AMERICAN SHARED HOSPITAL SERVICES REPORTS 2004 THIRD QUARTER AND NINE MONTH RESULTS Operating Income Sets New Records on Higher Revenue San Francisco, CA

AMERICAN SHARED HOSPITAL SERVICES

REPORTS 2004 THIRD QUARTER AND NINE MONTH RESULTS

Operating Income Sets New Records on Higher Revenue

San Francisco, CA, October 26, 2004 AMERICAN SHARED HOSPITAL SERVICES

(AMEX,PCX:AMS), the leading provider of Gamma Knife radiosurgery services,

today announced record operating income and higher revenue for the third

quarter and first nine months of 2004.

For the three months ended September 30, 2004, revenue increased 3% to

$4,136,000 from $4,011,000 for the third quarter of 2003. Operating income

rose 13% to a record $860,000 from $758,000 a year earlier. Net income

increased to $840,000, or $0.16 per diluted share, which included an income tax

benefit of $472,000 related to the exercise of previously expensed stock

options. For last year s third quarter, net income was $369,000, or $0.07 per

For the nine months ended September 30, 2004, the Company reported revenue of

$12,479,000, a gain of 6% compared to revenue of $11,785,000 for the same

period a year ago. Operating income grew 12% to a record $2,471,000 from

$2,197,000 last year. Net income increased to $1,599,000 or $0.31 per diluted

share. This compares to net income for the first nine months of 2003 of

$1,039,000, or $0.20 per diluted share.

Ernest A. Bates, M.D., Chairman and Chief Executive Officer, said, Based on

contracts in hand, over the next nine months we expect to increase the number

of Gamma Knife centers by 17%. We see many opportunities to continue to build

our Gamma Knife platform and to expand our business into the market for

radiosurgery of the body, a new and exciting growth opportunity for AMS.

Bates noted that the Company s strong operating results have allowed it to

increase the fourth quarter dividend by 6%, to $0.18 per share at an annual

rate, following the 6% dividend increase paid in the third quarter of 2004.

At September 30, 2004, AMS provided Gamma Knife radiosurgery services to 18

hospitals in the United States. Craig Tagawa, Chief Operating and Financial

Officer, said that three additional hospitals currently are scheduled to begin

Gamma Knife service through AMS over the next few quarters. Our Baptist of

East Tennessee Gamma Knife project is scheduled to open by January 2005.

Northern Westchester Hospital in Mt. Kisco, New York has received its

Certificate of Need approval and is anticipated to open late in the first

quarter of 2005. Mercy Health Center in Oklahoma City, our 21st Gamma Knife

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

Tagawa noted that total treatments in the third quarter of 2004 increased 8%

compared to the third quarter of 2003. He said that treatments from Gamma

Knife units in operation more than one year decreased 4% compared to last

year s unusually high volume, reflecting normal fluctuations in disease

incidence and related factors. The pace of treatments has picked up

noticeably in the past couple of months, he said.

AMS has scheduled its conference call for 4:00 pm ET today. To participate in

the live call, dial (800) 446-1671 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 10196953. 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 and June 30, 2004 and the definitive Proxy

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

AMERICAN SHARED HOSPITAL SERVICES

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