Good afternoon everyone, and welcome to the Fourth Quarter and 2015 Financial Results Conference Call for American Shared Hospital Services. At this time all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. [Operator Instructions] I would now like to turn the call over to Dr. Ernest Bates, Chairman and Chief Executive Officer; Craig Tagawa, Chief Operating and Financial Officer; and Alexis Wallace, Controller of American Shared Hospital Services. Mr. Tagawa, you may begin.

Thank you, Sylvia and thank you all for joining us for AMS's fourth quarter and 2015 financial results conference call and webcast. Please note that various remarks that we may make on this conference call about future expectations, plans and prospects of the company constitute forward-looking statements for the purposes of Safe Harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may vary materially from those indicated by these forward-looking statements as a result of various important factors including those discussed in the company's filings with the Securities and Exchange Commission, including the company's Annual Report on Form 10-K for the year ended December 31, 2014, its Quarterly Reports on Form 10-Q for the three months ended March 31, 2015; June 30, 2015; and September 30, 2015; and the definitive proxy statement for the Annual Meeting of Shareholders held on June 16, 2015. The company assumes no obligation to update the information contained in this conference call. Our business performed well for the fourth quarter and 2015 overall posting gains in treatments, revenue and operating income compared to 2014. We attribute this top and bottom line growth to our hard work this past year to refine our cost structure to improve operating margins and increased utilization by our hospital partners. Efforts in these areas have been successful and we hope to make additional progress in the New Year. Based on the Hospital outpatient payment rate for 2016, recently announced by the Senate for Medicare Medicaid services, we estimate that the average CMS reimbursement rate for delivery of Gamma Knife or LINAC one session cranial radiosurgery separately reimbursable ancillary codes. Exclusive to co-insurance and other adjustments will be increased by approximately 10% in 2015. To put this in perspective we estimate that the CMS Gamma Knife reduction…

Thank you, Craig. For the three months ended December 31, 2015 medical services revenue increased 4.3% to $4,162,000 compared to medical services revenue of $3,992,000 for the fourth quarter of 2014. Net income for the fourth quarter 2015 more than quadrupled to $277,000 or $0.05 per share. This compares to net income of $58,000 or $0.01 per share for 2014. Total number of procedures performed in AMS's Gamma Knife business decreased 1.7% for the fourth quarter of 2015 compared to the same period of 2014. This decrease is primarily due to the expiration of site contract in March 2015. Increase in revenue despite the decrease in procedure volume reflected a favorable mix of treatments at the company's retail sites as well as an increase in Medicare reimbursement for Gamma Knife services that went into effect on January 1, 2015. Medical services gross margin for the fourth quarter of 2015 increased to 44.7% compared to medical services gross margin at 38.6% for the fourth quarter of 2014. Improvement in gross margin was primarily the result of reduced maintenance cost. Operating income increased 91.9% at $731,000 for the fourth quarter of 2015 compared to operating income of $381,000 of the same period a year earlier. Pre-tax income net as income attributable of the non-controlling interest increased to $383,000 for the fourth quarter of 2015 compared to pre-tax income net as income attributable of the non-controlling interest of $154,000 for the fourth quarter of 2014. Selling & administrative expenses for the fourth quarter of 2015 decreased 5.5% to $792,000 compare to SG&A expenses of $838,000 for the fourth quarter of 2014. This is primarily the result of lower consulting expenses. For the 12 months ended December 31, 2015 medical services revenue increased 7.3% to $16,548,000 compared to medical services revenue of $15,417,000 for…

Thank you, Alexis. Sylvia we are ready for the first question.

Thank you. [Operator Instructions] And the first question comes from Tony Kamin from Eastwood Partners.

Hi, good afternoon.

Good afternoon Tony.

It was a very good quarter and I guess my question surrounds your sense of being able to replicate quarters like this going forward. You certainly express some optimism about the Gamma Knife business but is this something that we should look at as a new norm or was this unusual quarter?

Well, I think in terms of the cost control as you see we have made significant progress during the year. the one thing obviously we can't control is, because of the way of our contracts are structured is, the revenue side. We feel good about it going forward in 2016. As we mentioned earlier the Medicare rates have pretty much stabilized. We don't think that will have a large impact on us so I think things look very bright as a whole for the Gamma Knife in 2016. But we can't, as we've had in the past there will be peaks in values but overall we feel very good about what the revenue should look like in 2016.

I think that it's very likely that these kind of numbers are going to attract new people looking at the company and I think it might be just as a suggestion I think it would be very helpful going forward to put your EBITDA number into your press release particularly as the proton beam I'm sure will generate a depreciation as well in with your debt load. It looks sort of funny if you don't look at the EBITDA and also the realization that allows your Gamma Knife under non-recourse.

Good point, we'll take under advice Tony.

Okay, thank you. Next question, incredibly exciting that the proton beam is for those who suffered long time is about to start its first treatment. Can you talk about the internship for the health center and maybe give me a better understanding of what they're doing to market? Are they yet really marketing or they're kind of try to open quietly? I'm really curious about their efforts to raise awareness that this treatment is now available at Orlando.

