AMERICAN SHARED HOSPITAL SERVICES REPORTS 2004 FOURTH QUARTER AND ANNUAL RESULTS San Francisco, CA

AMERICAN SHARED HOSPITAL SERVICES

REPORTS 2004 FOURTH QUARTER AND ANNUAL RESULTS

San Francisco, CA, January 31, 2005 AMERICAN SHARED HOSPITAL SERVICES (AMEX,PCX:AMS), the

leading provider of Gamma Knife radiosurgery services, today announced financial results for the

fourth quarter and 2004.

For the twelve months ended December 31, 2004, the Company reported that net income increased 44%

to $1,985,000, or $0.39 per diluted share, the largest increase in net income since the Gamma Knife

became the Company s core business in 1999 and the third consecutive year of higher earnings. This

compares to net income for 2003 of $1,382,000, or $0.27 per diluted share. Net income for 2004

included an income tax benefit related to the exercise of previously expensed stock options of

$547,000 compared to an income tax benefit of $81,000 for 2003. Operating income increased for the

fourth consecutive year, rising 10% to $3,278,000, a record for the Company s Gamma Knife business,

from $2,976,000 for 2003. Revenue for 2004 increased 1% to $16,389,000 from $16,178,000 for 2003.

For the three months ended December 31, 2004, net income increased to $386,000, or $0.08 per

diluted share, from $343,000, or $0.07 per diluted share, for the fourth quarter of 2003.

Operating income rose 4% to $807,000 from $779,000 a year earlier. Revenue decreased 11% to

$3,910,000 from $4,393,000 for the fourth quarter of 2003.

Ernest A. Bates, M.D., Chairman and Chief Executive Officer, said, With the opening of our

19th Gamma Knife center earlier this month at Baptist Hospital of East Tennessee, and

two additional units scheduled to commence operations later this year, we expect more rapid revenue

growth in 2005. Our focus on increasing efficiency and reducing costs, which contributed to our

record operating income for 2004, will continue in 2005. We are optimistic about the outlook for

2005, and we intend to continue to share the Company s success with all of our stockholders through

our cash dividend policy.

At December 31, 2004, AMS provided Gamma Knife radiosurgery services to 18 hospitals in the United

States. Northern Westchester Hospital in Mt. Kisco, New York is anticipated to open in early

second quarter 2005. Mercy Health Center in Oklahoma City, the Company s 21st Gamma

Knife project, is projected to begin operating in mid-2005.

AMS has scheduled a conference call for 4:00 pm ET 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 10848615. The replay will also be available at

www.ashs.com and www.companyboardroom.com.

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, 2003, its Quarterly Report on

Form 10-Q for the periods ended March 31, 2004, June 30, 2004 and September 30, 2004 and the

definitive Proxy Statement for the Annual Meeting of Shareholders held on June 17, 2004.

AMERICAN SHARED HOSPITAL SERVICES

Fourth Quarter 2004 Financial Results

Selected Financial Data