American Shared Hospital Services Q4 2025 Earnings Call - Shift to Direct Patient Care Now Majority, But Cash and Covenant Pressure Mounts

Chuck, Conference Moderator, Conference Services: Please note this event is being recorded. I would now like to turn the conference over to Mr. Kirin Smith. Please go ahead.

Karen, Investor Relations / Legal Compliance, American Shared Hospital Services: Thank you, Chuck, and thank you everyone for joining us today. AMS’s fourth quarter and full year 2025 earnings press release was issued today before the market opened. If you need a copy, it can be accessed on the company’s website at www.ashs.com at Press Releases under the Investors tab. Before turning the call over to management, I would like to make the following remarks concerning forward-looking statements. Please note that various remarks that may be made on this conference call about future expectations, plans and prospects for 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 SEC, including our annual report on Form 10-K for the year ended December 31, 2025. The company assumes no obligation to update the information contained in this conference call. Before I turn the call over to management, I’d like to remind everyone about our Q&A policy, where we provide each participant the time to ask one question and one follow-up. As always, we’ll be happy to take additional questions offline at any time. With that, I’d now like to turn the call over to Ray Stachowiak, Executive Chairman. Ray, please go ahead.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Thank you, Karen, and good afternoon, everyone. As I reflect on 2025, I’m reminded of the strength and importance of our health system partnerships, which continue to be our foundation to our business and a key driver of our long-term strategy. Over the past year, we’ve worked closely with both longstanding and new partners to position our company for success in 2026 and beyond. These alliances have allowed us to expand our clinical capabilities, strengthen our operational foundation, and enhance patient access to advanced cancer care. 2025 was a year of transition and investment. While our total revenue remained relatively stable at $28.1 million, the underlying transformation of our business was significant. We continued our sea change toward a direct patient care model, which now represents the majority of our revenue and provides a more stable and scalable platform for long-term growth.

At the same time, we encountered challenges across certain areas of our business, including physician turnover, reimbursement dynamics, and expected headwinds in our leasing segment. Importantly, we took decisive actions to address all these issues. A key highlight of the year was the strengthening of our partnerships, including our new collaboration with Brown University Health in Rhode Island, which has helped us rebuild our physician base and improve treatment volumes. We’re also very pleased to have to announce our long-standing relationship with Orlando Health has been extended by a 7-year lease extension for our proton beam radiation therapy system. I would like to highlight our long-standing partnership of over two decades with Orlando Health, which clearly exemplifies the long-term nature of our relationships and reflects the ongoing collaboration in delivering advanced cancer treatment services.

In addition, as part of our broader focus on strengthening our financial position, we’re actively engaged with our lending partners as we evaluate opportunities to enhance our capital structure and support our long-term growth initiatives. We have a long-standing relationship with our lenders, and these discussions are constructive and ongoing. Looking ahead, we believe we’ve laid a strong foundation for future growth, supported by new and old partnerships, expanded clinical capacity, and a clear development pipeline. With that, I’ll turn the call over to Gary. Gary?

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: Thanks, Ray, and good afternoon, everyone. 2025 was a foundational year for American Shared Hospital Services as we expanded our direct patient care services platform and strengthened the operational infrastructure needed to support long-term growth. Our strategy is centered on building and leveraging strong partnerships with leading health systems, and we made meaningful progress on that front throughout the year. In Rhode Island, we worked closely with Brown University Health, Care New England and CharterCARE Health Partners to stabilize and rebuild our radiation oncology physician team. Through these efforts, physician staffing has now been stabilized and we’re beginning to see improvements in treatment volumes, which we expect to continue into 2026. We also took important steps to enhance our operational capabilities, including improving our revenue cycle management infrastructure.

This gives us greater control over billing and collections and positions us to improve financial performance over time. From a growth standpoint, our Direct Patient Care Services segment expanded significantly, driven by a full year of operations at our Rhode Island centers and our center in Puebla, Mexico. These centers are increasing patient access to advanced radiation therapy treatment options and are central to our long-term growth strategy. Additionally, we saw strong growth in LINAC treatments, with volumes increasing significantly year-over-year, reflecting the contribution from our Rhode Island and Puebla centers. At the same time, Gamma Knife volumes improved on a same-center basis following technology upgrades, while proton therapy treatment volumes reflected variability. Our international business continues to be a strong contributor and meaningful source of future opportunity. In 2025, we successfully relocated our Lima, Peru center and upgraded our Gamma Knife to a state-of-the-art Esprit platform.

