Full Press Release Details
SHARED HOSPITAL SERVICES
SECOND QUARTER RESULTS
San Francisco, CA - August
9, 2012 - AMERICAN SHARED HOSPITAL SERVICES (NYSE AMEX:AMS), a leading provider of turnkey technology solutions for
advanced radiosurgical and radiation therapy services, today announced financial results for the second quarter and first half
Second Quarter Results
For the three months ended June 30, 2012,
revenue increased 1.9% to $4,284,000 compared to $4,206,000 for the second quarter of 2011. Net income for the second quarter of
2012 was $15,000, or $0.00 per diluted share. This compares to net income of $21,000, or $0.00 per diluted share, for the second
The number of procedures performed on Gamma
Knife Perfexion systems supplied by AMS increased 3.8% for the second quarter and 4.1% for the first six months of 2012 compared
to the same periods of 2011. The total number of procedures performed in AMS' Gamma Knife business increased 17.1% for this year's
second quarter and 10.9% for the first six months compared to the same periods of 2011, primarily reflecting the opening of a new
Gamma Knife site in Turkey earlier this year. The additional revenue generated from this growth in procedure volume was partially
offset by the loss of revenue from the early termination in the third quarter of 2011 of the existing 10-year lease on the Gamma
Knife system AMS supplied to Lehigh Valley Hospital, and the expiration of a customer contract at another site.
Gross margin for this year's second quarter
was unchanged compared to the second quarter of 2011 at 43.7%, and increased sequentially compared to gross margin of 41.7% for
the first quarter of 2012 and 39.5% for the fourth quarter of 2011.
Selling and administrative expenses for
the second quarter of 2012 increased to $1,109,000 compared to $1,041,000 for the second quarter of 2011. Operating income for
this year's second quarter was unchanged compared to the second quarter of 2011 at $225,000.
Cash flow, as measured by earnings before
interest, taxes, depreciation and amortization (EBITDA), was $1,988,000 for the second quarter and $4,127,000 for the first six
months of 2012 compared to $2,034,000 for the second quarter and $4,081,000 for the first six months of 2011.
Balance Sheet Highlights
At June 30, 2012, cash, cash equivalents
and certificates of deposit were $9,997,000 compared to $11,580,000 at December 31, 2011. Shareholders' equity June 30, 2012 was
$25,196,000, or $5.47 per outstanding share. This compares to shareholders' equity at December 31, 2011 of $25,171,000, or $5.46
per outstanding share.
For the six months ended June 30, 2012,
revenue increased to $8,687,000 compared to $8,573,000 for the first six months of 2011. Net income for the first six months of
2012 was $24,000, or $0.01 per diluted share, compared to net income for the first six months of 2011 of $42,000, or $0.01 per
Chairman and Chief Executive Officer Ernest
A. Bates, M.D., said, "Our long-term strategy is to develop our proton beam projects as rapidly as possible, while continuing
to grow our Gamma Knife business during these economically challenging times. The Gamma Knife business has produced 13 consecutive
years of pre-tax profits since the sale of our diagnostic imaging business. During the second quarter we reported several significant
positive developments in both our established Gamma Knife business and our emerging Proton Therapy business that confirmed our
strategic plan and underscored the quality of AMS's long-term growth opportunity.
"In June, Mevion Medical Systems,
Ltd. announced receipt of FDA 510(k) clearance for its MEVION S250 Proton Therapy System. AMS owns approximately 1% of Mevion,
and is developing proton therapy centers in Orlando, Boston and Long Beach, California which are expected to employ the MEVION
S250 proton therapy device. Combining the elements of a superconducting synchrocyclotron mounted on a gantry with accelerator technology
that has been proven to be reliable and simple for the user, the MEVION S250 significantly reduces the cost, size and complexity
of proton technology, and promises to bring accessibility, affordability and practicality to this innovative therapy. With FDA
510(k) clearance for the MEVION S250 now in hand, we expect AMS' proton therapy business to accelerate, both the projects we have
already announced as well as additional projects that have awaited the FDA's positive decision. As an early adopter of the Mevion
technology, we were able to obtain favorable pricing and in addition we believe our equity investment in Mevion will turn out to
be a valuable asset. It is our intent to finance these projects primarily using senior debt instruments to minimize shareholder
dilution. We anticipate that our first Mevion project will commence construction shortly." Dr. Bates noted that AMS also is
developing a two room proton therapy center in Dayton, Ohio.
