American Shared Hospital Services 2026 Q2 Earnings Call

Please go ahead. Thank you, Nick, and thank you everyone for joining us today.

American Shared Hospital Services's second quarter 2026 earnings press release was issued earlier today. If you need a copy, it can be accessed on the company's website at www.ashs.com under the Investors section. 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 the company's annual report on Form 10-K for the year ended December 31, 2025, and Form 10-Q for the quarter ended March 31, 2026. The company assumes no obligation to update this information contained on 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. With that, I'd now like to turn the call over to Ray Stachowiak, Executive Chairman.

Ray, please go ahead. Thank you, Kirin, and good afternoon, everyone.

Thanks for joining us today and for your continued interest in American Shared Hospital Services. Before we begin, I'd like to take a moment to point out that we recently promoted Alexis Wallace, our longstanding Chief Accounting Officer, to the role of interim CFO. Our previous CFO, Scott Frech, has moved on to pursue other endeavors. We wish Scott all the best and appreciate his contributions while welcoming Alexis to this well-deserved role after her many years of excellent service on our accounting team. Now, let's get into the quarter. The second quarter represented another period of meaningful operational progress for our company. We delivered strong quarterly revenue of approximately $8.4 million, representing year-over-year growth of 19%, while first half revenue increased 18% to more than $15.5 million.

These results were driven by continued strength across our Direct Patient Services business, increasing proton beam radiation therapy activity, and improving performance from our international operations. More importantly, we believe these results validate the strategic direction we have been executing over the past several years. We have intentionally transformed American Shared Hospital Services from a company primarily dependent on equipment leasing into a more diversified radiation oncology platform with multiple avenues for growth. Today, we benefit from recurring revenues generated through our direct patient care operations, longstanding hospital partnerships, international treatment centers, Gamma Knife leadership, and our participation in proton beam radiation therapy. Each of these businesses contribute differently to our overall growth strategy, but together, they provide us with a broader, more resilient operating platform than at any point in our history. One of the most encouraging trends we continue to see is improving utilization across our network.

Our Rhode Island centers continue to experience higher patient volumes and improved operating performance. Our proton beam radiation therapy partnership in Orlando, Florida, delivered another strong quarter, benefiting from increased treatment volumes and favorable reimbursement trends. Internationally, our Gamma Knife center in Peru continues to demonstrate increased treatment volumes compared with the prior year following the Esprit upgrade that we completed in 2025. These operational achievements are especially encouraging because higher utilization remains one of the most important drivers of long-term profitability in our business model. I am also proud to report that our operating activities over the first 6 months generated $4.4 million of cash. Our cash balance at the end of the second quarter increased over 80% since the beginning of this year to $6.8 million.

It is validating to see the improving cash-generating capability of our business as our operating performance continues to strengthen. We also made important progress subsequent to quarter end with respect to our capital structure. As many of you know, we entered into a third amendment and forbearance agreement with Fifth Third Bank. Although our financing discussions have required considerable management attention over the past several months, we believe the agreement provides a defined framework that allows us to remain focused on executing our operating strategy while we continue pursuing longer-term capital solutions. A few months ago, I formed a new company that recently purchased additional shares of our company from a private investor. In addition, this new company has invested $2 million of subordinated financing after quarter end, which reflects our continued confidence in the long-term prospects of the company and provides additional financial flexibility as we move forward.

Importantly, none of these financing activities have changed our long-term strategic priorities. In Rhode Island, we continue advancing opportunities created through our certificate of need approvals, including plans for a new radiation therapy center in Bristol and a proton beam radiation therapy center in Johnston. Internationally, we remain excited about the continued development of our operations in Latin America and the opportunities we see to further expand our presence in attractive markets. An important component of our international growth strategy is in Guadalajara, Mexico, where we are partnering with Hospital San Javier to upgrade their Gamma Knife center. Importantly, this is an established Gamma Knife market and a well-established clinical partner. Hospital San Javier has been providing Gamma Knife treatments since 1994, giving us an experienced position and institutional platform from which to build.

While we recognize there's still important work ahead of us, particularly regarding our balance sheet, I remain extremely confident in the underlying strength of our business. Our focus remains squarely on growing patient volumes, expanding and diversifying our installed base of advanced radiation therapy technologies, strengthening our partnerships with leading healthcare systems, and allocating capital where we believe it can generate attractive long-term returns. With that, I'll turn the call over to our interim CEO, Craig Tagawa, who will provide more detail on our operational performance.

Craig? Thank you, Ray, and good afternoon, everyone.

I'd also like to thank all of you for joining us today and for your continued interest in American Shared Hospital Services. The second quarter was another quarter of solid operational execution and meaningful progress across our businesses. While our reported financial results include several substantial items that Alexis will discuss in greater detail, I believe the most important takeaway from the quarter is that the underlying business continues to move in the right direction. We generated strong quarterly revenues of approximately $8.4 million, representing 19% year-over-year growth, while first half revenues increased to more than $15.5 million. Those results were driven by continued growth in our Direct Patient Services segment, improving proton beam radiation therapy performance, and higher procedure volumes across our international Gamma Knife operations.

More importantly, we continue to see encouraging trends in the metrics that matter most to the long-term success of our business: patient volumes, utilization, physician engagement, and central level operating performance. Beginning with Rhode Island, our three radiation oncology centers continued to improve during the quarter. These facilities once again generated strong revenue growth, supported by increased patient procedures and continued operational improvements. Since acquiring these centers, our primary objective has been to strengthen physician relationships, improve operational execution, and expand patient access to high-quality radiation therapy services. We believe we are making meaningful progress against each of those objectives. While there are still additional opportunities ahead, we are encouraged by the trajectory of these operations and believe they represent an important long-term growth platform for the company. Our Puebla, Mexico radiation therapy center also delivered another strong quarter. Patient activity remained healthy. Reimbursement trends continue to be favorable.