We continue to deliver strong performance in Puebla, which has exceeded our expectations, and we maintain leadership positions in Ecuador and Peru with the only Gamma Knife centers in those countries. Looking ahead, we see significant opportunity in international markets, including the development of our Guadalajara, Mexico center, which we expect to begin operations in 2026. In Rhode Island, we’ve also created a clear runway for expansion through our certificate of need approvals for both a new radiation therapy treatment center in Bristol and a proton beam radiation therapy center in Johnston. These projects represent major long-term growth drivers and further strengthen our partnerships with leading health systems in the region. From an operational and financial perspective, we’re also focused on strengthening the overall foundation of the business, including improving cash flow generation and aligning our cost structure with the scale of our operations.

As Ray mentioned, we’re working closely with our lending partners as we continue to invest in the business and position the company for long-term growth. We believe the steps we are taking operationally will support these efforts and enhance our financial flexibility over time. While 2025 included operational challenges, we addressed them directly and made the necessary investments to position the company for improved performance. Our priorities going forward are clear. Increase treatment volumes across our existing centers, drive operational efficiencies and margin improvement, expand our footprint through disciplined development, and continue to leverage our partnerships to scale our platform. With the foundation we’ve built, we are optimistic about 2026 and confident in our long-term growth trajectory. With that, I’ll turn the call over to Scott.

Scott, Chief Financial Officer, American Shared Hospital Services: Thank you, Gary, and good afternoon, everyone. I’ll begin with our fourth quarter results, followed by a review of our full-year 2025 performance and key financial drivers. For the fourth quarter, total revenue decreased 14.8% to $7.7 million, compared to $9.1 million in the prior period. This decline was primarily driven by the expiration of 3 Gamma Knife contracts and lower proton beam radiation therapy volumes. Revenue from our direct patient care service segment represented 63% of total revenue, increasing 2.6% year-over-year to $4.8 million, driven primarily by increased procedures at our Puebla, Mexico facility and in Rhode Island. Revenue from our medical equipment leasing segment declined 33.9% to $2.9 million, reflecting lower PBRT volumes and contract expirations.

Gross margin for the quarter was approximately $906 thousand or 12% compared to 35% in Q4 2024, reflecting both lower treatment volumes and the continued shift in revenue mix towards direct patient services. Net loss attributable to the company improved to $631 thousand or $0.09 per diluted share, compared to a net loss of $1.6 million or $0.23 per diluted share in the prior year period. Adjusted EBITDA was $868 thousand for the quarter, compared to $3.8 million in Q4 2024. For the full year, total revenue was $28.1 million compared to $28.3 million in 2024.

Direct patient care services revenue increased 23.7% to $15.5 million, while leasing revenue declined to $12.6 million, reflecting the company’s ongoing strategic transition. For additional perspective, LINAC revenue increased 35.4% to $11.5 million, while Gamma Knife revenue decreased 5.5% to $9.2 million, and proton beam radiation therapy revenue declined 26% to $7.4 million. LINAC treatment sessions more than doubled to 28,147 in 2025, the first full year of operation for both Puebla and Rhode Island. Gross margin for the year was $5.1 million, or 18% of revenue, compared to $9.2 million in 2024, reflecting increased operating costs and lower leasing segment contributions.

The net loss attributable to our company was $1.6 million or $0.23 per diluted share, compared to net income of $2.2 million in 2024, which included a $3.8 million bargain purchase gain related to the Rhode Island acquisition. Adjusted EBITDA for the full year was $5.5 million, compared to $8.9 million in 2024. Turning to the balance sheet. We ended the year with approximately $3.7 million in cash compared to $11.3 million at the end of 2024.

The decrease was primarily driven by $7.5 million in capital expenditures related to our Rhode Island expansion and international investments. Total debt at year-end was approximately $17.3 million, primarily associated with our credit facilities. As previously disclosed, certain financial covenants were not met at year-end due to lower profitability during our transition, higher operating costs and reduced leasing contributions. We are in active and constructive discussions with our lender regarding amendments and potential restructuring of our credit facility. Based on these discussions, we believe we will reach an agreement that provides the flexibility needed to support our business plan. While these conditions raise substantial doubt about our ability to continue as a going concern if unresolved, we are confident in our path forward based on our ongoing lender engagement and improved operational performance.

