Business Context and Reporting Period
Company: American Shared Hospital Services (ASHS)
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: ASHS provides turn-key technology solutions for stereotactic radiosurgery and advanced radiation therapy. Operations are divided into two segments: Leasing (medical equipment leasing to hospitals) and Direct Patient Services (stand-alone facilities in Rhode Island, Peru, Ecuador, and Mexico).
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | 2026 (6 Months) | 2025 (6 Months) |
|---|---|---|
| Total Revenues | $15,514,000 | $13,183,000 |
| Gross Margin | $2,721,000 (17.5%) | $2,572,000 (19.5%) |
| Operating Loss | $(1,834,000) | $(1,843,000) |
| Net Loss | $(1,960,000) | $(1,390,000) |
| Net Loss Attributable to ASHS | $(1,126,000) | $(905,000) |
| Loss Per Share (Basic & Diluted) | $(0.17) | $(0.14) |
| Cash and Cash Equivalents | $6,511,000 | $11,081,000 (Year End 2025) |
| Total Debt (Current + Long-Term) | $16,216,000 | $17,294,000 (Current Portion only at Dec 31, 2025) |
| Working Capital Deficit | $(5,056,000) | $(5,724,000) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased by $2.33 million (17.7%) year-over-year.
- Direct Patient Services: Increased $2.33 million, driven by higher procedure volumes at Rhode Island facilities and the Puebla, Mexico location.
- Leasing: Remained flat ($6.565 million vs. $6.562 million), with a slight decrease in Gamma Knife procedures offset by increased Proton Beam Radiation Therapy (PBRT) revenue.
- Expense Increases:
- Direct Operating Costs: Increased $2.18 million, primarily due to operating costs at Rhode Island facilities and a $909,000 increase in the allowance for credit losses for those facilities.
- Selling & Administrative: Increased $398,000, largely due to legal fees associated with negotiating the Third Amendment to the Credit Agreement.
- Depreciation: Decreased $312,000 due to the expiration of a Gamma Knife contract, assets becoming fully depreciated, and a change in the estimated useful life of PBRT equipment.
- Cash Flow: Net cash provided by operating activities was $4.385 million, a significant increase from $2.131 million in the prior year, driven by a reduction in receivables.
Guidance, Outlook, Risks, and Unusual Items
Going Concern and Liquidity Risks
Management has determined that the Company's liquidity condition raises substantial doubt about its ability to continue as a going concern.
- Covenant Defaults: As of June 30, 2026, the Company was not in compliance with the minimum fixed-charge coverage ratio, maximum funded debt-to-EBITDA ratio, and Minimum Cash Covenant under its Credit Agreement with Fifth Third Bank. The Company also failed to pay obligations when the Term Loan and Delayed Draw Term Loan matured on April 9, 2026.
- Subsequent Event (Forbearance): On July 22, 2026, the Company entered into a Third Amendment with Fifth Third. The lender agreed to forbear from exercising remedies until June 30, 2027, provided the Company pursues a sale of assets and meets specific milestones. All obligations are due at the end of this standstill period.
- DFC Loan: The Company is also non-compliant with cash-to-debt covenants under its loan with the U.S. International Development Finance Corporation (DFC) and is seeking a waiver.
Unusual Items and Contingencies
- Related Party Financing: On July 22, 2026, the Company issued a $2.0 million promissory note and warrant to RCS/TIG Holdings LLC, controlled by the Executive Chairman, to secure liquidity.
- Internal Controls: Disclosure controls and procedures were deemed ineffective due to a material weakness regarding insufficient personnel and resources for financial reporting. The CFO resigned in July 2026.
- Commitments: The Company has $7.884 million in commitments to purchase/install equipment and $5.764 million in service commitments.
Investor Verification Checklist
- Debt Restructuring Status: Verify the terms and conditions of the July 22, 2026, Third Amendment with Fifth Third and the likelihood of meeting the "sale of assets" milestone by June 30, 2027.
- Credit Loss Allowance: Review the $909,000 increase in the allowance for credit losses specifically related to the Rhode Island facilities to assess the quality of receivables.
- Going Concern Mitigation: Assess the sufficiency of the $2.0 million related-party note and the $6.761 million cash balance against the $10.9 million in debt payments due in the next 12 months.
- DFC Loan Resolution: Monitor the outcome of discussions with the DFC regarding the cash-to-debt covenant waiver.
- Management Stability: Evaluate the impact of the CFO resignation and the interim appointment on financial reporting reliability.