American Shared Hospital Services (AMS) Q3 2026 earnings review
American Shared Hospital Services builds cash, but treatment volumes fall
American Shared Hospital Services, which leases radiation equipment and runs cancer clinics, posted slower sales growth and a wider loss. Third-quarter revenue rose 6% from a year ago to $7.6 million, down from 19% growth in the second quarter. Executive chairman Ray Stachowiak said the operating business showed progress, but clinic costs and bank fees more than doubled the operating loss to $764,000.
| Revenue | $7.6M +6.3% from a year ago |
|---|---|
| Direct Patient Services revenue | $4.6M +13.6% from a year ago |
| Operating loss | $764K $344K loss a year ago |
| Cash and restricted cash | $9.5M up from $6.8M in Q2 |
⚖️ Verdict: 🔴 Bearish
The story got worse because the patient volume recovery that supported the first half of the year stalled in both segments. Treatment counts fell at the company's own radiation clinics in Rhode Island and Mexico, proton therapy sessions dropped 17% from a year ago, and the Guadalajara clinic opening slipped again to mid-2027. On the positive side, cash and restricted cash climbed to $9.5 million after a $2.0 million loan from Stachowiak's firm and steady operating cash flow.
The question now is whether the cancer care group can refinance or sell assets before its bank debt standstill expires in June 2027. Either rising clinic cash flow supports a standard refinancing, or falling treatment counts and heavy debt force a distressed sale that favors secured lenders. The third-quarter 10-Q filing will show whether the company met its autumn bank milestones.
🐂 Bull Case
Cash Balances Grew While Short-Term Debt Shrank
American Shared Hospital Services, which leases radiation therapy equipment and operates cancer clinics, ended September with $9.5 million in total cash and restricted cash. That is up from $6.8 million three months earlier and $3.7 million at the end of 2025. The increase came partly from a $2.0 million loan taken in July from RCS/TIG Holdings, a firm controlled by executive chairman Ray Stachowiak.
Operations also brought in cash. Nine-month operating cash flow reached $5.8 million, up from $4.4 million at the halfway mark, which leaves $1.4 million for the third quarter by our math. Meanwhile, the current portion of long-term debt fell to $15.7 million from $16.2 million in June, giving the cancer treatment provider more breathing room as it negotiates with lenders.
What to watch: Unrestricted cash versus restricted cash in the quarterly filing. A rising unrestricted balance would confirm that daily clinic operations can fund upcoming debt payments without another insider loan.
Upgraded Brain Surgery Machines Lifted Volumes
The company leases and operates Gamma Knife machines, which deliver focused radiation to treat brain tumors without open surgery. In June 2025, the healthcare group upgraded its clinic in Lima, Peru to the newer Gamma Knife Esprit model. Because the Esprit system shortens treatment times, clinics can treat more patients in a day, lifting international Gamma Knife procedures by 8.9% from a year ago.
While that pace slowed from the 46.7% jump recorded in the second quarter, the third quarter compared against a period when the Peru upgrade was already running. At the same time, US Gamma Knife procedures grew 13.1% from a year ago, rebounding now that the April 2025 expiration of a hospital lease contract has passed out of the comparison base.
What to watch: Domestic and international Gamma Knife procedure growth in the fourth quarter. Holding double-digit domestic volume growth would show that remaining hospital partners are using their leased machines more heavily.
🐻 Bear Case
Cancer Center Treatments Fell Despite Higher Sales
"Our underlying operating business is demonstrating encouraging progress," Stachowiak said, pointing to the Direct Patient Services segment, which runs the company's own cancer clinics. Segment sales grew 13.6% from a year ago to $4.6 million, slowing sharply from nearly 40% growth in the second quarter. Within that division, revenue from the three Rhode Island clinics and the Puebla, Mexico center rose 13.5% to $3.3 million.
However, patient volume at those four clinics actually shrank. Radiation therapy procedures fell 2.9% from a year ago to 7,143, reversing the 6.4% volume gain seen in the second quarter. By our math, revenue per procedure jumped 16.9%, meaning the top-line increase relied entirely on higher billed rates or collection estimates rather than treating more patients.
That split matters because Rhode Island revenue is recorded based on estimated collectible amounts. Last quarter, the operator had to take a $909,000 charge for uncollected Rhode Island bills dating back to 2025. Growing clinic revenue while patient visits drop raises the risk that accounting estimates, rather than patient demand, are carrying the segment.
What to watch: Credit loss reserve disclosures and Rhode Island procedure counts in the quarterly filing. A second quarter of falling treatment counts alongside rising revenue per visit would point to further collection write-offs ahead.
Clinic Operating Costs and Bank Fees Widened Losses
"While we continue to optimize our cost structure, we remain focused on improving operational performance, managing expenses, and maximizing the contribution of our existing facilities," interim chief executive Craig Tagawa said. Despite that goal, gross profit slipped to $1.5 million from $1.6 million a year ago, and gross margin fell 2.2 percentage points to 19.9% of sales.
