By M. Marin
NYSE:AMS
READ THE FULL AMS RESEARCH REPORT
Total revenue increased 36% y/y in 3Q24…
American Shared Hospital Services (NYSE:AMS) reported 3Q24 results yesterday with total revenue up 36.3% year-over-year to $7.0 million. Topline results benefitted from the company’s growth strategy to boost and diversify revenue by geographic market and by business line and recent expansion of its Direct patient operating segment.
…As revenue from Direct patient segment up nearly 4-fold
The increase in revenue reflected revenue from AMS’s Rhode Island centers and its new Puebla, Mexico facility. AMS purchased a 60% interest in three Rhode Island facilities under its new own and operate (O&O) business model. Reflecting these two new business streams, retail revenue from the company’s direct patient services operating segment was $3.7 million, compared to $988,000 in 3Q23. This represents a 273.2% year-over-year advance.
In addition to the newly acquired three Rhode Island radiation therapy facilities, revenue from the Versa HD Linear Accelerator at its 85%-owned Radiation Therapy Facility in Puebla, Mexico came online in early August. The Puebla facility represents a new revenue stream for AMS and the company is optimistic about this opportunity.
Growing its O&O or retail footprint is a core objective for AMS. All three Rhode Island sites are equipped with state-of-the-art cancer treatment technology using Linear Accelerators (LINACs) and comprehensive treatment planning software. AMS noted that it incurred some $300k of costs in 3Q24 related to equipment upgrades and other 1-time changes when it began operating the Rhode Island centers. The centers are close to Rhode Island hospital campuses. The Rhode Island facilities expand AMS’s O&O footprint into the U.S. As the company continues to grow the direct retail footprint, we expect strong segment growth to continue.
For example, AMS signed a JV in 3Q24 for a Gamma Knife facility in Guadalajara, Mexico, marking the company’s 4th international location and newest O&O location, which will also contribute to segment / overall revenue growth. AMS will hold a 70% interest. The JV plans to upgrade equipment. In addition to the U.S. and Mexico O&O centers, the company owns cancer care treatment centers in Peru and Ecuador.
As sales pipeline expands and new O&O projects are evaluated, ‘asset-light’ approach would reduce upfront capital commitment
In its traditional business line, the company continues to engage in discussions for upgrades and extensions at several locations. Over the last 15 months, the AMS leasing segment has signed five lease extensions from its base of ten domestic Gamma Knife sites. The company believes its enhanced focus on sales, marketing, and customer service has led to improved customer relations and greater success at achieving contract extensions, as well as growing its pipeline for future new business.
As the company continues to evaluate new O&O opportunities, the company is evaluating a relatively asset-light model. Under this model, AMS would not plan to own the actual treatment facility, but would seek to partner with a REIT or another investor. This would reduce the upfront capital investment significantly. In addition, AMS also would likely seek to enter into a JV, if applicable, with a medical center, while retaining a majority interest in the PBRT center, further reducing the upfront capital commitment and also likely broadening the medical services that the overall center could offer.
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