Finally, I would like to point out that as of December 31, 2025, our shareholders’ equity, including non-controlling interests, was $24 million or $3.66 per outstanding share compared to $25.2 million or $3.92 per outstanding share at December 31, 2024. When comparing this to our current market valuation, we’d like to highlight the steep discount in our market value. This concludes the financial review. I’ll now turn the call back for Q&A.

Chuck, Conference Moderator, Conference Services: Thank you. We will now begin the question-and-answer session. To ask a question, you may press star then one on your touch tone phone. If you are using a speakerphone, please pick up your handset before pressing the keys. If at any time your question has been addressed and you would like to withdraw your question, please press star then two. Our first question for today will come from Marla Marin with Zacks. Please go ahead.

Marla Marin, Analyst, Zacks: Thank you. It seems clear from your remarks and from what we’ve seen that when you upgrade equipment, which is obviously a positive over the long run, but in the short term, there’s a temporary distortion because the absence of that equipment sort of, you know, distorts the year-over-year comparability. First of all, thank you for providing some same center volumes. I think that’s helpful. Long-winded way of getting to the question, which is, as you deepen your footprint in Rhode Island, will you be able to help offset some of that noise by referring patients from one center to another? Or is that just not something that’s easily done?

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: Well, thank you for your question. That is certainly part of the strategy in Rhode Island. You know, once we establish the infrastructure that we have in place, we are able to leverage that infrastructure over a bigger footprint. There are the economies of scale, and that certainly is part of our strategy in building out our regional development in Rhode Island.

Marla Marin, Analyst, Zacks: Okay, great. Thanks. One follow-up. If you could just remind us of the timeline for constructing the first new facility in Rhode Island, but also importantly, how early before the center actually opens do you begin initiatives to staff the facility?

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: We anticipate that the Bristol facility will come online in late 2027 and followed by the proton facility in 2028. In terms of staffing, we normally start staffing up several months in advance. Again, that’s one of the advantages that we have. We have a team, for instance, of radiation therapists or physicists or dosimetrists, physicians that we can, you know, spread over that certainly at the start or at the initial ramp up period, so we can very closely manage our expenses. As we need to add additional headcount, we’ll do that over time as the volumes increase.

Marla Marin, Analyst, Zacks: Could I sneak one follow-up in in very brief follow-up? Should we interpret that as there really won’t be that much downtime for some of the professional staffing because of the timeline between hiring and then actually opening the facility and the possibility of utilizing some of those resources at other sites?

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: That is correct.

Marla Marin, Analyst, Zacks: Okay. Thank you.

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: Thank you.

Chuck, Conference Moderator, Conference Services: The next question will come from Anthony Marchese with Investor. Please go ahead.

Anthony Marchese, Investor/Analyst, Investor: Yeah. Hi, guys. Question for you regarding the three expired contracts. Did you know about these contracts in the last conference call? I’m trying to figure out why we can’t, you know, why we’re constantly surprised with, oh, revenue was lower this quarter because, you know, contracts expired. Isn’t that something that ordinarily you should give out to investors if you know that these contracts are expiring?

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: Ray, I’m just gonna ask you just by way of history and of other calls, our disclosures on expiring contracts. We did have three, and in all three of those cases, they were centers, health systems that desired to, basically, decided to do the update themselves rather than utilize us as part of that financing of their capital expenditure.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Yeah, Tony, I think we’ve.

Anthony Marchese, Investor/Analyst, Investor: They did continue.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Tony, I think there’s nothing new really being disclosed here. We’ve mentioned it in past calls and disclosures. You know, when you do a fourth quarter, well, 2025 comparison to 2024, you know, if those agreements expired in the third quarter of 2024, you’re gonna see negative variances when you compare the full year. If they expired in first quarter of 2025, you’re gonna see negative variances when you compare fourth quarter of 2024 against fourth quarter of 2025. I think we’ve been pretty consistent. There’s no really new contracts expiring. We have one, but it’s low technology and we’re kinda just keeping it extended with low volumes. There’s little or no cost to that situation.