- Costs of revenue (running clinics and maintaining machines): 80.1% of sales, up 2.2 percentage points from a year ago
- Selling and administrative expense (corporate overhead and professional fees): 23.6% of sales, up 2.2 percentage points
- Operating loss: $764,000, more than double the $344,000 loss a year ago
- Net loss attributable to the company: $620,000, or $0.09 per share, compared with $17,000 a year ago
Two expense lines drove the wider loss. First, the company cited "higher operating costs at the Rhode Island and international Gamma Knife facilities", showing that running its own clinics carries heavier ongoing costs than leasing equipment. Second, overhead rose on "legal, banking and consulting expenses associated with the Third Amendment to the Credit Agreement with Fifth Third Bank" signed in July.
What to watch: Selling and administrative expenses in the fourth quarter. Because the Fifth Third Bank amendment closed in July, advisory fees should drop if the debt standstill holds without new legal disputes.
Proton Beam Treatments Reversed Back into Decline
Within the Medical Equipment Leasing division, the largest revenue source is Proton Beam Radiation Therapy (PBRT), which uses proton particles to target tumors while sparing surrounding tissue. After falling during 2025, PBRT treatment fractions — individual radiation sessions — grew 20.7% in the first quarter of 2026 and 9.6% in the second quarter, making proton therapy a key recovery driver in the first half.
That recovery stalled in the third quarter. PBRT treatment fractions dropped 16.5% from a year ago to 960, pulling proton revenue down to $2.0 million from $2.1 million and dragging total leasing segment sales down 3.1%. The company attributed the drop to "normal cyclical changes in patient activity", while higher average reimbursement per session cushioned the revenue decline.
What to watch: Fourth-quarter PBRT fractions and revenue per session. Under the extended Orlando lease, the company's contractual share of collections steps down in certain periods, so volume drops cannot rely on higher per-session rates forever.
Guadalajara Clinic Delayed Again as Debt Pressures Persist
The company is partnering with Hospital San Javier in Guadalajara, Mexico to "upgrade the hospital's existing Gamma Knife Perfexion system to a Gamma Knife Esprit system". Management initially targeted a startup in late 2025, then moved the target to the second quarter of 2026, and later to late 2026. Now the group "expects patient treatments at the facility to begin in mid-2027".
Meanwhile, several standing balance-sheet and governance risks remain unresolved or awaiting the full quarterly filing:
- Fifth Third Bank debt standstill: $15.7 million in current debt remains due by June 2027 while management continues "exploring longer-term capital structure alternatives".
- Insider lending and sale process: Stachowiak's firm holds a $2.0 million subordinated loan alongside warrants, and the release gave no update on the bank-mandated sale milestones.
- Unfunded expansion projects: The release did not mention the planned Bristol and Johnston clinics in Rhode Island or how equipment commitments will be funded.
- Interim leadership: Tagawa remains interim chief executive, and the company has not named a permanent chief executive or finance chief.
What to watch: The debt footnote in the third-quarter 10-Q filing. It will show whether the company met its autumn milestones under the Fifth Third Bank forbearance agreement without incurring penalty fees.
💲 Other KPIs
Profit before interest, taxes, depreciation and stock compensation fell 29.9% from a year ago, dropping to $1.36 million from $1.94 million. As a share of revenue, Adjusted EBITDA contracted to 17.9% from 27.1% in the third quarter of 2025, weighed down by higher clinic operating expenses and bank amendment advisory fees.
Book value attributable to common shareholders slipped to $22.6 million, or $3.40 per share, down from $23.1 million ($3.49 per share) in June and $24.0 million ($3.66 per share) at the end of 2025. Ongoing net losses and a slightly higher share count reduced per-share equity for a third straight quarter.
The average diluted share count rose 2.1% from a year ago to 6.77 million, up from 6.63 million in the third quarter of 2025. Period-end shares outstanding reached 6.65 million, up from 6.58 million at year-end, before counting the 220,000 warrants issued to the executive chairman's lending entity in July.
❓ Key Questions
Why did clinic revenue rise while treatments fell?
Rhode Island and Puebla revenue grew 13.5% even though radiation procedures dropped 2.9%. Given the $909,000 write-off of older Rhode Island bills in the second quarter, investors need to know whether higher revenue per visit reflects payer rate increases or aggressive collection estimates.
Where does the lender-mandated sale process stand?
The July forbearance agreement with Fifth Third Bank required the company to pursue a sale or refinancing against set milestones before all debt comes due in June 2027. The press release gave no update on whether an investment bank is hired or milestones were met.
What delayed the Guadalajara clinic to mid-2027?
The Hospital San Javier Gamma Knife upgrade in Mexico was previously expected in 2026 and is now pushed to mid-2027. Management has not explained whether equipment delivery, hospital permitting, or the company's own cash constraints caused the latest delay.
What is the status of the Rhode Island expansion centers?
Earlier releases highlighted Certificate of Need approvals for new radiation and proton therapy centers in Bristol and Johnston, Rhode Island. Neither project appeared in this quarter's release, leaving open whether they are on hold during the debt standstill.