American Shared Hospital Services (NYSEAMERICAN:AMS) reported higher third-quarter revenue as its direct patient services business grew, but its net loss widened and margins narrowed amid higher expenses tied to its credit agreement and operations.
Revenue rose 6.3% to approximately $7.6 million for the quarter ended September 30, 2026, from $7.2 million a year earlier. Net loss attributable to the company widened to approximately $620,000, or $0.09 per diluted share, from about $17,000 in the prior-year quarter.
Executive Chairman Ray Stachowiak said the company is working with lenders and other stakeholders on its capital structure while expanding its direct patient services business. Its lender, Fifth Third Bank, agreed in July to forbear from exercising certain rights and remedies through June 30, 2027, under an amendment and forbearance agreement.
Direct patient services drive growth
Third-quarter direct patient services revenue increased 13.6% to approximately $4.6 million, primarily reflecting higher revenue from Rhode Island radiation therapy facilities and international Gamma Knife operations, Interim Chief Financial Officer and Chief Accounting Officer Alexis Wallace said. Medical equipment leasing revenue slipped to approximately $3 million from $3.1 million.
Interim Chief Executive Officer Craig Tagawa said total Gamma Knife procedures increased approximately 11% in both the third quarter and the first nine months of the year. An upgrade to the Leksell Gamma Knife Esprit system in Peru has helped shorten treatment times, he said.
Revenue from the Rhode Island and Puebla, Mexico, radiation therapy facilities increased in both periods, although procedure volumes at those facilities were somewhat lower than a year earlier, Tagawa said. Proton Beam Radiation Therapy revenue fell in the third quarter but rose over the first nine months.
For the nine months, total revenue increased 13.7% to approximately $23.1 million. Direct patient services revenue rose 27% to $13.5 million, while leasing revenue was approximately $9.6 million.
Margins and earnings under pressure
Third-quarter gross profit declined to approximately $1.5 million from $1.6 million, and gross margin narrowed to 19.9% from 22.1%. Selling and administrative expenses rose to approximately $1.8 million from $1.5 million, primarily because of legal, banking and consulting expenses associated with the company’s credit agreement and capital structure strategies, Wallace said.
Wallace said other direct operating costs also increased, reflecting the cost structure of the direct patient services business and a higher allowance for credit losses associated with the Rhode Island facilities. Third-quarter EBITDA fell to approximately $1.4 million from $1.9 million.
For the first nine months, the company reported a net loss attributable to American Shared Hospital Services of approximately $1.7 million, or $0.26 per diluted share, compared with a loss of approximately $922,000, or $0.14 per diluted share, a year earlier. Nine-month EBITDA declined to approximately $3.8 million from $4.6 million.
Stachowiak said management sees opportunities to improve gross margins through operating efficiencies. He also said costs associated with the banking relationship, legal work and consulting were weighing on profitability and that resolving the Fifth Third relationship should improve operating margins.
Financing and development projects
Cash equivalents and restricted cash totaled approximately $9.5 million at September 30, up from $3.7 million at the end of 2025. The company generated approximately $5.8 million in operating cash flow during the first nine months, while its working capital deficit narrowed to $4.6 million from $5.7 million.
The current portion of long-term debt, net, was approximately $15.6 million, down from $17.3 million at the end of 2025. Stachowiak said the company owed Fifth Third roughly $15 million at the end of September and expressed confidence that it could find a solution.
Stachowiak also said a company he formed had invested $2 million in subordinated financing during the quarter. He said the investment provided additional financial flexibility.
On development projects, Stachowiak said the company expects its joint venture with Hospital San Javier in Guadalajara, Mexico, to begin treating patients in mid-2027. The project involves an upgraded Gamma Knife at the hospital.
In Rhode Island, the company has certificates of need for a linear accelerator in Bristol and a Proton Beam Radiation Therapy system in Johnston. Both projects are in the design phase, with limited capital expenditures incurred so far, Stachowiak said. The company is pursuing an asset-light approach for the proton therapy project.
Stachowiak said the company has other opportunities in its pipeline but is pursuing them less aggressively until it resolves its relationship with creditors, including Fifth Third.
About American Shared Hospital Services (NYSEAMERICAN:AMS)
American Shared Hospital Services (NYSE American: AMS) is a healthcare services company that provides hospitals and healthcare providers with access to advanced radiation oncology and other medical technologies. Its business model focuses on supplying equipment, financing, management and operational support through hospital-based and outpatient arrangements. The company has historically specialized in Gamma Knife stereotactic radiosurgery systems, which are used to treat certain brain disorders and tumors without conventional surgery.
