American Shared Hospital Services Reports Fourth Quarter and 2012 Results and Updates Status of Medicare Reimbursement for Gamma

  American Shared Hospital Services Reports Fourth Quarter and 2012 Results
  and Updates Status of Medicare Reimbursement for Gamma Knife Procedures

Business Wire

SAN FRANCISCO -- April 1, 2013

AMERICAN SHARED HOSPITAL SERVICES (NYSE MKT:AMS), a leading provider of
turnkey technology solutions for advanced radiosurgical and radiation therapy
services, today announced financial results for the fourth quarter and 2012,
and provided an update on the status of Medicare reimbursement for Gamma Knife
procedures.

Fourth Quarter Results

Medical services revenue for the three months ended December 31, 2012
decreased 8.3% to $4,125,000 compared to medical services revenue for the
fourth quarter of 2011 of $4,500,000. Net income for the fourth quarter of
2012 was $5,000, or $0.00 per diluted share. This compares to net income of
$244,000, or $0.05 per diluted share, for the fourth quarter of 2011.

The number of procedures performed on Gamma Knife® Perfexion™ systems supplied
by AMS increased 8.0% for the fourth quarter and 8.0% for 2012 compared to the
same periods of 2011. The total number of procedures performed in AMS' Gamma
Knife business, including Gamma Knife and Gamma Knife Perfexion procedures,
increased 1.9% for the fourth quarter of 2012 and 7.1% for the year as a whole
compared to the same periods of 2011. Revenue decreased despite the increase
in procedure volume primarily due to variations in the mix of procedures by
location.

Medical services gross margin for the fourth quarter of 2012 decreased to
37.0%, compared to medical services gross margin of 39.5% for the fourth
quarter of 2011.

Selling and administrative expenses for the fourth quarter of 2012 increased
to $952,000 compared to $840,000 for the fourth quarter of 2011. This increase
was primarily due to unusually low legal and public reporting related expenses
in fourth quarter of 2011. Operating income for the fourth quarter of 2012 was
$56,000. This compares to operating income for the fourth quarter of 2011 of
$325,000.

Twelve Month Results

For the twelve months ended December 31, 2012, medical services revenue
decreased to $17,048,000 compared to medical services revenue of $17,237,000
for 2011. Total revenue for 2011 of $22,221,000 included revenue from the sale
of a Gamma Knife Perfexion to Lehigh Valley Hospital for $4,984,000. Net
income for 2012 was $38,000, or $0.01 per diluted share. This compares to net
income for 2011 of $506,000, or $0.11 per diluted share, which included income
from the Lehigh transaction.

Cash flow, as measured by earnings before interest, taxes, depreciation and
amortization (EBITDA), was $2,067,000 for the fourth quarter and $8,306,000
for 2012, compared to $2,493,000 for the fourth quarter and $9,265,000 for
2011, which included income from the Lehigh transaction.

Balance Sheet Highlights

At December 31, 2012, cash, cash equivalents and certificates of deposit were
$10,564,000 compared to $11,580,000 at December 31, 2011. Shareholders' equity
December 31, 2012 was $24,830,000, or $5.39 per outstanding share. This
compares to shareholders' equity at December 31, 2011 of $25,171,000, or $5.46
per outstanding share.

CEO Comments

Chairman and Chief Executive Officer Ernest A. Bates, M.D., said, "The
American Taxpayer Relief Act of 2012 (ATRA) included Provision 634 that
reduces Medicare reimbursement for Gamma Knife services by approximately
$4,000 per treatment compared to 2012 Medicare reimbursement levels, effective
April 1, 2013. In the three months since ATRA’s enactment, AMS and other
affected parties have engaged lobbyists and attorneys and have worked
vigorously to have this provision rescinded or modified.

“While we have not yet been successful, we will continue to fight to have this
provision rescinded or modified. This provision was enacted under the
assumption that Gamma Knife and linear accelerator-based radiosurgery
treatments are clinically equal, and therefore should be reimbursed by
Medicare at like amounts. This is contrary to a decision made by the Centers
for Medicare and Medicaid in November 2012, prior to Provision 634, that the
reimbursement rates assigned to the Gamma Knife and linear accelerator-based
radiosurgery devices were appropriate.

Moreover, we strongly disagree that the two technologies are clinically equal.
There have been no randomized studies that demonstrate that Gamma Knife and
linear accelerator-based radiosurgery are clinically equivalent. Additionally,
there exists a significant difference in the manner in which these
technologies are reimbursed by Medicare. Unlike the Gamma Knife, linear
accelerator-based radiosurgery devices are reimbursed for every treatment
session, up to five treatment sessions. Since we believe a majority of linear
accelerator-based radiosurgery devices treat patients in multiple sessions,
the majority of linear accelerator-based radiosurgery treatments are more
costly than Gamma Knife treatment, even prior to ATRA. We continue to believe
that once all of the facts are thoroughly analyzed, the Gamma Knife’s
unequaled, clinically documented patient results and cost effectiveness will
result in the rescission or modification of Section 634 of ATRA.

“We also are implementing an aggressive program to lower our costs. This
program includes but is not limited to the subleasing of our office space,
payroll reductions and the refinancing of existing equipment loans/leases.

