercise of previously expensed stock options, to $16,000 for this year s second quarter from

$48,000 for the same period last year.

For the six months ended June 30, 2005, revenue increased 10% to $9,179,000 from $8,343,000 for the

first six months of 2004. Operating income increased 5% to $1,690,000 from $1,611,000 a year ago.

Income before income taxes increased 6%, to $1,229,000 from $1,157,000 for the same period last

year. Net income for the first six months of 2005 increased to $786,000, or $0.15 per diluted

share, reflecting an effective income tax rate of 36%. This compares to net income for the first

six months of 2004 of $759,000, or $0.15 per diluted share, reflecting an effective income tax rate

Dr. Bates said, We currently are discussing opportunities with a large number of potential

clients. While we did not consummate any transactions in the second quarter, activity was high.

We are confident that the many doors we have opened this year ultimately will prove both beneficial

and profitable to us as we seek to increase both the depth and breadth of our business. In

addition to the large number of locations we have identified that we believe can support a Gamma

Knife, we also see substantial opportunities for long-term growth in the emerging market for

Intensity Modulated Radiation Therapy ( IMRT ) or Image Guided Radiation Therapy ( IGRT )

equipment. During the second quarter we also invested in the development of our Operating Room

for the 21st Century concept, and we are encouraged by the progress we are making in this area as

Dr. Bates added, Because of our strong performance, AMS recently increased its quarterly cash

dividend by 5.6%, to $0.0475 per share. Based on AMS stock price on June 30, 2005, this

represents a dividend yield of 3.1%. In addition to providing a tangible reward to our loyal

shareholders, this dividend increase clearly signals our confidence in AMS future. We are proud

that we have now delivered a total return to our shareholders, including dividend payments and

stock price appreciation, of 162% from the date of our first dividend payment in 2001 through June

At June 30, 2005, the Company reported working capital of $3,875,000, and cash, cash equivalents

and securities of $8,817,000. Shareholders equity increased to $18,016,000 compared to

$17,546,000 at December 31, 2004.

Earnings Conference Call

American Shared has scheduled a conference call for today at 4:00 pm EDT (1:00 pm PDT) today. To

participate in the live call, dial 800-471-6718 at least 5 minutes prior to the scheduled start

time. A simultaneous WebCast of the call may be accessed through the Company s website,

www.ashs.com, or through CCBN, www.companyboardroom.com. A replay will be

available for 30 days at these same internet addresses, or by calling 888-843-8996, pass code

American Shared Hospital Services is building a profitable medical services company in an

underserved niche turnkey technology solutions for advanced radiosurgical procedures. The

Company s core business is supplying hospitals with the Gamma Knife a non-invasive treatment for

malignant and benign brain tumors, vascular malformations and trigeminal neuralgia (facial pain).

The Gamma Knife, the gold standard in radiosurgery, reduces surgical risk and patient discomfort,

resulting in a shorter hospital stay and lower risk of complications. In most cases, Gamma Knife

patients resume their normal activities within a few days of treatment, compared to weeks or months

for patients who undergo conventional surgery. More than 250,000 patients worldwide have already

received this treatment. American Shared Hospital Services is the world leader in providing Gamma

Knife radiosurgery services.

Safe Harbor Statement

This press release may be deemed to contain certain forward-looking statements with respect to

the financial condition, results of operations and future plans of American Shared Hospital

Services, which involve risks and uncertainties including, but not limited to, the risks of the

Gamma Knife business and the risks of developing its IMRT and The Operating Room for the

21st Century programs. Further information on potential factors that could

affect the financial condition, results of operations and future plans of American Shared Hospital

Services is included in the filings of the Company with the Securities and Exchange Commission,

including the Company s Annual Report on Form 10-K for the year ended December 31, 2004, its

Quarterly Report on Form 10-Q for the period ended March 31, 2005 and the definitive Proxy

Statement for the Annual Meeting of Shareholders to be held on June 16, 2005.

AMERICAN SHARED HOSPITAL SERVICES

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