I think they'd done several things. They've done a good job of marketing the services coming Orlando Health and they did that when they first installed the synchrocyclotron and I think it was November of 2014. They had a lot of press coverage there, and they did get a lot of play at that point to let people know what's going to be coming and expected treatments in 2016. Actually next week I'll be holding a press event announcing the opening of the center. So I think they will get widespread coverage both from newspapers and the TV media. So I think they've done quite a good job of getting this out there. So I think it's not an unknown quality. They're getting people to, calling in to ask about the service and we're very excited. I think we've got an excellent group of both from administrative and the clinical team that we're working with.

Tony, there is also a second open house in the latter part of April which I will be attending with Dr. Bates. I think it's a luminary institution. I'm not quite certain that they'll do well. They will make us all proud.

I think along the same logic I really do believe it's time that having a good quarter and having this, after ten years of waiting having this occur now I think it would be a perfect time for AMS throughout the year not just on a one shot but throughout the year to really go out and start to retell or tell for the first time to people who never heard the AMS story itself. I think that the shares our very undervalued and I think that getting that story out there I think now is the time it would really receive the right reception. And I think as each as you have the first treatment and then you have revenue starting to roll in and hopefully then signing the next proton beam. I think this is the time you might really find the market receptive to learning more about AMS.

We agree.

Great. So next question, you mentioned that the signing of the financing for Orlando had attracted some interest from other hospitals. Sort of standard question every quarter but do you think that this year we might see another partnership on your second proton beam or?

We are in discussions with several institutions. I'm reasonably certain that we will announce at least one more, two more in 2016.

That would be great. And final question, Dr. Bates, any further studies or things in literature or even just feedback you're getting from being in medical community of proton beams and their relative acceptance and the relative efficacy and all that?

Yes, Tony. In preparation for the earnings call today, we looked at some of the recent literature, actually looked at about 120 papers and they all are very promising in terms of tumor-controlled and acceptable toxicity profiles using protons over conventional radiation therapy. It's getting out there now that there is clearly a clinical advantage to protons. So you'll see more and more papers in the literature coming out showing that.

Great. Well great quarter and congratulations.

Thank you, Tony.

The following question comes from Robert Patty [ph].

You've done a great job turning the company around. I'm very proud of you. I've been a long time shareholder. I remember when you paid dividends. But what I'm interested in shareholder, however they're helping us and they have a -- there is a Chinese company that has financed part of Mevion. And I was wondering if they were also be helping the financing for us and full year projects.

The Chinese investment company that you have mentioned they did make a -- did one of the fundings with Mevion the latter part of last year which is very important. We all benefited from that obviously. I don't anticipate them reaching out to individual companies to finance their projects but I don't know for certain. I think one of the things that Mevion did announce is that they will be forming a joint venture in China to really distribute and service and even probably make some of the parts in China for that market. And China is concerned of the second biggest market for protons behind the United States. So I think it's a very good partnership that they've struck with these investors.

Mr. Patty, I don't think we're going to have any major difficulty getting financing for our needs in the next two years in this country. Financing will be available.

Very good, keep up the good work. Thank you.

Thank you.

Thank you.

And the following questions comes from Tony Polak [ph].

Good afternoon. Could you give us an idea on when you'll see some revenues from the Florida proton beam therapy?

Yes, we should see some in the second quarter. I think you'll see a ramp up period so you won't see probably a huge influx of revenues that we'll start gradually seeing that in the second quarter and I think they'll keep ramping up during the rest of the year. So I think you'll see more in the significant revenues probably in the third and fourth quarter.

Do you foresee sometime in this year or next year or quarter where they will be operating close to capacity or what St. Louis is doing?

Yes I think that sort of the benchmark St. Louis did a little over 100 patients their first year, and at that time that was the fastest single room ramp up. I think we anticipate that Orlando facility will at least match that if not exceed that.

Great. Okay, thank you.

Thank you.

And the next question comes from Lenny Dun [ph].

Good afternoon. I'm very pleased to see we're now operating the Gamma Knives in a profitable manner, and it sounds sustainable from the information you've given. Do you anticipate being able to place one or two more Gamma Knives this year?

We do. We've been working on that. We've got, look we're trying to place at this point. So yes I think we hope to place at least one and possibly two.

Great. I think this is a good time for you to say a word about the new Gamma Knife, the improvement of the previous Gamma Knife, the Icon.

Sure. The Icon was recently FDA approved and they've installed one in the United States so far, in Sacramento, we are looking to install some of these in the course, over the next year probably. What the icon does is that it integrates an imaging device with the software so that you could do multiple fractions on a large tumor. So, if a tumor's too large you do a single fraction due to the radiation dose, you might do the larger tumor over two to five fractions and there is a reimbursement mechanism for that from Medicare and this really rounds out what the Gamma Knife can do. It's a frame of procedure that is why it's very important to have the cone beam CT imaging attached and integrated to the perfection. And the perfections can all be upgraded to the Icon platform. We are very excited about it, we are learning as we go along, the capabilities and the advantages of the Icon.