Anthony Marchese, Investor/Analyst, Investor: Right. Okay. My follow-up question is, do you anticipate being profitable for 2025, I’m sorry, 2026, overall?

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Gary, I’ll take that.

Anthony Marchese, Investor/Analyst, Investor: Yes, go ahead and please take it. Yep.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Yeah. Tony, we really can’t speculate on that. We really have not ever been in the habit of giving forward-looking statements. We really can’t comment on that.

Anthony Marchese, Investor/Analyst, Investor: Got it.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: You know, we had

Anthony Marchese, Investor/Analyst, Investor: Okay.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: foundational issues, and those foundational issues have been addressed. We’ve addressed them.

Anthony Marchese, Investor/Analyst, Investor: Got it. I assume that your credit agreement or even one that you’re proposing or that you would be entering into at some point, hopefully in the near future, would that prevent you guys from, you know, buying back stock?

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Tony, could you restate the question? I’m not sure.

Anthony Marchese, Investor/Analyst, Investor: Oh, I’m sorry. I’m just asking, your ability to buy back stock, is that constrained by a credit agreement or you guys have just decided that, you know, you don’t wanna buy back stock? I mean, my point is you guys are, you know, go out of your way to say that you’re trading at half of book, but there’s no stock buyback, you know, and your directors basically own zero stock. I mean, two directors own 2,000 shares, one director owns zero. I don’t see a lot of you know, and I’m sorry to have to be so harsh, but, you know, as an investor, I like to see, you know, the board aligned with investors.

Frankly, three of your board members own virtually zero stock and so I’m asking, if they’re not gonna buy stock and show some confidence in the company, then perhaps the company might want to demonstrate some confidence to investors by buying back stock. I’m just asking, is that a possibility or are you constrained from buying back stock because of other factors?

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Yeah. Gary, I’ll take that.

Anthony Marchese, Investor/Analyst, Investor: You’ve addressed this on prior calls, and I’ll turn it over to him.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Yeah. Thanks for the question. You know, in the past, the company’s not really been interested in a buyback, stock buyback program. Under this situation with our lenders, it’s unlikely to change that stance. You know, I have continued to align. I remain very bullish on the company. I know our stock has not performed, and it’s disheartening to report a loss for a year, but I’m still very bullish on the future of our company.

Anthony Marchese, Investor/Analyst, Investor: No, I know you are. Right. 100%. I know you are. We’ve had calls and private calls. I know you’re. I guess it would be helpful, and I’ll just leave it at this. I’m not trying to die on the hill, so to speak, on this comment, but my point is it would be really helpful and a show of confidence if, you know, the three directors who own basically zero stock would step up and buy something. I mean, you pay them $50,000 a year in compensation. You know, maybe as a way to preserve cash or extend your cash runway, you might wanna consider having them take their compensation in the form of stock as opposed to cash, thereby, I think, helping to align, you know, their interests along with mine.

I’ll leave it at that.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Yeah. Yeah. I think it’s duly noted. We’ll take that under consideration, Tony.

Anthony Marchese, Investor/Analyst, Investor: All right. Thank you.

Ray Stachowiak, Executive Chairman, American Shared Hospital Services: Thank you, Tony, for your questions.

Chuck, Conference Moderator, Conference Services: Again, if you have a question, please press star then one. This will conclude our question and answer session. I would like to turn the conference back over to Mr. Gary Delanois for any closing remarks. Please go ahead.

Gary Delanois, Chief Operating Officer / Management, American Shared Hospital Services: Thank you, Chuck, and thank you all for joining us today. 2025 was a year where we laid the foundation for future growth. Through strong partnerships, expanded clinical capacity, and targeted operational improvements, we positioned the company for the next phase of its evolution. While we encountered challenges during the year, we took decisive actions to address them, and we’re already seeing the benefits of those efforts. With a strengthened management team, a growing direct patient care services platform, and a robust development pipeline, we’re optimistic about 2026 and beyond. We remain focused on delivering high-quality cancer care, expanding patient access through the advanced treatment technologies, and creating long-term value for our shareholders. Thank you again for your continued support and interest in American Shared Hospital Services.

Chuck, Conference Moderator, Conference Services: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.