Dr. Bates continued, "In our Gamma
Knife business, the Perfexion system we supplied to Florence Nightingale Hospital Group in Istanbul through our EWRS Turkey subsidiary
began treating patients in the second quarter. This is the thirteenth Perfexion installation made possible by AMS' flexible financing
solutions, and our first outside the United States. This Perfexion is in addition to the Gamma Knife and linear accelerator we
previously supplied to Baskent University in Adana, Turkey. Separately, we continue to expect the Gamma Knife unit we have contracted
to provide to Hospital Central FAP in Lima, Peru to begin treating patients early next year. We expect that these projects will
increase AMS' future profitability.
"The upgrade of ten of our existing
sites to Gamma Knife Perfexion specifications and addition of new Gamma Knife and Perfexion sites drove revenue higher in the second
quarter, despite the absence of revenue from the Lehigh site in this year's results versus last year, and the expiration of a customer
contract at another site. We expect our revenue growth to accelerate in the second half with the continued development of Gamma
Knife Perfexion units, which will allow us to take advantage of the operating leverage inherent in our Gamma Knife business model.
"Adding to our optimism, we recently
entered into a contract to supply a Perfexion system to Northern Westchester Hospital (NWH) in Mt. Kisco, New York. The Perfexion
system will be an upgrade to an existing Gamma Knife supplied by AMS to NWH in 2005. Pending regulatory approval, patient treatments
on this Perfexion system are expected to begin in first quarter 2013. We see tremendous growth potential in Turkey and other international
markets, as well as in the United States, and will continue our vigorous efforts to bring advanced radiosurgery and radiation therapy
devices to additional partner hospitals in this country and around the world.
"Progress is being made in the monetization
of our operating room patents. We are currently negotiating a licensing agreement with a manufacturer of operating room lights.
We anticipate completion of contract negotiations this year and commencement of royalties in 2015.
"The Company continues to search
for ways to lower expenses and increase profitability and cash flow. Currently, the Company is attempting to relocate its corporate
headquarters and to refinance certain of its equipment debt.
"As previously announced, we do not
believe that these exciting developments have been properly reflected in our share price, so we decided to re-activate our share
repurchase program. We are prepared to buy back our shares if the price remains near the current market price." The Company
has repurchased approximately 928,000 shares of AMS common stock under a 1,000,000-share repurchase authorization, and currently
has approximately 4,605,000 common shares outstanding.
Earnings Conference Call
American Shared has scheduled a conference
call at 12:00 p.m. PDT (3:00 p.m. EDT) today. To participate in the live call, dial (800) 588-4973 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.earnings.com (individual investors) or www.streetevents.com (institutional investors). A replay
will be available for 30 days at these same internet addresses, or by calling (888) 843-7419, pass code 33035987#.
American Shared Hospital Services provides
turnkey technology solutions for advanced radiosurgical and radiation therapy services. AMS is the world leader in providing Gamma
Knife radiosurgery equipment, a non-invasive treatment for malignant and benign brain tumors, vascular malformations and trigeminal
neuralgia (facial pain). The Company also offers the latest IGRT and IMRT systems, as well as its proprietary Operating Room for
the 21st Century concept. Through its preferred stock investment in Mevion Medical Systems, Inc., formerly Still River Systems,
AMS also plans to complement these services with the MEVION S250 proton beam radiation therapy (PBRT) system.
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 and
radiation therapy businesses, the risks of developing The Operating Room for the 21st Century program, and the risks of investing
in a development-stage company, Mevion Medical Systems, Inc., without a proven product. 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