Okay. And the Icon, will you still only get the same reimbursement you do on the regular Gamma Knife or is there a potential for a little more reimbursement procedure?

How the Icon, how the reimbursement works for what we call Hypo Fractionated Radio Surgery and that's where we are giving two to five fractions, so you are giving the dose over two to five days as opposing to a single day. So the patient will come back and re-treated at the same tumor. So, there are separate codes for this type of procedure and from a Medicare standpoint, it's about the same rate if you are doing between probably three to five fractions or three to five sessions as you would get on a single treatment. So, it's just a different way of treating and expanding the types of indications that a Gamma Knife can treat.

Okay. And when is the first patient supposed to be treated in Orlando?

In April.

I understand that but mid-April or--?

Probably the beginning part of April. Hopefully sometime in the next week.

Okay that' great and after the first patient, assuming everything goes smoothly, do you think you will be able to treat half a dozen more in April or is it hard to say?

It's up to the clinicians as to, the pace if they want to ramp out. But they have a very experienced team with Proton Therapy experience so.

Okay and the final question I have is that I am assuming that there was a big learning curve when you were getting this set-up so that if you assign a second hospital probably everything goes at a faster pace, would that be an accurate expectation?

Yes, I think you check with Mevion and other manufacturers they are all installing and getting these up and running faster now. Everybody is learning from, the experiences they have gotten from installing the previous ones. I think we are seeing the times are going to be quicker, from the time you start constructing to the time you actually treat your first patient.

Okay that sounds like all good news and thank you again for the yard work now that you have got this thing turned around now. Thank you.

Thank you.

Our next question comes from Anthony Markesy [ph].

Good afternoon. First, again congratulations on what looks like a very good quarter and obviously getting the Proton beam going. You know the stock trades at a third of boo value. Clearly it's just people, maybe they will start to care but certainly it looks like people just don't care. I think part of it unfortunately has to be due to not properly telling the story. Could you be more specific in terms of what you intend to do to more effectively tell the story because by any measure, the stock is significantly undervalued yet it continues to stay undervalued. So I think it's going to take a push on the company's part to better tell the story outside of just doing conference calls and occasional press release. Could you be more specific in terms of what you intend to do to more effectively tell the story?

Anthony what we intend to do was go on the road now. I think we can do it now since we have an operating machine but you can imagine how difficult it was when we are telling people that we are not sure when we will have our first proton revenue. Now, we are there. So yes we intend to go out on the road and talk more about what's going on with the company and with protons.

Okay, I think unfortunately as they always say stocks don't sell themselves and so I think it's important that you guys take the initiative to tell the story because that's the only way we will see fair value. I guess I sense that people who have been in the stock a long time and the minute they see 2 to 2.25, they are immediately looking to get out of their physician because that's been the pattern. So again not to dwell on, maybe a sort of topic, but thank you very much for increasing your effort in the future.

You're welcome.

Thank you.

And our final question comes from Mason Mattsky [ph].

Hi, guys. How are you doing this afternoon? Nice quarter.

Thank you.

I was interested if you could review for me how many more machines you have deposits down forward with Mevion, the cost of those machines and then the current cost that customers of Mevion have to pay for a new machine, ball park? Thank you.

Well, the cost of the machines we really can't disclose because we get them at a discount, so it's not fair to Mevion to disclose that. And we have two of those. Is that correct, Craig?

We have two more that we've made commitments to.

Okay.

The prices of these single treatment rooms are coming down.

You have said publicly what your discount was so I believe haven't you on your, you have two machines left that you have deposits for?

Correct.

Okay. What is the cost of a new machine if somebody was, ballpark, would go to Mevion right now?

Well, I think you need to call up Mevion and find that out for yourself.

Okay. Thanks.

Mr. Tagawa, we have no further questions. Would you like to make a closing remark?

Yes. I believe Dr. Bates would like to make some closing remarks.

I just want to say that things have really turned around. I think we now see the light at the end of the tunnel. When we first started out on this in 2006, signing our first agreement with Mevion, there are only three proton machines in the United States. Now there are 21, and by the end of 2017 there will probably be another ten, so there will be over 30. I think it's clear to us that protons are now accepted and everyone I think is beginning to see the advantage over conventional radiation therapy. So we're quite excited about going forward. We have a lot of interest in the single room machine. I think Mevion has done a good job and now IBA has also got a one room solution which is also very exciting, as those variant. So I think people see what we saw ten years ago. Right now single room make up about 25% of the market, Craig, is it?

Single rooms.

Single rooms.

That's correct.

And I think that percentage is going to grow. Okay. So thank you all for joining us this afternoon. We look forward to speaking with you in May on our first quarter 2016 results conference call.

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