“We expect the reimbursement cut to reduce revenue at AMS' five U.S. retail
Gamma Knife sites, where the Company receives a percentage of the hospital's
Medicare reimbursement. We do not know what, if any, impact the change in
reimbursement might have on our remaining 12 U.S. centers, where AMS' revenue
per procedure is contractually fixed with the hospital. As a result of this
uncertainty, we are unable to accurately predict the effect that reduced
Medicare reimbursement will have on our financial results. If AMS’ business
mix in the last nine months of 2013 is identical to that in the last nine
months of 2012, we estimate that revenues would be reduced by approximately
$500,000 to $650,000 and pre-tax income by approximately $300,000 to $400,000
during the period. We caution, however, that actual results could vary
materially based on many factors, including payer mix volumes, the impact, if
any, from the Company’s other contracts, increases in treatment volume,
continuing mitigation efforts, and the results of our cost reduction program.

"Even as we work to mitigate ATRA’s effects and reduce costs, we are moving
forward in our Gamma Knife business, as we continue to see opportunities to
place systems at new and existing AMS sites both in the U.S. and
internationally. This past January, the government of Turkey approved
reimbursement under the country's health insurance program for treatment with
the Perfexion system at Florence Nightingale Hospital Group in Istanbul
supplied by AMS through our EWRS Turkey subsidiary. Our newest Perfexion site,
Sacred Heart Health System in Pensacola, Florida, began treating patients last
week. The installation of our fourteenth Perfexion system, at Northern
Westchester Hospital in Mt. Kisco, New York, is scheduled for the second
quarter of 2013. These recent additions to our Perfexion portfolio demonstrate
that neurosurgeons and radiation oncologists who know the competing
technologies best continue to demand this advanced stereotactic radiosurgery
system for treating cancers and other diseases of the brain, skull, cervical
spine and head & neck regions."

Dr. Bates added, “Turning to our proton therapy business, construction of MD
Anderson Orlando's dedicated proton center is underway, and the facility is
expected to begin treating patients next year. As previously announced, AMS
has received a firm financing commitment for the MEVION S250^TM Proton Therapy
System we will supply for this $25 million facility. FDA approval of this
advanced proton device was received last year. The MD Anderson Cancer Center
Orlando project will be the model for additional proton centers we are
developing.”

AMS owns approximately 1% of Mevion Medical Systems, developer of the MEVION
S250, and in addition to Orlando is developing proton therapy centers in
Boston and Long Beach, California which are expected to employ the Mevion
device. "We believe our equity investment in Mevion will turn out to be a
valuable asset for AMS and our shareholders," Dr. Bates said. AMS is also
developing a one room proton therapy center in Dayton, Ohio.

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 3453 3650#.

About AMS

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^SM
concept. AMS owns a preferred stock investment in Mevion Medical Systems,
Inc., developer of the compact MEVION S250 Proton Therapy 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 the year
ended December 31, 2012, and the definitive Proxy Statement for the Annual
Meeting of Shareholders held on June 7, 2012.


Selected Financial Data
(unaudited)
                  
                      Summary of Operations Data
                                                                        
                      Three months ended                    Twelve months ended
                      December 31,                          December 31,
                      2012               2011               2012               2011
                                                                               
Medical
services              $ 4,125,000        $ 4,500,000        $ 17,048,000       $ 17,237,000
revenue
Equipment sales        --               --               --               4,984,000  
                        4,125,000          4,500,000          17,048,000         22,221,000
                                                                               
Costs of                2,600,000          2,716,000          10,118,000         10,078,000
revenue
Costs of               --               6,000            --               4,146,000  
equipment sales
Gross margin            1,525,000          1,778,000          6,930,000          7,997,000
                                                                               
Selling &
administrative          952,000            840,000            4,045,000          4,041,000
expense
Interest               517,000          613,000          2,155,000        2,367,000  
expense
                                                                               
Operating               56,000             325,000            730,000            1,589,000
income
Other income           165,000          20,000           190,000          108,000    
                                                                               
Income before           221,000            345,000            920,000            1,697,000
income taxes
Income tax             55,000           (120,000   )      107,000          208,000    
expense
                                                                               
Net income            $ 166,000          $ 465,000          $ 813,000          $ 1,489,000
Less: Net
income
attributable to        (161,000   )      (221,000   )      (775,000   )      (983,000   )
non-controlling
interest
                                                                               
Net income
attributable to
American Shared       $ 5,000           $ 244,000        $ 38,000          $ 506,000    
Hospital
Services
                                                                               
Earnings per
common share:
Basic                 $ 0.00            $ 0.05            $ 0.01            $ 0.11       
Assuming              $ 0.00           $ 0.05           $ 0.01           $ 0.11       
dilution
                                                                               
                                                                               
                                                                               
                                                                               
                      Balance Sheet Data
                      December 31,
                      2012               2011
Cash and cash         $ 1,564,000        $ 2,580,000
equivalents
Certificate of        $ 9,000,000        $ 9,000,000
deposit
Current assets        $ 15,956,000       $ 17,615,000
Investment in         $ 2,687,000        $ 2,656,000
preferred stock
Total assets          $ 73,323,000       $ 74,535,000
                                                                               
Current               $ 9,653,000        $ 9,944,000
liabilities
Shareholders'         $ 24,830,000       $ 25,171,000
equity
                                                                               

Contact:

American Shared Hospital Services
Ernest A. Bates, M.D., 415-788-5300
Chairman and Chief Executive Officer
e.bates@ashs.com
or
Berkman Associates
Neil Berkman, 310-477-3118
President
info@berkmanassociates.com
 
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